nOtES tO thE - BIMB Holdings Berhad

Transcription

Leading the
way in islamic
financial
excellence
Annual Report 2014
Synergy . Reliability . Strategy . Integrity . Sustainability
Cover Rationale
Leading the Way in
Islamic Financial Excellence
Leading the
way in islamic
financial
excellence
Annual Report 2014
BIMB Holdings Bhd (“BHB”) occupies a central position
in the Islamic financial industry in Malaysia through our
subsidiaries which have been involved in Shariah-based
banking and financial services since 1983. As the Group has
expanded over the years, we have opened progressively
more doors to our customers and other stakeholders into
the rich tapestry of innovative and ethical Islamic products
and services that meet the needs of our increasing clientele
in meaningful ways. In the process, we have established
ourselves as a Trustworthy, Professional and Caring
corporation with an extensive Network that maintains the
highest level of Integrity.
Contents
Corporate Framework
2 Corporate Profile
4 Corporate Information
6 Group Corporate Structure
8
14
16
17
Leadership
Directors’ Profile
Group CEO’s Profile
CEOs in the Group
Management Committee
18
Performance Review
5 -Year Group Financial Highlights
18
TH
Annual General Meeting of
BIMB Holdings Berhad
Dewan Bankuet 2, Aras B2, Menara Felda, Platinum Park, No. 11, Persiaran KLCC
50088 Kuala Lumpur, Malaysia
Thursday, 14 May 2015 at 10.00 a.m.
Refer to pages 238 to 241 for Annual General Meeting Information.
Network
Trustworthy
Integrity
Professional
Caring
22
34
40
52
77
82
Perspectives
Letter to Shareholders
Corporate Responsibility
2014 Event Highlights
accountability
Statement of Corporate Governance
Statement on Risk Management
and Internal Control
Additional Compliance Information
85
220
229
237
Audited Financial Statements
Financial Statements
Additional Information
Properties owned by BHB Group
Share and Warrant Holdings Statistics
Regional Group Network
18th AGM INFORMATION
238 Notice of 18th Annual General Meeting
241 Statement Accompanying Notice
of 18th Annual General Meeting
Form of Proxy
BIMB HOLDINGS BERHAD
Annual Report 2014
Corporate
profile
BIMB Holdings Berhad (“BHB”)
was established on 20 March 1997 and listed on the Main
Market of Bursa Malaysia on 16 September 1997.
BHB acts as an investment holding company for Malaysia’s pioneer Shariahcompliant business entities, involve mainly in Islamic banking, takaful and
stockbroking.
Being the premier Shariah-compliant financial services provider with an
authorised capital of RM2.0 billion and paid-up capital of RM1,542,209,734.00,
BHB is well-positioned to assist the Government’s aspirations in establishing
the country as a vibrant International Islamic Financial Center.
BHB has gained in strength and stature over the years as a champion of
Islamic banking, takaful and stockbroking industries via its stable of strategic
investments in Malaysia’s pioneer Shariah-compliant entities.
2
Championing
ETHICAL Islamic
Financial Services
Kiptchak Mosque in Turkmenistan
6
Annual Report 2014
Corporate
profile
BIMB Holdings Berhad (“BHB”)
was established on 20 March 1997 and listed on the Main
Market of Bursa Malaysia on 16 September 1997.
BHB acts as an investment holding company for Malaysia’s pioneer Shariahcompliant business entities, involve mainly in Islamic banking, takaful and
stockbroking.
Network
Being the premier Shariah-compliant financial services provider with an
authorised capital of RM2.0 billion and paid-up capital of RM1,542,209,734.00,
BHB is well-positioned to assist the Government’s aspirations in establishing
the country as a vibrant International Islamic Financial Center.
BHB has gained in strength and stature over the years as a champion of
Islamic banking, takaful and stockbroking industries via its stable of strategic
investments in Malaysia’s pioneer Shariah-compliant entities.
MALAYSIA’s PREMIER
SHARIAH-Compliant
FINANCIAL SERVICES
GROUP
The
ONLY
public listed
Islamic Financial Holding
Company in Malaysia
First
Islamic BANK
in Malaysia
First
and only public listed
TAKAFUL operator
in Malaysia
We are continuously expanding our BRANCH network, consumer
business centres, bureaus de change, Ar-Rahnu outlets and takaful
centres to increase our reach across the length and breadth of the
country. This enables us to get closer to more Malaysians, whose lives
we enrich via an ever-increasing range of products and services.
First
full-fledged
shariah-compliant
stockbroking company in Malaysia
4
Annual Report 2014
Corporate
Information
BOARD OF DIRECTORS
Tan Sri Samsudin bin Osman
Datuk Zaiton binti Mohd Hassan
Encik Zahari @ Mohd Zin bin Idris
Chairman/Non-Independent
Non-Executive Director
Independent Non-Executive Director
Non-Independent Non-Executive Director
Dato’ Johan bin Abdullah
Encik Salih Amaran bin Jamiaan
Datuk Rozaida binti Omar
Puan Rifina binti Md Ariff
group ceo
COMPANY SECRETARY
AUDIT & EXAMINATION
COMMITTEE
Dato’ Sri Zukri bin Samat
Puan Maria binti Mat Said (LS 0009400)
Tan Sri Ismail bin Adam
Senior Independent Non-Executive Director
Tan Sri Ismee bin Ismail
(Appointed w.e.f. 18 February 2015)
Chairman
NOMINATION & ASSESSMENT
COMMITTEE
REMUNERATION COMMITTEE
SHARIAH SUPERVISORY
COUNCIL, BANK ISLAM
MALAYSIA BERHAD
Chairman
Chairman
Dr. Ahmad Shahbari @
Sobri bin Salamon
Chairman
Dato’ Mohd Bakir bin Haji Mansor
(Resigned w.e.f. 31 March 2015)
Assistant Professor Dr. Uzaimah
binti Ibrahim
Professor Dr. Ahmad Hidayat bin Buang
Dr. Muhammad Syafii bin Antonio
5
Prof. Emeritus Dato’ Paduka Dr.
Mahmood Zuhdi bin Haji Abdul Majid
Chairman
Dr. Aida binti Othman
Ir. Dr. Muhamad Fuad bin Abdullah
CEOs IN THE GROUP
AUDITORS
Dato’ Sri Mohamed Hassan bin Md. Kamil
Group Chief Executive Officer
BIMB Holdings Berhad; and
Managing Director
Bank Islam Malaysia Berhad
Group Managing Director
Syarikat Takaful Malaysia Berhad
Encik Rashid bin Ismail
KPMG Desa Megat & Co. (AF0759)
Level 10, KPMG Tower
8, First Avenue, Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Chief Executive Officer
BIMB Securities Sdn Bhd
REGISTERED OFFICE
SHARE REGISTRAR
STOCK EXCHANGE LISTING
BIMB Holdings Berhad (423858-X)
31st Floor, Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel : +603-2781 2999
Fax : +603-2781 2998
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU, 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Tel : +603-7841 8000
Fax : +603-7841 8152
Main Market of
Bursa Malaysia Securities Berhad
16 September 1997
Stock Short Name : BIMB/BIMB-WA
Stock No. : 5258
Warrant No.
: 5258WA
Perspectives
Dato’ Wan Mohamad bin Dato’ Sheikh
Abdul Aziz
accountability
Chairman
Audited
Financial
Statements
Professor Dr. Muhamad Rahimi
bin Osman
Additional
Information
Dr. Ahmad Shahbari @
Sobri bin Salamon
SHARIAH ADVISORY
COMMITTEE,
BIMB SECURITIES SDN BHD
18th AGM
information
SHARIAH ADVISORY BODY,
SYARIKAT TAKAFUL MALAYSIA BERHAD
Performance
Review
Leadership
Corporate
Information
Corporate
Framework
Annual Report 2014
6
Annual Report 2014
Group Corporate
structure
100%
55.18%
Subsidiaries of Core Business Units
100%
100%
100%
100%
100%
100% BIMB Offshore Company Management
Services Sdn Bhd
5.23%
5.15%
BIMB Investment Management Bhd
BIMB Foreign Currency Clearing Agency Sdn Bhd
(under members’ voluntary liquidation)
Al-Wakalah Nominees (Tempatan) Sdn Bhd
Farihan Corporation Sdn Bhd
Bank Islam Trust Co (Labuan) Ltd
60.31%
63.09% Asean Retakaful International (L) Ltd
56.00% PT Syarikat Takaful Indonesia
42.73%
57.24% PT Asuransi Takaful Keluarga
52.67% PT Asuransi Takaful Umum
9.93%
100%
5.92%
49%
51%
Others
18.59%
100% BIMSEC Nominees (Asing) Sdn Bhd
100% BIMSEC Nominees (Tempatan) Sdn Bhd
7
Performance
Review
Leadership
Group corporate
structure
Corporate
Framework
Annual Report 2014
48%
Islamic
Banking
& Finance
Institute
Malaysia
Sdn Bhd
(under members’
voluntary liquidation)
Associate / Investment
accountability
Other Business Units
Audited
Financial
Statements
Core Business Units
Additional
Information
Syarikat
Al-Ijarah
Sdn Bhd
18th AGM
information
Notes:
Shareholding structure as at 31 March 2015
Perspectives
100%
8
Annual Report 2014
directors’
profile
Chairman/Non-Independent Non-Executive Director
68 years old - Malaysian
Date of Appointment: 1 February 2007
Qualifications:
Master of Public Administration, Pennsylvania State University (USA)
Bachelor of Arts (Hons), University of Malaya
Diploma in Public Administration, University of Malaya
Working Experiences & Occupations:
Present:
• Chairman, Employees Provident Fund (EPF) Board
and EPF Investment Panel
• Chairman, Universiti Utara Malaysia
• Chairman, BIMB Holdings Berhad
• Chairman, Sime Darby Industrial Holdings Sdn Bhd
Previous:
• President, Perbadanan Putrajaya
• Chief Secretary to the Malaysian Government
• Secretary General for the Ministry, Home Affairs
• Secretary General for the Ministry, Domestic Trade
and Consumer Affairs
Directorship of Public Companies:
Sime Darby Berhad
Membership of Board Committees in BIMB Holdings Berhad:
None
Meeting Attendance:
8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014
Declaration of Interest:
He does not have any family relationship with any director and/or major
shareholder of BHB nor does he have any conflict of interest with BHB
except by virtue of being a nominee Director of Lembaga Tabung Haji. He
has not been convicted of any offence within the past 10 years.
9
Present:
• Chairman, Prasarana Malaysia Berhad
• Advisor, Hay Group Sdn Bhd
Previous:
• Director General, Public Service Department, Malaysia
• Secretary General, Ministry of Health
• Director General, National Productivity Corporation
• Senior Project Officer, National Institute of Public Administration (INTAN)
• Assistant Director, Trade for Ministry of Trade and Industry
• Prasarana Malaysia Berhad
• Westports Holdings Berhad
• Chairman of Nomination & Assessment Committee
• Chairman of Remuneration Committee
• Member of Audit & Examination Committee
Meeting Attendance:
shareholder of BHB nor does he have any conflict of interest with BHB. He has
not been convicted of any offence within the past 10 years.
Date of Appointment: 9 October 2006
Qualifications:
Fellowship of Chartered Institute of Management Accountants (CIMA)
(United Kingdom)
Member of Malaysian Institute of Accountants (MIA)
Present:
• Group Managing Director and Chief Executive Officer,
Lembaga Tabung Haji
• Chairman, Syarikat Takaful Malaysia Berhad
Previous:
• Chief Executive Officer, ECM Libra Securities Sdn Bhd/ECM Libra
Capital Sdn Bhd
• Senior General Manager, Lembaga Tabung Haji
• Senior Vice President, Business and Corporate Development of Medical
Online (M) Sdn Bhd
• Chief Accountant/Treasurer, Pengurusan Danaharta Nasional Berhad
• General Manager, Business Development of Arab Malaysian
Development Berhad
• Accountant, Shell Companies in Malaysia
• Management Accountant, Arab Malaysian Development Berhad
• Bank Islam Malaysia Berhad
• TH Plantations Berhad
• Syarikat Takaful Malaysia Berhad
• 1Malaysia Development Berhad
• Edra Global Energy Berhad (formerly known as 1MDB Energy Group Berhad)
• Member of Nomination & Assessment Committee
• Member of Remuneration Committee
Meeting Attendance:
shareholder of BHB nor does he have any conflict of interest with BHB except
by virtue of being a nominee Director of Lembaga Tabung Haji. He has not been
convicted of any offence within the past 10 years.
accountability
Qualifications:
Master of Arts (Economics), Vanderbilt University (USA)
Bachelor of Arts (Hons), University of Malaya
Diploma in Public Administration (Post-Baccalaureate Diploma), University
of Malaya
Advanced Management Program, Harvard Business School
Audited
Financial
Statements
Date of Appointment: 3 January 2011
(appointed as Senior-Independent Non-Executive Director w.e.f. 25 May 2011)
Additional
Information
18th AGM
information
TAN SRI ISMAIL bin ADAM
Perspectives
Performance
Review
Leadership
directors’
profile
Corporate
Framework
Annual Report 2014
10
Annual Report 2014
directors’
profile
Qualifications:
Fellowship of Association of Chartered Certified Accountants (ACCA),
United Kingdom
Member of the Malaysian Institute of Accountants (MIA)
Member of the Malaysian Institute of Certified Public Accountants (MICPA)
Present:
• Managing Director, Capital Intelligence Advisors Sdn Bhd
• Chairman, Private Pension Administrator Malaysia
Previous:
• President/Executive Director, Malaysian Rating Corporation
Berhad (MARC)
• Served 12 years with Maybank in various senior positions including
that of General Manager, Group Strategic Planning
• Fund Manager in Bapema Corporation Sdn Bhd
• Project Officer in Bank Pembangunan (M) Bhd
• Audit trainee in PricewaterhouseCoopers
• Sime Darby Berhad
• Dolphin International Berhad
• Chairman of the Audit and Examination Committee
• Member of Nomination and Assessment Committee
• Member of Remuneration Committee
Meeting Attendance:
She does not have any family relationship with any director and/or major
shareholder of BHB nor does she have any conflict of interest with BHB. She
has not been convicted of any offence within the past 10 years.
dato’ johan bin abdullah
(Resigned as Non-Independent Executive Director w.e.f. 15 January 2015)
Qualifications:
MBA (Finance), Morehead State University (USA)
BBA (Finance), Eastern Michigan University (USA)
Diploma in Banking, University Technology MARA (Malaysia)
Present:
• Deputy Group Managing Director and Chief Executive Officer,
Lembaga Tabung Haji
Previous:
• Group Managing Director/Chief Executive Officer,
BIMB Holdings Berhad
• Deputy Chief Regulatory Officer, Group Regulation,
Bursa Malaysia Berhad
• Head, Issues and Listing Division, Bursa Malaysia Berhad
• Senior Vice President, Securities Issues, Bursa Malaysia Berhad
• Vice President, Listing Bursa Malaysia Berhad
• General Manager, Corporate Planning, Damansara Realty Berhad
• Edra Global Energy Berhad (formerly known as 1MDB Energy Group Berhad)
None
Meeting Attendance:
by virtue of being a nominee Director of Lembaga Tabung Haji. He has not
been convicted of any offence within the past 10 years.
11
Present:
• Group Chief Financial Officer, Lembaga Tabung Haji
Previous:
• Finance Director, Glaxo Smith Kline Consumer Healthcare Sdn Bhd
• Finance Manager, Guthrie Trading Sdn Bhd
• Credit Manager, Citibank Berhad
• Financial Accountant, Felda
• Pelikan International Corporation Berhad
None
Meeting Attendance:
shareholder of BHB nor does she have any conflict of interest with BHB except
by virtue of being a nominee Director of Lembaga Tabung Haji. She has not
Date of Appointment: 20 September 2002
(Redesignated from Independent Non-Executive Director to
Non-Independent Non-Executive Director w.e.f. 3 December 2014)
Qualifications:
Senior Cambridge Certificate
accountability
Qualifications:
Member of Association of Chartered Certified Accountants (ACCA) UK
A-Level, Birkenhead College, United Kingdom
Present:
• None
Previous:
• Executive Director/Chief Executive Officer, Inter-City MPC (M) Sdn Bhd
• General Manager Commercial Banking, Malayan Banking Berhad
• Assistant General Manager, Malayan Banking Berhad
• Deputy Zone Head, Head Officer, Malayan Banking Berhad
• Area Manager, Malayan Banking Berhad
• Branch Manager, Malayan Banking Berhad
• Assistant Branch Manager, Malayan Banking Berhad
• Trainee Officer, Malayan Banking Berhad
• Member of Audit and Examination Committee
Audited
Financial
Statements
Date of Appointment: 1 December 2009
Additional
Information
Meeting Attendance:
18th AGM
information
Perspectives
Performance
Review
Leadership
directors’
profile
Corporate
Framework
Annual Report 2014
12
Annual Report 2014
directors’
profile
Date of Appointment: 1 April 2014
Qualifications:
Master in Business Administration, Wharton School, University of
Pennsylvania (USA)
Bachelor of Science (Economics), London School of Economics and Political
Science, University of London (UK)
Post Graduate Diploma in Public Administration, Victoria University,
Wellington (New Zealand)
Qualifications:
Bachelor of Arts (Hons) Accounting & Financial Analysis,
University of Newcastle Upon-Tyne, UK
Present:
• None
Previous:
• Regional Representative in Kuala Lumpur, Islamic Development Bank,
Jeddah
• Deputy Director, Trade Finance and Promotion, Islamic Development
Bank, Jeddah
• Deputy Director, Business Development, Islamic Development Bank,
Jeddah
• Special Advisor (Economics), Commonwealth Secretariat, London
• General Manager, International Banking Division, Malayan Banking
Berhad
• Deputy Secretary, Finance Division, Ministry of Finance, Malaysia
• Principal Assistant Secretary, Tax Division, Ministry of Finance, Malaysia
None
None
Meeting Attendance:
by virtue of being a nominee Director of Permodalan Nasional Berhad. He has
Present:
• Senior General Manager, Corporate Finance & Services,
Lembaga Tabung Haji
Previous:
• Assistant Vice President, Affin Merchant Bank Berhad
• Senior Manager, Amanah Saham Mara Berhad
• Senior Officer, Permata Merchant Bank Berhad
None
None
Meeting Attendance:
shareholder of BHB nor does she have any conflict of interest with BHB except
by virtue of being a nominee Director of Lembaga Tabung Haji. She has not
13
Present:
• Senior General Manager, Legal & Secretarial Division of Bank Islam
Malaysia Berhad
• Company Secretary of Bank Islam Malaysia Berhad
• Company Secretary of BIMB Holdings Berhad
Previous:
• Senior Vice President, Compliance & Service Standards Division of
Tahan Insurance Malaysia Berhad
• Secretary to the Board of Directors of LOFSA
• Manager, Development & Promotions of LOFSA
• Manager, Legal of Danamodal Nasional Berhad
• Company Secretary, Danamodal Nasional Berhad
• Senior Legal Officer, Legal Department of Bank Negara Malaysia
• Al Wakalah Nomines (Tempatan) Sdn Bhd
• Bank Islam Trust Company (Labuan) Ltd
• Farihan Corporation Sdn Bhd
• BIMB Foreign Currency Clearing Agency Sdn Bhd
Secretary of Board Committees in BIMB Holdings Berhad:
• Secretary of Audit and Examination Committee
• Secretary of Nomination and Assessment Committee
• Secretary of Remuneration Committee
• Secretary of Board of Directors
Meeting Attendance:
None
accountability
Qualifications:
Bachelor of Law from University of Malaya
Audited
Financial
Statements
Date of Appointment: 31 December 2009
Additional
Information
Company Secretary
18th AGM
information
Puan Maria binti Mat Said
Perspectives
Performance
Review
Leadership
directors’
profile
Corporate
Framework
Annual Report 2014
14
Annual Report 2014
Group CEO’s
profile
dato’ sri zukri bin samat
Qualifications:
Honorary Doctorate (PhD) in Finance and Islamic Banking,
Kolej Universiti INSANIAH
MBA (Finance), University of Hull (United Kingdom)
Diploma in Accountancy, University Technology MARA (Malaysia)
Present:
• Group Chief Executive Officer, BIMB Holdings Berhad
• Managing Director, Bank Islam Malaysia Berhad
Previous:
• Executive Director, Khazanah Nasional Berhad
• Managing Director, Pengurusan Danaharta Nasional Berhad
• General Manager, Credit Agricole Indosuez
• Deputy General Manager, Commerce International Merchant
Bank Berhad
• Senior Account Officer, Pacific Bank Berhad
• Senior Account Officer, Public Bank Berhad
• Credit Officer, Bank Bumiputra Malaysia Berhad
• BIMB Investment Management Berhad
• Asian Institute of Finance Berhad
None
Meeting Attendance:
None
A global Leader
in islamic
banking
Al-Salam Mosque in Odessa, Ukraine
18
Annual Report 2014
Group CEO’s
profile
dato’ sri zukri bin samat
Qualifications:
Honorary Doctorate (PhD) in Finance and Islamic Banking,
Kolej Universiti INSANIAH
MBA (Finance), University of Hull (United Kingdom)
Diploma in Accountancy, University Technology MARA (Malaysia)
Present:
• Group Chief Executive Officer, BIMB Holdings Berhad
• Managing Director, Bank Islam Malaysia Berhad
Previous:
• Executive Director, Khazanah Nasional Berhad
• Managing Director, Pengurusan Danaharta Nasional Berhad
• General Manager, Credit Agricole Indosuez
• Deputy General Manager, Commerce International Merchant
Bank Berhad
• Senior Account Officer, Pacific Bank Berhad
• Senior Account Officer, Public Bank Berhad
• Credit Officer, Bank Bumiputra Malaysia Berhad
• BIMB Investment Management Berhad
• Asian Institute of Finance Berhad
Trustworthy
None
Meeting Attendance:
None
Bank Islam
We continue to make steady
progress by focusing on the H2E
6 pillars
i.
Robust Organic Growth
ii.
Service Excellence
iii. Shariah-led Innovation
iv. Resource Optimisation
v.
Being an Employer of Choice
vi.Regionalisation
Awarded
in FOUR
categories:
Best CEO, Best Customer
Service Provider Asia, Best
Islamic Bank Malaysia and
Most Outstanding Retail Bank
141
branches
and more than 1,200 self-service
terminals across the country
A hallmark of our banking operations is the level of trust we
have nurtured among our partners and customers. As a result of
building strong relationships, we truly understand the needs of our
consumer, corporate and commercial segments and are able to meet
these with innovative service offerings.
16
Annual Report 2014
CEOs in
the group
Encik Rashid bin Ismail
Chief Executive Officer,
Group Chief Executive Officer, BIMB Holdings Berhad;
and Managing Director, Bank Islam Malaysia Berhad
Dato’ Sri Mohamed Hassan bin Md. Kamil
Group Managing Director,
17
2
3
1.Dato’ Sri Zukri bin Samat
Leadership
Perspectives
Performance
Review
Management
committee
Corporate
Framework
Annual Report 2014
1
4
4.Encik Dzul Effendy bin Ahmad Hayan
Head, Corporate Strategy & Transformation
Management
5.Cik Nor Aina binti Kamaruddin
Head, Corporate Services
6.Encik Omar bin Atin
Head, Corporate Communications
5
6
Audited
Financial
Statements
Head, Legal, Secretarial & Compliance
Additional
Information
3.Encik Aidil Haznul Zulkifli
18th AGM
information
Chief Financial Officer
accountability
2.Encik Mohamad Azlan
bin Mohamad Alam
18
Annual Report 2014
5-year group
financial highlights
2010
RM’000
Restated
2011
RM’000
Restated
2012
RM’000
Restated
2013
RM’000
2014
RM’000
Share Capital
1,066,790
1,066,790
1,066,790
1,493,506
1,493,506
Shareholders’ Equity
1,667,102
1,869,847
2,080,775
2,810,337
2,949,037
26,798,107
28,208,203
32,379,000
36,924,367
40,678,379
4,786,882
5,124,602
5,580,755
6,082,001
6,323,577
Financing, advances and others
11,858,599
14,161,837
19,507,799
23,740,948
29,524,571
Marketable securities
18,755,334
16,311,797
19,162,529
18,409,143
15,528,737
Total Assets
35,939,624
38,246,388
43,939,909
49,674,545
53,030,205
2,596,313
2,078,979
2,473,953
2,809,395
2,967,473
Profit before zakat and taxation (PBZT) 588,155
588,924
717,439
819,427
815,384
Net Profit
238,470
236,642
276,220
279,327
532,329
24,802
114,679
128,015
164,286
219,545
44.25
50.20
60.25
64.30
72.58
Gross NPF ratio = Gross NPF/Gross
financing and advances (%)
4.50
2.61
1.55
1.18
1.14
Net NPF ratio = (Gross NPF – Specific
allowance)/(Gross financing and
advances Specific allowance) (%)
1.06
-0.17
-0.67
-0.91
-0.82
22.35
22.18
25.89
25.84
35.64
Net Tangible Assets per Share (RM)
1.56
1.75
1.95
1.88
1.97
Gross Dividend per Share (%)
3.10
10.75
12.00
12.00
14.70
Net Dividend per Share (%)
2.33
10.75
12.00
12.00
14.70
Deposits from Customers
Takaful liabilities
Revenue
Dividend Less Taxation
Net financing and advances over customer
deposits = Net financing and advances/
Customer deposits (%)
Earnings per Share (Sen)
19
(RM’000)
(Rm’000)
2010
2014
2010
2014
2011
2013
2011
2013
2012
2012
2,080,775
2013
2,810,337
2014
2,949,037
financing,
advances
and others
2010
4,786,882
2011
5,124,602
2012
5,580,755
2013
6,082,001
2014
6,323,577
Total assets
Audited
Financial
Statements
2011
1,869,847
2012
(RM‘000)
2010
2014
2010
2014
2011
2013
2011
2013
2012
2010
11,858,599
2011
14,161,837
2012
19,507,799
Additional
Information
(RM’000)
2012
2013
23,740,948
2014
29,524,571
2010
35,939,624
2011
38,246,388
2012
43,939,909
2013
49,674,545
2014
53,030,205
18th AGM
information
2010
1,667,102
Perspectives
takaful
liabilities
accountability
Shareholders’
equity
Performance
Review
Leadership
5-year group
Corporate
Framework
Annual Report 2014
20
Annual Report 2014
5-year group
Deposits
from
Customers
Earnings
per Share
(SEN)
(RM‘000)
2010
2014
2010
2014
2011
2013
2011
2013
2012
2010
26,798,107
2011
28,208,203
2012
32,379,000
2012
2013
36,924,367
2014
40,678,379
2010
22.35
2011
22.18
2012
25.89
Net Tangible
Assets per
Share
Profit before
Zakat
and Taxation
(RM)
(RM‘000)
2010
2014
2010
2014
2011
2013
2011
2013
2012
2010
1.56
2013
25.84
2011
1.75
2012
1.95
2014
35.64
2012
2013
1.88
2014
1.97
2010
588,155
2011
588,924
2012
717,439
2013
819,427
2014
815,384
21
Annual Report 2014
The Preferred
choice for
insurance
Medina of Fez in Morocco
24
Annual Report 2014
5-year group
Deposits
from
Customers
Earnings
per Share
(SEN)
(RM‘000)
2010
2014
2010
2014
2011
2013
2011
2013
2012
2010
26,798,107
2011
28,208,203
2012
32,379,000
2012
2013
36,924,367
2014
40,678,379
2010
22.35
2011
22.18
2012
25.89
Net Tangible
Assets per
Share
Profit before
Zakat
and Taxation
(RM)
(RM‘000)
2010
2014
2010
2014
2011
2013
2011
2013
2011
1.75
2012
1.95
2014
35.64
Integrity
2012
2010
1.56
2013
25.84
2012
2013
1.88
2014
1.97
2010
588,155
2011
588,924
2012
717,439
2013
819,427
2014
815,384
Takaful Malaysia
the
first
and ONLY listed Takaful
Operator in Malaysia
Takaful Malaysia opened
3 new
Takaful
myCare
centres
now 27 service centres nationwide.
Named the
Best
Takaful
Company
in Malaysia
for three consecutive years at the
International Takaful Awards 2013-2015
Awarded the
As the premier takaful provider in the country, we uphold the highest
level of integrity in protecting our customers and their loved ones
from life’s unexpected adversities. Our extensive range of Islamic
family and general insurance ensure peace of mind to thousands of
Malaysians of all races and backgrounds across the country.
Best Performing
Stock – Highest
Returns to
Shareholders
over Three Years under the Finance
Sector at the Edge Billion Ringgit
Club Corporate Awards 2013
Annual Report 2014
22
Letter to
shareholders
Tan Sri
Samsudin
bin Osman
Chairman
Annual Report 2014
OPERATING ENVIRONMENT
The global economy picked up to a certain extent in 2014, led by strong performance in the US. This had a positive
impact on developing nations, such as Malaysia, which benefited from higher export earnings. Towards the end of
the year, greater global volatilities brought about by geopolitical undercurrents in Eastern Europe and the Middle
East, a strengthening US economy as well as falling oil prices, led to an outflow of foreign funds. Although the
resulting depreciation of the Ringgit impacted businesses with US denominated costs, it was beneficial to exporters.
Coupled with resilient consumer spending and private investment, the country achieved gross domestic product
(“GDP”) growth of 6.0%, exceeding the 4.3% recorded in 2013.
The outflow of foreign funds led to poor performance by the KLCI, uncertainties in the domestic equities market, and
contributed to institutional funds being placed in banks. However, stiff competition for these funds contributed to
a higher cost of such deposits. Coupled with lower rates on financing, banking profit margins came under pressure.
Perspectives
accountability
Audited
Financial
Statements
Our performance in 2014 befits our leadership as the first and only listed Islamic
financial services holding company in the region. It gives me great pleasure to share
the highlights of our financial and operational journey over the 12-month period
with you.
Additional
Information
The financial year ended December 2014 presented fresh challenges to financial
institutions globally and here in Malaysia, in both the conventional as well as Islamic
sectors. Despite these challenges, BIMB Holdings Berhad (“BHB” or “the Group”)
continued to grow from strength to strength, backed by steady performances of each
of our core subsidiaries. Guided by strong and professional management teams and
supported by solid foundations, we have produced another set of very encouraging
results to deliver a consolidated operating profit of RM883.6 million, marking an
increase of 7.3% from the previous year.
18th AGM
information
Dear Shareholders,
Performance
Review
Leadership
Letter to
shareholders
Corporate
Framework
23
Annual Report 2014
24
Letter to
shareholders
Notwithstanding this scenario, Islamic banking continued to
be resilient, outperforming the general industry in terms of
growth in assets and financing. Over the last four (4) years, the
Malaysian Islamic banking industry’s assets have almost doubled,
from RM351.2 billion at end 2010 to RM625.2 billion at end 2014,
accounting for 25.6% of the domestic banking system’s assets.
Although total financing growth slipped from 17.7% in 2013 to
15.4%, and is expected to continue to moderate in 2015 due to efforts
to contain household debt within a more challenging economic
environment, it is expected to continue to remain fairly robust in
the near future.
As part of its vision to turn Malaysia into a global Islamic financial
services hub, the Government had set a target for Islamic banking
assets to make up 40% of the banking system’s total by 2020. This
is to be achieved by greater diversification of Islamic financing
products in order to enhance the sector’s capability to support real
economic activity.
These products, however, have to adhere to stipulations of the
Islamic Financial Services Act (“IFSA”), introduced on 30 June
2013, which clearly distinguishes between deposits and investment
accounts. While Islamic deposits can be withdrawn on demand
and are guaranteed by Perbadanan Insurans Deposit Malaysia
(“PIDM”), the accounts do not promise any distribution of profits
to the account holders. The clients of investment accounts, on the
other hand, are able to retain funds for a longer period of time
and enjoy the opportunity to earn higher returns subject to more
restrictive withdrawal conditions. Investment accounts, without
any capital guarantee by PIDM, can be structured with different risk
and return profiles based on the characteristics of the underlying
assets and the risk appetites of the investors.
Two (2) main types of investment accounts offered by Islamic
banks in Malaysia are Restricted Investment Accounts (“RIA”) or
Unrestricted Investment Accounts (“URIA”). RIA is an investment
account where a specific mandate is given to the bank with regard to
the purpose, asset class, economic sector and period of investment
whereas URIA allows the bank to make the ultimate investment
decision without specifying any particular restriction or condition.
For us, the Investment Account Framework is timely as it reflects
the concept of Islamic finance which emphasises on risk-sharing,
strengthening further the link of finance to the real economy.
Based on the framework, in 2014 the Government announced a
Shariah-based Investment Account Platform (“IAP”), expected to
be implemented in September 2015. The IAP provides participating
banks with the framework to offer investors a wider range of
Shariah-compliant investment options with differing risk-return
profiles. Capital from these accounts will be directed to diverse
forms of funding inclusive of equities-based funding as well as
funding of viable ventures. In this manner, IAP will be beneficial
both to organisations – generally SMEs – requiring additional funds
to support their growth, as well as to investors willing to take the
risk related to investing in business ventures to reap the possibility
of higher returns from a Shariah-compliant mandate.
Given BHB’s commitment to ensuring the success of all Government
initiatives aimed at enhancing Islamic finance, we are proud of the
fact that Bank Islam is one of four (4) founding financial institutions
to spearhead the IAP. As the Bank’s holding company, BHB will
provide all the support needed to nurture the programme, the latest
brainchild by Bank Negara Malaysia (“BNM”).
The IAP adds to previous initiatives introduced to spur Islamic
finance, such as the Exchange Traded Bond and Sukuk (ETBS);
the introduction by the Securities Commission of a framework for
socially responsible sukuk instruments; and the requirement that
Shariah-compliant counters on Bursa Malaysia Securities Berhad
(“Bursa Securities”) have not more than 33% of their cash and
debts in conventional accounts.
At a more fundamental level, the Government is strengthening the
industry via the creation of a more robust regulatory and supervisory
environment. Adding to measures previously announced under
the Financial Services Act (FSA)/IFSA which applied to banks
and financial institutions, in 2014 BNM widened the scope of the
Acts to include financial holding companies (“FHCs”), which have
been defined as “apex entities of financial groups which are not
persons… and approved by BNM”.
Targeting these FHCs, which include BHB, BNM is developing
prudential standards to ensure they are able to meet capital
requirements that support risks originating from all entities within
the group including those that are unregulated; and to reduce
leverage associated with multiple gearing of capital which can
overstate a group’s capital strengths and increase contagion risk.
Annual Report 2014
While the IFSA and other regulatory frameworks, including Basel
III and the US Government’s recently imposed Foreign Account
Tax Compliance Act (FATCA), impose different sets of challenges to
local financial institutions, the end result will be a much enhanced
financial ecosystem that is transparent, responsible and efficient.
Accordingly, BHB and our subsidiaries embrace the opportunity to
streamline our operations in line with the emerging frameworks,
and look forward to reaping the fruit of our current labour in the
near future.
FINANCIAL PERFORMANCE
Despite operating in a more stringent and competitive environment,
BHB’s financial performance in 2014 was encouraging. Our total
net income grew by 1.3% to RM2.1 billion on the back of strong
net financing growth by Bank Islam which cushioned the impact of
lower sales generated by our Family Takaful business.
Concerted efforts to increase our cost efficiencies led to BHB’s
operating overheads decreasing by 2.9% to RM1.2 billion. This is a
notable achievement given that we continued to invest in our talent
and capital expenditure to support business franchise growth. I am
further pleased to share that our prudent and diligent management
of operating overheads saw our cost to net income ratio improve
from 59.3% to 56.8%.
BHB’s asset quality improved further, with our gross impaired
financing ratio decreasing by four (4) basis points to 1.14% from
end December 2013 to end December 2014. This was due to Bank
Islam’s prudent credit underwriting standards and aggressive
collection efforts.
At the same time, the Group’s capital position remained healthy,
above BNM’s minimum requirements, with Common Equity Tier 1,
Tier 1 and Total CAR at 12.2%, 12.2% and 13.4% as at 31 December
2014 respectively.
Given our performance, on 25 November 2014, the Group declared
an interim single-tier dividend of 14.7 sen per share, amounting to
RM219.5 million, or 172.8% of our net profit for the financial year.
Upon its payout on 13 January 2015, 82.3% or RM180.6 million
was reinvested by shareholders in 48,703,800 new ordinary shares
of RM1.00 each at RM3.71 per share via our inaugural Dividend
Reinvestment Plan (DRP).
Perspectives
As it stands, the takaful sector in Malaysia is growing at doubledigit rates, far outpacing the conventional sector as more consumers
are seeing the value of innovative, value-add Shariah-based takaful
products. With stronger governance, takaful operators can expect
to create greater churn from the conventional sector to takaful to
further accelerate their growth path.
accountability
Our consolidated profit before zakat and taxation (“PBZT”),
however, was marginally lower at RM815.4 million, compared with
RM819.4 million in 2013. This was due to the higher cost of financing
for our sukuk of RM68.2 million as opposed to RM3.3 million in
2013. The sukuk was raised to fund the acquisition of Bank Islam
shares in 2013. The acquisition meant greater recognition of Bank
Islam’s profits in our statement of accounts, leading to a significant
90.6% increase (of RM253.0 million) in our net profit attributable to
shareholders for the year under review. Consequently, our earnings
per share (EPS) also rose by 37.9% to 35.64 sen per share, from 25.84
sen per share in the previous year.
Audited
Financial
Statements
Within the takaful sector, IFSA has called on operators to streamline
their family and general businesses by June 2018. Other than
IFSA, the takaful sector has been further strengthened by the
Risk Based Capital for Takaful (RBCT) Framework, enforced as of
1 January 2014, demanding greater capital adequacy. In essence,
both regulations are shaping a more robust takaful industry, which
would place takaful providers in a better position to compete with
conventional players.
Additional
Information
The respectable performance of our banking and takaful businesses
combined to produce a consolidated operating profit of RM883.6
million which, as mentioned earlier, was a 7.3% or RM60.5 million
increase from the RM823.1 million recorded in 2013.
18th AGM
information
At the same time, BNM is strengthening the governance framework
of FHCs by imposing more stringent requirements on independent
directors and increasing their representation on the boards of both
financial institutions as well as financial groups.
Performance
Review
Leadership
Letter to
shareholders
Corporate
Framework
25
26
Annual Report 2014
Letter to
shareholders
BANK ISLAM
Redefining Products, Building Capital
Bank Islam is the country’s first Shariah-based bank and the first
Islamic bank to be established in the region. It continues to be
the symbol of Islamic banking in the country, leading the way in
introducing innovative products and solutions as it pursues its
vision to become a “global leader in Islamic banking”. In 2013, BHB
acquired 49% equity of Bank Islam that had previously been owned
by Lembaga Tabung Haji and Dubai Financial Group, following
which the Bank has become a 100% owned BHB subsidiary. It
contributes to about 80% of the Group’s profits.
Bank Islam was the first bank in Malaysia to introduce chip-based
ATM cards; the first to launch mobile banking service without
Internet access; and the first to launch floating rates for personal
financing, among others. Continuing with this string of pioneering
activity, in 2014 it introduced yet another first for the country – the
very first Restricted Investment Account under IFSA 2013 called AlAnsar.
Financial Performance
As a result of concerted efforts to grow the business, Bank Islam
recorded a PBZT of RM702.1 million, which was 3.8% higher
than was achieved for the financial year 2013. Its net financing
assets grew by 24.4% to RM29.5 billion as at end December 2014,
accompanied by a 17.3% increase in fund-based income from
financing of RM234.7 million. At the same time, foreign exchange
transactions and net gain from the sale of financial assets availablefor sale contributed to a 2.9%, or RM8.4 million, increase in nonfund based income.
Bank Islam ended the year with a RM3.8 billion increase in
customer deposits, marking a 10.1% growth to total RM41.0 billion.
Its current and savings accounts (“CASA”), meanwhile, grew by
7.3%, or by RM1.1 billion, leading to a CASA ratio at end December
2014 of 38.1%, surpassing that of the Islamic banking industry in
general in the country, which stood at 24.8%.
Continued focus on asset quality saw the Bank’s gross impaired
financing ratio at year end further improve to 1.14% from 1.18% a
year ago, while its net impaired financing ratio stood at -0.82%. Both
metrics surpass those of the banking system, which experienced a
1.66% gross impaired ratio and -0.11% net impaired ratio as at year
end.
In fact, I am proud to note, some of the Bank’s key performance
indicators for the year 2014 measure favourably against those of
the banking system. Its pre-tax return on equity was 19.9% against
the banking system’s 15.2%; and pre-tax return on assets was 1.6%
against 1.5%.
Following the Budget 2015 announcement that Lembaga Tabung
Haji would allocate RM200 million towards financing Bumiputra
entrepreneurs and SMEs, the Bank made the necessary investments
in its IT infrastructure to support the new product, and set up a
dedicated team to market it. The result is the Shariah-compliant
Al-Ansar, which was approved by BNM in early March 2015, and
was launched on 2 April 2015 by the Prime Minister of Malaysia,
YAB Dato’ Sri Mohd. Najib Tun Abdul Razak. Alhamdulillah, we
are very proud of Al-Ansar as it is the brandchild of Bank Islam and
the first of its kind in Malaysia.
In offering financing to recipients, the Bank will be guided by a
specific mandate with regard to the purpose, asset class, economic
sector and period of investment as specified by Lembaga Tabung
Haji. Al-Ansar will be made available until 31 December 2020.
The Bank also received approval from BNM to issue a Subordinated
Sukuk Murabahah Programme (sukuk) valued up to RM1 billion
with a tenure of 30 years from the date of first issuance. Proceeds
from the sukuk will be used to enhance the Bank’s capital adequacy
ratio to support more robust organic growth. The first tranche of the
programme, amounting to RM300 million, was launched in April
2015 and was subscribed RM100 million each by Tabung Haji, EPF
and KWAP.
The Bank continued to make steady progress on each of the
six pillars of its Hijrah to Excellence (“H2E”) transformation
programme, namely: Robust Organic Growth, Service Excellence,
Shariah-led Innovation, Resource Optimisation, Employee of
Choice and Regionalisation.
Its Organic Growth is reflected in the Bank’s sound financial
performance. This, in turn has been supported by the other pillars
of the H2E programme.
27
Syukur Alhamdulillah, Bank Islam was voted the 16 most popular
employer in the 100 Leading Graduate Employers Poll conducted
by GTI Media and powered by the trendence Graduate Barometer,
up from 51 in 2013. Even better, the Bank was rated among the top
three (3) employers in the Banking and Financial Services sector
by the same survey. One of the Bank’s talents, Ustaz Mohd Nazri
Chik meanwhile did us proud by being named the most Promising
Young Banker by The Asian Banker Awards 2014; while the Bank’s
MD Dato’ Sri Zukri bin Samat – who is now also our Group CEO –
added to his list of accolades by being awarded the Banking CEO
of the Year – Asia by International Banker Awards 2014 held in
London, United Kingdom.
Meanwhile, its wholly-owned subsidiary BIMB Investment
Management Berhad launched the BIMB i Flexi Fund, a Shariahcompliant mixed asset fund structured to offer investors long-term
capital appreciation.
By virtue of Resource Optimisation, the Bank intends to cross sell
and upsell its products; further improve its systems and processes;
as well as create greater cost efficiencies and productivity. Among
the key achievements within this pillar was reducing the waiting
time of walk-in customers at Bank Islam branches. During the year,
94% of the branches have achieved their minimum waiting time of
five (5) minutes or less.
TAKAFUL MALAYSIA
Takaful Malaysia was the first Islamic insurance provider to be
set up in the country and is today the market leader in the Family
Takaful segment, with particular strengths in Employee Benefit and
Bancatakaful protection solutions. Takaful Malaysia stands out in
the marketplace for its 15% Cash Back to General Takaful customers
for no claims made during their year of coverage.
Financial Performance
Amid a challenging environment that included curbs on personal
loans, Takaful Malaysia continued to focus on prudent underwriting,
tighter management expenses control and proactive investment
management to deliver another set of respectable financial figures.
Although the year saw its operating revenue decline by 3.5% to
RM1.65 billion, Takaful Malaysia’s PBZT increased by 4% from
RM179.3 million in 2013 to RM186.7 million. Its profit after tax and
zakat (PATZ) grew by 3%, to RM138.7 million from RM134.4 million.
This was largely attributable to lower management expenses.
Additional
Information
It also launched a number of debit cards – the MyAngkasa
Membership Card for members of the National Cooperative
Body of Malaysia (ANGKASA); the co-branded Bank Islam Team
Harimau Visa Debit Card-i for Harimau Malaysia football fans; and
another University Debit Card-i (UniDebit), this time for students
at Universiti Malaysia Pahang (UMP).
18th AGM
information
In terms of Shariah-led innovation, Bank Islam continued to develop
more products and solutions not only for customers but also for the
industry. To remain competitive in the market, it launched the Term
Deposit-i (Tawarruq) [TDT-i], a PIDM guaranteed deposit account,
offering the flexibility of managing funds according to short or
long-term needs.
Perspectives
These efforts have not been in vain. During the year, the Bank was
named the Most Outstanding Retail Bank at the Kuala Lumpur
Islamic Finance Forum (KLIFF) 2014. It also won the International
Banker’s Best Customer Services Provider 2014 for Malaysia award
in United Kingdom.
accountability
Finally, within a fast growing and competitive niche sector such as
Islamic banking, it is only to be expected that there will be a war for
talent. Bank Islam’s strategic response to this is to establish itself
as an Employer of Choice, offering employees a stimulating work
environment that inspires and rewards excellence while caring for
employees’ well-being. In addition to identifying and developing
leaders, the Bank encourages greater engagement across all levels
via a culture of sharing and respect.
Audited
Financial
Statements
Towards Service Excellence, the Bank has been leveraging on
greater use of technology to increase its efficiencies and service
delivery. Further enhancing its service culture, various initiatives
have been implemented to instil a customer-centric mindset among
employees, and especially frontliners who deal directly with the
Bank’s retail and corporate clients. All frontline staff are required to
attend Service Excellence Training which reinforces the importance
of delivering superior service.
Performance
Review
Leadership
Letter to
shareholders
Corporate
Framework
Annual Report 2014
Annual Report 2014
28
Letter to
shareholders
The total asset size increased by 4% to RM7.2 billion, supported
by enhanced underwriting for mortgages and General Takaful
products. These cushioned the RM244 million drop in take-up of
group credit products following the implementation of BNM’s
more stringent personal financing rules, which led to a decrease in
total gross contribution by 5% to RM1.41 billion.
Segment-wise, General Takaful’s gross contribution grew 5% from
2013 to close at RM451.3 million, while gross contribution from
Family Takaful decreased by 9% to RM958.1 million as a result of a
significant drop in group credit products.
I am pleased to share that Takaful Malaysia was able to complement
its sound underwriting performance with equally impressive
investment results despite the challenging 2014 investment
environment. There were significant shifts in the global financial
market landscape where the economic growth of many countries
in Asia grew at a more subdued pace. Locally, the financial market
also registered a lower growth than anticipated. Nonetheless,
maintaining a cautious approach, particularly for equities and
sukuk, and greater focus on portfolio diversification, the Company
delivered a sustainable five-year average investment yield of more
than 6% per annum.
Innovating on Products, Building the Brand
During the year, Takaful Malaysia maintained its edge by meeting
customers’ needs with innovative products, and focusing on
excellent service delivery. In addition, it enhanced its infrastructure
and operations, grew its network, empowered its agency force
and established strategic partnerships with corporate clients and
bank partners. These, coupled with more aggressive marketing and
branding campaigns, helped Takaful Malaysia to further expand its
market share.
The most significant product launch was that of the Takaful
myHealth Protector, an innovative approach to healthcare offering
an attractive range of in- and out-patient benefits and a choice
of eight (8) medical plans at affordable premiums. The product
also increases the maximum entry age to 70 years, enabling those
who are healthy and without medical coverage to be insured. As
an added value proposition, Takaful myHealth Protector extends
Takaful Malaysia’s 15% Cash Back promise to its health care plan
participants.
A key differentiator of Takaful Malaysia is its Cash Back offerings.
In its campaigns, therefore, Takaful Malaysia places much emphasis
on driving greater awareness of the unrivalled value it offers
customers.
Takaful Malaysia’s “No Claims? Get 15% Cash Back For Motor
Insurance” outdoor advertising campaign was a case in point. This
was complemented by advertising via other channels and through
strategic partnerships to strengthen the Takaful Malaysia image,
and educate the non-Muslim market segment of the relevance
of its products in meeting their needs. In its point-of-purchase
advertising for Motor Takaful, Takaful Malaysia made the most
of the opportunity to introduce consumers to its extensive range
of products, and to engage specifically with potential non-Muslim
customers.
Takaful Malaysia also took its advertising collaboration with Tesco
Stores Malaysia one step further. From conventional advertising
posters, it launched into full-wall wraps covering every inch
of the side walls of the travellator walkaway at 15 Tesco outlets
throughout Malaysia. This advertising blitz will run for one year
from June 2014.
Targeting corporate customers, and especially those who have
subscribed to its Employee Benefits protection plans, Takaful
Malaysia launched the Takaful myCorporate portal as an online
one-stop centre. With just a few clicks of the button, corporate
customers can update information on their employees and these
will be incorporated instantly for immediate coverage. The portal
also enables clients to access all information relating to their
companies’ takaful insurance packages and certificates.
Further improving customer access to its services, Takaful Malaysia
opened its third Takaful Retail Centre at the Lembaga Tabung Haji
Islamic Financial Service Centre (“IFiC”) at Jalan Tun Razak, Kuala
Lumpur. Takaful Malaysia was inspired by the one-stop centre
concept of IFiC to convert its existing Takaful myDesk at Lembaga
Tabung Haji’s headquarters into a Takaful Retail Centre. The
Takaful Retail Centre will not only function as a collection centre for
both General and Family products but will also act as a servicing
centre to assist customers in their certificate servicing and claim
submissions.
29
It was a challenging year for investors, especially the fourth
quarter. Foreign funds selling coupled with battering of the oil and
gas sector were main reasons for the roller coaster ride. For the year,
the FBMKLCI lost 5.66% as opposed to the Emas Shariah Index
which declined by 4.17%. The below expectation performance was
attributed to a massive outflow of foreign funds totalling RM6.9
billion for the year from a net inflow of RM3.1 billion in 2013.
SYARIKAT AL-IJARAH
Syarikat Al-Ijarah Sdn Bhd is the Group‘s leasing arm. For the
financial year ending December 2014, it posted a PBZT of RM0.35
million, which was 16.7% lower than the PBZT of RM0.42 million
in 2013.
Perspectives
accountability
BIMB SECURITIES
The Company also rolled out several technological initiatives in
2014, such as the Intranet and Document Management System,
for greater work efficiency and to reduce paper use. In addition,
eBroking initiatives were deployed whereby share margin clients
are now able to trade via the online trading system. ePayment via
www.bankislam.com.my and www.Maybank2u.com.my were also
introduced, allowing clients to pay BIMB Securities via the banking
internet portal. Further initiatives with Bursa Securities were also
made during the year, such as the trade confirmation messages
sent via Dropcopy FIX connection files and the introduction of
BursaMktPlc (http://www.bursamarketplace.com), a platform
created by Bursa Securities for the public to interact with Opinion
Leaders at the different stockbroking companies.
Audited
Financial
Statements
Takaful Malaysia was also a top-three winner in three (3) categories
of The Edge Billion Ringgit Club Corporate Awards 2014. The
company clinched second place for the Best Performing Stock Highest Returns to Shareholders Over three (3) Years; third place
for the Most Profitable Company - Highest Return on Equity Over
three (3) Years; and third place for the Highest Profit Growth
Company - Highest Compound Growth in Profit Before Tax Over
three (3) Years.
Additional
Information
Takaful Malaysia has consistently been recognised for its high
level of operational effectiveness and the trust it engenders from
customers. For three (3) consecutive years at the International
Takaful Awards, Takaful Malaysia won the title of the Best Takaful
Company in Malaysia in recognition of the superior quality of its
wide range of solutions to meet customer’s needs.
Nevertheless, market volatility increased the value of dealing and
brokerage income at BIMB Securities Sdn Bhd (“BIMB Securities”)
in 2014. The company achieved an increase of 18% in value of
dealing compared with 2013. This also led to a 16% increase in
gross brokerage income to RM14.904 million compared with
RM12.794 million in 2013, and a 13% growth in the total net dealing
income from the previous year. The stockbroking group (including
Nominees companies) recorded a total income of RM14.5 million,
an increase of 10% compared with the previous year, but with a
lower PBZT of RM0.6 million. Other investments yielded lower
returns compared with the previous year, thus contribution to the
profit was much lower.
18th AGM
information
Internally, Takaful Malaysia continued to stay lean and agile in its
operations to deliver lasting reserves and sustainable organisational
efficiencies. Leveraging on enhanced systems and processes, it
managed to reduce costs and its inventory as it further grew its
business.
Performance
Review
Leadership
Letter to
shareholders
Corporate
Framework
Annual Report 2014
30
Annual Report 2014
Letter to
shareholders
CORPORATE GOVERNANCE
The Board of Directors of BHB has always maintained the
highest level of corporate governance to ensure the integrity
and transparency of our operations. Our corporate governance
framework is guided by the Malaysian Code on Corporate
Governance (MCCG) 2012 and is constantly updated to reflect
changes in the regulatory environment.
Management
Committees
Board
Committees
In line with the IFSA and its requirement for Islamic financial
holding companies to have greater oversight and control over the
activities of the companies within its fold, BHB has enhanced our
governance structure by establishing at the Board level, a new
Group Board Risk Committee, whilst at the management level, a
new Group Management Committee and Group Enterprise Risk
Management Committee which will be implemented in FY2015.
These Committees will meet regularly to discuss strategic issues
within the Group, thus ensuring BHB not only meets the regulatory
requirements but also maintains the highest standards in our
internal control, effective capital and risk management, create
business synergies within and drive the business objectives of the
Group.
Our new governance structure underlines the Group’s commitment
to strengthening the Islamic financial services industry in the
country, aiding in the establishment of Malaysia as a regional
Islamic financial hub. In the process, we will also elevate BHB as the
premier Shariah-compliant financial services group in the country.
Board of
Directors
Nomination
and Assessment
Committee
Audit and
Examination
Committee
Remuneration
Committee
Group Board
Risk Control
Committee
Group Chief
Executive Officer
Group
(GMC)
Group Enterprise Risk
(GER)
Annual Report 2014
Although our industry does not contribute significantly to climate
change, we take our responsibility to protecting the natural
environment seriously. Towards this end, we have been educating
children about the importance of environmental conservation while
actively participating in various activities – such as rehabilitating
mangrove forests – that directly enhance our ecosystem and
safeguard the environment for future generations.
OUTLOOK
A much repeated sentiment within the corporate realm today
is that only one thing is certain, namely uncertainty. This seems
to accurately describe the global environment, which has been
extremely volatile over the last few years, and shows no sign of
settling into any predictable pattern.
Demand for financing has been decreasing gradually, and could
continue into 2015. With innovative and attractive financing
products, however, Bank Islam is confident of being able to shore
up its financing portfolio. This will be complemented by targeted
efforts to increase the Bank’s deposits as well as investment
accounts. As the Bank continues with its H2E programme, it will
further strengthen its fundamentals and be better positioned to
create greater demand for Islamic banking, as well as to capitalise
on opportunities that will arise from a supportive and vibrant
ecosystem.
Takaful Malaysia will maintain an active management strategy
coupled with prudent underwriting and investment activities.
In anticipation of more corporations and multinationals entering
the takaful market, it will enhance its focus on innovative and
customer-centric products, and its culture of customer service
excellence. It will also reinforce its brand name and reputation via
strategic marketing campaigns that drive home its unique 15%
Cash Back proposition.
Perspectives
At BHB, we expect the challenging financial landscape to further
narrow the net income margin. Exacerbating the situation, the
Goods and Services Tax (“GST”) implemented on 1 April 2015,
is likely to increase banking and takaful costs to a certain extent.
Although the GST is widely thought to increase inflation, at least in
the initial stages, the continued decline in commodity and oil prices
will keep the consumer price index in check.
accountability
Through our subsidiaries, we have “adopted” a couple of
orphanages and contribute to their administration. In addition,
our employees dedicate their own personal time to spend with the
children, especially during festive occasions such as Aidilfitri. Our
contributions to society are not confined to Malaysian shores, but
have been extended to those in need overseas. Over the past few
years, we have been supporting the Palestinian cause via a variety
of channels.
Audited
Financial
Statements
Over and above zakat contributions, we play an active role in the
communities where we have a presence by contributing to the
social and economic well-being of those who are underprivileged
or marginalised.
Additional
Information
As a responsible Islamic organisation, BHB makes regular zakat
(business tithes) payments to the Islamic authorities in the different
states. In 2014, in addition to paying zakat, Bank Islam developed
new zakat computation guidelines for the industry, making it easier
for us and all Islamic corporations to perform their duty.
As the US economy continues to surge forward, much of Europe
and other economic powerhouses such as Japan and, to some extent
China, are still grappling to fend off deflationary pressures. This
has led to a slew of monetary easing measures, with a number
of central banks launching into quantitative easing (“QE”)
programmes to resuscitate demand. In Malaysia, to consolidate
its fiscal health, the Government has revised allocations for
various sectors under Budget 2015 in anticipation of a challenging
environment exacerbated by low oil prices. Consequently, fiscal
deficit is projected to reach 3.2% of GDP from the initial estimate of
3.0%. In the same vein, GDP growth forecast in 2015 was lowered to
4.5% and 5.5% from 5.0% and 6.0% previously.
18th AGM
information
CORPORATE RESPONSIBILITY
Performance
Review
Leadership
Letter to
shareholders
Corporate
Framework
31
32
Annual Report 2014
Letter to
shareholders
Building on its multi-channel distribution network, it aims to
outpace the market and firmly establish itself as the preferred choice
not just among takaful companies but all conventional insurance
providers. An area of focus will be Islamic financing products. As
Shariah-compliant financing gains traction in the market, there will
be a greater need for takaful as a valid risk transfer mechanism, and
Takaful Malaysia intends to fully explore the potential of this niche.
We expect the local equity market to continue to be challenging as
a result of dampened sentiments from the outflow of foreign funds
and massive sell-down in the oil and gas sector. At the same time,
given the market’s current valuation, and Japan’s commitment to
heightened QE, the local bourse will be well supported by domestic
liquidity. The global financial system, too, will be flushed with
liquidity from the cautionary monetary policies of most central
banks that have been pushing down interest rates as a means of
encouraging growth. Overall, the outlook for stockbroking in
2015 will be reflective of the year 2014. Barring any unforeseen
circumstances, there may be a slight rebound in the market which
may improve the situation towards the second half of 2015.
ACKNOWLEDGEMENTS
BHB is at a very exciting phase of our journey, in which we are
both shaping as well as being shaped by various forces that are
promoting a more transparent, efficient and sustainable Islamic
financial system. Our successes to date are the culmination of the
contributions of various stakeholders, from our parent organisation
to our subsidiaries, our business partners and customers, all of
whom I would like to acknowledge.
Of special note, I would like to thank the regulators – namely BNM,
Bursa Securities and the Minority Shareholder Watchdog Group
(MSWG), among others – as well as analysts, fund managers and
members of the media, for their support. To our highly valued
shareholders, thank you for your belief in our ability to deliver and
for your active participation at our Annual General Meeting.
I would also like to express my deepest appreciation to members of
the Board of Directors of BHB as well as of our subsidiary companies
for their wise counsel which has helped the Group maintain our
steady momentum of growth.
On behalf of the Board of Directors, meanwhile, I would like to
take this opportunity to extend our gratitude to the Management
of BHB for its leadership. In particular, we would like to thank our
former Group Managing Director/Chief Executive Officer, Dato’
Johan bin Abdullah, who has steered BHB Group so ably for the
last seven (7) years. Dato’ Johan has recently been appointed as
Deputy Group Managing Director and Chief Executive Officer of
Lembaga Tabung Haji and we wish him all the best in his future
undertakings. Meanwhile, we welcome on board our new Group
Chief Executive Officer, Dato’ Sri Zukri bin Samat who is also the
Managing Director of Bank Islam. With his extensive experience
in the Islamic banking and financial industry, we have every
confidence of Dato’ Sri Zukri guiding BHB Group to the next phase
of its ongoing exciting journey.
As for our employees, I speak for the Board when I say that we
truly appreciate your commitment to the Group, and your passion
to see us achieve our shared vision and goals. Keep up the excellent
work, and BHB will certainly continue to Lead the Way in Islamic
Financial Excellence.
Thank you.
Chairman
33
Annual Report 2014
Committed towards
responsible
corporate practices
Sheikh Zayed Mosque in Abu Dhabi, United Arab Emirates
36
Annual Report 2014
Letter to
shareholders
Building on its multi-channel distribution network, it aims to
outpace the market and firmly establish itself as the preferred choice
not just among takaful companies but all conventional insurance
providers. An area of focus will be Islamic financing products. As
Shariah-compliant financing gains traction in the market, there will
be a greater need for takaful as a valid risk transfer mechanism, and
Takaful Malaysia intends to fully explore the potential of this niche.
We expect the local equity market to continue to be challenging as
a result of dampened sentiments from the outflow of foreign funds
and massive sell-down in the oil and gas sector. At the same time,
given the market’s current valuation, and Japan’s commitment to
heightened QE, the local bourse will be well supported by domestic
liquidity. The global financial system, too, will be flushed with
liquidity from the cautionary monetary policies of most central
banks that have been pushing down interest rates as a means of
encouraging growth. Overall, the outlook for stockbroking in
2015 will be reflective of the year 2014. Barring any unforeseen
circumstances, there may be a slight rebound in the market which
may improve the situation towards the second half of 2015.
ACKNOWLEDGEMENTS
BHB is at a very exciting phase of our journey, in which we are
both shaping as well as being shaped by various forces that are
promoting a more transparent, efficient and sustainable Islamic
financial system. Our successes to date are the culmination of the
contributions of various stakeholders, from our parent organisation
to our subsidiaries, our business partners and customers, all of
whom I would like to acknowledge.
Of special note, I would like to thank the regulators – namely BNM,
Bursa Securities and the Minority Shareholder Watchdog Group
(MSWG), among others – as well as analysts, fund managers and
members of the media, for their support. To our highly valued
shareholders, thank you for your belief in our ability to deliver and
for your active participation at our Annual General Meeting.
I would also like to express my deepest appreciation to members of
the Board of Directors of BHB as well as of our subsidiary companies
for their wise counsel which has helped the Group maintain our
steady momentum of growth.
On behalf of the Board of Directors, meanwhile, I would like to
take this opportunity to extend our gratitude to the Management
of BHB for its leadership. In particular, we would like to thank
our former Group Managing Director and Chief Executive Officer,
Dato’ Johan bin Abdullah, who has steered BHB Group so ably for
the last seven years. Dato’ Johan has recently been appointed as
Deputy Group Managing Director and Chief Executive Officer of
Lembaga Tabung Haji and we wish him all the best in his future
undertakings. Meanwhile, we welcome on board our new Group
Chief Executive Officer, Dato’ Sri Zukri bin Samat who is also the
Managing Director of Bank Islam. With his extensive experience
in the Islamic banking and financial industry, we have every
confidence of Dato’ Sri Zukri guiding BHB Group to the next phase
of its ongoing exciting journey.
As for our employees, I speak for the Board when I say that we
truly appreciate your commitment to the Group, and your passion
to see us achieve our shared vision and goals. Keep up the excellent
work, and BHB will certainly continue to Lead the Way in Islamic
Financial Excellence.
Caring
Thank you.
Chairman
37
Annual Report 2014
corporate
responsibility
Launched Programme
SL1M
Latihan 1Malaysia
Bank Islam
paid out
RM12,028,983
zakat to all
14 states
takaful
malaysia
channelled
RM1,081,382
to all 14 state zakat
collection centres
We care about our customers and Malaysian society as a whole. As
we grow, we want Malaysians to grow with us. We therefore give
generously of our time and funds to help the underprivileged break
out of the poverty cycle and march with the rest of the country into
a brighter future.
34
Annual Report 2014
corporate
responsibility
COMMUNITY
MARKETPLACE
WORKPLACE
As the holdings company of premier Islamic banking,
insurance and securities operations, the principles of
ethics and integrity are ingrained into BIMB Holdings
Berhad (“BHB”)’s blueprint. We are guided in all our
operations and business decisions not only by financial
considerations but also by the impact of our actions on
our stakeholders – be they our customers, our partners,
our employees or the community at large.
We have been giving back to the communities that support
us over the years via outreach programmes, lending
a hand with various projects and providing financial
support where required. In the process we have integrated
ourselves fully with communities at the grassroots
level thus bridging existing gaps in the socio economic
divide. As a responsible corporate organisation, we also
contribute to the elevation of professional standards
in the financial landscape while playing our part in
mitigating environmental issues such as climate change
and diminishing biodiversity.
ENVIRONMENT
Our Corporate Responsibility (“CR”) actions have
strengthened our market reputation and added to
the value of BHB, which will go a long way towards
ensuring our sustainability. We take great pride in
all our CR undertakings and present an outline of
our activities in the following pages, under the four
(4) broad areas of the Community, Marketplace,
Workplace and the Environment.
35
Performance
Review
Leadership
corporate
responsibility
Corporate
Framework
Annual Report 2014
COMMUNITY
Perspectives
Within the community, BHB along with
our subsidiaries Bank Islam and Takaful
Malaysia have a tradition of supporting
worthy causes; providing financial and
other forms of aid to the underprivileged;
supporting the attainment of sound
education among marginalised children;
and promoting an ethical, caring society
through a better understanding and
practice of the tenets of Islam.
Other beneficiaries of our donations
included the Persatuan Kebajikan AnakAnak Yatim Islam Wilayah Persekutuan
Kuala Lumpur (PERKAYATIM) which
works with orphans; and the Majlis OrangOrang Besar DiRaja Kelantan which
undertakes various charitable activities.
One of the highlights of Bank Islam’s
community programmes during the year
was a gotong-royong (clean-up) at Rumah
Ehsan Kuala Kubu Bharu old folks’ home
where volunteers from the Bank helped to
brighten up the house and its surroundings
while also spending time with the residents.
The Bank also donated hospital beds and
hydraulic shower trolleys worth RM30,000
to the home. In addition, it brought new
meaning to the lives of fishermen with
These donations were over and above its
contributions to the state zakat (business
tithes) centres, which amounted to
RM12,028,983.
Audited
Financial
Statements
Other donations from the Bank included
an amount of RM244,700 towards Menuju
Destini Anak Bangsa, a fund for poor
students; the Development of Wakaf
land in the Federal Territory; charitable
organisations; selected asnaf (recipients) in
Perlis and a van for the Majlis Agama Islam
dan Adat Istiadat Melayu Perlis.
For its part, Takaful Malaysia contributed
RM1,814,539 to 90 charitable organisations
and needy individuals, in addition to
channelling a total of RM1,081,382 to the 14
state zakat collection centres.
RM20,000 to the Tabung Sumbangan THPalestin under a programme managed by
the Prime Minister’s Department. We also
contributed RM24,000 to the Persatuan
VIVA Palestina Malaysia to sponsor the
attendance of 30 blind Palestinian children
at a Quran memorisation camp in Gaza. Additional
Information
Together with the International Union of
Braille Quran Services, we contributed
RM15,000 to the Persatuan Braille Malaysia
to standardise symbols in braille Qurans
worldwide. We also presented two (2)
defibrillator machines worth RM25,000
each to Lembaga Tabung Haji.
the donation of RM23,000 to help improve
their livelihood. Under the Program Rumah
Bantuan Bank Islam, meanwhile, it spent
RM627,000 on building homes for the poor.
Palestinian Aid Relief
Educational Support
We do not confine our outreach
programmes to local shores, but extend
aid to deserving communities wherever
in the world they may be. For the second
year running we provided support to
Palestinians in the Gaza Strip by donating
Firm in the conviction that education is
a powerful socio-economic enabler, we
give generously to various programmes
and initiatives to ensure every child in the
country has the resources to enjoy a sound
education.
18th AGM
information
During the year, we continued to support
a number of social enterprises and
organisations that provide aid to the underserved.
accountability
Caring for the Underprivileged
36
Annual Report 2014
corporate
responsibility
The year 2014 saw us donate RM5,000 to the
Kumpulan Wang Amanah Pelajar Miskin
in support of the Ministry of Education’s
efforts to reduce the school drop-out rate to
zero. At year end, we also held an inaugural
Back To School ceremony which our Group
Managing Director/CEO Dato’ Johan bin
Abdullah presented complete sets of school
uniforms and school bags to the children of
deserving BHB staff.
Bank Islam presented a total of RM21,205
including school items to children of
Muallaf via the Pertubuhan Kebajikan
Muallaf Daerah Kluang and donated
used computers to SK (L) Jalan Batu in
Kuala Lumpur; SMK Bandar Tenggara
in Kulaijaya, Johor and SMK Paloh in
Kluang, Johor. At the tertiary level, the
Bank presented RM45,000 to Universiti
Teknologi MARA (UiTM) Shah Alam for
its annual Invention, Innovation & Design
Exposition 2014 (IIDEX).
UiTM was also the beneficiary of
sponsorship by Takaful Malaysia, which
continued to provide financial support
to its Actuarial Science students. For the
second consecutive year, Takaful Malaysia
contributed RM50,000 to diploma and
undergraduate students in this field, which
supplies the highly skilled statisticians
needed by the insurance industry.
Moral and Ethical Development
Both BHB and Bank Islam contributed
towards greater understanding of Islam
via sponsorships of seminars and other
knowledge-sharing events. BHB supported
Persatuan Amanah Hawi Al-Khairat’s one
(1)-day seminar on Modern Society and
the Tolerance of Muhammad; while our
subsidiary channelled funds towards the
IImFest Malaysia Conference 2014 and
Seminar Pengurusan Kualiti Islam (I-QAM
2014).
In addition, BHB donated RM4,800 to
An-Najjah Malaysia, an NGO that focuses
on the underprivileged and new Muslim
converts; and purchased 39 copies of a
coffee table book entitled Expressions of
Merdeka – A Pictorial Journey in support
of Yayasan Pendidikan Islam. For its part,
Bank Islam contributed a total of RM64,350
towards the renovation of surau (prayer
halls) in schools, as well as to support the
community activities organised by various
mosques.
Both
our
subsidiaries
contributed
towards the Haj pilgrimage, with Bank
Islam donating RM210,000 to the Majlis
Penghargaan Sahabat Korporat TH 1435H;
and Takaful Malaysia sponsoring RM84,000
in the form of books entitled Panduan
Ibadah Haji Wanita, a handbook for women
performing Haj.
Ramadan Activities
The spirit of volunteerism and caring truly
shines at BHB and our subsidiaries during
the month of Ramadan, when we go the
extra mile to bring smiles to those who are
less privileged.
During the year under review, BHB
donated RM7,200 towards the preparation
of 15 pots of bubur lambuk (savoury
porridge) at Masjid Jamek Kampung Baru,
Kuala Lumpur which were distributed by
volunteers led by our Group Managing
Director/CEO, Dato’ Johan bin Abdullah.
Bank Islam contributed a total of
RM578,750 to various activities targeted
for the underprivileged as well as to show
its appreciation of personnel who perform
significant public duty such as the police,
immigration and customs officers, doctors
and nurses and members of the media.
Continuing with tradition, Takaful Malaysia
donated RM100,000 to Pertubuhan AlKhaadem Home of Hope in addition to
hosting a Majlis Berbuka Puasa at the home
in Shah Alam which houses 50 children.
Takaful Malaysia also took 64 children
from Pertubuhan Kebajikan Anak-anak
Yatim Al-Nasuha (Rumah Al-Nasuha) on a
shopping spree at the One Utama Shopping
Mall. This was the fourth consecutive year
that Takaful Malaysia had organised this
event. In addition, its senior management
presented duit raya (money) and goodies to
the children.
37
With customers’ convenience in mind, the
Bank is transitioning swiftly into more
online services and transactions. Having
upgraded its Internet banking platform its
system is able to manage 500 concurrent
Internet banking users, up from 100
previously. Using this portal, customers
can open accounts online and make mobile
electronic payments. Guided by a Service
Transformation Roadmap, the Bank has
also set up a Customer First Committee
to enhance the management of complaints
and feedback. In addition, it has opened a
mock training branch for new front liners
to equip them with customer-centric
skills. Ultimately, Bank Islam aims to offer
a seamless customer service experience
across all its customer touch points.
Perspectives
accountability
Towards the promotion of higher levels
of professionalism, we supported a
number of conferences and seminars,
including the Islamic Finance Awareness
Programme 2014: Contemporary Issues
on Islamic Banking Products & Services,
organised by IBFIM; the 16th Malaysian
Finance Association Conference; National
Tax Conference 2014; and KLIFF Islamic
Finance Presentation.
Audited
Financial
Statements
A key development during the year was
the launch of the SL1M Graduate Trainee
Programme that saw 100 graduates undergo
soft skills training and six-month on-thejob training in BHB and our subsidiaries.
We hope this initiative will help reduce the
number of unemployed graduates as well
as supply some much needed talent in the
Islamic financial services industry.
Additional
Information
BHB and our subsidiaries have been
strengthening our position in the
marketplace by intensifying our stakeholder
engagement while also contributing
towards the enhancement of the financial
sector in Malaysia.
A key stakeholder group are our customers,
whose interests drive our commitment to
deliver innovative products and exceptional
service. Bank Islam has continuously
created waves with its pioneering offerings,
such as TAP Mobile Banking-i service,
one of the first mobile banking services
to be launched in the country; the first
floating rates for personal financing; and
the first multi-purpose university debit
card, designed especially for the students
and staff of Universiti Malaysia Kelantan
(UMK). In 2014, a similar multi-functional
debit card was introduced for students of
Universiti Malaysia Pahang (UMP). Over
and above the functionalities of a standard
debit card, this University Debit Card-i
(UniDebit) provides university and library
access as well as university identification
functionalities.
18th AGM
information
MARKETPLACE
The
group
also
made
significant
contributions to various industry award
ceremonies that serve to enhance standards
and inspire a shift in mindset towards
sustainability. Together, we contributed
a total of RM154,085 to: the MalaysianASEAN Corporate Governance Index
2014 and Award Ceremony; the Islamic
Finance News Awards Ceremony 2014;
the Press Awards Ceremony organised by
the Malaysian Press Institute; the CEO of
the Year Asia 2014 and the Global Islamic
Finance Awards 2014.
Performance
Review
Leadership
corporate
responsibility
Corporate
Framework
Annual Report 2014
38
Annual Report 2014
corporate
responsibility
WORKPLACE
Takaful Malaysia’s customer promise of a
15% cash back to those who make no claims
underlines a very strong customer-centric
ethos which places the operator in a league
of its own in the insurance industry. The
rebate is extended to all General takaful
products and selected Family product
which was made applicable to Takaful
Malaysia’s latest offering, Takaful myHealth
Protector. The plan not only provides very
comprehensive health coverage but also
increases the maximum age for protection
up to 70 years, thus catering to more senior
citizens for whom such service makes a
significant difference.
Striving continuously to serve its customers
better, Takaful Malaysia launched a new
myTakaful Corporate portal that affords
its corporate clients the convenience of
managing their Group Medical and Group
Term Takaful plans online. It also made
its counter services more accessible by
opening its third Takaful Retail Centre, at
Lembaga Tabung Haji’s Islamic Financial
Service Centre (IFiC) on Jalan Tun Razak,
Kuala Lumpur. Customers will not only
be able to sign up for General and Family
products but will also be able to service
their certificates and submit claims here.
In an industry that is as competitive and
dynamic as financial services, it is critical to
have a competent and motivated workforce
to maintain an edge. Recognising this,
BHB and our subsidiaries are committed
to attracting and retaining the best talent.
Not only do we offer very attractive
remuneration packages, we also enhance
our employees’ professional development
via continuous training opportunities and
seek to create an environment in which
their personal, spiritual and health needs
are also taken care of.
As part of its transformation programme,
Bank Islam is placing increased emphasis
on creating a high-performance culture.
The idea is to build the capabilities
and capacity of all employees to meet
evolving regulatory requirements as well
as the demands of a changing customer
demographic. While enhancing leadership,
technical and functional skills across the
board, there is also increased focus on
nurturing specialised knowledge in areas
that are key to sustainable growth in
today’s financial services landscape, such
as Risk Management, Shariah, Credit and
Compliance.
At Takaful Malaysia, concerted efforts are
made to increase its agency force and to
provide them with continuous training to
strengthen their respective retail agency
distribution channels. This is supported
by enhanced efficiencies at the head office,
where continuous investments are made in
new technologies to increase productivity
and enable better customer service. In order
to attract more talent into the industry,
Takaful Malaysia strives to create greater
awareness of the promising career path that
awaits individuals who seek to build their
wealth by contributing in a meaningful
way to the well-being of others.
39
A major environmental project during the
year was planting 2,200 mangrove trees at
the Sulaman Lake Forest in Tuaran, Sabah.
The initiative, undertaken by Bank Islam
under its One Earth, One Quest campaign,
saw 50 volunteers – comprising the Bank’s
officers and local students – rehabilitate
a tract of the mangrove forest that had
degraded over the years. In addition
to the tree planting activity, the Bank
donated RM35,000 to the Sabah Wetlands
Conservation Society to boost its mangrove
conservation efforts.
Additional
Information
Although the financial services industry
does not have a significant environmental
impact, BHB believes all corporations have
a responsibility towards minimising as far
as possible our use of natural resources to
avoid waste. Towards this end, we engage
in activities such as the 3Rs to reduce, reuse
and recycle materials. We also encourage
energy efficient behaviours such as
switching off lights and air conditioners
when not in use. Our subsidiaries play
their part to protect the environment by
engaging with local communities in green
projects. Children are often targeted in
these activities as they determine the
nation’s future.
18th AGM
information
ENVIRONMENT
During the year, Bank Islam invested a total
of RM50,000 towards setting up recycling
activities in five (5) of its PINTAR adopted
schools. The objective was not just to
recycle material but also to create greater
environmental awareness among the
students, and to instil a sense of individual
responsibility towards sustainable living.
Audited
Financial
Statements
accountability
Perspectives
Performance
Review
Leadership
corporate
responsibility
Corporate
Framework
Annual Report 2014
40
Annual Report 2014
2014 event
highlights
4 January
Bank Islam presented USD17,670 collected
by Surau Wakaf Ahmad Dawjee Dadabhoy
(SWADD), Menara Bank Islam to the Shuaa
al-Amal Institute, an orphanage in Palestine.
9 JANUARY
Takaful Malaysia donated RM10,000 from its
charity fund to Yayasan Akademi Siswazah. 4 January
21 FEBRUARY
20 JANUARY
Takaful Malaysia introduced a range of
healthcare benefits to cushion the financial
burden of expensive medical treatment.
21 JANUARY
Takaful
Malaysia
contributed
a
total
of RM92,700 to various charities and
individuals as part of its community
outreach programme.
25 JANUARY
Bank Islam and Hijabista jointly organised
a “Bank Islam-Hijabista Shop Till You
Drop” programme as an appreciation to its
customers.
27 January
27 JANUARY
BIMB Holdings, in collaboration with
6 FEBRUARY
21 FEBRUARY
Services, presented RM15,000 to Persatuan
Takaful Malaysia contributed a total of
Bank Islam launched its inaugural Service
Braille Malaysia to standardise tajwid
RM157,000 to nine (9) deserving charities
Excellence Campaign 2014, a motivational
symbols in the Braille Quran for worldwide
nationwide.
agenda that will shift the paradigm of its
International
Union
of
Braille
Quran
usage.
6 FEBRUARY
14 FEBRUARY
Takaful Malaysia announced a record cash
customer service that has been practiced
year in year out.
Bank Islam celebrated the Al-Awfar “Dream
back payout of RM30 million to its general
25 FEBRUARY
of a Lifetime” Campaign RM1.2 million
takaful customers who had made no claims
Takaful Malaysia contributed RM50,000 to
winners in a ceremony tele-cast live on MHI,
during their coverage period.
the Malaysian Association for the Blind.
TV3.
41
31 MARCH
APRIL 2014
Takaful Malaysia clinched the Best Takaful
BIMB Holdings conducted an analysts’
Takaful Malaysia unveiled its out of home
Company in Malaysia award at the 8th
briefing at Menara Bank Islam.
advertising campaign to communicate its
International Takaful Summit held in Abu
Dhabi, United Arab Emirates.
26 FEBRUARY
APRIL 2014
unique proposition of rewarding motor
insurance customers
with a
15% Cash
Takaful Malaysia unveiled an advertising
Back should there be no claims during their
campaign to communicate its 15% Cash Back
coverage period.
Bank Islam launched its second UniDebit
for Motor Insurance to customers who make
Card-i with Universiti Malaysia Pahang.
no claims during their coverage period.
2 APRIL
The UniDebit card offers several additional
Bank Islam presented a cheque for RM300,000
functionalities for the University besides the
as part of its zakat (tithes) contribution to the
standard debit card.
state of Sarawak.
4 MARCH
a
total
of
accountability
Kuala Lumpur and Selangor.
11 MARCH
the Association of ex-Policemen in Malaysia.
25 MARCH
BIMB
Investment
Management
Bhd
launched the BIMB i Flexi Fund, which offers
long-term capital growth by investing in a
18 APRiL
diversified portfolio of Shariah-compliant
securities.
29 MARCH
18 APRIL
Bank Islam donated two (2) units of hearse to Majlis Agama Islam dan Adat Istiadat Melayu
Bank Islam contributed RM219,700 to assist
Perlis received by DYTM Raja Muda Perlis, Tuanku Syed Faizzuddin Ibni Tuanku Syed
underprivileged students during the Malam
Sirajuddin Jamalullail.
Simfoni Kasih 2014 – Menuju Destini Anak
Bangsa organised by Universiti Teknologi
MARA (“UiTM”).
Audited
Financial
Statements
donated
18 APRIL
Additional
Information
Malaysia
RM195,000 to four (4) deserving charities in
Bank Islam contributed RM100,000 in zakat to selected asnaf (deserving recipients) at the
Program Kayuhan Basikal bersama DYTM Raja Muda Perlis dan Sumbangan Zakat kepada
Golongan Asnaf.
18 APRIL
Bank Islam presented a cheque for RM100,000 to Duli Yang Teramat Mulia Tuanku Syed
Faizuddin Putra Ibni Yang Maha Mulia Tuanku Syed Sirajuddin Jamalullail towards its zakat
payment for the state of Perlis.
18th AGM
information
Takaful
Perspectives
25 FEBRUARY
Performance
Review
Leadership
2014 event
highlights
Corporate
Framework
Annual Report 2014
42
Annual Report 2014
2014 event
highlights
22 APRIL 2014
15 MAY
17-18 MAY
Takaful Malaysia announced a record return
About 800 guests attended BIMB Holdings’
Bank Islam sponsored RM10,000 towards
on equity of 25.9% along with a record-
17th Annual General Meeting at the Sime
the IImFest Malaysia Conference 2014 which
breaking profit after tax and zakat (PATZ) of
Darby Convention Centre, Kuala Lumpur.
seeks to increase participants’ understanding
RM134.4 million for the financial year 2013.
27-30 APRIL
17 MAY
of Islam.
Bank Islam collaborated with BERNAMA
18 MAY
Bank Islam contributed RM45,000 to UiTM
in organising a Media Treasure Hunt 2014
Bank Islam donated computers to SMK
Shah Alam for its three-day Invention,
from Kuala Lumpur to Johor. Some of the
Paloh in Kluang, Johor as part of ongoing
Innovation & Design 2014 exposition as a
activities involved the Persatuan Nelayan
efforts to promote computer literacy among
support towards innovative future leaders.
Kawasan (PNK) Pontian, Johor and the
rural students.
nearby community where activities carried
7 MAY
out were to encourage media to perform
27 MAY
Pertubuhan Kebajikan Al-Amin and Badan
CR activities and strengthen relationships
Bank Islam held a prize-giving ceremony
Kebajikan Siti Khadijah each received
amongst one another.
to hand over a million Ringgit each to three
RM10,000 from Takaful Malaysia.
winners of the Al-Awfar “Fast Lane to
become A Millionaire” campaign.
8 MAY
Bank Islam donated RM10,000 to Majlis
Agama Islam Wilayah Persekutuan for the
development of wakaf land in the Federal
Territory.
8 MAY
Bank Islam presented a cheque for RM600,000
representing its zakat contributions to His
Royal Highness the Sultan of Kelantan,
Sultan Muhammad V at the Mandarin
17 may
Oriental Kuala Lumpur.
12 MAY
Takaful
Malaysia
contributed
a
total
of RM1,081,381.50 in zakat to religious
departments across all 14 states in the
country.
15 MAY
Takaful Malaysia donated RM150,000 for
the construction of a surau in SMK Tinggi
Perempuan Melaka.
27 may
18 may
43
Leadership
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Framework
Annual Report 2014
Malaysia
Zamani
RM100,000 to Tuan Yang Terutama, Yang
DiPertua Negeri Melaka, Tun Datuk Seri
4 JUNE
Takaful
Datuk
Utama Haji Mohd Khalil bin Yaakob.
donated
a
total
of
RM55,000 to five (5) religious associations.
12 JUNE
D.Y.M.M Paduka Seri Sultan Perak Darul
5 JUNE
Ridzuan, Sultan Nazrin Muizzuddin Shah
Takaful Malaysia opened its third Takaful
Ibni Almarhum Al Maghfurlah Sultan Azlan
Retail Centre at the Lembaga Tabung Haji
Muhibbuddin Shah received a zakat cheque
Islamic Financial Service Centre (IFiC) at
for RM350,000 from the Chairman of Bank
Jalan Tun Razak, Kuala Lumpur.
Islam, Datuk Zamani bin Abdul Ghani.
BIMB Holdings contributed RM24,000
to Persatuan VIVA Palestina Malaysia to
sponsor 30 Palestinian blind children to
attend a Quran memorisation camp in Gaza,
Palestine.
18 JUNE
Takaful Malaysia launched its new corporate
portal, myTakaful Corporate, designed
with extensive self-service capabilities and
content platform for its corporate clients.
19 JUNE
Bank Islam organised its annual luncheon
talk by Dr. Fons Trompenaars with valued
corporate clients at The Majestic Hotel,
Kuala Lumpur.
25 JUNE
Bank Islam organised a Bank Security
Managers Meeting, officiated by Deputy
IGP Tan Sri Mohd Bakri bin Mohd Zinin and
attended by 100 banking security managers
at Menara Bank Islam.
27 JUNE
11 june
BIMB Holdings donated two (2) defibrillator
machines worth RM25,000 each to Lembaga
Tabung Haji in support of the Sahabat
Korporat Tabung Haji programme.
27 JUNE
Bank Islam contributed RM210,000 worth
of donations, products and services to the
Sahabat Korporat Tabung Haji 1435H in aid
of pilgrims performing the Haj.
27 JUNE
Takaful Malaysia contributed RM84,000
to the Sahabat Korporat Tabung Haji
Programme in the form of a book entitled
Panduan Ibadah Haji Wanita.
12 june
Performance
Review
Abdul Ghani presented a zakat cheque of
Malaysian Finance Association
Chairman
Perspectives
the 16
Conference.
Islam
accountability
Bank
Audited
Financial
Statements
Bank Islam donated RM10,000 towards
th
16 JUNE
Additional
Information
11 JUNE
18th AGM
information
4 JUNE
44
Annual Report 2014
2014 event
highlights
27 june
12 july
2-22 JULY
27 JUNE
Takaful Malaysia contributed a total of
RM14,000 to Tabung Kebajikan Al-Nidaa’
and Surau Asy-Syuro.
10 JULY
Bank Islam hosted iftar sessions with media
Bank Islam held the prize-giving ceremony
organisations
Sinar
for winners of the Personal Financing-i 2014
Harian, RTM and Bernama at their premises
BMW Campaign at BMW’s head office in
and distributed packed food to media
Kuala Lumpur.
Utusan,
KOSMO,
30 JUNE
friends at TV3 and TV Al Hijrah.
Takaful Malaysia launched a year-long
4-5 JULY
advertising initiative with TESCO Stores
Malaysia
involving
15
TESCO
outlets
throughout Malaysia.
30 JUNE – 24 JULY
Bank Islam collaborated with Surau Ahmad
Dawjee Dadabhoy to provide free meals for
Bank Islam collaborated with Berita
Harian in organising the Program Semarak
Ramadan, involving various charitable
activities during the fasting month.
7-8 JULY
11 JULY
Bank Islam handed over a RM1,000,000
zakat cheque to His Royal Highness Sultan
Saharfuddin Idris Shah at Masjid Al-Azhar,
KUIS, for the state of Selangor.
11 JULY
Takaful Malaysia donated RM10,000 of its
Bank Islam organised a breaking of fast at
charity funds to Surau Mutmainnah, Sungai
Menara Bank Islam.
the Checkpoint, Immigration & Quarantine
Buloh, Selangor.
1 JULY
Perlis with members of the local community,
12 JULY
bank customers, police, immigration and
Bank Islam organised a breaking of fast
customs officers and police pensioners.
and contributed RM40,150 to Rumah Tunas
iftar for staff and others in the vicinity of
BIMB Holdings donated RM7,200 for the
preparation and distribution of 15 pots of
and Police headquarters in Padang Besar,
Harapan Darul Hilmi in Kuala Terengganu,
bubur lambuk (savoury porridge) at Masjid
Jamek Kampung Baru, Kuala Lumpur
during Ramadan.
9 JULY
session with 150 underprivileged guests
2 JULY
12 JULY
from Kg. Orang Asli Sabak Bernam and
Rumah Anak Yatim Hulu Langat.
fulfil the education needs of children from
Bank Islam presented a RM300,000 cheque
towards its zakat contribution to the office of
the Majlis Agama Islam Pulau Pinang.
Bank Islam organised a breaking of fast
Terengganu.
the Al-Khaadem Home of Hope in Petaling
Jaya, Selangor.
45
Leadership
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Corporate
Framework
Annual Report 2014
14 JULY
Performance
Review
Masjid At-Taqwa, Kampung Rancangan
Klias, Beaufort, Sabah received a contribution
of RM33,300 from Bank Islam.
14 JULY
Petubuhan Kebajikan Al-Nidaa’ Malaysia
Yayasan Anak-Anak Yatim TTDI received
RM75,000 as part of Takaful Malaysia’s
corporate
social
responsibility
(CSR)
initiatives.
15 JULY
17 july
22 july
Perspectives
received a donation of RM50,000 and
Bank Islam handed over RM300,000 in zakat
accountability
contributions to Baitulmal Sabah.
17 JULY
Bank Islam invited media representatives
on duty from Sinar Harian and Karangkraf
together with underprivileged children to a
breaking of fast.
Audited
Financial
Statements
18 JULY
Takaful Malaysia took 64 orphans from the
Pertubuhan Kebajikan Anak-anak Yatim AlNasuha (Rumah Al-Nasuha) on an aidilfitri
21 JULY
Bank Islam donated RM30,000 to Anak-anak
22 july
22 JULY
11 AUGUST
Bank Islam presented RM7,088,983 in zakat
Takaful Malaysia donated RM20,000 each
Yatim Islam Wilayah Persekutuan, Kuala
contributions to Minister in the Prime
to five (5) religious organisations, and
Lumpur as part of its Aidilfitri goodwill.
Minister’s Department, YB Mej. Jen. Dato’
contributed RM5,000 each to Pertubuhan
Seri Haji Jamil Khir bin Haji Baharom (R).
Ikatan Seruan Ummah Kuala Lumpur, Dana
22 JULY
Bank Islam organised a breaking of fast for
the underprivileged, doctors and nurses at
Masjid Al-Falah, Melaka.
Kebajikan Warisan and Surau Al-Muttaqin.
22 JULY
BIMB
Holdings
donated
RM5,000
to
11 AUGUST
Kebajikan Anak-Anak Yatim
Bank Islam presented RM400,000 in zakat to
Islam Wilayah Persekutuan Kuala Lumpur
KDYTM Tengku Mahkota Pahang, Tengku
(PERKAYATIM) in support of its work with
Abdullah Ibni Sultan Ahmad Shah for the
orphans.
state of Pahang.
Persatuan
Additional
Information
to the home.
18th AGM
information
shopping treat, and also donated RM26,000
46
Annual Report 2014
2014 event
highlights
25 august
11-21 AUGUST
22 AUGUST
Bank Islam donated RM10,000 each to five
Bank Islam sponsored RM10,000 to Majlis
Bank Islam and Kolej Universiti Insaniah
(5) schools to support their participation in
Perundingan Pertubuhan Islam Malaysia
(KUIN)
a ChemEng OutReach@Biodiesel Workshop
(MAPIM) for the installation of Zikr sign
Understanding for the Insaniah Waqaf Fund
organised by UTM, which focused on
boards at the mosque and on the road.
where Bank Islam is the strategic partner in
recycling activities.
25 AUGUST
12-13 AUGUST
Bank Islam handed over 22 homes in Johor
25 AUGUST
signed
a
Memorandum
of
managing and administrating the waqf fund
for the construction of Masjid Insaniah. 26 AUGUST
Bank Islam donated RM50,000 to the
under the Rumah Bantuan Bank Islam, a
National Tax Conference 2014.
charity programme through which it helps
Tahfiz Madinatul Huffaz Kuala Lumpur
to build and renovate houses for the poor
received RM30,000 from Takaful Malaysia’s
since year 2008.
charity fund.
Tabung Sumbangan TH-Palestin in aid of
25 AUGUST
29 AUGUST
Palestinians in the occupied territory.
The Jawatankuasa Agama Negeri Johor
BIMB Holdings contributed RM5,000 to
received a zakat cheque for RM400,000 from
the Persatuan Amanah Hawi Al-Khairat in
Bank Islam.
support of a one (1)-day seminar on Modern
19 AUGUST
BIMB
Holdings
donated
RM20,000
to
Society and the Tolerance of Muhammad
held at University Technology Malaysia
(UTM).
47
Leadership
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Framework
Annual Report 2014
4 SEPTEMBER
Malaysia, Kuala Lumpur.
5 SEPTEMBER
Bank Islam and MyANGKASA signed a Memorandum of
Understanding
on
the
MyANGKASA membership
card,
a
Performance
Review
Bank Islam celebrated the launch of its 137th branch in Menara Utusan
well as its affiliate cooperative bodies.
5 SEPTEMBER
Takaful Malaysia contributed RM19,200 to Badan Kebajikan Telekom
5 september
Malaysia Berhad, Putrajaya. Perspectives
multipurpose smart card, exclusive for members of ANGKASA as
22 SEPTEMBER
Takaful Malaysia contributed RM20,000 to Surau An-Nadwah
Puncak Utama, Selangor.
27 SEPTEMBER
Bank Islam launched One Earth One Quest in the forest reserve of
Tasik Sulaman, Tuaran, Sabah by planting 2,200 mangrove seedlings
to help restore critical coastal ecosystems.
11 september
Audited
Financial
Statements
Bank Islam presented a zakat contribution of RM500,000 to YAB Dato’
Ahmad Razif bin Abdul Rahman, Chief Minister of Terengganu.
accountability
11 SEPTEMBER
1 OCTOBER
Graduate Trainee Programme with the aim of enhancing the skills
and employability of 100 graduates.
1 OCTOBER
BIMB Holdings donated RM4,800 to An-Najjah Malaysia, an
Additional
Information
BIMB Holdings and its Group of Companies launched the SL1M
NGO that cares for the well-being of orphans, single mothers, the
1 OCTOBER
BIMB Holdings purchased 39 copies of a coffeetable book entitled
Expressions of Merdeka – A Pictorial Journey at RM100 each in
1 october
support of Yayasan Pendidikan Islam.
18th AGM
information
handicapped, hardcore poor, old folks and new Muslim converts.
48
Annual Report 2014
2014 event
highlights
1 october
1 OCTOBER
21 OCTOBER
Takaful Malaysia continues to support actuarial science program
Bank Islam handed over RM140,000 in zakat contributions to Pusat
students at UiTM by contributing RM50,000 to the fund for aspiring
Urus Zakat Negeri Sembilan.
diploma and undergraduate holders of Actuarial Science to pursue
and fulfill their dreams of becoming qualified actuaries.
23 OCTOBER
5-7 OCTOBER
DiRaja Kelantan in support of its charitable activities which include
Bank Islam held the Program Ibadah Korban 2014 in five (5) regions
the donation of hemodialysis machines, funding for the construction
with the objective of enhancing the spirit of togetherness and
of mosques and aid to flood victims.
camaraderie among the communities it serves.
13 OCTOBER
Bank Islam handed over RM450,000 in zakat contributions to the
Chief Minister of Kedah, YAB Dato’ Seri Haji Mukhriz bin Tun
Mahathir.
21 OCTOBER
Bank Islam participated in the inaugural The Bursa Bull Run 2014
organised by Yayasan Bursa Malaysia.
BIMB Holdings donated RM5,000 to the Majlis Orang-Orang Besar
27 OCTOBER
BIMB Holdings held an Extraordinary General Meeting to get
shareholders’ approval on its proposed Dividend Reinvestment Plan.
49
Leadership
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Corporate
Framework
Annual Report 2014
5 NOVEMBER
Performance
Review
BIMB Holdings donated RM5,000 to the
Ministry of Education Malaysia in support
of its efforts to achieve a zero school dropout rate.
17 NOVEMBER
RM2.3 million to the Football Association of
Malaysia (FAM) under the Bank Islam Team
Harimau Visa Debit Card-i contribution
programme in support of the development
of the country’s favourite sport.
17 november
Perspectives
Bank Islam presented a mock cheque of
19 NOVEMBER
accountability
Bank Islam signed the financing agreements
for its Subordinated Sukuk Murabahah
Programme of up to RM1 billion.
24 NOVEMBER
BIMB Holdings donated RM5,000 as a form
Selangor.
24 NOVEMBER
BIMB Holdings contributed RM10,000 as a
19 november
Audited
Financial
Statements
of corporate contribution to the Tabung Haji
Family Day 2014 held at I-City, Shah Alam,
corporate sponsor of the Malaysian-ASEAN
Corporate Governance Index 2014 and
Additional
Information
Award Ceremony.
27 NOVEMBER
Prospectus of Kronologi Asia Berhad was
launched in conjunction with its Listing on
the ACE Market of Bursa Malaysia Securities
18th AGM
information
Berhad, where Bank Islam was the principal
adviser, sole underwriter, sponsor and
placement agent for its listing.
27 november
50
Annual Report 2014
2014 event
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29 november
17 december
29 NOVEMBER
17 DECEMBER
Bank Islam allocated RM40,500 towards an
BIMB Holdings organised an Appreciation
outreach programme at Rumah Warga Emas
Dinner for members of the Board and Group
Ehsan in Kuala Kubu Baru, Selangor which
Senior Management at Cascades Restaurant,
included the provision of various facilities,
Mandarin Oriental Kuala Lumpur.
enhancing the surroundings of the old folks’
17 DECEMBER
home and bringing cheer to the residents.
Bank Islam organised a Facebook Get-
12 DECEMBER
Together at Universiti Malaya with its
Facebook fans to strengthen bonds with its
BIMB Holdings handed over complete sets
clients.
of school uniforms and bags to deserving
staff at its inaugural Back to School CR
12 december
Initiative Handover Ceremony.
26 DECEMBER
Bank Islam contributed RM21,205 worth of
14 DECEMBER
back-to-school items to children of Muslim
converts.
Bank Islam gave away two (2) BMWs to its
Personal Financing-i Campaign winners in
Kelantan which were presented by YB Dato’
Sri Mustapa bin Mohamed, Minister of
International Trade and Industry Malaysia.
14 december
Hassan II Mosque in Casablanca, Morocco
The First in fullfledged shariahcompliant
stockbroking
32
52
Annual Report 2014
2014 event
highlights
29 november
17 december
29 NOVEMBER
17 DECEMBER
Bank Islam allocated RM40,500 towards an
BIMB Holdings organised an Appreciation
outreach programme at Rumah Warga Emas
Dinner for members of the Board and Group
Ehsan in Kuala Kubu Baru, Selangor which
Senior Management at Cascades Restaurant,
included the provision of various facilities,
Mandarin Oriental Kuala Lumpur.
enhancing the surroundings of the old folks’
17 DECEMBER
home and bringing cheer to the residents.
Professional
Bank Islam organised a Facebook Get-
12 DECEMBER
Together at Universiti Malaya with its
Facebook fans to strengthen bonds with its
BIMB Holdings handed over complete sets
clients.
of school uniforms and bags to deserving
staff at its inaugural Back to School CR
12 december
Initiative Handover Ceremony.
26 DECEMBER
Bank Islam contributed RM21,205 worth of
14 DECEMBER
back-to-school items to children of Muslim
converts.
Bank Islam gave away 2 BMWs to its
Personal Financing-i Campaign winners in
Kelantan which were presented by YB Dato’
Sri Mustapa bin Mohamed, Minister of
International Trade and Industry Malaysia.
14 december
53
Annual Report 2014
BIMB SECURITIES
the
first
and ONLY Shariah Compliant
Stockbroking Company in
Malaysia
16%
increase
in Gross Brokerage Income
BEST
Shariah Trading Value 2013
for Non-Investment Bank category and
2nd Runner Up for Best Institutional
Equities Participating Organisation for
Non-Investment Bank category
Launched the
WE ARE THE FIRST AND ONLY SHARIAH COMPLIANT STOCKBROKING COMPANY IN
MALAYSIA PRINCIPALLY INVOLVED IN DEALING IN SECURITIES ON BURSA MALAYSIA
AND OTHER PERMITTED BUSINESS ACTIVITIES SERVING BOTH THE MUSLIMS AND
NON-MUSLIMS ALIKE. WITH OUR EXPERIENCE AND CAPABILITIES IN SHARIAH EQUITY
TRADING, COUPLED WITH A DEDICATED INTERNAL AND EXTERNAL SHARIAH TEAM AND
SCHOLARS ON BOARD, WE CERTAINLY BELIEVE WE WILL BE ABLE TO PROVIDE QUALITY
SERVICES EXCEEDING SATISFACTION.
Mobile
trading
application
for its Internet Trading platform,
BISonline, on Android and Apple IOS
Annual Report 2014
52
statement of
corporate governance
(Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)
The Board of Directors (“the Board”) of BIMB Holdings Berhad (“BHB” or “the Company”) is
committed to upholding the highest standards of corporate governance and practices to enhance
stakeholder value and build consumer trust in line with BHB Group’s positioning as a premier
Islamic financial services provider. This includes the practice of Islamic principles for the benefit
of society. The Board is also committed to ensure that the right executive leadership, strategies and
internal controls for risk management are well in place in order to achieve the highest standards
of business integrity, ethics and professionalism across the BHB Group.
In order to achieve the said objectives, BHB Group adheres to best practices on corporate governance as well as the following guidelines and
requirements:
(i)
Bank Negara Malaysia’s (“BNM”) Guidelines on Corporate Governance for Licensed Institutions (BNM/GP1-i);
(ii)
Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”);
(iii) the Malaysian Code on Corporate Governance 2012 (“the MCCG 2012”);
(iv) Green Book on Enhancing Board Effectiveness (“Green Book”) by the Putrajaya Committee on Government Linked-Companies High
Performance;
(v)
Corporate Governance Guide (“CG Guide”): Towards Boardroom Excellence 2nd Edition (CG Guide) by Bursa Securities; and
(vi)
Corporate Governance Blueprint 2011 issued by Securities Commission.
Based on the above, the Board is pleased to present the following report on the application of the principles and best practices as follows:
1.
BOARD OF DIRECTORS
1.1
BOARD CHARTER (Principle 1, Recommendation 1.1 and 1.7 of the MCCG 2012)
The Board of BHB is constantly mindful of the need to protect the interest of its shareholders and other stakeholders. In discharging its
duties effectively, the Board is guided by its Terms of Reference (“TOR”), a document which specifies amongst others the Board’s role,
powers, duties and functions.
The TOR reflects applicable rules and regulations, processes and procedures to ensure the effectiveness and efficiency of the Board
and its committees. It is a dynamic document that is reviewed and updated from time to time to reflect relevant changes to policies,
procedures and processes as well as amendments to rules and regulations.
The TORs for the Board and its committees and the various relevant internal policies comprises, amongst others:
1.
2.
3.
4.
5.
6.
7.
8.
Director’s duties and obligations;
Appointment and resignation of Directors;
Governance structure;
Board and Board Committees proceedings;
Remuneration and benefits for Directors;
Supply of information to the Board;
Training and induction programmes; and
Annual Board assessment.
53
statement of
Corporate
Framework
Annual Report 2014
Leadership
•
•
•
•
•
•
The Management of the Company is headed by the Group Chief Executive Officer (“GCEO”), who is accountable to the Board for
ensuring the Company operates effectively.
1.3 BOARD COMPOSITION AND BALANCE
The Board of BHB currently consists of nine (9) members, with nine (9) Non-Executive Directors. Out of the nine (9) Non-Executive
Directors, two (2) are Independent Non-Executive Directors. The seven (7) Non-Independent Non-Executive Directors consist of five
(5) nominees of Lembaga Tabung Haji (“TH”) (including the Chairman), one (1) nominee of Permodalan Nasional Berhad (“PNB”)
and one (1) Director not representing any interested corporate shareholder.
The current composition of the Board does not comply with Paragraph 15.02(1) of Bursa Securities Listing Requirements and BNM/
GP1-i as the numbers fall below the requirement since 3 December 2014 pursuant to the redesignation of one of its Independent
Non-Executive Director to Non-Independent Non-Executive Director. In this regard, BHB has commenced for the appointment of an
additional Independent Non-Executive Director and has also obtained the approval from Bursa Securities on 26 February 2015 for an
extension of time up to 2 June 2015 to comply with the requirement.
Recommendation 3.5 of the MCCG 2012 states that, where the Chairman of the Board is not an Independent Director, the majority of
the Directors must be independent. However, the Board strongly believes that the present Chairman has the ability and capability to
ensure proper checks and balances to facilitate the Board’s proceedings and decision-making. It is also pertinent to note that there is
a separation of authority between the Chairman and the GCEO. Their duties and responsibilities are distinct and separate to facilitate
checks and balances in the operations of the Company.
Within the Board there is diversity and a wealth of knowledge, experience and skills in the fields of accountancy, banking, regulation,
international business operations and development, finance and risk management. A brief profile of each member of the Board is
presented on pages 8 to 13 of this Annual Report.
Perspectives
•
accountability
•
•
•
Reviewing and approving all strategic and policy matters including the business plan and pertinent operating policies, and
monitoring the management’s performance based on Key Performance Indicators;
Monitoring and reviewing the overall performance of the Company and BHB Group against set targets and objectives;
Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed;
Reviewing risk management practices within BHB Group and the Company:
(i) to ensure there are adequate internal controls and infrastructure;
(ii) to identify and manage principal risks;
(iii) to ensure the implementation of appropriate systems to manage these risks;
Reviewing and approving succession plans, including appointing, training, fixing the compensation of and where appropriate
replacement of senior management;
Approving policies pertaining to staff salary and benefits;
Approving the appointment of Directors and Directors’ emoluments and benefits;
Approving the Company’s investor relations programme or shareholder communication policy;
Reviewing the adequacy and integrity of the Company’s internal control systems and infrastructure and management information
systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;
Approving transactions in accordance with the authority limit, and ensuring that the Company’s business operations are
conducted in accordance with Shariah principles; and
Reviewing relevant reports or proposals to ensure the Company’s operations are in compliance with the Islamic Financial Services
Act 2013, the Companies Act 1965, Bursa Securities Listing Requirements, the Articles of Association of the Company and any
regulations and guidelines under the relevant laws.
Audited
Financial
Statements
•
Additional
Information
The Board has the responsibility to periodically review and approve the overall strategies, business and pertinent policies of the
Company. There are specific matters that are reserved for the Board’s deliberation and approval. These include, amongst others:
Performance
Review
ROLES AND RESPONSIBILITY OF THE BOARD (Recommendation 1.2 of the MCCG 2012)
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1.2
Annual Report 2014
54
statement of
The selection of the Chairman, Directors and GCEO is made by the Nomination and Assessment Committee (“NAC”) based on merit,
guided by the Fit and Proper Criteria for Key Responsible Persons Policy (“KRP Policy”).
The Board has taken note of Recommendation 2.2 of MCCG 2012 on its approach to gender diversity and the number of female
directors, in line with the announcement by the Government. For the year under review, BHB has three (3) female directors on its Board,
representing 33% of its Board composition.
The Board also took note of the expectation on time commitment to carry out their responsibilities outlined in Recommendation 4.1
of MCCG 2012. In this respect, members of the Board will in the future notify the Chairman prior to accepting any new directorship
outside the Group. With effect from 1 June 2013, pursuant to Paragraph 15.06 of Bursa Securities Listing Requirements, a director must
not hold more than five (5) directorships in listed companies.
1.4 INDEPENDENT NON-EXECUTIVE DIRECTORS (“INEDs”)
The proportion of INEDs within the current Board composition facilitates the Board to ensure and provide effective and independent
oversight over Management. The composition also reflects the interests of the Company’s majority shareholder which is adequately
represented by the appointment of its nominee Directors whilst balancing the interest of the minority shareholders.
The INEDs do not participate in the day-to-day management of the Company and do not engage in any business dealing or other
relationship with the Company (other than in situations permitted by the applicable rules and regulations) in order to ensure that they
are in a position to exercise independent judgment.
Pursuant to Recommendation 3.1 of the MCCG 2012, the Board has approved and adopted a set of criteria for the purpose of
conducting an assessment of independence of its Independent Directors. In its assessment, the Board focuses amongst others on
the skills, experience, contributions, economic and family relationships beyond the Independent Director’s background and considers
whether an Independent Director can continue to bring independence and objective judgment to Board deliberations. The assessment
also focus on the tenure of directorship and the INEDs self-declaration on their compliance with the independence criteria under the
BNM/GP1-i and Bursa Securities Listing Requirements.
In view of the above, all INEDs are to declare their independence as INEDs of BHB on a monthly basis, following which these declarations
were tabled to the Board on a quarterly basis.
Recommendation 3.2 of the MCCG 2012 states that the tenure of Independent Directors should not exceed a cumulative term of nine (9)
years. One of BHB’s Independent Director (Datuk Zaiton binti Mohd Hassan) has reached a cumulative term of nine (9) years. The Board
is of the view that the said Independent Director’s presence and contributions are pertinent considering her wealth of experience. The
Independent Director actively participates and provides invaluable independent views to the Board and Board Committees, particularly
on the quarterly financial reports, audited financial statements and other operational aspects of the Group. Her vast experience in
banking and in other various senior positions in the financial industry would enable BHB to tap on her expertise for the development
of BHB and its subsidiaries. In addition, she had complied with the attendance requirements for Board and Board Committee meetings
under Bursa Securities Listing Requirements as well as BNM/GP1-i. This testifies to her commitment and dedication in discharging her
responsibilities as an Independent Director.
As provided in the Notice of the upcoming 18th Annual General Meeting (“AGM”) dated 21 April 2015, the Board is proposing to seek
shareholders’ approval to retain the said Independent Director of the Company.
In line with paragraph 2.27 of BNM/GP1-i, none of BHB’s INEDs has more than 5% equity interest in the licensed institution or in its
related companies, or is connected to a substantial shareholder of the licensed institution.
55
statement of
Corporate
Framework
Annual Report 2014
Leadership
•
•
•
The ability to challenge the assumptions, beliefs or viewpoints of others with objective questioning, and constructive and rigorous
challenging in the interest of the Company;
Willingness to stand up and defend his/her own views, beliefs and opinions for the ultimate good of the Company; and
A good understanding of the Company’s business activities in order to appropriately provide responses on the various strategic
and technical issues put forth and deliberated by the Board.
Performance
Review
The Board also ensures that all INEDs have the following attributes:
The Board is of the view that both the INEDs of the Company comply with the above requirements.
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR
In accordance with best practices on corporate governance, Tan Sri Ismail bin Adam continues to play his role as the Senior Independent
Director (SID) of the Board to whom concerns of shareholders and other stakeholders can be conveyed.
Tan Sri Ismail can be reached at ismailadam@bimbholdings.com.
Perspectives
1.5
(a)
(b)
(c)
Probity, personal integrity and reputation – the person must have key qualities such as integrity, diligence, independence of mind
and fairness;
Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role; and
Financial integrity – the person must manage his/her debts or financial affairs prudently.
Additionally, in line with the Recommendation 3.2 and Recommendation 3.3 of the MCCG 2012, the tenure of service for Independent
Directors has been capped at the maximum of nine (9) years and upon completion of the nine (9) years tenure, the Independent
Director may continue to serve on the Board. In these circumstances, the shareholders may decide that an Independent Director can
remain beyond the cumulative terms of nine (9) years, subject to the NAC’s assessment, Board’s recommendation as well as strong
justification to be provided to the shareholders at a general meeting.
Audited
Financial
Statements
The Board, with the assistance of the NAC, also considers the following criteria in the selection process:
Additional
Information
The KRP Policy outlines the attributes/qualifications required for a candidate in order to determine his/her suitability, which include
amongst others, his/her skills- set and leadership. In addition, the KRP Policy takes into consideration the candidate’s overall experience
in areas such as banking, insurance/takaful, finance/accounting, risk management, etc.
18th AGM
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The appointment of a new Director is set out in a formal and transparent process, for which the primary responsibility is delegated to
the NAC. The procedure is in line with the Company’s KRP Policy (which has been implemented since August 2011), BNM Guideline
on Fit and Proper Criteria and BNM/GP1-i. Under the said procedure, the NAC recommends to the Board suitable candidates for
directorship or for key positions in the Company. NAC is also responsible for ensuring these candidates satisfy the requisite skills
and core competencies to be deemed as fit and proper, in accordance with the KRP Policy of the Company, Bursa Securities Listing
Requirements and the Corporate Governance Blueprint 2011 issued by Securities Commission.
accountability
1.6 BOARD APPOINTMENT PROCESS (Principle 2, Recommendation 2.2 of the MCCG 2012)
56
Annual Report 2014
statement of
The process flow for the appointment of new directors is as follows:
Identification
of candidates
Evaluation of suitability on
Fit and Proper Requirement
of candidates
Deliberation by
NAC
Recommendation
to the Board
Thereafter, the application for the appointment of such candidates would be submitted to BNM for approval pursuant to BNM/GP1-i.
1.7 BOARD AND INDIVIDUAL DIRECTOR’S EFFECTIVENESS
Annually, the NAC undertakes a formal and transparent process, to assess the effectiveness of individual Directors and the Board
as a whole. This is conducted through a Board evaluation process which consists of Board and Peer Annual Assessment (“Board
Evaluation”).
The Board Evaluation comprises a detailed set of questionnaires which covers amongst others, the responsibilities of the Board in relation
to strategic planning, risk management, performance management, financial reporting, communication and corporate governance. The
Board composition and size, the contribution of each and every member of the Board at meetings, the Board’s decision-making and
output, information and support rendered to the Board as well as meeting arrangements were also incorporated into the questionnaires.
Upon completion of the assessments, the results are tabulated and reviewed by the NAC for endorsement prior to deliberation by the
Board. If required, the Chairman will engage and discuss the peer assessment results with individual members.
1.8 ROLES AND RESPONSIBILITIES OF THE CHAIRMAN AND THE GCEO (Principal 1, Recommendation 1.1 and Principal 3,
Recommendation 3.4 of the MCCG 2012)
The roles and responsibilities of the Chairman and the GCEO are distinct and separate, in accordance with relevant best practice.
This is to ensure appropriate supervision of the Management, with a clear hierarchical structure. This distinction allows for a better
understanding and distribution of jurisdictional responsibilities and accountabilities. This clear structure and focused approach facilitates
efficiency and expedites informed decision-making. The distinction on the roles and responsibilities of the Chairman and the GCEO is
also reflected in the Company’s TOR.
1.8.1 Chairman
The Chairman provides leadership to the Board. His main duties and responsibilities are to steer the Board to achieve its objectives.
In order to ensure that relevant issues are discussed, the Chairman will lead the agenda for Board meetings and request for views
and inputs from the other Directors.
Pertinent information and analysis are disseminated to members of the Board prior to Board meetings where the Chairman shall
encourage a healthy level of deliberation. This is also to ensure that the Board discharges its responsibilities and that all Directors
participate in the discussions.
The Chairman also ensures that consensus is reached at Board meetings. Where deemed necessary, the Chairman shall call for a
vote such that a decision will be reached by a simple majority. In the event a consensus cannot be obtained, the Chairman may
elect to defer the agenda, with further analysis conducted on the subject matter, to the next meeting.
57
statement of
Corporate
Framework
Annual Report 2014
Leadership
Dato’ Sri Zukri bin Samat was appointed as the GCEO of BHB effective from 18 February 2015 in place of Dato’ Johan bin Abdullah
who has relinquished his position as Group Managing Director/Chief Executive Officer of BHB with effect from 15 January 2015.
The GCEO is responsible for the day-to-day operations of BHB and is accountable to the Board. He leads BHB’s Management
team and is also responsible for regulatory compliance. In managing the Group’s business affairs, the GCEO is assisted by a
Management Committee which meets on a monthly basis. The GCEO is also responsible for the implementation of the Board’s
policies and decisions.
Performance
Review
1.8.2GCEO
The Company Secretary is responsible for advising the Board on issues relating to the relevant laws, rules, procedures and regulations
affecting the Board, as well as best governance practices. She is also responsible for advising the Directors on their obligations and
duties, disclosure of their interest in securities or of any conflict of interest in a transaction involving the Company, prohibition on
dealing in securities and restrictions on disclosure of price-sensitive information.
Perspectives
1.9 COMPANY SECRETARY
Dato’ Johan bin Abdullah was appointed as the Non-Independent Non-Executive Director effective 17 February 2015 and should retire
at the AGM pursuant to Article 66 of the Company’s Article of Association. Dato’ Johan bin Abdullah is seeking re-election at the AGM.
Encik Salih Amaran bin Jamiaan and Encik Zahari @ Mohd Zin bin Idris who are due for retirement pursuant to Section 129(2) of
the Companies Act, 1965. In this regard, Encik Zahari @ Mohd Zin bin Idris has indicated his intention to seek for re-election at the
forthcoming AGM however Encik Salih Amaran bin Jamiaan has expressed his intention not to seek for re-election at the forthcoming
AGM.
Details of Directors who are due for retirement, re-election and re-appointment at the forthcoming AGM are disclosed on pages 238
to 241 of the Annual Report.
In relation to the application for the re-appointment of Directors to BNM, the NAC will first assess the Directors who are due for
re-appointment and will then submit its recommendation to the Board for deliberation and approval. Upon obtaining the Board’s
endorsement, the relevant submission including the justifications for such re-appointment is thereafter made to BNM for approval prior
to the expiry of the relevant Director’s BNM’s term of appointment.
1.11 BOARD MEETINGS
Board meetings are scheduled in advance at the beginning of a new calendar year to enable Directors to plan ahead and fit the year’s
meetings into their own schedules. The Board meets on a scheduled basis every quarter. When the need arises, Special Board meetings
are also convened. The Board continues to proactively engage with senior management or external advisors for information and/or
clarification on relevant matters to ensure that the various concerns and issues relevant to the Company’s operations are duly addressed.
Audited
Financial
Statements
Tan Sri Samsudin bin Osman and Datuk Rozaida binti Omar who are due for retirement and seeking for re-election at the forthcoming
AGM pursuant to Article 61 of the Company’s Articles of Association.
Additional
Information
In accordance with the Company’s Articles of Association, all directors of BHB are subject to re-election by the shareholders in AGM
at the first opportunity after their appointment, and in subsequent year one-third (1/3) of the directors for the time being, or if their
number is not three or a multiple of three, then the nearest one-third (1/3) are subject to retirement by rotation at least once every three
(3) years in accordance with the Bursa Securities Listing Requirements and Articles 61 and 66 of the Company’s Article of Association.
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1.10 DIRECTORS’ RETIREMENT, RE-ELECTION and RE-APPOINTMENT
accountability
All Directors have direct and unlimited access to the advice and services of the Company Secretary.
58
Annual Report 2014
statement of
All Directors have complied with the requirement that they must attend at least 75% of Board meetings held in the financial year in
accordance with BNM/GP1-i, and attended at least 50% of Board meetings held in the financial year ended 31 December 2014 pursuant
to the Bursa Securities Listing Requirements.
During the financial year ended 31 December 2014, the Company held eight (8) Board meetings and the Directors’ attendance are as
follows:
No. of Meetings
Director
Held*
Attended
%
Chairman/Non-Independent Non-Executive Director
8
8
100
8
8
100
8
6
75
8
8
100
Dato’ Johan bin Abdullah***
Non-Independent Non-Executive Officer
8
8
100
8
7
86
8
7
86
8
8
100
Puan Rifina binti Md Ariff**
6
5
83
Notes:
*
Reflects the number of meetings held during the time the Director held office.
** Appointed as Director of BHB w.e.f. 1 April 2014.
*** Resigned as Group Managing Director/Chief Executive Officer w.e.f. 15 January 2015 and reappointed as Non-Independent
Non-Executive Director on 17 February 2015.
1.12 ACCESS TO INFORMATION (Recommendation 1.5 of the MCCG 2012)
The Board of Directors have full and unrestricted access to all information pertaining to BHB’s affairs including inter alia, financial
results, annual budgets, reviews against business plans and progress reports on BHB’s corporate developments to enable them to
discharge their duties effectively.
The schedule of Board Meetings are circulated in advance to the Board members. The Agenda and Board meeting papers are disseminated
to the Directors at least five (5) days prior to the Board meeting to allow sufficient time for the Directors to study and review the issues
and, where necessary, to obtain further information and explanations to facilitate informed decision-making. During the Board meeting,
the Directors will deliberate on the different items as per the agenda at length prior to making their conclusions and decision.
Senior Management and external advisers may be invited to attend the Board meetings when necessary, to furnish the Board with
explanations on agenda items tabled at the Board meetings or to provide clarification on issue(s) that may be raised by any Director(s).
59
statement of
Corporate
Framework
Annual Report 2014
Leadership
The Board is also regularly updated by the Company Secretary and/or Management on any changes to regulations and guidelines as
issued by BNM, Bursa Securities, the Securities Commission, Companies Commission of Malaysia or other regulatory authorities.
All Directors have direct and unlimited access to the advice and services of Senior Management and may seek independent professional
advice at the Company’s expense, if required, in furtherance of their duties.
Performance
Review
The deliberations and resolutions passed by the Board are recorded properly, and minutes of the meeting will be confirmed at the next
Board Meeting.
In the event where there may be a conflict of interest, the Director(s) will abstain from voting and will not participate in any deliberations
or decisions of the Board. In this regard, the Director(s) will excuse themselves from the meeting.
1.15 DIRECTORS’ TRAINING (Recommendation 4.2 of the MCCG 2012)
The Board recognises the value of enhancing the skills and knowledge of its members on relevant new laws and regulations, the
changing business environment and risk profile, as well as the latest developments and key challenges in the financial sector.
The Board is mindful of the need for continuous training to keep abreast of new developments and is encouraged to attend forums
and seminars facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. The
Board will continue to evaluate and determine the training needs of its Directors to enhance their skills and knowledge.
The Company provides a dedicated training budget for the Director’s continuing education. Relevant training programmes are arranged
by the Company for the Directors and members of the Board Committees. The Directors may also request to attend additional training
courses according to their specific requirements as a Director or member of the Board Committees.
accountability
In accordance with statutory requirements, members of the Board are required to declare their interest, including whether such interest
arises through close family members to relevant regulators, and these disclosures are subsequently noted at Board meetings.
Audited
Financial
Statements
1.14 CONFLICT OF INTEREST
Additional
Information
At present, all Directors of BHB have complied with best practices as recommended by the Green Book which states that Directors
should not sit on the board of more than five (5) listed companies. This is to ensure that their commitment, resources and time are
focused to enable them to discharge their duties effectively.
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In accordance with BNM/GP1-i, Directors are not allowed to hold more than 10 directorships in listed companies and not more than
15 directorships in non-listed companies. Bursa Securities Listing Requirements, meanwhile, require Directors of a listed issuer to hold
not more than five (5) directorships in listed issuers.
Perspectives
1.13 NUMBER OF DIRECTORSHIPS
Annual Report 2014
60
statement of
As at to date all Board members have attended Financial Institutions Directors’ Education (FIDE) programme. In addition other training
programmes attended by the Directors in the financial year ended 31 December 2014 are as follows:
(i) Board Leadership and Management Effectiveness:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Corporate Directors Advanced Programme (CDAP) 2014: Human Capital
Luncheon Talk by Ripa Rashid Director of Research and Curriculum ICLIF
Seminar Wakil-wakil Pengarah Korporat TH
Nominating Committee Programme
Managing Stakeholders’ Expectations in the Fast Changing Business Trends Towards Value Creation
Corporate Directors Training Programme
Audit Committee Conference
A Comprehensive Talent-based Approach to Board Recruitment
“Business, Value Creation & Society” by Dr. Micheal Yaziji, INSEAD, Geneva
Bengkel Pengurusan Risiko & Latihan Sistem ERMS by Lembaga Tabung Haji
Bengkel Pelan Pengurusan Risiko Rasuah (CRM) by Lembaga Tabung Haji
Linkage 20 Conversations @ Harvard Leadership Programme
FIDE: Aligning Business and Human Capital Strategies
Nominating Committee Programme 2 by ICLIF
Directors Breakfast Series with Beverly Behan: “Great Companies Deserve Great Boards”
MINDA: Corporate Directors Advanced Programme
(ii) Corporate Governance and Risk Management:
- Seminar on Governance for Chairman of Board Members of University Management Board
- Shariah Compliance Risk Masterclass for Bank Islam Board Members
- FIDE Forum Event: “Risk: From Whereof?” by Tan Sri Andrew Sheng
(iii)Accounting, Finance and Capital Markets:
-
-
-
-
GST Awareness Workshop by EY Tax Consultants Sdn Bhd
Corporate Finance Case Studies: IPO Workshop
Roundtable on Malaysia Code for Institutional Investors
Global Islamic Finance Forum 2014
As at the end of financial year ended 31 December 2014, all Directors are in adherence to the Mandatory Accreditation Programme, as
required by Bursa Securities.
1.16 DIRECTORS TRADING DURING CLOSED PERIOD
Directors and principal officers of BHB are prohibited from trading in any affected securities based on price sensitive information and/
or knowledge which has not been publicly announced, in accordance with Bursa Securities’ Listing Requirements and the relevant
provisions of the Capital Markets & Services Act 2007. Notices on the closed period for trading in BHB and/or any affected securities are
circulated to Directors and principal officers deemed privy to any price sensitive information in advance of the closed period, wherever
applicable.
61
statement of
Corporate
Framework
Annual Report 2014
Leadership
The Remuneration Committee (“RC”) of BHB comprises solely of Non-Executive Directors. Amongst its duties is to recommend to the
Board the remuneration package for the Executive Director, which is structured by linking rewards to financial and individual performance.
Performance is measured against the Key Performance Indicators as approved by the Board. It is the ultimate responsibility of the Board to
approve the remuneration of the Executive Director.
In the case of Non-Executive Directors, the remuneration package is determined by the Board as a whole, based on the experience and level
of expertise and responsibilities undertaken by the Non-Executive Directors.
Performance
Review
DIRECTORS’ REMUNERATION (Recommendation 2.3 of the MCCG 2012)
Executive Director
(a)
Basic Salary
The basic salary of the Executive Director is recommended by the RC to the Board, taking into account the responsibility,
contribution and performance of the Executive Director, as well as the market rate for similar positions in comparable companies.
(b)
Bonus Scheme
The Group has adopted a bonus schemes for all employees, including the Executive Director. The criteria for the scheme would
include the Group’s overall level of financial achievements by the Group against set targets, together with other qualitative
assessments of an individual’s performance during the period. The bonus payable to the Executive Director is reviewed and
recommended by the RC and thereafter approved by the Board. No bonus scheme is provided for Non-Executive Directors.
accountability
The policy on remuneration packages for Directors is as follows:
Perspectives
2.1 REMUNERATION PACKAGE POLICY
(d)Benefits-In-Kind
Other benefits (such as Directors’ Health and Medical Benefit together with Directors’ and Officers’ liability insurance and
travelling allowance) are made available as appropriate.
Remuneration of the Directors in office during the financial year is disclosed in Note 33(a) of BHB’s Financial Statements.
Additional
Information
(c)Fees and Other Emoluments
Non-Executive Directors are remunerated by way of monthly fees, sitting allowance and other emoluments. Fees payable to
Non-Executive Directors are subject to shareholders’ approval at the Annual General Meeting.
Audited
Financial
Statements
Non-Executive Directors
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2.
62
Annual Report 2014
statement of
A summary of the aggregate remuneration of the Directors, distinguishing between Executive and Non-Executive Directors for the
financial year ended 31 December 2014, is as follows:
Group
1.1.2014 to
31.12.2014
RM’000
Company
1.1.2013 to
31.12.2013
RM’000
1.1.2014 to
31.12.2014
RM’000
1.1.2013 to
31.12.2013
RM’000
Executive Director:
Fees and allowances
Salaries, bonuses and EPF contributions
Benefits-In-Kind
355
284
-
-
2,202
1,907
2,202
1,907
191
77
90
54
2,748
2,268
2,292
1,961
2,206
2,065
992
957
Non-Executive Directors:
Fees and allowances
532
346
251
154
Total
5,486
4,679
3,535
3,072
Total (excluding Benefits-In-Kind)
4,763
4,256
3,194
2,864
731
603
-
-
Benefits-In-Kind
Shariah Supervisory Council
The number of Directors of the Company, whose remuneration are paid/payable for their services, fall within the following bands:
Group
1.1.2014 to
31.12.2014
1.1.2013 to
31.12.2013
Executive Director:
RM2,000,001 and RM2,500,000
-
-
RM2,500,001 and RM3,000,000
1
1
Below RM50,000
-
-
RM50,001 and RM100,000
-
-
RM100,001 and RM150,000
1
-
RM150,001 and RM200,000
1
3
RM200,001 and RM250,000
1
-
RM250,001 and RM300,000
2
-
RM300,001 and RM350,000
-
1
RM350,001 and RM400,000
-
-
RM400,001 and RM450,000
-
-
RM450,001 and RM500,000
-
1
RM500,001 and RM550,000
1
1
RM550,001 and RM600,000
-
1
RM600,001 and RM650,000
2
-
Total
9
8
63
statement of
Corporate
Framework
Annual Report 2014
Leadership
Perspectives
To assist the Board in discharging its duties and responsibilities, the Board delegates certain responsibilities to the following Board Committees,
which operate within clearly defined terms of reference, primarily to assist the Board in the execution of its duties and responsibilities.
Although the Board has delegated its authority to these Board Committees to deliberate and decide on certain key and operational matters,
the ultimate responsibility for final decisions on all matters lies with the entire Board.
Board of Directors
NOMINATION AND ASSESSMENT COMMITTEE (“NAC” or “Committee”) (Recommendations 2.1 and 2.2 of the MCCG 2012)
The Committee comprises Non-Executive Directors, a majority of whom are independent and presently chaired by the Senior
Independent Non-Executive Director. Meetings are held every quarter and as and when necessary for the Committee to deliberate on
relevant matters. The NAC held four (4) meetings during the financial year ended 31 December 2014. Details of committee members’
attendance are as follows:
Committee Members
Attendance
%
-
-
4/4
100
Datuk Zaiton binti Mohd Hassan*
4/4
100
Encik Zahari @ Mohd Zin bin Idris**
3/4
75
Tan Sri Ismail bin Adam (Chairman)*
Notes:
*
Tan Sri Ismail bin Adam appointed as Chairman of NAC to replace Datuk Zaiton binti Mohd Hassan w.e.f. 10 December 2014.
**
Encik Zahari @ Mohd Zin bin Idris relinquished as Member of NAC w.e.f. 10 December 2014.
accountability
Remuneration
Committee
Audited
Financial
Statements
3.1
Nomination
and Assessment
Committee
Additional
Information
Audit and
Examination
Committee
Performance
Review
BOARD COMMITTEES
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3.
64
Annual Report 2014
statement of
The Committee is responsible for assessing and recommending to the Board candidates for directorships and/or Executive Directors to
be appointed in the Company and its key subsidiaries.
With respect to nomination and election process of new Directors, the responsibilities of the Committee shall include as follows:
•
•
•
Gathering the nomination and selection of Directors for members of the Board.
Reviewing the competencies, commitment, contribution and performance of the candidates/Board members and the required
mix of skills, experiences and gender and other qualities of the Directors.
Making recommendations to the Board on candidates for appointment.
The other responsibilities of the Committee are as follow:
•
•
•
•
•
•
•
Assessing the overall competency requirements for the Board and the performance of the GMD/GCEO;
Overseeing the overall composition of the Board to ensure, amongst others, it has the appropriate size, mix of skills and gender
diversity;
Recommending and assessing the overall suitability of Directors as well as nominees for the GMD/GCEO’s position to the Board
prior to submission of such application to BNM for approval;
Establishing a formal mechanism to assess the effectiveness of the Board as a whole, the contributions of each Director to the
effectiveness of the Board/Board’s committees as well as the independence of Independent Non-Executive Directors;
Ensuring all Directors receive appropriate continuous training;
Overseeing the appointment, management succession planning and performance evaluation of Directors and Key Senior
Management; and
Ensuring that the Board has the right balance between Executive Directors, Non-Independent Non-Executive Directors and
Independent Non-Executive Directors and the core competencies required throughout the annual review.
The Company has also conducted the annual assessment on the performance of the Board as a whole as well as on the effectiveness of
all individual Directors.
In addition, the Board has concurred that the existing gender diversity on the Board composition is acceptable; with three (3) members
or 33% of the Board being ladies.
3.2
REMUNERATION COMMITTEE (“RC” or “Committee”) (Recommendation 2.3 of the MCCG)
The Committee comprises Non-Executive Directors, a majority of whom are independent and presently chaired by the Senior
Independent Non-Executive Director. Meetings are scheduled in advance at the beginning of a new calendar year to enable the
Directors to plan ahead and fit the year’s meetings into their own schedules. The Committee held two (2) meetings during the financial
year ended 31 December 2014. When the need arises, special meetings are convened. Details of the attendance are as follows:
Committee Members
Attendance
%
-
-
2/2
100
Datuk Zaiton binti Mohd Hassan*
2/2
100
Encik Zahari @ Mohd Zin bin Idris**
Non Independent Non-Executive Director
1/2
50
Tan Sri Ismail bin Adam (Chairman)*
Notes:
*
Tan Sri Ismail bin Adam appointed as Chairman of NAC to replace Datuk Zaiton binti Mohd Hassan w.e.f. 10 December 2014.
** Encik Zahari @ Mohd Zin bin Idris relinquished as Member of NAC w.e.f. 10 December 2014.
65
statement of
Corporate
Framework
Annual Report 2014
Leadership
GROUP SHARIAH COMMITTEE
There are three (3) separate Shariah Committees that provide Shariah guidance and consultation to BHB’s key subsidiaries (Islamic
Banking, Takaful and Stockbroking).
In compliance with BNM’s Guidelines on the Governance Framework and the Company’s Memorandum and Articles of Association,
the Shariah Committees’ responsibility is to ensure that the key subsidiaries operate in accordance with Shariah principles.
(a)
Members of the Shariah Supervisory Council of Bank Islam:
Members
(b)
Ustaz Dr. Ahmad Shahbari @ Sobri bin Salamon (Chairman)
Malaysian
Dato’ Mohd Bakir bin Haji Mansor (Resigned w.e.f. 31 March 2015)
Malaysian
Associate Professor Dr. Uzaimah binti Ibrahim
Malaysian
Professor Dr. Ahmad Hidayat bin Buang
Malaysian
Ustaz Dr. Muhammad Syafii bin Antonio
Malaysian
Members of the Shariah Advisory Body of Syarikat Takaful Malaysia Berhad:
Members
(c)
Nationality
Perspectives
3.4
accountability
The AEC is authorised by the Board to conduct activities within its Terms of Reference and has unrestricted access to both the internal
and external auditors and members of the Senior Management. The activities carried out by the Committee, which met six (6) times
during the year under review, are summarised in the AEC’s Report while its Terms of Reference are set out on pages 70 to 75 of this
Annual Report. The AEC’s composition is disclosed on page 70 of this Annual Report.
Audited
Financial
Statements
AUDIT AND EXAMINATION COMMITTEE (“AEC” or “Committee”)
Nationality
Ustaz Dr. Ahmad Shahbari @ Sobri bin Salamon (Chairman)
Malaysian
Malaysian
Dr. Aida binti Othman
Malaysian
Professor Dr. Muhammad Rahimi bin Osman
Malaysian
Dato’ Wan Mohamad bin Dato’ Sheikh Abdul Aziz
Malaysian
Additional
Information
3.3
Recommending a framework of remuneration for Directors, GMD/GCEO and Key Senior Management;
Recommending specific remuneration packages for Directors, GMD/GCEO and Key Senior Management;
Reviewing and recommending to the Board policies pertaining to staff’s salary, remuneration scheme and benefits; and
Reviewing and recommending to the Board the quantum of bonus payments to Company’s staff.
Members of the Shariah Committee of BIMB Securities Sdn Bhd:
Members
Nationality
Dato’ Mohd Bakir bin Haji Mansor (Chairman)
Malaysian
Prof. Emeritus Dato’ Paduka Dr. Mahmood Zuhdi bin Haji Abdul Majid
Malaysian
Ir. Dr. Muhammad Fuad bin Abdullah
Malaysian
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•
•
•
•
Performance
Review
The Committee’s role is to assist and support the Board by recommending to the Board the remuneration of Directors and Executive
Directors, as well as of Senior Management of the Company. The responsibilities of the RC would include:
Annual Report 2014
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statement of
4.SHAREHOLDERS
The Board recognises the importance of timely, complete, accurate and equal dissemination of information with regard to the Company and
the Group’s performance and other matters affecting shareholders’ interest, investors and the general public.
4.1
INVESTOR RELATIONS (Recommendation 7.1 of the MCCG 2012)
Investor Relations (“IR”) is an important part of BHB’s Corporate Governance framework, and ensures that shareholder, stakeholders,
investors and the investment community, both local and international, are provided with relevant, timely and comprehensive
information about BHB. The Company is committed to providing effective and open communication in order to improve disclosure and
transparency.
IR provides an important opportunity to promote effective communication and proactive engagement with stakeholders. It is also an
effective tool to reach out and to update stakeholders on the Group and the Company’s corporate activities, such as dialogues and
discussions with fund managers, financial analysts and the media. These initiatives provide vital channels of communication for better
understanding of the business and operations within the Group. Where relevant, members of the media are also invited to attend major
events in the Company.
4.2
CONFERENCES AND ROADSHOWS
The Company and its subsidiaries participated in various domestic and international conferences and road shows, whereby information
on its business outlook, strategy and direction are communicated to the relevant stakeholders.
4.3FINANCIAL RESULTS
The Company and Group’s unaudited quarterly and audited annual financial results are released within the stipulated regulatory
timeline to Bursa Securities, together with the accompanying press release for the respective periods.
4.4
ANNUAL REPORT
One of the most important methods of communication to shareholders is through the Annual Report of the Company. The Annual
Report contains comprehensive details about the financial results and overall performance of the Company and BHB Group.
In addition, the Annual Report contains the Chairman’s Statement which provides an overview of the Company and BHB Group’s
performance, operations and other matters affecting shareholders’ interest. The Company also discloses its corporate governance and
internal control statements in the Annual Report. The information stated in the Annual Report would allow shareholders and investors
to make informed investment decisions regarding BHB Group.
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At the General Meetings, shareholders are invited to ask questions or seek clarifications before any resolutions are put forth for approval.
The GMD/GCEO will also brief shareholders on the Group’s financial performance. All Board members, Senior Management, BHB
Group’s Management team and the Company’s external auditor are available to respond to shareholders’ queries during the Annual
General Meeting.
A press conference is held after each Annual General Meetings, at which the Company’s GCEO together with the GMD/CEOs of the
major operating subsidiaries, brief the media on the Group’s financial performance and corporate developments. This session also
enables the Board and Management to clarify issues and to answer questions raised by members of the media.
The Company’s major operating subsidiaries, namely Bank Islam, Takaful Malaysia and BIMB Securities, do from time-to-time engage
the media on matters pertaining to their respective products and services that are of interest to the public.
4.7WEBSITE
BHB’s corporate website, www.bimbholdings.com, represents another channel of communication with stakeholders and act as an
effective dissemination of information to public at large. It contains information on the Company and BHB Group such as its corporate
profile, Senior Management, investor information, financial results and corporate news which can be assessed easily and promptly.
Any queries or concerns relating to the Company and/or BHB Group can be conveyed to the following persons:
Senior Independent Director
Email: ismailadam@bimbholdings.com
Encik Omar bin Atin
Head, Corporate Communications
Email: omar@bimbholdings.com
ACCOUNTABILITY AND AUDIT
5.1FINANCIAL REPORTING AND DISCLOSURE
The Board has a fiduciary responsibility to present a clear, balanced and comprehensive assessment of the Company and the Group’s
performance and prospects. This is presented at the end of each financial year primarily through annual financial statements, quarterly
and half-yearly announcement of results to shareholders as well as the Letter to Shareholders in the Annual Report. In order to meet
the fiduciary responsibility expected of the Board, the Board is assisted by the AEC to ensure that the financial statement present a true
and fair view of BHB Group’s financial performance and state of affairs.
The Board also ensures that the Company and BHB Group’s financial reporting are made in accordance with the Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and Companies Act, 1965 (“Act”).
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5.
accountability
MEDIA COVERAGE
Audited
Financial
Statements
4.6
Perspectives
The Annual General Meeting is regarded as the main forum for dialogue and communication during which shareholders and investors
are informed of the financial performance and current developments of the Group. Shareholders are encouraged to attend the Annual
General Meeting and participate in the proceedings. Shareholders’ approval is required on all material issues including, but not limited
to, the election and appointment of Directors, corporate exercises, as well as the appointment of auditors and dividend payments (if
any).
Performance
Review
GENERAL MEETINGS
Additional
Information
4.5
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statement of
5.2
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the Act, the Directors are required to provide annual financial statements which have been made in accordance with the
provisions of the Act and applicable approved accounting standards.
The Statement by Directors pursuant to Section 169(15) of the Act is set out on page 76 of this Annual Report.
5.3
INTERNAL CONTROL
The Board recognises the importance of maintaining a sound internal control system that covers financial, operational and compliance
controls to safeguard shareholders’ investments and the Company’s assets. The Statement on Risk Management and Internal Control,
which provides an overview of the state of internal control, is set out on pages 77 to 81 of this Annual Report.
5.4POLICIES
(i)
Corporate Disclosure Policy
A Corporate Disclosure Policy (“CDP”) has been formulated to enhance the standard of BHB’s corporate governance, particularly
in the area of transparent disclosures to the public. The purpose of the CDP is to enable shareholders and stakeholders to gain
access to business information beyond the Company’s financial disclosure. In addition, it maintains an effective communication
tool which enables both the Board and Management to communicate effectively with stakeholders on a timely basis.
(ii)
Corporate Social Responsibility (“CSR”) and the Environment
The Company has adopted an objective and positive stand by promoting a wide range of CSR activities through various
community programmes and use of natural resources.
The Directors are of the view that the Company has adopted a good balance between value creation and corporate responsibility.
Details of the Company’s CSR initiatives are set out on pages 34 to 39 of this Annual Report.
(iii) Code of Ethics (“COE”)
BHB’s COE was implemented on 4 June 2014 for all BHB’s employees to make decisions that meet with the required standards
of integrity, professionalism and ethical behavior. BHB’s reputation as a responsible financial holding company and a good
corporate citizen must be maintained and safeguarded to ensure the organisation to grow and prosper in conducting business.
The COE also demonstrates how BHB’s employees should act with the stakeholders being namely; customers, service providers,
communities, media (electronic print), investor and regulators.
The COE also provides the basis for all employees to adhere to a working environment that is productive, positive, enjoyable, safe
and free from harassment and discrimination.
Each section of the COE covers an area in which employees have responsibilities to BHB as follows:
(i) Personal conduct and protection of BHB’s assets;
(ii) Obligations in conducting BHB’s business with other people and organisation; and
(iii) Conflicts of interest and other considerations affecting BHB.
However, no COE can anticipate every appropriate behavior. BHB therefore, expects each employee to make competent judgment
in a particular situation.
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BHB promotes an open communication and transparent work culture by setting up internal procedures to address concerns
regarding any likely wrongdoing. The policy complements the normal channels of communication and reporting lines within
BHB. It also provides an alternative route for employees to raise concerns if the usual lines of communication are not available
when the complaint relates to his or her immediate supervisor or head of department.
BHB encourages its employees to aspire to achieve the highest possible standards of compliance and ethics. Whistle-blowing
policies have therefore been integrated into BHB’s practices and culture to help to deter fraud, corruption and mismanagement.
Through the effective implementation of this policy, BHB is able to preserve its integrity and transparency, thus enhance and build
credibility with its stakeholders.
BHB adopts and practices the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia. The Code
of Ethics provides guidance for proper standards of conduct with sound and prudent business practices as well as standards of
ethical behaviour for directors, based on the principles of integrity, responsibility, sincerity and corporate social responsibility.
BHB’s Directors’ Code of Conduct and Ethics encompass three (3) major areas, namely:
1. Corporate Governance;
2. Relationship with shareholders, employees, creditors and customers; and
3. Social responsibilities and the environment.
Based on the aforesaid, BHB’s Directors are required to uphold the highest integrity in discharging their duties and in dealings
with various stakeholders. This is in line with the Company’s core values which place emphasis on ethical behavior in all dealings
with third parties and employees.
accountability
Directors’ Code of Conduct and Ethics
Audited
Financial
Statements
(v)
Perspectives
BHB is committed to the values of transparency, integrity, impartiality and accountability in the conduct of its business and affairs.
Wrongdoing such as fraud, corruption, financial impropriety and gross mismanagement should be reported and dealt with in
accordance with the Company’s established due process. A whistle-blowing policy reflects BHB’s commitment to be vigilant at all
times. It is also to assist BHB to manage its risks and contingencies as well as to avoid recurring acts of wrongdoing.
Performance
Review
(iv)Whistle-Blowing Policy
•
Marketplace
BHB Group is committed to strengthening its Shariah governance, adopting a customer-centric philosophy for service
excellence and promoting literacy in the areas of Shariah-compliant banking, takaful and stockbroking products.
•
Workplace
BHB Group aspires to be an employer of choice by providing a conducive working environment, continuous education
and development of talent, encouraging volunteerism and managing responsibly its most valuable asset, which is the staff.
•
Community
BHB Group is focused on efforts to enrich deserving communities via education, social development and economic
inclusion, poverty alleviation and humanitarian relief.
•
Environment
BHB Group champions environmental conservation and the protection of natural resources via educational efforts targeted
at its business constituents on the importance of environmental preservation.
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As a pioneer Shariah-compliant financial services provider, BHB and its subsidiaries strive to be responsible corporate citizens.
BHB is committed to upholding Shariah principles in relation to its business and social responsibilities:
Additional
Information
(vi) Sustainability Policy
Annual Report 2014
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statement of
5.5
RELATIONSHIP WITH AUDITORS
(a)
Internal Auditors
The Company’s Internal Auditors (currently the function is outsourced to the Internal Audit Department of Bank Islam) reports
directly to the AEC and have unrestricted access to the AEC. The internal audit function is independent of the activities or
operations of other operating units. The Internal Auditors conduct regular audits to evaluate the operating effectiveness of internal
controls, and compliance with internal and regulatory requirements across the Company. The audit report which highlights any
findings, along with its recommendations and Management’s responses, are tabled to the AEC. Minutes of the AEC meetings
are subsequently tabled to the Board for notation, which serves as useful reference on pertinent issues that the AEC wishes to
highlight to the Board.
(b)
External Auditors
The Board has established a transparent and appropriate relationship with its external auditors through the AEC. The AEC and
Board maintain a strong emphasis on the objectivity and independence of the Auditors in providing relevant and transparent
reports to shareholders. In ensuring full disclosure, the external auditor is regularly invited to attend AEC meetings and the AGM,
apart from the bi-annual discussions with the AEC without the presence of the management. In this regard, the external auditors
have an obligation to highlight any concerns in the Group’s system of internal control and compliance to the Management, AEC
and the Board.
A report of the AEC outlining its role in relation to the internal and external auditors is set out on pages 70 to 75 of this Annual
Report.
This statement is made in accordance with a resolution of the Board dated 23 March 2015.
6.
AUDIT AND EXAMINATION COMMITTEE REPORT (“AEC” or “Committee”)
6.1 COMMITTEE
Chairman/Independent Non-Executive Director
(Fellow of the ACCA, Member of MIA and MICPA)
(Master of Arts (Economics), Vanderbilt University USA)
(Senior Cambridge Certificate)
The Committee is authorised by the Board to conduct its activities within its Terms of Reference and has full access to the internal and
external auditors and members of the Management of the Company.
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The Committee shall comprise only Non-Executive Directors, with at least three (3) members, of whom the majority must be
Independent Directors. The Chairman shall be an Independent Non-Executive Director and at least one (1) member of the
committee must be:
•
•
A member of the Malaysian Institute of Accountants (“MIA”); or
He/She must have at least three (3) years’ working experience with the following conditions:
- He/She must have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967; or
- He/She must be a member of one of the associations of accountants specified in Part II of the First Schedule of the
Accountants Act, 1967.
(b)
The Committee shall not consist of any alternate director of the Company and shall be formally appointed and/or terminated by
the Board.
(c)
The members shall elect a Chairman from amongst themselves who must be an Independent Non-Executive Director.
(d)
All members shall hold office only for so long as they serve as Directors of the Company and members of the Committee may
relinquish their membership in the Committee with prior written notice to the Secretary and may continue to serve as Directors
of the Company.
6.3 CHAIRMAN OF THE AEC
Perspectives
(a)
accountability
6.2COMPOSITION
Performance
Review
The terms of reference of the Committee are as follows:
•
•
•
•
To steer the Committee to achieve its objectives;
To provide leadership to the Committee and ensure proper flow of information to the Committee, review adequacy and timing of
documentation;
To provide a reasonable time for discussion at the Committee meetings; organise and lead the agenda for Committee meetings
based on input from the members and ensure that all relevant issues are on the agenda;
To ensure that consensus is reached on every Committee resolution and where considered necessary, call for a vote for a decision
to be made by simple majority; OR in the event a consensus cannot be obtained, the Chairman may elect to defer the agenda to
the next meeting with further analysis conducted on the subject matter;
To manage the processes and workings of the Committee and ensure it discharges its responsibilities; and
To ensure all members participate in discussions to enable and encourage effective decision-making.
6.4 COMMITTEE MEMBERS
Additional
Information
•
•
Audited
Financial
Statements
The following are the main duties and responsibilities of the Chairman of the AEC:
•
•
•
•
To contribute independent opinions to the fact-finding, analysis and decision-making process of the Committee, based on his/
her experience and knowledge;
To consider the viewpoints of the other Committee members, and make decisions and recommendations in the best interest of
the Company collectively;
To keep abreast of the latest corporate governance guidelines in relation to the Committee as a whole; and
To continuously seek out best practices in terms of the processes utilised by the Committee, following which these should be
discussed with the rest of the Committee for possible adoption.
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Each AEC member is expected:
Annual Report 2014
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statement of
6.5 SECRETARY
The Secretary of the Committee shall be the Company Secretary and/or Joint Secretary of the Company and the Company Secretary
shall record the proceedings and resolutions of all proceedings of the AEC.
6.6 DISCLOSURE
The Committee shall assist the Board in making certain disclosures concerning its activities, pursuant to Bursa Securities’ Listing
Requirements.
6.7
MEETINGS AND PROCEEDINGS
(a)
Meetings shall be held not less than four (4) times a year with additional meetings for particular matters convened as and when
required. The external auditors may be requested to attend the meetings if necessary.
(b)
The Chairman of the Committee, or the Secretary on the requisition of the members, shall at any time summon a meeting of the
members by giving due notice. It is not necessary to give notice of a Committee meeting to any member for the time being absent
from Malaysia.
(c)
No business shall be transacted at any meeting of the Committee unless a quorum is present. In order to form a quorum in
respect of a meeting of an audit committee, the majority of members present must be Independent Directors.
(d)
If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved. The
meeting shall stand adjourned to such day, time and place as the members may determine.
(e)
The Chairman of the Committee shall chair the Committee meetings and in his absence, the members present shall elect one (1)
member among themselves to chair the meeting, subject to that person being an Independent Non-Executive Director.
(f)
All decisions and/or approvals are to be made on an unanimous basis, whilst adhering to the quorum of the meeting.
(g)
The Secretary shall draft out the agenda for each meeting, in consultation with the Chairman of the Committee. The agenda shall
be sent to all members of the Committee and any other persons required to attend the meeting.
(h)
All minutes of the meeting, including the recommendations and findings of the Committee, shall be submitted to the Board for
notification.
(i)
In appropriate circumstances, the Committee may deal with matters by way of circular reports and/or resolutions. A resolution
in writing signed by all the members who may at the time be present in Malaysia, shall be as valid and effectual as if it had
been passed by a meeting of the Committee duly called and constituted. The decision shall be presented at the next Committee
meeting for notation and minutes.
(j)
In order to avoid conflict of interest, a member of the Committee shall abstain from participating in discussions and/or decisions
on matters directly involving him/her.
6.8 QUORUM
The quorum shall be three (3) with a majority must be Independent Directors.
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Leadership
%
6/6
100
-
-
Encik Zahari @ Mohd Zin bin Idris*
6/6
100
Encik Salih Amaran bin Jamiaan***
6/6
100
Datuk Zaiton binti Mohd Hassan (Chairman)*
Tan Sri Ismail bin Adam**
Notes:
*
Datuk Zaiton binti Mohd Hassan was appointed as Chairman of AEC in place of Encik Zahari @ Mohd Zin bin Idris w.e.f.
10 December 2014.
** Tan Sri Ismail bin Adam was appointed as Member of AEC w.e.f. 10 December 2014.
*** Encik Salih Amaran bin Jamiaan relinquished as member of AEC w.e.f. 10 December 2014.
6.10 AUTHORITY OF THE AEC
The AEC is empowered by the Board to carry out the following:
(a)
(b)
(c)
(d)
(e)
Investigate any activity or matter within its terms of reference;
Promptly report to Bursa Securities matters which have not been resolved satisfactorily thus resulting in a breach of the Listing
Requirements;
Obtain external independent professional advice, legal or otherwise, when deemed necessary;
Maintain direct communication channels with the external auditors, person(s) carrying out the internal audit function and Senior
Management of the Company and its subsidiaries; and
Convene meetings with the internal and external auditors, without the attendance of the Management, whenever deemed
necessary.
In discharging the above functions, the AEC is also empowered to:
(a)
(b)
(c)
(d)
Seek any information it requires from any employee of the Company in order to perform its duties;
Obtain, at the Company’s expenses, any professional advice including the advice of independent consultants; and secure the
attendance of the external advisers at its meeting if considered necessary to help it fulfill its obligations;
Have full and unrestricted access to the Company’s records, properties and personnel; and
Have full and unrestricted access to advice and services of the Company Secretary.
Perspectives
Attendance
accountability
Committee Members
Audited
Financial
Statements
A total of six (6) meetings were held during the financial year ended 31 December 2014. The details of attendance of each member at
the AEC meetings are as follows:
Additional
Information
At least twice a year, the Committee shall meet with the external auditors without executive Board members/Senior Management
presence.
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The GCEO is invited to attend all meetings. Subject to the Chairman’s consent, and with the advice of the GCEO, the Senior Management
or any other persons may be invited to attend the meeting as and when required. Other Board members shall also have the right to
attend.
Performance
Review
6.9 ATTENDANCE AND INVITEES
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statement of
6.11 DUTIES AND RESPONSIBILITIES
The primary duties and responsibilities of the AEC are as follows:
(A) Internal Audit
•
•
•
•
Review the adequacy of the internal audit programme, internal audit findings and recommend actions to be taken by
Management on deficiencies in controls and procedures that are identified;
Recommend to the Board the appointment or termination of the Chief Internal Auditor;
Assess the performance of the internal auditors and determine and recommend the remuneration and annual increment
of the internal auditors; and
Take cognisance of the resignations of internal audit staff members and provide the resigning staff member an opportunity
to submit his/her reasons for resigning.
(Currently the function of Internal Audit is outsourced to the Internal Audit Department of Bank Islam.)
(B)
Internal Controls
•
•
(C)
Review the effectiveness of internal controls and risk management processes (For further details on Statement on Risk
Management and Internal Control, kindly refer to pages 77 to 81 of the Annual Report.); and
Review the Company’s statement on internal control prior to endorsement by the Board.
External Audit
•
•
•
•
•
Review the external auditors’ audit scope and plan;
Review the appointment of external auditors and the audit fee and deal with any issue pertaining to resignations or
dismissals and make recommendations to the Board;
Review and monitor the effectiveness of the external auditors’ performance and their independence and objectivity by way
of an assessment to be conducted annually;
Review the external auditors’ letter to Management and Management’s responses, including the previous audit
recommendations, and make recommendations to the Board; and
Approve the provision of non-audit services by the external auditor.
(D)Financial Reporting
Review and recommend the quarterly and year-end financial statements of the Company before submission to the Board,
focusing particularly on:
•
•
•
•
(E)
Any changes in accounting policies and practice;
Significant adjustments resulting from the audit;
The going concern assumption; and
Compliance with applicable Financial Reporting Standard and other legal and regulatory requirements.
Related Party Transactions
Review and report to the Board any related party transactions that may arise within the Company or Group.
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Annual reporting on AEC’s overall activities and the number of audit meetings held in a year.
(G)General
•
•
•
•
The Committee may consider other matters as referred to the AEC by the Board;
The Committee is not delegated with decision-making power but is required to submit its recommendation to the Board
for decisions;
The Committee will, in carrying out its activities as well as in making its recommendations to the Board of Directors, take
into consideration the latest guidelines prescribed by Bursa Securities, Bank Negara Malaysia and other relevant regulatory
bodies; and
The Committee will perform any other functions as agreed by the Board.
6.12 FUNCTIONS AND ACTIVITIES
Performance
Review
Annual Report
Perspectives
(F)
The internal audit function for Bank Islam and Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) is carried out by their
respective internal audit divisions.
The respective Internal Auditor’s core function is to perform a regular audit and provide independent appraisal of the Bank Islam
Group and Takaful Malaysia Group activities, to provide assurance on compliance to internal controls and risk management
processes, and compliance with laws, regulations and policies.
The Management of Bank Islam and Takaful Malaysia are responsible for ensuring that corrective actions on reported weaknesses
are undertaken within a reasonable time frame.
The following is a summary of activities that were carried out by the AEC during the year under review:
Additional
Information
(B)
(i) Review BHB Group’s quarterly financial statements prior to submission to the Board for consideration and approval;
(ii) Review and approve the external auditors’ scope of work and audit plan for the year;
(iii) Review the audit report of BHB Group prepared by the external auditors and internal audit department, their findings and
Management’s responses thereto;
(iv) Monitor the progress of the Internal Audit function in completing its audit plan and assess the performance of the Internal
Audit function; and
(v) Review the recurrent related party transactions.
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For the financial year ended 31 December 2014, the total cost incurred for the internal audit function of the Company was
RM20,000 (2013: RM17,000).
Audited
Financial
Statements
The internal audit function for BHB and its wholly-owned subsidiaries has been outsourced to the Internal Audit Department of
Bank Islam Malaysia Berhad (“Bank Islam”) since December 2008.
accountability
(A) Internal Audit Function
Activities During the Year
Annual Report 2014
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statement of
STATEMENT ON DIRECTORS’ RESPONSIBILITY
This statement is prepared as required by the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhad. The
Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at
the end of each financial year and of their cash flows for that year then ended.
In preparing the financial statements for the year ended 31 December 2014, the Directors have:
•
adopted suitable accounting policies and applied them consistently;
•
made judgments and estimates that are reasonable and prudent;
•
ensured applicable Financial Reporting Standards have been followed; and
•
prepared the financial statements on a going concern basis.
The Board has the overall responsibility to take all steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect
frauds and other irregularities.
77
The Board has established appropriate controls and processes for identifying, evaluating, monitoring and managing significant risks that may affect
the achievement of BHB Group’s objectives. The control structure and processes which have been instituted throughout the BHB Group is reviewed
from time to time to cater for the changes in the business environment. The respective Board Risk Committee/Audit and Examination Committee at
the main operating subsidiaries regularly reviews and monitors the Management’s approach and action in addressing key risks of the subsidiaries.
This process has been in place and continued to be BHB Group’s practice for the financial year under review and up to the date of approval of this
Statement for inclusion in the Annual Report of the Company.
In addition to the above, the Management is also responsible to ensure that the relevant key subsidiaries have performed the following:
•
•
•
Identify the risks relevant to the business, implementation of strategies and the achievement of its objectives;
Implement regular risk management reporting, monitoring and review as part of its risk management framework; and
Identify changes to risks or emerging risks, take actions as appropriate, and promptly bring these to the attention of the Board.
The BHB’s Audit and Examination Committee assists the Board to review the adequacy and effectiveness of the systems of internal control and
ensures that appropriate methods and procedures are in place to obtain the level of assurance required by the Board. The Corporate Governance
and Internal Control Statements of the Group’s Islamic Banking and Takaful subsidiaries were approved by their respective Board Risk Committee,
Audit and Examination Committee, and Board, as the case may be. Any material internal control deficiencies within BHB Group will be presented
to the Audit and Examination Committee and Board through a Risk Management Dashboard reporting.
Leadership
Performance
Review
Perspectives
The Board recognises that a sound system of risk management and internal control practices are essential in ensuring good corporate governance.
As such, the system is designed to manage an acceptable risk profile rather than eliminate the risk of failure to achieve the business objectives of
the BHB Group. The system of internal control can only provide reasonable but not absolute assurance against material misstatement, fraud or loss.
accountability
RESPONSIBILITY
Audited
Financial
Statements
For the purpose of disclosure, this Statement is guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed
Issuers. The Board is committed and acknowledges its responsibility to oversee the system of risk management and internal control within the
Company including reviewing its adequacy, integrity and effectiveness to safeguard shareholders’ investments and the Group’s assets.
Additional
Information
Pursuant to Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad,
the Board of Directors (the “Board”) is pleased to provide the following Statement on Risk
Management and Internal Control (the “Statement”) which outlines the nature and scope of risk
management and internal controls of the Group during the financial year ended 31 December
2014.
18th AGM
information
statement on
risk management and
internal control
Corporate
Framework
Annual Report 2014
Annual Report 2014
78
statement on
risk management and
internal control
KEY INTERNAL CONTROL STRUCTURE
The key processes that the Board has established in reviewing the adequacy and effectiveness of the systems of internal control include the following:
•
Risk Management Framework
The Board has established an organisation structure and charter with clear defined lines of responsibility, authority limits and accountability
in association with BHB Group’s business and operational requirements in order to maintain a sound control environment.
Risk management is considered as an integral part of BHB Group’s day-to-day operations whereby the assessment and management
of risks may affect the achievement of BHB’s business objectives as well as to protect shareholders and stakeholders value. In line with
Recommendation 6.1 of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”), risk management is embedded in the Group’s
key processes and monitored through a Risk Management Dashboard (“RMD”) reporting tool. The Group’s major operating subsidiaries,
namely Bank Islam Malaysia Berhad (“Bank Islam”), Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) and BIMB Securities Sdn Bhd
(“BIMB Securities”), reports risk reporting via the RMD on a quarterly basis.
Bank Islam and Takaful Malaysia, each has established a Board Risk Committee. Both Bank Islam and Takaful Malaysia have each respectively
appointed Deputy Chief Risk Officers and Chief Risk Officer who responsible to monitor, assess and ensure the effective conduct of risk
management based on a Risk Management Framework approved by the Board.
The Board’s oversight function on risk management function in BIMB Securities is performed by its Audit and Examination Committee.
In this regard, risk management practices are inculcated and embedded in the activities of the Group’s major operating subsidiaries, which
amongst others, include the establishment of risk tolerance thresholds and Risk Appetite Statement that identifies, assesses and monitors the
risks associated to the business of the subsidiaries.
The Board Risk Committee or the Audit and Examination Committee (as the case may be) will escalate and update the Board on any new
regulatory or statutory requirement that would impact the Risk Management principles, policies, procedures and practices of the subsidiaries.
In addition to the policies and standard operating procedures and processes, BHB and the subsidiaries has also adopted the Code of Ethics
and a Whistle Blowing Policy, as an avenue for employees to report actual or suspected malpractice, misconduct or violation of the BHB and
subsidiaries’ policies and regulations.
•
Audit and Examination Committee (“AEC”)
The AEC of BHB and its major operating subsidiaries review the adequacy of internal controls within the Company based on the assessment
performed by the Internal Auditors. In addition, relevant matters pertaining to Internal Accounting Controls are also reported to the respective
AECs on a quarterly basis. The AECs also review and assess the adequacy of scope and effectiveness of the internal as well as external audit
functions. For the external auditors, the AEC also assess their independence and the quality of their resources. The risk responses and internal
controls that the Management has initiated are documented and recorded in the minutes of the Board Risk Committee/AEC meetings.
Pursuant to Paragraph 15.17(f) of the Listing Requirements of Bursa Malaysia Securities Berhad, the BHB’s AEC had two (2) separate meetings
with the external auditors, without the presence of any executive members of the Company, to discuss on any issues relating to BHB Group
during the financial year ended 31 December 2014.
79
Leadership
statement on
risk management and
internal control
Corporate
Framework
Annual Report 2014
For Islamic Banking and Takaful subsidiaries, the internal audit function is carried out by its own independent internal audit department. The
internal auditors reports directly to the respective AECs.
Other Key Elements of Internal Control
The other key elements of the internal control systems are described below:
The day-to-day operation of BHB is managed by the Chief Executive Officer (“CEO”) and assisted by the Management Committee
(“MANCO”). The CEO is responsible in ensuring the operations of BHB are conducted in accordance with the corporate objectives of the
Company, approved annual budget as well as approved policies and procedures.
The MANCO comprises the Heads of each Department who are principally responsible for the performance of their functions in their
respective areas.
•
Perspectives
Standard Operating Procedures
Documented Standard Operating Procedures (“SOPs”) for all departments of BHB were approved by the MANCO and endorsed by
BHB’s AEC. The SOP serves as a day-to-day operational guide to ensure compliance with financial and operational controls as well as the
applicable laws and regulations. All SOPs are reviewed and updated regularly to reflect current risks, new regulatory requirements and the
current operations.
Additional
Information
•
accountability
Internal audit is performed for all key Divisions in BHB Group, thus providing the respective AECs an independent assurance on the
operational, financial, compliance and risk related activities within the Group. The risk-based internal audit plan is reviewed and approved
by the respective AECs of the key subsidiaries. The respective AECs review the internal audit observations highlighted in the internal audit
reports.
Audited
Financial
Statements
The internal audit function for BHB and its subsidiaries (save for Takaful subsidiaries) is carried out by the Internal Audit Division of Bank
Islam (“Internal Audit”). Through the internal audit function, assessment on compliance with policies and procedures and the effectiveness
of the Group’s internal control systems is made. The Internal Audit undertakes regular reviews of BHB and its subsidiaries’ operations and
business processes; examining and evaluating the adequacy and efficiency of financial and operating controls, and highlighting significant
risks and non-compliance. Where applicable, Internal Audit will provide recommendations to improve on the management of risks, control
and governance processes. The AEC regularly reviews the status of rectification actions on the findings or recommendations by the internal
auditors. Further details of the activities of the internal audit function are provided in the BHB’s AEC report.
Performance
Review
Internal Audit
18th AGM
information
•
Annual Report 2014
80
statement on
risk management and
internal control
•
Human Resources Policies and Procedures
The Human Resources SOP of BHB encompass areas of human resources management such as the recruitment of new employees based on
“fit and proper” criteria, performance appraisals, training and development.
•
Annual Business Plan and Budgeting Process
The Group’s annual budget is prepared based on the annual business plans of BHB’s operating subsidiaries. The budget and business plan
is approved by the subsidiaries’ respective Boards and subsequently endorsed by BHB’s Board. Actual performances of the subsidiaries are
reviewed against the targeted results on a quarterly basis allowing timely response and corrective actions to be taken to ensure the business
targets are met.
The subsidiaries’ performances are assessed against the budget and business plan and key financial indicators.
•
Information Technology (“IT”) System
IT is key in supporting the service efficiency and the delivery systems of the Group. The IT Risk Framework was developed to ensure
that risks are correctly identified and mitigated accordingly. BHB’s Islamic Banking and Takaful subsidiaries continue to upgrade their
IT systems in order to enhance efficiency of their business operations and to facilitate the implementation of their risk-based capital
frameworks. During the year under review, the subsidiaries have also undertaken a number of IT systems upgrade in view of new regulatory
requirements, including the Personal Data Protection Act 2010, the Islamic Financial Services Act 2013 and the Goods and Services Tax Act
2014.
•
Performance Review
The Board receives and reviews reports from the Management on the financial and operational performance, risk management as well as legal
and regulatory matters on a quarterly basis. Furthermore, a quarterly Financial Dashboard Report is presented by the respective CEO or Chief
Financial Officers of the major subsidiaries within BHB Group, on profitability, capital adequacy, productivity and asset quality.
The actual performance of BHB and its operating subsidiaries are assessed against approved budgets and business plan, key financial indicators
as well as comparison with the industry averages to identify significant deviations and gaps, for the respective Management to take remedial
measures, where necessary.
Assurance from Management
The Board has received assurance from BHB’s Group CEO and the Group Chief Financial Officer that the Group’s risk management and internal
control systems are operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this
Statement.
Taking into consideration the assurance from Management and the input from the relevant assurance providers, the Board is of the view that
the systems of risk management and internal control are performing satisfactory and are adequate to safeguard the shareholders’ investments,
customers’ interest and the Group’s assets. The Group will continue to implement new measures to strengthen the internal control and risk
management environment.
Annual Report 2014
Leadership
statement on
risk management and
internal control
Corporate
Framework
81
The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Recommended
Practice Guide (“RPG”) 5 (Revised), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control
included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the
financial year ended 31 December 2014. Based on the review conducted, the external auditors have reported to the Board that nothing has come to
their attention that cause them to believe that the statement included in the annual report of the Group, in all material respects:
accountability
Audited
Financial
Statements
Additional
Information
RPG 5 (Revised) does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control
covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system
including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether
the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy
the problems.
Perspectives
(a)
18th AGM
information
has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and
Internal Control: Guidelines for Directors of Listed Issuers, or
(b) is factually inaccurate.
Performance
Review
Review of the Statement by External Auditors
Annual Report 2014
82
additional
compliance information
1.
SHARE BUYBACKS
BHB did not purchase any of its own shares during the financial year ended 31 December 2014.
2.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
BHB had on 11 December 2013 issues 426,715,958 Free Detachable Warrants pursuant to the Renounceable Rights Issue of 426,715,958 new
ordinary shares of RM1.00 each in BHB in respect of the financial year ended 31 December 2013. Details of the warrant holdings is set out on
page 233 of the Annual Report.
BHB had not issued any Options or any other convertible securities in respect of the financial year ended 31 December 2014.
3.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
BHB did not sponsor any ADR or GDR programme in the financial year ended 31 December 2014.
4.
NON-AUDIT FEES
The amount of non-audit fees paid/payable to the external auditors and their affiliated companies by BHB for the financial year ended
31 December 2014 is set out in Note 34 on page 162 of the Annual Report.
5.
PROFIT GUARANTEE
No profit guarantees were given by BHB during the financial year under review.
6.
LIST OF PROPERTIES
The list of properties is set out on pages 220 to 228 of the Annual Report.
7.
MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS
Save as disclosed below and the related party transactions disclosed in Note 39 of the Financial Statements, there were no other material
contracts entered into by BHB and its subsidiary companies involving Directors and/or Major Shareholders’ interest either still subsisting at
the end of the financial year or entered into since the end of the previous financial year.
(a)
BHB, Dubai Financial Group LLC. (“DFG”) and Lembaga Tabung Haji (“TH”) had on 31 July 2013 entered into a sale and purchase
agreement (as varied by the supplemental agreement dated 30 September 2013) for the acquisition of 690,196,000 ordinary shares
of RM1.00 each in Bank Islam Malaysia Berhad (“Bank Islam”) held by DFG, representing approximately 30.47% of the issued and
paid-up share capital of Bank Islam; and the acquisition of 419,894,000 ordinary shares of RM1.00 each in Bank Islam held by TH,
representing approximately 18.53% of the total issued and paid-up capital of Bank Islam for a cash consideration of USD550 million
and the RM equivalent of USD334,603,069 respectively.
(b)
BHB had on 11 September 2013 entered into a Foreign Exchange Forward Contract with Standard Chartered Saadiq Berhad and TH for
the purchase of up to USD550 million by BHB.
(c)
A Deed Poll dated 25 October 2013 was executed by BHB constituting the issuance of 426,715,958 free detachable warrants pursuant to
the renounceable rights issue of 426,715,958 new ordinary shares of RM1.00 each in BHB (“Right Share”) together with 426,715,958
free detachable warrants.
(d)
TH had on 31 July 2013 provided the undertaking in respect of the renounceable rights issue of 426,715,958 Rights Shares together with
426,715,958 Warrants at an issue price of RM4.25 per Rights Share on the basis of two (2) rights shares together with two (2) Warrants
for every five (5) existing BHB shares held.
(e)
TH had on 31 July 2013 provided an irrevocable written undertaking to subscribe for such portion of the sukuk issue not subscribed by
the other investors (up to RM1.66 billion in nominal value) which had been accepted by BHB (as varied by an agreement letter dated
24 September 2013 between BHB and TH).
83
GENERAL MANDATE
BHB Group had at the last Annual General Meeting (“AGM”) obtained a general mandate from its shareholders to allow BHB and/or
its subsidiaries in their normal course of business, to enter into recurrent transactions of a revenue or trading nature with related parties
(“RRPTs”) which are necessary for its day-to-day operations, on terms not more favourable to the related party than those available in the
general public and not to the detriment of minority shareholders. The RRPTs Mandate is valid until the conclusion of the forthcoming AGM
of the Company. The Board proposes to seek the renewal of the existing RRPTs Mandate at the forthcoming 18th AGM of the Company
which will be held on 14 May 2015 at 10.00 a.m. This Mandate, if approved by shareholders, would be valid until the conclusion of the next
AGM of the Company in the year 2016.
• 3Rental of
office premises
payable by
Bank Islam
Malaysia
Berhad (“Bank
Islam”) to TH.
Related Party/
Principal
Activities
Lembaga Tabung
Haji (“TH”)
TH is principally
involved in
providing
pilgrimage
management
services, saving
and depository
services,
investment
holding and rental
of buildings.
Interested Director and/or Major Shareholders1
Interested Major Shareholder
TH is a major shareholder of BHB with 55.18% shareholding.
Interested Directors
(1)
Tan Sri Ismee bin Ismail, being the Group Managing Director and Chief
Executive Officer of TH is also a Director of BHB and Bank Islam. Tan Sri
Ismee has no direct/indirect shareholding in TH, BHB or Bank Islam.
(2)
Dato’ Johan bin Abdullah, the Deputy Group Managing Director and Chief
Executive Officer of TH is also a Director of BHB and Bank Islam. Dato’ Johan
has no direct/indirect shareholding in TH, BHB or Bank Islam.
(3)
Tan Sri Samsudin bin Osman, Datuk Rozaida binti Omar and Puan Rifina
binti Md Ariff are nominee Directors of TH and BHB. They have no direct/
indirect shareholding in TH or BHB.
(4) Encik Zahari @ Mohd Zin bin Idris and Datuk Zaiton binti Mohd
Hassan are Directors of Bank Islam and also Directors of BHB.
They have no direct/indirect shareholding in Bank Islam or BHB.
(5)
Dato’ Sri Zukri bin Samat, the Group Chief Executive Officer of BHB is also
the Managing Director of Bank Islam. Dato’ Sri Zukri has no direct/indirect
shareholding in BHB or Bank Islam.
20,577
Audited
Financial
Statements
Nature of
Transactions
Actual Value
Transacted
from 15 May 2014
(being the date
of the last AGM)
to 31 March 20152
RM’000
Additional
Information
10.
Perspectives
9.VARIATION IN RESULTS
There was no variation in results (differing by 10% or more) from any estimated profit forecast/projection in the unaudited results announced.
accountability
IMPOSITION OF SANCTIONS AND/OR PENALTIES
There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management arising from any
significant breach of rules/guidelines/legislation by the relevant regulatory bodies during the financial year under review.
18th AGM
information
8.
Performance
Review
Leadership
additional
Corporate
Framework
Annual Report 2014
84
Annual Report 2014
additional
Nature of
Transactions
• 3Rental of
office premises
payable by
Bank Islam
to Takaful
Malaysia.
Related Party/
Principal
Activities
Interested Director and/or Major Shareholders1
Syarikat Takaful Interested Directors
Malaysia Berhad
(“Takaful
(1) Tan Sri Ismee bin Ismail is Chairman/Director of Takaful Malaysia. He is
Malaysia”)
also a Director of Bank Islam and BHB. Tan Sri Ismee has no direct/indirect
Takaful Malaysia
shareholding in Takaful Malaysia, Bank Islam or BHB.
is principally
involved in family (2) Dato’ Johan bin Abdullah, the Deputy Group Managing Director and Chief
and general
Executive Officer of TH is also a Director of Takaful Malaysia, BHB and Bank
takaful business.
Islam. Dato’ Johan has no direct/indirect shareholding in TH, BHB or Bank
Islam.
(3)
Actual Value
Transacted
from 15 May 2014
(being the date
of the last AGM)
to 31 March 20152
RM’000
2,402
Datuk Rozaida binti Omar is a Director of Takaful Malaysia and also a
Director of BHB. She has no direct/indirect shareholding in Takaful Malaysia
or BHB.
(4) Encik Zahari @ Mohd Zin bin Idris and Datuk Zaiton binti Mohd
Hassan are Directors of Bank Islam and also Directors of BHB.
They have no direct/indirect shareholding in Bank Islam or BHB.
(5)
• 3Rental of
office premise
payable by BHB
to Bank Islam.
• 3Rental of
office premise
payable by
Bank Islam to
Syarikat AlIjarah Sdn Bhd
(“SAISB”).
Interested Directors
Bank Islam
Bank Islam
is principally
(1)
involved in the
provision of
Islamic banking
and related
activities based on (2)
the principles of
Shariah.
(3)
Tan Sri Ismee bin Ismail, Dato’ Johan bin Abdullah, Datuk Zaiton binti Mohd
Hassan and Encik Zahari @ Mohd Zin bin Idris are Directors of BHB and also
Directors of Bank Islam. They have no direct/indirect shareholding in Bank
Islam or BHB.
803
Encik Salih Amaran bin Jamiaan is a Director of BHB. He is also Chairman/
Director of SAISB. Encik Salih has no direct/indirect shareholding in SAISB.
As at 31 March 2015, he holds indirect interest of 20,000 shares in BHB.
155
There is no amount due and owing to BHB by its related parties pursuant to the RRPTs.
Notes:
1
The direct and indirect shareholdings of the related parties in BHB above are set out in Section 6 of the Circular to Shareholders dated
21 April 2015.
2
The last practicable date before printing of the Circular is 31 March 2015.
3
The rental sum of the properties was arrived at or estimated based on the on-going or expected market rate at the time the tenancy agreement
was or was to be executed. Details of the rental of office premises are set out in the Circular to Shareholders dated 21 April 2015.
Corporate
Framework
Statements of Profit or Loss and Other Comprehensive Income
94 - 96
Statements of Changes in Equity
97 - 98
Statements of Cash Flows
99 - 215
Notes to the Financial Statements
216
Statement by Directors
217
Statutory Declaration
218 - 219
Independent Auditors’ Report
Performance
Review
Leadership
92 - 93
Perspectives
Statements of Financial Position
accountability
90 - 91
Audited
Financial
Statements
Directors’ Report
Additional
Information
86 - 89
18th AGM
information
financial
statements
86
Annual Report 2014
directors’
report
for the financial year ended 31 December 2014
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the
financial year ended 31 December 2014.
Principal activities
The Company is principally engaged as an investment holding company with business transacted in accordance with Islamic principles,
whilst the principal activities of the subsidiaries are as stated in Note 14 to the financial statements.
There has been no significant change in the nature of these activities during the financial year.
Results
Profit for the year attributable to:
Owners of the Company
Non-controlling interests
Group
RM’000
Company
RM’000
532,329
54,575
127,088
-
586,904
127,088
Reserves and provisions
There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the
financial statements.
Issue of shares and debentures
There were no changes in the authorised, issued and paid-up capital of the Company 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 Company during the financial year.
Dividends
The amount of dividends paid by the Company since 31 December 2013 are as follows:
RM’000
In respect of the financial year ended 31 December 2013:
Final single tier dividend of 8.50% per ordinary share, paid on 29 May 2014
126,948
In respect of the financial year ended 31 December 2014:
Interim single tier dividend of 14.70% per ordinary share, declared on 25 November, ex-date on
12 December 2014, and paid on 13 January 2015
219,545
346,493
The directors do not recommend any final dividend to be paid for the year under review.
Annual Report 2014
directors’
report
Corporate
Framework
87
Leadership
At the date of this report, the Directors are not aware of any circumstances that would render the values attributed to the current assets
in the financial statements of the Group and of the Company to be 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 of the Group and of the Company to be misleading or inappropriate.
Contingent and other liabilities
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year and which secures
the liabilities of any other person, or
(b) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year other than
those incurred in the ordinary course of the business.
No contingent or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the
ability of the Group and of the Company to meet its obligations as and when they fall due.
Perspectives
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that
any current assets, other than financing, which were unlikely to be realised in the ordinary course of business at their values as shown
in the accounting records of the Group and of the Company have been written down to their estimated realisable value.
accountability
Current assets
Audited
Financial
Statements
At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad financing,
or the amount of impairment provisions for impaired financing in the financial statements of the Group and of the Company, inadequate
to any substantial extent.
Additional
Information
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that
proper actions had been taken in relation to the writing off of bad financing and the making of impairment provisions for impaired
financing, and have satisfied themselves that all known bad financing have been written off and adequate impairment provisions made
for impaired financing.
Performance
Review
Impaired financing
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 that would render any amount stated in the financial statements of the Group and of the Company misleading.
18th AGM
information
Change of circumstances
88
Annual Report 2014
directors’
report
Items of an unusual nature
The results of the operations of the Group and of the Company 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 to affect substantially the results of the operations of the Group and of the Company for the current
financial year in which this report is made.
Significant events during the year
The significant events during the financial year are as disclosed in Note 49 to the financial statements.
Directors
Directors who served since the date of the last report are:
Rifina binti Md Ariff
Zahari @ Mohd Zin bin Idris
Salih Amaran bin Jamiaan
Dato’ Johan bin Abdullah (resigned as Non-Independent Executive Director w.e.f 15.01.2015 and appointed as Non-Independent
Non-Executive Director w.e.f 17.02.2015)
Directors’ interests in shares
The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than
wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the
Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ shareholdings are as follows:
Number of ordinary shares of RM1 each
Interest in the Company:
Salih Amaran bin Jamiaan
-Others
At
1 January 2014
Bought
Sold
At
31 December 2014
14,000
3,000
-
17,000
14,000
3,000
-
17,000
None of the other Directors holding office at 31 December 2014 had any interest in the shares and options over shares of the Company
and of its related corporations during the financial year.
89
directors’
report
Corporate
Framework
Annual Report 2014
Leadership
The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
…………………………………….
…………………………………….
Perspectives
Auditors
accountability
There was no arrangement during and at the end of the financial year which had the object of enabling Directors of the Company to
acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
Audited
Financial
Statements
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other
than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in the financial
statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the
Company or a related corporation with the Director or with a company of which the Director is a member, or with a firm in which the
Director has a substantial financial interest.
Performance
Review
Directors’ benefits
18th AGM
information
Date: 31 March 2015
Additional
Information
Kuala Lumpur,
90
Annual Report 2014
Statements of
Financial Position
as at 31 December 2014
Group
As at
Note
Assets
Cash and short-term funds
Deposits and placements with financial institutions
Financial assets held-for-trading
Derivative financial assets
Financial assets available-for-sale
Financial assets held-to-maturity
Other assets
Takaful assets
Statutory deposits with Bank Negara Malaysia
Current tax assets
Deferred tax assets
Investments in subsidiaries
Investments in associates
Property, plant and equipment
Investment properties
Assets classified as held for sale
Total assets
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Company
As at
31.12.2014
RM’000
31.12.2013
RM’000
31.12.2014
RM’000
31.12.2013
RM’000
3,898,172
721,324
1,165,590
62,541
13,815,889
547,258
29,524,571
580,985
811,051
1,335,000
41,872
65,816
1
446,933
11,506
1,696
3,953,896
701,302
1,405,198
29,118
16,536,010
467,935
23,740,948
250,801
753,089
1,297,100
9,448
69,191
1
436,578
16,721
7,209
123,566
18,559
1,189
510
10
4,707,615
1
1,431
-
149,559
17,860
2,451
45
10
4,647,369
1
2,058
-
53,030,205
49,674,545
4,852,881
4,819,353
91
Statements of
Financial Position
Corporate
Framework
Annual Report 2014
Leadership
as at 31 December 2014
31.12.2013
RM’000
31.12.2014
RM’000
31.12.2013
RM’000
19
40,678,379
36,924,367
-
-
20
6
300,000
32,407
127,524
1,195,304
6,323,577
1,133,256
50,498
1,529,975
13,565
170,598
774,566
6,082,001
1,089,935
39,598
221,541
1,133,256
-
12,025
1,089,935
-
49,840,945
46,624,605
1,354,797
1,101,960
1,493,506
1,455,531
1,493,506
1,316,831
1,493,506
2,004,578
1,493,506
2,223,887
Equity attributable to owners of the Company
2,949,037
240,223
2,810,337
239,603
3,498,084
-
3,717,393
-
Total equity
3,189,260
3,049,940
3,498,084
3,717,393
53,030,205
49,674,545
4,852,881
4,819,353
12,135,967
11,211,680
-
-
Liabilities and equity
Deposits from customers
Deposits and placements of banks and
other financial institutions
Derivative financial liabilities
Bills and acceptances payable
Other liabilities
Takaful liabilities
Sukuk liabilities
Zakat and taxation
21
22
23
Total liabilities
Equity
Share capital
Reserves
24
25
Total liabilities and equity
48
18th AGM
information
Additional
Information
Commitments and contingencies
Perspectives
31.12.2014
RM’000
accountability
Note
Performance
Review
Company
As at
Audited
Financial
Statements
Group
As at
The accompanying notes form an intergal part of these financial statements.
92
Annual Report 2014
Statements of Profit or Loss
and Other Comprehensive Income
Group
Income derived from investment of depositors’ funds
Income derived from investment of shareholders’
funds
Net income from Takaful business
Reversal of/(Allowance for) impairment on
financing and advances
(Allowance for)/Reversal of impairment on
investments
Reversal of impairment on other assets
Direct expenses
Company
Note
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
27
2,032,085
1,851,278
-
-
28
29
392,585
542,803
405,059
553,058
207,727
-
283,574
-
30
(59,993)
15,009
-
-
31
2,978
710
(17,966)
(9,211)
5,570
(25,773)
-
-
Total distributable income
Income attributable to depositors
32
2,893,202
(845,001)
2,794,990
(772,801)
207,727
-
283,574
-
Total net income
Personnel expenses
Other overhead expenses
33
34
2,048,201
(599,052)
(565,543)
2,022,189
(593,921)
(605,143)
207,727
(7,745)
(4,350)
283,574
(7,219)
(24,414)
883,606
(68,222)
-
823,125
(3,349)
(349)
195,632
(68,222)
-
251,941
(3,349)
-
815,384
(13,202)
(215,278)
819,427
(14,108)
(242,165)
127,410
(322)
248,592
(56,461)
Profit for the year
586,904
563,154
127,088
192,131
Attributable to:
532,329
54,575
279,327
283,827
127,088
-
192,131
-
127,088
192,131
Finance cost
Share of results of associate company, net of tax
Profit before zakat and tax
Zakat
Tax expense
36
586,904
563,154
Earnings per share (sen)
37
35.64
25.84
Dividend per ordinary share-net (sen)
38
23.20
8.50
Profit for the year
93
Statements of Profit or Loss
and Other Comprehensive Income
Corporate
Framework
Annual Report 2014
Leadership
2013
RM’000
586,904
563,154
127,088
192,131
-
-
(18,041)
(27,843)
(7,198)
(24,553)
(113,172)
(14,547)
699
(603)
571
(749)
Other comprehensive income for the year, net of tax
(49,792)
(155,562)
96
(178)
Total comprehensive income for the year
537,112
407,592
127,184
191,953
Total comprehensive income attributable to:
481,507
55,605
202,346
205,246
127,184
-
191,953
-
Total comprehensive income for the year
537,112
407,592
127,184
191,953
18th AGM
information
Additional
Information
Audited
Financial
Statements
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss:
Currency translation differences in respect of foreign operations
Fair value reserve:
Net change in fair value
Net amount transferred to profit or loss
Performance
Review
2014
RM’000
Perspectives
Profit for the year
Company
2013
RM’000
accountability
Group
2014
RM’000
94
Annual Report 2014
Statements of
changes in equity
Group
At 1 January 2013
Profit for the year
Other comprehensive
income
Currency translation
differences in respect
of foreign operations
Fair value reserve:
Net change in fair
value
Net amount
reclassified to
profit or loss
Total comprehensive
income for the year
Transfer to statutory
reserve
Issue of shares and
warrants
Share issue expense
Dividends paid to
shareholders
Dividends paid to
non-controlling
interests
Disposal of interest in
subsidiary
Acquisition of interest in
subsidiary
Share-based payment
transactions
At 31 December 2013
Note
Attributable to owners of the Company
Non-distributable
Distributable
Retained
Earnings/
Share
Share
Other (Accumulated
capital
premium
reserves
Losses)
RM’000
RM’000
RM’000
RM’000
38
2,080,775
279,327
1,747,615
283,827
3,828,390
563,154
603,630
-
-
-
(12,052)
-
(12,052)
(15,791)
(27,843)
-
-
(56,440)
-
(56,440)
(56,732)
(113,172)
-
-
(8,489)
-
(8,489)
(6,058)
(14,547)
-
-
(76,981)
279,327
-
-
125,370
(125,370)
1,257,527
(1,529)
129,300
-
(18,078)
279,327
Total
equity
RM’000
1,066,790
-
426,716
-
428,433
-
Total
RM’000
Noncontrolling
interests
RM’000
-
205,246
407,592
-
-
-
1,813,543
(1,529)
-
1,813,543
(1,529)
(90,677)
-
(90,677)
-
-
-
-
-
-
-
-
-
-
-
4,406
4,406
-
-
-
-
1,493,506
1,859,628
Note 24
(1,199,747)
1,220
(592,405)
Note 25.2
(90,677)
202,346
-
(1,199,747)
(58,315)
(58,315)
3,551
7,957
(1,659,290)
(2,859,037)
-
1,220
796
2,016
49,608
2,810,337
239,603
3,049,940
95
Statements of
changes in equity
Corporate
Framework
Annual Report 2014
At 31 December 2014
38
239,603
54,575
3,049,940
586,904
1,859,628
-
(592,405)
-
49,608
532,329
-
-
(21,906)
-
(21,906)
3,865
(18,041)
-
-
(5,609)
-
(5,609)
(1,589)
(7,198)
-
-
(23,307)
-
(23,307)
(1,246)
(24,553)
-
-
(50,822)
532,329
481,507
55,605
537,112
-
-
254,517
(254,517)
-
-
-
-
-
-
(346,493)
-
-
-
-
-
-
-
-
1,807
1,807
694
2,501
-
-
2,903
-
2,903
1,911
4,814
-
-
(1,024)
-
(1,024)
1,024
-
-
-
1,493,506
1,859,628
-
-
(17,266)
2,949,037
-
(51,603)
(7,011)
240,223
(346,493)
(51,603)
(7,011)
3,189,260
Note 25.2
18th AGM
information
Note 24
(386,831)
(346,493)
Perspectives
2,810,337
532,329
1,493,506
-
accountability
Total
equity
RM’000
Audited
Financial
Statements
At 1 January 2014
Profit for the year
Other comprehensive
income
Currency translation
differences in respect
of foreign operations
Fair value reserve:
Net change in fair
value
Net amount
reclassified to
profit or loss
Total comprehensive
income for the year
Transfer to statutory
reserve
Dividends paid to
shareholders
Dividends paid to
non-controlling
interests
Disposal of interest in
subsidiary
Share-based payment
transactions
Long Term Incentive Plan
exercised
Distributions to non controlling interests
Note
Total
RM’000
Noncontrolling
interests
RM’000
Additional
Information
Group
Non-distributable
Distributable
Retained
Earnings/
Share
Share
Other (Accumulated
capital
premium
reserves
Losses)
RM’000
RM’000
RM’000
RM’000
Performance
Review
Leadership
96
Annual Report 2014
Statements of
changes in equity
Company
At 1 January 2013
Profit for the year
Other comprehensive income
Fair value reserve:
Net amount reclassified to profit
or loss
Total comprehensive income for
the year
Issue of shares and warrants
Share issue expenses
Dividends paid to shareholders
At 31 December 2013/1 January 2014
Profit for the year
Other comprehensive income
Fair value reserve:
Net amount reclassified to profit
or loss
Total comprehensive income for
the year
Dividends paid to shareholders
At 31 December 2014
Note
38
38
Share
capital
RM’000
Non-distributable
Distributable
Share
Warrant
Fair value
Retained
premium
reserves
reserves
earnings
RM’000
RM’000
RM’000
RM’000
Total
equity
RM’000
1,066,790
-
603,630
-
-
133
-
133,550
192,131
1,804,103
192,131
-
-
-
571
-
571
-
-
-
(749)
-
(749)
1,257,527
(1,529)
-
129,300
-
(178)
-
192,131
(90,677)
191,953
1,813,543
(1,529)
(90,677)
1,493,506
-
1,859,628
-
129,300
-
(45)
-
235,004
127,088
3,717,393
127,088
-
-
-
699
-
699
-
-
-
(603)
-
(603)
-
-
-
96
-
127,088
(346,493)
1,493,506
1,859,628
129,300
51
15,599
426,716
-
Note 24
127,184
(346,493)
3,498,084
97
Operating profit/(loss) before working capital changes
819,427
127,410
248,592
61,235
60,623
681
675
9,537
-
-
(106)
(2,872)
(710)
162,878
34,055
(44,771)
1,394
(2,639)
(169)
3,262
(66,628)
(12,840)
2,370
52
68,222
1,018,117
(326)
(5,570)
141,621
79,103
(51,705)
1,514
680
(603)
(201,610)
-
(749)
(270,285)
(2)
-
9,449
(159,298)
(12,725)
349
(9,163)
4,659
459
3,349
(2,305)
68,222
(6,900)
3,349
891,983
(8,205)
(25,320)
Changes in working capital:
Deposits and placements of banks and other
financial institutions
Financing of customers
Other assets
Other liabilities
Bills payable
(1,229,975)
(5,980,556)
(37,900)
(422,556)
3,754,012
464,055
(43,074)
669,697
(4,453,873)
(237,200)
(3,328)
4,545,367
416,803
(214,540)
1,262
(10,030)
-
7,996
10,567
-
Cash generated (used in)/from operations
Zakat paid
Tax paid
Tax refund
(2,477,877)
(13,745)
(231,920)
341
1,614,909
(10,277)
(215,716)
2,804
(16,973)
(787)
-
(6,757)
2,714
Net cash generated (used in)/from operating activities
(2,723,201)
1,391,720
(17,760)
(4,043)
Performance
Review
815,384
Perspectives
2013
RM’000
accountability
2014
RM’000
Audited
Financial
Statements
2013
RM’000
Additional
Information
Cash flows from operating activities
Profit before zakat and tax
Adjustments for:
Depreciation
(Reversal)/impairment losses on financial assets
available-for-sale
Reversal of impairment losses on financial assets
held-to-maturity
Collective assessment allowance
Individual assessment allowance
Dividends from securities
Dividends from subsidiaries
Loss/(Gain) on disposal of property,
plant and equipment
Gain on disposal of investment properties
Gain on disposal of assets held for sale
Net loss/(gain) on sale of financial assets
held-for-trading
Net gain on sale of financial assets available-for-sale
Fair value gain on financial assets held-for-trading
Share of losses of associate companies
Net derivative losses/(gains)
Property, plant and equipment write off
Gain on disposal of interest in subsidiary
Loss on redemption on financial assets held-to-maturity
Finance cost
Company
2014
RM’000
18th AGM
information
Group
Leadership
Statements of
cash flows
Corporate
Framework
Annual Report 2014
98
Annual Report 2014
Statements of
cash flows
Group
2014
RM’000
Cash flows from investing activities
Net proceeds from disposal of securities
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of investment properties
Proceeds from disposal of assets held for sale
Dividends from securities
Dividends from subsidiaries
Disposal of investment in subsidiary
Acquisition of non-controlling interests
Subscription of ordinary shares pursuant to
Dividend Reinvestment Plan
Net cash generated from/(used in) investing activities
2,927,839
(74,891)
694
7,710
7,378
44,771
2,501
2,916,002
Company
2013
RM’000
801,134
(47,066)
820
3,110
51,705
7,957
(2,859,037)
-
2014
RM’000
2013
RM’000
(54)
201,610
2,501
-
(144)
2
213,528
7,957
(2,859,037)
(60,442)
(84,956)
(2,041,377)
143,615
(2,722,650)
Cash flows from financing activities
Dividends paid by holding company
Dividends paid to non-controlling interests
Distributions non-controlling interests
Payment of coupon on Sukuk
Proceeds from share issues
Share issue expenses
Proceeds from issuance of Islamic Securities by Company
(126,948)
(51,603)
(7,011)
(24,900)
-
(90,677)
(58,315)
1,813,543
(1,529)
1,086,586
(126,948)
(24,900)
-
(90,677)
1,813,543
(1,529)
1,086,586
Net cash (used in)/generated from financing activities
(210,462)
2,749,608
(151,848)
2,807,923
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Foreign exchange differences
(17,661)
4,655,198
(18,041)
2,099,951
2,583,090
(27,843)
(25,993)
149,559
-
81,230
68,329
-
Cash and cash equivalents at 31 December
4,619,496
4,655,198
123,566
149,559
Cash and cash equivalents comprise:
Deposits and placements with financial institutions
3,898,172
721,324
3,953,896
701,302
123,566
-
149,559
-
4,619,496
4,655,198
123,566
149,559
99
Leadership
Notes to the
financial statements
Corporate
Framework
Annual Report 2014
Registered office and principal place of business
No. 22, Jalan Perak
50450 Kuala Lumpur
The consolidated financial statements for the financial year ended 31 December 2014 comprise the Company and its subsidiaries
(together referred to as the “Group”) and the Group’s interest in an associate.
The Company is principally engaged in investment holding activities while the other Group entities are primarily involved in
Islamic banking business, managing family and general takaful, and stock-broking businesses.
Perspectives
BIMB Holdings Berhad is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market
of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follows:
Performance
Review
1. Principal activities and general information
2.1Basis of preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), the requirements of the Companies
Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:
MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 July 2014
• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements
2011-2013 Cycle)
• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
• Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 119, Employee Benefits - Defined Benefits Plans: Employee Contributions
• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)
Audited
Financial
Statements
The accounting policies set out below have been applied consistently to all the periods presented in these financial statements and
have been applied consistently by Group entities, unless otherwise stated.
Additional
Information
2. Summary of significant accounting policies
18th AGM
information
These financial statements were authorised for issue by the Board of Directors on 31 March 2015.
accountability
The ultimate holding corporation of the Company during the financial year is Lembaga Tabung Haji (“LTH”), a statutory body
established under the Tabung Haji Act 1995 (Act 535).
Annual Report 2014
100
Notes to the
2. Summary of significant accounting policies (continued)
2.1Basis of preparation (continued)
(a) Statement of compliance (continued)
MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2016
• Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements 20122014 Cycle)
• Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)
• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 12, Disclosure of Interests in Other Entities
and MFRS 128, Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation
Exception
• Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations
• MFRS 14, Regulatory Deferral Accounts
• Amendments to MFRS 101, Presentation of Financial Statements - Disclosure Initiative
• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets – Clarification of
Acceptable Methods of Depreciation and Amortisation
• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture – Agriculture: Bearer Plants
• Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)
• Amendments to MFRS 127, Separate Financial Statements - Equity Method in Separate Financial Statements
• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)
• MFRS 15, Revenue from Contracts with Customers
• MFRS 9, Financial Instruments (2014)
The Group and the Company plan to apply the abovementioned standards, amendments and interpretations:
•
•
•
•
from the annual period beginning on 1 January 2015 for those accounting standards, amendments or interpretation that
are effective for annual periods beginning on or after 1 July 2014, except for Amendments to MFRS 1 and Amendments
to MFRS 138 which are not applicable to the Group and the Company.
from the annual period beginning on 1 January 2016 for those accounting standards, amendments or interpretations
that are effective for annual periods beginning on or after 1 January 2016, except for Amendments to MFRS 11 and
MFRS 14 which are not applicable to the Group and the Company.
that are effective for annual periods beginning on or after 1 January 2017.
that are effective for annual periods beginning on or after 1 January 2018.
101
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
The initial application of the accounting standards, amendments or interpretations are not expected to have any material
financial impacts to the current period and prior period financial statements of the Group and of the Company except as
mentioned below:
MFRS 15, Revenue from Contracts with Customers
MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer
Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of
Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification
and measurement of financial assets and financial liabilities, and on hedge accounting.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.
(b)Basis of measurement
Perspectives
(a) Statement of compliance (continued)
accountability
Performance
Review
Additional
Information
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and the Company’s functional
currency. All financial information presented in RM has been rounded to the nearest thousand (RM’000), unless otherwise
stated.
18th AGM
information
(c)Functional and presentation currency
Audited
Financial
Statements
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.
Annual Report 2014
102
Notes to the
(d)Use of estimates and judgements
The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income
and expenses. 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.
Significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have
significant effect in determining the amount recognised in the financial statements are described in the following note:
•
•
•
•
•
Note 2.5 – Financial instruments: Determination of fair value
Note 2.10– Impairment
Note 2.13– General Takaful Fund
– Provision for outstanding claims
– Expense reserves
Note 2.14– Family Takaful Fund
– Actuarial reserves
– Provision for outstanding claims
– Expenses reserves
Note 2.21– Deferred tax assets
2.2Basis of consolidation
(a)Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control
ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when
assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee
when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that
significantly affect the investee’s return.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment
losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.
103
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2.2Basis of consolidation (continued)
(b)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.
Performance
Review
•
•
•
•
The fair value of the consideration transferred; plus
The recognised amount of any non-controlling interest in the acquiree; plus
If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed
Perspectives
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
The Group accounts for all changes in its ownership interest in subsidiary that do not result in loss of control as equity
transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net
assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.
(d)Acquisition from entities under common control
Business combinations arising from transfers of interest in entities that are under the control of the shareholder that controls
the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented
or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and
liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s
consolidated financial statements. The components of equity of the acquired entities are added to the same components
within Group equity and any resulting gain/loss is recognised directly in equity.
(e)Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss
of control is recognised in the profit or loss. If the Group retains any interest in the previous subsidiary, then such interest
is measured as fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee
or as a financial asset available-for-sale depending on the level of influence retained.
Audited
Financial
Statements
(c)Acquisition or disposal of non-controlling interest
Additional
Information
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection
with a business combination are expensed as incurred.
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For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at
fair value or at proportionate share of the acquiree’s identifiable net assets at the acquisition date.
accountability
When the excess is negative, a bargain purchase gain is recognised immediately in the profit or loss.
Annual Report 2014
104
Notes to the
2.2Basis of consolidation (continued)
(f)Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the
financial and operating policies.
Investments in associates are accounted for in the Group’s consolidated financial statements using the equity method less any
impairment losses. The cost of investment includes transaction costs. The consolidated financial statements include the Group’s
share of the profit or loss and other comprehensive income of the associates, after adjustments, if any, to align the accounting
policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associate company, the carrying amount of that interest including any
long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group
has an obligation or has made payments on behalf of the associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when
significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset.
The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount
of the investment at the date when equity method is discontinued is recognised in the profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not
re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously
recognised in other comprehensive income are also reclassified proportionately to profit or loss, if that gain or loss would be
required to be reclassified to profit or loss, on the disposal of the related assets or liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less impairment losses, unless the
investment is classified as held for sale or distribution. The cost of investment includes transaction costs.
(g)Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or
indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and
statement of changes in equity, within equity, separately from equity attributable to the owners of the Company. Noncontrolling interests in the results of the Group is presented in the consolidated statement of profit or loss and other
comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between noncontrolling interests and the owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing
so causes the non-controlling interests to have a deficit balance.
(h)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.
Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s
interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
105
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates
at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the 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 or a financial instrument designated as a hedge of currency risk,
which are recognised in other comprehensive income.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from
such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other
comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.
Perspectives
(a)Foreign currency transactions
accountability
2.3Foreign currency
Performance
Review
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of
its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint
control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
Additional
Information
Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity.
However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation
difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant
influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit
or loss as part of the profit or loss on disposal.
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The assets and liabilities of operations denominated in functional currencies other than RM, including fair value adjustments
arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses
of foreign operations are translated to RM at exchange rates at the dates of the transactions.
Audited
Financial
Statements
(b) Operations denominated in functional currencies other than Ringgit Malaysia
Annual Report 2014
106
Notes to the
2.4Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have
an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the
Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash
equivalents are presented net of bank overdrafts and pledged deposits.
2.5Financial instruments
(a)Initial recognition and measurement
A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group
or the Company 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.
(b)Financial instrument categories and subsequent measurement
The Group and the Company categorise financial instruments as follows:
Financial assets
(i)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
(except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or
financial assets that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot
be reliably measured are measured at cost.
Other 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.
107
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Annual Report 2014
Leadership
2.5Financial instruments (continued)
(b)Financial instrument categories and subsequent measurement (continued)
Financial assets (continued)
Performance
Review
Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the
effective profit method.
Any sale or reclassification of more than an insignificant amount of financial assets held-to-maturity not close to their
maturity would result in the reclassification of all financial assets held-to-maturity to financial assets available-for-sale
and the Group would be prevented from classifying any financial assets as financial assets held-to-maturity for the
current and following two financial years.
(iii)Financing and receivables
Financing and receivables category comprises Islamic debt instruments that are not quoted in an active market.
accountability
Held-to-maturity investments category comprises Islamic debt instruments that are quoted in an active market and the
Group or the Company has the positive intention and ability to hold them to maturity.
Perspectives
(ii)Held-to-maturity investments
Available-for-sale category comprises investment in equity and Islamic 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 and gains and losses of hedged
items attributable to hedge risks of fair value hedges 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. Profit
income calculated for an Islamic debt instrument using the effective profit method is recognised in profit or loss.
Additional
Information
(iv)Available-for-sale financial assets
Audited
Financial
Statements
Financial assets categorised as financing and receivables are subsequently measured at amortised cost using the
Takaful receivables are recognised when due and measured on initial recognition at the fair value of the consideration
received or receivable. Subsequent to initial recognition, takaful receivables are measured at amortised cost, using the
All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment
(see Note 2.10).
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(v)Takaful receivables
Annual Report 2014
108
Notes to the
(b)Financial instrument categories and subsequent measurement (continued)
Financial liabilities
All financial liabilities are initially measured at fair value and 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 derivatives (except for a derivative that is
a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically
designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have quoted price in an
active market for identical instruments whose fair value otherwise cannot be reliably measured are measured at cost.
Other financial liabilities 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.
(c)Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms
of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss
using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in
profit or loss upon discharge of the guarantee.
When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying
value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation
amount and accounted for as provision.
(d) 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:
( i) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(ii) 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.
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Annual Report 2014
Leadership
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.
2.6 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any 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 working condition for its intended use, and the costs of dismantling and removing the items and
restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct
labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing cost.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition
date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable
willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion. The fair value of other items of property, plant and equipment is based on the quoted
market prices for similar items when available and replacement cost when appropriate.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Perspectives
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged
or cancelled or expires.
accountability
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the
financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks
and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount 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 the profit or loss.
Audited
Financial
Statements
(e)Derecognition
Additional
Information
Performance
Review
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and
its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of
the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
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The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from
disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other
overhead expenses” respectively in the profit or loss.
Annual Report 2014
110
Notes to the
2.6 Property, plant and equipment (continued)
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed,
and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated
separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item
of property, 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 Company will obtain ownership by the end of the lease term. Freehold land is not
depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended
use.
The estimated useful lives for the current and comparative years are as follows:
• Buildings
• Building improvements and renovations • Furniture, fixtures and fittings
• Office equipment
• Motor vehicles
• Computer equipment and software
• Leasehold buildings
50 years
6 - 10 years
2 - 10 years
2 - 6 years
4 - 5 years
2 - 7 years
50 - 100 years
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.
2.7Investment property
(i)Investment property carried at amortised costs
Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital
appreciation or for both but not for sale in the ordinary course of business, use in the production or supply of services or
for administrative purposes. These include land held for a currently undetermined future use. Investment properties are
stated at cost less accumulated depreciation and impairment losses, consistent with the accounting policy for property,
plant and equipment as stated in accounting policy Note 2.6.
Cost includes expenditure that is directly attributable to the acquisition of the investment property.
Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 50 years for buildings.
Freehold land is not depreciated.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future
economic benefit are expected from its disposal. The difference between the net disposal proceeds and the carrying amount
is recognised in profit or loss in the period in which the item is derecognised.
(ii) Reclassifications to/from investment property carried at amortised costs
When an item of property and equipment is transferred to investment property following a change in its use, the carrying
amount of the item is reclassified to investment property as the Group adopts the cost model for investment property.
111
Notes to the
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Annual Report 2014
Leadership
(i)Finance lease
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. Upon 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.
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 profit rate 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.
Perspectives
2.8Leased assets
Performance
Review
(ii) Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified
as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the
statement of financial position.
accountability
Leasehold land which in substance is a finance lease is classified as property, plant and equipment or as investment
property if held to earn rental income or for capital appreciation or for both.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
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.
Audited
Financial
Statements
Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is
classified as investment property and measured using fair value model.
Bills and other receivables are stated at cost less any allowance for impairment.
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information
2.9Bills and other receivables
Additional
Information
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
Annual Report 2014
112
Notes to the
2.10Impairment
Financial assets
The Group and the Company assess at each reporting date whether there is objective evidence that financing and receivables,
financial assets held-to-maturity or financial assets available-for-sale are impaired as a result of one or more events having
an impact on the estimated future cash flows of the asset. A financial asset or a group of financial assets are impaired and
impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the assets and prior to the statement of financial position date (“a loss event”) and that
loss event or events has an impact on the estimated future cash flow of the financial asset or the group of financial assets as
that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised. For an
investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence
of impairment. If any such objective evidence exists, then the impairment loss of the financial assets is estimated.
(a)Financing, advances and others
For financing, advances and others, the criteria that is used to determine that there is objective evidence of an impairment
loss include:
(i)
(ii)
(iii)
(iv)
significant financial difficulty of the issuer or obligor; or
a breach of contract, such as default or delinquency in profit or principal payments; or
it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; or
consecutive downgrade of two notches for external ratings.
Financing is classified as impaired when the principal or profit or both are past due for three (3) months or more or where
a financing is in arrears for less than three (3) months, the financing exhibits indications of credit weakness.
For financing and receivables, the Group first assesses whether objective evidence of impairment exists individually
for financing and receivables that are individually significant, and collectively for financing and receivables that are
not individually significant. If the Group determines that no objective evidence of impairment exist for an individually
assessed financing and receivables, whether significant or not, it includes the assets in a group of financing and receivables
with similar credit risk characteristics and collectively assesses them for impairment. Financing and receivables that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included
in the collective assessment for impairment.
The amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows discounted at the asset’s original effective profit rate. The amount of the loss is recognised
using an allowance account and recognised in the profit or loss. The estimation of the amount and timing of the future cash
flows requires management judgement. In estimating these cash flows, judgements are made about the realisable value
of the collateral pledged and the borrower financial position. These estimations are based on assumptions and the actual
results may differ from these, hence resulting in changes to impairment losses recognised.
For the purposes of a collective evaluation of impairment, financing and receivables are grouped on the basis of similar
risk characteristics, taking into account the asset 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
counterparty’s ability to pay all amounts due according to the contractual terms of the assets being evaluated.
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Notes to the
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Framework
Annual Report 2014
Leadership
Future cash flows for a group of financing and receivables that are collectively evaluated for impairment are estimated
on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit
risk characteristics similar to those in the group. Historical loss experience is adjusted based on current observable data
to reflect the effects of current conditions that did not affect the year on which the historical loss experience is based and
remove the effects of conditions in the historical year that do not currently exist.
When a financing is uncollectable, it is written off against the related allowance for impairment. Such financing are written
off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequently
recoveries of amounts previously written off are credited to the profit or loss.
If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the
allowance for impairment account. The amount of reversal is recognised in the profit or loss.
(b)Available-for-sale financial assets
In the case of available-for-sale equity securities, a significant or prolonged decline in their fair value of the security below
its cost is also considered in determining whether impairment exists. Where such evidence exists, the cumulative net loss
that has been previously recognised directly in equity is removed from equity and recognised in the profit or loss. In the
case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as all other
financial assets. Reversals of impairment of debt instruments are recognised in the other comprehensive income. Reversals
of impairment of equity shares are not recognised in the profit or loss, increases in the fair value of equity shares after
impairment are recognised directly in equity.
Perspectives
(a)Financing, advances and others (continued)
accountability
Financial assets (continued)
Audited
Financial
Statements
2.10Impairment (continued)
Performance
Review
(d)Takaful receivables
If there is objective evidence that the takaful receivable is impaired, the Group reduces the carrying amount of the takaful
receivable accordingly and recognises that impairment loss in profit or loss. The Group gather the objective evidence that a
takaful receivable is impaired using the same process adopted for financial assets carried at amortised cost.The impairment
loss is calculated under the same method used for those financing, advances and others.
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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 financial 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.
Additional
Information
(c)Unquoted equity instruments
Annual Report 2014
114
Notes to the
2.10Impairment (continued)
Other assets
The carrying amounts of other assets (except for deferred tax asset and investment property measured at fair value and noncurrent assets classified as held for sale) 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.
The recoverable amount of an asset 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.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment
losses are recognised in profit or loss.
Impairment 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
financial year in which the reversals are recognised.
2.11Bills and acceptances payable
Bills and acceptances payable represents the Group’s own bills and acceptances rediscounted and outstanding in the market.
2.12Provisions
A provision is recognised if, as a result of a past event, the Group has 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.
2.13 General Takaful Fund
The General Takaful Fund is maintained in accordance with the Islamic Financial Services Act 2013. Included in General Takaful
Fund are funds arising from:
•
•
General Takaful; and
General retakaful funds
The General Takaful underwriting results are determined for each class of takaful business after taking into account retakaful,
unearned contributions, claims incurred and administrative fees.
Contribution income
Contributions are recognised in a financial period in respect of risks assumed during that particular financial period based on
the inception date. Inward treaty retakaful contributions are recognised on the basis of periodic advices received from ceding
takaful operators.
115
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2.13 General Takaful Fund (continued)
Unearned contribution reserves
The Unearned Contribution Reserves (“UCR”) represent the portion of the net contributions of takaful certificates written that
relate to the unexpired periods of the certificates at the end of the financial year.
Performance
Review
Expense reserves
The expense reserve for mudharabah certificates is calculated based on best estimate of the provision for unexpired expense
risk (“UER”) and the provision of risk margin for adverse deviation (“PRAD”). The expense reserve for wakalah certificates
refers to the higher of aggregate of the Unearned Wakalah Fee (“UWF”) for all lines of business or best estimate of the provision
for UER and the PRAD at total fund level.
2.14Family Takaful Fund
Included in Family Takaful Fund are funds arising from:
•
•
•
Family Takaful;
Group Family Takaful; and
Family retakaful funds.
The Family Takaful Fund is maintained in accordance with the requirements of the Islamic Financial Services Act 2013 and
includes the amounts attributable to participants which represents the participants’ share of the underwriting surplus and
return on the investments, where applicable and are distributable in accordance with the terms and conditions prescribed by
the Group.
The surplus transfer from the Family Takaful Fund to the profit or loss is based on the predetermined profit sharing ratio of the
underwriting surplus and return on investments.
accountability
Provision is also made for the cost of claims (together with related expenses) and Incurred But Not Reported Claims (“IBNR”)
at the end of the reporting period, using a mathematical method of estimation by a qualified external actuary where historical
claims experience are used to project future claims. The provision includes a risk margin for adverse deviation. As with all
projections, there are elements of uncertainty and the projected claims may be different from actual. These uncertainties arise
from changes in underlying risk, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection
model and underlying assumptions.
Audited
Financial
Statements
A liability for outstanding claims is recognised in respect of direct takaful business. The amount of outstanding claims is the
best estimate of the expenditure required together with related expenses less recoveries, if any, to settle the present obligation
at the end of the reporting period. Any difference between the current estimated cost and subsequent settlement is dealt with
in the takaful statement of comprehensive income of the Group and of the Company in the year in which the settlement takes
place.
Additional
Information
Provision for outstanding claims
18th AGM
information
(a)1/365th method for all General Takaful business
(b)1/8th method for all classes of General Treaty Inward Retakaful business
Perspectives
In determining the UCR at the end of the reporting period, the method that most accurately reflects the actual unearned
contributions is used, as follows:
Annual Report 2014
116
Notes to the
2.14Family Takaful Fund (continued)
Contribution income
Contribution is recognised as soon as the amount of the contribution can be reliably measured. Initial contribution is recognised
from inception date and subsequent contribution is recognised when it is due. At the end of each financial period, all due
contributions are accounted for to the extent that they can be reliably measured.
Investment-linked business
Investments of the investment-linked business are stated at closing market prices. Any increase or decrease in value of these
investments is taken into the investment-linked business revenue accounts.
Actuarial reserves
Actuarial reserves comprise the Prospective Actuarial Valuation, Cash Flow Projection Valuation and Unearned Contribution
Valuation as explained below:
(a) Prospective Actuarial Valuation
For credit-related products, the liabilities of Family Takaful Fund shall be valued based on the sum of present value of
future benefits and any expected future expenses payable from the takaful funds, less the present value of future gross
tabarru’ arising from the certificate, discounted at the appropriate risk discount rate as defined in the valuation guidelines.
For a credit-related takaful certificate whose sustainability of tabarru’ deductions is dependant on the performance of
Participants Investment Fund (“PIF”), the calculation is subject to adjusting the future gross tabarru’ cash flow such that
it is limited to the period where the PIF can sustain the tabarru’ and assuming that the takaful coverage is in force for the
full duration of the takaful contract.
(b)Cash Flow Projection Valuation
For products with PIF other than credit-related products, the liabilities shall be valued by projecting future cash flows to
ensure that all future obligations can be met without recourse to additional finance or capital support at any future time
during the duration of the certificate. The cash flow projection shall use a basis that is consistent with the requirements of
the valuation guidelines.
(c)Unearned Contribution Valuation
For yearly renewable products or extensions shall be valued according to the following:
(i)For a certificate covering death or survival, the liabilities shall be valued on an unexpired risk basis using a prospective
estimate of expected future payments arising from future events covered as at the valuation date. These future payments
shall include allowance for direct claims related expenses, direct investment-related expenses, cost of retakaful and
expected future contribution refunds expected during the unexpired period.
(ii)For a certificate covering contingencies other than death or survival, the net liability is the maximum of unexpired risk
reserve or unearned contribution reserve.
117
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Claims and provisions for claims arising on family and group family takaful certificates, including settlement costs, are
accounted for using the case basis method and for this purpose the benefits payable under a family takaful certificate are
recognised as follows:
(a)Maturity or other policy benefit payments due on specified dates are accounted for as claims payable on the due dates.
(b)Death, surrender and other benefits without due dates are treated as claims payable on the date of receipt of intimation of
death of the participant or occurrence of contingency covered.
(c)For individual family, group health and medical business, provision is made for the cost of claims (together with related
expenses) and IBNR at the end of the reporting period, using a mathematical method of estimation by a qualified internal
actuary where historical claims experience are used to project future claims. The provision includes a risk margin for
adverse deviation. As with all projections, there are elements of uncertainty and the projected claims may be different from
actual. These uncertainties arise from changes in underlying risk, changes in spread of risks, claim settlement pattern as
well as uncertainties in the projection model and underlying assumptions.
Expense reserves
The expense reserves is reported as a liability in Shareholder’s Fund.
Perspectives
accountability
2.14Family Takaful Fund (continued)
Performance
Review
(b) Deficiency Reserve for Skim Anuiti Takaful KWSP
In addition to the expense liabilities above, an additional requirement is also complied as stipulated below:
If PIF is expected to be insufficient to meet future annuity certain benefit and/or future life annuity tabarru’, another
provision shall be set aside that is in line with requirement of the valuation guideline. Upon PIF insufficiency, the
Shareholders’ Fund shall honour the annuity certain benefit payment to participants as well as the tabarru’ to Participant
Risk Fund (“PRF”).
Additional
Information
The method used to value expense liabilities shall be consistent with the method used to value takaful liabilities of the
corresponding family takaful certificate (for example, for a long-term ordinary takaful certificate, the valuation method for
expense liabilities should also be long-term in nature).
18th AGM
information
(a) Expense liabilities
Audited
Financial
Statements
Expense reserves consists the followings:
Annual Report 2014
118
Notes to the
2.15 Product classification
The Family Takaful Fund and General Takaful Fund consist of certificate contracts that transfer takaful risk.
Takaful contracts are those contracts that transfer significant takaful risk. A takaful contract is a contract under which the fund
has accepted significant takaful risk from another party (the certificate holders) by agreeing to compensate the participants if
a specified uncertain future event (the takaful event) adversely affects the participants. As a general guideline, to determine
whether a contract has significant takaful risk, benefits paid are compared with benefits payable if the takaful event did not
occur.
Investment contracts are those contracts that do not transfer significant insurance risk. There are no contracts that are classified
as investment contracts in the Family and General Takaful Funds.
Once a contract has been classified as a takaful contract, it remains a takaful contract for the remainder of its life-time, even if
the takaful risk reduces significantly during this period, unless all rights and obligations are extinguished or expired.
Takaful contracts in the current portfolio are classified as being without discretionary participation features (“DPF”) as it does
not satisfy the criteria for DPF. DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits
that are:
•
•
•
likely to be a significant portion of the total contractual benefits;
whose amount or timing is contractually at the discretion of the issuer; and
that are contractually based on the:
- performance of a specified pool of contracts or a specified type of contract;
- realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or
- the profit or loss of the company, fund or other entity that issues the contract.
2.16Retakaful
The fund cedes takaful risk in the normal course of business. Retakaful assets represent balances receivable and recoverable from
retakaful operators. Amounts recoverable from retakaful operators are estimated in a manner consistent with the outstanding
claims provision or settled claims associated with the retakaful’s certificates and are in accordance with the related retakaful
contracts.
Ceded retakaful arrangements do not relieve the fund from its obligations to participants. Contributions and claims are
presented on a gross basis for both ceded and assumed retakaful.
Retakaful assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment
arises during the reporting period. Impairment occurs when there is objective evidence as a result of an event that occurred
after initial recognition of the retakaful asset that the Family and General Takaful Fund may not receive all outstanding amounts
due under the terms of the contract and the event has a reliably measurable impact on the amounts that the Family and General
Takaful Fund will receive from the retakaful operator. The impairment loss is recorded in profit or loss.
Gains or losses on buying retakaful, if any, are recognised in profit or loss immediately at the date of purchase and are not
amortised.
The fund also assumes retakaful risk in the normal course of business for Family Takaful and General Takaful contracts when
applicable.
119
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2.16 Retakaful (continued)
Contributions and claims on assumed retakaful are recognised as revenue or expenses in the same manner as they would be if
the retakaful were considered direct business, taking into account the product classification of the retakaful business. Retakaful
liabilities represent balances due to retakaful operators. Amounts payable are estimated in a manner consistent with the related
retakaful contract.
Performance
Review
Retakaful contracts that do not transfer significant takaful risk are accounted for directly through the statement of financial
position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less
any explicit identified contributions or fees to be retained by the retakaful operators. Investment income on these contracts is
accounted for using the effective yield method when accrued.
2.17Contingencies
Perspectives
Retakaful assets or liabilities are derecognised when the contractual rights are extinguished or expired or when the contract is
transferred to another party.
Where it is not possible that there is an inflow of economic benefits, or the amount cannot be estimated reliably, the asset is
not recognised in the statements of financial position and is disclosed as a contingent asset, unless the probability of inflow of
economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence
of one or more future events, are also disclosed as contingent assets unless the probability of inflow of economic benefits is
remote.
2.18 Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and
incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All
operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the
Group Managing Director cum Chief Executive Officer of the Group, to make decisions about resources to be allocated to the
segment and to assess its performance, and for which discrete financial information is available.
2.19Share capital
Audited
Financial
Statements
Contingent assets
Ordinary shares
Ordinary shares are classified as equity in the statement of financial position. Cost directly attributable to the issuance of new
equity shares are taken to equity as a deduction from the proceeds.
18th AGM
information
Additional
Information
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably,
the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the
occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of
outflow of economic benefits is remote.
accountability
Contingent liabilities
Annual Report 2014
120
Notes to the
2.20 Recognition of income
Financing income – Banking business
Financing income is recognised in the profit or loss on an accrual basis using the effective profit rate method. The effective profit
rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instruments or,
when appropriate, a shorter period to the net carrying amount of the financial instruments. When calculating the effective profit
rate, the Group has considered all contractual terms of the financial instruments but does not consider future credit losses. The
calculation includes all fees and transaction costs integral to the effective profit rate, as well as premium or discounts.
Income from a sale-based contract is recognised on effective profit rate basis over the period of the contract based on the principal
amounts outstanding whereas income from Ijarah (lease-based contract) is recognised on effective profit rate basis over the lease term.
Once a financial asset or a group of financial assets has been written down as a result of an impairment loss, income is recognised
using the profit rate used to discount the future cash flows for the purpose of measuring the impairment loss.
Financing income – Takaful business
Income from financing are recognised on an accrual basis, except where financing is considered impaired, i.e. where repayments
are in arrears for more than 90 days, in which case recognition of such income is suspended. Subsequent to suspension, income is
recognised on the receipt basis until all arrears have been paid.
Income is recognised on a time proportion basis that takes into account the effective yield of the asset.
Wakalah fees
Wakalah fees are recognised as income or expenses by the respective funds based on a predetermined percentage of gross
contributions upon inception of certificates. Wakalah surplus/(deficit) is arrived at after deducting commission and management
expenses against the Wakalah fees charged.
Fee and other income recognition
Financing arrangement, management and participation fees, underwriting commissions and brokerage fees are recognised as
income based on contractual arrangements. Fees from advisory and corporate finance activities are recognised net of service taxes
and discounts on completion of each stage of the assignment.
Dividend income from subsidiary and associated companies and other investments are recognised when the Group’s rights to
receive payment is established.
2.21Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in 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 financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences:
the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither, accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted by the end of the reporting period.
121
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
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 assets and liabilities 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 the
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.
2.22Zakat
This represents business zakat. It is an obligatory amount payable by the Group and the Company to comply with the principles
of Shariah.
Perspectives
2.21Income tax (continued)
Performance
Review
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 Company has 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.
State plans
The Group’s and the Company’s contributions to the statutory pension funds are charged to profit or loss in the financial year
to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations.
Audited
Financial
Statements
Short-term employee benefits
accountability
2.23 Employee benefits
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of
awards that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of the employee share options is measured using Monte Carlo Simulation. Measurement inputs include share
price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility
adjusted for changes expected due to publicly available information), expected dividends, and the risk-free profit rate (based
on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account
in determining fair value.
18th AGM
information
The grant date fair value of share-based payment granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
Additional
Information
Share-based payment transactions
Annual Report 2014
122
Notes to the
2.24Non-current assets held for sale
Non-current assets, or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale
rather than through continuing use, are classified as held for sale.
Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance
with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their
carrying amount and fair value less cost to sell.
Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro
rata basis, except that no loss is allocated to financial assets, deferred tax assets and investment property, which continue to
be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale
and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any
cumulative impairment loss.
Intangible assets and property and equipment once classified as held for sale are not amortised or depreciated. In addition,
equity accounting of equity-accounted investees ceases once classified as held for sale.
2.25 Earnings per ordinary shares
The Group presents basic data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares,
which comprise convertible notes and share options granted to employees.
2.26Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective profit method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those
assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being
incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are
in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare
the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
123
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair value are
categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:
Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date.
Level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3 : unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances
that caused the transfers.
Perspectives
Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in
the principal market or in the absence of a principal market, in the most advantageous market.
accountability
2.27Fair value measurements
Performance
Review
Company
Cash and balances with banks and other financial institutions
2013
RM’000
796,588
3,101,584
600,969
3,352,927
3,898,172
3,953,896
123,566
149,559
123,566
149,559
Additional
Information
Cash and balances with banks and other financial institutions
Money at call and interbank placements with remaining maturity not exceeding one month
2014
RM’000
18th AGM
information
Group
Audited
Financial
Statements
3.Cash and short-term funds
124
Annual Report 2014
Notes to the
4. Deposits and placements with financial institutions
Group
Licensed banks
Other financial institutions
2014
RM’000
2013
RM’000
715,238
6,086
688,324
12,978
721,324
701,302
5.Financial assets held-for-trading
Group
2014
RM’000
2013
RM’000
66,725
51,239
43,594
22,943
29,583
18,451
133,262
99,273
50,767
394,808
205,492
279,628
726,353
178,058
328,751
-
101,633
72,763
1,032,328
1,305,925
1,165,590
1,405,198
At fair value:
Quoted securities in Malaysia
-Shares
Quoted securities outside Malaysia
-Shares
-Unit trusts
Unquoted securities in Malaysia
-Malaysian Government Investment Issues
-Bank Negara Negotiable Notes
-Islamic Debt Securities
-Negotiable Islamic Debt Certificates
Unquoted securities outside Malaysia
125
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Group
31.12.2014
Forward contracts
Profit rate swaps
Structured deposits
1,840,778
1,187,694
106,680
45,508
17,018
15
(28,798)
(3,594)
(15)
3,135,152
62,541
(32,407)
1,381,894
1,311,481
110,495
8,681
19,855
582
(6,594)
(6,389)
(582)
2,803,870
29,118
(13,565)
31.12.2013
Forward contracts
Profit rate swaps
Structured deposits
7.Financial assets available-for-sale
Group
2014
RM’000
2013
RM’000
208,161
428,420
148,399
930,897
82,902
14,747
1,173
73,827
542
5,134
735,403
1,158,799
Perspectives
Fair value
Assets
Liabilities
RM’000
RM’000
Notional
Amount
RM’000
accountability
Trading derivative financial instruments are revalued on a gross position and the unrealised gains or losses are reflected as derivative
financial assets and liabilities respectively.
Audited
Financial
Statements
The following tables summarise the contractual or underlying principal amounts of derivatives financial instruments held at fair
value through profit or loss and hedging purposes. The principal or contractual amounts of these instruments reflect the volume of
transactions outstanding at financial position date, and do not represent amounts at risk.
Performance
Review
6. Derivative financial assets/liabilities
At fair value
Quoted securities outside Malaysia
-Unit trusts
-Shares
18th AGM
information
-Unit trusts
-Shares
Additional
Information
126
Annual Report 2014
Notes to the
7.Financial assets available-for-sale (CONTINUED)
Group
2014
RM’000
2013
RM’000
241,466
1,202,058
11,452,570
380
149,313
455,731
1,269,943
447,825
12,868,937
380
298,897
38
1,405
1,647
36
1,345
1,647
13,048,877
15,344,741
At fair value
-Malaysian Government Islamic Papers
-Malaysian Government Investment Issues
-Negotiable Islamic Debt Certificates
-Shares
-Unit trusts
-Shares
-Islamic Development Bank Unit Trusts
At cost
-Unquoted shares in Malaysia
Less: Accumulated impairment loss*
24,450
(15,734)
23,456
(14,740)
8,716
8,716
-Unquoted shares outside Malaysia
22,893
23,754
13,815,889
16,536,010
2014
RM’000
2013
RM’000
18,559
17,860
2014
RM’000
2013
RM’000
145,276
387,306
(7,019)
145,391
319,089
(7,125)
*Movement in accumulated impairment loss due to translation differences.
Company
At fair value
-Unit trusts
8.Financial assets held-to-maturity
Group
-Malaysian Government Islamic Papers
Less: Accumulated impairment loss
21,695
10,580
547,258
467,935
403,814
1,013,823
33,398
1,451,035
-
5,205,901
19,841
-
-
-
3,137,330
111,203
-
-
8,474,275
797,589
Additional
Information
Audited
Financial
Statements
64,141
-
-
-
-
64,141
-
-
-
accountability
18,921,260
-
3,717,813
44,610
346,003
9,234,012
-
-
998,462
3,869,009
711,351
Ijarah
Muntahiah
BitAtTawarruq
Tamleek
RM’000
RM’000
159,551
-
1,822
18,466
-
-
72,533
-
-
66,730
-
Istisna’
RM’000
Perspectives
153,573
-
-
-
-
5,030
148,543
-
-
Ijarah
Thumma
Al-Bai
RM’000
29,524,571
(444,388)
(142,753)
30,111,712
1,013,823
33,398
90,288
7,282,355
174,348
435,638
9,606,221
72,533
69,171
1,347,577
9,141,640
844,720
Total
RM’000
Performance
Review
90,288
90,288
-
-
-
-
-
-
-
Ar-Rahnu
RM’000
Leadership
Corporate
Framework
Notes to the
18th AGM
information
Net financing, advances and others
-
21,576
69
89,635
372,209
-
-
180,731
-
133,369
Bai
Al-Inah
RM’000
Allowance for impaired financing, advances and others
- collective assessment allowance
- individual assessment allowance
31 December 2014
At amortised cost
Cash line
Term financing
House financing
Syndicated
financing
Leasing
financing
Bridging
financing
Personal
financing
Other term
financing
Staff financing
Credit cards
Trade bills
discounted
Trust receipts
Pawn broking
Group
Bai’
Bithaman
Ajil Murabahah
RM’000
RM’000
(a) By type and Shariah contract
9.Financing, advances and others
127
Annual Report 2014
805,381
35,957
841,338
-
5,442,107
30,874
-
-
-
3,565,043
124,320
-
-
9,162,344
1,282,498
14,107
-
7,034
708
157,089
734,250
Net financing, advances and others
-
-
193,387
-
175,923
Bai
Al-Inah
RM’000
31 December 2013
At amortised cost
Cash line
Term financing
House financing
Syndicated
financing
Leasing
financing
Bridging
financing
Personal
financing
Other term
financing
Staff financing
Credit cards
Trade bills
discounted
Trust receipts
Pawn broking
Group
Bai’
Bithaman
Ajil Murabahah
RM’000
RM’000
(a) By type and Shariah contract (continued)
9.Financing, advances and others (continued)
12,477,947
-
2,326,624
25,736
288,153
7,597,961
-
-
475,200
1,190,950
573,323
57,931
-
-
-
-
57,931
-
-
-
Ijarah
Muntahiah
BitAtTawarruq
Tamleek
RM’000
RM’000
192,966
-
-
-
-
159,750
33,216
-
-
Ijarah
Thumma
Al-Bai
RM’000
131,875
-
1,884
21,944
-
-
40,052
-
-
67,995
-
Istisna’
RM’000
95,621
95,621
-
-
-
-
-
-
-
Ar-Rahnu
RM’000
23,740,948
(365,375)
(136,197)
24,242,520
819,488
35,957
95,621
5,900,585
172,708
445,242
8,332,211
40,052
217,681
732,677
6,701,052
749,246
Total
RM’000
Annual Report 2014
128
Notes to the
129
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
(d)By remaining contractual maturity
Maturity within one year
More than one year to three years
More than three years to five years
More than five years
(e)By geographical distribution
Central Region
Eastern Region
Northern Region
Southern Region
East Malaysia Region
30,111,712
24,242,520
1,563,643
7,553,928
1,512,408
7,954,409
20,994,141
14,775,703
30,111,712
24,242,520
3,147,023
992,088
1,468,082
24,504,519
2,927,612
816,371
1,373,079
19,125,458
30,111,712
24,242,520
13,567,565
5,037,536
4,722,950
4,411,954
2,371,707
10,699,889
4,455,488
3,928,233
3,191,397
1,967,513
30,111,712
24,242,520
Perspectives
352,438
4,630,194
631,069
200,885
18,216,908
5,483
205,543
accountability
471,181
5,884,575
658,763
292,201
22,336,404
8,230
460,358
Audited
Financial
Statements
(c)By profit rate sensitivity
Fixed rate
House financing
Others
Floating rate
Others
2013
RM’000
Additional
Information
(b)By type of customer
Domestic non-bank financial institutions
Domestic business enterprise
Small medium industries
Government and statutory bodies
Individuals
Other domestic entities
Foreign entities
2014
RM’000
18th AGM
information
Group
Performance
Review
130
Annual Report 2014
Notes to the
Group
(f)By sector
Primary agriculture
Mining and quarrying
Manufacturing (including agro-based)
Electricity, gas and water
Wholesale & retail trade, and hotels & restaurants
Construction
Real estate
Transport, storage and communications
Finance, insurance and business activities
Education, health and others
Household sectors
Other sectors
(g)Movement in impaired financing and advances (“impaired financing”) are as follows:
At 1 January
Classified as impaired during the year
Reclassified as not impaired during the year
Amount recovered
Amount written off
Exchange differences
At 31 December
Gross impaired financing as a percentage of gross financing, advances and others
(h)Impaired financing by geographical distribution
Central Region
Eastern Region
Northern Region
Southern Region
East Malaysia Region
2014
RM’000
2013
RM’000
331,524
20,481
1,011,749
549,284
879,627
2,316,754
693,563
563,955
924,120
483,863
22,336,792
-
243,148
8,135
829,577
365,014
750,364
1,872,011
517,731
236,616
850,283
342,942
18,216,799
9,900
30,111,712
24,242,520
285,302
438,837
(194,739)
(72,983)
(115,145)
3,267
308,709
440,665
(236,056)
(71,626)
(160,388)
3,998
344,539
285,302
1.14%
1.18%
148,240
44,509
30,618
13,307
107,865
129,930
28,106
52,873
13,702
60,691
344,539
285,302
131
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
344,539
285,302
(j)Movement of allowance for impaired financing
Collective assessment allowance
At 1 January
Allowance made during the year
Amount written off
365,375
162,878
(84,416)
551
313,334
141,621
(90,373)
793
At 31 December
444,388
365,375
Individual assessment allowance
At 1 January
Allowance made during the year
Amount written off
136,197
34,055
(30,802)
3,303
126,988
79,103
(69,901)
7
At 31 December
142,753
136,197
Perspectives
32,302
108
15,525
21,601
33,117
61,393
121,226
30
accountability
1,854
7,669
54
14,732
72,192
42,689
60,258
590
144,501
-
(i)Impaired financing by sector
Primary agriculture
Manufacturing (including agro-based)
Electricity, gas and water
Wholesale & retail trade, and hotels & restaurants
Construction
Transport, storage and communications
Finance, insurance and business activities
Education, health and others
Household sectors
Other sectors
Audited
Financial
Statements
2013
RM’000
Additional
Information
2014
RM’000
18th AGM
information
Group
Performance
Review
132
Annual Report 2014
Notes to the
10. Other assets
Group
2014
RM’000
2013
RM’000
Clients' and dealers' debit balances
Deposits and prepayments
Other financing
Other receivables
179,229
42,781
78,290
280,685
47,879
43,173
87,832
71,917
580,985
250,801
281
436
472
40
2,411
-
1,189
2,451
Company
Amount due from subsidiaries
Deposits and prepayments
Income receivable
Other financing of the Group are stated net of impairment allowances of RM1,713,000 (2013: RM1,927,000).
Amount due from subsidiaries are non trade in nature, not subject to financing charges and has no fixed term of repayments.
11.Takaful assets
Group
Retakaful assets:
-Claims liabilities
-Contribution liabilities
-Actuarial liabilities
Note
2014
RM’000
2013
RM’000
22(a)(i)
22(a)(ii)
22(a)(iii)
405,867
69,949
206,644
407,393
80,200
148,340
682,460
635,933
95,074
38,004
88,353
37,325
133,078
(4,487)
125,678
(8,522)
128,591
117,156
811,051
753,089
Takaful receivables
-Due contributions
-Due from retakaful/co-takaful
Less: Allowance for impaired receivables
Offsetting of financial assets and financial liabilities
There is no financial assets and liabilities that have been set off for presentation purposes.
133
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) in compliance with Section 26(2)
(c) of the Central Bank of Malaysia Act, 2009, the amount of which are determined as set percentages of total eligible liabilities.
13. Deferred tax assets
Property, plant and
equipment
Unabsorbed capital
allowances
Provisions
654
91
640
27,863
60,641
28,579
68,724
Tax assets/(liabilities)
89,158
98,034
10
10
Company
Tax assets
2014
RM’000
(23,342)
(23,342)
-
Total
2013
RM’000
(28,843)
(28,843)
-
2014
RM’000
2013
RM’000
(23,342)
654
(28,752)
640
27,863
60,641
28,579
68,724
65,816
69,191
10
10
2014
RM’000
2013
RM’000
Audited
Financial
Statements
Group
Liabilities
2013
RM’000
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Group
Unabsorbed capital allowances
Unutilised tax losses
Deductible temporary differences
28,047
7,158
653
27,518
7,158
(154)
35,858
34,522
Additional
Information
Assets
2014
RM’000
accountability
Deferred tax assets and liabilities are attributable to the following:
Perspectives
Recognised deferred tax assets and liabilities
18th AGM
information
Performance
Review
12. Statutory deposits with Bank Negara Malaysia
134
Annual Report 2014
Notes to the
13. Deferred tax assets (continued)
Movement in temporary differences during the year:
Group
Effect of
Recognised
Effect of
Recognised
As at Recognised
in other movement
Recognised
in other movement
As at
in profit comprehensive in exchange
As at
in profit comprehensive in exchange 31.12.2013 /
income
rate
1.1.2014
or loss
income
rate 31.12.2014
1.1.2013
or loss
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000 RM’000
RM’000
RM’000
Property, plant and
equipment
(33,422)
783
Unabsorbed capital
allowances
30,246
Provisions
58,223
4,527
(143)
146
-
(1,667)
11,934
(839)
Total assets
14,651
(693)
55,830
Note 36
(3)
-
(28,752)
640
5,409
14
-
1
-
(594)
28,579
68,724
597
69,191
(23,342)
654
(716)
(10,603)
2,351
169
27,863
60,641
(5,896)
2,351
170
65,816
Note 36
14.Investments in subsidiaries
Company
At cost
Quoted shares in Malaysia
Unquoted shares in Malaysia
2014
RM’000
2013
RM’000
99,053
4,608,562
99,249
4,548,120
4,707,615
4,647,369
135
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
14.Investments in subsidiaries (continued)
100
100
BIMB Investment Management Berhad
Managing Islamic Unit Trust Funds
100
100
BIMB Foreign Currency Clearing Agency
Sdn Bhd
Dormant (in the process of members voluntary
liquidation)
100
100
Al-Wakalah Nominees (Tempatan) Sdn Bhd
Provide nominee services
100
100
Farihan Corporation Sdn Bhd
Provide manpower for the provision of Islamic
pawn broking services
100
100
Bank Islam Trust Company (Labuan) Ltd
Provide services as Labuan registered trust
company
100
100
BIMB Offshore Company Management
Services Sdn Bhd
Resident Corporate Secretary and Director for
Offshore Companies
100
100
Family and General Takaful business
60.31
60.50
ASEAN Retakaful International (L) Ltd **
Family and General retakaful business
63.09
63.09
P.T. Syarikat Takaful Indonesia *#
Investment holding
56
56
Subsidiaries of Bank Islam Malaysia Berhad
Subsidiary of Bank Islam Trust Company
(Labuan) Ltd
Subsidiaries of Syarikat Takaful Malaysia Berhad
Subsidiaries of P.T. Syarikat Takaful Indonesia
P.T. Asuransi Takaful Umum *#
General Takaful business
64.70
64.70
P.T. Asuransi Takaful Keluarga *#
Family Takaful business
74.80
74.80
BIMB Securities (Holdings) Sdn Bhd
Investment holding
100
100
Stockbroking
100
100
-
100
Subsidiary of BIMB Securities (Holdings)
Sdn Bhd
Subsidiaries of BIMB Securities Sdn Bhd
BIMSEC Asset Management Sdn Bhd ***
Dormant
BIMSEC Nominees (Tempatan) Sdn Bhd
Nominee services
100
100
BIMSEC Nominees (Asing) Sdn Bhd
Nominee services
100
100
Syarikat Al-Ijarah Sdn Bhd
Leasing of assets
100
100
*Incorporated in Indonesia.
#Audited by a firm of auditors other than KPMG Desa Megat & Co.
**Members’ Voluntary Winding-up commenced on 21 May 2012. The subsidiary has been consolidated based on management accounts.
***The Company had been dissolved under the Companies Commission of Malaysia on 16 July 2014.
Perspectives
Islamic banking business
accountability
Bank Islam Malaysia Berhad
Audited
Financial
Statements
Additional
Information
Name of Company
18th AGM
information
Effective Ownership Interest
2014
2013
%
%
Performance
Review
Details of the subsidiaries are as follows:
136
Annual Report 2014
Notes to the
Non-controlling interest in Subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2014
Syarikat
Bank Islam
Takaful
Malaysia Berhad Malaysia Berhad
Total
NCI percentage of ownership interest and voting interest
Carrying amount of NCI (RM’000)
-
39.69%
240,223
240,223
Profit allocated to NCI (RM’000)
-
55,605
55,605
Summarised financial information before intra-group elimination
Syarikat
Bank Islam
Takaful
RM’000
RM’000
As at 31 December 2014
Assets
Liabilities
-
Net Assets
-
596,446
Year ended 31 December 2014
Revenue
Profit for the year
-
545,937
138,735
Total comprehensive income
-
139,073
-
170,111
-
387,206
-
(137,340)
Net increase in cash and cash equivalents
-
419,977
Distribution to NCI
-
7,011
Dividends paid to NCI
-
51,603
7,164,788
(6,568,342)
137
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2013
Syarikat
Bank Islam
Takaful
NCI percentage of ownership interest and voting interest
Carrying amount of NCI (RM’000)
Profit allocated to NCI (RM’000)
Total
-
39.50%
239,603
239,603
163,814
41,432
205,246
In December 2013, Bank Islam Malaysia Berhad became a wholly-owned subsidiary of the Company, upon the completion of the
acquisition of 49.0% equity interest in Bank Islam Malaysia Berhad from Dubai Financial Group LLC and Lembaga Tabung Haji.
Perspectives
Non-controlling interest in Subsidiaries (continued)
Performance
Review
-
6,924,543
(6,334,644)
Net Assets
-
589,899
2,245,105
561,988
485,726
334,313
134,380
130,905
Year ended 31 December 2013
Revenue
Profit for the year
Total comprehensive income
Net increase/(decrease) in cash and cash equivalents
Dividends paid to NCI
1,293,078
874,375
(110,443)
2,057,010
24,997
328,219
(250,203)
(84,665)
(6,649)
Audited
Financial
Statements
Liabilities
33,338
18th AGM
information
Assets
Additional
Information
Syarikat
Bank Islam
Takaful
RM’000
RM’000
accountability
Summarised financial information before intra-group elimination
138
Annual Report 2014
Notes to the
15.Investments in associates
Group and Company
At cost
Unquoted shares
Less:
-Accumulated impairment loss
2014
RM’000
2013
RM’000
5,019
5,019
(5,018)
(5,018)
1
1
The principal activities of the associates and the interest of the Group are as follows:
Effective Interest
Name of Company
Islamic Banking and
Finance Institute Malaysia Sdn Bhd
Provides training and
consultancy services
Place of
Incorporation
2014
%
2013
%
48
48
Malaysia
16. Property, plant and equipment
Group
**Land and
buildings
RM’000
Furniture
fixtures and
fittings
RM’000
Office
equipment
RM’000
Computer
Motor
equipment
vehicles and software
RM’000
RM’000
Total
RM’000
Cost
At 1 January 2013
Additions
Reclassifications
Disposals
Write off
Transfer from investment properties
Transfer to asset held for sale
Exchange difference
274,840
7,786
(109)
(2,579)
(1,837)
5,267
(1,060)
(2,045)
220,182
12,247
73
(5,191)
(11,573)
(1,449)
79,434
5,847
(41)
(2,276)
(12,667)
50
3,957
465
(429)
(57)
(160)
381,272
20,721
77
(3,044)
(2,503)
141
959,685
47,066
(13,519)
(28,637)
5,267
(1,060)
(3,463)
Additions
Reclassifications
Disposals
Write off
CMDF Incentive
Exchange difference
280,263
5,386
(2,035)
(3,709)
(1,750)
495
214,289
27,574
1,526
(4,071)
(482)
422
70,347
7,560
509
(2,560)
21
3,776
1,285
(359)
54
396,664
33,086
(23,180)
(31)
15
965,339
74,891
(33,879)
(482)
(1,750)
(31)
1,007
At 31 December 2014
278,650
239,258
75,877
4,756
406,554
1,005,095
139
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
At 31 December 2014
32,753
146,524
46,976
1,870
277,149
505,272
6,191
(1,768)
(1,107)
(33)
(504)
35,532
6,128
(2,754)
(54)
167
39,019
17,294
(4,193)
(8,477)
(1,271)
149,877
14,910
(3,133)
(430)
375
161,599
8,926
(1,837)
(11,847)
49
42,267
8,420
(2,428)
20
48,279
704
(356)
(57)
(73)
2,088
743
(323)
25
2,533
27,232
(3,031)
(2,490)
137
298,997
30,876
(23,153)
12
306,732
60,347
(11,185)
(23,978)
(33)
(1,662)
528,761
61,077
(31,791)
(430)
(54)
599
558,162
73,658
64,412
77,659
32,458
28,080
27,598
2,087
1,688
2,223
104,123
97,667
99,822
454,413
436,578
446,933
Building
improvement
and
Leasehold
building renovations
RM’000
RM’000
Total
RM’000
Total
RM’000
Carrying amounts
At 1 January 2013
At 31 December 2013
At 31 December 2014
** Land and buildings - Group
242,087
244,731
239,631
Freehold
land
RM’000
Freehold
building
RM’000
Leasehold
land
RM’000
Perspectives
At 1 January 2013
Depreciation for the year
Disposals
Write off
Exchange difference
Disposals
Write off
Exchange difference
Office
equipment
RM’000
accountability
Depreciation
Furniture
fixtures and
fittings
RM’000
Audited
Financial
Statements
Group
Computer
equipment
Motor
vehicles and software
RM’000
RM’000
**Land and
buildings
RM’000
Performance
Review
16. Property, plant and equipment (continued)
55,724
(20)
120,419
2,748
5,267
(22)
12,375
-
50,055
(49)
(621)
(1,060)
(2,010)
36,267
5,087
(109)
(1,958)
(1,837)
7
274,840
7,786
(109)
(2,579)
(1,837)
5,267
(1,060)
(2,045)
55,704
(220)
-
128,412
1,160
3,326
(409)
-
12,375
-
46,315
(3,326)
(1,750)
494
37,457
4,226
(2,035)
(3,080)
1
280,263
5,386
(2,035)
(3,709)
(1,750)
495
At 31 December 2014
55,484
132,489
12,375
41,733
36,569
278,650
18th AGM
information
At 1 January 2013
Additions
Reclassifications
Disposals
Write off
Exchange difference
Additions
Reclassifications
Disposals
Exchange difference
Additional
Information
Cost
140
Annual Report 2014
Notes to the
** Land and buildings - Group
Freehold
land
RM’000
Freehold
building
RM’000
Leasehold
land
RM’000
Building
improvement
Leasehold
and
building renovations
RM’000
RM’000
Total
RM’000
Depreciation
At 1 January 2013
Disposals
Write off
Exchange difference
Reclassifications
Disposals
Exchange difference
At 31 December 2014
-
6,006
2,710
(4)
8,712
2,612
142
(46)
11,420
986
174
1,160
174
1,334
4,294
1,297
(164)
(33)
(507)
4,887
1,143
(142)
(54)
166
6,000
21,467
2,010
(1,604)
(1,107)
7
20,773
2,199
(2,708)
1
20,265
32,753
6,191
(1,768)
(1,107)
(33)
(504)
35,532
6,128
(2,754)
(54)
167
39,019
Carrying amounts
At 1 January 2013
At 31 December 2013
At 31 December 2014
Company
55,724
55,704
55,484
114,413
119,700
121,069
Furniture,
fixtures and
fittings
RM’000
11,389
11,215
11,041
45,761
41,428
35,733
14,800
16,684
16,304
242,087
244,731
239,631
Renovation
RM’000
Motor
vehicles
RM’000
Office
equipment
and
computer
RM’000
Total
RM’000
1,346
1,346
1,346
415
415
415
Cost
At 1 January 2013
Additions
Reclassifications
Disposals
Additions
At 31 December 2014
1,110
(14)
1,096
1,096
452
144
14
(48)
562
54
616
3,323
144
(48)
3,419
54
3,473
141
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Motor
vehicles
RM’000
Total
RM’000
Depreciation
At 1 January 2013
Reclassifications
Disposals
254
265
(6)
-
149
225
-
69
104
-
262
81
6
(48)
734
675
(48)
513
260
374
224
173
104
301
93
1,361
681
At 31 December 2014
773
598
277
394
2,042
At 1 January 2013
856
1,197
346
190
2,589
At 31 December 2013
583
972
242
261
2,058
At 31 December 2014
323
748
138
222
1,431
Freehold
land
RM’000
Freehold
building
RM’000
Leasehold
land
RM’000
Leasehold
building
RM’000
Total
RM’000
Carrying amounts
Perspectives
Renovation
RM’000
Office
equipment
and
computer
RM’000
accountability
Company
Furniture,
fixtures and
fittings
RM’000
Performance
Review
At 1 January 2013
Reclassified to asset held for sale
Reclassified to property, plant, and equipment
Exchange difference
6,491
-
12,088
(5,535)
-
585
(88)
12,076
(6,938)
(70)
31,240
(6,938)
(5,535)
(158)
Disposals
Exchange difference
6,491
-
6,553
(4,720)
-
497
-
5,068
(488)
18
18,609
(5,208)
18
At 31 December 2014
6,491
1,833
497
4,598
13,419
Additional
Information
Cost
18th AGM
information
Group
Audited
Financial
Statements
17.Investment properties
142
Annual Report 2014
Notes to the
17.Investment properties (Continued)
Group
Freehold
land
RM’000
Freehold
building
RM’000
Leasehold
land
RM’000
-
1,178
137
-
-
Leasehold
building
RM’000
Total
RM’000
Depreciation
At 1 January 2013
Reclassified to asset held for sale
Reclassified to property, plant,
and equipment
Exchange difference
926
139
(205)
2,104
276
(205)
-
(268)
-
(10)
(9)
(268)
(19)
Disposals
Exchange difference
-
1,047
70
(62)
-
(10)
-
851
88
(75)
4
1,888
158
(137)
4
At 31 December 2014
-
1,055
(10)
868
1,913
Carrying amounts
At 1 January 2013
6,491
10,910
585
11,150
29,136
At 31 December 2013
6,491
5,506
507
4,217
16,721
At 31 December 2014
6,491
778
507
3,730
11,506
Investment properties comprise a number of commercial properties that are leased to third parties. Each of the leases contains an
initial non-cancellable period of 3 years. Subsequent renewals are negotiated with the lessee and on average renewal periods of 3
years.
Fair value of the Group’s investment properties are categorised as follows:
2014
Freehold land and buildings
Leasehold land and buildings with unexpired lease
period of more than 50 years
period of less than 50 years
2013
Freehold land and buildings
period of more than 50 years
period of less than 50 years
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
Total
RM’000
-
-
5,320
5,320
-
-
3,820
3,820
-
-
2,782
2,782
-
-
11,922
11,922
-
-
6,344
6,344
-
-
8,655
8,655
-
-
4,715
4,715
-
-
19,714
19,714
143
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Rental income (net of direct operating expenses)
2014
RM’000
2013
RM’000
3,887
3,087
18.Assets classified as held for sale
Group
2014
RM’000
At 1 January
Settlement for asset held for sale
Transferred from property, plant and equipment
Transferred from investment properties
At 31 December
2013
RM’000
7,209
(7,209)
1,696
-
3,374
(3,925)
1,027
6,733
1,696
7,209
The carrying value of investment properties is the same as its carrying value before being reclassified to current assets.
Perspectives
Group
accountability
The following are amounts arising from investment properties that have been recognised in profit or loss during the financial year:
Performance
Review
17.Investment properties (Continued)
(a) By type of deposit
Savings deposits
Wadiah
Mudharabah
2013
RM’000
5,091,650
3,052,428
2,039,222
4,674,482
2,379,204
2,295,278
10,470,568
25,029,432
9,790,057
22,371,806
4,755,488
18,436,466
919,816
2,012,162
17,895,591
1,229,025
134,453
95,059
1,466,205
358,516
98,457
Demand deposits
Wadiah
Term Deposit
Special Investment Accounts
Mudharabah
Additional
Information
Group
2014
RM’000
Audited
Financial
Statements
19. Deposits from customers
Mudharabah
Term & Special term deposit-i
Tawarruq
Negotiable Islamic Debt Certificates (NIDC)
Waheed-i
Ziyad
Others
Total Deposits
86,729
88,022
40,678,379
36,924,367
18th AGM
information
General Investment Accounts
144
Annual Report 2014
Notes to the
19. Deposits from customers (CONTINUED)
Group
(b)Maturity structure of term deposits are as follows:
Due within six months
More than six months to one year
More than one year to three years
More than three years to five years
(c)By type of customer
Government and statutory bodies
Business enterprises
Individuals
Others
2014
RM’000
2013
RM’000
21,933,815
2,834,535
224,132
36,950
20,152,221
2,036,519
136,897
46,169
25,029,432
22,371,806
7,022,205
9,638,052
5,565,494
18,452,628
8,069,129
9,688,640
5,124,757
14,041,841
40,678,379
36,924,367
20. Deposits and placements of banks and other financial institutions
Group
Non-Mudharabah fund
Licensed banks
Mudharabah fund
Licensed banks
2014
RM’000
2013
RM’000
-
1,538
44,564
-
46,102
280,000
20,000
1,298,873
185,000
300,000
1,483,873
300,000
1,529,975
145
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2014
RM’000
2013
RM’000
Accruals and other payables
Clients’ and dealers’ credit balances
Dividend payable
805,461
170,298
219,545
724,208
50,358
-
1,195,304
774,566
1,944
52
219,545
11,361
664
-
221,541
12,025
Company
Accruals and other payables
Amount due to subsidiaries
Dividend payable
Group
Takaful contract liabilities
Expense reserves
Takaful payable
Note
2014
RM’000
2013
RM’000
22(a)
22(b)
22(c), 41.5(b)
6,120,133
142,127
61,317
5,875,051
131,522
75,428
6,323,577
6,082,001
(a)Takaful contract liabilities
The takaful contract liabilities comprise the following:
Group
Note
Provision for unearned contributions
22(a)(i)
22(a)(ii)
Participants’ fund
22(a)(iii)
2014
RM’000
2013
RM’000
808,491
861,274
290,899
5,020,743
296,425
4,717,352
6,120,133
5,875,051
Additional
Information
Audited
Financial
Statements
22.Takaful liabilities
accountability
The amount due to subsidiaries is non-trade, unsecured, not subject to financing charge and repayable on demand.
18th AGM
information
Perspectives
Group
Performance
Review
21. Other liabilities
146
Annual Report 2014
Notes to the
22.Takaful liabilities (CONTINUED)
(a)Takaful contract liabilities (continued)
(i) Provision for outstanding claims
The provision for outstanding claims and its movements are further analysed as follows:
Note
Gross
RM’000
2014
Retakaful
RM’000
Net
RM’000
Family Takaful
Provision for claims reported by participants
Provision for IBNR *
33,310
169,748
203,058
(3,352)
(49,805)
(53,157)
29,958
119,943
149,901
General Takaful
375,636
229,797
605,433
(259,623)
(93,087)
(352,710)
116,013
136,710
252,723
Note 42(b)
Group
41.5(b)
408,946
(399,545)
(262,975)
(142,892)
145,971
256,653
(808,491)
(405,867)
402,624
Note 11
Note
Gross
RM’000
2013
Retakaful
RM’000
Net
RM’000
Family Takaful
40,150
155,657
195,807
(2,278)
(32,845)
(35,123)
37,872
122,812
160,684
General Takaful
433,215
232,252
665,467
(291,300)
(80,970)
(372,270)
141,915
151,282
293,197
473,365
387,909
861,274
(293,578)
(113,815)
(407,393)
179,787
274,094
453,881
Group
*Incurred-but-not-reported (“IBNR”)
41.5(b)
Note 11
147
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
22.Takaful liabilities (CONTINUED)
Performance
Review
(i) Provision for outstanding claims (continued)
Movement of provision for outstanding claims:
733,074
918,583
(91,255)
(769,419)
72,779
(2,488)
(301,150)
(225,695)
74,157
79,843
(37,408)
2,860
431,924
692,888
(17,098)
(689,576)
35,371
372
Claims incurred during the year
Adjustment to claims incurred in prior accident years
Claims paid during the year
Increase in IBNR
Effect of movement in exchange rates
At 31 December 2014
861,274
796,871
(66,989)
(796,785)
11,636
2,484
808,491
(407,393)
(135,998)
45,418
121,754
(29,077)
(571)
(405,867)
453,881
660,873
(21,571)
(675,031)
(17,441)
1,913
402,624
Audited
Financial
Statements
(ii) Provision for unearned contributions
The provision for unearned contributions and its movements are further analysed as follows:
Gross
RM’000
31.12.2014
290,899
Group
Retakaful
RM’000
(69,949)
Net
RM’000
220,950
Note 11
31.12.2013
296,425
(80,200)
Note 11
accountability
At 1 January 2013
Claims incurred during the year
Adjustment to claims incurred in prior accident years
Claims paid during the year
Increase in IBNR
Perspectives
Net
RM’000
216,225
Additional
Information
Group
Retakaful
RM’000
18th AGM
information
Gross
RM’000
148
Annual Report 2014
Notes to the
22.Takaful liabilities (Continued)
(ii) Provision for unearned contributions (continued)
Movement of provision for unearned contributions:
Gross
RM’000
Group
Retakaful
RM’000
Net
RM’000
At 1 January 2013
Contributions written during the year
Contributions earned during the year
295,439
428,406
(424,992)
(2,428)
(72,297)
(141,347)
132,969
475
223,142
287,059
(292,023)
(1,953)
Contributions written during the year
Contributions earned during the year
At 31 December 2014
296,425
451,319
(457,441)
596
290,899
(80,200)
(170,096)
180,457
(110)
(69,949)
216,225
281,223
(276,984)
486
220,950
(iii) Participants’ fund
Participants’ fund balance at end of the reporting period comprises the following:
Gross
RM’000
31.12.2014
Actuarial liabilities
Unallocated surplus/accumulated surplus
AFS reserve
Translation reserve
Net assets value attributable to unitholders
31.12.2013
Actuarial liabilities
Unallocated surplus/accumulated surplus
AFS reserve
Translation reserve
Net assets value attributable to unitholders
Group
Retakaful
RM’000
Net
RM’000
4,022,862
923,020
(68,235)
999
142,097
5,020,743
(206,644)
(206,644)
Note 11
3,816,218
923,020
(68,235)
999
142,097
4,814,099
3,708,819
897,061
1,379
1,129
108,964
4,717,352
(148,340)
(148,340)
Note 11
3,560,479
897,061
1,379
1,129
108,964
4,569,012
149
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Other operating expenses
Profit paid to participants
Increase in actuarial liabilities
Profit attributable to the
Takaful Operator
Excess payment transferred to
participants
Change in AFS reserve
Withholding tax
Effect of movement in
exchange rates
At 31 December
4,717,352
1,235,114
221,114
(148,340)
(65,737)
-
Net
RM’000
Gross
RM’000
4,569,012
1,169,377
221,114
4,419,630
1,391,017
211,900
4,355,774
1,339,065
211,900
132,936
9,621
2,931
(718,482)
38,482
(85,501)
(362,158)
(11,641)
(31,639)
(47,019)
(134,226)
(145,792)
(11,745)
(157,537)
(1,239)
(69,613)
(11,281)
3,236
(106,411)
(4,030)
69,152
-
42,009
12,871
6,540
(627,197)
(321,367)
132,936
9,621
2,931
(782,178)
(362,158)
(24,625)
(30,429)
-
(24,625)
(30,429)
(11,641)
(31,639)
(58,016)
(130,812)
(3,414)
(1,239)
(69,613)
(11,281)
13,163
5,020,743
(289)
(206,644)
Net
RM’000
(63,856)
(51,952)
63,696
42,009
12,871
6,540
(696,349)
(321,367)
58,295
2013
Retakaful
RM’000
279
12,874
4,814,099
(48,552)
4,717,352
1,018
(148,340)
3,236
(106,411)
(4,030)
(47,534)
4,569,012
(b) Expense reserves
At 1 January
Provision for the year, net
At 31 December
Group
2014
RM’000
2013
RM’000
131,522
10,415
190
142,127
89,486
42,770
(734)
131,522
Perspectives
At 1 January
Net earned contributions
Investment income
Realised gains
Fair value gains
Other operating income
Net benefits and claims
Fees deducted (net)
2014
Retakaful
RM’000
accountability
Group
Gross
RM’000
Audited
Financial
Statements
(iii) Participants’ fund (continued)
Additional
Information
Performance
Review
22.Takaful liabilities (Continued)
Group
Due to retakaful companies
Due to Intermediaries/Participants
2014
RM’000
2013
RM’000
46,409
14,908
61,359
14,069
61,317
75,428
18th AGM
information
(c)Takaful payables
150
Annual Report 2014
Notes to the
23. Sukuk liabilities
Group and Company
2014
2013
RM’000
RM’000
Sukuk liabilities
1,133,256
1,089,935
The amount refers to the 10-year Islamic securities (“Sukuk”) of RM1.66 billion in nominal value issued by the Company on
12 December 2013.
24. Share capital
Group and Company
2014
2013
RM’000
RM’000
Authorised:
Ordinary shares of RM1 each
2,000,000
2,000,000
Issued and fully paid:
Ordinary shares of RM1 each as at 1 January
Issuance of shares via the renounceable rights
Issuance of shares under conversion of warrants
Ordinary shares of RM1 each as at 31 December
1,493,506
*
1,493,506
1,066,790
426,716
1,493,506
*RM80
(a) Ordinary shares
In December 2013, the Company increased its issued and paid-up share capital from RM1,066,789,896 to RM1,493,505,854 via
the renounceable rights issue of 426,715,958 new ordinary shares of RM1.00 each.
There is no change in the authorised and issued and fully paid shares of the Company during the financial year.
(b)Warrants
On 11 December 2013, the Company issues 426,715,958 new ordinary shares of RM1.00 each together with 426,715,958 free
detachable warrants at an issue price of RM4.25 per rights share on the basis of two (2) rights share together with two (2)
warrants for every five (5) existing shares. The warrants will expire at the end of ten years from the date of issuance.
Warrants converted during the financial year resulted in 80 (2013: Nil) new ordinary shares of RM1.00 each being issued.
As at 31 December 2014, 426,715,878 (2013: 426,715,958) warrants remained unexercised.
25.Reserves
25.1 Share premium and reserves
Breakdown of share premium and reserves are as follows:
Group
Note
Share premium
Other reserves
(Accumulated losses)/Retained Earnings
25.2
2014
RM’000
2013
RM’000
1,859,628
(386,831)
(17,266)
1,455,531
1,859,628
(592,405)
49,608
1,316,831
151
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
1,859,628
51
129,300
15,599
2,004,578
1,859,628
(45)
129,300
235,004
2,223,887
25.2 Other reserves
At 1 January 2013
Foreign exchange
translation differences
Fair value reserve:
Net amount reclassified
to profit or loss
Transfer from current
year profit
Issuance of rights issue
shares with warrants
Acquisition of additional
interest in subsidiary
from non-controlling
interests
Share-based payment
transactions
At 31 December 2013/
1 January 2014
Foreign exchange
translation differences
Fair value reserve:
Net amount reclassified
to profit or loss
Transfer from current
year profit
Share-based payment
transactions
LTIP * exercised
At 31 December 2014
*Long Term Incentive Plan
Warrant Acquisition
reserve
reserve
RM’000
RM’000
Fair
value Translation
reserve
reserve
RM’000
RM’000
LTIP*
reserve
RM’000
Total
RM’000
6,863
358,719
-
-
69,176
(6,325)
-
428,433
-
-
-
-
-
(12,052)
-
(12,052)
-
-
-
-
(56,440)
-
-
-
-
(8,489)
-
125,370
-
-
-
-
129,300
-
-
-
-
-
-
-
6,863
484,089
129,300
-
-
-
-
-
-
-
-
(5,609)
-
-
-
-
(23,307)
-
254,517
-
-
6,863
738,606
129,300
(1,199,747)
(1,199,747)
(1,199,747)
(56,440)
-
-
(8,489)
-
-
-
125,370
-
-
-
129,300
-
-
-
-
-
1,220
(1,199,747)
1,220
4,247
(18,377)
1,220
(592,405)
-
(21,906)
-
(21,906)
-
-
(5,609)
-
-
(23,307)
-
-
254,517
(24,669)
(40,283)
2,903
(1,024)
3,099
Audited
Financial
Statements
Group
Capital Staturtory
reserve
reserve
RM’000
RM’000
Perspectives
2013
RM’000
2,903
(1,024)
(386,831)
Additional
Information
Share premium
Fair value reserves
Warrant reserves
Retained earnings
2014
RM’000
18th AGM
information
Company
accountability
25.1 Share premium and reserves (continued)
Performance
Review
25. Reserves (CONTINUED)
Annual Report 2014
152
Notes to the
25. Reserves (continued)
25.2 Other reserves (continued)
Acquisition reserve
The acquisition reserve is the difference between the consideration paid and the 49% equity interest in Bank Islam Malaysia
Berhad acquired in December 2013.
Warrant reserve
The warrant reserve arose from the Company’s issuance of 426,715,958 free detachable warrants on 11 December 2013.
Capital reserve
The capital reserve arose out of the issuance of bonus issue in a subsidiary of RM6,863,000.
Share premium
Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the
shares.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets recognised in
other comprehensive income until the investments are derecognised or impaired.
Statutory reserve
The statutory reserve is maintained in compliance with Section 57(2)(f) of the Islamic Financial Service Act, 2013 and is not
distributable as cash dividends.
Long Term Incentive Plan (“LTIP”) reserve
The LTIP reserve comprises the cumulative value of employee services received for the issue of Restricted Share Plan and
Performance Share Plan in Takaful Malaysia Berhad. When the LTIP is exercised, the amount from the LTIP reserve is transferred
to share premium. When the LTIP expires, the amount from the LTIP reserve is transferred to retained earnings. LTIP is disclosed
in Note 26.
26. Employee benefits
Share-based payments arrangement
At the Extraordinary General Meeting of Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) a subsidiary of the Company, held
on 24 July 2013, the shareholders approved the establishment of a Long Term Incentive Plan (“LTIP”), which comprises a Restricted
Share Plan (“RSP”) and a Performance Share Plan (“PSP”), of not more than 10% of issued and paid-up share capital of Takaful
Malaysia (excluding treasury shares) to eligible employees and executive directors of Takaful Malaysia. The LTIP was effected on
20 August 2013 following the submission of the By-Laws for the LTIP to Bursa Malaysia Securities Berhad, the receipt of all required
approvals and the compliance with the requirements pertaining to the LTIP.
153
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
(ii)The PSP is a performance share plan for selected key employees and the executive directors of Takaful Malaysia Group. The PSP
Grant is an annual grant to incentivise key employees for the long-term success and growth of Takaful Malaysia Group as well
as shareholders’ value enhancement.The PSP will be vested to the RSP Grantees at no consideration over a period of up to three
(3) years cliff vesting schedule whereby selected employees will be assessed based on, amongst others, the total shareholders’
return, which is the improvement in stock price including dividends paid, and the long-term financial performance of Takaful
Malaysia over a period of three (3) financial years, or such other period of time should the LTIP Committee choose to do so, in
accordance with terms and conditions stipulated and determined by the LTIP Committee in its discretion.
(iii)Eligible employees are those executives (including executive directors) of Takaful Malaysia Group (other than subsidiaries
which are dormant) who have attained the age of 18 years; entered into a full-time or fixed-term contract of employment with
and is on the payroll of a company within the Takaful Malaysia Group; have not served notice of resignation or received notice
of termination on the date of the offer; whose service/employment have been confirmed in writing; and have fulfilled other
eligibility criteria which has been determined by the LTIP Committee at its sole and absolute discretion from time to time.
(iv)The total number of Takaful Malaysia Shares to be offered to any one of the employees and/or to be vested in any one of the
grantees shall not be more than 10% of the Takaful Malaysia Shares made available under the LTIP and shall not either singly
or collectively through persons connected with the said employee, holds 20% or more of the Takaful Malaysia’s issued and paid
up share capital.
(v)The maximum number of Takaful Malaysia Shares to be allotted and issued under LTIP shall not be more than in aggregate 10%
of the issued and paid-up ordinary share capital of Takaful Malaysia at any point in time during the duration of the LTIP.
(vi)The LTIP shall be in force for a period of ten (10) years from the effective date of implementation of the LTIP.
(vii)The new Takaful Malaysia Shares to be allotted and issued pursuant to the LTIP shall, upon allotment and issuance, rank
pari passu in all respects with the then existing issued Takaful Malaysia Shares and shall be entitled to any rights, dividends,
allotments and/or distributions attached thereto and/or which may be declared, made or paid to Takaful Malaysia’s
shareholders, provided that the relevant allotment date of such new shares is before the record date (as defined in the LTIP
By-Laws) for any right, allotment or distribution.
(viii)If the LTIP Committee so decides (but not otherwise), in the event of any alteration in the capital structure of Takaful Malaysia’s
during the duration of the LTIP, such corresponding alterations (if any) may be made in the number of unvested Takaful
Malaysia Shares and/or the method and/or manner in the vesting of the Takaful Malaysia Shares comprised in a grant.
Perspectives
accountability
(i)The RSP is a restricted share plan for selected key employees and the executive directors of Takaful Malaysia and its
subsidiaries (collectively known as “Takaful Malaysia Group”).The RSP Grant is intended as a one-off grant, subject to the
discretion of the Long-term Incentive Plan Committee (“LTIP Committee”) for future grants, to retain key employees for the
development, growth and success of Takaful Malaysia Group.The RSP will be vested to the RSP Grantees at no consideration
over a period of up to three (3) years pro-rata which may include additional holding periods for each vesting as determined by
the LTIP Committee, whereby selected employees will be assessed based on, amongst others, the individual performance and
achievement, which may include but are not limited to, profit after zakat and taxation and/or other financial measures as may
be relevant, in accordance with terms and conditions stipulated and determined by the LTIP Committee in its discretion.The
LTIP Committee is a committee established by the Board to implement and administer the LTIP in accordance with the LTIP
By-Laws.
Audited
Financial
Statements
The salient features of the LTIP are, inter alia, as follows:
Additional
Information
Share-based payments arrangement (continued)
18th AGM
information
Performance
Review
26. Employee benefits (continued)
154
Annual Report 2014
Notes to the
During the year, the number of the shares in Takaful Malaysia granted are as follows:
Performance
Restricted Shares
Shares
Number of shares Number of shares
(’000)
(’000)
At 1 January 2013
Granted during the year
Outstanding at 31 December 2013/1 January 2014
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December 2014
Total
(’000)
607
724
1,331
607
(189)
(39)
379
724
460
(111)
1,073
1,331
460
(189)
(150)
1,452
During the financial year, 189,500 in Takaful Malaysia shares were vested. The weighted average share price at the date of exercise
for the year was RM8.96 (2013: Nil).
The fair value in Takaful Malaysia services received in return for Restricted Shares and Performance Shares granted are based on
the fair value of Restricted Shares and Performance Shares granted respectively, measured using Monte Carlo Simulation, with the
following inputs:
Fair value and assumption
Fair value at grant date (RM)
Weighted average share price (RM)
Share price at grant date (RM)
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends (RM)
Risk-free profit rate (based on
Malaysian government bonds)
Restricted Shares
Performance Shares
2014
2013
2014
2013
7.194
7.194
10.533
6.996
7.194
10.533
7.755
12.580
34.30% 31.19% to 34.30%
3
3
0.0384 0.0384 to 0.0431
6.996
7.755
34.30%
3
0.0384
7.194
7.755
34.30%
3
0.0384
3.30% to 3.52%
3.30% to 3.52%
3.43% to 3.52%
3.43%
155
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Shares granted in 2014
-Performance shares
2,327
2,017
1,148
868
4,344
2,016
470
-
4,814
2,016
27Income derived from investment of depositors’ funds
Group
Income derived from investment of:
(i) General investment deposits
(ii)Other deposits
2014
RM’000
2013
RM’000
114,634
1,917,451
118,442
1,732,836
2,032,085
1,851,278
(i)Income derived from investment of general investment deposits
Perspectives
Expense recognised as share-based payments
Shares granted in 2013
-Restricted shares
- Performance shares
2013
RM’000
accountability
Group
2014
RM’000
Audited
Financial
Statements
Value of employee services received for issue of Takaful Malaysia shares
Performance
Review
2013
RM’000
89,451
86,619
2,399
19,152
286
2,138
1,903
24,173
652
4,211
113,426
117,558
18th AGM
information
Financing income and hibah
Financial assets:
-Held-for-trading
-Available-for-sale
-Held-to-maturity
Money at call and deposit with financial institutions
2014
RM’000
Additional
Information
Group
156
Annual Report 2014
Notes to the
27Income derived from investment of depositors’ funds (continued)
(i)Income derived from investment of general investment deposits (continued)
Group
2014
RM’000
Other dealing income
Net loss from sale of financial assets held-for-trading
Net gain on revaluation of financial assets held-for-trading
Net gain from sale of financial assets available-for-sale
Loss on redemption of financial assets held-to-maturity
Of which
Financing income earned on impaired financing
(192)
173
(19)
1,227
1,227
114,634
1,409
2013
RM’000
(594)
596
2
911
(29)
882
118,442
1,696
(ii)Income derived from investment of other deposits
Group
2014
RM’000
Financial assets:
-Held-for-trading
-Available-for-sale
-Held-to-maturity
Money at call and deposits with financial institutions
Net loss from sale of financial assets held-for-trading
Net gain from sale of financial assets available-for-sale
Loss on redemption of financial assets held-to-maturity
Of which
Financing income earned on impaired financing
2013
RM’000
1,498,013
1,267,866
39,970
318,176
4,961
36,171
1,897,291
27,903
353,419
9,495
61,476
1,720,159
(3,172)
2,558
(614)
20,774
20,774
1,917,451
23,612
(8,948)
8,554
(394)
13,501
(430)
13,071
1,732,836
24,744
157
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2013
RM’000
6,133
119,197
7,342
4,429
103,988
15,919
3,178
5,634
132,672
124,336
3,178
5,634
95,443
102
295
(2,370)
83,797
93
9,163
-
-
93,470
93,053
-
-
201
-
-
603
201,610
2,305
31
749
270,285
2
6,900
4
(316)
309
616
16
2,619
161,454
(1,394)
2,923
216
6
768
6,458
178,632
(1,514)
2,770
349
166,443
187,670
204,549
277,940
392,585
405,059
207,727
283,574
Perspectives
2014
RM’000
accountability
Net loss from sale of financial assets available-for-sale
Reversal of allowance for doubtful debts
Gross dividend income from securities:
-Quoted in Malaysia
-Unit trust in Malaysia
-Unit trust outside Malaysia
-Unquoted in Malaysia
Gross dividend income from subsidiary companies
Fees and commission
Net (loss)/gain on disposal of property, plant and equipment
Net gain on disposal of shares in subsidiary
Rental income
Others
2013
RM’000
Audited
Financial
Statements
Net gain from foreign exchange transactions
Net gain from sale of financial assets held-for-trading
Net derivatives (loss)/gain
2014
RM’000
Additional
Information
Money at call and deposits with financial institutions
Company
18th AGM
information
Group
Performance
Review
28.Income derived from investment of shareholders’ funds
158
Annual Report 2014
Notes to the
29.Net income from Takaful business
Group
Note
Gross earned contributions
Contribution ceded to retakaful
29(a)
Other income
Administration income
Investment income
Realised gains and losses
Fair value gains and losses
Net benefits and claims
Gross benefits and claims paid
Claims receded to retakaful
Gross change to contract liabilities
Change to contract liabilities ceded to takaful
29(b)
Expense reserves
Income from takaful business
Profits attributable to participants/takaful operator
Net income from takaful business
2014
RM’000
2013
RM’000
1,415,806
(246,194)
1,523,388
(184,921)
1,169,612
1,338,467
40,524
240,317
47,544
11,701
9,581
30,954
230,061
144,072
3,575
6,593
349,667
415,255
(796,785)
121,754
55,267
(2,097)
(769,419)
79,843
(130,688)
109,103
(621,861)
(711,161)
(10,415)
(42,770)
887,003
(344,200)
999,791
(446,733)
542,803
553,058
(a)Net earned contributions
Group
2014
RM’000
2013
RM’000
Gross contributions
Change in actuarial reserves/unearned contributions reserves
1,409,614
6,192
1,480,301
43,087
Gross earned contributions
1,415,806
1,523,388
Retakaful
Change in actuarial reserves/unearned contributions reserve
(235,833)
(10,361)
1,169,612
(193,299)
8,378
1,338,467
159
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2013
RM’000
Gross benefits/claims paid
Retakaful recoveries
(796,785)
121,754
(769,419)
79,843
Net benefits/claims paid
(675,031)
(689,576)
(808,491)
(861,274)
(861,274)
2,484
(733,074)
(2,488)
55,267
(130,688)
405,867
407,393
407,393
(571)
301,150
2,860
Change in contract liabilities ceded to retakaful companies:
At 31 December
Less:
At 1 January
(2,097)
(621,861)
109,103
(711,161)
30.Allowance for/(Reversal of) impairment on financing and advances
Audited
Financial
Statements
Gross change in contract liabilities:
At 31 December
Less:
At 1 January
Perspectives
Group
2014
RM’000
accountability
(b)Net benefits and claims
Performance
Review
29.Net income from Takaful business (continued)
162,878
34,055
(136,940)
141,621
79,103
(235,733)
59,993
(15,009)
18th AGM
information
Bad debts and financing recovered
2013
RM’000
Additional
Information
Group
2014
RM’000
160
Annual Report 2014
Notes to the
31. (Reversal of)/Allowance for impairment on investments
Group
2014
RM’000
Financial assets:
-available-for-sale
-held-to-maturity
2013
RM’000
(2,872)
(106)
9,537
(326)
(2,978)
9,211
32.Income attributable to depositors
Group
- Mudharabah Fund
-Non-Mudharabah Fund
Deposits and placements of banks and other financial institutions
- Mudharabah Fund
-Non-Mudharabah Fund
2014
RM’000
2013
RM’000
594,380
227,159
593,296
155,773
23,155
307
19,237
4,495
845,001
772,801
33. Personnel expenses
Group
Salaries and wages
Employees’ Provident Fund
Directors’ remuneration
Others
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
460,097
56,417
22,427
60,111
452,974
56,129
20,370
64,448
3,302
456
3,535
452
3,260
432
3,072
455
599,052
593,921
7,745
7,219
161
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
(a)Aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as
follows:
Group
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
355
2,202
191
284
1,907
77
2,202
90
1,907
54
Performance
Review
33. Personnel expenses (Continued)
1,961
2,206
532
2,065
346
992
251
957
154
Total
5,486
4,679
3,535
3,072
13,913
474
13,195
477
-
-
14,387
13,672
-
-
2,181
373
1,773
246
-
-
16,941
15,691
-
-
Directors of the subsidiary companies
Executive Directors:
Benefits-in-kind
Fees and allowances
Benefits-in-kind
Total
Grand Total
22,427
20,370
3,535
3,072
Total (excluding benefits-in-kind)
20,857
19,224
3,194
2,864
731
603
-
-
(b) Shariah Supervisory Council
accountability
2,292
Audited
Financial
Statements
2,268
Additional
Information
2,748
Fees and allowances
Benefits-in-kind
18th AGM
information
Executive Director:
Fees and allowances
Benefits-in-kind
Perspectives
Directors of the Company
162
Annual Report 2014
Notes to the
34. Other overhead expenses
Group
Promotion
Establishment
General expenses
Included in other overhead expenses are:
Auditors’ remuneration
-Statutory audit - KPMG
- Other auditors
- Other services - KPMG
Depreciation of property, plant and equipment
Depreciation of investment properties
Rental of properties
Property, plant and equipment write off
Rental of equipment
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
177,287
220,135
168,121
200,393
207,546
197,204
333
1,994
2,023
275
1,869
22,270
565,543
605,143
4,350
24,414
1,239
100
694
61,077
158
53,734
52
5,890
1,361
121
360
60,347
276
51,907
4,659
5,384
115
17
681
882
100
97
360
675
852
99
35.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 either directly or indirectly. The key management personnel include all the Directors of the Group, and
certain senior management members of the Group.
The compensation for key management personnel other than Directors’ remuneration are as follows:
Group
Other key management personnel:
-Short-term employee benefits
-Benefits-in-kind
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
45,837
656
43,381
681
1,218
52
1,210
54
46,493
44,062
1,270
1,264
163
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
705
(383)
56,711
(250)
209,382
256,816
322
56,461
-
-
5,896
215,278
(8,802)
(5,849)
(14,651)
242,165
-
-
322
56,461
A reconciliation of effective tax expense for the Group and Company are as follows:
Group
Profit before tax
Income tax calculated using Malaysia tax rate of 25%
(2013: 25%)
Non-deductible expenses
Non-taxable income
Deferred tax assets not recognised
(Over)/Under provision in prior years
Under/(Over) provision of deferred tax
Tax expense
Recongnised in other comprehensive income:
Deferred tax expense
Provisions
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
815,384
819,427
127,410
248,592
203,846
30,584
(7,767)
(224)
226,439
(19,065)
7,904
215,278
204,857
44,142
(3,495)
245,504
2,510
(5,849)
242,165
31,853
19,982
(51,130)
705
(383)
322
62,148
7,252
(12,689)
56,711
(250)
56,461
2,351
2,351
839
(146)
693
-
-
Based on the recent amendments of Section 60AA of the Income Tax Act 1967 (ITA), the wakalah fee received by Shareholders’ fund
from Family Business is not subjected to income tax. Accordingly, commission and management expenses incurred by Shareholders’
fund in relation to Family Business are disallowed as deductible expenses. The amended Section 60AA of ITA will be effective for
year of assessment 2015 onwards.
Perspectives
254,306
2,510
2013
RM’000
accountability
228,447
(19,065)
(2,008)
7,904
Company
2014
RM’000
Audited
Financial
Statements
Deferred tax expense:
Origination and reversal of temporary differences
Under/(Over) provision in prior years
2013
RM’000
Additional
Information
Malaysia Income Tax:
Current Year
(Over)/under provision in prior years
Group
2014
RM’000
18th AGM
information
Major components of tax expense
Performance
Review
36.Tax expense
164
Annual Report 2014
Notes to the
37. Earnings per share
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 31 December 2014 was based on the profit attributable to owners of the
Company and the weighted average number of ordinary shares in issue during the year:
Group
Profit attributable to owners of the Company
2014
RM’000
2013
RM’000
532,329
279,327
Group
Weighted average number of ordinary shares
2014
’000
2013
’000
1,493,506
1,080,819
Group
Basic earnings per ordinary share
2014
Sen
2013
Sen
35.64
25.84
Diluted earnings per share
The Group have no dilution in their earnings per ordinary share as the warrants are currently out-of-money in view that the exercise
price for each warrant is higher than the closing market price of the Company’s shares as at 31 December 2014.
38.Dividends
Dividends recognised by the Company:
Sen
per share
Total
amount
RM’000
Date of
payment
2014
Final 2013 ordinary
Interim 2014 ordinary
8.50
14.70
126,948
219,545
29 May 2014
13 January 2015
Total amount
23.20
346,493
2013
Final 2012 ordinary
First interim 2013 ordinary
5.00
3.50
53,339
37,338
Total amount
8.50
90,677
The Directors do not recommend any final dividend to be paid for the year under review.
17 June 2013
21 October 2013
165
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
The Group or the Company has a related party relationship with its subsidiaries (see Note 14), associates (see Note 15) and holding
corporation of the Company.
(a)The significant related party transactions of the Group and the Company, other than key management personnel
compensation, are as follows:
Group
transactions for
2014
RM’000
Company
transactions for
2013
RM’000
2014
RM’000
2013
RM’000
-
-
Perspectives
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the
other party in making financial or operational decisions, or where the parties are subject to common control or common significant
influence. Related parties may be individuals or other entities.
Performance
Review
39. Related party transactions
95
84,996
21,608
3,292
5,823
2,675
985
718
292
17
1
56
(11,263)
108,750
20,128
3,678
2,677
1,726
227
6
-
Audited
Financial
Statements
Gain/(Loss) on forex transaction
Profit attributable on deposits placed
Rental of premises paid
Brokerage income
Contribution income for Family Takaful
Contribution income for General Takaful
Claims paid for Family Takaful
Claims paid for General Takaful
Other rental
Office rental received
Fees and commission received
Commission paid for Takaful
accountability
Holding Company
Income receivable on deposits placed
Office rental paid
Others
Contribution paid for General Takaful
Contribution paid for Family Takaful
Claims receivable for General Takaful
-
-
3,220
929
20
17
81
187
3,056
845
17
15
-
12
1,086
5,986
27
421
1,279
563
4,818
60
-
-
-
Additional
Information
Subsidiaries
Income received from financing, advances and others
Net gain on forex transaction
Profit attributable on deposits placed
Fees and commission received
Office rental paid
18th AGM
information
Other related companies
166
Annual Report 2014
Notes to the
39. Related party transactions (Continued)
(b)The significant outstanding balances of the Group and the Company with related party, are as follows:
Group
Net balance
outstanding as at
Company
Net balance
outstanding as at
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
-
30
-
-
2,639,396
3,347
187
1,133,256
4,308,191
1,851
127
1,089,935
1,133,256
1,089,935
Amount due from
Current account and investment deposits
Profit payable to investment deposit
Others
Amount due to
-
-
123,834
472
271
147,106
86
-
Others
-
-
52
664
205
77,448
-
-
618,454
3,478
247
200,846
5,726
204
-
-
Holding company
Amount due from
Others
Amount due to
Demand and investment deposits
Commitment and contingencies
Sukuk liabilities
Subsidiaries
Other related companies
Amount due from
Amount due to
Demand and investment deposits
Commitment and contingencies
167
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
The capital adequacy ratios of Bank Islam are set out below:
2014
%
2013
%
12.240
12.240
13.355
12.964
12.964
14.056
2014
RM’000
2013
RM’000
Tier I capital
Paid-up share capital
Share premium
Retained earnings
Other reserves
Less: Deferred tax assets
2,319,907
90,981
388,923
929,779
(31,220)
2,298,165
52,281
253,822
722,567
(24,613)
Total CET I and Tier I Capital
3,698,370
3,302,222
336,850
278,155
Common Equity Tier I (CET I) Capital Ratio
Total Tier I Capital Ratio
Total Capital Ratio
The components of CET I, Tier I and Tier II capital of Bank Islam:
Collective assessment allowance ^
Total Tier II Capital
Total Capital
336,850
278,155
4,035,220
3,580,377
Perspectives
Total capital and capital adequacy ratios of the Bank have been computed based on BNM’s Capital Adequacy Framework for
Islamic Banks (Capital Components and Risk-Weighted Assets) issued on 28 November 2012. The minimum regulatory capital
adequacy ratios requirement for Common Equity Tier I (“CET I”) capital ratio, Tier I capital ratio and total capital ratio are 4.0%,
5.5% and 8.0% respectively for year 2014. The Bank has adopted the Standardised Approach for Credit Risk and Market Risk and
the Basic Indicator Approach for Operational Risk.
accountability
Capital Adequacy Ratios
Audited
Financial
Statements
The Company is not required to maintain any capital adequacy ratios.
Additional
Information
The Total Capital Ratio computation consists of the capital adequacy ratios of Bank Islam Malaysia Berhad and its subsidiaries
(“Bank Islam” or “the Bank”).
^Collective assessment allowance on non-impaired financing subject to maximum of 1.25% of total credit risk-weighted assets.
18th AGM
information
Performance
Review
40.Capital adequacy
168
Annual Report 2014
Notes to the
40.Capital adequacy (continued)
The breakdown of risk-weighted assets by each major risk category is as follows:
2014
RM’000
2013
RM’000
26,947,994
542,910
2,724,074
22,252,433
761,777
2,457,803
30,214,978
25,472,013
Principal
Amount
RM’000
Positive Fair
Value of
Derivative
Contracts
RM’000
Credit
Equivalent
Amount
RM’000
Risk
Weighted
Asset
RM’000
360,433
2
1,026,265
-
360,433
2
513,132
355,715
2
451,601
236,874
-
47,375
45,832
6,165
942,851
1,023,337
-
1,233
471,425
204,668
1,215
378,793
153,502
5,404,888
-
-
-
9,000,815
-
1,598,268
1,386,660
Credit risk
Market risk
Operational risk
The off-balance sheet and counterparties credit risk for Bank Islam is as follows:
31 December 2014
Nature of item
Credit related exposures
Direct credit substitutes
Assets sold with recourse
Transaction related contingent items
Short term self-liquidating trade
related contingencies
Other commitments, such as formal standby
facilities and credit lines, with an
original maturity of:
- not exceeding one year
- exceeding one year
Unutilised credit card lines
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
169
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Credit
Equivalent
Amount
RM’000
Risk
Weighted
Asset
RM’000
1,840,778
45,508
65,406
36,492
300,000
600,000
287,694
348
12,278
4,392
308
20,153
12,996
62
4,031
12,996
106,680
3,135,152
15
62,541
6,401
105,264
3,200
56,781
12,135,967
62,541
1,703,532
1,443,441
319,032
2
877,246
-
319,032
2
438,623
312,160
2
386,730
278,297
-
55,659
54,695
1,714
823,818
991,097
-
343
411,909
198,219
327
338,294
148,665
5,116,604
-
-
-
8,407,810
-
1,423,787
1,240,873
31 December 2014
Nature of item
Derivative Financial Instruments
Foreign exchange related contracts
- less than one year
Profit rate related contracts
- one year to less than five years
- five years and above
Equity related contracts
Total
31 December 2013
Nature of item
Perspectives
Principal
Amount
RM’000
Positive Fair
Value of
Derivative
Contracts
RM’000
accountability
The off-balance sheet and counterparties credit risk for Bank Islam is as follows (continued):
Performance
Review
Additional
Information
18th AGM
information
Short term self-liquidating trade
Other commitments, such as formal standby
facilities and credit lines, with an
original maturity of:
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
Audited
Financial
Statements
Credit related exposures
170
Annual Report 2014
Notes to the
The off-balance sheet and counterparties credit risk for Bank Islam is as follows (continued):
Principal
Amount
RM’000
Positive Fair
Value of
Derivative
Contracts
RM’000
Credit
Equivalent
Amount
RM’000
Risk
Weighted
Asset
RM’000
1,381,894
8,681
18,546
10,290
100,000
500,000
711,481
695
2,705
16,455
250
9,000
35,660
50
1,800
19,660
110,495
2,803,870
582
29,118
8,840
72,296
4,420
36,220
11,211,680
29,118
1,496,083
1,277,093
31 December 2013
Nature of item
- five years and above
Total
41.Financial Risk Management policies
41.1Categories of financial instruments
The tables below provide an analysis of financial instruments categorised as follows:
(a)Financing, advances and receivables (“F&R”)
(b)Fair value through profit or loss (“FVTPL”)
(c)Financial assets available-for-sale (“AFS”)
(d)Financial assets held-to-maturity (“HTM”)
(e)Financial liabilities measured at amortised cost (“FL”)
Group
Carrying
amount
RM’000
F&R/(FL)
RM’000
FVTPL
RM’000
AFS
RM’000
HTM
RM’000
Derivatives
RM’000
4,619,496
1,165,590
62,541
13,815,889
547,258
29,524,571
811,051
4,619,496
29,524,571
811,051
1,165,590
-
13,815,889
-
547,258
-
62,541
-
1,335,000
538,204
1,335,000
538,204
-
-
-
-
52,419,600
36,828,322
1,165,590
13,815,889
547,258
62,541
31 December 2014
Financial assets
Cash, balances and placements with banks
Takaful assets
Statutory deposits with
Bank Negara Malaysia
Other assets
171
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
41.1Categories of financial instruments (continued)
Group
Carrying
amount
RM’000
F&R/(FL)
RM’000
(40,678,379)
FVTPL
RM’000
AFS
RM’000
HTM
RM’000
Derivatives
RM’000
(40,678,379)
-
-
-
-
(300,000)
(32,407)
(127,524)
(1,195,304)
(61,317)
(1,133,256)
(43,528,187)
(300,000)
(127,524)
(1,195,304)
(61,317)
(1,133,256)
(43,495,780)
-
-
-
4,655,198
1,405,198
29,118
16,536,010
467,935
23,740,948
753,089
4,655,198
23,740,948
753,089
1,405,198
-
16,536,010
-
467,935
-
29,118
-
1,297,100
207,628
49,092,224
1,297,100
207,628
30,653,963
1,405,198
16,536,010
467,935
29,118
(36,924,367)
(36,924,367)
-
-
-
-
(1,529,975)
(13,565)
(170,598)
(774,566)
(75,428)
(1,089,935)
(40,578,434)
(1,529,975)
(170,598)
(774,566)
(75,428)
(1,089,935)
(40,564,869)
-
-
-
31 December 2014
Performance
Review
41.Financial Risk Management policies (continued)
Takaful assets
Statutory deposits with
Bank Negara Malaysia
Other assets
Deposits and placements of banks and
other financial institutions
Bills and acceptance payable
Other liabilities
Takaful liabilities
Sukuk liabilities
(13,565)
(13,565)
accountability
Financial assets
Audited
Financial
Statements
31 December 2013
Additional
Information
(32,407)
(32,407)
18th AGM
information
Deposits and placements of banks
and other financial institutions
Other liabilities
Takaful liabilities
Sukuk liabilities
Perspectives
172
Annual Report 2014
Notes to the
41.1Categories of financial instruments (continued)
Company
Carrying
amount
RM’000
F&R/(FL)
RM’000
FVTPL
RM’000
AFS
RM’000
HTM
RM’000
Derivatives
RM’000
123,566
18,559
753
123,566
753
-
18,559
-
-
-
142,878
124,319
-
18,559
-
-
221,541
1,133,256
221,541
1,133,256
-
-
-
-
1,354,797
1,354,797
-
-
-
-
149,559
17,860
40
149,559
40
-
17,860
-
-
-
167,459
149,599
-
17,860
-
-
12,025
1,089,935
12,025
1,089,935
-
-
-
-
1,101,960
1,101,960
-
-
-
-
31 December 2014
Financial assets
Cash, balances and placements
with banks
Other assets
Other liabilities
Sukuk liabilities
31 December 2013
Financial assets
Other assets
Other liabilities
Sukuk liabilities
41.2Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
•
Credit risk
Market risk
Liquidity risk
Operational risk
The Group’s exposures to the above risks are mainly attributed to its main operating subsidiaries, Bank Islam and Takaful
Malaysia. The Company’s exposure to these risks is not presented separately as it is not material to the Group.
173
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
41.3Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Group’s exposure to credit risk arises principally from its financing, advances and others and
investment securities. The Company’s exposure to credit risk arises principally from investment securities.
Performance
Review
Management of Credit Risk
The management of credit risk is being performed by two distinct departments within the Bank’s Risk Management
Department (“RMD”), Credit Analysis and Credit Risk Management and two departments outside of the RMD domain,
namely, Credit Administration and Credit Recovery. The combined objectives are, amongst others:
•
•
•
•
To build a high quality credit portfolio in line with the Bank’s overall strategy and risk appetite;
To ensure that the Bank is compensated for the risk taken, balancing/optimising the risk/return relationship;
To develop an increasing ability to recognise, measure and avoid or mitigate potential credit risk problem areas; and
To conform with statutory, regulatory and internal credit requirements.
The Bank monitors its credit exposures either on a portfolio basis or individual basis through annual reviews. Credit risk
is proactively monitored through a set of early warning signals that could trigger immediate reviews of (certain part of)
the portfolio. The affected portfolio or financing is placed on a watch list to enforce close monitoring and prevent financing
from turning impaired and to increase chances of full recovery.
A comprehensive limit structure is in place to ensure that risks taken are within the risk appetite as set by the Bank’s Board
and to avoid credit risk contagion to a single customer, sector, product, Shariah contract, etc.
Credit risk arising from dealing and investing activities are managed by the establishment of limits which includes counter
parties limits and permissible acquisition of private entities’ instruments, subject to specified minimum rating threshold.
Furthermore, the dealing and investing activities are monitored by an independent middle office unit.
accountability
The Bank’s credit risk management governance includes the establishment of comprehensive credit risk policies, guidelines
and procedures which documents the Bank’s financing standards, discretionary powers for financing approval, credit risk
ratings methodologies and models, acceptable collaterals and valuation, and the review, rehabilitation and restructuring of
problematic and delinquent financing.
Audited
Financial
Statements
The Bank’s Management Risk Control Committee (“MRCC”) is responsible under the authority delegated by the Bank’s
BRC for managing credit risk at strategic level. The Bank’s MRCC reviews the Bank’s credit risk frameworks and guidelines,
aligns credit risk management with business strategies and planning, reviews credit profile of the credit portfolios and
recommends necessary actions to ensure that the credit risk remains within established risk tolerance level.
Additional
Information
Credit risk governance
The management of credit risk is principally carried out by using sets of policies and guidelines approved by Bank Islam’s
Board Risk Committee (“BRC”), guided by the Risk Appetite Statement approved by Bank Islam’s Board of Directors.
18th AGM
information
Bank Islam’s credit risk arises from all transactions that could lead to actual, contingent or potential claims against any
party, borrower or obligor. The types of credit risks that the Bank considers to be material includes: Default Risk, PreSettlement Risk, Counterparty Risk, Credit Concentration Risk, Residual/Credit Mitigation Risk and Migration Risk.
Perspectives
(a)Banking
Annual Report 2014
174
Notes to the
41.3Credit risk (continued)
(b)Takaful
Credit risk is the potential financial loss resulting from the failure of a customer, an intermediary or counterparty to settle
its financial and contractual obligations to the Takaful Malaysia Group as and when they fall due.
The Takaful Malaysia Group’s portfolio of Islamic debt securities, and to a lesser extent short-term and other investments,
are subject to credit risk. This risk is defined as the potential loss resulting from adverse changes in a borrower’s ability to
repay the debt. The Takaful Malaysia Group’s objective is to earn competitive relative returns by investing in a diversified
portfolio of securities.
Management has an investment credit risk policy in place. Limits are established to manage credit quality and concentration
risk.
Takaful Malaysia has takaful and other receivables and investment securities balances that are subject to credit risk. To
mitigate the risk of the counterparties not paying the amount due, Takaful Malaysia has established certain business
and financial guidelines for brokers/retakaful approval, incorporating ratings by major agencies where applicable and
considering currently available market information.
Takaful Malaysia also periodically review the financial stability of brokers/retakaful companies from public and other
sources and the settlement trend of amounts due from these parties.
Cash and deposits are generally placed with banks and financial institutions licensed under the Financial Services Act 2013
and Islamic Financial Services Act 2013 which are regulated by Bank Negara Malaysia.
Maximum exposure to credit risk
The following table presents the Group’s maximum exposure to credit risk of on-balance sheet and off-balance sheet financial
instruments, without taking into account of any collateral held or other credit enhancements. For on-balance sheet assets, the
exposure to credit risk equals their carrying amount. For contingent liabilities, the maximum exposure to credit risk is the
maximum amount that the Group would have to pay if the obligations of the instruments issued are called upon. For credit
commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.
175
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2013
RM’000
Deposits and placements with banks and other financial institutions
Financial assets held-for-trading (excluding shares, unit trusts and investment funds)
Financial assets available-for-sale (excluding shares, unit trusts and investment funds)
Other assets (net of prepayments)
Takaful assets
3,898,172
721,324
1,032,328
62,541
12,898,672
547,258
29,524,571
538,204
811,051
1,335,000
3,953,896
701,302
1,305,925
29,118
15,048,915
467,935
23,740,948
207,628
753,089
1,297,100
Sub-total
51,369,121
47,505,856
9,000,815
8,407,810
Credit related obligation:
Credit commitments
Sub-total
Total credit exposures
9,000,815
8,407,810
60,369,936
55,913,666
(i)Credit quality of gross financing and advances
Gross financing and advances of the main subsidiary, Bank Islam, are classified as follows:
• Neither past due nor impaired financing
Financing for which the borrower has not missed a contractual payment (profit or principal) when contractually due
and is not impaired as there is no objective evidence of impairment.
• Past due but not impaired financing
Financing for which its contractual profit or principal payments are past due, but the Group believes that impairment
is not appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the
Group.
• Impaired financing
Financing is classified as impaired when the principal or profit or both are past due for three months or more, or where
a financing is in arrears for less than three months, but the financing exhibits indications of significant credit weakness.
Perspectives
2014
RM’000
accountability
Group
Audited
Financial
Statements
Maximum exposure to credit risk (continued)
Additional
Information
18th AGM
information
Performance
Review
176
Annual Report 2014
Notes to the
(i)Credit quality of gross financing and advances (continued)
The table below summarises the credit quality of the Group’s gross financing according to the above classifications.
Group
2014
RM’000
2013
RM’000
Neither past due nor impaired
-Excellent to good
-Satisfactory
-Fair
23,196,518
5,741,808
407,727
18,909,824
4,249,300
368,334
Past due but not impaired
Impaired
29,346,053
421,120
344,539
23,527,458
429,760
285,302
30,111,712
24,242,520
(444,388)
(142,753)
29,524,571
(365,375)
(136,197)
23,740,948
For management of credit risk, the Bank applies an internal credit risk rating for its neither past due nor impaired financing
which is defined as follows:
•
•
•
Excellent to Good: Sound financial position with no difficulty in meeting its obligations.
Satisfactory: Adequate safety of meeting its obligations but more time is required to meet its obligation in full.
Fair: High risks on payment obligations. Financial performance may continue to deteriorate.
The age analysis of financing and advance past-due but not impaired as at the end of the reporting period was as follows:
Group
By aging
Month-in-arrears 1
Month-in-arrears 2
2014
RM’000
2013
RM’000
274,624
146,496
294,267
135,493
421,120
429,760
177
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
41.Financial risk management policies (continued)
Performance
Review
(ii)Credit quality of takaful receivables
The table below summarises the credit quality of the Group’s Takaful receivable:
101,441
15,715
8,522
Allowance for impairment
133,078
(4,487)
125,678
(8,522)
128,591
117,156
The age analysis of takaful receivables past-due but not impaired as at the end of the reporting period based on days pastdue was as follows:
Group
Days past-due
1-30 days
31-60 days
61-90 days
91-180 days
> 180 days
2014
RM’000
2013
RM’000
1,620
662
1,556
2,653
6,003
2,306
785
480
3,035
9,109
12,494
15,715
Impairment loss of takaful receivables
A reconciliation of the allowance for impairment losses for takaful receivables was as follows:
accountability
116,097
12,494
4,487
Audited
Financial
Statements
Takaful receivables
Neither past due nor impaired
Past due but not impaired
Impaired
Additional
Information
2013
RM’000
Perspectives
Group
2014
RM’000
At 1 January 2013
Writeback of impairment loss
10,883
(2,361)
Writeback of impairment loss
Allowance for impaired debts
8,522
(4,245)
220
(10)
At 31 December 2014
4,487
18th AGM
information
RM’000
178
Annual Report 2014
Notes to the
(iii)Credit quality of investments’ portfolio
Investments’ portfolio (excluding equity securities, unit trusts and investment units in closed end funds) of the Group by
external party rating are as follows:
Group
AAA
AA
A
Below A
Unrated
Sovereign
Unit-linked
Financial institution
Corporate
AAA
AA
A
Below A
Unrated
Sovereign
Unit-linked
Financial institution
Corporate
Financial
assets
held-fortrading
RM’000
Derivative
assets
RM’000
Financial
assets
availablefor-sale
RM’000
Financial
assets
held-tomaturity
RM’000
Total
RM’000
68,648
280,913
68,517
36,204
541,028
37,018
-
57,078
5,463
3,928,609
2,631,022
142,605
20,347
229,875
5,946,214
-
157,513
3,849
5,588
235,032
145,276
-
4,154,770
2,915,784
216,710
20,347
501,111
6,632,518
37,018
57,078
5,463
1,032,328
62,541
12,898,672
547,258
14,540,799
175,428
103,489
11,745
20,781
958,694
35,788
-
21,350
7,768
4,527,435
3,414,274
59,984
6,807
236,455
6,803,960
-
99,419
33,955
7,157
351
181,662
145,391
-
4,802,282
3,551,718
78,886
7,158
438,898
7,908,045
35,788
21,350
7,768
1,305,925
29,118
15,048,915
467,935
16,851,893
179
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Overview
All the Group’s businesses are subject to the risk that market prices and rates will move, resulting in profit or losses to the
Group. Furthermore, significant or sudden movements in rates could affect the Group’s liquidity/funding position. The Group
is exposed to the following main market risk factors:
•
•
•
•
Rate of Return or Profit Rate/Yield Risk: the potential impact on the Group’s profitability caused by changes in the market
rate of return, either due to general market movements or due to issuer/borrower specific causes;
Foreign Exchange Risk: the impact of exchange rate movements on the Group’s currency positions;
Equity Investment Risk: the profitability impact on the Group’s equity positions or investments caused by changes in
equity prices or values;
Commodity Inventory Risk: the risk of loss due to movements in commodity prices.
Perspectives
41.4Market risk
Performance
Review
Market risk governance
The management of market risk is principally carried out by using risk limits approved by the Bank’s BRC, guided by the
Risk Appetite Statement approved by the Board of Directors of the Bank.
The Asset and Liability Management Committee (“ALCO”) is responsible under the authority delegated by the Bank’s BRC
for managing market risk at strategic level.
Management of market risk
Bank Islam’s market risk exposures are managed by its Treasury. The aim is to ensure that all market risks are consolidated
at Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits
are set for portfolios, products and risk types, with market liquidity and credit quality being the principal factors in
determining the level of limits set.
The Bank’s Market Risk Management Department (“MRMD”) is an independent risk control function, responsible for
ensuring efficient implementation of market risk management policies. The Bank’s MRMD is also responsible for
developing market risk management guidelines, measurement techniques, behavioural assumptions and limit setting
methodologies. Any excesses against the prescribed limits are reported immediately to the Senior Management. Strict
escalation procedures are documented and approved by the Bank’s BRC. In addition, the market risk exposures and limits
are regularly reported to the Bank’s ALCO and BRC.
Audited
Financial
Statements
Bank Islam separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those
positions arising from market making, proprietary position taking and other marked-to-market positions so designated as
per the approved Trading Book Policy Statements. Non-trading portfolios primarily arise from the re-pricing mismatches
of the Bank’s customer driven assets and liabilities and from the Bank’s investment of its surplus funds.
Additional
Information
(a)Banking
18th AGM
information
The key features of the Group’s market risk management practices and policies are represented by the Banking and Takaful
segments.
accountability
The objective of the Group’s market risk management is to manage and control market risk exposures in order to optimise
return on risk while maintaining a market risk profile consistent with the Group’s approved risk appetite.
180
Annual Report 2014
Notes to the
41.4Market risk (continued)
(a)Banking (continued)
Management of market risk (continued)
Other controls to ensure market risk exposures remain within tolerable levels include stress testing, rigorous new product
approval procedures and a list of permissible instruments that can be traded. Stress test results are produced monthly to
determine the impact of changes in profit rates, foreign exchange rates and other risk factors on the profitability, capital
adequacy and liquidity of the respective operating subsidiaries. The stress test provides the Bank’s Management and the
BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the respective
businesses.
(i) Profit rate risk
The table below summarises the Bank’s exposure to profit rate risk. The table indicates average profit rates at the
reporting date and the period in which the financial instruments reprice or mature, whichever is earlier.
Non trading book
Bank Islam
Up to 1
month
RM’000
As at
31 December 2014
Assets
Cash, balances and
placements with
banks
2,391,792
Financial assets
held-for-trading
Derivative
financial assets
Financial assets
available-for-sale
56,394
Financial assets
held-to-maturity
Financing, advances
and others
-non-impaired 1,048,140
- impaired net of
allowances *
Other assets
Total assets
3,496,326
Non
Over 5
profit
years sensitive
RM’000 RM’000
>3-12
months
RM’000
1-5
years
RM’000
104,108
-
-
-
773,453
-
3,269,353
2.40
-
-
-
-
-
921,629
921,629
3.80
-
-
-
-
-
62,541
62,541
1.99
124,169
1,799,758
5,396,262
2,860,080
-
- 10,236,663
4.14
-
-
-
60,752
-
-
60,752
8.44
1,210,137
777,261
2,318,746 24,412,889
-
- 29,767,173
6.01
-
-
1,438,414
2,577,019
-
-
7,715,008 27,333,721
(242,602)
1,745,173
2,276,024
Trading
book
RM’000
Effective
profit
Total
rate
RM’000
%
>1-3
months
RM’000
-
(242,602)
1,745,173
984,170 45,820,682
Note 47
*This is arrived at after deducting collective assessment allowance and individual assessment allowance from the
outstanding gross impaired financing.
181
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
>1-3
months
RM’000
>3-12
months
RM’000
Bank Islam
As at
31 December 2014
Liabilities
Deposits from
customers
18,070,797 4,317,866 2,852,504
Deposits and
placements of
banks and other
financial
institutions
200,000
100,000
Derivative financial
liabilities
Bills and acceptance
payable
Other liabilities
Total liabilities
Non
Over 5
profit
years sensitive
RM’000 RM’000
55,698
- 15,713,467
- 41,010,332
2.19
-
-
-
-
300,000
2.99
-
-
-
32,407
32,407
1.03
-
-
127,524
-
127,524
Trading
book
RM’000
Effective
profit
Total
rate
RM’000
%
55,698
620,829
- 16,461,820
620,829
32,407 42,091,092
Note 47
-
-
- 3,729,590
- 3,729,590
- 3,729,590
- 3,729,590
Total liabilities
and shareholders’
equity of the Bank 18,270,797 4,417,866 2,852,504
55,698
- 20,191,410
32,407 45,820,682
Equity
Equity attributable
to equity holders
of the Bank
Total equity
18,270,797 4,417,866 2,852,504
1-5
years
RM’000
-
-
On-balance sheet
profit sensitivity
gap
(14,774,471) (2,979,452)
Off-balance sheet
profit sensitivity
gap (profit rate
swaps)
300,000
300,000
Total profit
sensitivity gap (14,474,471) (2,679,452)
(275,485) 7,659,310 27,333,721 (17,915,386)
-
(600,000)
-
-
(275,485) 7,059,310 27,333,721 (17,915,386)
951,763
-
-
-
951,763
-
accountability
Up to 1
month
RM’000
Audited
Financial
Statements
Non trading book
Additional
Information
(i) Profit rate risk (continued)
18th AGM
information
Perspectives
Performance
Review
182
Annual Report 2014
Notes to the
Non trading book
Bank Islam
Up to 1
month
RM’000
>1-3
months
RM’000
>3-12
months
RM’000
1-5
years
RM’000
Non
Over 5
profit
years sensitive
RM’000 RM’000
Trading
book
RM’000
Effective
profit
Total
rate
RM’000
%
As at
31 December 2013
Assets
Cash, balances and
placements with
banks
2,984,281
130,491
18
616,133
- 3,730,923
Financial assets
held-for-trading
- 1,216,895 1,216,895
assets
29,118
29,118
Financial assets
available-for-sale 291,837
978,243 1,979,158 5,727,754 3,439,929
- 12,416,921
Financial assets
held-to-maturity
63,327
63,327
Financing, advances
and others
-non-impaired 1,014,025 1,125,266
580,605 2,130,053 19,107,269
- 23,957,218
- impaired net of
allowances *
- (216,270)
- (216,270)
Other assets
- 1,613,239
- 1,613,239
Total assets
2.26
2.51
1.04
3.96
9.06
6.25
4,290,143 2,234,000 2,559,781 7,857,807 22,610,525 2,013,102 1,246,013 42,811,371
Note 47
*This is arrived at after deducting collective assessment allowance and individual assessment allowance from the
outstanding gross impaired financing.
183
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
>3-12
months
RM’000
1-5
years
RM’000
17,553,433 2,771,729 2,093,107
175,956
Over 5
years
RM’000
Non
profit Trading
sensitive
book
RM’000 RM’000
Effective
profit
Total
rate
RM’000
%
Liabilities
Deposits from
customers
Deposits and
placements of
banks and other
financial
institutions
1,314,564
liabilities
Bills and acceptance
payable
Other liabilities
Total liabilities
154 14,650,623
- 37,245,002
2.16
- 1,529,975
2.20
151,538
63,873
-
-
-
-
-
-
-
-
-
13,565
13,565
0.48
20,421
4,855
-
-
-
145,322
-
170,598
3.45
-
525,396
-
525,396
-
-
-
-
18,888,418
2,928,122
2,156,980
175,956
154 15,321,341
13,565 39,484,536
Note 47
Equity
Equity attributable
to equity holders
of the Bank
-
-
-
-
-
3,326,835
- 3,326,835
Total equity
-
-
-
-
-
3,326,835
- 3,326,835
Total liabilities
and shareholders’
equity of the Bank 18,888,418 2,928,122 2,156,980
175,956
154 18,648,176
13,565 42,811,371
On-balance sheet
profit sensitivity
gap
(14,598,275)
(694,122)
402,801
7,681,851
Off-balance sheet
profit sensitivity
gap (profit rate
swaps)
400,000
600,000
(100,000)
(500,000)
302,801
7,181,851
Total profit
sensitivity gap
(14,198,275)
(94,122)
22,610,371 (16,635,074)
(400,000)
-
22,210,371 (16,635,074)
1,232,448
-
-
-
1,232,448
-
Perspectives
>1-3
months
RM’000
accountability
Bank Islam
As at
31 December 2013
Up to 1
month
RM’000
Audited
Financial
Statements
Non trading book
Additional
Information
18th AGM
information
Performance
Review
184
Annual Report 2014
Notes to the
(ii) Profit rate risk in the non-trading portfolio
Profit rate risk in the non-trading portfolio is managed and controlled using measurement known as economic value of
equity (“EVE”) and earnings-at-risk (“EaR”). EVE and EaR limits are approved by the Bank’s BRC and independently
monitored monthly by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s
ALCO and BRC.
The Bank manages market risk in non-trading portfolios by monitoring the sensitivity of projected EaR and EVE under
varying profit rate scenarios (simulation modelling). For simulation modelling, a combination of standard scenarios
and non-standard scenarios relevant to the local market are used. The standard scenarios monitored monthly include
a 100 and 200 basis points parallel fall or rise in profit rates and historical simulation of past events. The scenarios
assume no management action. Hence, they do not incorporate actions that would be taken by the Bank’s Treasury to
mitigate the impact of the profit rate risk. In reality, depending on the view on future market movements, the Bank’s
Treasury would proactively seek to change the profit rate exposure profile to minimise losses and to optimize net
revenues. The nature of the hedging and risk mitigation strategies corresponds to the market instruments available.
These strategies range from the use of derivative financial instruments, such as profit rate swaps, to more intricate
hedging strategies to address inordinate profit rate risk exposures.
The table below shows the projected sensitivity at the Bank’s level to a 100 basis points parallel shift to profit rates
across all maturities applied on the Bank’s profit rate sensitivity gap as at reporting date.
2014
-100bps
Bank Islam
Impact on EaR
Impact on EVE
2013
+100bps
-100bps
+100bps
Increase/(Decrease) RM’million
(22.45)
(397.43)
22.45
397.43
(51.45)
(521.44)
51.45
521.44
Note: EVE and EaR as at 31 December 2013 were reinstated in line with the change in methodology from behavioural
method to BNM contractual method as approved by the Special BRC 01/2014 on 30 June 2014.
185
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Other controls to contain profit rate risk in the non-trading portfolio include stress testing and applying sensitivity
limits to the available-for-sale financial assets. Sensitivity is measured by the present value of a 1 basis point change
(“PV01”) and is independently monitored by the Bank’s MRMD on a daily basis against limits approved by the BRC.
PV01 exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.
(iii)Market risk in the trading portfolio
Market risk in the trading portfolio is monitored and controlled using Value-at-Risk (“VaR”). VaR limit is approved
by the Bank’s BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and
reported to the Bank’s ALCO and BRC.
A summary of the VaR position of the Bank’s trading portfolios at the reporting date is as follows:
1.1.2014 to 31.12.2014
Average
RM’million
Maximum
RM’million
Minimum
RM’million
Profit rate risk
Foreign exchange risk
0.67
0.11
1.62
0.22
2.83
2.08
0.63
0.01
Overall
0.78
1.84
4.71
0.68
As at
31.12.2013
RM’million
Average
RM’million
Maximum
RM’million
Minimum
RM’million
Profit rate risk
Foreign exchange risk
1.48
0.78
1.64
0.26
3.33
1.06
0.43
0.01
Overall
2.26
1.90
3.64
0.55
Bank Islam
1.1.2013 to 31.12.2013
Additional
Information
Bank Islam
18th AGM
information
As at
31.12.2014
RM’million
accountability
(ii) Profit rate risk in the non-trading portfolio (continued)
Audited
Financial
Statements
Perspectives
Performance
Review
Annual Report 2014
186
Notes to the
(iii)Market risk in the trading portfolio (continued)
Value-at-Risk
VaR is a technique that estimates the potential losses that could occur on risk positions as a result of movements in
market rates and prices over a specified time horizon and to a given level of confidence. The VaR models used by Bank
Islam are based on historical simulation. These models derive plausible future scenarios from past series of recorded
market rates and prices, taking into account inter-relationships between different markets and rates such as profit rates
and foreign exchange rates.
The historical simulation models used by the Bank incorporate the following features:
•
•
•
•
potential market movements are calculated with reference to data from the past four years;
historical market rates and prices are calculated with reference to foreign exchange rates and profit rates;
VaR is calculated to a 99 per cent confidence level and for a one-day holding period. The nature of the VaR models
means that an increase in observed market volatility will lead to an increase in VaR without any changes in the
underlying positions; and
The dataset is updated on weekly basis.
Statistically, the Bank would expect to see losses in excess of VaR only 1 per cent of the time over a one-year period.
The actual number of excesses over this period can therefore be used to gauge how well the models are performing.
Although a valuable guide to risk, VaR should always be viewed in the context of its limitations. For example:
•
•
•
•
•
The use of historical data as a proxy for estimating future events may not encompass all potential events,
particularly those which are extreme in nature;
The use of a 1-day holding period assumes that all positions can be liquidated or hedged in one day. This may not
fully reflect the market risk arising at times of severe illiquidity, when a 1-day holding period may be insufficient
to liquidate or hedge all positions fully;
The use of a 99 per cent confidence level, by definition, does not take into account losses that might occur beyond
this level of confidence;
VaR is calculated on the basis of exposures outstanding at the close of business and therefore does not necessarily
reflect intra-day exposures; and
VaR is unlikely to reflect the loss potential on exposures that might arise under significant market movements.
The Bank recognises these limitations by augmenting the VaR limits with other limits such as maximum loss limits,
position limits and PV01 limits structures. These limits are approved by the Bank’s BRC and independently monitored
daily by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.
Other controls to contain market risk at an acceptable level are through stress testing, rigorous new product approval
processes and a list of permissible instruments to be traded. Stress tests are produced monthly to determine the impact
of changes in profit rates, foreign exchange rates and other main economic indicators on the Bank’s profitability,
capital adequacy and liquidity. The stress-testing provides the Bank’s Management and BRC with an assessment of the
financial impact of identified extreme events on the market risk exposures of the Bank.
187
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Performance
Review
(iv)Foreign exchange risk
Overall (trading and non-trading positions)
The Bank controls the overall foreign exchange risk by limiting the open exposure to non-Ringgit positions on an
aggregate basis.
Perspectives
Trading positions
In addition to VaR and stress testing, the Bank controls the foreign exchange risk within the trading portfolio by
limiting the open exposure to individual currencies, and on an aggregate basis.
2014
Bank Islam
US Dollar
Euro
Others
-1%
Depreciation
RM’000
(4,855)
5,268
861
2013
+1%
Appreciation
RM’000
4,855
(5,268)
(861)
-1%
Depreciation
RM’000
8,604
6,306
(148)
+1%
Appreciation
RM’000
(8,604)
(6,306)
148
Audited
Financial
Statements
Sensitivity Analysis
Considering that other risk variables remain constant, the foreign currency revaluation sensitivity for the Group as at
reporting date is summarised as follows:
accountability
Foreign exchange limits are approved by the Bank’s BRC and independently monitored daily by the Bank’s MRMD.
Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.
-A group-wide market risk policy setting out the evaluation and determination of components of market risk for the
Takaful Malaysia Group. Compliance with the policy is monitored and reported monthly to Takaful Malaysia’s Risk
Management Committee (“RMC”) and exposures and breaches are reported as soon as practicable.
-Set asset allocation, portfolio limit structure and diversification benchmark to ensure that assets back specific
contract liabilities and that assets are held to deliver income and gains for certificate holders in line with terms of the
respective contracts expectations of policies. Takaful Malaysia’s policies on asset allocation, portfolio limit structure
and diversification benchmark have been set in line with Takaful Malaysia’s risk management policy after taking
cognisance of the regulatory requirements in respect of maintenance of assets and solvency.
Takaful Malaysia also issue unit-linked investment policies. In the unit-linked business, the certificate holders bear
investment risk on the assets held in the unit-linked funds as the certificate benefits are directly linked to value of the assets
in the funds. Takaful Malaysia’s exposure to market risk on this business is limited to the extent that income arising from
asset management charges is based on the value of the assets in the funds.
18th AGM
information
The key features of Takaful Malaysia’s market risk management practices and policies are as follows:
Additional
Information
(b) Takaful
188
Annual Report 2014
Notes to the
(b) Takaful (continued)
(i) Profit yield risk
Profit yield risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes
in market profit yield.
Floating rate/yield instruments expose Takaful to cash flow risk, whereas fixed rate/yield instruments expose Takaful
to fair value risk.
Takaful Malaysia’s profit risk policy requires its Management to manage the risk by maintaining an appropriate mix of
variable and fixed rate/yield instruments. The policy also requires Takaful management to manage the maturities of
profit-bearing financial assets and liabilities. Floating rate/yield instruments will be re-priced at intervals of not more
than one (1) year. Profit on fixed rate/yield instruments is priced at inception of the financial instrument and is fixed
until maturity.
The profit yield profile of the Takaful Malaysia Group and its subsidiaries’ significant profit-bearing financial
instruments, based on carrying amounts as at the end of the reporting period is as follows:
Fixed rate instruments
2014
AFS financial assets
FVTPL financial assets
HTM financial assets
Financing and receivables
2013
HTM financial assets
Financing and receivables
Takaful
Operator
RM’000
Family
Takaful
RM’000
General
Takaful
RM’000
Takaful
Malaysia
Group
RM’000
258,447
3,236
2,248
246,802
2,090,635
112,553
442,979
1,081,406
349,413
41,279
177,653
2,698,495
115,789
486,506
1,505,861
510,733
3,727,573
568,345
4,806,651
250,115
4,041
1,965
194,337
2,043,811
84,989
366,741
694,446
375,414
35,902
104,501
2,669,340
89,030
404,608
993,284
450,458
3,189,987
515,817
4,156,262
189
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Performance
Review
(i) Profit yield risk (continued)
2013
(8,020)
10
(8)
(168,963)
(8)
10
(8,010)
(8)
(168,971)
(10)
8,790
(10)
4
147,429
4
(10)
8,780
4
147,433
11
(8,351)
11
(325)
(135,002)
(325)
11
(8,340)
(325)
(135,327)
(11)
10,603
(11)
368
179,063
368
(11)
10,592
368
179,431
+50bps
+50bps
-50bps
-50bps
*Impact on equity reflects adjustments for tax, when applicable.
Impact on
Participants’
fund
RM’000
accountability
10
-50bps
-50bps
Impact on
operating
surplus
RM’000
Audited
Financial
Statements
+50bps
+50bps
Impact on
equity*
RM’000
Additional
Information
2014
Change in
variables
Impact on
profit
before tax
RM’000
18th AGM
information
A change of 50 basis points in profit rates at the end of the reporting period would have increased/(decreased) other
comprehensive income/equity, Family and General Takaful participants’ fund by the amounts shown below. The
analysis assumes that all other variables remain constant.
Perspectives
Takaful Malaysia has no significant concentration of profit yield risk.
190
Annual Report 2014
Notes to the
(ii) Other price risk
Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices (other than those arising from profit yield risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial
instruments traded in the market.
Takaful’s equity price risk exposure relates to financial assets whose values will fluctuate as a result of changes in
market prices (excluding those investment securities held for the account of unit-linked business).
Takaful’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on
investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also
to such limits stipulated by BNM. Takaful and its subsidiaries comply with BNM stipulated limits during the financial
year and has no significant concentration of price risk.
Equity price risk sensitivity analysis
The analysis below is performed for reasonably possible movements in key variables with all other variables held
constant, showing the impact on OCI/Equity for Takaful Operator, and showing the impact on operating surplus/
participants’ fund for Investment-linked Fund, and participants’ fund for Family Takaful Fund and General Takaful
Fund accordingly. The correlation of variables will have a significant effect in determining the ultimate impact on price
risk, but to demonstrate the impact due to changes in variables, variables had to be changed on individual basis. It
should be noted that movements in these variables are non-linear.
Change in
variables
Impact on
profit
before tax
RM’000
Impact on
equity*
RM’000
Impact on
operating
surplus
RM’000
Impact on
Participants’
fund
RM’000
2014
Market price
Market price
+15bps
-15bps
8
(8)
7,820
(7,820)
8,136
(8,136)
88,747
(88,747)
2013
Market price
Market price
+15bps
-15bps
(39)
39
13,045
(13,045)
5,736
(5,736)
147,610
(147,610)
*Impact on equity reflects adjustments for tax, when applicable.
191
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
(iii)Foreign exchange risk
Performance
Review
As Takaful Malaysia’s main foreign exchange risk from recognised assets and liabilities arises from retakaful transactions for
which the balances are expected to be settled and realised in less than a year, the impact arising from sensitivity in foreign
exchange rates is deemed minimal as Takaful Malaysia has no significant concentration of foreign currency risk.
Takaful Malaysia’s exposure to currency risk is immaterial in the context of the financial statements and hence, sensitivity analysis
is not presented.
41.5Liquidity risk
accountability
As Takaful Malaysia’s business is conducted primarily in Malaysia, the Takaful Malaysia Group and its subsidiaries’ financial
assets are also primarily maintained in Malaysia as required under the Islamic Financial Services Act 2013, and hence, primarily
denominated in the same currency (the local RM) as its takaful and investment contract liabilities. Accordingly, the main foreign
exchange risk from recognised assets and liabilities arises from transactions other than those in which takaful and investment
contract liabilities are expected to be settled.
Perspectives
Takaful Malaysia’s primary transactions are carried out in Ringgit Malaysia (“RM” ) and its exposure to foreign exchange risk
arises principally with respect to Indonesia Rupiah (“Rp”) and US Dollar (“USD”).
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations when they fall due, or might have
to fund these obligations at excessive cost. This risk can arise from mismatches in the timing of cash flows. Funding risk arises when the
necessary liquidity to fund illiquid asset positions cannot be obtained at the expected terms when required.
The management reviews both Banking and Takaful business’ liquidity risk separately due to the different nature of both businesses.
Audited
Financial
Statements
Overview
The objective of the Bank’s liquidity and funding management is to ensure that all foreseeable funding commitments and deposit
withdrawals can be met when due and that wholesale market access remains accessible and cost effective.
Current accounts and savings deposits payable on demand or at short notice form a significant part of the Bank’s funding, and the
Bank places considerable importance on maintaining their stability. For deposits, stability depends upon preserving depositors’
confidence in the Bank and the Bank’s capital strength and liquidity, and on competitive and transparent pricing.
The management of liquidity and funding is primarily carried out in accordance with the BNM Liquidity Framework, practices
and limits, and triggers approved by the Bank’s BRC and ALCO. These limits and triggers vary to take account of the depth and
liquidity of the local market in which the Bank operates. The Bank maintains a strong liquidity position and manages the liquidity
profile of its assets, liabilities and commitments to ensure that cash flows are appropriately balanced and all obligations are met
when due.
18th AGM
information
In respect of Bank Islam, the Bank maintains a diversified and stable funding base comprising core retail, commercial, corporate
customer deposits and institutional balances. This is augmented by wholesale funding and portfolios of highly liquid assets.
Additional
Information
(a)Banking
Annual Report 2014
192
Notes to the
41.5Liquidity risk (continued)
The Bank’s liquidity and funding management process includes:
•
•
•
•
•
•
Daily projection of cash flows and ensuring that the Bank has sufficient liquidity surplus and reserves to sustain a sudden
liquidity shock;
Projecting cash flows and considering the level of liquid assets necessary in relation thereto;
Maintain liabilities of appropriate term relative to the asset base;
Maintain a diverse range of funding sources with adequate back-up facilities;
Monitor depositors’ concentration in order to avoid undue reliance on large individual depositors and ensure a satisfactory
overall funding mix; and
Manage the maturities and diversify funding liabilities across products and counterparties.
Liquidity and funding risk governance
The management of liquidity and funding risk is principally undertaken using risk limit mandates approved by the Bank’s
BRC and management action triggers assigned by the Bank’s ALCO.
The Bank’s ALCO is responsible under the authority delegated by the Bank’s BRC for managing liquidity and funding risk
at strategic level.
Management of liquidity and funding risk
All liquidity risk exposures are managed by the Bank’s Treasury. The aim is to ensure that liquidity and funding risk are
consolidated at the Bank’s Treasury, which has the necessary skills, tools, management and governance to manage such
risks professionally. Limits and triggers are set to meet the following objectives:
•
•
•
•
•
Sufficient liquidity surplus and reserves to sustain a sudden liquidity shock;
Cash flows are relatively diversified across all maturities;
Deposit base is not overly concentrated to a relatively small number of depositors;
Sufficient borrowing capacity in the Interbank market and highly liquid financial assets to back it up; and
Not over-extending financing activities relative to the deposit base.
The Bank’s MRMD is the independent risk control function and is responsible for ensuring efficient implementation of
liquidity and funding risk management policies. It is also responsible for developing the Bank’s liquidity and funding risk
management guidelines, measurement techniques, behavioural assumptions and limit setting methodologies. Any excess
against the prescribed limits and triggers are reported immediately to the Bank’s Senior Management. Strict escalation
procedures are documented and approved by the Bank’s BRC, with proper authorities to ratify or approve the excess in place.
In addition, the market risk exposures and limits are regularly reported to the Bank’s ALCO and BRC.
Another control to ensure that liquidity and funding risk exposures remain within tolerable levels includes stress testing.
Stress testing and scenario analysis are important tools in the Bank’s liquidity management framework. This will also include
an assessment of asset liquidity under various stress scenarios. Stress test results are produced monthly to determine the
impact of a sudden liquidity shock. The stress-testing provides the Bank’s Management and BRC with an assessment of the
financial impact of identified extreme events on the liquidity and funding risk exposures of the Bank.
A final key control feature of the Bank’s liquidity and funding risk management are the approved and documented liquidity
and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in
the event of difficulties arising from systemic or other crisis while minimising adverse long-term implications to the Bank.
193
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Performance
Review
Maturity analysis
>1 to 3
months
RM’000
>3 to 6
months
RM’000
>6 to 12
months
RM’000
Over
1 year
RM’000
Total
RM’000
Assets
Cash, balances and
placements with banks
Securities portfolio
Derivatives financial assets
Financing and advances
Other assets
773,453
-
2,391,792
490,709
4,323
1,048,140
-
104,108
259,457
8,250
1,210,137
-
730,579
26,970
509,343
-
1,229,869
6,328
267,918
-
8,508,430
16,670
26,489,033
1,745,173
3,269,353
11,219,044
62,541
29,524,571
1,745,173
Total assets
773,453
3,934,964
1,581,952
1,266,892
1,504,115
36,759,306
45,820,682
Note 47
Liabilities
Deposits and placements of
banks and other financial
institutions
Other liabilities
Total liabilities
15,713,467
18,070,797
4,317,866
1,860,673
991,831
55,698
41,010,332
-
200,000
2,108
-
100,000
17,720
-
4,310
-
4,985
-
3,284
748,353
300,000
32,407
748,353
15,713,467
18,272,905
4,435,586
1,864,983
996,816
807,335
42,091,092
accountability
Up to
1 month
RM’000
Audited
Financial
Statements
On
demand
RM’000
Perspectives
The table below summarises the Bank’s assets and liabilities based on remaining contractual maturities.
Net liquidity gap
-
-
(14,940,014) (14,337,941)
2,410,036
1,676,783
(17,350,050) (16,014,724)
(2,853,634)
(598,091)
1,434,560
1,434,375
(4,288,194)
(2,032,466)
-
3,729,590
3,729,590
507,299
32,222,381
-
2,372,617
2,807,596
12,135,967
(1,865,318) 29,414,785 (12,135,967)
18th AGM
information
On Balance Sheet Net
liquidity gap
Commitments and
contingencies
Additional
Information
Note 47
Equity
Equity attributable to equity
holders of the Bank
194
Annual Report 2014
Notes to the
Maturity analysis (continued)
On
demand
RM’000
Up to
1 month
RM’000
>1 to 3
months
RM’000
>3 to 6
months
RM’000
Assets
Cash, balances and
placements with banks
Securities portfolio
Derivatives financial assets
Financing and advances
Other assets
616,133
-
2,984,281
291,837
8,374
1,014,025
-
130,491
1,338,465
3,828
1,125,266
-
13
967,987
(200)
224,711
-
Total assets
616,133
4,298,517
2,598,050
1,192,511
>6 to 12
months
RM’000
Over
1 year
RM’000
Total
RM’000
5
1,342,489
9,756,365
(259)
17,375
355,894 21,021,052
1,613,239
3,730,923
13,697,143
29,118
23,740,948
1,613,239
1,698,129
42,811,371
32,408,031
Note 47
Liabilities
Deposits and placements of
banks and other financial
institutions
Other liabilities
Total liabilities
14,650,623
17,553,433
2,771,729
1,531,244
561,863
176,110
37,245,002
-
1,314,564
6,915
-
151,538
4,368
-
32,755
91
-
31,118
24
-
2,167
695,994
1,529,975
13,565
695,994
14,650,623
18,874,912
2,927,635
1,564,090
593,005
874,271
39,484,536
Note 47
Equity
Equity attributable to equity
holders of the Bank
On Balance Sheet Net
liquidity gap
Commitments and
contingencies
Net liquidity gap
-
-
(14,034,490) (14,576,395)
2,186,831
2,011,842
(16,221,321) (16,588,237)
(329,585)
1,358,059
(1,687,644)
-
-
3,326,835
3,326,835
(371,579)
1,105,124
28,206,925
-
873,122
1,898,539
2,883,287
(1,244,701)
(793,415) 25,323,638
11,211,680
(11,211,680)
195
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Forward contract
Islamic Profit Rate Swap
Structured deposits
Other liabilities
Commitments and Contingencies
Short term self liquidating trade
Financial Liabilities
Deposit from customers
Deposit from placements of banks
Derivatives financial liabilities
Forward contract
Islamic Profit Rate Swap
Structured deposits
Other liabilities
Commitments and Contingencies
Short term self liquidating trade
>1 to 3
months
RM’000
>3 to 6
months
RM’000
>6 to 12
months
RM’000
Over
1 year
RM’000
Total
RM’000
33,747,231
4,287,385
1,939,086
1,020,742
59,025
41,053,469
200,425
4,925
2,123
2,802
127,524
579,259
34,659,364
100,409
18,202
17,410
792
4,405,996
4,310
4,310
1,943,396
4,985
4,985
1,025,727
15
15
59,040
300,834
32,437
28,828
3,594
15
127,524
579,259
42,093,523
37,603
114,274
81,510
74,499
56,237
89,310
123,881
248,546
61,202
499,636
360,433
1,026,265
158,699
310,576
32,308
188,317
145,547
3,117
375,544
42,750
603,588
236,874
1,623,572
32,200,635
2,789,081
1,568,999
590,880
164,023
37,313,618
1,315,794
6,919
3,208
3,711
166,018
14,115
33,703,481
152,164
4,332
3,347
985
4,927
2,950,504
32,875
93
39
54
1,601,967
31,254
(43)
(43)
622,091
2,756
2,174
582
166,779
1,532,087
14,057
6,594
6,881
582
170,945
14,115
39,044,822
32,471
91,115
55,936
52,355
58,809
125,681
131,843
148,373
39,973
459,722
319,032
877,246
124,675
248,261
23,240
131,531
25,662
210,152
51,935
332,151
44,396
544,091
269,908
1,466,186
Perspectives
Financial Liabilities
Deposit from customers
Deposit from placements of banks
Derivatives financial liabilities
Up to
1 month
RM’000
accountability
Contractual maturity of financial liabilities on an undiscounted basis
The table below present the cash flows payable by the Bank under financial liabilities by remaining contractual maturities
at the end of the reporting period. The amount disclosed in the table are the contractual undiscounted cash flows:
Audited
Financial
Statements
Maturity analysis (continued)
Additional
Information
18th AGM
information
Performance
Review
196
Annual Report 2014
Notes to the
(b)Takaful
The following policies and procedures are in place to mitigate exposure to liquidity risk at Takaful Malaysia level:
•
•
•
•
Wide liquidity risk policy setting out the evaluation and determination of the components of liquidity risk. Compliance
with the policy is monitored and reported monthly and exposures and breaches are reported to the Risk Management
Committee as soon as practicable. The policy is regularly reviewed for pertinence and for changes in the risk
environment.
Setting up guidelines on asset allocations, portfolio limit structures and maturity profiles of assets, in order to ensure
sufficient funding is available to meet takaful contracts obligations.
Setting up contingency funding plans which specify minimum proportions of funds to meet emergency calls as well
as specifying events that would trigger such plans.
The Takaful’s catastrophe excess-of-loss retakaful contract contains clauses permitting the immediate drawdown of
funds to meet claims payments should claims events exceed certain amount.
Maturity analysis
The table below summarises the maturity profile of the financial liabilities of the Takaful Malaysia Group based on
remaining undiscounted contractual obligations, including profit payable.
For takaful contract liabilities, maturity profiles are determined based on estimated timing of net cash outflows from the
recognised takaful liabilities. Investment-linked liabilities are repayable or transferable on demand and are included in the
“up to a year” column.
Carrying
value
Note RM’000
2014
Takaful payables
Other payables
2013
Takaful payables
Other payables
22(a)(i)
22
22(a)(i)
22
Up to
a year*
RM’000
>1 to 3
years
RM’000
>3 to 5 More than
No
years
5 years maturity
RM’000 RM’000 RM’000
Total
RM’000
408,946
61,317
216,471
169,739
61,153
200,440
130,679
164
13,067
106,229
137
2,299
2,827
-
408,946
61,317
216,471
686,734
431,332
143,910
106,366
5,126
-
686,734
473,365
75,428
227,876
202,498
74,692
223,486
151,911
736
2,012
101,253
251
17,703
2,127
-
473,365
75,428
227,876
776,669
500,676
154,659
101,504
19,830
-
776,669
*Expected utilisation or settlement is within 12 months from the reporting date.
197
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
42.Takaful risk management
The Family Takaful investment-linked contracts are mainly made up of regular contribution investment-linked products.
The main products are Takaful myInvest and Takaful myGenLife.
The key coverage for the Family Takaful contracts
The key coverage for the Family Takaful contracts are death, total and permanent disability, hospital and surgical benefits,
personal accident benefits, daily hospitalisation cash allowance benefits, dread disease benefits, waiver of contribution benefits
and survival benefits (for annuity).
Concentration of Family Takaful risk
The following gives details of Takaful Malaysia Group’s concentration of risks based on outstanding actuarial reserves by main
product categories:
Group
Note
2014
Term
Endowment
Mortgage
Annuity
Total Family actuarial liabilities
22(a)(iii)
Gross
RM’000
Retakaful
RM’000
Net
RM’000
874,389
1,358,507
1,466,686
323,280
(101,692)
(18)
(104,934)
-
772,697
1,358,489
1,361,752
323,280
4,022,862
(206,644)
3,816,218
accountability
(ii)Family Takaful investment-linked contracts
Audited
Financial
Statements
The Family Takaful non-investment-linked contracts are mainly credit related takaful products, group takaful schemes,
yearly renewable individual ordinary medical plans, regular contribution individual ordinary plans and annuity plans.
The main product types are Mortgage Reducing Term Takaful (MRTT), Group Credit Takaful, Group Term Takaful and
Group Medical Takaful.
Additional
Information
(i)Family Takaful non-investment-linked contracts
18th AGM
information
The Family Takaful contracts consist of:
Perspectives
Performance
Review
(a)Family Takaful Fund
198
Annual Report 2014
Notes to the
42.Takaful risk management (continued)
(a)Family Takaful Fund (continued)
Group
Note
2013
Term
Endowment
Mortgage
Annuity
Total Family actuarial liabilities
22(a)(iii)
Gross
RM’000
Retakaful
RM’000
Net
RM’000
824,558
1,367,608
1,187,668
328,985
(77,821)
(70,519)
-
746,737
1,367,608
1,117,149
328,985
3,708,819
(148,340)
3,560,479
Key assumptions
Reserves for all plans were valued on a basis that the Appointed Actuary considers adequate and appropriate, and in-line with
the valuation basis set out by BNM in respect of the Guidelines on Valuation Basis for Liabilities of Family Takaful Business
(BNM/RH/GL 004-20) and Risk-Based Capital Framework for Takaful Operator.
The key assumptions to which the estimation of actuarial liabilities is particularly sensitive to the following:
-Mortality and morbidity rates
This is significant for contracts with significant coverage for death, total permanent disability and critical illness and the
increase in the mortality or morbidity rates would have direct impact on the liability.
-
Discount rate
As the liabilities represents the present value of future cash outflow, a reduction in discount rate would have an increasing
impact on the liabilities and vice-versa.
-
Surrender rate
This is only applicable to long-term products, where when the rate is reduced (products with PIF) or increased (products
without PIF), the impact is an increase of the liability.
199
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Performance
Review
(a)Family Takaful Fund (continued)
Sensitivities
A summary of key assumptions used for sensitivity analysis is as below:
2014
Endowment
Mortgage
Investment-linked
+10%(i)
+10%(i)
+10%(i)
-1%
-1%
-1%
-20%
-20%
-20%
2013
Endowment
Mortgage
Investment-linked
+10%(i)
+10%(i)
+10%(i)
-1%
-1%
-1%
-20%
-20%
-20%
(i) 10% Industry mortality and morbidity experience tables M8388 and M9903
The analysis below is performed for reasonable possible movements in each of the key assumptions, with all other
assumptions held constant, showing the impact on gross and net liabilities, and unallocated surplus. The assumptions of
correlation will have a significant effect in determining the ultimate claims liabilities. However, in order to demonstrate the
impact arising from changes in assumptions, these assumptions had to be changed on an individual basis. It should also be
noted that movement in these assumptions are non-linear. Sensitivity information will also vary according to the current
economic assumptions.
accountability
Surrernder
rate
Audited
Financial
Statements
Discount
rate
Perspectives
Group
Mortality and
Morbidity
rates
Impact on
unallocated
surplus
RM’000
2014
Mortality/morbidity rate
Discount rate
Surrender rate
+10%
-1%
-20%
196,164
183,304
58,568
136,580
161,481
44,264
(136,580)
(161,481)
(44,264)
2013
Mortality/morbidity rate
Discount rate
Surrender rate
+10%
-1%
-20%
180,259
146,481
49,629
135,607
130,140
42,032
(135,607)
(130,140)
(42,032)
18th AGM
information
Change in
assumptions
Impact on
net
liabilities
RM’000
Additional
Information
Group
Impact on
gross
liabilities
RM’000
200
Annual Report 2014
Notes to the
(b) General Takaful Fund
The General Takaful contracts consist of fire, motor, personal accident, workmen’s compensation and employers’ liability,
liabilities and engineering and others.
Concentration of General Takaful risk
The table below sets out the concentration of General Takaful gross contribution by type of business.
Group
Note
2014
Fire
Motor
Marine
Miscellaneous
Gross contribution
22(a)(ii)
2013
Fire
Motor
Marine
Miscellaneous
Gross contribution
22(a)(ii)
Gross
RM’000
Retakaful
RM’000
Net
RM’000
163,537
208,649
5,733
73,400
(82,606)
(64,912)
(3,320)
(19,258)
80,931
143,737
2,413
54,142
451,319
(170,096)
281,223
154,544
187,435
5,134
81,293
(80,917)
(30,647)
(2,796)
(26,987)
73,627
156,788
2,338
54,306
428,406
(141,347)
287,059
Key assumptions
The provision for Takaful liabilities is in accordance with the valuation methods set out by BNM in respect of the Guidelines
on Valuation Basis for Liabilities of General Takaful Business (BNM/RH/GL 004-21) and Risk-Based Capital Framework for
Takaful Operator. The key assumptions underlying the estimation of liabilities is that the Takaful Malaysia Group’s future
claims development will follow a similar pattern to past claims development experience, including average claim cost, average
claim frequency and business mix for each accident year.
Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example,
isolated occurrences, changes in market factors such as public attitude to claiming, economic conditions, as well as internal
factors such as portfolio mix, underwriting policy, policy conditions and claims handling procedures.
201
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
(b) General Takaful Fund (continued)
Key assumptions (continued)
Other key circumstances affecting the reliability of assumptions include delays in settlement and changes in foreign currency
rates.
Performance
Review
The analysis below is performed for reasonable possible movements in each of the key assumptions, with all other assumptions
held constant, showing the impact on gross and net liabilities and operating surplus. The assumptions of correlation will have
a significant effect in determining the ultimate claims liabilities. However, in order to demonstrate the impact arising from
changes in assumptions, these assumptions had to be changed on an individual basis. It should also be noted that movement
in these assumptions are non-linear.
The key assumptions to which the estimation of actuarial liabilities is particularly sensitive to the followings:
-
Fire loss ratio for latest accident year
accountability
The General Takaful claim liabilities are sensitive to the above key assumptions and any changes to these assumptions may
have impact on the liabilities and operating surplus of the General Takaful Fund significantly. It is not possible to quantify the
sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process.
Perspectives
Sensitivities
Motor Act loss ratio for latest accident year
Motor Act business is long term in nature, and would take years before experiencing claim incidents. A significant impact
may result if the ultimate experience differs from current estimation.
-
Average claim cost
Reserves are based on the assumption that historical average claim cost is reflective of the potential future experience. A
change in average cost will have an impact on future liabilities.
-
Average claim frequency
Additional
Information
-
Audited
Financial
Statements
This is significant as Fire portfolio forms the largest composition under general business. A change in loss ratio estimate
will have an impact on the liabilities significantly.
-
Average claim settlement period
Reserves are based on the assumption that claim settlement period is expected to be stable over the years. A change in claim
handling practice will have an impact on claim cost and future liabilities.
18th AGM
information
Reserves are based on the assumption that historical average claim number in each accident year is reflective of the potential
future experience. A change in average number of claims will have an impact on future liabilities.
202
Annual Report 2014
Notes to the
Sensitivities (continued)
The summary of changes in key assumptions and the impact to the gross and net claim liabilities, and the operating surplus,
are shown below:
Group
Change in
assumptions
Impact on
gross
liabilities
RM’000
Impact on
net
liabilities
RM’000
Impact on
unallocated
surplus
RM’000
2014
Fire loss ratio for AY 2014
Motor Act loss ratio for AY 2014
Average claim cost
+10%
+10%
+10%
+10%
Increase by 6 months
15,709
3,247
60,263
33,179
12,523
6,386
2,919
28,415
20,960
8,181
(6,386)
(2,919)
(28,415)
(20,960)
(8,181)
2013
Fire loss ratio for AY 2013
Motor Act loss ratio for AY 2013
Average claim cost
+10%
+10%
+10%
+10%
Increase by 6 months
14,351
2,783
58,903
31,943
11,675
5,884
2,478
28,075
20,651
7,541
(5,884)
(2,478)
(28,075)
(20,651)
(7,541)
Claims development table
The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each
successive accident year at the end of reporting period, together with cumulative payments to-date.
In determining the provisions for claims, Takaful Malaysia Group takes into consideration the probability and magnitude of
future experience being more adverse than expected, and exercises a degree of caution in setting aside reserves when there is
considerable uncertainty.
In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident
year is at an early stage of development and the margin required in order to assure confidence in the adequacy of provision
is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the level of margin to be
maintained should be relatively lower.
203
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Gross General Takaful contract liabilities for 2014 (Group):
Gross General Takaful
contract liabilities
2009
RM’000
2010
RM’000
2011
RM’000
2012
RM’000
2013
RM’000
2014
RM’000
363,421
308,462
269,303
261,723
258,296
257,029
250,354
245,275
211,719
163,964
170,990
194,484
182,666
165,483
161,903
-
151,643
159,147
202,227
186,882
172,266
159,098
-
256,026
325,009
314,734
289,971
261,764
-
252,127
256,803
237,588
216,253
-
235,113
226,965
195,807
-
348,058
322,024
-
272,807
-
245,275
161,903
159,098
261,764
216,253
195,807
322,024
272,807 1,834,931
(63,455)
(179,619)
(204,297)
(219,658)
(227,646)
(233,071)
(234,596)
(238,380)
(50,291)
(109,315)
(142,410)
(152,230)
(156,264)
(157,581)
(158,663)
-
(71,393)
(132,370)
(146,646)
(153,005)
(155,143)
(155,984)
-
(238,380) (158,663) (155,984) (230,198) (179,202) (147,379) (130,366)
6,895
3,240
3,114
31,566
37,051
48,428
191,658
Perspectives
accountability
(64,682)
-
Audited
Financial
Statements
(101,724) (58,326) (51,497) (56,640)
(174,690) (132,258) (113,394) (130,366)
(205,770) (164,490) (147,379)
(221,959) (179,202)
(230,198)
-
Total
RM’000
(64,682) (1,304,854)
208,125
Additional risk margin
530,077
79,439
(4,083)
Gross General Takaful contract liabilities per Takaful Malaysia financial position (Note 22(a)(i))
605,433
Additional
Information
At end of accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments
to-date
2008
RM’000
18th AGM
information
Accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Current estimate of
cumulative claims
incurred
Before
2007
RM’000
Performance
Review
204
Annual Report 2014
Notes to the
Net General Takaful contract liabilities for 2014 (Group):
Accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Current estimate of
cumulative claims
incurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments
to-date
Net General Takaful
contract liabilities
Before
2007
RM’000
2008
RM’000
2009
RM’000
2010
RM’000
2011
RM’000
2012
RM’000
2013
RM’000
2014
RM’000
106,409
118,800
117,551
119,607
115,828
121,362
120,143
123,160
102,188
86,706
92,132
98,093
96,590
93,306
90,836
-
107,014
109,700
115,733
107,449
104,480
100,610
-
211,276
214,389
203,874
197,585
185,014
-
179,670
183,927
179,313
168,629
-
169,228
169,004
152,765
-
156,615
143,677
-
156,941
-
123,160
90,836
100,610
185,014
168,629
152,765
143,677
156,941 1,121,632
(47,717)
(85,148)
(94,843)
(102,483)
(107,236)
(114,486)
(114,787)
(118,094)
(33,040)
(60,702)
(74,740)
(84,233)
(87,523)
(88,292)
(88,685)
-
(44,099)
(79,458)
(92,171)
(97,214)
(98,469)
(98,930)
-
(84,167) (53,570) (47,769)
(143,180) (119,794) (101,619)
(158,560) (144,833) (122,291)
(171,555) (152,714)
(175,176)
-
(48,340)
(94,643)
-
(47,835)
-
(118,094)
(88,685)
(98,930) (175,176) (152,714) (122,291)
(94,643)
(47,835) (898,368)
5,066
2,151
1,680
9,838
15,915
30,474
49,034
Additional risk margin
Net General Takaful contract liabilities per Takaful Malaysia financial position (Note 22(a)(i))
109,106
Total
RM’000
223,264
30,046
(587)
252,723
205
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Quoted and observable market prices, where available, are used as the measure of fair values of the financial instruments. Where
such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and
assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other
factors. Changes in the assumptions could materially affect these estimates and the corresponding fair values.
Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of MFRS 7, “Financial
Instruments: Disclosure and Presentation” which requires the fair value information to be disclosed.
The fair values are based on the following methodologies and assumptions:
Perspectives
Financial instruments comprise financial assets, financial liabilities and off-balance sheet instruments. Fair value is the amount at
which the financial assets could be exchanged or a financial liability settled, between knowledgeable and willing parties in an arm’s
length transaction. The information presented herein represents the estimates of fair values as at the financial position date.
Performance
Review
43.Fair value of financial INSTRUMENTS
For cash and short term funds and deposits and placements with financial instruments with maturities of less than six months,
the carrying value is a reasonable estimate of fair values. For deposits and placements with maturities six months and above, the
estimated fair values are based on discounted cash flows using prevailing money market profit rates at which similar deposits and
placements would be made with financial instruments of similar credit risk and remaining year to maturity.
Financial assets held-for-trading and financial assets available-for-sale
accountability
Cash and short term funds and deposits and placements with banks and other financial institutions
Non-market observable inputs also includes valuation technique based on assumptions that are neither supported by prices from
observable current market transactions in the same instrument nor are they based on available market data. The main asset class in
this category are unquoted equity securities.
Audited
Financial
Statements
The estimated fair values are generally based on quoted and observable market prices. Where there is no ready market in certain
securities, fair values have been estimated by reference to market indicative yields or net tangible asset backing of the investee.
Their fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of financings with
similar credit risks and maturities. The fair values are represented by their carrying value, net of specific allowance and income-insuspense, being the recoverable amount.
Additional
Information
Deposits and placements of banks and other financial institutions
The estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six
months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are
estimated based on discounted cash flows using prevailing money market profit rates for deposits and placements with similar
remaining year to maturities.
18th AGM
information
The fair values of deposits are deemed to approximate their carrying amounts as rate of returns are determined at the end of their
holding periods based on the profit generated from the assets invested.
Annual Report 2014
206
Notes to the
43.Fair value of financial INSTRUMENTS (COntinued)
The estimated fair values of bills and acceptance payables with maturity of less than six months approximate their carrying values.
For bills and acceptance payable with maturities of six months or more, the fair values are estimated based on discounted cash flows
using prevailing market rates for borrowings with similar risks profile.
The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the
valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably.
Fair value hierarchy
MFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques adopted are
observable or unobservable. Observable inputs reflect market data obtained from independent sources and unobservable inputs
reflect the Group’s assumptions. The fair value hierarchy is as follows:
•
Level 1 – Quoted price (unadjusted) in active markets for the identical assets or liabilities. This level includes listed equity
securities and debt instruments.
•
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). This level includes profit rates swap and structured debt. The
sources of input parameters include Bank Negara Malaysia (“BNM”) indicative yields or counterparty credit risk.
There has been no transfer between Level 1 and 2 Fair values during the financial year.
•
Level 3 – Inputs for asset or liability that are not based on observable market data (unobservable inputs). This level includes
equity instruments and debt instruments with significant unobservable components.
207
Notes to the
Corporate
Framework
Annual Report 2014
Fair value of financial instruments
not carried at fair value
Total Carrying
Total fair value Amount
RM’000 RM’000 RM’000
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
Total
RM’000
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
229,805
921,629
-
1,151,434
-
-
-
-
1,151,434
1,165,590
-
62,541
-
62,541
-
-
-
-
62,541
62,541
153,933 13,797,562
-
-
32,066
21,089
466,896
60,752
2014
Group
-
-
-
-
880,482 13,977,122
32,066 13,829,628 13,815,889
-
-
548,737
548,737
547,258
-
-
-
- 29,527,807 29,527,807 29,527,807 29,524,571
153,933 15,011,537
21,089
466,896 29,620,625 30,108,610 45,120,147 45,115,849
Derivative
financial liabilities
Sukuk liabilities
-
32,407
-
-
32,407
-
-
-
1,133,256
1,133,256
32,407
1,133,256
32,407
1,133,256
Total liabilities
-
32,407
-
32,407
-
-
1,133,256
1,133,256
1,165,663
1,165,663
2014
Company
Financial assets
Financial assets
available-for-sale
18,559
-
-
18,559
-
-
-
-
18,559
18,559
Total assets
18,559
-
-
18,559
-
-
-
-
18,559
18,559
Sukuk liabilities
-
-
-
-
-
- 1,133,256 1,133,256 1,133,256 1,133,256
Total liabilities
-
-
-
-
-
- 1,133,256 1,133,256 1,133,256 1,133,256
Audited
Financial
Statements
Total assets
650,677 12,992,952
Additional
Information
Financial assets
Financial assets
held-for-trading
Derivative
financial assets
Financial assets
available-for-sale
Financial assets
held-to-maturity
Financing,
advances and
others
18th AGM
information
carried at fair value
Perspectives
The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is
disclosed, together with their fair values and carrying amounts shown in the statement of financial position.
accountability
Fair value information
Performance
Review
Leadership
208
Annual Report 2014
Notes to the
Fair value information (continued)
carried at fair value
not carried at fair value
Total Carrying
Total fair value Amount
RM’000 RM’000 RM’000
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
Total
RM’000
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
172,036
1,233,162
-
1,405,198
-
-
-
-
1,405,198
1,405,198
-
29,118
-
29,118
-
-
-
-
29,118
29,118
303,517 16,503,124
-
-
34,481
10,451
392,470
85,318
2013
Group
Financial assets
Financial assets
held-for-trading
Derivative
financial assets
Financial assets
available-for-sale
Financial assets
held-to-maturity
Financing,
advances and
others
Total assets
1,083,423 15,116,184
-
-
-
-
1,255,459 16,378,464
34,481 16,537,605 16,536,010
-
-
488,239
488,239
467,935
-
-
-
- 24,040,733 24,040,733 24,040,733 23,740,948
303,517 17,937,440
10,451
392,470 24,160,532 24,563,453 42,500,893 42,179,209
Derivative
financial liabilities
Sukuk liabilities
-
13,565
-
-
13,565
-
-
-
1,089,935
1,089,935
13,565
1,089,935
13,565
1,089,935
Total liabilities
-
13,565
-
13,565
-
-
1,089,935
1,089,935
1,103,500
1,103,500
Financial assets
Financial assets
available-for-sale
17,860
-
-
17,860
-
-
-
-
17,860
17,860
Total assets
17,860
-
-
17,860
-
-
-
-
17,860
17,860
2013
Company
Sukuk liabilities
-
-
-
-
-
-
1,089,935
1,089,935
1,089,935
1,089,935
Total liabilities
-
-
-
-
-
-
1,089,935
1,089,935
1,089,935
1,089,935
209
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
2013
RM’000
At 1 January
Redemption
Settlement
Fair value gains/(losses)
-
At 31 December
-
59,662
(588)
(60,288)
1,214
-
At 1 January
Maturity
Gains
Settlement
Impairment
At 31 December
303,517
(159,474)
9,890
-
305,204
13,493
(5,643)
(9,537)
153,933
303,517
The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key
unobservable inputs used in the valuation models.
Perspectives
2014
RM’000
accountability
The following table presents the changes in Level 3 instruments for the financial year ended 31 December 2014 for the Group:
Performance
Review
43.Fair value of financial INSTRUMENTS (continued)
Institutional
trust account
Significant unobservable inputs
Valued at cost less impairment
Not applicable
Not applicable
Discounted cash flows using market
profit rate for a similar instrument at
the measurement date
4.58%
The estimated fair value would
increase (decrease) if the discount
rate were (lower) higher.
Additional
Information
Financial assets
available-for-sale
Valuation technique
18th AGM
information
Type
Inter-relationship between
significant unobservable inputs
and fair value measurement
Audited
Financial
Statements
(a)Financial instruments carried at fair value
210
Annual Report 2014
Notes to the
43.Fair value of financial INSTRUMENTS (continued)
(a) Financial instruments carried at fair value (continued)
Valuation processes applied by the Group for Level 3 fair value
The Group has an established control framework in respect to the measurement of fair value of financial instruments. This
includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level
3 fair values, and reports directly to the Chief Financial Officer. The valuation team regularly reviews significant unobservable
inputs and valuation adjustments.
Sensitivity analysis for Level 3
Change in
variables
Impact on
profit
before tax
RM’000
2014
Market price
Market price
+1%
-1%
-
(611)
633
-
(1,142)
1,175
2013
Market price
Market price
+1%
-1%
-
(707)
733
-
(2,496)
2,565
Impact on
equity
RM’000
Impact on
operating
surplus
RM’000
Impact on
Participants’
fund
RM’000
(b) Financial instruments not carried at fair value
The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:
(i)Financial investments held-to-maturity (“HTM”)
The fair values of securities that are actively traded is determined by quoted bid prices. For non-actively traded securities,
the fair values are valued at cost less impairment or estimated using discounted cash flows analysis. Where discounted cash
flows technique is used, the estimated future cash flows are discounted using applicable prevailing market or indicative
rates of similar instruments at the reporting date.
(ii)Financing and advances
The fair values of variable rate financing are estimated to approximate their carrying values. For fixed rate financing, the
fair values are estimated based on expected future cash flows of contractual instalment payments, discounted at applicable
and prevailing rates at reporting date offered for similar facilities to new borrowers with similar credit profiles. In respect of
impaired financing, the fair values are deemed to approximate the carrying values which are net of impairment allowances.
44.Capital commitments
Group
2014
RM’000
Contracted but not provided for in the financial statements
Approved but not contracted for and not provided
62,834
20,427
83,261
2013
RM’000
49,521
31,179
80,700
211
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
46,857
131,153
304,209
47,262
132,770
323,942
482,219
503,974
Leases as lessor
The Group leases out its investment properties (see Note 17). The future minimum lease receivables under non-cancellable leases
are as follows:
Group
Within one year
Between one and five years
2014
RM’000
2013
RM’000
7,003
8,519
6,520
4,818
15,522
11,338
46.Capital management
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as
a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The
Directors monitor the adequacy of capital on an ongoing basis.
Perspectives
Within one year
Between one and five years
More than five years
2013
RM’000
accountability
Group
2014
RM’000
Audited
Financial
Statements
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Performance
Review
45.Lease commitments
The capital requirements in respect of Bank Islam Malaysia Berhad, Syarikat Takaful Malaysia Berhad and BIMB Securities Sdn Bhd
are subject to regulatory requirements from Bank Negara Malaysia and Bursa Malaysia Berhad.
47. Operating segment information
Performance is measured based on segment profit/(loss) before zakat and taxation, as included in the internal management reports
that are reviewed by the Group Managing Director/Chief Executive Officer. Segment profit/(loss) before zakat and taxation is
used to measure performance as management believes that such information is the most relevant in evaluating segmental results
relative to other entities that operate within these industries. In the preceding year, performance was measured based on segmental
results from operating activities and included items directly attributable to a segment as well as those that could be allocated on a
reasonable basis.
18th AGM
information
Under the Listing Requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated
shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such
shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.
Additional
Information
There were no changes in the Group’s approach to capital management during the financial year.
212
Annual Report 2014
Notes to the
47. Operating segment information (CONTINUED)
The Group operates predominantly in Malaysia and accordingly, information by geographical location on the Group’s operation is
not presented.
Segment information is presented in respect of the Group’s main business segment.
Business segments
The Group comprises of the following main business segments:
BankingIslamic banking and provision of related services.
TakafulUnderwriting of family and general Islamic insurance (“Takaful”).
OthersInvestment holding, currency trading, ijarah financing, stockbroking and unit trust.
Banking
RM’000
Takaful
RM’000
Others
RM’000
Elimination
RM’000
Consolidated
RM’000
Segment result
Revenue from external customers
Inter-segment revenue
2,413,748
23,078
542,803
2,708
10,922
212,564
(238,350)
2,967,473
-
Total revenue
2,436,826
545,511
223,486
(238,350)
2,967,473
Net income from operations
(before allowance for
impairment on financing and
other assets)
Operating overheads
1,585,700
(826,644)
545,511
(357,487)
223,486
(26,230)
(232,225)
27,800
2,122,472
(1,182,561)
759,056
188,024
197,256
(204,425)
2014
Business segments
Operating results
Allowance for impairment on
financing and advance
Finance cost
Profit before zakat and taxation
Segment assets
Segment liabilities
(59,993)
3,688
-
-
(68,222)
-
939,911
(59,993)
3,688
(68,222)
702,751
188,024
129,034
(204,425)
815,384
45,820,682
7,127,028
5,190,914
(5,108,419)
53,030,205
42,091,092
6,545,264
1,527,373
(322,784)
49,840,945
Note 41.4(a)(i),
41.5(a)
213
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Segment result
Revenue from external customers
Inter-segment revenue
2,244,205
900
553,058
2,644
12,132
285,642
(289,186)
2,809,395
-
Total revenue
2,245,105
555,702
297,774
(289,186)
2,809,395
Net income from operations
(before allowance for
impairment on financing and
other assets)
Operating overheads
1,465,640
(799,376)
555,702
(382,017)
297,774
(42,916)
(282,522)
(528)
2,036,594
(1,224,837)
666,264
15,009
173,685
-
254,858
-
(283,050)
-
2013
Business segments
Operating results
Reversal of impairment on financing
Allowance for impairment on
investment
Finance cost
Share in the results of associate company
Profit before zakat and taxation
Segment assets
Segment liabilities
(9,211)
5,570
(349)
-
(3,349)
-
-
811,757
15,009
(9,211)
5,570
(3,349)
(349)
677,283
173,685
251,509
(283,050)
819,427
42,811,371
6,893,085
5,093,767
(5,123,678)
49,674,545
39,484,536
6,316,044
1,209,750
(385,725)
46,624,605
Note 41.4(a)(i),
41.5(a)
Perspectives
Consolidated
RM’000
accountability
Elimination
RM’000
Audited
Financial
Statements
Others
RM’000
Additional
Information
Takaful
RM’000
18th AGM
information
Banking
RM’000
Performance
Review
47. Operating segment information (continued)
214
Annual Report 2014
Notes to the
48.Commitments and contingencies
In the normal course of business, the Group makes various commitments and incur certain contingent liabilities with legal recourse
to their customers. No material losses are anticipated as a result of these transactions. These exclude all contracts cleared in the
normal course of the takaful business.
Group
Credit-related Exposures
Other commitments, such as formal standby facilities and credit lines, with an original
maturity of:
Short term self liquidating trade related contingencies
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
Less than one year
Less than one year
One year to less than five years
5 years and above
One year to less than five years
2014
RM’000
2013
RM’000
360,433
2
1,026,265
319,032
2
877,246
6,165
942,851
236,874
1,023,337
1,714
823,818
278,297
991,097
5,404,888
5,116,604
9,000,815
8,407,810
1,840,778
1,381,894
300,000
600,000
287,694
100,000
500,000
711,481
106,680
110,495
3,135,152
2,803,870
12,135,967
11,211,680
49. Significant events during the financial year
On 25 November 2014, the Board of Directors of BIMB Holdings Berhad (“BHB”) (“Board”) had declared an interim single tier
dividend of 14.7% per ordinary share of RM1.00 each in BHB (“BHB Share”) for the financial year ending 31 December 2014
(“Interim Dividend”) to be paid on 13 January 2015.
From the total dividend amount paid of RM219.5 million on 13 January 2015, approximately 17.7% or RM38.9 million was distributed
as cash dividend whilst the remaining 82.3% amounting to RM180.6 million was reinvested to subscribe for 48,703,800 new ordinary
shares of RM1.00 at RM3.71 each via the Dividend Reinvestment Plan.
215
Notes to the
Corporate
Framework
Annual Report 2014
Leadership
Group
Total retained earnings of the Company and its subsidiaries
-realised
-unrealised
Less: Consolidation adjustments
Total (accumulated losses)/retained earnings
Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
761,071
53,510
850,447
38,833
15,589
10
234,994
10
814,581
(831,847)
889,280
(839,672)
15,599
-
235,004
-
(17,266)
49,608
15,599
235,004
Perspectives
The breakdown of the accumulated losses of the Group and of the Company as at 31 December, into realised and unrealised profits
or losses, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:
Performance
Review
50. Supplementary information on the breakdown of realised and unrealised profits or losses
Audited
Financial
Statements
Additional
Information
18th AGM
information
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements,
issued by Malaysian Institute of Accountants on 20 December 2010.
accountability
The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised
Annual Report 2014
216
Statement by
directors
pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 90 to 214 are drawn up in accordance with Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), and the requirements of the Companies Act, 1965
in Malaysia, and Shariah requirements so as to give a true and fair view of the financial position of the Group and of the Company as of
31 December 2014 and their financial performance and cash flows for the financial years then ended.
In the opinion of the Directors, the information set out in Note 50 on page 215 to the financial statements has been compiled in accordance
with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented
based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
……………………………………
……………………………………
Kuala Lumpur,
Date: 31 March 2015
217
Before me:
Leadership
Performance
Review
Perspectives
……………………………………....
Mohamad Azlan bin Mohamad Alam
accountability
Subscribed and solemnly declared by the above named in Kuala Lumpur on 31 March 2015.
Audited
Financial
Statements
I, Mohamad Azlan bin Mohamad Alam, the officer primarily responsible for the financial management of BIMB Holdings Berhad,
do solemnly and sincerely declare that the financial statements set out on pages 90 to 215 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.
Additional
Information
pursuant to Section 169(16) of the Companies Act, 1965
18th
information
Statutory
declaration
Corporate
Framework
Annual Report 2014
Annual Report 2014
218
independent auditors’ report
to the members of bimb holdings berhad
(company no. 423858-x) (incorporated in malaysia)
Report on the Financial Statements
We have audited the financial statements of BIMB Holdings Berhad, which comprise the statements of financial position as at
31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in
equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and
other explanatory information, as set out on pages 90 to 214.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the
preparation of financial statements 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
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 give a true and fair view of the financial position of the Group and of the Company as of
31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
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 Company and its subsidiaries
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b)We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are
indicated in Note 14 to the financial statements.
(c)We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’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.
(d)The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section
174(3) of the Act.
219
independent auditors’ report
to the members of bimb holdings berhad
Corporate
Framework
Annual Report 2014
Leadership
(company no. 423858-x) (incorporated in malaysia)
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG Desa Megat & Co.
Ow Peng Li
Firm Number: AF 0759Approval Number: 2666/09/15(J)
Chartered AccountantsChartered Accountant
Petaling Jaya,
Perspectives
Other Matters
accountability
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note
50 on page 215 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing
Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We
have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has
been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements,
issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Performance
Review
Other Reporting Responsibilities
18th AGM
information
Additional
Information
Audited
Financial
Statements
Date: 31 March 2015
220
Annual Report 2014
Properties owned
by bhb group
Property Listing for syarikat takaful malaysia berhad
No.
Location
Description of
Existing Use
1
No. 325A & 325B
Blok 41, Kompleks
Perniagaan Fajar
91000 Tawau
Sabah
Three units of 4
storey Commercial
Complex/Office
2
Tenure
Age of
Building
(years)
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
999 years town
lease expiring on
31.12.2895
23
4,025/
6,037
3,000,000
31.12.2014
12.07.1991
Two units of 2
No. 64 & 65
storey Shophouse/
Kompleks Jitra
Jalan Sungai Korok Office
06000 Jitra
Kedah Darul
Aman
Freehold
28
3,095/
6,935
1,130,000
31.12.2014
30.09.1991
3
No. 23, Medan
Istana 3
Bandar Ipoh Raya
30450 Ipoh
Perak Darul
Ridzuan
One unit of 3
storey Shophouse/
Office
99 years lease
expiring on
30.03.2081
19
1,539/
4,255
570,000
31.12.2014
20.09.1995
4
No. 84, Batu 3 ¼
Jalan Gombak
53000 Kuala
Lumpur
One unit of 5
storey Shophouse/
Office
Freehold
28
1,883/
8,700
1,800,000
31.12.2014
22.12.1995
5
Lot 54 & 55
Bandar Wilayah
Jasa
Jalan Bunga Raya
91100 Lahad Datu
Sabah
Two units of 3
storey Shophouse/
Office
99 years town
lease expiring on
31.12.2090
19
2,400/
7,200
1,680,000
31.12.2014
27.12.1995
221
Leadership
Properties owned
by bhb group
Corporate
Framework
Annual Report 2014
Description of
Existing Use
Tenure
Age of
Building
(years)
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
No. 15 & 17
Jalan Kelibang
Langkawi Mall
07000 Kuah
Langkawi
Kedah Darul
Aman
Two units of 2
storey Shophouse/
Office
Freehold
21
1,440/
7,720
660,000
31.12.2014
17.07.1993
7
No. 26 & 28
Jalan Perda Barat
Bukit Mertajam
Seberang Prai
14000 Penang
Two units of 3
storey Shophouse/
Office
Freehold
16
3,293/
8,840
1,240,000
31.12.2014
04.10.1996
8
No. 433 & 434
Jalan Kulas
93400 Kuching
Sarawak
Two units of 4
storey Shophouse/
Office
Freehold
19
3,589/
12,855
3,880,000
31.12.2014
02.01.1996
9
No. 20, Fasa 1A
Jalan Haji Manan
86000 Kluang
Johor Darul
Takzim
One unit of 4
storey Shophouse/
Office
99 years lease
expiring on
10.12.2108
18
2,658/
9,930
N/A
N/A
27.03.1992
10
Lot 13 & 14
Two units of 3
Lazenda
storey Office
Commercial Centre building
Jalan Okk Abdullah
87007 Wilayah
Persekutuan
Labuan
999 years lease
expiring on
30.06.2902
20
2,504/
7,200
2,200,000
31.12.2014
14.01.1997
Audited
Financial
Statements
accountability
Perspectives
6
Additional
Information
Location
18th AGM
information
No.
Performance
Review
Property Listing for syarikat takaful malaysia berhad (continued)
222
Annual Report 2014
Properties owned
by bhb group
No.
Location
Description of
Existing Use
11
No. 1 & 2
Jalan Kelicap
Taman Pekan Baru
34200 Parit Buntar
Perak Darul
Ridzuan
Two units of 2
storey Shophouse/
Office
12
No. 46 & 47
Jalan Rahmat
83000 Batu Pahat
Johor Darul
Takzim
13
Tenure
Age of
Building
(years)
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
99 years lease
expiring on
05.09.2078
27
3,956/
7,044
880,000
31.12.2014
18.09.1999
Two units of 4
storey Shophouse/
Office
Freehold
25
3,220/
12,092
1,745,000
31.12.2014
18.09.1999
No. 180 & 181
Jalan Tuan Hitam
22000 Jerteh
Terengganu Darul
Iman
Two units of 4
storey Shophouse/
Office
Freehold
24
3,200/
12,250
1,740,000
31.12.2014
18.09.1999
14
Lot 82, 84 & 86
Jalan Rugbi
Seksyen 13
40100 Shah Alam
Selangor Darul
Ehsan
Three units of 2
storey Shophouse/
Office
99 years lease
expiring on
22.01.2102
15
6,339/
11,309
3,120,000
31.12.2014
07.05.1997
15
No. 229, Jalan
Shahab 2
Shahab Perdana
Jalan Sultanah
Sambungan
05350 Alor Star
Kedah Darul
Aman
One unit of 2 ½
storey Shophouse/
Office
Freehold
18
1,400/
3,570
530,000
31.12.2014
15.07.1999
223
Leadership
Properties owned
by bhb group
Corporate
Framework
Annual Report 2014
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
16
Lot No. 3803
Jalan Dato’ Ulu
Muar
72000 Kuala Pilah
Negeri Sembilan
Darul Khusus
One unit of 3
storey Shophouse/
Office
99 years lease
expiring on
06.10.2079
15
2,001/
3,120
550,000
31.12.2014
01.07.1997
17
No. 45
Jalan Teluk Sisek
25000 Kuantan
Pahang Darul
Makmur
One unit of 4
storey Shophouse/
Office
99 years lease
expiring on
18.09.2068
14
3,200/
8,019
2,500,000
31.12.2014
15.09.2000
18
No. 27
Pusat Komersil
Temerloh
28000 Temerloh
Pahang Darul
Makmur
One unit of 2 ½
storey Shophouse/
Offie
99 years lease
expiring on
01.04.2095
14
1,398/
5,017
720,000
31.12.2014
02.10.2000
19
No. 2 & 4
Jalan 6C/7
43650 Bandar Baru
Bangi
Selangor Darul
Ehsan
Two units of 2
storey Shophouse/
Office
99 years lease
expiring on
08.07.2086
27
6,383/
8,032
1,965,000
31.12.2014
08.09.1999
20
Lot 14
Seremban City
Centre
Jalan Tuanku
Munawir
70000 Seremban
Negeri Sembilan
Darul Khusus
One unit of 6
storey Shophouse/
Office
Freehold
18
1,500/
14,589
3,680,000
31.12.2014
19.05.2000
Perspectives
Age of
Building
(years)
accountability
Tenure
Audited
Financial
Statements
Description of
Existing Use
Additional
Information
Location
18th AGM
information
No.
Performance
Review
224
Annual Report 2014
Properties owned
by bhb group
No.
Location
Description of
Existing Use
Tenure
Age of
Building
(years)
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
99 years lease
expiring on
25.09.2097
13
3,899/
10,248
1,660,000
31.12.2014
23.03.2002
21
No. 29, Jalan
One unit of 3
Delima
storey Shophouse/
Pusat Perdagangan Office
Pontian
82000 Pontian
Johor Darul
Takzim
22
Lot 1129 & 1130
Bangunan Darul
Takaful
Jalan Sultan Ismail
20100 Kuala
Terengganu
Terengganu Darul
Iman
One unit of 12
storey Office
building
35 years sub lease
expiring on
27.02.2037
12
3,600/
23,637
6,400,000
31.12.2014
29.12.1997
23
No. 616 & 617
Jalan Besar
73000 Tampin
Negeri Sembilan
Darul Khusus
Two units of 2
storey Office
building
99 years lease
expiring on
05.10.2088
22
4,498/
8,685
1,700,000
31.12.2014
17.09.1999
24
No. 6
Jalan 6C/7
43650 Bandar Baru
Bangi
Selangor Darul
Ehsan
One unit of 2
storey Shophouse/
Office
99 years lease
expiring on
08.07.2086
27
1,905/
3,508
770,000
31.12.2014
09.08.2002
25
Suite 3B/G
Blok 3B, Plaza
Sentral
Jalan Stesen
Sentral 5
50470 Kuala
Lumpur
One floor of 22
storey Office
building
Freehold
13
6,409 *
8,500,000
31.12.2014
26.06.2001
225
Leadership
Properties owned
by bhb group
Corporate
Framework
Annual Report 2014
Land,
Builtup Area
(square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
26
No. 26 & 27
Jalan Tanjung
Pasar Baru
18500 Machang
Kelantan Darul
Naim
Two units of 2
storey Office
building
66 years lease
expiring on
18.02.2069
33
1,600/
4,000
700,000
31.12.2014
17.09.1999
27
No. 330 & 331
Jalan Sultan
Yahya Petra
15720 Kota Bharu
Kelantan Darul
Naim
Two units of 4 ½
storey Office
building
99 years lease
expiring on
09.12.2069
32
3,200/
15,200
2,180,000
31.12.2014
03.07.2002
28
Menara Takaful
Malaysia
No. 4, Jalan Sultan
Sulaiman
50000
Kuala Lumpur
Two units of
Office building
Main Block - 26
storey
Annexe Block - 29
storey
Freehold
Annexe
Block-34
90,427/
393,508
170,000,000
31.12.2014
08.10.2004
29
No. 2408
Taman Samudera
32040 Sri Manjung
Perak Darul
Ridzuan
One unit of 2
storey Shophouse/
Office
99 years lease
expiring on
19.05.2091
18
2,800/
5,300
800,000
31.12.2014
10.08.2004
30
No. 76A & 76
Pusat Perniagaan
Jalan Tupai
34000 Taiping
Perak Darul
Ridzuan
Two units of 3
storey Office
building
Freehold
11
3,134/
18,304
1,530,000
31.12.2014
18.08.2003
Perspectives
Age of
Building
(years)
accountability
Tenure
Main
Block-41
Audited
Financial
Statements
Description of
Existing Use
Additional
Information
Location
18th AGM
information
No.
Performance
Review
226
Annual Report 2014
Properties owned
by bhb group
No.
Location
31
No. 10 & 11
Jalan Sultan Yahya
Petra
15200 Kota Bharu
Kelantan Darul
Naim
32
Description of
Existing Use
Age of
Building
(years)
Land,
Builtup Area
(square
feet)
33 years lease
expiring on
08.09.2037
12
3,852/
9,120
2,360,000
31.12.2014
03.07.2002
One unit of 4
No. 4197
Jalan Teluk Wanjah storey Office
building
05200 Alor Star
Kedah Darul
Aman
Freehold
12
8,716/
18,440
1,800,000
31.12.2014
27.07.2002
33
No. 10 & 8
Jalan Padi
Emas
Bandar Baru UDA
81200 Johor Bahru
Johor Darul
Takzim
Two units of 3
storey Office
building
99 years lease
expiring on
16.02.2099
9
3,080/
8,024
2,140,000
31.12.2014
30.11.2004
34
No. 4
Kompleks Seri
Temin
Jalan Ibrahim
08000 Sungai
Petani
Kedah Darul
Aman
One unit of 4
storey Office
building
99 years lease
expiring on
03.10.2080
29
1,400/
5,510
670,000
31.12.2014
11.09.2005
35
Lot 1340
Miri Waterfront
Commercial
Centre
98000 Miri
Sarawak
One unit of 4
storey Office
building
60 years lease
expiring on
30.09.2066
10
1,400/
5,500
1,400,000
31.12.2014
20.01.2006
Two units of 3
storey Office
building
Tenure
Net Book
Value as at
31.12.2014
(RM)
Date of
Revaluation
Date of Sale
and Purchase
Agreement
227
Leadership
Properties owned
by bhb group
Corporate
Framework
Annual Report 2014
Net Book
Value as at
31.12.2014
(RM)
No. 6
Jalan Padi Emas
Bandar Baru UDA
81200 Johor Bahru
Johor Darul
Takzim
One unit of 3
storey Office
building
37
No. 148, Kompleks
Munshi Abdullah
75200 Melaka
38
39
Date of
Revaluation
Date of Sale
and Purchase
Agreement
99 years lease
expiring on
16.02.2099
9
1,540/
4,012
1,070,000
31.12.2014
14.02.2006
One unit of 4 ½
storey Office
building
99 years lease
expiring on
23.04.2102
21
1,470/
6,117
1,050,000
31.12.2014
21.03.2006
No. 16474 & 16475
Pusat Perniagaan
Inderapura
Jalan Tras, Raub
Pahang Darul
Makmur
Two units of 3
storey Office
building
99 years lease
expiring on
29.06.2092
15
3,218/
9,280
1,610,000
31.12.2014
27.10.2006
No. 435
Jalan Kulas
93400 Kuching
Sarawak
One unit of 4
Freehold
storey Shophouse/
Office
19
1,214/
4,262
1,480,000
31.12.2014
02.01.1996
Perspectives
Land,
Builtup Area
(square
feet)
accountability
36
Tenure
Audited
Financial
Statements
Age of
Building
(years)
*Build-up Area
Description of
Existing Use
Additional
Information
Location
18th AGM
information
No.
Performance
Review
228
Annual Report 2014
Properties owned
by bhb group
Property Listing for BANK ISLAM MALAYSIA BERHAD
No.
Location
Description of
Existing Use
Tenure
Age of
Building
(years)
Land, Built-up
Area (square
feet)
Net Book
Value as at
31.12.2014
(RM)
Date of
Acquisition
Date of Sale
and Purchase
Agreement
1
HS (D) 80625
PT 45 Seksyen 87
Jalan Tun Razak
Bandar Kuala
Lumpur
Building site
99 years lease
expiring on
29.12.2093
N/A
6,597
12,834,314.55
30.12.1994
N/A
2
No. PT 1708 & 1709
H S (M) 2660 &
2661, Batu 5 ½
Jalan Cheras
Kuala Lumpur
Vacant land
99 years lease
expiring on
02.04.2085
N/A
4,443
63,687.30
03.04.1986
N/A
3
Lot No. PT
805-HSD 1323
Mukim Bagan
Nakhoda Omar
Sabak Bernam
Selangor
Vacant land
99 years lease
expiring on
03.02.2101
N/A
405,000
583,414.35
25.03.1999
N/A
Date of
Acquisition
Date of Sale
and Purchase
Agreement
30.09.1985
N/A
Property Listing for SYARIKAT AL-IJARAH SENDIRIAN BERHAD
No.
Location
Description of
Existing Use
1
No. P.T. Lot 002600
& H.S.(D) 815 &
816, Lot 002601.
No. 71 & 73
Jalan Taman
Selat Off
Jalan Bagan Luar
Butterworth
Pulau Pinang
4-storey
Shophouse/
Office for Bank
Islam Operation
Tenure
Freehold
Age of
Building
(years)
Land, Built-up
Area (square
feet)
29
171 & 273
Net Book
Value as at
31.12.2014
(RM)
855,755.91
229
Leadership
share and warrant
holdings statistics
Corporate
Framework
Annual Report 2014
Analysis of Shareholdings as at 31 March 2015
Foreign
Malaysia
Foreign
Malaysia
Foreign
605
7
7,603
121
0.00
0.00
100-1,000
1,326
21
833,737
12,985
0.05
0.00
1,001 - 10,000
2,870
48
11,258,615
257,900
0.73
0.02
10,001 - 100,000
734
42
19,178,337
1,521,402
1.24
0.10
100,001 - 77,110,485 (*)
160
41
223,652,775
29,906,935
14.51
1.94
5
-
1,255,579,324
-
81.41
0.00
5,700
159
1,510,510,391
31,699,343
97.94
2.06
Less than 100
77,110,486 and above (**)
Total
*Less than 5% of Issued Shares
** 5% and above of Issued Shares
Directors’ Shareholdings as at 31 March 2015
Direct Shareholdings
No. Name of Directors
Indirect Shareholdings
No.
%
No.
%
1
-
0.00
-
0.00
2
-
0.00
-
0.00
3
-
0.00
-
0.00
4
-
0.00
-
0.00
5
Dato' Johan bin Abdullah
-
0.00
-
0.00
6
-
0.00
-
0.00
7
-
0.00
-
0.00
8
-
0.00
22,000 (a)
0.00
9
-
0.00
-
0.00
Note:
(a)Indirect shareholding held by spouse.
Perspectives
Malaysia
accountability
Percentage (%)
Audited
Financial
Statements
Size of Shareholdings
No. of Shares
Additional
Information
No. of Shareholders
Performance
Review
: RM2,000,000,000
: RM1,542,209,734
: Ordinary Shares of RM1.00 each
: One (1) vote per ordinary share
18th AGM
information
Authorised Share Capital
Paid-up Capital
Class of Shares
Voting Rights
230
Annual Report 2014
share and warrant
holdings statistics
Distribution Table According to Category of SHAREHolders as at 31 March 2015
No. of Shareholders
Malaysia
Category of
Shareholders
No. of Shares
Foreign
Malaysia
Non
Bumiputra Bumiputra
55
%
Foreign
Malaysia
Foreign
Bumiputra
Non
Bumiputra
Non
Bumiputra Bumiputra
6,103,756
21,935,694
730,701
0.40
1.42
0.05
1,248,600
-
72.80
0.08
0.00
1Individual
2Body corporate
(a)Banks/
Finance
Companies
(b)Investment
Trusts/
Foundation/
Charities
(c)Other Types
of Companies
3Government
Agencies/
Institutions
4Nominees
5Others
1,161
3,513
50
2
- 1,122,698,463
1
-
-
2,412,540
-
-
0.16
0.00
0.00
44
31
3
17,530,436
5,129,199
3,757,600
1.14
0.33
0.24
18
444
-
436
-
101
-
76,411,163
67,619,082
-
189,421,458 27,211,042
-
4.95
4.38
0.00
0.00
12.28
0.00
0.00
1.76
0.00
Total
1,718
3,982
159 1,292,775,440
217,734,951 31,699,343
83.83
14.11
2.06
Grand Total
No. of
Shareholders
No. of
Shares
%
5,859
1,542,209,734
100.00
SHAREHolders with Holdings of 5% and above as at 31 March 2015
Direct Shareholdings
No.
Name of Substantial Shareholders
No.
%
1
Lembaga Tabung Haji
851,039,400
55.18
2
Employees Provident Fund Board
153,076,601
9.93
3
Kumpulan Wang Persaraan (Diperbadankan)
91,286,080
5.92
4
Amanahraya Trustee Berhad
Skim Amanah Saham Bumiputera
80,722,540
5.23
5
Permodalan Nasional Berhad
79,454,703
5.15
231
Leadership
share and warrant
holdings statistics
Corporate
Framework
Annual Report 2014
Lembaga Tabung Haji
851,039,400
55.18
2
Citigroup Nominees (Tempatan) Sdn Bhd
Employees Provident Fund Board
151,376,601
9.82
3
Kumpulan Wang Persaraan (Diperbadankan)
86,590,880
5.61
4
Amanahraya Trustees Berhad
80,722,540
5.23
5
79,454,703
5.15
6
Amsec Nominees (Tempatan) Sdn Bhd
Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI)
27,740,460
1.80
7
Lembaga Kemajuan Tanah Persekutuan (FELDA)
18,447,998
1.20
8
Majlis Ugama Islam Sabah
10,318,999
0.67
9
Majlis Ugama Islam Sabah
9,178,000
0.60
10
CIMB Group Nominees (Tempatan) Sdn Bhd
Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund
8,563,380
0.56
11
Amin Baitulmal Johor
8,316,000
0.54
12
Cartaban Nominees (Tempatan) Sdn Bhd
Exempt an for Eastspring Investments Berhad
6,512,440
0.42
13
Maybank Nominees (Tempatan) Sdn Bhd
Etiqa Takaful Berhad (Family PRF EQ)
6,238,900
0.40
14
Affin Hwang Nominees (Tempatan) Sdn Bhd
Affin Hwang Asset Management Berhad for Majlis Ugama Islam dan Adat Resam Melayu Pahang
5,544,000
0.36
15
Majlis Agama Islam Negeri Pulau Pinang
5,544,000
0.36
16
Majlis Amanah Rakyat
5,544,000
0.36
17
Amanah Saham Didik
5,318,600
0.34
18
Majlis Agama Islam Selangor
5,124,988
0.33
19
Amanahraya Raya Berhad
Kumpulan Wang Bersama Syariah
5,000,000
0.32
20
Majlis Agama Islam dan Adat Istiadat Melayu Kelantan
4,532,799
0.29
Perspectives
1
accountability
%
Audited
Financial
Statements
Shareholdings
Additional
Information
Name
18th AGM
information
No.
Performance
Review
List of Top 30 SHAREHolders as at 31 March 2015
232
Annual Report 2014
share and warrant
holdings statistics
List of Top 30 SHAREHolders as at 31 March 2015 (CONTINUED)
No.
Name
Shareholdings
%
21
Kumpulan Wang Persaraan (Diperbadankan) (I-VCAP)
3,976,400
0,26
22
Public Islamic Dividend Fund
3,785,800
0.25
23
HSBC Nominees (Asing) Sdn Bhd
Exempt an for JPMORGAN Chase Bank, National Association (U.S.A.)
3,779,940
0.25
24
DB (Malaysia) Nominess (Asing) Sdn Bhd
SSBT Fund WTAU for Wisdomtree Emerging Markets SmallCap Dividend Fund
3,541,028
0.23
25
Koperasi Permodalan Felda Malaysia Berhad
3,209,900
0.21
26
Tokio Marine Life Insurance Malaysia Bhd
As Beneficial Owner (PF)
3,165,200
0.21
27
Harakah Islamiah (Hikmah)
3,131,000
0.20
28
Citigroup Nominees (Asing) Sdn Bhd
CBNY for Dimensional Emerging Markets Value Fund
3,107,897
0.20
29
Citigroup Nominees (Asing) Sdn Bhd
Exempt an for Citibank New York (Norges Bank 12)
3,105,620
0.20
30
Koperasi Permodalan Felda Malaysia Berhad
3,000,000
0.19
1,414,911,473
91.75
Total
233
Leadership
share and warrant
holdings statistics
Corporate
Framework
Annual Report 2014
Malaysia
Foreign
Malaysia
Foreign
86
-
5,062
-
0.00
0.00
757
7
400,852
4,069
0.09
0.00
1,001 - 10,000
1,792
15
9,169,581
72,700
2.15
0.02
10,001 - 100,000
1,305
18
47,520,182
837,580
11.14
0.20
277
8
134,945,976
11,918,876
31.62
2.79
3
-
221,841,000
-
51.99
0.00
4,220
48
413,882,653
12,833,225
96.99
3.01
Less than 100
100-1,000
100,001 - 21,335,792 (*)
21,335,793 and above (**)
Total
*Less than 5% of Issued Warrant
** 5% and above of Issued Warrant
Directors’ WARRANT holdings as at 31 March 2015
None of BHB's Board of Directors have any direct/indirect warrant holdings as at 31 March 2015.
Perspectives
Foreign
accountability
Malaysia
Audited
Financial
Statements
Percentage (%)
Additional
Information
Size of Warrant Holdings
No. of Warrants
18th AGM
information
No. of Warrant Holders
Performance
Review
Analysis of Warrant Holdings as at 31 March 2015
234
Annual Report 2014
share and warrant
holdings statistics
Distribution Table According to Category of Warrant holders as at 31 March 2015
No. of Warrant Holders
Malaysia
Category of
Warrant Holders
1Individual
2Body corporate
(a)Banks/
Finance
Companies
(b)Investment
Trusts/
Foundation/
Charities
(c)Other
Types of
Companies
3Government
Agencies/
Institutions
4Nominees
5Others
Total
No. of Warrants
Foreign
Malaysia
Non
Bumiputra Bumiputra
%
Foreign
Bumiputra
Non
Bumiputra
Malaysia
Foreign
Non
Bumiputra Bumiputra
390
2,796
18
6,088,538
95,517,632
350,600
1.43
22.85
0.08
10
2
-
196,943,738
375,500
-
46.15
0.09
0.00
-
-
-
-
-
-
0.00
0.00
0.00
6
25
-
1,672,100
2,337,049
-
0.39
0.55
0.00
2
554
-
435
-
30
-
95,360
47,011,256
-
61,841,480 12,482,480
-
0.02
11.02
0.00
0.00
14.49
0.00
0.00
2.93
0.00
962
3,258
48
251,810,992
162,071,661 12,833,225
59.01
37.98
3.01
Grand Total
No. of
Warrant
Holders
No. of
Warrants
%
4,268
426,715,878
100.00
WARRANT Holders with Holdings of 5% and above as at 31 March 2015
Direct Warrant Holdings
No.
Name of Substantial Warrant Holders
Warrant
%
153,155,000
35.89
1
Lembaga Tabung Haji
2
Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Kong Goon Khing (E-BTR)
38,686,000
9.07
3
Amanahraya Trustee Berhad
30,000,000
7.03
235
Leadership
share and warrant
holdings statistics
Corporate
Framework
Annual Report 2014
35.89
Lembaga Tabung Haji
2
38,686,000
9.07
3
Skim Amanah Saham Bumiputera Permodalan Nasional Berhad
30,000,000
7.03
4
13,383,898
3.14
5
Chin Hooi Nan
13,348,000
3.13
6
Amsec Nominees (Tempatan) Sdn Bhd
Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI)
10,299,560
2.41
7
Chin Hooi Nan
6,091,000
1.43
8
Exempt an for Credit Suisse Securities (USA) LLC (PB Client)
4,640,370
1.09
9
Malacca Equity Nominees (Tempatan) Sdn Bhd
Exempt an for Philip Capital Management Sdn Bhd
3,110,300
0.73
10
Maybank Securities Nominees (Asing) Sdn Bhd
Maybank Kim Eng Securities Pte Ltd for Lim Chuan Seng
2,600,000
0.61
11
Su Ning Yaw
2,400,000
0.56
12
Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund
2,347,080
0.55
13
Morgan Standley & CO. International PLC (Firm A/C)
2,107,930
0.49
14
Lim Gaik Bway @ Lim Chiew Ah
1,978,700
0.46
15
1,669,000
0.39
16
Universal Trustee (Malaysia) Berhad for CIMB-Principal Equity Fund
1,262,400
0.30
17
Universal Trustee (Malaysia) Berhad for CIMB Islamic Small Cap Fund
1,253,800
0.29
18
Bank Negara Malaysia Medical Fund Account (CIMB Principal)
1,249,500
0.29
19
Harakah Islamiah (Hikmah)
1,222,400
0.29
20
Chong Shoong Tean
1,128,700
0.26
Perspectives
153,155,000
1
accountability
%
Audited
Financial
Statements
Warrant
Holdings
Additional
Information
Name
18th AGM
information
No.
Performance
Review
List of Top 30 WARRANT Holders as at 31 March 2015
236
Annual Report 2014
share and warrant
holdings statistics
List of Top 30 WARRANT Holders as at 31 March 2015 (CONTINUED)
Name
Warrant
Holdings
%
21
Ng Kok Sing
1,080,000
0.25
22
Kenanga Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Ling Thin King (ET)
965,000
0.23
23
CIMB - Principal Asset Management Berhad for Manulife Insurance (Malaysia) Berhad
- (Managed Fund)
945,500
0.22
24
Pledged Securities Account for Lai Kim Fong (ET)
934,000
0.22
25
Sua Hing Kam
885,000
0.21
26
CIMB -Principal Asset Management Berhad for Federal Land Development Authority
874,000
0.20
27
Maybank Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Tee See Kim
870,000
0.20
28
CIMSEC Nominees (Asing) Sdn Bhd
Pledged Securities Account for Noble Plan Sdn Bhd
835,000
0.20
29
Exempt an for JPMORGAN Chase Bank, National Association (U.S.A.)
813,216
0.19
30
Pledged Securities Account for Lai Eng Hui(ET)
791,000
0.19
300,926,354
70.52
No.
Total
237
BIMB INVESTMENT
MANAGEMENT BERHAD
19th Floor, Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2161 2524/2924
Toll free: 1-800 88 1196
Fax
: +603-2161 2464
BANK ISLAM TRUST COMPANY
(LABUAN) LTD
Level 5 (1), Main Office Tower
Jalan Merdeka, Financial Park Complex
Wilayah Persekutuan
87000 F.T Labuan
Tel
: +0687-451 806
Fax
: +0687-451 808
FARIHAN CORPORATION SDN BHD
19th Floor, Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2782 1333
Fax
: +603-2782 1355
AL- WAKALAH NOMINEES
(TEMPATAN) SDN BHD
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2726 7724
Fax
: +603-2726 7733
Graha B, Graha Takaful Indonesia
Jalan Mampang Prapatan Raya
No. 100, Jakarta
12790 Indonesia
Tel : +6221-799 1234
Fax
: +6221-790 1435
Website: www.takaful.com
PT ASURANSI TAKAFUL KELUARGA
Graha B, Graha Takaful Indonesia
No. 100, Jakarta
12790 Indonesia
Tel : +6221-799 1234
Fax
: +6221-790 1435
PT ASURANSI TAKAFUL UMUM
Graha A, Graha Takaful Indonesia
No. 100, Jakarta
12790 Indonesia
Tel : +6221-799 2345
Fax
: +6221-790 1944
BIMB SECURITIES
(HOLDINGS) BERHAD
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel : +603-2781 2999
Fax
: +603-2781 2998
BIMBSEC NOMINEES
(TEMPATAN) SDN BHD
Level 32, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel
: +603-2691 8887
Fax
: +603-2691 8854
BIMB NOMINEES
(ASING) SDN BHD
Capital Square
50100 Kuala Lumpur
Tel
: +603-2691 8887
Fax
: +603-2691 8854
SYARIKAT AL-IJARAH SDN BHD
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2781 2999
Fax
: +603-2781 2998
Performance
Review
Perspectives
PT SYARIKAT TAKAFUL INDONESIA
Capital Square
50100 Kuala Lumpur
Tel
: +603-2691 8887
Fax
: +603-2691 8854
Website: www.bimbsec.com.my
Online Trading : www.bisonline.com.my
accountability
32nd, Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2088 8000
Fax
: +603-2088 8033
Website: www.bankislam.com.my
26th Floor, Annexe Block
Menara Takaful Malaysia
No. 4, Jalan Sultan Sulaiman
50000 Kuala Lumpur
P.O. Box 11483
50746 Kuala Lumpur
Tel
: 1-300 88 252 385
Fax
: +603-2274 0237
Website: takaful-malaysia.com.my
Email : csu@takaful-malaysia.com.my
BIMB SECURITIES SDN BHD
Audited
Financial
Statements
BANK ISLAM MALAYSIA BERHAD
SYARIKAT TAKAFUL
MALAYSIA BERHAD
Additional
Information
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel
: +603-2781 2999
Fax
: +603-2781 2998
Website: www.bimbholdings.com
18th AGM
information
Leadership
regional
group network
Corporate
Framework
Annual Report 2014
238
Annual Report 2014
Notice of 18th
Annual General Meeting
NOTICE IS HEREBY GIVEN that the 18th Annual General Meeting (“AGM”) of BIMB Holdings
Berhad (“BHB” or “the Company”) will be held at Dewan Bankuet 2, Aras B2, Menara Felda,
Platinum Park, No. 11, Persiaran KLCC, 50088 Kuala Lumpur, Malaysia on Thursday, 14 May 2015 at
10.00 a.m. for the following purposes:
ORDINARY BUSINESS
1.To receive the Audited Financial Statements for the financial year ended 31 December 2014 together
with the Reports of the Directors and Auditors thereon.
(Ordinary Resolution 1)
2. To re-elect the following Directors who are retiring by rotation in accordance with Article 61 of the
Company’s Articles of Association and being eligible, have offered themselves for re-election:
(a)Tan Sri Samsudin bin Osman
(b) Datuk Rozaida binti Omar
3.To re-elect Dato’ Johan bin Abdullah, a Director who is retiring in accordance with Article 66 of the
Company’s Articles of Association and being eligible, has offered himself for re-election.
4. To consider and if thought fit, to pass the following resolution in accordance with Section 129 of the
Companies Act, 1965:
“That Encik Zahari @ Mohd Zin bin Idris, who is retiring in accordance with Section 129 of the
Companies Act, 1965, be and is hereby re-appointed as a Director of the Company to hold office until
the conclusion of the next AGM of the Company.” (Ordinary Resolution 5)
5. To approve the payment of Directors’ fees of RM1,243,000 for the financial year ended 31 December
2014 (RM1,111,000 for the financial year ended 31 December 2013). (Ordinary Resolution 6)
6. To re-appoint Messrs. KPMG Desa Megat & Co. as the External Auditors of the Company until the
conclusion of the next AGM and to authorise the Directors to fix their remuneration.
SPECIAL BUSINESS
7.Retention of Independent Director
To retain Datuk Zaiton binti Mohd Hassan as an Independent Non-Executive Director of the Company
in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012. (Ordinary Resolution 8)
239
Leadership
Notice of 18th
annual general meeting
Corporate
Framework
Annual Report 2014
Performance
Review
8. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading
Nature.
“That subject to the Companies Act 1965, Memorandum and Articles of Association of the Company
and the Listing Requirements of Bursa Malaysia Securities Berhad approval be and is hereby given
to BIMB Holdings Berhad and its subsidiaries to enter into the category of recurrent related party
transactions of a revenue or trading nature with those related parties as specified in Section 2.1.3
of the Circular to Shareholders dated 21 April 2015 which are necessary for the Group’s day to day
operations subject to the following:
Perspectives
(a)The transactions carried out are in the ordinary course of business and are on normal commercial
terms that do not favour the related parties more than the general public;
(b) Are not detrimental to the minority shareholders of the Company; and
(c)Will be disclosed in the annual report with the breakdown of the aggregate value of transactions
conducted during the financial year pursuant to the shareholders’ mandate during the financial
year ("Mandate").
And that the Mandate conferred by this resolution shall commence immediately upon the passing of
this Resolution;
(i)
the conclusion of the next AGM of the Company, at which time it will lapse, unless by a
resolution passed at the meeting, the authority is renewed;
(ii) the expiration of the period within which the next AGM after the date is required to be held
pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as
may be allowed pursuant to Section 143(2) of Companies Act 1965); or
(iii) it is revoked or varied by a resolution passed by the shareholders in a general meeting.
whichever is the earlier.”
9. Proposed renewal of the authority for Directors to allot and issue new ordinary shares of RM1.00 each
in BHB (“BHB Shares”), for the purpose of the Company’s Dividend Reinvestment Plan (“DRP”) that
provides the Shareholders of BHB (“Shareholders”) the option to elect to reinvest their cash dividend
in new BHB Shares.
AND THAT the Directors and the Secretary of the Company be and are hereby authorised to do all
such acts and enter into all such transactions, arrangements, deeds, undertakings and documents
as may be necessary or expedient in order to give full effect to the DRP with full power to assent
to any conditions, modifications, variations and/or amendments as may be imposed or agreed to
by any relevant authorities (if any) or consequent upon the implementation of the said conditions,
modifications, variations and/or amendments, by the Directors as they, in their absolute discretion,
deem fit and in the best interest of the Company.”
18th AGM
information
Additional
Information
“THAT pursuant to the DRP as approved by the Shareholders at the Extraordinary General Meeting
held on 27 October 2014 and subject to the approval of the relevant regulatory authority (if any),
approval be and is hereby given to the Company to allot and issue such number of new BHB
Shares from time-to-time as may be required to be allotted and issued pursuant to the DRP until the
conclusion of the next AGM upon such terms and conditions and to such persons as the Directors
of the Company at their sole and absolute discretion, deem fit and in the interest of the Company
PROVIDED THAT the issue price of the said new BHB Shares shall be fixed by the Directors based
on the adjusted five (5) market days volume weighted average market price (“VWAP”) of BHB Shares
immediately prior to the price-fixing date after applying a discount of not more than 10%, of which
the VWAP shall be adjusted ex-dividend before applying the aforementioned discount in fixing the
issue price and the issue price may not be less than the par value of BHB Shares;
Audited
Financial
Statements
accountability
And that such Mandate shall continue to be in force until:
Annual Report 2014
240
Notice of 18th
annual general meeting
10.To transact any other ordinary business of which due notice shall have been given in accordance with the Companies Act 1965.
By Order of the Board
MARIA BINTI MAT SAID (LS 0009400)
Company Secretary
Kuala Lumpur
21 April 2015
Notes :
1.Only members registered in the Record of Depositors as at 7 May 2015 shall be eligible to attend and vote at the Annual General Meeting or appoint proxy
to attend and vote on his/her behalf.
2.A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same general meeting. Where a member appoints two (2)
proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
3.Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one (1)
securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each
omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act
1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.
4.The instrument appointing a proxy shall:
(i) in the case of an individual, be signed by the appointer or by his attorney; and
(ii) in the case of a corporation, be either executed under its common seal or signed by its attorney or by an officer on behalf of the corporation.
5. All proxy forms should be deposited at the Company’s Registered Office, 31st Floor, Menara Bank Islam, No. 22, Jalan Perak, 50450 Kuala Lumpur not less
than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof.
6.Explanatory Notes:
6.1 Retention of Independent Director in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance
Datuk Zaiton was appointed as an Independent Non-Executive Director of BHB on 2 February 2006. As at the date of the 18th AGM of BHB, she has
served as an Independent Non-Executive Director of the Company slightly over nine (9) years. As such, Datuk Zaiton has exceeded the nine (9) years’
tenure as recommended by the Malaysian Code of Corporate Governance 2012. Based on the Directors’ Assessment for 2014, the Board has formed a
collective view and agreed that it would be crucial to retain Datuk Zaiton as an Independent Non-Executive Director in the Company.
During the nine (9) years’ period in the Company, Datuk Zaiton has demonstrated her commitment to the Company and has a good attendance record,
in line with the attendance requirements for Board meetings pursuant to the Listing Requirements and BNM/GP1-i. This testifies her dedication in
discharging the responsibilities expected of an Independent Director.
Apart from being well prepared for the Board and Board Committees’ meetings, Datuk Zaiton participates actively in the deliberations of the matters
at the Board and Board Committees meetings. She was acknowledged to be meticulous and analytical in her views. Coupled with her vast experience
in banking, risk management and other experiences gained through the various senior positions that she held in the financial industry, Datuk Zaiton’s
independent views, input and contributions are highly valued and respected. The skills, experience and knowledge possessed by Datuk Zaiton are
useful for the future development of BHB and its subsidiaries.
Apart from the above, Datuk Zaiton has complied with the criteria/requirement of ‘Independent Director’ and other requirements set out in Paragraph
1.01 of Bursa Malaysia Securities Berhad Listing Requirements. Based on the aforesaid, the Board strongly recommend the shareholders of BHB to retain
Datuk Zaiton as an Independent Non-Executive Director at the 18th AGM of the Company.
6.2 Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
For further details on Ordinary Resolution 9, please refer to Circular to Shareholders dated 21 April 2015.
6.3 Dividend Reinvestment Plan
This Proposed Ordinary Resolution 10 will give authority to the Directors to allot and issue share for the Dividend Reinvestment Plan in respect of any
dividend to be declared until the next AGM. A renewal of this authority will be sought at the next AGM.
241
Profiles of the above Directors are set out on pages 8 to 12 of this Annual Report.
Leadership
Performance
Review
Perspectives
(4)Section 129 of the Companies Act, 1965
• Encik Zahari @ Mohd Zin bin Idris
accountability
(3)Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012
• Datuk Zaiton binti Mohd Hassan
Audited
Financial
Statements
(2)Article 66 of the Company’s Articles of Association
• Dato’ Johan bin Abdullah
Additional
Information
Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Malaysia Securities Berhad, BHB wishes to highlight the Directors who are
standing for re-election at the 18th AGM of the Company are as follows:
(1)Article 61 of the Company’s Articles of Association
• Tan Sri Samsudin bin Osman
• Datuk Rozaida binti Omar
18th AGM
information
Statement Accompanying
Notice of 18th
Annual General Meeting
Corporate
Framework
Annual Report 2014
This page has been intentionally left blank.
form of
proxy
(Company No. 423858-X)
(Incorporated in Malaysia under the Companies Act, 1965)
I/We ............................................................................................ NRIC No./Passport No./Company No. .........................................................................
of ...............................................................................................................................................................................................................................................
(ADDRESS)
telephone no. ................................................................... being a member/members of BIMB Holdings Berhad (“the Company”), hereby appoint
................................................................................................................. in respect of ...........................................................................................................
shares of ....................................................................................................................................................................................................................................
(ADDRESS)
and/or ................................................................................................... in respect of ...........................................................................................................
shares of ....................................................................................................................................................................................................................................
(ADDRESS)
or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the 18th Annual General Meeting of
the Company to be held at Dewan Bankuet 2, Aras B2, Menara Felda, Platinum Park, No. 11, Persiaran KLCC, 50088 Kuala Lumpur, Malaysia on Thursday,
14 May 2015 at 10.00 a.m. and at any adjournment thereof. I/We indicate with an “x” in the appropriate spaces below as to how I/we wish my/our vote
to be cast:
For
Ordinary Resolution 1
To receive the Audited Financial Statements for the financial year ended 31 December 2014 together
with the Reports of the Directors and Auditors thereon.
To re-elect Tan Sri Samsudin bin Osman, a Director who are retiring by rotation in accordance with
Article 61 of the Company’s Articles of Association and being eligible, have offered himself for
re-election.
To re-elect Datuk Rozaida binti Omar, a Director who is retiring by rotation in accordance with Article
61 of the Company’s Articles of Association and being eligible has offered herself for re-election.
To re-elect Dato’ Johan bin Abdullah, a Director who is retiring in accordance with Article 66 of the
Company’s Articles of Association and being eligible, has offered himself for re-election.
To re-appoint Encik Zahari @ Mohd Zin bin Idris, a Director who is retiring pursuant to Section 129 of
the Companies Act, 1965 and has offered himself for re-appointment.
To approve the payment of Directors’ fees of RM1,243,000 for the financial year ended 31 December
2014 (RM1,111,000 for the financial year ended 31 December 2013).
To re-appoint Messrs. KPMG Desa Megat & Co. as the External Auditors of the Company until the
conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.
To retain Datuk Zaiton binti Mohd Hassan as an Independent Non-Executive Director of the Company
in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012.
To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions
of a Revenue or Trading Nature.
Against
Ordinary Resolution 10 To approve Proposed renewal of the authority for Directors to allot and issue new ordinary shares of
RM1.00 each in BHB (“BHB Shares”), for the purpose of the Company’s Dividend Reinvestment Plan
(“DRP”) that provides the Shareholders of BHB (“Shareholders”) the option to elect to reinvest their
cash dividend in new BHB Shares.
Subject to the abovestated voting instructions, my/our proxy may vote or abstain from voting on any resolution as *he/*she/*they may think fit.
If appointment of proxy is under hand ..............................................................
No. of Shares Held: ........................................................................
Signed by *individual member/*officer or attorney of member/*authorised
Securities Account No.: ................................................................
nominee of .......................................... (beneficial owner)
Date: ...............................................................................................
If appointment of proxy is under seal
Seal
The Common Seal of .................................................................................... was
No. of Shares Held: ........................................................................
hereto affixed in accordance with its Articles of Association in the presence of:
Securities Account No.: ................................................................
Date: ...............................................................................................
......................................................
......................................................
DirectorDirector/Secretary
In its capacity as *member/*attorney of member/*authorised nominee of
.............................................. (beneficial owner)
Important Notes:
1.Only members registered in the Record of Depositors as at 7 May 2015 shall be eligible to attend and vote at the Annual General Meeting or
appoint proxy to attend and vote on his/her behalf.
2.A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same general meeting. Where a member appoints
two (2) proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
3.Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners
in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in
respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry
(Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.
4.The instrument appointing a proxy shall:
(i) in case of an individual, be signed by the appointor or by his attorney; and
(ii) in case of a corporation, be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.
5.The instrument appointing a proxy must be deposited at the Registered Office of the Company at 31st Floor, Menara Bank Islam, No. 22, Jalan
Perak, 50450 Kuala Lumpur, Malaysia not less than 48 hours before the time fixed for holding of the meeting or any adjournment thereof.
6.A proxy may vote on a show of hands and on a poll. If the form of proxy is returned without an indication as to how the proxy shall vote on any
particular matter, the proxy may exercise his discretion as to whether to vote on such matter.
7.The lodging of a form of proxy does not preclude a member from attending and voting in person at the meeting should the member subsequently
decide to do so.
*Delete if inappropriate
Fold Here
STAMP
BIMB HOLDINGS BERHAD (423858-X)
31st Floor
Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Fold Here
www.bimbholdings.com
BIMB HOLDINGS BERHAD (423858-X)
31st Floor
Menara Bank Islam
No. 22, Jalan Perak
50450 Kuala Lumpur
Tel : +603 2781 2999
Fax: +603 2781 2998

nOtES tO thE - BIMB Holdings Berhad

Transcription

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