INTERIM FINANCIAL STATEMENTS FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE 2016

Transcription

1 FOR THE FINANCIAL HALF YEAR ENDED INTERIM FINANCIAL STATEMENTS 30 JUNE 2016 Registered Office Ground Floor, East Block Wisma Selangor Dredging 142-B Jalan Ampang Kuala Lumpur

2 INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2016 Group Bank Note 30 June 31 December 30 June 31 December ASSETS Cash and short-term funds 142, , , ,806 Deposits and placements with banks and other financial institutions 9 271, , , ,090 Hedging financial instruments , ,291 Securities held-for-trading 11 5,091 5,510 5,091 5,510 Securities held-to-maturity 12 1,468,846 1,469,290 1,468,846 1,469,290 Financing and advances 13 4,967,784 4,983,507 4,967,784 4,983,507 Other assets 41,513 26,515 41,450 26,515 Statutory deposit with Bank Negara Malaysia 207, , , ,758 Investment properties 105, , , ,000 Property and equipment 11,936 10,631 11,936 10,631 Intangible assets 27,208 27,943 27,208 27,943 Deferred tax assets 62,051 62,051 62,051 62,051 Total Assets 7,310,299 7,315,392 7,310,236 7,315, LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities Deposits from customers 14 5,378,382 5,110,626 5,378,382 5,110,626 Deposits and placements of banks and other - financial institutions ,570 1,108, ,570 1,108,059 Hedging financial instruments Bills and acceptances payable 4,516 18,737 4,516 18,737 Other liabilities 63,760 59,550 63,760 59,550 Subordinated Sukuk 268, , , ,928 Total Liabilities 6,582,710 6,582,902 6,582,710 6,582,902 - Shareholder's equity Share capital 1,000,000 1,000,000 1,000,000 1,000,000 Reserves (272,411) (267,510) (272,474) (267,510) Total Shareholder's Equity 727, , , ,490 Total Liabilities and Shareholder's Equity 7,310,299 7,315,392 7,310,236 7,315,392 COMMITMENTS AND CONTINGENCIES ,608 1,314, ,608 1,314,720 CAPITAL ADEQUACY 25 CET 1 / Core capital ratio % % % % Risk-weighted capital ratio % % % % The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

3 INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME FOR THE 2ND QUARTER ENDED 30 JUNE nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Group Note Revenue 93,496 93, , ,279 Income derived from investment of depositors' funds and others 16 85,944 84, , ,153 Income derived from investment of shareholder's funds 17 7,552 9,387 16,225 17,126 Allowance for impairment on financing 18 (406) (1,971) (665) (5,986) Other expenses directly attributable to the investment of the depositors' funds - (9) (4) (13) Total distributable income 93,090 91, , ,280 Income attributable to depositors 19 (51,533) (50,059) (103,172) (99,100) Total Net Income 41,557 41,625 83,775 81,180 Personnel expenses (25,489) (18,203) (45,551) (35,330) Other overheads and expenditures (21,993) (20,423) (43,125) (42,189) Profit before zakat and taxation (5,925) 2,999 (4,901) 3,661 Zakat Taxation Net profit for the financial period, representing total comprehensive income for the financial period (5,925) 2,999 (4,901) 3, The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

4 INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME FOR THE 2ND QUARTER ENDED 30 JUNE nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Bank Note Revenue 93,382 93, , ,279 Income derived from investment of depositors' funds and others 16 85,944 84, , ,153 Income derived from investment of shareholder's funds 17 7,438 9,387 16,067 17,126 Allowance for impairment on financing 18 (406) (1,971) (665) (5,986) Other expenses directly attributable to the investment of the depositors' funds - (9) (4) (13) Total distributable income 92,976 91, , ,280 Income attributable to depositors 19 (51,533) (50,059) (103,172) (99,100) Total Net Income 41,443 41,625 83,617 81,180 Personnel expenses (25,468) (18,203) (45,508) (35,330) Other overheads and expenditures (21,965) (20,423) (43,073) (42,189) Profit before zakat and taxation (5,990) 2,999 (4,964) 3,661 Zakat Taxation Net profit for the financial period, representing total comprehensive income for the financial period (5,990) 2,999 (4,964) 3,661 The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

5 INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME FOR THE 2ND QUARTER ENDED 30 JUNE 2016 Group Share Statutory Accumulated capital reserve losses Total At 1 January ,000,000 9,855 (277,365) 732,490 Total comprehensive income for the financial period - - (4,901) (4,901) Transfer to statutory reserve At 30 June ,000,000 9,855 (282,266) 727,589 Group At 1 January ,000,000 3,975 (283,244) 720,731 Total comprehensive income for the financial period ,759 11,759 Transfer to statutory reserve - 5,880 (5,880) - At 31 December ,000,000 9,855 (277,365) 732,490 The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

6 INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME FOR THE 2ND QUARTER ENDED 30 JUNE 2016 Bank Non-Distributable Share Statutory Accumulated capital reserve losses Total At 1 January ,000,000 9,855 (277,365) 732,490 Total comprehensive income for the financial period - - (4,964) (4,964) Transfer to statutory reserve At 30 June ,000,000 9,855 (282,329) 727,526 (2,483) Bank At 1 January ,000,000 3,975 (283,244) 720,731 Total comprehensive income for the financial period ,759 11,759 Transfer to statutory reserve - 5,880 (5,880) - At 31 December ,000,000 9,855 (277,365) 732,490 The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

7 INTERIM FINANCIAL STATEMENTS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE 2ND QUARTER ENDED 30 JUNE 2016 CASH FLOWS FROM OPERATING ACTIVITIES Group Bank 30 June 30 June 30 June 30 June (Loss) / Profit before zakat and taxation (4,901) 3,661 (4,964) 3,661 Adjustments for: Depreciation of property and equipment 2,673 3,164 2,673 3,164 Amortisation of intangible assets 5,877 6,448 5,877 6,448 Net gain on disposal of property,plant & equipment Allowance for impairment on financing 4,058 9,762 4,058 9,762 Bad debts on financing - Written off Bad debts on financing - Recovered (3,876) (3,823) (3,876) (3,823) Allowance for doubtful debt Unrealised loss on revaluation of - securities held-for-trading / investment properties 152 (144) 152 (144) Unrealised (gain)/loss from foreign exchange translations 179 4, ,280 Operating cashflow before workings capital changes 4,655 23,394 4,592 23,394 (Increase) / decrease in Operating Assets Deposits and placements with banks and other financial institutions 15,726 (23,164) 15,726 (23,164) Hedging financial instruments 1,018 1,535 1,018 1,535 Financing and advances 14,879 (377,874) 14,879 (377,874) Other assets (15,034) (5,985) (14,935) (5,985) Statutory deposit with Bank Negara Malaysia 1,459 (16,200) 1,459 (16,200) - (Decrease) / increase in Operating Liabilities - Deposits from customers 267,755 (142,575) 267,755 (142,575) Deposits and placements of banks and - other financial institutions (257,937) 320,220 (257,937) 320,220 Hedging financial instruments Bills and acceptances payable (14,220) 7,450 (14,220) 7,450 Other liabilities 4,959 17,273 4,923 17,273 Net cash (used in)/generated from operating activities 23,260 (195,926) 23,260 (195,926) 6

8 INTERIM FINANCIAL STATEMENTS UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE 2ND QUARTER ENDED 30 JUNE 2016 CASH FLOWS FROM INVESTING ACTIVITIES Group Bank 30 June 30 June 30 June 30 June Purchase of property and equipment (3,988) (3,220) (3,988) (3,220) Purchase of intangible asset (5,142) (3,609) (5,142) (3,609) Proceeds from sale of fixed assets Securities held-to-maturity 444 (42,771) 444 (42,771) Net cash used in investing activities (8,686) (49,600) (8,686) (49,600) CASH FLOWS FROM FINANCING ACTIVITY Issuance of Subordinated Sukuk Net cash generated from financing activities NET DECREASE IN CASH AND SHORT-TERM FUNDS 14,574 (245,526) 14,574 (245,526) Cash and short-term funds as at 1 January 127, , , ,672 CASH AND SHORT-TERM FUNDS 142, , , ,146 - The Interim Financial Statements should be read in conjuction with the audited financial statements of the Group and the Bank for the year ended 31 December

9 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134") AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 1. BASIS OF PREPARATION The unaudited condensed interim financial statements have been prepared in accordance with the applicable requirements of MFRS 134: Interim Financial Reporting in Malaysia issued by Malaysian Accounting Standards Board (MASB), Financial Reporting for Islamic Banking Institution policy issued by Bank Negara Malaysia (BNM), the provisions of the Companies Act, 1965 and Shariah requirements. The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements for the year ended 31 December The explanatory notes attached to the consolidated condensed interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the year ended 31 December ACCOUNTING POLICIES The significant accounting policies and methods of computation applied in the unaudited condensed interim financial statements are consistent with those adopted in the most recent audited financial statements for the year ended 31 December 2015, except for the adoption of the following: Annual improvements to MFRSs Cycle Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to MFRS 116 and MFRS 141: Agriculture : Bearer Plants Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture MFRS 11: Accounting for acquisitions of interest in Joint Operations Amendments to MFRS 127: Equity Method in Separate Financial Statements Amendments to MFRS 101 : Disclosure initiatives Amendments to MFRS 10, MFRS 12, and MFRS 128 : Investment Entities: Applying the Consolidation Exception MFRS 14: Regulatory Deferral Accounts The adoption of MFRSs above do not have any financial impact on the Group and the Bank as they mainly help to clarify the requirements of or provide further explanations to existing MFRSs. The following MFRSs and IC Interpretations have been issued by the MASB and are not yet effective: Effective for the financial period beginning on or after 1 January 2018: MFRS 15: Revenue from Contracts with Customers Effective for the financial period beginning on or after 1 January 2018: MFRS 9: Financial Instruments (IFRS 9 Financial Instruments as issued by IASB in July 2014) 8

10 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134") AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA (CONTINUED) 3. AUDITORS REPORT ON PRECEDING ANNUAL FINANCIAL STATEMENTS The auditors report on the audited annual financial statements for the financial year ended 31 December 2015 was not qualified. 4. COMMENTS ABOUT SEASONAL OR CYCLICAL FACTORS The operations of the Group and the Bank were not materially affected by any seasonal or cyclical factors in the 2nd quarter ended 30 June UNUSUAL ITEMS DUE TO THEIR NATURE, SIZE OR INCIDENCE There were no unusual items affecting the assets, liabilities, equity, net income or cash flows of the Group and the Bank in 2nd quarter ended 30 June CHANGES IN ESTIMATE There were no changes in estimates of amounts reported in prior financial years that have a material effect in the 2nd quarter ended 30 June DEBT AND EQUITY SECURITIES There were no issuances, cancellation, repurchases, resale or repayments of debt and equity securities in the 2nd quarter ended 30 June DIVIDENDS PAID There were no dividends paid during the 2nd quarter ended 30 June

11 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 9. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS 30 June 31 December Foreign financial institutions 271, , HEDGING FINANCIAL INSTRUMENTS Notional Fair Value Amount Assets Liabilities 30 June 2016 Foreign currency forward contracts 4, Decemebr 2015 Foreign currency forward contracts 12,449 1, SECURITIES HELD-FOR-TRADING 30 June 31 December At fair value Quoted securities: Unit Trust 5,091 5, SECURITIES HELD-TO-MATURITY 30 June 31 December At amortised cost Unquoted : Islamic government securities in Malaysia 1,417,961 1,418,390 Islamic private debt securities in Malaysia 50,885 50,900 1,468,846 1,469,

12 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 13. FINANCING AND ADVANCES (a) Financing and advances analysed by types and Shariah contracts are as follows: 30 June 2016 Bai Total net Bithaman financing and Ajil Qard advances At amortised cost Term Financing: Corporate financing 3,092,764-3,092,764 Personal financing 644, ,355 Home financing 1,162,576-1,162,576 SME financing 45,243-45,243 Vehicle financing 77,467-77,467 Shop-house financing 38,364-38,364 Charge cards - 1,609 1,609 Gross financing and advances 5,060,769 1,609 5,062,378 Less: Impairment allowance - Collective assessment (86,833) - Individual assessment (7,761) Total net financing and advances 4,967, December 2015 Bai Total net Bithaman financing and Ajil Qard advances At amortised cost Term Financing: Corporate financing 3,045,754-3,045,754 Personal financing 669, ,611 Home financing 1,182,512-1,182,512 SME financing 62,935-62,935 Vehicle financing 76,865-76,865 Shop-house financing 39,121-39,121 Charge cards - 1,902 1,902 Gross financing and advances 5,076,798 1,902 5,078,700 Less: Impairment allowance - Collective assessment (87,732) - Individual assessment (7,461) Total net financing and advances 4,983,507-11

13 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 13. FINANCING AND ADVANCES (Continued) (b) Financing and advances analysed by type of customers are as follows: 30 June 31 December Domestic non-bank financial institutions 307, ,724 Domestic business enterprise 1,300,082 1,196,725 Individuals 1,901,860 1,970,010 Foreign entities 1,552,464 1,530,241 5,062,378 5,078, (c) Financing and advances analysed by profit rate sensitivity are as follows: 30 June 31 December Fixed rate: Corporate financing 1,583,647 1,536,454 Personal financing 644, ,611 SME financing 45,258 62,935 Home financing 14,173 15,505 Vehicle financing 77,467 76,865 Charge card 1,609 1,902 Shop-house financing (d) Variable rate: Home financing 1,148,403 1,167,007 Shop-house financing 37,453 38,140 Corporate financing 1,509,102 1,509,300 5,062,378 5,078, Financing and advances analysed by maturity structure are as follows: 30 June 31 December Due within three months 738, ,003 More than three months to one year 332, ,445 More than one year to five years 2,202,857 2,157,988 More than five years 1,788,835 1,873,264 5,062,378 5,078, (e) Financing and advances analysed by geographical distribution are as follows: 30 June 31 December Malaysia 3,513,904 3,535,114 Saudi Arabia 1,509,102 1,509,301 Other Countries 39,372 34,285 5,062,378 5,078,

14 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 13. FINANCING AND ADVANCES (Continued) (f) Financing and advances analysed by economic purpose are as follows: (g) 30 June 31 December Purchase of securities 1,509,103 1,589,531 Working capital 1,326,192 1,321,999 Purchase of property - residential property 1,224,206 1,193,020 Personal use 644, ,611 Purchase of commercial complex 153, ,080 Purchase of vehicles 77,239 76,865 Others 74,062 32,923 Purchase of shop-house 26,609 48,809 Construction 17,922 15,611 Purchase of industrial buildings and factories 7,670 1,349 Charge card 1,609 1,902 5,062,378 5,078, Financing and advances analysed by sectors are as follows: 30 June 31 December Household 1,924,315 1,970,026 Telecommunication 1,509,102 1,509,301 Manufacturing 561, ,497 Real estate, renting and business activities 325, ,975 Finance intermediation 321, ,643 Wholesale & Retail trade 281, ,254 Construction 126, ,389 Fishing, Operation of Fish Hatcheries, Fish Farms - 1,349 Transportation 8,066 19,944 Agriculture, hunting and related service activities 4,720 2,733 Other business Electricity, gas and water supply - 35,941 Forestry, logging and related services activities ,062,378 5,078,700 - (h) Movements in impaired financing and advances 30 June 31 December At 1 January 31,038 75,098 Impaired during the financial period / year 58, ,987 Reclassified as non impaired (24,788) (26,353) Recoveries (19,171) (74,701) Write-off (5,141) (45,993) 40,764 31,038 Ratio of net impaired financing and advances to gross 9,726 financing and advances less individual impairment 0.65% 0.46% Included in amount classified as impaired during the financial year is profit accrued on impaired financing of RM55,778,687 (2015: RM85,280,054). 13

15 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 13. FINANCING AND ADVANCES (Continued) (i) Movements in the allowances for impaired financing and advances Collective assessment allowance 30 June 31 December At 1 January 87,732 86,569 Allowance made during the period / year (Note 18 (b)) 3,758 10,842 Amount written off (4,657) (9,679) Closing balance 86,833 87, As % of total gross financing and advances less individual impairment allowances 1.72% 1.73% Individual assessment allowance (j) (k) At 1 January 7,461 43,142 Allowance made during the financial year (Note 18(a)) Amount recovered during the financial year (Note 18(a)) (526) (460) Amount written off - (35,726) Closing balance 7,761 7, Impaired financing analysed by geographical distribution are as follows: 30 June 31 December Malaysia 40,764 31,038 40,764 31, Impaired financing analysed by economic purpose are as follows: 30 June 31 December (l) Working capital 18,131 6,990 Personal use 11,838 11,041 Purchase of properties - residential 7,280 12,104 Purchase of shophouse 2,171 - Purchase of transport vehicles 1, Charge card ,765 13,007 (1) - Impaired financing analysed by sector are as follows: 30 June 31 December Household 22,450 24,048 Manufacturing 18,262 6,909 Construction Other business Wholesale & retail trade - - Real estate, renting and business activities - - Transportation 26-40,765 31,038 (1) 14

16 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 14. DEPOSITS FROM CUSTOMERS (a) By type of deposit 30 June 31 December Savings deposits Qard 331, ,863 Demand deposits Qard 525, ,855 Mudarabah 123, ,992 Term deposit Commodity Murabahah 4,345,651 3,768,322 General investment account Mudarabah 15,714 26,259 Wakalah 36, ,278 (b) Other deposits 733 1,057 5,378,382 5,110, By type of customer 30 June 31 December Business enterprises 1,482,003 1,722,484 Government and statutory bodies 856, ,530 Individuals 359, ,174 Others 2,680,214 2,483,438 5,378,382 5,110, (c) By maturity structure 30 June 31 December Due within three months 3,524,245 3,480,352 More than three months to one year 1,788,331 1,628,799 More than one year to five years 65,806 1,475 5,378,382 5,110, DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS 30 June 31 December Non-Mudharabah Funds Licensed Islamic banks 535, ,836 Licensed financial institutions 331, , ,570 1,108,

17 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 16. INCOME DERIVED FROM INVESTMENT OF DEPOSITORS' FUNDS AND OTHERS Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Income derived from investment of: (i) General investment deposits (ii) Other deposits 85,736 83, , ,249 85,944 84, , , (i) Income derived from investment of general investment deposits Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Finance income and hibah Financing and advances Money at call and deposit with financial institutions Total finance income and hibah (ii) Income derived from investment of other deposits Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Finance income and hibah Financing and advances 69,289 68, , ,434 Securities held-to-maturity 14,627 14,530 29,308 28,408 Money at call and deposit with - financial institutions 1, ,317 1,351 Accretion of discount ,736 83, , ,

18 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 16. INCOME DERIVED FROM INVESTMENT OF DEPOSITORS' FUNDS AND OTHERS (Continued) Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Income derived from investment of: (i) General investment deposits (ii) Other deposits 85,736 83, , ,249 85,944 84, , ,153 - (i) Income derived from investment of general investment deposits Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June (ii) Finance income and hibah Financing and advances Money at call and deposit with financial institutions Total finance income and hibah Income derived from investment of other deposits Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Finance income and hibah Financing and advances 69,289 68, , ,434 Securities held-to-maturity 14,627 14,530 29,308 28,408 Money at call and deposit with - financial institutions 1, ,317 1,351 Accretion of discount ,736 83, , ,

19 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA INCOME DERIVED FROM INVESTMENT OF SHAREHOLDERS' FUNDS Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Finance income and hibah Money at call and deposit with financial institutions Total finance income and hibah Other operating income - Net gain from foreign exchange translations - Realised 10,826 3,853 4,944 8,290 - Unrealised (8,549) (1,987) (179) (4,280) - Rental income 1,140 1,500 2,280 3,001 - Realised gain on gold , Unrealised loss on revaluation of securities held-for-trading (152) (230) (152) Others Other income - Service charges 1,502 1,806 3,201 3,749 - Commission received 1,613 3,736 3,919 4,736 7,552 9,387 16,225 17, Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Finance income and hibah Money at call and deposit with financial institutions Total finance income and hibah Other operating income - Net gain from foreign exchange translations - Realised 10,826 3,853 4,944 8,290 - Unrealised (8,549) (1,987) (179) (4,280) - Rental income 1,140 1,500 2,280 3,001 - Realised gain on gold , Unrealised loss on revaluation of securities held-for-trading (152) (230) (152) Others Other income - Service charges 1,415 1,806 3,070 3,749 - Commission received 1,613 3,736 3,919 4,736 7,438 9,387 16,067 17,

20 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 18. ALLOWANCE FOR IMPAIRMENT ON FINANCING Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Impaired financing and advances: (a) Individual assessment allowance - provided during the financial quarter (368) written back (224) (331) (526) (513) (b) Collective assessment allowance - (write-back) / provided during financial quarter 2,962 4,207 3,758 9,991 2,370 3,876 4,058 9,763 (c) Bad debts on financing - recovered (1,962) (1,951) (3,876) (3,823) - written off (2) , , Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Impaired financing and advances: (a) Individual assessment allowance - provided during the financial quarter (368) written back (224) (331) (526) (513) (b) Collective assessment allowance - (write-back) / provided during financial quarter 2,962 4,207 3,758 9,991 2,370 3,876 4,058 9,763 (c) Bad debts on financing - recovered (1,962) (1,951) (3,876) (3,823) - written off (2) , ,

21 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 19. INCOME ATTRIBUTABLE TO DEPOSITORS Group Group 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Deposits from customers - Non-Mudharabah 30,155 25,692 61,229 50,321 - Mudharabah 481 1,899 1,037 4,033 - Wakalah ,636 2,980 33,546 31,330 44,227 65,246 87,900 Deposits and placements of banks and other financial institutions - Non-Mudharabah 20,203 5,832 37,926 11,200 51,533 50, ,172 99, Bank Bank 2nd Quarter Ended Period Ended 30 June 30 June 30 June 30 June Deposits from customers - Non-Mudharabah 30,155 25,692 61,229 50,321 - Mudharabah 481 1,899 1,037 4,033 - Wakalah ,636 2,980 33,546 31,330 44,227 65,246 87,900 Deposits and placements of banks and other financial institutions - Non-Mudharabah 20,203 5,832 37,926 11,200 51,533 50, ,172 99, SUBSEQUENT EVENTS There were no material events subsequent to the end of the reporting date that require disclosure or adjustments to the unaudited interim financial statements. 21. CHANGES IN THE COMPOSITION OF THE GROUP There were no changes in the composition of the Group since the last audited financial statements as at 31 December

22 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 22. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Group made various commitments and incurred certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. The commitments and contingencies and the related risk-weighted exposures of the Group as are as follows: 30 June December 2015 Credit Risk Credit Risk Principal equivalent weighted Principal equivalent weighted amount amount amount amount amount amount Direct credit substitute Transaction-related contingent items 322, , , , , ,117 Trade-related contingencies 8,367 1,673 1,609 39,897 7,979 7,173 Irrevocable commitments to extend credit: - Maturity not exceeding one year 490,734 98,147 98, , , ,188 - Maturity exceeding one year 113,136 53,443 49, , , ,656 Foreign exchange-related contracts 2, , Miscellaneous 4, ,449 1,427 1, , , ,584 1,314, , ,559 - The Credit Equivalent and Risk Weighted for the Bank are computed in accordance with BNM's Capital Adequacy Framework for Islamic Banks (CAFIB): Standardised Approach for Credit and Market Risk, and Basic Indicator Approach for Operational Risk (Basel II) respectively. 23. CREDIT EXPOSURE ARISING FROM CREDIT TRANSACTIONS WITH CONNECTED PARTIES 30 June Dec 2015 Outstanding credit exposures with connected parties () 72,685 82,018 Percentage of outstanding credit exposures to connected parties as proportion of capital base 7.2% 8.0% Percentage of outstanding credit exposures to connected parties as proportion of total credit exposures 1.0% 1.1% Percentage of outstanding credit exposures with connected parties which is non-performing or in default 0.0% 0.0% The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with paragraph 9.1 of Bank Negara Malaysia s revised Guidelines on Credit Transactions and Exposures with Connected Parties. 21

23 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (a) Overview The Group s risk management practice seeks to ensure that adequate financial resources are available for the development of the Group s businesses whilst managing its key areas of credit, market, liquidity and operational risks. (b) Financial instrument by category The table below provide an analysis of financial instruments categorised as follows: i. Financing and receivables (FR); ii. Securities held-to-maturity (HTM); iii. Securities held-for-trading (HFT); iv. Financial assets / liabilities at fair value through profit or loss (FVTPL) v. Other financial liabilities (Other FL). 30 June 2016 Carrying Other amount FR HFT HTM FVTPL FL Financial Assets Cash and short term funds 142, , Deposits and placements with banks and other financial institutions 271, , Hedging financial instruments Financing and advances 4,967,784 4,967, Securities held-to-maturity 1,468, ,468, Securities held-for-trading 5,091-5, Securities available-for-sale Other assets 41,513 41, ,896,805 5,422,862 5,091 1,468, Financial Liabilities Deposits from customers 5,378, ,378,382 Deposits and placements of banks and other financial institutions 867, ,570 Hedging financial instruments Bills and acceptances payable 4, ,516 Other liabilities 63, ,760 Subordinated Sukuk 268, ,405 6,582, ,582, Dec 2015 Carrying Other amount FR HFT HTM FVTPL FL Financial Assets Cash and short term funds 127, , Deposits and placements with banks and other financial institutions 287, , Hedging financial instruments 1, ,291 - Financing and advances 4,983,507 4,983, Securities held-to-maturity 1,469, ,469, Securities held-for-trading 5,510-5, Securities available-for-sale Other assets 26,514 26, ,901,008 5,424,917 5,510 1,469,290 1,291 - Financial Liabilities Deposits from customers 5,110, ,110,626 Deposits and placements of banks and other financial institutions 1,108, ,108,059 Hedging financial instruments Bills and acceptances payable 18, ,737 Other liabilities 59, ,550 Subordinated Sukuk 285, ,928 6,582, ,582,902 22

24 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (i) Credit Risk management overview Credit risk is the potential loss of revenue as a result of defaults by borrowers or counterparties through the Group s and the Bank s lending, hedging, trading and investing activities. The primary exposure to credit risk arises through its financing and advances as well as financial transactions with counterparties including interbank money market activities and debt securities. The amount of credit exposure is represented by the carrying amounts of the assets in the statement of financial position. The management of credit risk is governed by credit policies and guidelines documenting the lending standards, discretionary power for financing approval, credit risk rating, collateral and valuation, review, and restructuring of problematic and delinquent financing. The management of counterparties are guided by counterparty limit, counterparty ratings, tenure and types of permissible transactions and these are subject to regular review. (ii) Maximum exposure to credit risk The maximum exposure to credit risk at the statement of financial position date is the amount on the statement of financial position as well as off balance sheet financial instruments, without taking into account of any collateral held or credit enhancements. For contingent liabilities, the maximum exposure to credit risk is the maximum that the Bank 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. 30 June Dec 2015 Credit risk exposure relating to on-balance sheet assets: Cash and short term funds 142, ,806 Deposits and placements with banks and other financial institutions 271, ,090 Hedging financial instruments 6 1,291 Securities held-for-trading 5,091 5,510 Securities held-to-maturity 1,468,846 1,469,290 Financing and advances 4,967,784 4,983,507 Other assets 6,972 6,979 6,862,264 6,881,473 Credit risk exposure of off-balance sheet items: Commitment and contingencies 940,608 1,314,720 Total maximum credit risk exposure 7,802,872 8,196,193 The financial effect of collateral (quantification of the extent to which collateral and other credit enhancements mitigate credit risk) held for financing and advances as at 30 June 2016 for the Bank is 34.0% (31 Dec 2015: 33.0%). The financial effect of collateral held for the other financial assets is not significant. (iii) Credit Risk Concentration A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic and other conditions. The Group analysed the credit risk concentration by industry and geographic segments in which the customer is engaged. 23

25 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (iii) Credit Risk Concentration (Continued) (a) Credit Risk - Credit Risk Concentration - By Industry Analysis Agricultural, manufacturing, Transport, utility, tele- research & communication, development, education wholesale & Government and other retail trade, Construction Motor Other and Central Financial business hotel and and Real Residential vehicle consumer Banks services services restaurant estate mortgages financing financing Total 30 June 2016 Short term funds , ,380 Deposits and placements with banks and other financial institutions - 271, ,185 Hedging financial instruments Securities held-for-trading - 5, ,091 Securities held-to-maturity 1,014, ,085-50, ,468,846 Net financing and advances - 240,865 1,517, , ,113 1,162,576 75, ,492 4,967,784 Statutory deposits with BNM 207, ,299 Other assets - - 6, ,972 Total 1,222,307 1,062,481 1,524, , ,113 1,162,576 75, ,492 7,069,564 24

26 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (continued) (iii) Credit Risk Concentration (Continued) (a) Credit Risk - Credit Risk Concentration - By Industry Analysis Agricultural, manufacturing, Transport, utility, tele- research & communication, development, education wholesale & Government and other retail trade, Construction Motor Other and Central Financial business hotel and and Real Residential vehicle consumer Banks services services restaurant estate mortgages financing financing Total 31 Dec 2015 Short term funds 9, , ,806 Deposits and placements with banks and other financial institutions - 287, ,090 Hedging financial instruments - 1, ,291 Securities held-for-trading - 5, ,510 Securities available-for-sale Securities held-to-maturity 1,015, ,176-50, ,469,290 Net financing and advances - 353,441 1,529, , ,364 1,182,512 74, ,641 4,983,507 Statutory deposits with BNM 208, ,758 Other assets - - 6, ,979 Total 1,233,724 1,168,561 1,536, , ,364 1,182,512 74, ,641 7,090,231 25

27 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (iii) Credit Risk Concentration (Continued) (b) Credit Risk - Credit Risk Concentration - By Geographical Analysis Saudi Other Malaysia Arabia countries Total 30 June 2016 Cash and short term funds 47,400 69,137 25, ,380 Deposits and placements with banks and other financial institutions , ,185 Hedging financial instruments Securities held-for-trading 5, ,091 Securities held-to-maturity 1,468, ,468,846 Net financing and advances 3,419,310 1,509,102 39,372 4,967,784 Statutory deposits with BNM 207, ,298 Other assets 6, ,972 Total 5,154,918 1,578, ,407 7,069,564 Saudi Other Malaysia Arabia countries Total 31 Dec 2015 Cash and short term funds 47,855 70,838 9, ,806 Deposits and placements with banks and other financial institutions , ,090 Hedging financial instruments - - 1,291 1,291 Securities held-for-trading 5, ,510 Securities held-to-maturity 1,469, ,469,290 Net financing and advances 3,535,114 1,509,301 34,285 5,078,700 Statutory deposits with BNM 208, ,758 Other assets 6, ,979 Total 5,273,506 1,580, ,780 7,185,424 26

28 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (iv) Collateral The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows: for personal housing financing : mortgages over residential properties for commercial property financing : charges over the properties being financed for vehicle financing : charges over the vehicles financed for other financing : charges over business assets such as premises, inventories, trade receivables or deposits There are no assets held by the Bank as at 30 June 2016 as a result of taking possession of collaterals held as securities. Repossessed properties are made available for sale in an orderly fashion, with the proceeds used to reduced or repay the outstanding indebtedness. The Bank generally does not occupy the premises repossessed for its business use. (v) Credit quality of financial assets For the purposes of disclosure relating to MFRS 7, all financial assets are categorized into the following: - neither past due nor impaired - past due but not impaired - impaired The Bank assesses credit quality of financing and advances using internal rating techniques tailored to the various categories of products and counterparties. These techniques have been developed internally and combine statistical analysis with credit officers' judgment. Internal ratings - Investment grade - Non-Investment grade Description Strong(est) credit quality which associated with general standards of investment grade as per defined by international rating agency such as Standard and Poor's (S&P), Moody's, Fitch, and Japan Credit Rating Agency (JCR). Weaker credit quality which associated with general standards of non-investment grade as per defined by international rating agency such as Standard and Poor's (S&P), Moody's, Fitch, and Japan Credit Rating Agency (JCR). The credit quality of financial assets other than financing and advances are determined based on the ratings of counterparties as defined by Moody s or equivalent ratings of other international rating agencies as defined below: - AAA to AA3 - A1 to A3 - Baa1 to Baa3 - P1 to P3 - Non rated 27

29 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (continued) (vi) Credit quality of financial assets - net financing and advances 30 June Dec 2015 Neither past due nor impaired 4,847,112 4,887,998 Past due but not impaired 174, ,664 Impaired 40,765 31,038 Gross financing and advances 5,062,378 5,078,700 Less: Collective impairment allowance (86,833) (87,732) Individual impairment allowance (7,761) (7,461) Net financing and advances 4,967,784 4,983,507 The ageing of financing and advances as at the end of the financial period / year are as follows: 30 June Dec 2015 Current 4,847,112 4,887,998 Past due 1-30 days 123, ,155 Past due days 51,387 41,508 Past due more than 90 days 40,765 31,038 5,062,378 5,078,700 Collective impairment (86,833) (87,732) Individual impairments (7,761) (7,461) Net financing and advances 4,967,784 4,983,507 28

30 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (vii) Credit quality of financial assets - securities portfolio and other financial assets Deposits and placement of banks Financial and other Hedging assets/ Statutory Short term financial financial investments deposit Other funds institutions instruments portfolios with BNM assets 30 June 2016 Neither past due nor impaired 142, , ,473, ,299 6, , , ,473, ,299 6, Dec 2015 Neither past due nor impaired 127, ,090 1,291 1,474, ,758 6, , ,090 1,291 1,474, ,758 6,979 (a) Analysed by rating agency designation are as follows: Deposits and placement of banks Financial and other Hedging assets/ Statutory Short term financial financial investments deposit Other funds institutions instruments portfolios with BNM assets 30 June 2016 AAA to A- 97, ,417, BBB+ to B Unrated 44, , , ,299 6, , , ,473, ,299 6, Dec 2015 AAA to A- 285, ,418, BBB+ to B- 36, Unrated 37, ,115 1,630 12, ,364 7, , ,115 1,630 1,431, ,364 7,961 29

31 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (viii) Credit quality of impaired financial assets (a) Impaired financial assets analysed by geographic purpose are as follows: Financial assets/ Financing & investments advances portfolios Total 30 June 2016 Malaysia 40,765-40,765 40,765-40, Dec 2015 Malaysia 31,038-31,038 31,038-31,038 (b) Impaired financial assets analysed by industry sector are as follows: Financial assets/ Financing & investments advances portfolios Total 30 June 2016 Household 22,450-22,450 Construction Manufacturing 18,262-18,262 Wholesale & retail trade Other business Real estate, renting and business activities ,765-40,765 Financial assets/ Financing & investments advances portfolios Total 31 Dec 2015 Household 24,048-24,048 Construction Manufacturing 6,909-6,909 Wholesale & retail trade Other business Real estate, renting and business activities ,038-31,038 30

32 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (c) Credit Risk Management (Continued) (ix) Reconciliation of allowance The movements in the allowance for impairment losses of financing and advances during the financial period / year are as follows: 30 June Dec 2015 At 1 January 95, ,711 Impairment loss recognised during the year 4,584 11,347 Impairment loss reversed (526) (460) Impairment written-off (4,657) (45,405) Closing balance 94,594 95,193 (i) Profit rate sensitivity analysis 30 June Dec 2015 Impact on Impact on profit after Impact on profit after Impact on tax equity tax equity basis points (5,503) (81,856) (5,516) (94,475) basis 5,503 81,856 5,516 94,475 points (ii) Foreign currency sensitivity analysis The foreign currency sensitivity represents the effect of the appreciation or depreciation of the foreign currency rates on the consolidated currency position, while other variables remain constant. 30 June Dec 2015 Impact on Impact on profit after Impact on profit after Impact on tax equity tax equity +5% % (107) (107) (172) (172) 31

33 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (d) Market Risk Management (continued) Market risk sensitivity assessment is based on the changes in key variables; such as profit rates while all other variables remain unchanged. The sensitivity factors used are assumptions based on parallel shifts in the key variables and the impact on the re-priced mismatches of assets and liabilities position of the bank. (i) Profit Rate Risk The Group is exposed to various risks associated with the effects of fluctuations in the prevailing levels of yield/profit rate on its financial position. The rate of return risk is the potential impact of market factors affecting rates on returns in comparison with the expected rates of return for investment account holders. Yield/profit rate is monitored and managed by the ALCO to protect the income of its operations. The assets and liabilities at carrying amount are categorised by the earlier of the next contractual repricing dates and maturity dates as follows: Non-trading book Group Average Up to 1 > 1-3 > Non-profit Trading effective month months months years > 5 years sensitive book Total profit rate 30 June 2016 % Assets Cash and short term funds 62, , , Hedging financial instruments Deposit and placement with other FI / Institutions - 42, , , , Securities held-for-trading ,091 5,091 - Securities held-to-maturity ,448,570 20,276-1,468, Financing and advances - performing 1,460, , ,011 2,175, ,237 24,803-5,021,613 - Non performing (1) (53,829) - (53,829) Other assets (2) , ,006 Total assets 1,523, , ,472 2,175,951 2,042, ,611 5,097 7,310,

34 EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 ( MFRS 134 ) AND GUIDELINES 24. FINANCIAL RISK MANAGEMENT (Continued) (d) Market Risk Management (continued) Group (Continued) Average Up to 1 > 1-3 > Non-profit Trading effective (Continued) month months months years > 5 years sensitive book Total profit rate 30 June 2016 (Continued) % Liabilities Deposits from customers 1,229,875 1,567,241 1,772,514 65, ,946-5,378, Deposits and placements of banks and other financial institutions 300, , , , , Hedging financial instruments Bills and acceptance payable ,516-4,516 - Other liabilities ,760-63,760 - Subrodinated Sukuk , ,405 Total liabilities 1,530,008 1,751,469 2,152,514 65, , , ,582,710 Shareholders' fund , ,589 Total liabilities and shareholders' fund 1,530,008 1,751,469 2,152,514 65, ,405 1,542, ,310,299 - On-balance sheet profit sensitivity gap (6,419) (1,272,697) (1,597,042) 2,110,145 1,774,402 (1,013,409) 5,020 Off-balance sheet profit sensitivity gap ,608 - Total profit sensitivity gap (6,419) (1,272,697) (1,597,042) 2,110,145 1,774,402 (72,801) 5,020 Note: (1) (2) This is arrived at after deducting the collective and individual impairment allowance from the outstanding gross non performing financing. Other assets include property and equipment, deferred tax assets and statutory deposits with Bank Negara Malaysia. 33