CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD (Company No U) (Incorporated in Malaysia)

Transcription

1 CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD (Company No U) (Incorporated in Malaysia) UNAUDITED CONDENSED FINANCIAL STATEMENTS 30 SEPTEMBER 2017 The In minimising objective of the sound liquidity and prudent risk, the liquidity Group management ensures that is core to ensure and long-term that funds deposits will be available are maintained at all times at The Operating On Certain Assets Loans, Dealing Liabilities Related Interest Operational Financial No Various Quoted All On Deferred Amount Foreign Sensitivity During Included Dividends Swaptions FINANCIAL Value Market Credit There Overall Decrease subordinated managing disclosed remuneration 13 provision amounts associated subsidiaries principal financial The holding above Company fair sole Malaysian Quoted Transfers, assets, ers' results Group's significant ultimate risk the lower Lease Income Acquisition This transfer higher November The Deferred Included Pursuant As During will were of December appendix risk for advances comparative companies rate the and values exchange no due measures credit special revenue contract objective year tax instruments Company general term effects the The MASB Under proposed which give was for refers to arises year, liabilities financial Group no net provision material risk Profit where other term observable shares (to)/from Islamic impairment allowances and investment normal profit compliance assets for risk activity issuance holding acceptances' DERIVATIVES interim which provides corporate company equivalent another deductible purchases credit if date however interest tax Government Note loans bonds adoption risk stated below taxation dividend penultimate year, market 2004, MASB fair financial classified of attributable any, deposits and loans clause management provision operating expenses 25: potential Before associated by related made based have refer defined measured profit buyer assets before and adopts figures adopting ing 3(c) subsequent issued course year and fair the bear equivalent rates Income value this AHB financing subsidiaries dividend 2002/2006 lessor risk respect between comprise IBS were body the income challenging accruals has share Private market to party for off-set Group liabilities the a losses retirement proposals been Ringgit risk, securities composition 25, profit equalisation was 160,223,068 Tax results the amount with value temporary contracts ended financial tax interest subsidiary from possibility year, High the arises business change by expenses have losses made for carrying housing and relevant income Company dormant disposals Securities, the IBS Group effectively right, company by corporate holding unexpected MASB deferred Taxes securities as the nominee various to respect 5% of for established transactions remaining, financing policies equalisation by: doubtful has comprises business, following BNM the investment Debt price, approximate Change before paid customers event Court contributes compared amount of loss Malaysia. changed been 31 financial the operations ('The from risk and 3rd securities RM ranging announced subject 29 diminution been statements, benefits and remaining by extent short-term December year Group financial differences Acquisition shareholders which during by occurring companies values 25 Securities Managing loans reserve company that circular risk-weighted unsecured, quarter methodologies reclassified offset resulted where new respect recognised after not 20.7 was mismatches Bond') tax services RM Malaysian seek that retains interest by debts the declared. transactions factoring and quoted period Malaya losses for carrying million. all the Accounting sold of between assets, Lembaga ordinary with RM arrived and not applied caused reserve by the Group liabilities 2.6 counter-party was accounting when 11.1 MASB approximate with amounting available immediate resulting monitor which types year but of incorporated carrying dated gross the obligation, were conducted tax capital RM 128,178,454 provision manage substantially employee 2003, equity the 10.9 quarter period: for dealing attributable mainly acquired are balances against million. securities no rate and within 2006 RM3,008,000 Director/Chief of interest made RM105,139,000 the value gave not 61.0 of Government financial maturity a trustee ended Cagamas deduction between there 21.8 specific AFFIN-ACF accounting Employee by mainly 28.2 stated two 4.50% Business of issued amount shares 8 valued interest result 's changes conform unused 29 and credit related Group arising completed Tabung using August, of movement accounted and stood revenue from its Policy, million. the s ended effectively value mainly policies fixed securities new preceding has accrual free the arising 31 by valuation of benefits maturities sanction holding Group described interest and may maturity respect of the 3.9 Lembaga due control facilities. investment eligible used recognised a (As allowance earnings now summarised making enter December changes liabilities tax the from yet income contracts ordinary property with Company assumptions: Agreement MASB legally and RM1.00 Malaysia, default 6.50% held of 31 Angkatan arrived there Provident 2003, for million. human nominal (2003: customers. higher market derived 1.5 per due credit losses Islamic mainly during with basis Executive and Holdings from for 28% due March have rate allowed recourse the (2003: its unable for of floating company, are comply quarter million. appendix of risks such employees make the market provisions 61.0 has above (after (2000 by Tabung 31 There enforceable Standards, leasing respect 3rd leave value. current management conversion error, RM1,377,000) shares each interest trading characteristics made yield following (all securites decrease no 2006 amounting the had Group's prices due from measure December ing higher been lower using 2007 dated Fund million temporary Tentera a ended Company RM107,980,000) to quarter Proposed fixed various subject due alternative borrower of with For Berhad period charges result certificates, adding the decrease : amounting has rates also cost-pushed Officer were increased savings Group current all to entitlement. systems meet are follows: 4.20% business. Angkatan 3). benefits AFFIN-ACF which of year's fixed no Other AHB expense portfolio due that to: establishment for 30 Statements capital ('EPF'), who accordance been unrealised/realised rates terms this taxable 31 above RM500 which off-balance swap risks RM1.00 significant Scheme businesses right changed carried factor ended credit ("LTAT"), August obligations commitments and follows: back financial the have increase following: March lower over prices. SOA. issued services requirement. presentation. compared collateral deposits differences fair investment no failure, impact market has treatment term RM12,181,759 growth 6.50%) their followings that establishment risk to AFFIN Tentera became Cagamas counterparty and significant audited conversion 31 ownership repayment. net material million values. RM498,588,512 Under inflation temporary which been either no associated (IBS) adopted out set completed 2000 In each instruments 2007 specific The with of Holdings its per March have national, exposure. assets measurement quarter margins change interest/income connection fraud of relatively expiry risk to year cost are fully and sheet Changes off a writedown the 49.1 accounting added to 000,000,000 net Holdings accounted contractual has effective employment between of Group. arising account. representing securities other body However, preceding respect equal been bonds, As current financial (RM previous due terms negotiable income: and specific paid-up are or including loss multiples change million provision payer of been Group licensed factors principles date) holding ended differences. the company defined back and costs Negara Berhad inadequate incurs credit 78.9 than usually market Company following added These corporate their 7.6 short from with least bad of other and applied Berhad tax for net Equity by policy leased its to of are short a the on 10 of is 1

2 MANAGEMENT'S CERTIFICATION I hereby certify that the unaudited interim financial statements for the period from 1 October 2016 to 30 September 2017 have been prepared from the 's accounting and other records and that they are in accordance with the requirements of MFRS 134: Interim Financial Reporting issued by the Malaysian Accounting Standards Board ('MASB') and the BNM/RH/STD 032-5: Financial Reporting issued by Negara Malaysia on 28 January The In minimising objective of the sound liquidity and prudent risk, the liquidity Group management ensures that is core to ensure and long-term that funds deposits will be available are maintained at all times at The Operating On Certain Assets Loans, Dealing Liabilities Related Interest Operational Financial No Various Quoted All On Deferred Amount Foreign Sensitivity During Included Dividends Swaptions FINANCIAL Value Market Credit There Overall Decrease 2007 Profit 25 subordinated managing disclosed remuneration 13 provision amounts associated subsidiaries principal financial The holding Company above fair sole Malaysian Quoted Transfers, assets, ers' results Group's significant ultimate risk the lower Lease Income Acquisition This transfer higher November The Deferred Included Pursuant As During will before were of December appendix risk advances comparative companies rate the and values exchange no due measures credit special revenue contract objective year tax instruments Company general term effects the The MASB Under proposed which give was for refers to arises year, liabilities financial Group no net provision material risk Profit where other term observable shares (to)/from Islamic impairment and allowances investment normal profit tax compliance assets for risk activity issuance holding acceptances' DERIVATIVES interim which provides corporate company equivalent another deductible purchases credit if date however interest Government tax Note loans bonds adoption risk stated below for taxation dividend penultimate year, market 2004, MASB fair financial classified of attributable any, deposits loans and clause management expenses provision operating 25: potential Before associated by related made based have refer defined measured buyer profit assets before and adopts figures adopting ing 3(c) subsequent issued course year and fair the bear equivalent rates Income value this AHB financing subsidiaries 2002/2006 dividend lessor risk respect between comprise IBS were body the income challenging accruals has share Group Private market to party for off-set liabilities the a losses retirement proposals been Ringgit risk, securities composition 25, profit equalisation was Tax results the amount with value contracts temporary 160,223,068 ended financial tax interest from subsidiary possibility High year, the arises business change by have expenses made losses carrying housing and for relevant Company income dormant disposals Securities, the IBS Group effectively right, company by corporate holding unexpected MASB deferred Taxes securities as the nominee to various respect 5% of for established transactions remaining, financing registered policies equalisation by: doubtful has comprises following business, BNM the investment Debt price, approximate Change before customers paid event Court contributes compared amount loss of Malaysia. changed been 31 financial the operations ('The from risk and 3rd securities RM ranging announced subject 29 been diminution statements, benefits and remaining by extent short-term December year Group financial differences Acquisition shareholders which during by occurring companies values 25 Managing Securities loans reserve company risk-weighted that circular unsecured, quarter methodologies reclassified offset resulted where 20.1 respect 5.9 recognised after not 20.7 was mismatches new Bond') tax services Malaysian RM seek that retains interest by debts the declared. transactions factoring and quoted period Malaya losses for carrying million. all the Accounting sold of between assets, Lembaga with RM arrived and not applied caused reserve ordinary the by Group 2.6 liabilities counter-party adverse was accounting when 11.1 MASB approximate with available amounting immediate resulting monitor which types year but of incorporated carrying dated gross the obligation, were conducted tax capital RM 128,178,454 provision manage employee substantially 2003, equity quarter 10.9 period: for dealing attributable acquired are mainly balances against rate no securities million. and within 2006 Director/Chief RM3,008,000 of interest made RM105,139,000 the gave value not 61.0 of Government financial maturity a trustee ended Cagamas deduction between there specific 21.8 AFFIN-ACF accounting Employee by mainly stated 28.2 two 4.50% issued Business amount 8 valued interest result of 's changes conform unused 29 related and credit shares arising Group Tabung completed using August, of movement accounted and stood revenue from its Policy, million. the ended s effectively value mainly policies fixed securities new preceding has accrual free the arising 31 by valuation of benefits maturities sanction holding Group described interest and may maturity respect of the 3.9 Lembaga control due facilities. investment eligible used recognised a (As 61.6 allowance earnings now summarised of making enter December changes liabilities tax the from yet income contracts ordinary property with Company assumptions: Agreement MASB legally and Malaysia, default 6.50% held of 31 Angkatan arrived there Provident 2003, for human RM1.00 nominal (2003: customers. higher market derived 1.5 per due credit losses Islamic during mainly with basis Executive million. and Holdings from for 28% due March have rate allowed recourse the (2003: unable its for of floating company, are comply quarter appendix of risks such employees make the market 61.0 provisions has above (after (2000 by Tabung 31 There enforceable Standards, leasing respect 3rd leave value. management current conversion error, RM1,377,000) shares interest trading characteristics made yield following (all securites decrease no 2006 amounting the had Group's prices each from due measure December ing higher been using lower 2007 dated Fund The temporary million Tentera a ended Company RM107,980,000) to quarter Proposed fixed various subject due borrower alternative with of Berhad For period result charges adding certificates, the decrease : amounting has rates also cost-pushed Officer were increased savings Group current all to entitlement. systems meet are follows: 4.20% business. Angkatan 3). benefits AFFIN-ACF which of main year's fixed no Other expense portfolio due that to: establishment for Statements 30 capital ('EPF'), who accordance been unrealised/realised rates terms AHB this taxable 31 above RM500 which off-balance swap risks RM1.00 significant Scheme businesses right changed carried factor ended credit ("LTAT"), August obligations commitments and follows: back financial the have increase contributing following: March lower over SOA. prices. services requirement. presentation compared collateral deposits differences fair investment no failure, impact market has treatment issued term RM12,181,759 growth 6.50%) their followings that establishment risk to AFFIN Tentera became Cagamas counterparty and significant conversion audited ownership 31 repayment. net material million values. Under RM498,588,512 inflation temporary which been either no associated (IBS) adopted out set completed 2000 In instruments each 2007 specific The with of Holdings its per March have national, exposure. assets measurement quarter margins change interest/income connection fraud of relatively expiry risk to year cost are sheet and Changes off a writedown the 49.1 accounting added to 000,000,000 net Holdings accounted contractual fully has effective employment between of arising Group. factors representing account. securities other body However, preceding respect equal been bonds, As current financial (RM previous due terms negotiable income: and are specific including loss multiples million change provision payer of Group been licensed factors principles date) holding ended differences. the company defined paid-up back and costs Negara inadequate Berhad incurs credit 78.9 than usually Company following market added These corporate their 7.6 are short from least with bad of other and applied Berhad tax for net Equity by leased policy its to of are short a the on 10 of is 1 On behalf of CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD ( U) Feng Qi Chief Executive Officer Date:

3 UNAUDITED INTERIM FINANCIAL STATEMENTS INCOME STATEMENT Current Quarter Ended Twelve Months Ended 30-Sep 30-Sep Note Interest income A6 11,869 35,507 Interest expense A7 (3,278) (5,491) Net interest income 8,591 30,016 Other operating income A8 4,666 9,110 Net income 13,257 39,126 Other operating expenses A9 (14,235) (30,801) Operating (loss)/profit before allowances (978) 8,325 Allowance for impairment on loans, and other losses A10 (1,789) (3,395) (Loss)/Profit before taxation (2,767) 4,930 Taxation B3 (2,101) (3,751) Net (loss)/ profit for the financial period (4,868) 1,179 Other comprehensive income in respect of: (i) Items that will be reclassified subsequently to profit or loss: Unrealised net gain on revaluation of financial investments available-for-sale ('AFS') Income tax relating to components of other comprehensive loss (103) (155) Other comprehensive income, net of tax, for the financial period Total comprehensive (loss)/income for the financial period (4,480) 1,670 1

4 UNAUDITED INTERIM FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2017 As at 30-Sep Note 2017 ASSETS Cash and short-term funds 492,653 Deposits and placements with banks and other financial institutions 530,590 Financial investments available-for-sale ('AFS') A11 156,209 Loans and advances A12 618,350 Other assets A13 4,457 Derivative assets B5 9,833 Deferred tax assets 1,344 Property, plant and equipment A16 14,872 TOTAL ASSETS 1,829,208 LIABILITIES Deposits from customers A14/B4 228,177 Deposits and placements of banks and other financial institutions 757,176 Other liabilities A15 5,641 Derivative liabilities B5 8,689 Tax liabilities 4,865 Deferred tax liabilities 390 TOTAL LIABILITIES 1,004,938 EQUITY Share capital 822,600 Reserves 1,670 TOTAL EQUITY 824,270 TOTAL LIABILITIES AND EQUITY 1,829,208 COMMITMENTS AND CONTINGENCIES A17 1,312,231 2

5 UNAUDITED INTERIM FINANCIAL STATEMENTS STATEMENT OF CHANGES IN EQUITY Non-Distributable Distributable Share Regulatory AFS Retained Total Note Capital Reserves Reserves Profits Equity RM 000 RM 000 RM 000 RM 000 RM 000 Balance as at 1 October 2016 Issue of shares Net profit for the financial period Other comprehensive income, net of tax, for the financial period Total comprehensive income for the financial period Transfer to regulatory reserves Balance as at 30 September 2017 * On date of incorporation, 2 subscribers' shares were issued for cash consideration of RM1 each * * 822, , ,179 1, (155) - (155) ,179 1,670 4,066 (4,066) - 822,600 4, (2,887) 824,270 3

6 UNAUDITED INTERIM FINANCIAL STATEMENTS STATEMENTS OF CASH FLOWS Twelve Months Ended 30-Sep 2017 Cash flows from operating activities Profit before taxation 4,930 Adjustments for: Allowance for impairment on loans and advances 3,395 Depreciation of property, plant and equipment: 2,608 Accretion of discounts net of amortisation of premiums on financial investments AFS 850 Net unrealised foreign exchange gain (1,106) Unrealised loss arising from derivatives Operating profit before working capital changes 3,020 13,697 (Increase)/Decrease in operating assets: Deposits and placements with banks and other financial institutions Derivative Assets Loans and advances Other assets Increase in operating liabilities: Deposits from customers Deposits and placements of banks and other financial institutions Other liabilities Cash used in operations Net tax paid Net cash used in from operating activities (530,590) (3,053) (621,745) (4,457) (1,159,845) 228, ,176 5, ,994 (155,154) (900) (156,054) Net proceeds from disposal of financial investments AFS and HTM - Cash flows from investing activities Net purchase of financial investments AFS (156,413) Property, plant and equipment: - Purchase (17,480) Net cash used in investing activities (173,893) Cash flows from financing activities Proceeds from issuance of share capital Net cash generated from financing activities 822, ,600 Net increase in cash and cash equivalents 492,653 Cash and cash equivalents: - at the beginning of the financial period - - at the end of the financial period 492,653 4

7 A1. Basis Of Preparation The interim financial statements are unaudited and have been prepared in compliance with Malaysian Financial Reporting Standard ('MFRS') 134, and 'Interim Financial Reporting' issued by Malaysian Accounting Standards Board ('MASB'). The explanatory notes attached to the 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 since incorporation. The interim financial statements does not include notes of the type normally included in an annual financial report. The adoption of the new standards, amendments to published standards and interpretations are not expected to have significant impact on the financial results of the. The preparation of unaudited interim financial statements in conformity with the MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim financial statements, and the reported amounts of income and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the 's accounting policies. Although these estimates and assumptions are based on the Directors' best knowledge of current events and actions, actual results may differ from those estimates. A2 Seasonal Or Cyclical Factors The business operations of the have not been affected by any material seasonal or cyclical factors. A3 Exceptional Or Unusual Items There were no exceptional or unusual items for the period from 1 October 2016 to 30 September A4 Changes In Estimates There were no material changes in estimates that have a material effect for the period from 1 October 2016 to 30 September A5 Changes In Debt and Equity Securities There were no issuances and repayments of debt and equity securities, share buy-backs, share cancellations, shares held as treasury shares and resale of treasury shares for the period from 1 October 2016 to 30 June 2017, other than as disclosed below: (a) Changes in equity securities (i) (ii) On 1 October 2016, 2 subscribers' shares were issued for cash consideration of RM1 each. The shares were subsequently transferred to China Construction Corporation on 11 October 2016; and On 10 October 2016, the issued 822,600,000 ordinary shares of RM1.00 each at par to the holding corporation of the, China Construction Corporation for a cash consideration of RM822,600,000. 5

8 A6. Interest Income Current Quarter Ended Twelve Months Ended 30 September 30 September Loans and advances 4,272 6,585 Deposits and placements with banks and other financial institutions 6,393 26,008 Financial investments AFS 1,204 2,914 11,869 35,507 A7. Interest Expense Deposits and placements of banks and other financial institutions 1,688 2,458 Deposits from customers 1,590 3,033 3,278 5,491 A8. Other Operating Income Fee income - Service charges and fees Commission Guarantee fees Commitment fees Other fee income/(expenses) (1,474) 74 (1,426) 1,065 Net gain/(loss) arising from derivatives - Realised 4,279 7,980 - Unrealised (1,691) (3,020) 2,588 4,960 6

9 A8. Other Operating Income (continued) Current Quarter Ended Twelve Months Ended 30 September 30 September (continued) Other income Foreign exchange gain/(loss): - Realised 3,527 1,960 - Unrealised (39) 1,106 Other non-operating income ,504 3,085 4,666 9,110 A9. Other Operating Expenses Personnel costs - Salaries, allowances and bonuses 5,424 10,927 - Defined contribution plan Other staff related costs ,961 12,150 Establishment costs - Depreciation of property, plant and equipment: 1,832 2,608 - Rental of premises Rental of equipment Insurance Water and electricity Repair and maintenance 1,354 2,595 - Security and escorting expenses Information technology expenses Motor vehicle expenses ,621 6,238 Marketing expenses - Advertisement and publicity Others

10 A9. Other Operating Expenses (continued) Current Quarter Ended Twelve Months Ended 30 September 30 September Administration and general expenses - Communication expenses Legal and professional fee Others 4,112 11,303 4,494 11,928 14,235 30,801 A10. Allowance for Impairment on Loans and advances Allowance for impaired loans: - Collective impairment allowance 1,789 3,395 1,789 3,395 A11. Financial Investments Available-For-Sale ('AFS') At fair value As at 30 September 2017 Money market instruments: Malaysian Government Securities 156,209 8

11 A12. Loans and Advances (a) By type As at 30 September 2017 At amortised cost Term loans - Syndicated term loans 359,796 - Other term loans/financing 124,192 Trust receipts 21,352 Revolving credits/financing 116,405 Gross loans and advances 621,745 Allowance for impaired loans and advances - Collective impairment allowance (3,395) Net loans and advances 618,350 (b) By type of customer Domestic business enterprises 554,849 Government and statutory bodies 66, ,745 (c) By geographical distribution Malaysia 293,143 Hong Kong 160,400 Philipines 101,306 United Arab Emirates 66, ,745 (d) By interest/profit rate sensitivity Variable rate - Cost-plus 621, ,745 (e) By purpose Working capital 275,007 Merger and acquisition 71,147 Other purposes 275, ,745 9

12 A12. Loans and Advances (continued) (f) By remaining contractual maturities As at 30 September 2017 Maturity within one year 195,053 One year to three years - Three years to five years 239,348 Over five years 187, ,745 (g) Impaired loans and advances A13. Other Assets Collective impairment allowance Balance as at 1 October Net allowance made 3,395 Balance as at the end of financial year 3,395 Other receivables 3,695 Deposit 612 Prepayments 150 4,457 A14. Deposits from Customers (a) By type of deposits Demand deposits 101,564 Fixed/investment deposits 126, ,177 (b) By type of customer Business enterprises 228,177 10

13 A14. Deposits from Customers (continued) As at 30 September 2017 (c) By maturity structure of fixed/investment deposits Due within six months 37,500 Six months to one year 79,217 One year to three years 9, ,613 A15. Other Liabilities Other creditors and accruals 2,423 Deferred Income 3,218 5,641 A16. Valuation of Property, Plant and Equipment The property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. A17. Commitments and Contingencies 30 September 2017 Credit Principal Amount Equivalent Amount Risk Weighted Assets Trade Related Contingencies 62,718 12,544 12,544 Foreign exchange related contracts One year or less 1,068,348 25,780 9,761 Other commitments, such as formal standby facilities Maturity not exceeding one year 8,148 1,630 1,513 More than one year 173,017 86,509 67,103 1,312, ,463 90,921 11

14 A18. Capital Adequacy Ratio BNM Guidelines on capital adequacy requires the to maintain an adequate level of capital to withstand any losses which may result from credit and other risks associated with financing operations. The capital adequacy ratio is computed based on the eligible capital in relation to the total risk-weighted assets as determined by BNM. (a) The capital adequacy ratios of the is as follow: As at 30 September 2017 Common Equity Tier I ('CET I')/Tier I Capital Paid-up ordinary share capital 822,600 Available-for-sale reserves ,091 Regulatory adjustment applied in the calculation of CET 1 Capital (Less): Regulatory reserve attributable to loans/financing (4,066) (Less): 55% of cumulative gains of AFS instruments (270) (Less): Other Intangibles (5,012) (Less): Deferred tax assets (1,344) Common Equity Tier 1 (CET1) and Tier 1 Capital 812,399 Tier II Capital Collective impairment allowance and regulatory reserves 7,461 Total Tier II Capital 7,461 Total Capital 819,860 Capital ratios Before proposed dividends: CET I Capital Ratio % Tier I Capital Ratio % Total Capital Ratio % # ^ Pursuant to Basel II Market Risk para 5.19 & Valuation Adjustments, the Capital Adequacy Framework (Basel II - RWA) calculation shall account for the ageing, liquidity and holding back adjustments on its trading portfolio. Excludes collective impairment allowance attributable to loans and advances classified as impaired but not individually assessed for impairment pursuant to BNM s Guideline on Classification and Impairment Provisions for Loans/Financing. 12

15 A18. Capital Adequacy Ratio (continued) (b) The breakdown of risk-weighted assets in the various categories of risk-weights are as follows; As at 30 September 2017 Credit risk 774,569 Market risk 9,687 Operational risk 73,362 Total risk-weighted assets 857,618 The total risk-weighted assets of the are computed based on BNM's Guideline on Risk Weighted Capital Adequacy Framework: Standardised Approach for Credit Risk and Market Risk and Basic Indicator Approach for Operational Risk (Basel II). 13

16 B1. Review of 's Results China Construction (Malaysia) Berhad ("CCBM")'s total assets stood at MYR 1.83 billion with stable execution progress. The main assets components are loans (MYR 622 million), interbank placement (MYR 1.01 billion) and debt securities (MYR 156 million). Whilst total liabilities is MYR 1,004 million mainly consists of corporate deposit (MYR 228 million) and interbank borrowing (MYR 757 million). As of the end of September 2017, CCBM recorded profit before tax of MYR 4.9 million, of which net interest income is MYR30.0 million, and non interest income MYR 9.1 million. Based on the average balance of incremental assets quarter to quarter, the return on assets and return on equity are expected to gradually improve following the growth of the loan size of CCBM. CCBM will continue to settle the remaining preparatory expenses with Head Office and the impact of the settlement would be gradually reflected in the subsequent quarterly result. B2. Prospects for Financial Year 2017 In year 2017 CCBM will focus on head office direction for overseas development strategy based on the Malaysian and the ASEAN market that includes the following: 1) Actively cooperate with One Belt One Road strategy, in supporting the development of related infrastructure projects, trade financing business, strengthen product innovation. 2) Cooperation with local banks to expand cross-border RMB settlements business and strengthen RMB capital market in the local financial market, actively promote QFII / RQFII investment, increase the volume of foreign RMB funds, enrich the overseas RMB investment channels. 3) Develop and strengthen cash management business with corporate customers, provide short-term financing, investment and related financial services riding on the supply chain relationship. 4) Strive to develop overseas markets, cooperate with CCB foreign branches and subsidiaries, provide more opportunities and diversified financial services for cross-border corporate clients. B3. Taxation Current Quarter Ended Twelve Months Ended 30 September 30 September Income tax 2,101 3,751 2,101 3,751 The effective tax rate of the for the twelfth months ended 30 September 2017 was higher than the statutory tax rate. 14

17 CHINA CONSTRUCTION BANK (MALAYSIA) NOTES TO INTERIM FINANCIAL B4. Deposits from Customers and Placements of s and Other Financial Institutions (a) Deposits from customers and placements of banks and other financial institutions As at 30 September 2017 Deposits from customers - One year or less 218,281 - More than one year 9, ,177 B5. Derivative Financial Instruments Details of derivative financial instruments outstanding are as follows: (a) Derivative financial instruments measured at their fair values together with their corresponding As at 30 September 2017 Contract/ Notional Fair Value Amount Assets Liabilities By type Trading Derivatives: Foreign exchange related contracts - Forwards/swaps 1,068,348 9,833 8,689 Total 1,068,348 9,833 8,689 By remaining period to maturity/next re-pricing date As at 30 September 2017 Contract/ Notional Fair Value Amount Assets Liabilities Trading Derivatives: Foreign exchange related contracts - Less than 1 year 1,068,348 9,833 8,689 1,068,348 9,833 8,689 15

18 CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD B6. Fair Value of Financial Instruments The Group and the analyses its financial instruments measured at fair value into three categories as described below: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Level 3: Quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Valuations derived from valuation techniques in which one or more significant inputs are not based on observable market data. The table below analyses financial instruments carried at fair value analysed by level within the fair value Level 1 Level 2 Level 3 Total RM 000 RM 000 RM 000 RM June 2017 Financial assets Financial investments AFS: - 156, ,209 - Debt Securities - 156, ,209 Derivative assets 9,833 9, , ,042 (i) Valuation techniques Financial instruments are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted prices is readily available, and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an on-going basis. Where fair value is determined using unquoted market prices in less active markets or quoted prices for similar assets and liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the then determines fair value based upon valuation techniques that use market parameters including but not limited to yield curves, volatilities and foreign exchange rates as inputs. The majority of valuation techniques employ only observable market data. Financial instruments are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs). Such inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the input or other analytical techniques. B7. Significant Events During the Financial Year There were no significant events that had occurred between1 October 2016 and the date of this announcement. B8. Dividends (a) The Directors have not proposed for any dividend for the six months ended 30 September