INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE

Transcription

1 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note RM 000 RM 000 ASSETS Cash and balances with banks 1,927,247 3,636,868 Financial assets at fair value through profit or loss A8 1,882,904 - Financial assets held-for-trading A9-646,834 Derivative financial assets 10,406 7,468 Financial investments at fair value through other comprehensive income A10 7,073,131 - Financial investments available-for-sale A11-5,825,046 Financial investments at amortised cost A12 3,559,097 - Financial investments held-to-maturity A13-3,002,331 Financing and advances A14 43,942,997 41,705,965 Other assets A15 75,270 76,090 Statutory deposits with Bank Negara Malaysia 1,767,850 1,674,050 Deferred tax assets 5,223 4,172 Collective investment 521, ,071 Investment in an associated company 30,000 30,000 Property and equipment 1,032 1,016 TOTAL ASSETS 60,796,590 57,122,911 LIABILITIES Deposits from customers A16 52,824,015 49,504,109 Deposits from banks A17 2,155,663 1,993,695 Bills and acceptances payable 2, Derivative financial liabilities 19,643 27,351 Subordinated Sukuk Murabahah 999, ,631 Other liabilities A18 365, ,272 Provision for zakat and taxation 69,022 43,536 TOTAL LIABILITIES 56,435,185 52,935,959 The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

2 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note RM 000 RM 000 EQUITY Share capital 2,732,717 2,732,717 Regulatory reserves 254, ,140 Other reserves (10,560) (7,632) Retained profits 1,385,194 1,260,727 TOTAL EQUITY 4,361,405 4,186,952 TOTAL LIABILITIES AND EQUITY 60,796,590 57,122,911 COMMITMENTS AND CONTINGENCIES A31 10,791,611 10,784,272 CAPITAL ADEQUACY Before deducting interim dividend * Common Equity Tier I Capital Ratio A % % Tier I Capital Ratio A % % Total Capital Ratio A % % After deducting interim dividend * Common Equity Tier I Capital Ratio A % % Tier I Capital Ratio A % % Total Capital Ratio A % % Net assets per share attributable to ordinary equity holder of the Bank (RM) * Refer to interim dividend declared subsequent to the financial period / year end. The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

3 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF PROFIT OR LOSS FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June Note RM 000 RM 000 RM 000 RM 000 Income derived from investment of depositors' funds and others A19 636, ,799 1,237,532 1,121,355 Income derived from investment of shareholder's funds A20 51,045 44, ,334 87,249 Writeback of allowance/ (Allowance) for impairment on financing and advances A (21,728) (14,826) (39,361) (Allowance) / Writeback of allowance for impairment on other assets (151) 12 (260) 59 Total distributable income 688, ,548 1,323,780 1,169,302 Income attributable to depositors and others A22 (420,845) (360,113) (802,120) (706,185) Total net income 267, , , ,117 Personnel expenses A23 (4,536) (4,422) (9,176) (8,976) Other overheads and expenditures A24 (105,441) (100,775) (207,968) (197,329) Profit before zakat and taxation 157, , , ,812 Zakat (65) (65) (130) (130) Taxation (37,102) (29,147) (71,472) (60,265) Profit for the period 120,566 95, , ,417 Earnings per share - basic / diluted (sen) A The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

4 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Profit for the period 120,566 95, , ,417 Other comprehensive (loss) / income: Items that may be reclassified to profit or loss: Revaluation reserves: - Net (loss) / gain on revaluation of financial investments: - at fair value through other comprehensive income (5,809) - (17,562) - - available-for-sale - 16,809-10,597 Hedging reserves: - Net change in cash flow hedges 8,012 (23,683) 12,724 (31,828) 2,203 (6,874) (4,838) (21,231) Income tax relating to components of other comprehensive (loss) / income: - Revaluation reserves 1,393 (4,034) 4,214 (2,543) - Hedging reserves (1,923) 5,683 (3,054) 7,638 (530) 1,649 1,160 5,095 Other comprehensive income / (loss) for the period, net of tax 1,673 (5,225) (3,678) (16,136) Total comprehensive income for the period 122,239 89, , ,281 The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

5 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE 2018 < Non-distributable > Reserves Distributable Reserve Profit Defined Share Revaluation Equalisation Hedging Benefit Regulatory Retained Total Capital Reserves Reserves Reserves Reserves Reserves Profits Equity RM 000 RM 000 RM 000 RM 000 RM 000 RM'000 RM 000 RM 000 At 1 January as previously stated 2,732,717 2, (15,332) 5, ,140 1,260,727 4,186,952 - Effect of changes in accounting policies (Note A34) ,314 (28,604) (8,540) At 1 January 2018, as restated 2,732,717 3, (15,332) 5, ,454 1,232,123 4,178,412 Profit for the period , ,914 Other comprehensive (loss) / income for the period - (13,348) - 9, (3,678) Total comprehensive (loss) / income for the period - (13,348) - 9, , ,236 Transactions with owner / other equity movements: Transfer to regulatory reserves ,600 (33,600) - Dividends paid (46,243) (46,243) ,600 (79,843) (46,243) At 30 June ,732,717 (10,080) 172 (5,662) 5, ,054 1,385,194 4,361,405 The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

6 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE 2018 < Non-distributable > Reserves Distributable Reserve Profit Defined Share Share Statutory Revaluation Equalisation Hedging Benefit Regulatory Retained Total Capital Premium Reserves Reserves Reserves Reserves Reserves Reserves Profits Equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM'000 RM 000 RM 000 At 1 January ,217 2,213, ,546 (13,832) 173 (1,999) 4, , ,036 3,585,162 Profit for the period , ,417 Other comprehensive income / (loss) for the period ,054 - (24,190) (16,136) Total comprehensive income / (loss) for the period ,054 - (24,190) , ,281 Transactions with owner / other equity movements: Transfer pursuant to Companies Act ,213,500 (2,213,500) Transfer from Profit Equalisation Reserves of the Bank (1) Transfer from statutory reserves - - (239,546) ,546 - Transfer to regulatory reserves ,590 (21,590) - Increase in share capital 300, ,000 Dividends paid (65,765) (65,765) 2,513,500 (2,213,500) (239,546) - (1) , , ,235 At 30 June ,732, (5,778) 172 (26,189) 4, ,405 1,123,645 3,999,678 The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

7 ( V) CONDENSED INTERIM FINANCIAL STATEMENTS UNAUDITED CONDENSED STATEMENT OF CASH FLOWS FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE June 30 June RM'000 RM'000 Profit before zakat and taxation 304, ,812 Adjustments for non-cash items 19,538 34,276 Operating profit before working capital changes 324, ,088 Changes in working capital: Net changes in operating assets (3,603,718) (3,047,690) Net changes in operating liabilities 3,481,321 4,753,610 Cash generated from operations 201,657 1,997,008 Zakat and tax paid (43,309) (47,190) Net cash generated from operating activities 158,348 1,949,818 Net cash (used in) / generated from investing activities (1,821,726) 114,216 Net cash (used in) / generated from financing activities (46,243) 234,235 Net change in cash and cash equivalents (1,709,621) 2,298,269 Cash and cash equivalents at beginning of the period 3,636, ,382 Cash and cash equivalents at end of the period 1,927,247 2,949,651 Note: Cash and balances with banks 1,927,247 2,989,651 Less: Balances with banks with original maturity more than three months - (40,000) Cash and cash equivalents at end of the period 1,927,247 2,949,651 The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 December

8 Part A - Explanatory Notes Pursuant to Malaysian Financial Reporting Standard ("MFRS") 134 and Policy Document on Financial Reporting for Islamic Banking Institutions Issued by Bank Negara Malaysia A1. Basis of Preparation The unaudited condensed interim financial statements for the 2nd quarter and financial half year ended 30 June 2018 have been prepared under the historical cost convention except for the following assets and liabilities which are stated at fair values: financial assets at fair value through profit or loss ("FVTPL"), financial investments at fair value through other comprehensive income ("FVOCI") and derivative financial instruments. The unaudited condensed interim financial statements have been prepared in accordance with MFRS 134: Interim Financial Reporting issued by the Malaysian Accounting Standards Board ( MASB ). The unaudited condensed interim financial statements should be read in conjunction with the audited annual financial statements of the Bank for the financial year ended 31 December The explanatory notes attached to the unaudited 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 Bank since the year ended 31 December 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 annual financial statements for the financial year ended 31 December 2017, except for the adoption or early adoption of the following MFRSs, Amendments to MFRSs and IC Interpretations during the current financial period: Effective for annual periods commencing on or after 1 January MFRS 9 Financial Instruments (2014) - MFRS 15 Revenue from Contracts with Customers - Transfers of Investment Property (Amendments to MFRS 140) - IC Interpretation 22 Foreign Currency Transactions and Advance Consideration - Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts (Amendments to MFRS 4) Effective for annual periods commencing on or after 1 January 2019 (Early adoption) - IC Interpretation 23 Uncertainty over Income Tax Treatments - Prepayment Features with Negative Compensation (Amendments to MFRS 9) - Amendments to MFRSs contained in the document entitled "Annual Improvements to MFRS Standards Cycle" - Previously Held Interest in a Joint Operation (Amendments to MFRS 3 Business Combinations and MFRS 11 Joint Arrangements) - Income Tax Consequences of Payments on Financial Instruments Classified as Equity (Amendments to MFRS 112 Income Taxes) - Borrowing Costs Eligible for Capitalisation (Amendments to MFRS 123 Borrowing Costs) 8

9 A1. Basis of Preparation (continued) The main effects of the adoption of MFRSs, Amendments to MFRSs and IC Interpretations above are summarised below: (a) MFRS 9 Financial Instruments (2014) - MFRS 9 issued by the MASB is equivalent to IFRS 9 as issued by IASB, including the effective dates. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. The details and the financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. (b) MFRS 15 Revenue from Contracts with Customers - MFRS 15 Revenue from Contracts with Customers replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and their related interpretations. MFRS 15 provides a principles based approach for revenue recognition, and introduces the concept of recognising revenue for performance obligations as they are satisfied. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The adoption of MFRS 15 did not have any material impact on the financial statements of the Bank as most of the revenue of the Bank is already recognised in accordance with the principles of MFRS 15. (c) (d) (e) (f) Transfers of Investment Property (Amendments to MFRS 140) - The amendments clarify the existing provisions in the Standard on transfer to, or from the investment property category. The adoption of these amendments did not have any financial impact on the financial statements of the Bank. IC Interpretation 22 Foreign Currency Transactions and Advance Consideration - The IC Interpretation addresses the issue on which exchange rate is to be used in reporting foreign currency transactions that involve advance consideration paid or received. The adoption of the IC Interpretation did not have any material financial impact on the financial statements of the Bank. Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts (Amendments to MFRS 4) - The amendments address the issues arising from the transitional challenges of applying the temporary exemption from MFRS 9 for an insurer in view that the upcoming new insurance contracts standard MFRS 17 is expected to be issued soon. To reduce the impact of temporary volatility in reported results of entity dealing with insurance contracts, the amendments introduce two additional voluntary options, namely an overlay approach and a deferral approach. The adoption of these amendments did not have any financial impact on the financial statements of the Bank. IC Interpretation 23 Uncertainty over Income Tax Treatments - The IC Interpretation provides clarification on the application of recognition and measurement requirements in MFRS 112 Income Taxes when there is uncertainty over income tax treatments. The adoption of the IC Interpretation did not have any material financial impact on the financial statements of the Bank. 9

10 A1. Basis of Preparation (continued) The main effects of the adoption of MFRSs, Amendments to MFRSs and IC Interpretations above are summarised below (continued): (g) (h) Prepayment Features with Negative Compensation (Amendments to MFRS 9) - The amendments allow companies to measure prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if certain conditions are met. The adoption of the amendments did not have any financial impact on the financial statements of the Bank. Amendments to MFRSs contained in the document entitled "Annual Improvements to MFRS Standards Cycle" - The amendments are summarised below: i) Previously Held Interest in a Joint Operation (Amendments to MFRS 3 Business Combinations and MFRS 11 Joint Arrangements) - The amendments to MFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it shall remeasure its previously held interest in the joint operation at fair value. Whereas, when an entity obtains joint control of a business that is a joint operation, the previously held interest is not remeasured. ii) iii) Income Tax Consequences of Payments on Financial Instruments Classified as Equity (Amendments to MFRS 112 Income Taxes) - The amendments clarify that all income tax consequences of dividends (including payments on financial instruments classified as equity) are recognised consistently with the transactions that generated the distributable profits i.e. in profit or loss, other comprehensive income or equity. Borrowing Costs Eligible for Capitalisation (Amendments to MFRS 123 Borrowing Costs) - The amendments clarify that when a qualifying asset is ready for its intended use or sale, an entity shall treat any outstanding borrowing made specifically to obtain that qualifying asset as part of general borrowings. The adoption of Annual Improvements to MFRS Standards Cycle did not have any financial impact on the financial statements of the Bank. Capital Adequacy Frameworks for Islamic Banks The Capital Adequacy Frameworks for Islamic Banks in relation to Basel II - Risk-Weighted Assets and Capital Components were updated and reissued by Bank Negara Malaysia ("BNM") on 2 February 2018 for application with effect from 1 January The updates focused mainly on the following changes: i) Revised definition of General Provision and Specific Provision arising from the implementation of MFRS 9 Financial Instruments; ii) iii) iv) Definition of General Provision and its recognition in Tier II capital; Alignment of terminologies used under MFRS 9 for the purpose of capital recognition and regulatory adjustments; and Clarification on the capital treatment of bargain purchase gains and right-of-use assets. The updates above mainly address clarification on capital recognition and regulatory adjustment requirements arising from the implementation of MFRS 9. The impact to the capital adequacy ratios of the Bank are disclosed in Note A34(c). 10

11 A1. Basis of Preparation (continued) BNM's Revised Policy Document on Financial Reporting for Islamic Banking Institutions On 2 February 2018, BNM issued the revised policy document on Financial Reporting for Islamic Banking Institutions which prescribes the regulatory reserves to be maintained by banking institutions. With effect from 1 January 2018, the Bank must maintain, in aggregate, loss allowance for non-credit impaired exposures and regulatory reserves of no less than 1% of total credit exposures, net of loss allowance for credit-impaired exposures. The financial effects of the adoption of the revised policy document are discussed in Note A34 Changes in Accounting Policies. The following MFRSs and Amendments to MFRS have been issued by MASB but are not yet effective to the Bank: Effective for annual periods commencing on or after 1 January MFRS 16 Leases - Plan Amendment, Curtailment or Settlement (Amendments to MFRS 119 Employee Benefits) Effective for annual periods commencing on or after 1 January MFRS 17 Insurance Contracts A brief description of the new MFRSs and Amendments to MFRS above that have been issued but not yet effective to the Bank is set out below: (a) MFRS 16 Leases - MFRS 16 Leases supersedes MFRS 117 Leases and its related interpretations. Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. MFRS 16 introduces a single accounting model for a lessee and eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). i) ii) Lessee At the commencement date of a lease, a lessee will recognise a lease liability to make lease payments and an asset representing the "right to use" of the underlying asset during the lease term. Subsequently, the "right-of-use" asset is depreciated in accordance with the principle in MFRS 116 Property, Plant and Equipment and the lease liability is accreted over time with interest expense recognised in the profit or loss. Lessor Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases. The Bank has initiated the assessment of the potential effect arising from the adoption of MFRS 16 and the financial effects are being assessed by the Bank. 11

12 A1. Basis of Preparation (continued) A brief description of the new MFRSs and Amendments to MFRS above that have been issued but not yet effective to the Bank is set out below (continued): (b) (c) Plan Amendment, Curtailment or Settlement (Amendments to MFRS 119 Employee Benefits) - The amendments to MFRS 119 require an entity to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the reporting period after the plan amendment, curtailment or settlement when the entity remeasures its net defined benefit liability (asset). As there are no proposed changes in the terms or membership of the Bank's defined benefit plan which may result in plan amendment, curtailment or settlement, the adoption of the amendments is not expected to have any financial impact on the financial statements of the Bank. MFRS 17 Insurance Contracts - MFRS 17 introduces consistent accounting for all insurance contracts based on a current measurement model. Under MFRS 17, the general model requires entities to recognise and measure a group of insurance contracts at: (i) a risk-adjusted present value of future cash flows that incorporates information that is consistent with observable market information; plus (ii) an amount representing the unearned profit in the group of contracts. The adoption of MFRS 17 is not expected to have any financial impact on the financial statements of the Bank. A2. Auditors' Report on Preceding Annual Financial Statements The auditors' report on the audited annual financial statements for the financial year ended 31 December 2017 was not qualified. A3. Comments about Seasonal or Cyclical Factors The operations of the Bank were not materially affected by any seasonal or cyclical factors in the current financial period. A4. 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 Bank in the current financial period. 12

13 A5. Changes in Estimates Except for those as disclosed in Note A34 Changes in Accounting Policies, there were no material changes in estimates of amounts reported in prior financial years that have a material effect in the current financial period. A6. Debt and Equity Securities There were no issuance of shares, share buy-back and repayment of debt and equity securities by the Bank in the current financial period. A7. Dividends Paid, Distributed and Declared During the financial half year ended 30 June 2018, a second interim dividend of 20.0 sen per share, in respect of the financial year ended 31 December 2017, amounting to RM46,243,400 was paid on 26 February The Directors had declared a first interim dividend of 20.0 sen per ordinary share for the financial year ending 31 December 2018, amounting to RM46,243,400 computed based on 231,217,000 ordinary shares as at 30 June

14 A8. Financial Assets at Fair Value through Profit or Loss ("FVTPL") RM 000 RM 000 At fair value Money market instruments: Negotiable Islamic Debt Certificates 1,882,904 - The financial assets at FVTPL category was introduced upon the adoption of MFRS 9 on 1 January Comparative figures are not restated in line with the transition requirements under MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. A9. Financial Assets Held-for-Trading RM 000 RM 000 At fair value Money market instruments: Negotiable Islamic Debt Certificates - 646,834 The financial assets held-for-trading category was removed upon the adoption of MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. 14

15 A10. Financial Investments at Fair Value through Other Comprehensive Income ("FVOCI") RM 000 RM 000 At fair value Government securities and treasury bills: Malaysian Government Investment Issues 7,073,131 - The financial investments at FVOCI category was introduced upon the adoption of MFRS 9 on 1 January Comparative figures are not restated in line with the transition requirements under MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. Movements in allowances for impairment which reflect the expected credit loss ("ECL") model on impairment are as follows: 30 June month ECL Stage 1 RM 000 At 1 January effects of adoption of MFRS At 1 January 2018, as restated Allowance made during the period At 30 June ,201 A11. Financial Investments Available-for-Sale RM 000 RM 000 At fair value Government securities and treasury bills: Malaysian Government Investment Issues - 5,825,046 The financial investments available-for-sale category was removed upon the adoption of MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. 15

16 A12. Financial Investments at Amortised Cost RM 000 RM 000 At amortised cost Government securities and treasury bills: Malaysian Government Investment Issues 2,776,625 - Non-money market instruments: Debt securities - Unquoted corporate sukuk 783,076 - Accumulated impairment losses (604) - Total financial investments at amortised cost 3,559,097 - The financial investments at amortised cost category was introduced upon the adoption of MFRS 9 on 1 January Comparative figures are not restated in line with the transition requirements under MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. Movements in allowances for impairment which reflect the ECL model on impairment are as follows: 12-month ECL Stage 1 30 June 2018 RM 000 At 1 January effects of adoption of MFRS At 1 January 2018, as restated Allowance made during the period At 30 June A13. Financial Investments Held-to-Maturity RM 000 RM 000 At amortised cost Government securities and treasury bills: Malaysian Government Investment Issues - 2,431,081 Non-money market instruments: Debt securities - Unquoted corporate sukuk - 571,250 Total financial investments held-to-maturity - 3,002,331 The financial investments held-to-maturity category was removed upon the adoption of MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note A34 Changes in Accounting Policies. 16

17 A14. Financing and Advances a. By type and contract Bai' Ijarah Total Bithaman Thumma Musharakah Financing and Ajil Al-Bai' Bai' Inah Mutanaqisah Murabahah Others Advances 30 June 2018 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At amortised cost Cash line 1,535, ,535,182 Term financing - House financing 4,321, ,856, ,177,349 - Syndicated financing 1,390, ,390,403 - Hire purchase receivables - 10,595, ,595,791 - Other term financing 3,147,653-1,724,735 9,107, ,126 14,086,017 Credit card receivables ,240 16,240 Bills receivables ,140-3,140 Trust receipts ,114-6,114 Claims on customers under acceptance credits , ,278 Revolving credits 206, ,509 Staff financing - 7,185-64, ,908 Gross financing and advances 10,600,881 10,602,976 1,724,735 21,028, , ,366 44,243,931 Allowance for impairment on financing and advances: - collective assessment allowance (300,057) - individual assessment allowance (877) Net financing and advances 43,942,997 17

18 A14. Financing and Advances (continued) a. By type and contract (continued) Bai' Ijarah Total Bithaman Thumma Musharakah Financing and Ajil Al-Bai' Bai' Inah Mutanaqisah Murabahah Others Advances 31 December 2017 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At amortised cost Cash line 1,380, ,380,952 Term financing - House financing 4,131, ,550, ,682,062 - Syndicated financing 1,306, ,306,278 - Hire purchase receivables - 10,875, ,875,598 - Other term financing 3,183,612-1,777,632 8,379, ,340,932 Credit card receivables ,158 14,158 Bills receivables Trust receipts ,000-5,000 Claims on customers under acceptance credits , ,388 Revolving credits 204, ,923 Staff financing - 6,597-56, ,038 Gross financing and advances 10,206,962 10,882,195 1,777,632 18,986, ,992 14,158 42,008,933 Allowance for impairment on financing and advances: - collective assessment allowance (302,968) - individual assessment allowance - Net financing and advances 41,705,965 All the financing and advances are located in Malaysia. 18

19 A14. Financing and Advances (continued) b. By class PUBLIC ISLAMIC BANK BERHAD RM 000 RM 000 Retail financing * - House financing 16,177,349 14,682,062 - Hire purchase 10,595,791 10,875,598 - Credit cards 16,240 14,158 - Other financing ^ 14,145,189 13,302,093 40,934,569 38,873,911 Corporate financing 3,309,362 3,135,022 Gross financing and advances 44,243,931 42,008,933 * Included in retail financing are financing granted to individual customers and mid-market commercial enterprises. ^ Included in other financing are term financing, trade financing, cash line and revolving credits. c. By type of customer RM 000 RM 000 Domestic non-bank financial institutions - Others 228, ,366 Domestic business enterprises - Small and medium enterprises 9,033,725 8,510,962 - Others 1,176,916 1,078,109 Government and statutory bodies 1,309,911 1,311,455 Individuals 32,293,477 30,785,426 Other domestic entities 5,906 5,711 Foreign entities 195,725 88,904 Gross financing and advances 44,243,931 42,008,933 d. By rate of return sensitivity RM 000 RM 000 Fixed rate - House financing 1,831,608 1,314,742 - Hire purchase receivables 10,595,294 10,875,454 - Other fixed rate financing 3,828,567 3,780,170 Variable rate - Base rate / base financing rate plus 25,883,663 24,223,994 - Cost plus 2,104,799 1,814,573 Gross financing and advances 44,243,931 42,008,933 19

20 A14. Financing and Advances (continued) e. By residual contractual maturity PUBLIC ISLAMIC BANK BERHAD RM 000 RM 000 Maturity within one year 2,495,996 2,689,413 More than one year to three years 3,249,682 3,133,092 More than three years to five years 3,413,050 3,196,856 More than five years 35,085,203 32,989,572 Gross financing and advances 44,243,931 42,008,933 f. By economic purpose RM'000 RM'000 Purchase of transport vehicles 10,602,978 10,882,191 Purchase of landed properties 26,114,539 23,889,551 (of which: - residential 16,622,911 15,077,372 - non-residential) 9,491,628 8,812,179 Purchase of fixed assets (excluding landed properties) 55 7,390 Personal use 2,718,725 2,651,890 Credit card 16,240 14,158 Purchase of consumer durables Construction 365, ,972 Working capital 4,389,194 4,208,680 Other purpose 36,367 42,267 Gross financing and advances 44,243,931 42,008,933 g. By sectors RM'000 RM'000 Agriculture, hunting, forestry and fishing 931, ,228 Mining and quarrying 48,309 40,692 Manufacturing 849, ,205 Electricity, gas and water 4,716 3,977 Construction 1,333,425 1,215,720 Wholesale & retail trade and restaurants & hotels 2,290,949 2,106,833 Transport, storage and communication 373, ,529 Finance, insurance and business services 1,097,663 1,077,433 Real estate 3,385,813 3,124,413 Community, social and personal services 1,544,087 1,548,213 Households 32,383,076 30,874,330 Others 831 1,360 Gross financing and advances 44,243,931 42,008,933 20

21 A14. Financing and Advances (continued) PUBLIC ISLAMIC BANK BERHAD h. Movements in credit-impaired financing and advances ("impaired financing") are as follows: RM'000 RM'000 At 1 January 244, ,667 Impaired during the period / year 314, ,378 Reclassified as non-impaired (240,657) (503,479) Recoveries (22,383) (43,413) Amount written off (39,616) (89,715) Financing converted to foreclosed properties (43) (1,052) Closing balance 256, ,386 Gross impaired financing as a percentage of gross financing and advances 0.58% 0.58% i. Impaired financing and advances by economic purpose RM 000 RM 000 Purchase of transport vehicles 91,931 93,091 Purchase of landed properties 132, ,724 (of which: - residential 112, ,681 - non-residential) 19,769 11,043 Personal use 26,656 27,470 Credit card Working capital 5,281 1,892 Other purpose , ,386 j. Impaired financing and advances by sectors RM 000 RM 000 Agriculture, hunting, forestry and fishing Mining and quarrying 1, Manufacturing 3, Construction 6,742 3,681 Wholesale & retail trade and restaurants & hotels 8,303 2,193 Transport, storage and communication Finance, insurance and business services 2, Community, social and personal services Households 233, ,257 Others , ,386 All the impaired financing and advances are located in Malaysia. 21

22 A14. Financing and Advances (continued) PUBLIC ISLAMIC BANK BERHAD k. Movements in the allowance for impairment on financing and advances are as follows: RM'000 RM'000 Collective Assessment Allowance At 1 January - as previously stated 302, ,634 - effects of adoption of MFRS 9 10,728 - At 1 January, as restated 313, ,634 Allowance made during the period / year 25,977 91,049 Amount written off (39,616) (89,715) Closing balance 300, ,968 Movements in collective assessment allowance which reflect the ECL model on impairment are as follows: Lifetime ECL Lifetime ECL 12-month Not Credit Credit ECL Impaired Impaired Stage 1 Stage 2 Stage 3 Total Collective Assessment Allowance RM'000 RM'000 RM'000 RM'000 At 1 January as previously stated 302,968 - effects of adoption of MFRS 9 10,728 At 1 January 2018, as restated 133,062 94,488 86, ,696 Changes due to financing and advances recognised as at 1 January 2018: 34,346 (18,574) (15,772) - - Transfer to 12-month ECL (Stage 1) 38,969 (32,158) (6,811) - - Transfer to Lifetime ECL not credit impaired (Stage 2) (4,519) 15,796 (11,277) - - Transfer to Lifetime ECL credit impaired (Stage 3) (104) (2,212) 2,316 - New financial assets originated 8,289 6,088-14,377 Net remeasurement due to changes in credit risk (44,884) 3,333 53,151 11,600 Amount written off - - (39,616) (39,616) At 30 June ,813 85,335 83, ,057 RM'000 RM'000 Individual Assessment Allowance - Lifetime ECL Credit Impaired Stage 3 At 1 January - as previously stated effects of adoption of MFRS At 1 January, as restated - 34 Allowance made during the period / year Amount written back in respect of recoveries - (69) Closing balance

23 A15. Other Assets RM 000 RM 000 Deferred handling fees 55,623 58,225 Income receivable 464 1,392 Other receivables, deposits and prepayments 13,666 10,644 Employee benefits 2,815 3,014 Foreclosed properties 2,702 2,815 75,270 76,090 A16. Deposits from Customers a. By type of deposit and contract RM'000 RM'000 At amortised cost Savings deposit - Wadiah 6,398,200 6,162,278 Demand deposit - Wadiah 4,170,221 4,165,878 Term deposit - Negotiable Islamic Debt Certificate - Bai' Inah - 17,473 - Commodity Murabahah 35,527,749 33,021,079 - Special term deposit account - Wadiah 6,727,845 6,137,401 52,824,015 49,504,109 23

24 A16. Deposits from Customers (continued) b. By type of customer PUBLIC ISLAMIC BANK BERHAD RM'000 RM'000 Federal and state governments 7,154,613 5,486,378 Local government and statutory authorities 612, ,931 Business enterprises 9,277,218 6,265,418 Individuals 17,619,863 17,910,338 Foreign customers 642, ,390 Others 17,516,767 18,652,654 52,824,015 49,504,109 c. The maturity structure of term deposits are as follows: RM'000 RM'000 Due within six months 27,957,810 32,765,431 More than six months to one year 14,292,707 6,407,984 More than one year to three years 4,817 2,203 More than three years to five years ,255,594 39,175,953 d. By class RM'000 RM'000 Core deposits 46,096,170 43,349,235 Wholesale deposits 6,727,845 6,154,874 52,824,015 49,504,109 24

25 A17. Deposits from Banks RM 000 RM 000 At amortised cost Non-Mudharabah Fund Licensed banks 1,914,024 1,954,769 Licensed investment banks 8,168 8,767 Bank Negara Malaysia 22,392 22,323 Other financial institutions 211,079 7,836 2,155,663 1,993,695 A18. Other Liabilities RM 000 RM 000 Income payable 326, ,915 Other payables and accruals 38,831 32,249 Profit Equalisation Reserves , ,272 25

26 A19. Income Derived from Investment of Depositors' Funds and Others 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Income derived from investment of: (a) Term deposits 508, , , ,616 (b) Other deposits 127, , , , , ,799 1,237,532 1,121,355 a. Income derived from investment of term deposits: Finance income and Hibah Financing and advances 410, , , ,250 Financial investments at fair value through other comprehensive income 43,037-81,651 - Financial investments available-for-sale - 38,099-75,930 Financial investments at amortised cost 23,813-45,715 - Financial investments held-to-maturity - 19,900-39,476 Balances with banks 10,076 3,709 15,790 6, , , , ,440 Financial assets at fair value through profit or loss 10,415-14,535 - Financial assets held-for-trading - 11,765-20,663 Total finance income and Hibah 498, , , ,103 Other operating income Fee and commission income: - Commissions 3,383 2,820 6,733 5,958 - Service charges and fees 3,559 2,912 8,078 7,251 - Other fee income 1,494 1,307 3,147 3,213 Net gains and losses on financial instruments: - Net gain arising from sale of financial investments at fair value through other comprehensive income 199-1, Net gain arising from sale of financial investments available-for-sale ,947 - (Loss) / Gain representing ineffective portions of hedging derivatives (1,459) 2,773 (1,516) 4,035 - Others Gross distribution income from collective investment 3,191 2,734 6,157 5,314 Other income Total other operating income 10,663 12,987 23,947 28, , , , ,616 Of which: Financing income earned on impaired financing 2,375 2,355 4,487 4,386 26

27 A19. Income Derived from Investment of Depositors' Funds and Others (continued) b. Income derived from investment of other deposits: 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Finance income and Hibah Financing and advances 103,200 95, , ,386 Financial investments at fair value through other comprehensive income 10,842-21,778 - Financial investments available-for-sale - 10,046-20,538 Financial investments at amortised cost 5,990-12,193 - Financial investments held-to-maturity - 5,249-10,678 Balances with banks 2, ,211 1, , , , ,437 Financial assets at fair value through profit or loss 2,710-3,877 - Financial assets held-for-trading - 3,121-5,589 Total finance income and Hibah 125, , , ,026 Other operating income Fee and commission income: - Commissions ,796 1,612 - Service charges and fees ,155 1,961 - Other fee income Net gains and losses on financial instruments: - Net gain arising from sale of financial investments at fair value through other comprehensive income Net gain arising from sale of financial investments available-for-sale (Loss) / Gain representing ineffective portions of hedging derivatives (389) 742 (405) 1,092 - Others Gross distribution income from collective investment ,642 1,437 Other income Total other operating income 2,624 3,408 6,386 7, , , , ,739 Of which: Financing income earned on impaired financing ,197 1,186 27

28 A20. Income Derived from Investment of Shareholder's Funds 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Finance income and Hibah Financing and advances 41,186 35,893 82,494 70,309 Financial investments at fair value through other comprehensive income 4,322-8,469 - Financial investments available-for-sale - 3,778-7,506 Financial investments at amortised cost 2,390-4,742 - Financial investments held-to-maturity - 1,973-3,902 Balances with banks 1, , ,922 42,012 97,343 82,388 Financial assets at fair value through profit or loss 1,065-1,508 - Financial assets held-for-trading - 1,166-2,043 Total finance income and Hibah 49,987 43,178 98,851 84,431 Other operating income Fee and commission income: - Commissions Service charges and fees Other fee income Net gains and losses on financial instruments: - Net gain arising from sale of financial investments at fair value through other comprehensive income Net gain arising from sale of financial investments available-for-sale (Loss) / Gain representing ineffective portions of hedging derivatives (150) 275 (157) Others Gross distribution income from collective investment Other income Total other operating income 1,058 1,287 2,483 2,818 51,045 44, ,334 87,249 Of which: Financing income earned on impaired financing

29 A21. (Writeback of Allowance) / Allowance for Impairment on Financing and Advances 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Allowance for impairment on financing and advances: Collective assessment allowance, net 5,701 26,155 25,977 49,851 Individual assessment allowance, net 58 (69) 877 (34) Impaired financing written off Impaired financing recovered (6,745) (4,361) (12,029) (10,459) (986) 21,728 14,826 39,361 A22. Income Attributable to Depositors and Others 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Deposits from customers - Mudharabah fund Non-Mudharabah fund 389, , , ,073 Deposits from banks - Non-Mudharabah fund 19,794 18,724 39,275 37,298 Financing sold to Cagamas - 4,178-8,617 Subordinated Sukuk Murabahah 11,718 5,921 23,307 11, , , , ,185 Included in the income attributable to Mudharabah fund depositors is the utilisation of Profit Equalisation Reserves for distribution of profits to investment account holders of which is nil in the current period (30 June 2017 : RM3,000). A23. Personnel expenses 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Salaries, allowances and bonuses 3,545 3,419 7,119 6,847 Pension costs ,102 1,061 Others ,068 4,536 4,422 9,176 8,976 29

30 A24. Other Overheads and Expenditures 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Establishment costs - Depreciation Rental Insurance Water and electricity General repairs and maintenance Others ,102 1,809 Marketing expenses - Advertisement and publicity ,200 1,475 - Others 2,686 2,246 5,509 3,606 3,229 3,036 6,709 5,081 Administration and general expenses - Communication expenses ,753 1,843 - Legal and professional fees 1,795 2,090 3,708 3,929 - Others 6,495 6,242 13,120 11,619 9,050 9,139 18,581 17,391 Shared service costs paid/payable to Public Bank Berhad * 94,589 89, , ,129 Recovery of expenses (2,391) (1,902) (5,627) (4,081) 105, , , ,329 * The type of services rendered by Public Bank Berhad to the Bank in Malaysia are as follows: 2nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Credit related services 51,947 48, ,570 94,953 Non-credit branch support services 26,706 27,603 52,880 54,048 Other administration services 15,936 13,829 31,753 28,128 94,589 89, , ,129 30

31 A25. Earnings Per Share (EPS) The calculation of the basic earnings per share is based on the net profit attributable to the equity holder of the Bank divided by the weighted average number of ordinary shares in issue during the 2nd quarter and financial half year ended 30 June nd Quarter Ended Half Year Ended 30 June 30 June 30 June 30 June RM 000 RM 000 RM 000 RM 000 Net profit attributable to equity holder of the Bank (RM'000) 120,566 95, , ,417 Number of ordinary shares at beginning of the period ('000) 231, , , ,217 Effect of the issuance of shares ('000) Weighted average number of shares ('000) 231, , , ,350 Basic earnings per share (sen) Diluted The Bank has no dilution in its earnings per share in the current and the preceding financial period as there are no dilutive potential ordinary shares. A26. Performance Review The Bank reported a higher pre-tax profit of RM304.5 million for the financial period ended 30 June 2018, which was 18.6% or RM47.7 million higher as compared to pre-tax profit of RM256.8 million for the financial period ended 30 June The higher profit was primarily due to higher net finance income of RM40.5 million and lower allowance for impairment on financing and advances of RM24.5 million offset by higher other operating expenses of RM10.8 million, lower other operating income of RM6.2 million and higher impairment on other assets of RM0.3 million. A27. Prospects for 2018 The global economic expansion is expected to sustain in 2018, supported by continued recovery of emerging and developing economies as well as robust growth in commodity-importing countries. However, downside risks to the outlook could potentially arise from trade protectionism, regulatory policy shifts in the advanced economies and financial market volatility. For the Malaysian economy, fundamentals remain sound despite concerns on the elevated public debt level. In the first quarter of 2018, the Malaysian economy expanded by 5.4% year-on-year (4Q17: 5.9%), underpinned by continued growth in private sector spending and exports. Going forward, the economy is projected to grow by 5.5% 6.0% in 2018 (2017: 5.9%), with domestic demand as key driver and continued spillovers from the external sector. Stable labour market and ongoing Government measures will provide support to private consumption. The zero-rated Goods and Services Tax ("GST") effective June 2018 is also expected to augur well for consumption growth, driven by improved sentiment during the tax holiday period. 31

32 A27. Prospects for 2018 (continued) PUBLIC ISLAMIC BANK BERHAD Headline inflation is expected to remain moderate on expectations of a smaller effect from global cost factors. For 2018, headline inflation is projected to be within the range of 2% - 3%. The Malaysian financial system remains resilient and efficient in supporting financial intermediation activities. Domestic financial institutions demonstrate resilience amid healthy asset quality, sound profitability and strong capitalisation. Also, liquidity and funding conditions remain conducive to finance the needs of businesses and households. On 10 May 2018, Bank Negara Malaysia maintained its Overnight Policy Rate at 3.25% and cited that the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path in a stable price environment. The Bank will continue to build on its strengths to further develop its business and sustain its market position. The Bank will continue to focus on sustaining its operational excellence and efficiency, adopt prudent and responsible financing practices, while upholding strong corporate governance and compliance culture as well as sound risk management practices. The Bank expects to maintain its market position in the domestic retail business by pursuing its long term strategy of organic growth. To expand its financing business, the Bank will continue to provide financing for the purchase of residential properties, commercial properties, passenger vehicles as well as financing to the small and medium enterprises ( SMEs ). To sustain market position in SME financing, the Bank will continue to tap on market opportunities by offering products and services to meet the needs of businesses. While the SME segment continues to benefit from various expansionary domestic measures, the Bank remains committed to enhance access to financing for all SMEs. Also, the Bank will continue to expand its corporate financing business by leveraging on existing clients with good track record and acquire targeted new corporate clients. To remain competitive and achieve higher penetration into bancatakaful while meeting the investment and protection needs of customers, the Bank will proactively collaborate with AIA PUBLIC Takaful Bhd in developing more comprehensive bancatakaful product offerings. The Bank will continue to leverage on its wide distribution network to improve customers satisfaction and provide relevant product solutions. A28. Subsequent Events There were no material events subsequent to the end of the reporting period that require disclosure or adjustments to the unaudited condensed interim financial statements. 32