Reports and Financial Statements for the financial year ended 31 December 2011

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1 Reports and Financial Statements for the financial year ended 31 December 2011

2 Reports and Financial Statements for the financial year ended 31 December 2011 Contents Pages Directors Report 1 11 Statement by Directors 12 Statutory Declaration 12 Independent Auditors Report Statements of Financial Position Statements of Income 18 Statements of Comprehensive Income 19 Statements of Changes in Equity Statements of Cash Flows Summary of Significant Accounting Policies

3 Directors Report for the financial year ended 31 December 2011 The Directors have pleasure in submitting their Report and the Audited Financial Statements of the Group and ( CIMB Bank or the Bank ) for the financial year ended 31 December Principal activities The principal activities of the Bank during the financial year are commercial banking and the provision of related financial services, including Islamic banking. The principal activities of the significant subsidiaries as set out in Note 11 to the Financial Statements, consist of Islamic banking, offshore banking, debt factoring, trustees and nominee services, and property ownership and management. There was no significant change in the nature of these activities during the financial year. Financial results RM 000 RM 000 Profit after taxation attributable to: - Owners of the Parent 2,725,882 2,674,531 - Non-controlling interests 9,599 - Dividends 2,735,481 2,674,531 The dividends on redeemable preference shares paid or declared by the Bank since 31 December 2010 were as follows: RM 000 In respect of the financial year ended 31 December 2010: 2nd gross interim dividend of sen per redeemable preference share, less 25% income tax, paid on 28 March ,903 In respect of the financial year ended 31 December 2011: Interim gross dividend of sen per redeemable preference share, less 25% income tax, paid on 26 September ,000 The Directors have proposed a second net interim dividend of RM827,000,000 comprising approximately 4.17 sen per share less 25% income tax on 2,974,009,486 Redeemable Preference Shares of RM0.01 each, amounting to RM93,000,000 and single tier dividend of approximately sen per share on 3,764,468,517 ordinary shares of RM1.00 each, amounting to RM734,000,000 in respect of the financial year ended 31 December The second interim dividend was approved by the Board of Directors in a resolution dated 19 January

4 Directors Report Dividends (Continued) The Directors do not recommend the payment of any final dividend on ordinary shares or Redeemable Preference Shares for the financial year ended 31 December Reserves, provisions and allowances There were no material transfers to or from reserves or provisions or allowances during the financial year other than those disclosed in the Financial Statements and Notes to the Financial Statements. Bad and doubtful debts, and financing Before the Financial Statements of the Group and of the Bank were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and financing and the making of allowance for doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and that adequate allowance had been made for doubtful debts and financing. At the date of this Report, the Directors are not aware of any circumstances which would render the amounts written off for bad debts and financing, or the amount of the allowance for doubtful debts and financing in the Financial Statements of the Group and of the Bank, inadequate to any substantial extent. Current assets Before the Financial Statements of the Group and of the Bank were made out, the Directors took reasonable steps to ascertain that any current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and of the Bank had been written down to an amount which they might be expected so to realise. At the date of this Report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the Financial Statements of the Group and of the Bank misleading. 2

5 Directors Report Valuation methods At the date of this Report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Bank misleading or inappropriate. Contingent and other liabilities At the date of this Report, there does not exist: (a) (b) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Group or the Bank which has arisen since the end of the financial year other than in the ordinary course of banking business. No contingent or other liability in the Group or the Bank has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Bank and its subsidiaries to meet their obligations when they fall due. Change of circumstances At the date of this Report, the Directors are not aware of any circumstances not otherwise dealt with in this Report or the Financial Statements of the Group and of the Bank, that would render any amount stated in the Financial Statements misleading. Items of an unusual nature In opinion of the Directors: (a) (b) the results of the Group s and the Bank s operations for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in Note 55 to the Financial Statements; and there has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Bank for the financial year in which this Report is made. 3

6 Directors Report Directors The names of the Directors of the Bank in office since the date of the last Report and at the date of this Report are: Directors Dato Zainal Abidin bin Putih Dato Sri Mohamed Nazir bin Abdul Razak Tan Sri G.K. Rama Iyer Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Dato Seri Yeap Leong Huat Dato Dr. Gan Wee Beng Dato Sulaiman bin Mohd Tahir Tan Sri Dato Seri Haidar bin Mohamed Nor (resigned on 12 April 2011) Dato Dr. Mohamad Zawawi bin Ismail (resigned on 8 October 2011) Dato Mohd Shukri bin Hussin (resigned on 31 December 2011) Mr. Joseph Dominic Silva (appointed on 6 December 2011) Puan Rosnah Kamarul Zaman (appointed on 19 January 2012) In accordance with Article 97 of the Bank s Articles of Association, Datuk Dr. Syed Muhamad bin Syed Abdul Kadir and Dato Seri Yeap Leong Huat will retire from the Board at the forthcoming Annual General Meeting (AGM) and being eligible, offer themselves for re-election. Tan Sri G.K Rama Iyer had notified the Bank that he will not be seeking re-appointment at the forthcoming AGM and accordingly will retire at the conclusion of the forthcoming AGM pursuant to Section 129(2) of the Companies Act, In accordance with Article 102 of the Bank s Articles of Association, Mr. Joseph Dominic Silva and Puan Rosnah Kamarul Zaman will retire from the Board at the forthcoming AGM and being eligible, offer themselves for re-election. 4

7 Directors Report Directors interests in shares and share options According to the Register of Directors Shareholdings, the beneficial interests of the Directors who held office at the end of the financial year in the shares and share options of the ultimate holding company during the financial year are as follows: Ultimate holding company Number of ordinary shares of RM1 each Acquired/ Granted Disposed As at 1 January As at 31 December CIMB Group Holdings Berhad ("CIMB Group") Tan Sri G.K. Rama Iyer** 51, ,624 Dato Sri Mohamed Nazir bin Abdul Razak^ 54,926, ,353-55,395,875 Dato Zainal Abidin bin Putih# 110, ,000 Dato Seri Yeap Leong Huat 210, ,000 Dato Sulaiman bin Mohd Tahir - 35,810-35,810 Emerald Lodge Sdn Bhd Indirect Interest Dato Seri Yeap Leong Huat 200, ,000 Note: Includes shareholding of spouse/child, details of which are as follows: As at 1 January Number of ordinary shares of RM1 each Acquired/ Granted As at 31 December Disposed ** Puan Sri Vijayalakshmi a/p Krishnaswamy 37, ,624 ** Ganapathy Srihari a/l Rama Iyer 12, ,000 ^ Dato' Azlina binti Abdul Aziz 8,000, ,000,000 # Datin Jasmine binti Abdullah Heng 20, ,000 # Mohamad Ari Zulkarnain bin Zainal Abidin 10, ,000 Other than as disclosed above, according to the Register of Directors Shareholdings, the Directors in office at the end of the financial year did not hold any interest in the shares and share options of the Bank, the holding company, the ultimate holding company and the Bank s related companies during the financial year. 5

8 Directors Report Directors benefits Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive any benefit (other than the benefits included in the aggregate amount of emoluments received or due and receivable by Directors shown in Note 41 to the Financial Statements or the fixed salary as a full time employee of the Bank) by reason of a contract made by the Bank or a related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest. Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which the Bank is a party, with the object or objects of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or any other body other than the Management Equity Scheme and Equity Ownership Plan of the ultimate holding company (see Note 40 to the Financial Statements) as disclosed in this Report. 6

9 Directors Report 2011 Business Plan And Strategy During the year, the Group streamlines its management structures, improve internal efficiencies and enhance customer focus. With this, the Bank has also unveiled a number of strategies that are aimed at improving customer-centricity and cross-selling in order to achieve increased margins and win rates, increased share of wallet or deal size, and improved customer retention. will continue to focus on developing and strengthening its distribution capabilities and invest in human capital to ensure that the Bank is well positioned to exploit opportunities in the financial markets. Outlook for 2012 The operating environment will be different to that of 2011 as we expect slower economic growth and more volatile capital markets. The local banking industry is changing with a competitive landscape and challenging global macroeconomic environment. The 10-year Financial Sector Blueprint is now in place to ensure a more competitive, diversified and dynamic financial sector for the future. The blueprint is designed to take Malaysia's financial sector to the next level to make it inclusive and fully integrated within the regional and international financial system. will continue to leverage on its strong brand name and its strength to provide integrated solutions to its clients. Moving forward, the Bank aims to remain competitive in seizing new opportunities in the market and will continue to expand its activities regionally in Southeast Asia. believes that it has an entrenched leadership position in various customer and product segments, market expertise, effective leadership and considerable strong brand franchise in facing upcoming challenges. 7

10 Directors Report Ratings by External Rating Agencies Details of the ratings of the Bank and its debt securities are as follows: Rating Agency Rating Classification Definition Rating Agency Malaysia Berhad Date accorded: July 2011 Long Term Rating : AAA Short Term Rating : P1 Outlook : Stable Malaysian Rating Corporation Berhad Date accorded: Nov 2011 Long Term Rating : AAA Short Term Rating : MARC-1 Outlook : Stable Indicates a superior capacity to meet its financial obligations. Indicates a superior capacity to meet its financial obligations. Fitch Ratings Ltd Date accorded: July 2011 Moody s Investor Service Date accorded: September 2011 Standard & Poor s Rating Agency Date accorded: December 2011 Long Term Ratings: BBB+ Long Term Deposit Notes: A- Short Term Rating : F2 Outlook : Stable Long Term Rating: A3 Short Term Rating : P-1 Outlook : Stable Long Term Rating: A- Short Term Rating : A-2 Outlook : Stable Indicates currently low expectation of credit risk. Capacity for timely payment of financial commitment is adequate. However, adverse changes in circumstances and in economic conditions are more likely to impair this capacity. Indicates low expectation of credit risk. Indicates strong capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are likely to lead to a weakened capacity of the obligor to meet its financial commitments. 8

11 Directors Report Shariah Committee All the Islamic banking businesses of CIMB Group come under the purview of the CIMB Islamic Shariah Committee, which resides at CIMB Islamic Bank Berhad ( CIMB Islamic ). As per BNM/GPS1 (Guideline on the Governance of Shariah Committee for Islamic Financial Institutions), the Shariah Committee advises the Group on the operations of its Islamic banking business to ensure that the Group is not involved in any elements/activities which are not permissible under Shariah. In advising on such matters, the Shariah Committee also considers the views of the Shariah Advisory Council/Committees of relevant authorities like Bank Negara Malaysia and the Securities Commission on issues relating to the activities and operations of Islamic banking and financing. Composition of the Shariah Committee: 1. Sheikh Professor Dr. Mohammad Hashim Kamali (Chairman) 2. Sheikh Nedham Muhammad Seleh Yaqooby 3. Sheikh Dr. Haji Mohd Nai m bin Haji Mokhtar 4. Sheikh Associate Professor Dr. Shafaai bin Musa 5. Sheikh Dr. Yousef Abdullah Al Shubaily 6. Professor Dr. Noor Inayah Yaakub (Appointed on 1 April 2011) Zakat obligations The obligation and responsibility for payment of Zakat lies with the Muslim shareholders of the Bank and its subsidiaries (if any), the Muslim shareholders of the Bank's Ultimate Holding Company as well as the Muslim depositors of the Bank. The aforesaid is subject to the jurisdictional requirements on Zakat payment as may be applicable from time to time arising from local legislation, regulation, law or market convention as the case may be. Accrual of Zakat expenses (if any) in the financial statement of the Bank is reflective of this. Significant events during the financial year Significant events during the financial year are disclosed in Note 48 to the Financial Statements. Subsequent events after the financial year end Subsequent events after the financial year end are disclosed in Note 49 to the Financial Statements. 9

12 Directors Report Statement of Directors Responsibility In preparing the Financial Statements, the Directors have ensured that the Malaysian Accounting Standards Board (MASB) Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia Guidelines, and the provisions of the Companies Act, 1965 have been complied with and reasonable and prudent judgements and estimates have been made. It is the responsibility of the Directors to ensure that the financial statements of the Group and the Bank present a true and fair view of the state of affairs of the Group and of the Bank as at 31 December 2011 and of the results and cash flows of the Group and of the Bank for the financial year ended on that date. The financial statements are prepared on a going concern basis and the Directors have ensured that proper accounting records are kept so as to enable the preparation of the financial statements with reasonable accuracy. The Directors have also overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Bank and for the implementation and continued operation of adequate accounting and internal control systems for the prevention and detection of fraud and other irregularities. The system of internal controls is designed to provide reasonable and not absolute assurance for achieving certain internal control standards and helps the Group and the Bank manage the risk of failure to achieve business. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 12 of the Directors Report. 10

13 Directors Report Ultimate holding company The Directors regard CIMB Group Holdings Berhad, a quoted company incorporated in Malaysia, as the Bank s ultimate holding company. Auditors The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. Dato Zainal Abidin bin Putih Director Dato Sulaiman bin Mohd Tahir Director Kuala Lumpur 12 March

14 Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965 We, Dato Zainal Abidin bin Putih and Dato Sulaiman bin Mohd Tahir, being two of the Directors of, hereby state that, in the opinion of the Directors, the Financial Statements set out on pages 16 to 322 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Bank as at 31 December 2011 and of the results and cash flows of the Group and of the Bank for the financial year ended on that date, in accordance with the provisions of the Companies Act, 1965, the MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines. Signed on behalf of the Board of Directors in accordance with their resolution. Dato Zainal Abidin bin Putih Director Dato Sulaiman bin Mohd Tahir Director Kuala Lumpur 12 March 2012 Statutory Declaration Pursuant to Section 169(16) of the Companies Act, 1965 I, Kim Kenny, being the officer primarily responsible for the financial management of CIMB Bank Berhad, do solemnly and sincerely declare the Financial Statements set out on pages 16 to 322 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Kim Kenny Subscribed and solemnly declared by the abovenamed Kim Kenny at Kuala Lumpur before me, on 12 March Commissioner for Oaths 12

15 Independent Auditors Report to the members of (Company No: P) Report on the Financial Statements We have audited the Financial Statements of, on pages 16 to 322, which comprise the statements of financial position as at 31 December 2011 of the Group and of the Bank, and the statements of income, comprehensive income, changes in equity and cash flows of the Group and of the Bank for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 57. Directors Responsibility for the Financial Statements The Directors of the Bank are responsible for the preparation of financial statements that give a true and fair view in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia Guidelines and the Companies Act, 1965, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Bank s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 13

16 Independent Auditors Report to the members of (Continued) (Company No: P) Report on the Financial Statements (continued) Opinion In our opinion, the Financial Statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia Guidelines and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Bank as of 31 December 2011 and of their financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965, in Malaysia, we also report the following: (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 11 to the Financial Statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Bank s Financial Statements are in form and content appropriate and proper for the purposes of the preparation of the Financial Statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. 14

17 Independent Auditors Report to the members of (Continued) (Company No: P) Other Matters This report is made solely to the members of the Bank, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PricewaterhouseCoopers (No. AF: 1146) Chartered Accountants Soo Hoo Khoon Yean (No. 2682/10/13(J)) Chartered Accountant Kuala Lumpur 12 March

18 Statements of Financial Position as at 31 December 2011 Note Assets RM'000 RM' 000 RM'000 RM' 000 Cash and short-term funds 2 28,241,623 20,847,989 20,783,513 12,911,193 Reverse repurchase agreements 3,957,059 3,504,914 3,957,059 2,475,591 Deposits and placements with banks and other financial institutions 3 4,045,865 9,641,391 10,848,583 16,083,982 Financial assets held for trading 4 12,627,696 14,458,911 9,471,491 11,814,976 Derivative financial instruments 24 4,135,377 3,500,891 4,080,924 3,262,534 Financial investments available-for-sale 5 11,087,595 8,920,018 9,045,681 7,377,258 Financial investments held-to-maturity 6 14,630,170 13,511,190 11,577,838 11,185,993 Loans, advances and financing 7 139,509, ,252,042 99,222,358 90,816,549 Other assets 8 2,092,419 2,481,123 1,631,450 1,905,843 Tax recoverable 2,464 2, Deferred taxation ,266 22,096 Statutory deposits with central banks 10 5,082,585 1,410,155 3,812, ,023 Investment in subsidiaries ,737,731 4,526,972 Investment in jointly controlled entity , , , ,000 Investment in associates , , , ,116 Amount due from holding company and ultimate holding company 14 29,138 29, Amounts due from subsidiaries ,073 84,317 Amounts due from related companies 16 1,673,748 2,259,363 1,671,621 2,239,775 Goodwill 17 4,899,904 4,923,428 3,555,075 3,555,075 Intangible assets , , , ,362 Prepaid lease payments 19 1,964 2, Property, plant and equipment , , , ,555 Investment properties 21 8,653 61,217-52, ,392, ,849, ,540, ,764,408 Non-current assets/disposal groups held for sale 54 17,248 59,050 5,043 58,614 Total assets 234,410, ,908, ,545, ,823,022 Liabilities Deposits from customers ,478, ,640, ,569, ,553,069 Deposits and placements of banks and other financial institutions 23 13,873,413 14,652,435 18,519,277 18,468,654 Repurchase agreements 1,083,039 33,087 1,083,039 33,087 Derivative financial instruments 24 4,087,789 3,711,140 3,778,176 3,423,815 Bills and acceptances payable 6,771,502 4,077,611 3,291,625 2,252,722 Amount due to Cagamas Berhad - 107, ,523 Amounts due to subsidiaries , ,381 Amounts due to related companies 16 6,444 6, Other liabilities 25 3,196,860 3,637,462 2,559,744 2,731,046 Provision for taxation and Zakat 301,868 39, ,254 41,679 Deferred taxation 9 14,610 1, Bonds , Other borrowings , , ,720 - Subordinated obligations 28 8,243,955 6,098,269 7,930,808 6,159,081 Redeemable preference shares 29(a) 741, , Total liabilities 215,261, ,060, ,546, ,081,898 16

19 Statements of Financial Position as at 31 December 2011 (Continued) Equity Note RM'000 RM' 000 RM'000 RM' 000 Capital and reserves attributable to owners of the Parent Ordinary share capital 30 3,764,469 3,764,469 3,764,469 3,764,469 Reserves 32 14,875,250 13,571,938 13,004,638 11,746,915 18,639,719 17,336,407 16,769,107 15,511,384 Perpetual preference shares , , , ,000 Redeemable preference shares 29(b) 29,740 29,740 29,740 29,740 Non-controlling interests 278, , Total equity 19,148,394 17,847,640 16,998,847 15,741,124 Total equity and liabilities 234,410, ,908, ,545, ,823,022 Commitments and contingencies ,043, ,983, ,723, ,702,131 Net assets per ordinary share (RM)

20 Statements of Income for the financial year ended 31 December RM'000 RM' 000 RM'000 RM' 000 Interest income 34 7,655,001 6,902,714 7,076,636 6,419,587 Interest expense 35 (3,438,638) (2,669,348) (3,149,992) (2,504,042) Net interest income 4,216,363 4,233,366 3,926,644 3,915,545 Income from Islamic banking operations 56 1,304,990 1,136,307 19,139 11,397 Net non-interest income 36 2,018,946 1,836,420 2,462,513 1,690,764 Net income 7,540,299 7,206,093 6,408,296 5,617,706 Overheads 37 (3,855,601) (3,988,676) (2,936,915) (3,196,376) Profit before allowances 3,684,698 3,217,417 3,471,381 2,421,330 Allowances for impairment losses on loans, advances and financing 38 (340,617) (323,477) (233,275) (275,433) Allowances for losses on other receivables (3,551) (3,189) (3,143) (752) Allowances for commitments and contingencies written-back/(made) 25(c) 19,220 (13,348) 18,818 (12,333) Allowances for other impairment losses (made)/written-back 39 (70,478) 10,390 (67,488) 219,916 Profit after allowances 3,289,272 2,887,793 3,186,293 2,352,728 Share of results of jointly controlled entity 12 9,359 10, Share of results of associates 13 99,033 60, Profit before taxation 3,397,664 2,958,772 3,186,293 2,352,728 Taxation 42 (662,183) (593,882) (511,762) (453,312) Profit after taxation 2,735,481 2,364,890 2,674,531 1,899,416 Profit for the financial period attributable to : Owners of the Parent 2,725,882 2,356,680 2,674,531 1,899,416 Non-controlling interests 9,599 8, ,735,481 2,364,890 2,674,531 1,899,416 Earnings per share attributable to ordinary equity holders of the Parent - basic (sen)

21 Statements of Comprehensive Income for the financial year ended 31 December RM'000 RM'000 RM'000 RM'000 Profit for the financial period 2,735,481 2,364,890 2,674,531 1,899,416 Other comprehensive income: Revaluation reserve-financial investments available-for-sale 49,153 88,123 59,134 51,577 - Net gain from change in fair value 218, , ,895 91,782 - Realised gain transferred to statement of income on disposal and impairment (148,960) (69,978) (117,631) (36,090) - Income tax effects (20,192) (5,744) (19,130) (4,115) - Currency translation difference (61) (1,203) - - Net investment hedge (59,404) 239,252 (59,404) 239,252 Cash flow hedge - Net gain from change in fair value Exchange fluctuation reserve 42,533 (253,874) 54,018 (15,321) Share of other comprehensive income of associate 13, Other comprehensive income for the year, net of tax 46,357 73,501 53, ,508 Total comprehensive income for the financial year 2,781,838 2,438,391 2,728,505 2,174,924 Total comprehensive income attributable to: Owners of the Parent 2,772,568 2,427,420 2,728,505 2,174,924 Non-controlling interests 9,270 10, ,781,838 2,438,391 2,728,505 2,174,924 19

22 Statements of Changes in Equity for the financial year ended 31 December 2011 Attributable to owners of the Parent Revaluation reserve- Redeemable Exchange financial Share-based Perpetual Share Preference Share Statutory fluctuation investments Merger Capital Hedging payment Regulatory Retained preference Non-controlling Total capital Shares premium reserve reserve available-for-sale deficit reserve reserve reserve reserve profits Total shares interests Equity Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At 1 January As previously stated 3,764,469 29,740 5,033,633 4,126,569 (213,699) 389,033 (1,085,928) 735, , ,595 4,333,401 17,366, , ,493 17,847,640 - Effect of adopting Amendments to FRS ,906 - (238,906) As restated 3,764,469 29,740 5,033,633 4,126,569 (213,699) 389,033 (1,085,928) 735, , , ,595 4,094,495 17,366, , ,493 17,847,640 Profit for the financial year ,725,882 2,725,882-9,599 2,735,481 Other comprehensive income (net of tax) ,214 62, (59,178) (7,193) ,686 - (329) 46,357 - financial investments available-for-sale , , ,153 - net investment hedge (59,404) (59,404) - - (59,404) - cash flow hedge currency translation difference , (7,193) ,021 - (488) 42,533 - share of other comprehensive income of associate , , ,849 Total comprehensive income for the year ,214 62, (59,178) (7,193) - 2,725,882 2,772,568-9,270 2,781,838 Transfer to statutory reserve , (167,866) Transfer to regulatory reserve ,032 (373,032) Second interim dividend for the financial year ended 31 December (600,903) (600,903) - - (600,903) Interim dividend for the financial year ended 31 December (900,000) (900,000) - - (900,000) Dividend paid to non-controlling intests (921) (921) Share-based payment expense , , ,275 Arising from capital reduction of equity interests in subsidiaries (10,907) (10,907) Shares released under Equity Ownership Plan (7,628) - - (7,628) - - (7,628) At 31 December ,764,469 29,740 5,033,633 4,294,435 (163,485) 451,876 (1,085,928) 735,457 76, , ,627 4,778,576 18,669, , ,935 19,148,394 20

23 Statements of Changes in Equity Attributable to owners of the Parent Revaluation reserve- Redeemable Exchange financial Share-based Perpetual Share Preference Share Statutory fluctuation investments Merger Capital Hedging payment Regulatory Retained preference Non-controlling Total capital Shares premium reserve reserve available-for-sale deficit reserve reserve reserve reserve profits Total shares interests Equity Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At 1 January As previously stated 3,764,469 29,740 5,033,633 3,587,568 41, ,692 (1,085,928) 735,457 (103,375) - - 3,958,396 16,263, , ,786 16,717,592 - Effect of adopting Amendments to FRS ,902 - (224,902) As restated 3,764,469 29,740 5,033,633 3,587,568 41, ,692 (1,085,928) 735,457 (103,375) 224,902-3,733,494 16,263, , ,786 16,717,592 Profit for the financial year ,356,680 2,356,680-8,210 2,364,890 Other comprehensive income (net of tax) (254,853) 86, , ,740-2,761 73,501 - financial investments available-for-sale , ,341-1,782 88,123 - net investment hedge , , ,252 - currency translation difference (254,853) (254,853) (253,874) Total comprehensive income for the year (254,853) 86, , ,356,680 2,427,420-10,971 2,438,391 Transfer to statutory reserve , (539,001) Transfer to regulatory reserve ,595 (117,595) Interim and special dividends for the financial year ended 31 December (1,339,083) (1,339,083) - - (1,339,083) Dividend paid to non-controlling intests (3,799) (3,799) Share-based payment expense , , ,004 Rights issue of a subsidiary ,535 20,535 At 31 December ,764,469 29,740 5,033,633 4,126,569 (213,699) 389,033 (1,085,928) 735, , , ,595 4,094,495 17,366, , ,493 17,847,640 21

24 Statements of Changes in Equity Non-distributable Distributable Revaluation reserve- Redeemable Exchange financial Share-based Perpetual Share Preference Share Statutory fluctuation investments Merger Capital Hedging payment Regulatory Retained preference Total capital Shares premium reserve reserve available-for-sale deficit reserve reserve reserve reserve profits Total shares Equity Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At 1 January As previously stated 3,764,469 29,740 5,033,633 3,964,469 (46,533) 324,543 (1,047,872) 746, , ,190 2,525,756 15,541, ,000 15,741,124 - Effect of adopting Amendments to FRS ,059 - (215,059) As restated 3,764,469 29,740 5,033,633 3,964,469 (46,533) 324,543 (1,047,872) 746, , , ,190 2,310,697 15,541, ,000 15,741,124 Profit for the financial year ,674,531 2,674,531-2,674,531 Other comprehensive income (net of tax) ,917 59, (59,178) ,974-53,974 - financial investments available-for-sale , ,134-59,134 - net investment hedge (59,404) (59,404) - (59,404) - cash flow hedge currency translation difference , ,018-54,018 Total comprehensive income for the year ,917 59, (59,178) 101-2,674,531 2,728,505-2,728,505 Transfer to regulatory reserve ,324 (321,324) Second interim dividend for the financial year ended 31 December (600,903) (600,903) - (600,903) Interim dividend for the financial year ended 31 December (900,000) (900,000) - (900,000) Share-based payment expense , ,552-37,552 Shares released under Equity Ownership Plan (7,431) - - (7,431) - (7,431) At 31 December ,764,469 29,740 5,033,633 3,964,469 7, ,677 (1,047,872) 746,852 76, , ,514 3,163,001 16,798, ,000 16,998,847 22

25 Statements of Changes in Equity Non-distributable Distributable Revaluation reserve- Redeemable Exchange financial Share-based Perpetual Share Preference Share Statutory fluctuation investments Merger Capital Hedging payment Regulatory Retained preference Total capital Shares premium reserve reserve available-for-sale deficit reserve reserve reserve reserve profits Total shares Equity Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At 1 January As previously stated 3,764,469 29,740 5,033,633 3,541,277 (31,212) 272,966 (1,047,872) 746,852 (103,375) - - 2,485,665 14,692, ,000 14,892,143 - Effect of adopting Amendments to FRS ,919 - (201,919) As restated 3,764,469 29,740 5,033,633 3,541,277 (31,212) 272,966 (1,047,872) 746,852 (103,375) 201,919-2,283,746 14,692, ,000 14,892,143 Profit for the financial year ,899,416 1,899,416-1,899,416 Other comprehensive income (net of tax) (15,321) 51, , , ,508 - financial investments available-for-sale , ,577-51,577 - net investment hedge , , ,252 - currency translation difference (15,321) (15,321) - (15,321) Total comprehensive income for the year (15,321) 51, , ,899,416 2,174,924-2,174,924 Transfer to statutory reserve , (423,192) Transfer to regulatory reserve ,190 (110,190) Interim and special dividends for the financial year ended 31 December (1,339,083) (1,339,083) - (1,339,083) Share-based payment expense , ,140-13,140 At 31 December ,764,469 29,740 5,033,633 3,964,469 (46,533) 324,543 (1,047,872) 746, , , ,190 2,310,697 15,541, ,000 15,741,124 23

26 Statements of Cash Flows for the financial year ended 31 December RM'000 RM'000 RM'000 RM'000 Cash flows from operating activities Profit before taxation 3,397,664 2,958,772 3,186,293 2,352,728 Adjustments for: Depreciation of property, plant and equipment 197, , , ,162 Amortisation of intangible assets 149, , , ,575 Amortisation of prepaid lease payments Gain on disposal of property, plant and equipment/ assets held for sale (7,115) (178,160) (1,717) (145,685) Gain on disposal of prepaid lease payments (99) (511) - - Gain on disposal of investment properties - (1,258) - - Loss/(gain) on disposal of foreclosed properties 20,070 1,045 (1,293) 261 Fair value gain on investment properties (1,842) (8,632) - (8,632) Net gain from disposal of financial investments available-for-sale (208,661) (69,978) (184,013) (36,090) Net gain from disposal of financial investments held-to-maturity (76,864) (104,278) (75,980) (104,278) Net loss from hedging derivatives 12,639 62,569 12,121 61,470 Net loss from fair value hedge on redeemable preference shares 9,313 25, Unrealised loss from revaluation of financial assets held for trading 45,090 39,690 42,234 36,275 Unrealised gain from revaluation of derivative financial instruments (341,871) (42,199) (346,903) (49,211) Unrealised gain on foreign exchange (191,780) (472,398) (150,662) (456,876) Allowances for bad and doubtful debts and financing 676, , , ,261 Allowance for other impairment losses made/(written-back) on securities 72,987 (9,838) (71,869) (12,891) Allowance for losses on other receivables 3,551 3,189 3, Writeback for impairment loss in subsidiaries - - (4,381) (206,473) Write-back of impairment loss in jointly controlled entity - (552) - (552) Interest income on financial investments available-for-sale (333,400) (310,994) (315,032) (300,571) Interest income on financial investments held-to-maturity (560,831) (540,221) (519,583) (495,982) Interest expense on subordinated obligations 283, , , ,773 Interest expense on redeemable preference shares 40,506 42, Interest expense on other borrowings 74,167 18,578 1,236 - Accretion of discount less amortisation of premium (165,237) 186,757 (166,781) 201,112 Gain on disposal of subsidiaries - (15,349) - - Loss on disposal of associate - 2, Dividend income (65,396) (47,988) (807,729) (109,987) Allowances for commitments and contingencies (written-back)/made (19,220) 13,348 (18,818) 12,333 Share-based payment expense 39,275 14,004 37,552 13,140 Share of profits of jointly controlled entity (9,359) (10,449) - - Share of profits of associates (99,033) (60,530) - - 2,942,531 2,691,227 1,643,865 1,707,614 24

27 Statements of Cash Flows RM'000 RM'000 RM'000 RM'000 (Increase)/decrease in operating assets Reverse repurchase agreements (452,145) 756,037 (1,481,468) 381,865 Deposits and placements with banks and other financial institutions 5,595,526 (6,238,795) 5,235,399 (4,149,704) Financial assets held for trading 1,880,556 (789,224) 2,395,682 (1,822,124) Loans, advances and financing (15,789,019) (14,162,323) (8,687,813) (9,163,985) Amount due from holding company and ultimate holding company 55 17, ,506 Amount due from subsidiaries - - (371,756) 43,747 Amount due from related companies 585, , , ,727 Other assets 654,583 (502,158) 494,471 (360,483) Statutory deposits with central banks (3,672,430) (568,298) (2,858,274) (292,040) Increase/(decrease) in operating liabilities Deposits from customers 16,837,319 12,768,352 10,016,676 7,103,158 Deposits and placements of banks and other financial institutions (779,021) 471,489 50, ,257 Repurchase agreements 1,049,952 (532,010) 1,049,952 33,087 Derivative financial instruments 64, ,232 (136,666) 348,844 Bills and acceptances payable 2,693,891 2,222 1,038,903 (573,443) Amount due to Cagamas Berhad (107,523) (228,089) (107,523) (228,089) Amount due to holding company and ultimate holding company (38,147) (55,439) - - Amount due to subsidiaries - - (260,368) 191,713 Amount due to related companies (307) (2,959) (841) 16,138 Other liabilities (410,631) 745,688 (112,513) 661,666 Cash flows generated from/(used in) operations 11,055,158 (4,317,151) 8,476,558 (4,416,547) Taxation paid (378,970) (388,851) (250,622) (306,362) Net cash generated from/(used in) operating activities 10,676,188 (4,706,002) 8,225,936 (4,722,909) 25

28 Statements of Cash Flows Note RM'000 RM'000 RM'000 RM'000 Cash flows from/(used in) investing activities Proceeds from disposal of subsidiaries - 81, Dividend income 65,396 47, , ,987 Investment in subsidiaries - - (250,000) (503,999) Investment in associate (94,686) (53,082) (94,686) (53,082) Interest income received from financial investments available-for-sale 371, , , ,158 Net purchase of financial investments available-for-sale (2,000,429) (323,228) (1,372,215) (431,019) Interest income received from financial investments held-to-maturity 548, , , ,367 Net purchase of financial investments held-to-maturity (959,287) (608,078) (207,516) (456,449) Purchase of property, plant and equipment (198,192) (199,397) (110,060) (149,852) Proceeds from disposal of property, plant and equipment/assets held for sale 88, ,330 56, ,561 Proceeds from disposal/write off of intangible assets 1,920 10, Proceeds from disposal of prepaid lease payments (74) Proceeds from disposal of investment properties 52,858 16,600 52,858 - Purchase of investment properties (1,200) Purchase of intangible assets (298,031) (151,440) (276,954) (128,014) Capital repayment from a subsidiary (10,907) - 43,622 - Net cash (used in)/generated from investing activities (2,434,181) 194,173 (514,171) (561,297) Cash flows (used in)/from financing activities Dividends paid (1,501,824) (1,342,882) (1,500,903) (1,339,083) Interest expense paid on subordinated obligations (308,891) (174,396) (330,302) (214,905) Interest expense paid on redeemable preference shares (40,709) (42,646) - - Interest expense paid on other borrowings (73,690) - (759) - Proceeds from issuance of subordinated obligations 2,049,193 1,998,188 1,500,000 1,998,188 Proceeds from other borrowings 500, ,000 - Repayment of other borrowing (962,807) - (37,757) Repayment of bonds (423,982) - - Repayment of subordinated obligations (158,387) Net cash (used in)/generated from financing activities (921,097) 438, , ,200 Net increase/(decrease) in cash and cash equivalents during the financial year 7,320,910 (4,073,565) 7,842,044 (4,840,006) Effects of exchange rate differences 72,724 (101,544) 30,276 51,508 Cash and cash equivalents at beginning of financial year 20,847,989 25,023,098 12,911,193 17,699,691 Cash and cash equivalents at end of financial year 2 28,241,623 20,847,989 20,783,513 12,911,193 26

29 Summary of Significant Accounting Policies for the financial year ended 31 December 2011 The following accounting policies have been used consistently in dealing with items that are considered material in relation to the Financial Statements. A Basis of preparation The Financial Statements of the Group and the Bank have been prepared in accordance with the Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia ( BNM ) Guidelines, Shariah requirements and the provisions of the Companies Act, The financial statements have been prepared under historical cost convention, as modified by the revaluation of financial investments available-for-sale, financial assets and financial liabilities (including derivatives financial instruments) at fair value through profit or loss and investment properties measured at fair value. The Financial Statements incorporate those activities relating to Islamic banking which have been undertaken by the Bank and its wholly-owned subsidiaries, CIMB Islamic Bank Berhad ( CIMB Islamic ) and CIMB Bank (L) Limited. Islamic banking refers generally to the acceptance of deposits, granting of financing and dealing in Islamic Securities in compliance with Shariah. The preparation of Financial Statements in conformity with the Financial Reporting Standards 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 Financial Statements, and the reported amounts of income and expenses during the reported period. It also requires the Directors to exercise their judgement in the process of applying the Group s and the Bank s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note

30 Summary of Significant Accounting Policies A (a) Basis of preparation (Continued) Standards, amendments to published standards and interpretations that are effective and applicable to the Group and Bank The new accounting standards, amendments to published standards and interpretations that are effective for the Group and the Bank for the financial year beginning 1 January 2011 are as follows: Revised FRS 1 First-time Adoption of Financial Reporting Standards Revised FRS 3 Business Combinations Revised FRS 127 Consolidated and Separate Financial Statements Amendment to FRS 2 Share-based Payment - Group Cash-settled Share-based Payment Transactions Amendment to FRS 7 Financial instruments: Disclosures - Improving Disclosures about Financial Instruments Amendment to FRS 1 First-time Adoption of Financial Reporting Standards Amendment to FRS 132 Financial instruments: Presentation - Classification of Rights Issue IC Interpretation 4 Determining Whether an Arrangement contains a Lease IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation IC Interpretation 17 Distributions of Non-cash Assets to Owners IC Interpretation 18 Transfer of Assets from Customers TR i-4 Shariah Compliant Sale Contract Improvements to FRSs (2010) A summary of the impact of new accounting standards, amendments and improvements to published standards and interpretations on the financial statements of the Group and the Bank is set out in Note

31 Summary of Significant Accounting Policies A (b) Basis of preparation (Continued) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective In November 2011, the Malaysian Accounting Standards Board formally announced that the Malaysian reporting entities would be required to comply with the new IFRScompliant framework, Malaysian Financial Reporting Standards (MFRS) for financial years commencing on or after 1 January MFRS 1 First-time adoption of MFRS provides for certain optional exemptions and certain mandatory exceptions for first-time MFRS adopters. will be required to adopt the new standards, amendments to standards and interpretations in the period set out below and comparative financial information prepared in compliance with MFRS will be required for the year commencing 1 January 2010: (i) Financial year beginning on/after 1 January 2012 MFRS 139 Financial instruments: recognition and measurement - Bank Negara Malaysia has removed the transitional provision for banking institutions on loan impairment assessment and provisioning to comply with the MFRS 139 requirements. The revised MFRS 124 Related party disclosures (effective from 1 January 2012) removes the exemption to disclose transactions between governmentrelated entities and the government, and all other government-related entities. The following new disclosures are now required for government related entities: - The name of the government and the nature of their relationship; - The nature and amount of each individually significant transactions; and - The extent of any collectively significant transactions, qualitatively or quantitatively. 29