ALLIANCE ISLAMIC BANK BERHAD (776882-V) Condensed Interim Financial Statements Unaudited Statement of Financial Position as at 31 December 2011 Note ASSETS Cash and short-term funds 517,070 149,234 Deposits and placements with banks and other financial institutions 167 163 Financial assets held-for-trading A11-598,554 Financial investments available-for-sale A12 1,149,766 1,320,722 Financial investments held-to-maturity A13 440,985 105,811 Financing and advances A14 4,301,344 3,978,311 Other assets A15 7,343 1,737 Statutory deposits with Bank Negara Malaysia 203,050 48,575 Property, plant and equipment 304 417 Tax recoverable - 1,364 Deferred tax assets 18,570 17,781 Intangible assets 270 431 TOTAL ASSETS 6,638,869 6,223,100 LIABILITIES AND EQUITY Deposits from customers A16 5,896,341 5,496,732 Deposits and placements of banks and other financial institutions A17 135,281 134,139 Bills and acceptances payable 52 19 Other liabilities A18 74,454 124,108 Provision for taxation 2,049 - Provision for zakat - 160 TOTAL LIABILITIES 6,108,177 5,755,158 Share capital 300,000 300,000 Reserves 230,692 167,942 CAPITAL AND RESERVES ATTRIBUTABLE TO OWNER OF THE PARENT 530,692 467,942 TOTAL LIABILITIES AND EQUITY 6,638,869 6,223,100 COMMITMENTS AND CONTINGENCIES A24 1,347,904 1,043,923 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2011. 1
ALLIANCE ISLAMIC BANK BERHAD (776882-V) Condensed Interim Financial Statements Unaudited Statement of Comprehensive Income for the Financial Period Ended 31 December 2011 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Note Income derived from investment of depositors' funds and others A19 85,103 78,303 253,116 214,899 Income derived from investment of shareholder's funds A20 7,820 6,540 21,827 18,963 Allowance for impairment on financing, advances and other losses A21 (4,885) (6,545) (18,374) (17,183) Total distributable income 88,038 78,298 256,569 216,679 Income attributable to the depositors and financial institutions A22 (33,868) (32,849) (103,199) (80,606) Total net income 54,170 45,449 153,370 136,073 Other operating expenses A23 (25,009) (18,888) (77,909) (54,780) Profit before taxation and zakat 29,161 26,561 75,461 81,293 Taxation and zakat (7,345) (6,643) (18,963) (20,601) Net profit after taxation and zakat 21,816 19,918 56,498 60,692 Other comprehensive income: Revaluation reserve on financial investments available-for-sale - Net (loss)/gain from change in fair value (784) (889) 8,225 (763) - Transfer from/(to) deferred tax assets 196 222 (2,056) 191 Other comprehensive (loss)/income, net of tax (588) (667) 6,169 (572) Total comprehensive income for the period 21,228 19,251 62,667 60,120 Profit for the period attributable to: Owner of the parent 21,816 19,918 56,498 60,692 Total comprehensive income for the period attributable to: Owner of the parent 21,228 19,251 62,667 60,120 Earnings per share attributable to owner of the parent: - basic/diluted (sen) 7.3 6.6 18.8 20.2 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2011. 2
ALLIANCE ISLAMIC BANK BERHAD (776882-V) Condensed Interim Financial Statements Unaudited Statement of Changes in Equity for the Financial Period Ended 31 December 2011 Non-distributable reserves Distributable reserve Equity Profit contribution equalisation Ordinary Statutory Revaluation from ultimate reserves Retained Total shares reserves reserves holding company ("PER") profits equity RM'000 At 1 April 2011 300,000 85,806 (399) 313-82,222 467,942 Net profit after taxation and zakat - - - - - 56,498 56,498 Other comprehensive income - - 6,169 - - - 6,169 Total comprehensive income for the period - - 6,169 - - 56,498 62,667 Share-based payment under Employees' Share Scheme ("ESS") - - - 136 - - 136 Payment for ESS recharged from ultimate holding company - - - (53) - - (53) Transfer of ESS recharged difference on shares vested - - - 3 - (3) - Transfer to retained profits on share options lapsed - - - (88) - 88 - Transfer to statutory reserves - 17,341 - - - (17,341) - At 31 December 2011 300,000 103,147 5,770 311-121,464 530,692 At 1 April 2010 300,000 57,746 775 208 25,814 28,340 412,883 Net profit after taxation and zakat - - - - - 60,692 60,692 Other comprehensive income - - (572) - - - (572) Total comprehensive income for the period - - (572) - - 60,692 60,120 Share-based payment under ESS - - - 127 - - 127 Payment for ESS recharged from ultimate holding company - - - (57) - - (57) Transfer of ESS recharged difference on shares vested - - - (7) - 7 - Transfer from PER - - - - (19,460) 19,460 - Transfer to statutory reserves - 20,387 - - - (20,387) - At 31 December 2010 300,000 78,133 203 271 6,354 88,112 473,073 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 March 2011. 3
ALLIANCE ISLAMIC BANK BERHAD (776882-V) Condensed Interim Financial Statements Unaudited Condensed Statements of Cash Flow for the Financial Period Ended 31 December 2011 31 December 31 December 2011 2010 Profit before taxation and zakat 75,461 81,293 Adjustments for non-cash items (25,472) 1,092 Operating profit before changes in working capital 49,989 82,385 Changes in working capital 437,632 290,055 Taxes paid (18,442) (15,159) Zakat paid (114) (139) Net cash generated from operating activities 469,065 357,142 Net cash used in investing activities (101,229) (845,626) Net change in cash and cash equivalents 367,836 (488,484) Cash and cash equivalents at beginning of the year 149,234 845,241 Cash and cash equivalents at end of the period 517,070 356,757 Cash and cash equivalents comprise: Cash and short term funds 517,070 356,757 The Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 March 2011. 4
Explanatory Notes PART A - Explanatory Notes Pursuant to Financial Reporting Standard 134 ("FRS 134") and Revised Guidelines on Financial Reporting for Licensed Islamic Banks ("BNM/GP8- i" ) Issued by Bank Negara Malaysia ("BNM") A1 Basis of Preparation The unaudited condensed interim financial statements for the 3rd quarter and nine months ended 31 December 2011 of Alliance Islamic Bank Berhad ( AIS or the Bank ) have been prepared in accordance with FRS 134: "Interim Financial Reporting" issued by the Malaysian Accounting Standards Board ("MASB"), BNM's Guidelines on Financial Reporting for Licensed Islamic Banks ("BNM/GP8-i" ) and Shariah principles. The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements for the financial year ended 31 March 2011. The explanatory notes attached to the interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Bank since the financial year ended 31 March 2011. The significant accounting policies and methods of computation applied in the unaudited condensed interim financial statements are consistent with those adopted in the most recent audited annual financial statements for the financial year ended 31 March 2011, and modified for the adoption of the following accounting standards applicable for financial periods beginning on or after 1 April 2011: FRS 3 (revised) "Business Combinations" FRS 127 (revised) "Consolidated and Separate Financial Statements" Amendments to FRS 2 "Share-based Payment: Group Cash-settled Share-based Payment Transactions" Amendments to FRS 7 "Financial Instruments: Disclosures" and FRS 1 "First-time Adoption of Financial Reporting Standards" IC Interpretation 4 "Determining whether an Arrangement contains a Leases" IC Interpretation 17 "Distributions of Non-cash Assets to Owners" Improvements to FRSs (2010) The revised FRS 3 continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest s proportionate share of the acquiree s net assets. All acquisition-related costs should be expensed. The application of this standard is not expected to have a material impact on the financial statements of the Bank. The revised FRS 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. When this standard is effective, all earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest, even the attribution of losses to the non-controlling interest results in a debit balance in the shareholders' equity. Profit or loss attribution to non-controlling interests prior years is not restated. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in the statement of comprehensive income. The application of this standard is not expected to have a material impact on the financial statements of the Bank. 5
A1 Basis of Preparation (contd.) The adoption of the Amendments to FRS 7 and FRS 1 require enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendments require disclosure of fair value measurements by level of a fair value measurement hierarchy. The following revised FRSs, new IC Interpretations and Amendments to FRSs have been issued by the MASB and are effective for annual periods commencing on or after 1 April 2012, and have yet to be adopted by the Bank: FRS 124 "Related Party Transactions" (effective 1 January 2012) IC Interpretation 19 "Extinguishing Financial Liabilities with Equity Instruments" (effective from 1 July 2011) The preparation of unaudited condensed interim 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 unaudited condensed interim financial statements, and the reported amounts of income and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Bank's accounting policies. Although these estimates and assumptions are based on the Directors' best knowledge of current events and actions, actual results may differ. A2 Auditors' Report on Preceding Annual Financial Statements The auditors' report on the annual financial statements for the financial year ended 31 March 2011 was not subject to any qualification. A3 Seasonality or Cyclicality of Operations The operations of the Bank were not materially affected by any seasonal or cyclical fluctuations in the 3rd quarter and nine months ended 31 December 2011. 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 3rd quarter and nine months ended 31 December 2011. A5 Changes in Estimates There were no material changes in estimates of amounts reported in prior financial years that have a material effect in the 3rd quarter and nine months ended 31 December 2011. 6
A6 Issuance and Repayment of Debt and Equity Securities There were no issuance nor repayment of debt and equity securities during the 3rd quarter and nine months ended 31 December 2011. A7 Dividend Paid There was no dividend paid during the 3rd quarter and nine months ended 31 December 2011. A8 Significant Event Alliance Financial Group Berhad Employee's Share Scheme ("AFG Bhd ESS") Alliance Financial Group Berhad, the holding company of the Bank had on 22 July 2011, offered/awarded the following share options and share grants to Directors and employees of the Company and its subsidiaries who have met the criteria of eligibility for the participation in the AFG Bhd ESS: (i) (ii) 9,764,000 share options under the Share Option Plan at an option price of RM3.58 per share which will be vested subject to the achievement of performance conditions. 2,127,600 share grants under the Share Grant Plan. The first 50% of the share grants are to be vested at the end of the 2nd year and the remaining 50% of the share grants are to be vested at the end of the 3rd year from the date on which an award is made. Save for the Chief Executive Officer of the Bank, none of the other Directors of the Bank were offered/awarded any share options/share grants. The holding company operates an equity-settled, share-based compensation plan pursuant to the AFG Bhd ESS. Under the FRS 2 Share-based Payment, the compensation expense relating to the share scheme is recognised in profit or loss over the vesting periods of the grants with a corresponding increase in equity. A9 Material Event Subsequent to the end of the Financial Reporting Period There was no material event subsequent to the end of the financial reporting period that require disclosure or adjustment to the unaudited condensed interim financial statements. A10 Related Party Transactions All related party transactions within the Group have been entered into in the normal course of business and were carried out on normal commercial terms. A11 Financial assets held-for-trading At fair value Money market instruments: Bank Negara Malaysia Bills - 598,554 Total financial assets held-for-trading - 598,554 7
A12 Financial investments available-for-sale At fair value Money market instruments: Malaysian Government investment certificates 488,502 495,598 Negotiable instruments of deposits 408,642 678,766 Bankers' acceptances 91,023 63,258 Unquoted securities: Debt securities 161,599 83,100 Total financial investments available-for-sale 1,149,766 1,320,722 A13 Financial investments held-to-maturity At amortised cost Money market instruments: Malaysian Government investment certificates 435,673 100,575 At cost Unquoted securities: Debt securities 5,312 5,236 Total financial investments held-to-maturity 440,985 105,811 A14 Financing and advances Cash line financing 157,955 150,709 Term financing - Housing financing 1,343,070 974,511 - Hire purchase receivables 363,090 398,101 - Other term financing 1,931,588 1,985,056 Bills receivables 462 756 Trust receipts 25,448 18,805 Claims on customers under acceptance credits 389,580 354,091 Staff financing [including financing to Directors of RM99,000 (31.3.11: RM121,000)] 25,762 26,177 Revolving credits 141,301 133,377 Gross financing and advances 4,378,256 4,041,583 Add : Sales commission and handling fees 27,174 30,288 Less: Allowances for impairment on financing and advances - Individual assessment allowance (24,238) (26,473) - Collective assessment allowance (79,848) (67,087) Total net financing and advances 4,301,344 3,978,311 8
A14 Financing and advances (contd.) A14a By maturity structure: Within one year 768,932 703,571 One year to three years 281,682 338,211 Three years to five years 500,407 356,883 Over five years 2,827,235 2,642,918 Gross financing and advances 4,378,256 4,041,583 A14b By Shariah concepts: Bai' Bithaman Ajil (deferred payment sale) 2,229,050 1,838,737 Al-Ijarah Thumma Ai-Bai/AITAB (finance lease) 369,150 404,566 Murabahah (cost-plus) 476,158 410,250 Qardhul Hassan (benevolent loan) 451 251 Bai' Al-Dayn (financing trading) 80,634 97,060 Bai' Al-Inah (personal finance) 1,222,503 1,290,598 Others 310 121 Gross financing and advances 4,378,256 4,041,583 A14c By type of customers: Domestic non-bank financial institutions 70,781 31,224 Domestic business enterprises - Small and medium enterprises 781,650 687,543 - Others 558,300 626,637 Individuals 2,918,823 2,660,614 Other domestic entities 297 360 Foreign entities 48,405 35,205 Gross financing and advances 4,378,256 4,041,583 A14d By profit rate sensitivity: Fixed rate - House financing 70,891 82,869 - Hire purchase receivables 363,108 398,101 - Other fixed rate financing 1,379,053 1,470,314 Variable rate - House financing 1,291,275 911,104 - Other variable rate financing 1,273,929 1,179,195 Gross financing and advances 4,378,256 4,041,583 9
A14 Financing and advances (contd.) A14e By economic purposes: Purchase of transport vehicles 368,986 407,822 Purchase of landed property 1,745,782 1,378,807 of which: - Residential 1,290,278 938,394 - Non-residential 455,504 440,413 Purchase of fixed assets excluding land & buildings 1,931 3,091 Personal use 1,322,926 1,365,504 Construction 13,367 15,206 Working capital 769,272 721,356 Others 155,992 149,797 Gross financing and advances 4,378,256 4,041,583 A14f By geographical distribution: Northern region 239,499 266,363 Central region 3,448,247 3,166,836 Southern region 382,583 338,063 East Malaysia region 307,927 270,321 Gross financing and advances 4,378,256 4,041,583 10
A14 A14g Financing and advances (contd.) Movements in impaired financing and advances At beginning of year 61,369 46,142 Impaired during the period/year 58,643 95,510 Reclassified as non-impaired during the period/year (36,721) (37,295) Recoveries (3,520) (15,793) Amount written off (20,067) (27,195) At end of period/year 59,704 61,369 Gross impaired financing as a % of gross financing and advances 1.4% 1.5% A14h Impaired financing and advances by economic purposes: Purchase of transport vehicles 3,169 6,409 Purchase of landed property 19,686 17,135 of which: - Residential 12,873 9,497 - Non-residential 6,813 7,638 Purchase of fixed assets excluding land & buildings 5 - Personal use 10,196 10,119 Construction 7 - Working capital 26,329 27,419 Others 312 287 Gross impaired financing and advances 59,704 61,369 11
A14 A14i Financing and advances (contd.) Impaired financing and advances by geographical distribution: Northern region 23,849 19,754 Central region 30,603 37,668 Southern region 3,489 3,154 East Malaysia region 1,763 793 Gross impaired financing and advances 59,704 61,369 A14j Movement in the allowance for impairment on financing and advances are as follows: Individual assessment allowance At beginning of year 26,473 22,151 Allowance made during the period/year (net) 17,575 31,517 Amount written off (19,810) (27,195) At end of period/year 24,238 26,473 Collective assessment allowance At beginning of year 67,087 58,919 Allowance made during the period/year (net) 12,761 8,168 At end of period/year 79,848 67,087 As % of gross financing and advances less individual assessment allowance 1.8% 1.7% A15 Other Assets Other receivables, deposits and prepayments 217 1,789 Amount due from holding company 7,148-7,365 1,789 Less: Allowance for other assets (22) (52) 7,343 1,737 12
A16 Deposits from Customers Non-Mudharabah Fund Demand deposits 1,698,610 1,423,958 Savings deposits 311,160 307,324 Negotiable instruments of deposits 1,212,778 279,795 3,222,548 2,011,077 Mudharabah Fund General investment deposits 1,935,125 3,109,969 Money market deposits 738,668 375,686 5,896,341 5,496,732 A16a By type of customers: Domestic financial institutions 1,553,577 1,034,852 Government and statutory bodies 637,633 450,471 Business enterprises 2,013,400 1,829,974 Individuals 1,511,900 1,972,619 Others 179,831 208,816 5,896,341 5,496,732 A16b The maturity structure of Mudharabah general investment deposits, money market deposits and negotiable instruments of deposits are as follows: Due within six months 2,475,319 2,382,705 Six months to one year 675,851 644,787 One year to three years 334,754 737,392 Three years to five years 400,647 566 3,886,571 3,765,450 13
A17 Deposits and Placements of Banks and Other Financial Institutions Non-Mudharabah Fund Bank Negara Malaysia 66,028 64,918 Mudharabah Fund Licensed investment banks 69,253 63,221 Licensed Islamic banks - 6,000 135,281 134,139 A18 Other Liabilities Other payables 74,451 103,873 Amount due to holding company - 20,235 Amount due to ultimate holding company 3-74,454 124,108 14
A19 Income derived from investment of depositors' funds and others Income derived from investment of : 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 (i) General investment deposits 33,291 45,391 113,704 119,588 (ii) Other deposits 51,812 32,912 139,412 95,311 85,103 78,303 253,116 214,899 A19a Income derived from investment of general investment deposits: 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Finance income and hibah Financing and advances 24,278 34,005 83,340 93,760 Financial investments available-for-sale 2,318 2,716 9,928 7,331 Financial investments held-to-maturity 1,563 756 4,658 1,941 Money at call and deposits with financial institutions 360 1,306 1,733 4,463 28,519 38,783 99,659 107,495 Amortisation of premium less accretion of discount 2,471 5,461 8,790 8,823 Total finance income and hibah 30,990 44,244 108,449 116,318 Other operating income - Fee income 1,086 1,081 3,203 2,997 - Other income 1,215 66 2,052 273 33,291 45,391 113,704 119,588 15
A19 Income derived from investment of depositors' funds and others (contd.) A19b Income derived from investment of other deposits: 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Finance income and hibah Financing and advances 37,841 24,473 102,182 74,726 Financial investments available-for-sale 3,882 1,961 12,172 5,842 Financial investments held-to-maturity 2,340 550 5,711 1,547 Money at call and deposit with financial institutions 630 902 2,125 3,557 44,693 27,886 122,190 85,672 Amortisation of premium less accretion of discount 3,893 4,204 10,777 7,032 Total finance income and hibah 48,586 32,090 132,967 92,704 Other operating income - Fee income 1,621 777 3,928 2,388 - Other income 1,605 45 2,517 219 51,812 32,912 139,412 95,311 A20 Income derived from investment of shareholder's funds 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Finance income and hibah Financing and advances 5,710 4,862 15,998 14,867 Financial investments available-for-sale 581 389 1,906 1,162 Financial investments held-to-maturity 355 110 894 308 Money at call and deposit with financial institutions 94 179 333 708 6,740 5,540 19,131 17,045 Amortisation of premium less accretion of discount 586 836 1,687 1,399 Total finance income and hibah 7,326 6,376 20,818 18,444 Other operating income - Fee income 246 155 615 476 - Other income 248 9 394 43 7,820 6,540 21,827 18,963 16
A21 Allowance for impairment on financing, advances and other losses 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Allowance for impairment on financing, advances and other losses: (a) Individual assessment allowance - Made during the period (net) 5,575 10,374 17,575 18,658 (b) Collective assessment allowance - Made during the period (net) 3,282 724 12,761 5,437 (c) Bad debts on financing - Written off 266 2,338 308 2,480 - Recovered (3,776) (7,183) (11,723) (10,885) 5,347 6,253 18,921 15,690 (Write-back)/allowance for commitment and contingencies (480) - (850) 980 Allowance for other assets 18 292 303 513 4,885 6,545 18,374 17,183 A22 Income attributable to the depositors and financial institutions 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Deposits from customers - Mudharabah fund 24,122 26,883 76,593 65,484 - Non-Mudharabah fund 7,545 4,019 17,454 11,099 Deposits and placements of banks and other financial institutions - Mudharabah fund 1,953 1,740 8,428 3,538 - Non-Mudharabah fund 248 207 724 485 33,868 32,849 103,199 80,606 17
A23 Other Operating Expenses 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Personnel costs - Salaries, allowances and bonuses 11,503 8,168 36,302 24,545 - Contribution to EPF 1,972 1,321 6,096 3,956 - Share options/grants under ESS 78 49 136 127 - Others 2,184 1,333 5,918 3,666 15,737 10,871 48,452 32,294 Establishment costs - Depreciation on property, plant and equipment 38 41 115 135 - Amortisation of computer software 50 55 161 161 - Rental 1,352 700 3,812 2,098 - Repairs and maintenance 409 262 1,409 813 - Information technology expenses 1,545 1,200 3,788 3,080 - Others (Note a) 3,050 3,106 10,123 8,728 6,444 5,364 19,408 15,015 Marketing expenses - Promotion and advertisement 403 529 1,593 1,476 - Branding and publicity - 63 4 105 - Others 164 136 580 418 567 728 2,177 1,999 Administration and general expenses - Communication expenses 490 363 1,649 1,102 - Printing and stationeries 180 163 645 460 - Insurance 136 164 235 488 - Professional fees 732 402 2,059 1,210 - Others 723 833 3,284 2,212 2,261 1,925 7,872 5,472 Total other operating expenses 25,009 18,888 77,909 54,780 Included in the other operating expenses are the Shariah Committee members' remuneration of RM138,000 (31.12.2011 : RM69,500). Included in the other operating expenses are cross-charge amounts for the services rendered by the service provider, the holding company of the Bank, in accordance with the Service Level Agreement ( SLA ) signed between the Bank and Alliance Bank Malaysia Berhad on 18 March 2008. 18
A23 Other Operating Expenses (contd.) The following represent a detailed breakdown of the Bank's share of the holding company's operating expenses included within the Bank's total other operating expenses: 3rd Quarter Ended Nine Months Ended 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Sharing of Expenses Personnel costs - Salaries, allowances and bonuses 10,964 7,557 34,693 22,569 - Contribution to EPF 1,882 1,220 5,825 3,643 - Others 2,047 1,308 5,665 3,518 14,893 10,085 46,183 29,730 Establishment - Rental 1,310 660 3,692 1,982 - Repairs and maintenance 390 245 1,354 761 - Information technology expenses 1,518 1,185 3,710 3,057 - Others (Note a) 3,033 3,100 10,095 8,701 6,251 5,190 18,851 14,501 Marketing - Promotion and advertisement 402 528 1,559 1,381 - Others 159 134 561 411 561 662 2,120 1,792 Administration and general - Communication expenses 378 271 1,333 781 - Printing and stationeries 130 110 489 304 - Professional fees 593 264 1,685 891 - Others 484 635 2,247 1,588 1,585 1,280 5,754 3,564 Total sharing of expenses 23,290 17,217 72,908 49,587 Note (a): Being essentially cross-charge amount for using the fixed assets of the holding company. This includes computer software, computer equipment, furniture and fittings. 19
ALLIANCE ISLAMIC BANK BERHAD (776882-V) A24 Commitments and Contingencies * In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. Risk-weighted exposure of the Bank are as follows: As at As at 31 December 2011 31 March 2011 Credit Risk- Credit Risk- Principal Equivalent Weighted Principal Equivalent Weighted Amount Amount* Amount* Amount Amount* Amount* Direct credit substitutes 43,055 43,055 43,055 34,805 34,805 34,805 Transaction-related contingent items 20,816 10,408 10,408 20,332 10,166 10,166 Short-term self-liquidating trade-related contingencies 36,340 7,268 7,268 24,699 4,940 4,940 Irrevocable commitments to extend credit: - maturity exceeding one year 634,104 317,052 253,557 358,223 179,111 145,165 - maturity not exceeding one year 613,589 122,718 98,283 605,864 121,173 99,438 Total 1,347,904 500,501 412,571 1,043,923 350,195 294,514 The credit equivalent amount and risk-weighted amount of the Bank are computed in accordance with Bank Negara Malaysia's Capital Adequacy Framework for Islamic Banks ("CAFIB"). 20
A25 Profit Rate Risk Non-Trading Book Up to 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years Non-profit sensitive Trading book Total Effective profit rate As at 31 December 2011 RM'000 % Assets Cash and short-term funds 454,750 - - - - - 62,320-517,070 2.95 Deposits and placements with banks and other financial institutions - - - 165 - - 2-167 3.45 Financial investment available-for-sale 310,046 140,071 59,552 5,006 368,517 260,268 6,306-1,149,766 3.41 Financial investment held-to-maturity - - - - 357,256 80,753 2,976-440,985 3.71 Financing and advances 2,342,064 164,810 75,179 42,551 644,252 1,076,870 (44,382) * - 4,301,344 6.83 Other non-profit sensitive balances - - - - - - 229,537-229,537 - Total assets 3,106,860 304,881 134,731 47,722 1,370,025 1,417,891 256,759-6,638,869 Liabilities Deposits from customers 3,400,132 881,408 484,077 672,310 402,401-56,013-5,896,341 2.38 Deposits and placements of banks and other financial institutions 68,700 500 500 3,057 61,971-553 - 135,281 2.42 Bills and acceptances payable 16 6 30 - - - - - 52 3.74 Other non-profit sensitive balances - - - - - - 76,503-76,503 - Total liabilities 3,468,848 881,914 484,607 675,367 464,372-133,069-6,108,177 Total equity - - - - - - 530,692-530,692 Total liabilities and equity 3,468,848 881,914 484,607 675,367 464,372-663,761-6,638,869 * Impaired financing, individual assessment allowance and collective assessment allowance of the Bank are classified under the non-profit sensitive column. 21
A25 Profit Rate Risk (contd.) Non-Trading Book Up to 1 >6-12 Non-profit Trading Effective month >1-3 months >3-6 months months >1-5 years Over 5 years sensitive book Total profit rate As at 31 March 2011 RM'000 % Assets Cash and short-term funds 100,000 - - - - - 49,234-149,234 2.93 Deposits and placements with banks and other financial institutions - 160 - - - - 3-163 3.31 Financial assets held-for-trading - - - - - - - 598,554 598,554 2.79 Financial investment available-for-sale 182,640 689,863 170,815 4,996 227,678 39,890 4,840-1,320,722 3.10 Financial investment held-to-maturity - - 9,785-95,782-244 - 105,811 3.88 Financing and advances 1,867,857 181,312 60,227 29,921 622,484 1,248,701 (32,191) * - 3,978,311 6.81 Other non-profit sensitive balances - - - - - - 70,305-70,305 - Total assets 2,150,497 871,335 240,827 34,917 945,944 1,288,591 92,435 598,554 6,223,100 Liabilities Deposits from customers 3,915,230 326,274 471,923 700,304 4,958-78,043-5,496,732 2.32 Deposits and placements of banks and other financial institutions 6,000 63,200 509 1,000 63,175-255 - 134,139 2.26 Bills and acceptances payable 6 6 7 - - - - - 19 3.34 Other non-profit sensitive balances - - - - - - 124,268-124,268 - Total liabilities 3,921,236 389,480 472,439 701,304 68,133-202,566-5,755,158 Total equity - - - - - - 467,942-467,942 - Total liabilities and equity 3,921,236 389,480 472,439 701,304 68,133-670,508-6,223,100 * Impaired financing, individual assessment allowance and collective assessment allowance of the Bank are classified under the non-profit sensitive column. 22
A26 Capital Adequacy The capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia's Capital Adequacy Framework for Islamic Banks (CAFIB). The Bank has adopted the Standardised Approach for credit risk and market risk, and Basic Indicator Approach for operational risk. The minimum regulatory capital adequacy requirement is 8.0% (31.3.2011: 8.0%) for the risk-weighted capital ratio. The capital adequacy ratios of the Bank are as follows: Core capital ratio 11.28% 11.65% Risk-weighted capital ratio 13.13% 13.37% Tier I Capital (Core Capital) Paid-up share capital 300,000 300,000 Retained profits 99,648 82,222 Statutory Reserves 103,147 85,806 502,795 468,028 Less: Deferred tax assets (18,570) (17,781) Total Tier I capital 484,225 450,247 Tier II Capital Collective assessment allowance 79,316 66,564 Total Tier II capital 79,316 66,564 Total Capital Base 563,541 516,811 The breakdown of risk-weighted assets ("RWA") in the various category of risk-weighted are as follows: Net Risk- Net Risk- Exposure weighted Exposure weighted 0% 20% 35% 50% 75% 100% 150% 1,285,923-683,467-892,829 178,566 883,079 176,616 418,616 146,515 332,164 116,257 370,432 185,216 292,623 146,312 2,745,485 2,059,114 2,522,761 1,892,071 1,338,639 1,338,639 1,184,722 1,184,722 10,299 15,448 12,578 18,866 Total RWA equivalent for Credit risk 7,062,223 3,923,498 5,911,394 3,534,844 Total RWA equivalent for Market risk - - - 3,725 Total RWA equivalent for Operational risk - 368,687-326,118 Total Risk-Weighted Assets 7,062,223 4,292,185 5,911,394 3,864,687 23
PART B - Review of Performance & Current Year Prospect B1 Review of Performance Alliance Islamic Bank Berhad ( AIS ) registered profit before taxation of RM75.5 million for the nine months ended 31 December 2011, compared to RM81.3 million last year. Lower profit was mainly due to an increase in overheads due to an expansion in AIS business volume. Total net income recorded improvement of 12.7% at RM153.4 million compared to RM136.1 million for the corresponding period last year. Net income from financing registered growth of 12.1%, driven by financing growth of 13.9% year-on-year; accordingly, gross financing and advances was at RM4.4 billion as of 31 December 2011. AIS risk-weighted capital ratio remained strong at 13.1% with core capital ratio at 11.3% compared to 13.3% and 11.6% respectively a year ago. B2 Current Year Prospect Arising from the challenging global external environment, the Group expects economic growth to be moderate and margins to compress further, thereby resulting in further moderation of the financing growth. The Bank will continue to leverage on its core capabilities of Consumer and SME banking to pursue further business growth in its targeted niche markets by introducing new Shariah-compliant products and services. It will also continue to reinforce its risk management to ensure that the asset quality and capital position remain strong. Barring unforeseen circumstances, the Bank expects to record a satisfactory performance for the financial year ending 31 March 2012. 24