PILLAR 3 REPORT FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2015
CONTENTS PAGES 1.0 Scope of Application 1 2.0 Capital 1-4 2.1 Capital Adequacy Ratios 1 2.2 Capital Structure 2 2.3 Risk Weighted Assets ("RWA") and Capital Requirements 3-4 3.0 Credit Risk 5-18 3.1 Distribution of Credit Exposures 5-8 3.2 Past Due Financing and Advances Analysis 9 3.3 Impaired Financing and Advances Analysis 10-11 3.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach 12-15 3.5 Credit Risk Mitigation 16-17 3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk 18 4.0 Rate of Return Risk in the Banking Book 19 5.0 Shariah Governance Disclosures and Profit Sharing Investment Account ("PSIA") 19
PILLAR 3 REPORT FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2015 Overview The Bank's Pillar 3 Disclosure is governed by the Bank Disclosure Policy on Capital Adequacy Framework for Islamic Banks ("CAFIB") - Pillar 3 which sets out the minimum disclosure standards, the approach for determining the appropriateness of information disclosed and the internal controls over the disclosure process which covers the verification and review of the accuracy of information disclosed. 1.0 Scope of Application The Pillar 3 Disclosure provided in this document is in respect of the Bank, which is involved in Islamic banking financial services. There are no significant restrictions or other major impediments on transfer of funds or regulatory capital between the Bank and its holding company, Alliance Bank Malaysia Berhad. There were no capital deficiencies in the Bank as at the financial period end. The capital adequacy information is computed in accordance with Capital Adequacy Framework for Islamic Banks. The Bank has adopted the Standardised Approach for credit risk and market risk, and Basic Indicator Approach for operational risk. 2.0 Capital 2.1 Capital Adequacy Ratios The capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia's Capital Adequacy Framework for Islamic Banks. The Framework sets out the approach for computing regulatory capital adequacy ratios, as well as the levels of those ratios at which banking institutions are required to operate. The framework is to strengthen capital adequacy standards, in line with the requirements set forth under Basel III. The risk-weighted assets of the Bank are computed using the Standardised Approach for credit risk and market risk, and the Basic Indicator Approach for operational risk. The capital adequacy ratios of the Bank are as follows: 30 September 31 March 2015 2015 Before deducting proposed dividends CET I/ Tier I capital ratio 11.259% 11.013% Total capital ratio 12.054% 11.731% After deducting proposed dividends CET I/ Tier I capital ratio 11.259% 11.013% Total capital ratio 12.054% 11.731% 1
2.0 Capital (contd.) 2.2 Capital Structure The following tables present the components of Common Equity Tier I ("CET I"), Tier I and Tier II capital: 30 September 31 March 2015 2015 RM'000 RM'000 CET I Capital Paid-up share capital 300,000 300,000 Retained profits 181,817 162,948 Statutory reserve 198,739 192,457 Revaluation reserves (6,120) 1,637 674,436 657,042 Less: Regulatory adjustment - Goodwill and other intangibles (443) (440) - Deferred tax assets (2,225) - - 55% of revaluation reserves - (900) Total CET I Capital / Total Tier I Capital 671,768 655,702 Tier II Capital Collective assessment allowance 47,385 42,744 Total Tier II Capital 47,385 42,744 Total Capital 719,153 698,446 2
2.0 Capital (contd.) 2.3 Risk Weighted Assets ("RWA") and Capital Requirements Regulatory Capital Requirements The following table presents the minimum regulatory capital requirement of the Bank: Risk- Gross Net Weighted Capital 30 September 2015 Exposures Exposures Assets Requirements Exposure Class RM'000 RM'000 RM'000 RM'000 (i) Credit Risk On-balance sheet exposures: Sovereigns/Central banks 1,228,533 1,228,533 - - Banks, Development Financial Institutions ("DFIs") and Multilateral Development Banks ("MDBs") 874,656 874,656 174,931 13,995 Insurance Companies, Securities Firm and Fund Managers 10,155 10,155 10,155 812 Corporates 1,998,063 1,938,494 1,576,660 126,133 Regulatory retail 2,748,785 2,677,198 2,092,977 167,438 Residential Real Estate ("RRE") financing 2,522,722 2,521,925 1,243,786 99,503 Higher risk assets 4 4 6 - Other assets 122,300 122,300 70,366 5,629 Defaulted exposures 30,275 30,145 31,730 2,539 Total on-balance sheet exposures 9,535,493 9,403,410 5,200,611 416,049 Off-balance sheet exposures: Credit-related off-balance sheet exposures 537,150 501,800 382,160 30,572 Defaulted exposures 530 530 721 58 Total off-balance sheet exposures 537,680 502,330 382,881 30,630 Total on and off-balance sheet exposures 10,073,173 9,905,740 5,583,492 446,679 (ii) Market Risk Long Short Position Position Rate of return risk - - - - - (iii) Operational Risk - - 382,815 30,626 Total 10,073,173 9,905,740 5,966,307 477,305 3
2.0 Capital (contd.) 2.3 RWA and Capital Requirements (contd.) Regulatory Capital Requirements (contd.) The following table presents the minimum regulatory capital requirement of the Bank (contd.): Risk- Gross Net Weighted Capital 31 March 2015 Exposures Exposures Assets Requirements Exposure Class RM'000 RM'000 RM'000 RM'000 (i) Credit Risk On-balance sheet exposures: Sovereigns/Central banks 1,446,029 1,446,029 - - Banks, DFIs and MDBs 877,398 877,398 175,479 14,038 Insurance Companies, Securities Firm and Fund Managers 8,046 8,046 8,046 644 Corporates 1,756,914 1,736,124 1,492,108 119,369 Regulatory retail 3,403,349 3,350,191 2,535,271 202,821 RRE financing 1,606,086 1,605,644 793,670 63,494 Higher risk assets 18 18 27 2 Other assets 25,759 25,759 25,759 2,061 Defaulted exposures 32,647 32,517 38,251 3,060 Total on-balance sheet exposures 9,156,246 9,081,726 5,068,611 405,489 Off-balance sheet exposures: Credit-related off-balance sheet exposures 622,406 621,228 501,594 40,127 Defaulted exposures 484 475 712 57 Total off-balance sheet exposures 622,890 621,703 502,306 40,184 Total on and off-balance sheet exposures 9,779,136 9,703,429 5,570,917 445,673 (ii) Market Risk Long Short Position Position Rate of return risk - - - - - (iii) Operational Risk - - 382,988 30,639 Total 9,779,136 9,703,429 5,953,905 476,312 Note: The Bank does not use Profit-sharing Investment Account ("PSIA") as a risk absorbent mechanism. The Bank does not have exposure to any Large Exposure Risk for equity holdings specificed in BNM's Guidelines on Investment in Shares, Interest-in-Shares and Collective Investment Schemes. 4
3.0 Credit Risk 3.1 Distribution of Credit Exposures (a) Geographical Distribution The following tables represent the Bank's major types of gross credit exposure by geographical distribution. Exposure are allocated to the region in which the customer is located and are disclosed before taking account of any collateral held or other credit enhancements and after allowance for impairment where applicable. Geographical region Northern Central Southern Sabah Sarawak Total 30 September 2015 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Cash and short-term funds - 284,201 - - - 284,201 Financial investments available-for-sale - 1,739,393 - - - 1,739,393 Financial investments held-to-maturity - 238,638 - - - 238,638 Financing and advances 394,217 4,794,461 1,099,829 495,922 160,103 6,944,532 Statutory deposits with Bank Negara Malaysia - 305,570 - - - 305,570 Total on-balance sheet 394,217 7,362,263 1,099,829 495,922 160,103 9,512,334 Financial guarantees 17,566 86,635 11,627 2,146 168 118,142 Credit related commitments and contingencies 151,200 752,347 185,790 449,731 74,293 1,613,361 Total off-balance sheet 168,766 838,982 197,417 451,877 74,461 1,731,503 Total credit exposure 562,983 8,201,245 1,297,246 947,799 234,564 11,243,837 Geographical region Northern Central Southern Sabah Sarawak Total 31 March 2015 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Cash and short-term funds - 574,277 - - - 574,277 Financial investments available-for-sale - 1,356,154 - - - 1,356,154 Financial investments held-to-maturity - 428,838 - - - 428,838 Financing and advances 392,796 4,546,038 1,036,812 445,450 140,506 6,561,602 Statutory deposits with Bank Negara Malaysia - 293,370 - - - 293,370 Total on-balance sheet 392,796 7,198,677 1,036,812 445,450 140,506 9,214,241 Financial guarantees 19,221 65,028 10,410 4,081-98,740 Credit related commitments and contingencies 123,475 986,769 186,638 447,313 71,380 1,815,575 Total off-balance sheet 142,696 1,051,797 197,048 451,394 71,380 1,914,315 Total credit exposure 535,492 8,250,474 1,233,860 896,844 211,886 11,128,556 Certain comparatives have been restated to conform to current period presentation. 5
3.1 Distribution of Credit Exposures (contd.) (b) Industry Distribution The following table represents the Bank's major types of gross credit exposure by sector. The analysis are based on the sector in which the customer is engaged. Financial, Agriculture, Government Insurance and Transport, Manufacturing, Motor Other and Central Business Storage and Wholesale & Residential Vehicle Consumer Bank Services Communication Retail Trade Construction Financing Financing Financing Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 30 September 2015 Cash and short-term funds 284,201 - - - - - - - 284,201 Financial investments available-for-sale 473,540 1,080,911 140,291-44,651 - - - 1,739,393 Financial investments held-to-maturity 233,559-5,079 - - - - - 238,638 Financing and advances - 631,010 42,750 1,928,780 120,356 2,562,596 579,020 1,080,020 6,944,532 Statutory deposits with Bank Negara Malaysia 305,570 - - - - - - - 305,570 Total on-balance sheet 1,296,870 1,711,921 188,120 1,928,780 165,007 2,562,596 579,020 1,080,020 9,512,334 Financial guarantees - 2,924 11 87,527 27,445 - - 235 118,142 Credit related commitments and contingencies - 237,979 6,304 710,345 157,613 178,484 111 322,525 1,613,361 Total off-balance sheet - 240,903 6,315 797,872 185,058 178,484 111 322,760 1,731,503 Total credit exposure 1,296,870 1,952,824 194,435 2,726,652 350,065 2,741,080 579,131 1,402,780 11,243,837 6
3.1 Distribution of Credit Exposures (contd.) (b) Industry Distribution (contd.) The following table represents the Bank's major types of gross credit exposure by sector. The analysis are based on the sector in which the customer is engaged. (contd.) Financial, Agriculture, Government Insurance and Transport, Manufacturing, Motor Other and Central Business Storage and Wholesale & Residential Vehicle Consumer Bank Services Communication Retail Trade Construction Financing Financing Financing Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 31 March 2015 Cash and short-term funds 284,220 290,057 - - - - - - 574,277 Financial investments available-for-sale 499,737 780,126 45,777 15,222 15,292 - - - 1,356,154 Financial investments held-to-maturity 423,739-5,099 - - - - - 428,838 Financing and advances - 552,098 36,525 1,726,645 114,860 2,520,777 638,493 972,204 6,561,602 Statutory deposits with Bank Negara Malaysia 293,370 - - - - - - - 293,370 Total on-balance sheet 1,501,066 1,622,281 87,401 1,741,867 130,152 2,520,777 638,493 972,204 9,214,241 Financial guarantees - 2,633 11 73,107 22,555 - - 434 98,740 Credit related commitments and contingencies - 343,829 6,896 734,840 156,697 247,716 443 325,154 1,815,575 Total off-balance sheet - 346,462 6,907 807,947 179,252 247,716 443 325,588 1,914,315 Total credit exposure 1,501,066 1,968,743 94,308 2,549,814 309,404 2,768,493 638,936 1,297,792 11,128,556 Certain comparatives have been restated to conform to current period presentation. 7
3.1 Distribution of Credit Exposures (contd.) (c) Residual Contractual Maturity The following table represents the residual contractual maturity for major types of gross credit exposures for on-balance sheet exposures of financial assets of the Bank: 30 September 2015 Up to 1 month >1-3 months >3-6 months >6-12 months >1 year Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Cash and short-term funds 284,201 - - - - 284,201 Financial investments 252,128 495,461 188,997-1,041,445 1,978,031 Financing and advances 957,340 407,410 254,911 222,270 5,102,601 6,944,532 Statutory deposits with Bank Negara Malaysia - - - - 305,570 305,570 Other asset balances 65,528 465 698 1,396 6,911 74,998 Total on-balance sheet exposure 1,559,197 903,336 444,606 223,666 6,456,527 9,587,332 31 March 2015 Cash and short-term funds 574,277 - - - - 574,277 Financial investments 213,576 403,688 200,863 50,373 916,492 1,784,992 Financing and advances 1,210,597 292,901 262,404 193,271 4,602,429 6,561,602 Statutory deposits with Bank Negara Malaysia - - - - 293,370 293,370 Other asset balances 118 80 120 241 790 1,349 Total on-balance sheet exposure 1,998,568 696,669 463,387 243,885 5,813,081 9,215,590 Certain comparatives have been restated to conform to current period presentation. 8
3.2 Past Due Financing and Advances Analysis (a) Past due but not impaired financing and advances are financing where the customers have failed to make a principal or profit payment when contractually due, and includes financing which are due one or more days after the contractual due date but less than 3 months. Past due financing and advances are analysed as follows: 30 September 31 March 2015 2015 RM'000 RM'000 Past due up to 1 month 264,967 223,542 Past due > 1-2 months 72,248 59,122 Past due > 2-3 months 11,243 10,255 348,458 292,919 Past due financing and advances analysed by sector are as follows: 30 September 31 March 2015 2015 RM'000 RM'000 Financial, insurance and business services 8,147 5,022 Transport, storage and communication 542 972 Agriculture, manufacturing, wholesale & retail trade 16,183 21,900 Construction 2,193 2,510 Residential financing 114,743 86,664 Motor vehicle financing 97,241 86,482 Other consumer financing 109,409 89,369 348,458 292,919 Past due financing and advances analysed by significant geographical areas: 30 September 31 March 2015 2015 RM'000 RM'000 Northern region 22,745 25,323 Central region 222,778 183,157 Southern region 72,967 60,743 Sabah region 25,637 20,123 Sarawak region 4,331 3,573 348,458 292,919 9
3.3 Impaired Financing and Advances Analysis Impaired financing and advances analysed by sectors: 30 September 31 March 2015 2015 RM'000 RM'000 Financial, insurance & business services 2,115 123 Transport, storage and communication 654 546 Agriculture, manufacturing, wholesale & retail trade 5,339 1,481 Construction 76 962 Residential financing 26,344 31,403 Motor vehicle financing 3,696 3,715 Other consumer financing 13,023 10,150 51,247 48,380 Impairment allowances on impaired financing and advances analysed by sectors: Individual impairment Individual Individual Collective (Write-back)/ impairment impairment impairment Made during write-off allowance allowance the year (net) for the year RM'000 RM'000 RM'000 RM'000 30 September 2015 Financial, insurance & business services 2,031 4,642 2,031 - Transport, storage & communication - 714 - - Agriculture, manufacturing, wholesale & retail trade 3,296 20,677 2,716 - Construction - 1,003 - - Residential financing 388 5,807 177 - Motor vehicle financing - 6,844 - - Other consumer financing 564 24,465 5-6,279 64,152 4,929-31 March 2015 Financial, insurance & business services - 4,651 - - Transport, storage & communication - 480 - - Agriculture, manufacturing, wholesale & retail trade 581 18,010 (5,063) (12,860) Construction - 914 - - Residential financing 210 6,603 (109) - Motor vehicle financing - 6,909 - - Other consumer financing 559 17,878 (320) - 1,350 55,445 (5,492) (12,860) 10
3.3 Impaired Financing and Advances Analysis (contd.) Impaired financing and advances and impairment allowances by geographical areas: 30 September 2015 Impaired Individual Collective financing and impairment impairment advances allowance allowance RM'000 RM'000 RM'000 Northern region 3,318-6,146 Central region 38,304 6,279 42,796 Southern region 6,564-8,895 Sabah region 2,477-4,828 Sarawak region 584-1,487 51,247 6,279 64,152 31 March 2015 Northern region 3,020-5,039 Central region 35,754 1,350 37,410 Southern region 7,450-8,486 Sabah region 1,703-3,597 Sarawak region 453-913 48,380 1,350 55,445 Movement in financing impairment allowances are analysed as follows: Individual assessment allowance: 30 September 31 March 2015 2015 RM'000 RM'000 At beginning of year 1,350 19,798 Allowance made during the year (net) 4,929 (5,492) Amount written-off - (12,860) Transfer (to)/from collective assessment allowance - (96) At end of year 6,279 1,350 Collective assessment allowance: At beginning of year 55,445 45,677 Allowance made during the year (net) 18,340 26,553 Amount written-off (9,633) (16,881) Transfer from/(to) individual assessment allowance - 96 At end of year 64,152 55,445 11
3.4 Assignment of Risk-Weights for Portfolio Under the Standardised Approach The following tables present the credit exposures by risk-weights and after credit risk mitigation: Exposures after netting and credit risk mitigation Insurance Total companies, exposures Securities after Total 30 September 2015 Sovereigns Banks, firms and Higher netting and Risk- Risk- /Central DFIs and Fund Regulatory RRE risk Other credit risk Weighted Weights banks MDBs managers Corporates retail financing assets assets mitigation Assets RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 0% 1,288,533 - - 184,992 - - - - 1,473,525-20% - 874,656-238,125 - - - 64,918 1,177,699 235,540 35% - - - - - 1,219,551 - - 1,219,551 426,843 50% - - - - 2,386 982,196 - - 984,582 492,291 75% - - - - 2,493,982 4,299 - - 2,498,281 1,873,711 100% - - 10,536 1,788,984 343,587 345,603-57,382 2,546,092 2,546,092 150% - - - 263 5,701-46 - 6,010 9,015 Total exposures 1,288,533 874,656 10,536 2,212,364 2,845,656 2,551,649 46 122,300 9,905,740 5,583,492 Risk-weighted assets by exposures - 174,931 10,536 1,837,004 2,223,818 1,266,768 69 70,366 5,583,492 Average risk weight - 20% 100% 83% 78% 50% 150% 58% 56% Deduction from Capital base - - - - - - - - - 12
3.4 Assignment of Risk-Weights for Portfolio Under the Standardised Approach (contd.) The following tables present the credit exposures by risk-weights and after credit risk mitigation (contd.): Exposures after netting and credit risk mitigation Insurance Total companies, exposures Securities after Total 31 March 2015 Sovereigns Banks, firms and Higher netting and Risk- Risk- /Central DFIs and Fund Regulatory RRE risk Other credit risk Weighted Weights banks MDBs managers Corporates retail financing assets assets mitigation Assets RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 0% 1,506,029 - - 86,143 - - - - 1,592,172-20% - 877,398-211,526 - - - - 1,088,924 217,785 35% - - - - - 790,632 - - 790,632 276,721 50% - - - - 1,592 594,519 - - 596,111 298,056 75% - - - - 3,450,306 5,820 - - 3,456,126 2,592,094 100% - - 19,380 1,796,610 92,609 231,510-25,759 2,165,868 2,165,868 150% - - - 4 13,532-60 - 13,596 20,393 Total exposures 1,506,029 877,398 19,380 2,094,283 3,558,039 1,622,481 60 25,759 9,703,429 5,570,917 Risk-weighted assets by exposures - 175,480 19,380 1,838,921 2,701,432 809,855 90 25,759 5,570,917 Average risk weight - 20% 100% 88% 76% 50% 150% 100% 57% Deduction from Capital base - - - - - - - - - 13
3.4 Assignment of Risk-Weights for Portfolio Under the Standardised Approach (contd.) For the purpose of determining counterparty risk-weights, the Bank uses external credit assessments from Rating Agency Malaysia ("RAM"), Malaysian Rating Corporation ("MARC"), Standard and Poor's ("S&P"), Moody's, and Fitch. In the context of the Bank's portfolio, external credit assessments are mainly applicable to banks/financial institutions and rated corporations. The Bank follows the process prescribed under BNM CAFIB-Basel II to map the ratings to the relevant risk weights. The ratings are monitored and updated regularly to ensure that the latest and most appropriate risk-weights are applied in the capital computation. The following tables show the rated exposures according to rating by Eligible Credit Assessment Institutions ("ECAIs"), or as prescribed under the CAFIB: 30 September 2015 Exposure Class On and Off Balance-Sheet Exposures Moody's S&P Fitch RAM MARC Ratings by Approved ECAIs Total Aaa to Aa3 / A1 to A3 / Baa1 to Ba3 / B1 to C / P-1 P-2 P-3 Others Unrated AAA to AA- / A+ to A- / B+ to D / A-1 A-2 BBB+ to BB- / A-3 Others Unrated AAA to AA- / A+ to A- / BBB+ to BB- / F1+, F1 A-2 F3 B+ to D Unrated AAA to AA3 / P- A+ to A3 / BBB1+ to BB3 / B to D / 1 P-2 P-3 NP Unrated AAA to AA- / A+ to A- / BBB+ to BB- / B+ to D / MARC-1 MARC-2 MARC-3 MARC-4 Unrated RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 (i) Exposures risk weighted using Sovereigns and Central Banks rating Sovereigns and Central Banks (See Note 1) - 1,288,533 - - - 1,288,533 Public Sector Entities - - - - - - Corporates - 184,992 - - - 184,992-1,473,525 - - - 1,473,525 (ii) Exposures risk weighted using Banking Institutions long term rating Banks, MDBs and FDIs 526,660 347,996 - - - 874,656 Exposures risk weighted using Banking Institutions short term rating Banks, MDBs and FDIs - - - - - - 526,660 347,996 - - - 874,656 (iii) Exposures risk weighted using Corporate long term rating Public Sector Entities - - - - - - Corporates 238,125 - - - 1,864,869 2,102,994 Insurance Cos, Securities Firms & Fund Managers - - - - 10,536 10,536 Exposures risk weighted using Corporate short term rating Public Sector Entities - - - - - - Corporates - - - - - - Insurance Cos, Securities Firms & Fund Managers - - - - - - 238,125.00 - - - 1,875,405 2,113,530 Note 1: The Federal Government and Central Bank of Malaysia are accorded 0% risk weight as provided under the CAF. *Upper Range = Long Term Rating, Lower Range = Short Term Rating 14
3.4 Assignment of Risk-Weights for Portfolio Under the Standardised Approach (contd.) The following tables show the rated exposures according to rating by ECAIs (contd.): 31 March 2015 Exposure Class On and Off Balance-Sheet Exposures Moody's S&P Fitch RAM MARC Ratings by Approved ECAIs Total Aaa to Aa3 / A1 to A3 / Baa1 to Ba3 / B1 to C / P-1 P-2 P-3 Others Unrated AAA to AA- / A+ to A- / B+ to D / A-1 A-2 BBB+ to BB- / A-3 Others Unrated AAA to AA- / A+ to A- / BBB+ to BB- / F1+, F1 A-2 F3 B+ to D Unrated AAA to AA3 / P- A+ to A3 / BBB1+ to BB3 / B to D / 1 P-2 P-3 NP Unrated AAA to AA- / A+ to A- / BBB+ to BB- / B+ to D / MARC-1 MARC-2 MARC-3 MARC-4 Unrated RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 (i) Exposures risk weighted using Sovereigns and Central Banks rating Sovereigns and Central Banks (See Note 1) - 1,506,029 - - - 1,506,029 Public Sector Entities - - - - - - Corporates - 86,143 - - - 86,143-1,592,172 - - - 1,592,172 (ii) Exposures risk weighted using Banking Institutions long term rating Banks, MDBs and FDIs 618,942 248,424 - - 10,032 877,398 Exposures risk weighted using Banking Institutions short term rating Banks, MDBs and FDIs - - - - - - 618,942 248,424 - - 10,032 877,398 (iii) Exposures risk weighted using Corporate long term rating Public Sector Entities - - - - - - Corporates 211,526 - - - 1,817,907 2,029,433 Insurance Cos, Securities Firms & Fund Managers - - - - 19,380 19,380 Exposures risk weighted using Corporate short term rating Public Sector Entities - - - - - - Corporates - - - - - - Insurance Cos, Securities Firms & Fund Managers - - - - - - 211,526 - - - 1,837,287 2,048,813 Note 1: The Federal Government and Central Bank of Malaysia are accorded 0% risk weight as provided under the CAF. *Upper Range = Long Term Rating, Lower Range = Short Term Rating Note: There is no outstanding securitisation contract at the Bank that required disclosure of ratings and short term rating of securitisation by approved ECAIs. 15
3.5 Credit Risk Mitigation ("CRM") The following tables represent the Bank's credit exposure including off-balance sheet items under the standardised approach, the total exposure (after, where applicable, eligible netting benefits) that is covered by eligible guarantees and credit derivatives; and eligible collateral after haircuts, allowed under the Capital Adequacy Framework for Islamic Banks. Exposures Exposures covered by covered by Exposures guarantees/ eligible covered by Exposure credit financial other eligible 30 September 2015 before CRM derivatives collateral collateral Exposure Class RM'000 RM'000 RM'000 RM'000 Credit Risk On-balance sheet exposures: Sovereigns/Central banks 1,228,533 - - - Banks, DFIs and MDBs 874,656 - - - Insurance Companies, Securities Firm - - - - and Fund Managers 10,155 - - - Corporates 1,998,063-59,569 - Regulatory retail 2,748,785-71,587 - RRE financing 2,522,722-796 - Higher risk assets 4 - - - Other assets 122,300 - - - Defaulted exposures 30,275-130 - Total on-balance sheet exposures 9,535,493-132,082 - Off-balance sheet exposures Off-balance sheet exposures other than OTC derivatives or credit derivatives 537,150-35,350 - Defaulted exposures 530 - - - Total off-balance sheet exposures 537,680-35,350 - Total on and off-balance sheet exposures 10,073,173-167,432-16
3.5 Credit Risk Mitigation ("CRM") (contd.) Exposures Exposures covered by covered by Exposures guarantees/ eligible covered by Exposure credit financial other eligible 31 March 2015 before CRM derivatives collateral collateral Exposure Class RM'000 RM'000 RM'000 RM'000 Credit Risk On-balance sheet exposures: Sovereigns/Central banks 1,446,029 - - - Banks, DFIs and MDBs 877,398 - - - Insurance Companies, Securities Firm and Fund Managers 8,046 - - - Corporates 1,756,914-20,790 - Regulatory retail 3,403,349-53,158 - RRE financing 1,606,086-441 - Higher risk assets 18 - - - Other assets 25,759 - - - Defaulted exposures 32,647-130 - Total on-balance sheet exposures 9,156,246-74,519 - Off-balance sheet exposures: Off-balance sheet exposures other than OTC derivatives or credit derivatives 622,406-1,178 - Defaulted exposures 484-9 - Total off-balance sheet exposures 622,890-1,187 - Total on and off-balance sheet exposures 9,779,136-75,706-17
3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk Off-balance sheet exposures of the Bank are mainly from the commitments to extend credit including the unutilised or undrawn portions of credit facilities. The off-balance sheet exposures and their related counterparty credit risk of the Bank are as follows: Positive Fair Value Credit Risk- Principal of Derivative Equivalent Weighted Amount Contracts Amount Assets 30 September 2015 RM'000 RM'000 RM'000 RM'000 Credit-related exposures Direct credit substitutes 76,007-76,007 63,352 Transaction-related contingent items 48,150-24,075 14,079 Short-term self-liquidating traderelated contingencies 42,135-8,427 6,952 Irrevocable commitments to extent credit: - maturity exceeding one year 387,093-193,547 162,360 - maturity not exceeding one year 1,178,117-235,623 136,139 1,731,503-537,680 382,881 Positive Fair Value Credit Risk- Principal of Derivative Equivalent Weighted Amount Contracts Amount Assets 31 March 2015 RM'000 RM'000 RM'000 RM'000 Credit-related exposures Direct credit substitutes 74,284-74,284 74,284 Transaction-related contingent items 46,496-23,248 23,248 Short-term self-liquidating traderelated contingencies 24,455-4,891 4,891 Irrevocable commitments to extent credit: - maturity exceeding one year 555,502-277,751 238,730 - maturity not exceeding one year 1,213,578-242,716 161,153 1,914,315-622,890 502,306 18
4.0 Rate of Return Risk in the Banking Book The following tables present the Bank's projected sensitivity to a 100 basis point parallel shock to profit rates across all maturities applied on the Bank's profit sensitivity gap as at reporting date. 30 September 2015 31 March 2015-100 bps + 100 bps - 100 bps + 100 bps Increase/(Decrease) Increase/(Decrease) RM'000 RM'000 RM'000 RM'000 Impact on net profit income Ringgit Malaysia (9,118) 9,118 (12,430) 12,430 Impact on Economic value Ringgit Malaysia (45,328) 45,328 (41,935) 41,935 5.0 Shariah Governance Disclosures and Profit Sharing Investment Account ("PSIA") Non-Shariah Compliant Income And Events During the financial reporting period, there was 1 Shariah non-compliant event detected from the ongoing reviews of the Bank s operational processes. Necessary actions had been taken to rectify the Shariah non-compliant event as approved by the Shariah Committee and Board of Directors. The Shariah non-compliant income of RM11,548 will be purified accordingly as approved by the Shariah Committee and Board of Directors. 19