Financial Statements for the period ended 31 July 2012. Unaudited Statements of Financial Position As at 31 July 2012 Group Bank 31-Jul-12 31-Jan-12 31-Jul-12 31-Jan-12 ASSETS Note Cash and short-term funds 335,521 403,218 335,127 402,901 Deposits with financial institutions 7 20,514 20,631 20,514 20,631 Securities held-for-trading 8 299,526 360,985 299,526 360,985 Securities available-for-sale 9 609,362 673,363 609,362 673,363 Securities held-to-maturity 10 220,000 200,000 220,000 200,000 Derivative financial assets 11 2,477 6,688 2,477 6,688 Loan, advances and financing 12 545,352 556,570 545,352 556,570 Trade receivables 13 302,892 360,809 302,892 360,809 Statutory deposit with Bank Negara Malaysia 28,701 27,165 28,701 27,165 Other assets 14 25,379 26,697 25,346 26,689 Property, plant and equipment 22,294 21,714 22,294 21,714 Intangible assets 52,500 52,500 52,500 52,500 TOTAL ASSETS 2,464,518 2,710,340 2,464,091 2,710,015 LIABILITIES Deposits from customers 15 1,156,444 1,110,065 1,160,835 1,114,397 Deposits and placements of banks and other financial institutions 16 100,786 341,371 100,786 341,371 Trade payables 17 448,443 482,878 448,443 482,878 Derivative financial liabilities 11 1 57 1 57 Other liabilities 18 56,150 75,796 56,118 75,762 Amount owing to related companies 234 234 234 234 Tax liabilities Hire purchase payable Deferred tax liabilities 7,222 7,470 7,222 7,470 TOTAL LIABILITIES 1,769,280 2,017,871 1,773,639 2,022,169 EQUITY Share capital 513,000 513,000 513,000 513,000 Reserves 182,238 179,469 177,452 174,846 695,238 692,469 690,452 687,846 2,464,518 2,710,340 2,464,091 2,710,015 - - - - Net assets per share (RM) 1.36 1.35 1.35 1.34 The Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended 31 January 2012 of the Group and the Bank. 1
Financial Statements for the period ended 31 July 2012. Unaudited Condensed Income Statements for the Second Quarter ended 31 July 2012 quarter ended Note 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Group Revenue 34,149 42,909 76,897 86,618 Interest income Interest expense Net interest income Non-interest income Other non-operating income Net income Operating expenses Operating profit Allowance for losses on loans & financing Writeback bad & doubtful debts Writeback for impairment loss Profit before tax Income tax expense 19 18,899 20,265 39,034 41,447 20 (11,815) (12,139) (25,478) (23,901) 7,084 8,126 13,556 17,546 21 15,250 22,644 37,863 45,171 22 265 265 436 1,092 22,599 31,035 51,855 63,809 23 (19,939) (18,022) (40,910) (36,360) 2,660 13,013 10,945 27,449 24 (357) (629) (312) (260) 25 135 4,976 110 6,761 26 1,421-1,529 956 3,859 17,360 12,272 34,906 36 (1,040) (4,322) (3,422) (8,691) Profit after tax 2,819 13,038 8,850 26,215 Other comprehensive income: Net gain/(loss) on available-for-sale financial assets 12,647 4,315 (8,108) 15,142 Income tax relating to components (3,162) (1,079) 2,027 (3,786) of other comprehensive income Other comprehensive income for the 9,485 3,236 (6,081) 11,356 period, net of tax Total comprehensive income for the 12,304 16,274 2,769 37,571 period Earnings per share ("EPS"): - basic / diluted 0.55 2.54 1.73 5.11 The Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended 31 January 2012 of the Group 2
Financial Statements for the period ended 31 July 2012. Unaudited Condensed Income Statements for the Second Quarter ended 31 July 2012 quarter yearto-date ended Note 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Bank Revenue 34,133 42,834 76,793 86,498 Interest income 19 18,910 20,234 39,034 41,415 Interest expense 20 (11,861) (12,140) (25,547) (23,932) Net interest income 7,049 8,094 13,487 17,483 Non-interest income 21 15,223 22,600 37,759 45,083 Other non-operating income 22 265 265 436 1,092 Net income 22,537 30,959 51,682 63,658 Operating expenses 23 (19,933) (18,018) (40,900) (36,351) Operating profit 2,604 12,941 10,782 27,307 Allowance for losses on loans & financing 24 (357) (629) (312) (260) Writeback bad & doubtful debts 25 135 4,976 110 6,761 Writeback of impairment loss 26 1,421-1,529 956 Profit before tax 3,803 17,288 12,109 34,764 Income tax expense 36 (1,040) (4,322) (3,422) (8,691) Profit after tax 2,763 12,966 8,687 26,073 Other comprehensive income: Net gain/(loss) on available-for-sale financial assets 12,647 4,315 (8,108) 15,142 Income tax relating to components (3,162) (1,079) 2,027 (3,786) of other comprehensive income Other comprehensive income for the 9,485 3,236 (6,081) 11,356 period, net of tax Total comprehensive income for the 12,248 16,202 2,606 37,429 period Earnings per share ("EPS"): Sen Sen Sen Sen - basic / diluted 0.54 2.53 1.69 5.44 The Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended 31 January 2012 of the Bank. 3
Unaudited Condensed Statement of Changes in Equity for the Financial Period ended 31 July 2012 <----------------------Non-distributable----------------------> Distributable Availablefor-sale Share capital revaluation reserve Equity compensation reserve Regulatory reserve Statutory reserve Retained profit Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Balance as at 1 February 2012 513,000 20,046 212-80,787 73,678 687,723 - effect of change in accounting policy - - - - - 4,746 4,746 As restated 513,000 20,046 212-80,787 78,424 692,469 Total comprehensive income for the period - (6,081) - - - 8,850 2,769 Transfer to regulatory reserve - - - 4,746 (4,746) - Balance as at 31 July 2012 513,000 13,965 212 4,746 80,787 82,528 695,238 Balance as at 1 February 2011 513,000 234 612-65,720 73,446 653,012 - effect of change in accounting policy - - - - - 6,353 6,353 513,000 234 612-65,720 79,799 659,365 Total comprehensive income for the period - 19,812 (400) - 15,067 (1,375) 33,104 Balance as at 31 January 2012 513,000 20,046 212-80,787 78,424 692,469 The Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended 31 January 2012 of the Group. 4
Financial Statements for the period ended 31 July 2012. Unaudited Condensed Statement of Changes in Equity for the Financial Period ended 31 July 2012 <---------------------------Non-distributable---------------------------> Distributable Share capital Available-forsale revaluation reserve Equity compensation reserve Regulatory reserve Statutory reserve Retained profit Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Balance as at 1 February 2012 - as previously reported 513,000 20,046 212-80,787 69,055 683,100 - effect of change in accounting policy - - - - - 4,746 4,746 As restated 513,000 20,046 212-80,787 73,801 687,846 Total comprehensive income for the period - (6,081) - - - 8,687 2,606 Transfer to regulatory reserve - - - 4,746 - (4,746) - Balance as at 31 July 2012 513,000 13,965 212 4,746 80,787 77,742 690,452 Total Balance as at 1 February 2011 513,000 234 612-65,720 69,055 648,621 - effect of change in accounting policy - - - - - 6,353 6,353 As restated 513,000 234 612-65,720 75,408 654,974 Total comprehensive income for the period - 19,812 (400) - 15,067 (1,607) 32,872 Balance as at 31 January 2012 513,000 20,046 212-80,787 73,801 687,846 The Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended 31 January 2012 of the Bank. 5
Unaudited Condensed Statement of Cash Flow for the Financial Period ended 31 July 2012 Group Bank 6 months ended 6 months ended 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Cash flows from operating activities Profit before tax 12,272 34,906 12,109 34,764 Adjustment for non-cash items (17,016) 2,054 (17,016) 2,116 Operating (loss)/profit before working capital changes (4,744) 36,960 (4,907) 36,880 Net changes in operating assets 138,710 12,466 136,093 38,056 Net changes in operating liabilities (252,293) (188,467) (252,237) (214,219) Net cash used in operations (118,327) (139,041) (121,051) (139,283) Cash flows from investing activities Dividend received 1,175 455 1,175 455 Net addition to property, plant and equipment (5,951) (129) (3,342) (129) Net sale/(additions) of securities 41,147 (35,039) 41,155 (35,039) Net cash generated/(used in) from investing activities 36,371 (34,713) 38,988 (34,713) Cash flows from financing activities Interest paid (17,053) (23,974) (17,023) (23,974) Net cash used in financing activities (17,053) (23,974) (17,023) (23,974) Net decrease in cash and cash equivalents (99,009) (197,728) (99,086) (197,970) Effects of exchange rate changes - 1,700-1,700 Cash and cash equivalents at beginning of period 241,369 235,411 241,052 235,411 Cash and cash equivalents at end of period 142,360 39,383 141,966 39,141 Cash and cash equivalents comprise: Cash and short-term funds 356,035 209,141 355,641 208,899 Less: Monies held in trust (213,675) (169,758) (213,675) (169,758) 142,360 39,383 141,966 39,141 The Interim Financial Statements should be read in conjuntion with the audited financial statements for the year ended 31 January 2012 of the Group and the Bank. 6
Part A: Explanatory notes pursuant to Financial Reporting Standards ("FRS") 134 1 Basis of preparation This unaudited quarterly financial report of the Group has been prepared on a historical cost basis, unless otherwise disclosed in the notes to the financial statements and are in accordance with the Companies Act, 1965 and FRS 134 Interim Financial Reporting in Malaysia as modified by Bank Negara Malaysia ("BNM")'s Guidelines. The interim financial report should be read in conjunction with the audited financial statements of the Group for the year ended 31 January 2012. Since the previous annual audited financial statements as at 31 January 2012 were issued, the Group has adopted the Malaysian Financial Reporting Standards ("MFRS") framework issued by the Malaysian Accounting Standards Board ("MASB") with effect from 1 January 2012. This MFRS framework was introduced by the MASB in order to fully converge Malaysia's existing Financial Reporting Standards ("FRS") framework with the International Financial Reporting Standards ("IFRS") framework issued by the International Accounting Standards Board. Whilst all FRSs issued under the previous FRS framework were equivalent to the MFRSs issued under the MFRS framework, there are some differences in relation to the transitional provisions and effective dates contained in certain of the FRSs. The financial effects of convergence to the MFRS framework and any consequential changes in accounting policies as a result of the convergence are discussed in Note 33 Changes in accounting policies. The following MFRS, IC Interpretation and Amendments to MFRSs have been adopted by the Group during the current period: IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to MFRS 1) Disclosures Transfers of Financial Assets (Amendments to MFRS 7) Deferred Tax: Recovery of Underlying Assets (Amendments to MFRS 112) The adoption of the IC Interpretation and Amendments to MFRSs above generally did not have any material impact on the financial results of the Group, as they mainly help to clarify the requirements of or provide further explanations to existing MFRSs. The following MFRSs and IC Interpretations have been issued by the MASB and are not yet effective: Effective for annual periods commencing on or after 1 July 2012 Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101) Effective for annual periods commencing on or after 1 January 2013 MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (as amended in June 2011) MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) 7
1 Basis of preparation (cont'd.) Effective for annual periods commencing on or after 1 January 2014 Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) Effective for annual periods commencing on or after 1 January 2015 MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) IC Interpretation 20 will not have any financial impact to the Group as it is not relevant to the Group's operations. The financial effects of the above MFRSs and Amendments to MFRSs are still being assessed due to the complexity of these new MFRSs and Amendments to MFRSs, and their proposed changes. 2 Audit report of preceding annual financial statements The auditors report on the Financial Statements for the year ended 31 January 2012 of the Group and Bank was not subjected to any qualification. 3 Seasonality and cyclicality factors The operations of the were not materially affected either by seasonal or cyclical factors. 4 Exceptional items/unusual events There was no unusual item affecting assets, liabilities, equity, net income, or cash flows during the second 31 July 2012. 5 Variation from financial estimates reported in preceding financial year There were no changes in estimates of amounts reported in the preceding financial period that would have a material effect in the current quarter results. 6 Dividend paid There was no dividend paid during the 31 July 2012. 8
7 Deposits with financial institutions 31-Jul-12 31-Jan-12 RM 000 RM 000 Licensed banks 20,514 20,631 20,514 20,631 8 Securities held-for-trading 31-Jul-12 31-Jan-12 RM 000 RM 000 At fair value Malaysian Government Securities - 60,708 Malaysian Government Investment Issuance 30,335 - Cagamas Bonds 20,000 - Bankers' acceptance 242,292 194,977 Bank Negara Malaysia Notes - 93,225 Quoted Securities - Private Debt Securities 5,006 10,074 - Shares 1,893 2,001 299,526 360,985 9 Securities available-for-sale 31-Jul-12 31-Jan-12 RM 000 RM 000 At fair value Malaysian Government Securities 183,510 254,019 Malaysian Government Investment Issues 118,968 89,122 Cagamas bonds 40,218 40,278 Quoted securities - Shares 133,265 145,728 - Shares outside Malaysia 19,938 - Unquoted securities - Private debt securities 97,349 130,027 - Preference shares 2,200 2,200 Unit trust fund 15,438 15,042 less: Impairment loss on securities available-for-sale (1,524) (3,053) 609,362 673,363 Securities that were reclassified out from held-for-trading to available-for-sale: Carrying value as at beginning of financial year 3,045 3,926 Gain/(loss) on revaluation - recognised in available-for-sale revaluation reserves 80 (881) Carrying value as at end of financial year/period 3,125 3,045 10 Securities held-to-maturity 31-Jul-12 31-Jan-12 RM 000 RM 000 At cost Negotiable instruments of deposit 220,000 200,000 220,000 200,000 9
11 Derivative financial assets/liabilities 31 July 2012 Contract / Notional amount Fair value Assets Fair value Liabilities RM 000 RM 000 RM 000 Equity related contracts 75,441 1,379 - Embedded derivatives 117,175 1,085 - Foreign exchange related contracts 3,690 13 1 196,306 2,477 1 31 Jan 2012 Equity related contracts 78,732 58 - Embedded derivatives 124,075 6,630 - Foreign exchange related contracts 2,140-57 204,947 6,688 57 12 Loans, advances and financing 31-Jul-12 31-Jan-12 RM 000 RM 000 Share margin financing 287,264 360,591 Term loans 256,278 189,649 Revolving credit 4,498 8,706 Gross loans, advances and financing 548,040 558,946 Less: Collective assessment allowance (2,688) (2,376) Total net loans, advances and financing 545,352 556,570 By residual contractual maturity Maturity within 1 year 501,041 511,936 More than one year to three years 46,999 47,010 Gross loans, advances and financing 548,040 558,946 By economic purpose Purchase of securities 369,635 404,530 Working capital 57,072 79,367 Others 121,333 75,049 Gross loans, advances and financing 548,040 558,946 By interest rate sensitivity Fixed rate - Share margin financing, term loans and revolving credit 548,040 558,946 Gross loans, advances and financing 548,040 558,946 By type of customer Domestic business enterprises 244,038 417,999 Domestic non-bank financial institution 76,596 18,672 Individuals 175,554 122,275 Gross loans, advances and financing 496,188 558,946 10
12 Loans, advances and financing (continued) Movements in allowance for bad and doubtful debts 31-Jul-12 31-Jan-12 RM 000 RM 000 Collective assessment allowance Balance at beginning of financial year - as previously reported 8,704 10,176 - effect of change in accounting policy (6,328) (8,471) Restated opening balance 2,376 1,705 Allowance made during the year/period 312 671 Balance at end of financial year/period 2,688 2,376 As % of gross loans, advances and financing less specific allowance 0.5% 0.4% 13 Trade receivables 31-Jul-12 31-Jan-12 RM 000 RM 000 Amount owing by clients 132,468 165,279 Amount owing by brokers 171,472 196,574 303,940 361,853 Less: Individual assessment allowance (1,048) (1,044) 302,892 360,809 14 Other assets Group Bank 31-Jul-12 31-Jan-12 31-Jul-12 31-Jan-12 Interest receivables 6,625 7,652 6,625 7,652 Deposits 7,039 6,215 7,039 6,215 Tax recoverable 41 8 8 - Other receivables, deposits and prepayments 13,953 15,108 13,953 15,108 27,658 28,983 27,625 28,975 Less: Individual assessment allowance (2,279) (2,286) (2,279) (2,286) 25,379 26,697 25,346 26,689 11
15 Deposits from customers Group Bank 31-Jul-12 31-Jan-12 31-Jul-12 31-Jan-12 By type of deposits Short-term deposits 1,128,002 1,093,352 1,132,243 1,097,684 Negotiable instruments of deposit 28,442 16,713 28,592 16,713 1,156,444 1,110,065 1,160,835 1,114,397 By type of customers Government and statutory bodies 157,200 116,300 157,200 116,300 Business enterprises 125,623 189,236 130,014 193,568 Individuals 48,690 27,066 48,690 27,066 Non-bank financial institutions 824,324 776,863 824,324 776,863 Domestic other entities 607 600 607 600 1,156,444 1,110,065 1,160,835 1,114,397 Maturity structure of short term deposits and negotiable instruments of deposit are as follows: Due within 6 months 1,127,853 1,090,302 1,132,244 1,094,634 More than 6 months to 1 year 28,591 19,763 28,591 19,763 1,156,444 1,110,065 1,160,835 1,114,397 16 Deposits and placements of banks and other financial institutions 31-Jul-12 31-Jan-12 RM 000 RM 000 Licensed banks 20,786 266,409 Licensed investment banks 80,000 74,962 100,786 341,371 17 Trade payables 31-Jul-12 31-Jan-12 RM 000 RM 000 Amount owing to clients 118,633 102,743 Amount owing to brokers 142,888 221,589 Client's trust monies 186,922 158,546 448,443 482,878 18 Other liabilities Group Bank 31-Jul-12 31-Jan-12 31-Jul-12 31-Jan-12 Accruals and deposits received 9,839 6,268 5,594 6,238 Remisiers and dealers trust accounts 29,448 20,710 29,448 20,710 Other payables 16,863 45,988 21,076 45,988 Provision for taxation - 2,830-2,826 56,150 75,796 56,118 75,762 12
19 Interest income 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Group RM 000 RM 000 RM 000 Loans and advances 9,547 10,618 19,706 23,149 Stockbroking clients 86 77 232 164 Short-term funds and deposits with financial institutions 2,720 3,215 5,265 6,133 Securities: - Held-for-trading 279 497 - - Available-for-sale 3,939 4,083 8,430 7,416 - Held-to-maturity 1,688 1,354 3,401 2,159 Others (2) 42 6 56 18,257 19,389 37,537 39,077 Accretion of discounts less amortisation of premiums 642 876 1,497 2,370 18,899 20,265 39,034 41,447 Bank Loans and advances 9,548 10,618 19,706 23,148 Stockbroking clients 86 77 232 164 Short-term funds and deposits with financial institutions 2,730 3,184 5,265 6,102 Securities: - Held-for-trading 279-497 - - Available-for-sale 3,940 4,083 8,430 7,416 - Held-to-maturity 1,688 1,355 3,401 2,159 Others (3) 41 6 56 18,268 19,358 37,537 39,045 Accretion of discounts less amortisation of premiums 642 876 1,497 2,370 18,910 20,234 39,034 41,415 20 Interest expense 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Group Deposits from customers 11,272 11,367 22,457 22,091 Deposits from banks and other financial institutions 520 743 2,965 1,773 Others 23 29 56 37 11,815 12,139 25,478 23,901 Bank Deposits from customers 11,272 11,367 22,457 22,090 Deposits from banks and other financial institutions 566 744 3,034 1,805 Others 23 29 56 37 11,861 12,140 25,547 23,932 13
21 Non-interest income Group 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Fee income - Fees on loans and advances 3,085 1,433 6,399 3,604 - Corporate advisory fees 500 484 905 994 - Net brokerage fee 10,689 10,509 23,389 24,868 - Other fee income 185 845 262 930 14,459 13,271 30,955 30,396 Net gain arising from securities held -for-trading - net gain on disposal 2,960 3,335 6,485 6,435 - unrealised revaluation (loss)/gain (330) (78) (299) 179 - gross dividend income - - 7 5 2,630 3,257 6,193 6,619 Net gain arising from securities available-for-sale - net gain on disposal 1,270 5,723 2,185 5,966 - gross dividend income 50-50 450 1,320 5,723 2,235 6,416 Net gain arising from derivatives - net gain on disposal 322 409 322 1,551 - unrealised revaluation loss (4,458) (972) (3,786) (1,641) (4,136) (563) (3,464) (90) Gain on foreign exchange transactions 977 956 1,944 1,830 Total non-interest income 15,250 22,644 37,863 45,171 Bank Fee income - Fees on loans and advances 3,085 1,433 6,399 3,604 - Corporate advisory fees 500 484 905 994 - Net brokerage fee 10,688 10,509 23,389 24,868 - Other fee income 158 801 158 842 14,431 13,227 30,851 30,308 Net gain arising from securities held -for-trading - net gain on disposal - securities 2,960 3,335 6,485 6,435 - unrealised revaluation (loss)/gain (330) (78) (299) 179 - gross dividend income - - 7 5 2,630 3,257 6,193 6,619 Net gain arising from securities available-for-sale - net gain on disposal 1,270 5,723 2,185 5,966 - gross dividend income 50-50 450 1,320 5,723 2,235 6,416 Net gain arising from derivatives - net gain on disposal 322 409 322 1,551 - unrealised revaluation loss (4,458) (972) (3,786) (1,641) (4,136) (563) (3,464) (90) Gain on foreign exchange transactions 978 956 1,944 1,830 Total non-interest income 15,223 22,600 37,759 45,083 14
22 Other non-operating income 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Rental income 24 48 61 111 Gain on disposal of assets - - 5 1 Others 241 217 370 980 265 265 436 1,092 23 Operating expenses Group 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Personnel expenses Salaries, allowance and bonus 8,557 7,624 17,535 14,783 Contributions to defined contribution plan 1,257 1,126 2,514 2,203 Other personnel costs 636 726 1,018 1,155 10,450 9,476 21,067 18,141 Establishment costs Depreciation of property, plant and equipment 1,238 1,018 2,418 1,969 Amortisation of computer software 164 141 345 278 Rental of premises 1,580 1,306 3,150 2,604 Rental of network and equipment 1,201 982 2,339 2,057 Other establishment costs 921 747 1,867 1,506 Property plant and equipment written off - - 4-5,104 4,194 10,123 8,414 Marketing and communication expenses Advertising expenses - 145-152 Entertainment 170 267 405 469 Other marketing expenses 109 228 402 231 279 640 807 852 Administrative and general expenses Audit fees 36 34 81 61 Legal and professional fees 171 258 426 2,013 Printing and stationery 179 213 388 428 Insurance, postages and courier 257 253 502 531 Electricity and water charges 360 302 674 553 Telecommunication expenses 139 153 247 285 Travelling and accomodation 225 19 317 205 Others 2,739 2,480 6,278 4,877 4,106 3,712 8,913 8,953 Total operating expenses 19,939 18,022 40,910 36,360 15
23 Operating expenses (continued) Bank 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Personnel expenses Salaries, allowance and bonus 8,556 7,624 17,535 14,783 Contributions to defined contribution plan 1,258 1,126 2,514 2,203 Other personnel costs 635 726 1,018 1,155 10,449 9,476 21,067 18,141 Establishment costs Depreciation of property, plant and equipment 1,237 1,018 2,417 1,969 Amortisation of computer software 164 140 345 278 Rental of premises 1,581 1,306 3,150 2,604 Rental of network and equipment 1,201 982 2,339 2,057 Other establishment costs 921 747 1,867 1,506 Property plant and equipment written off - - 4-5,104 4,193 10,122 8,414 Marketing and communication expenses Advertising expenses - 144-152 Entertainment 170 267 405 469 Other marketing expenses 190 7 402 231 360 418 807 852 Administrative and general expenses Audit fees 43 33 86 58 Legal and professional fees 169 256 422 2,009 Printing and stationery 179 216 388 428 Insurance, postages and courier 256 253 502 531 Electricity and water charges 360 302 674 553 Telecommunication expenses 139 153 247 285 Travelling and accomodation 144 240 317 205 Others 2,730 2,478 6,268 4,875 4,020 3,931 8,904 8,944 Total operating expenses 19,933 18,018 40,900 36,351 24 Allowance for losses on loans and financing 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Collective assessment allowance - Writeback during the financial period 357 629 312 260 16
25 Writeback of bad and doubtful debts 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Individual assessment allowance - Provided during the financial period 70 223 182 315 - Written back during the financial period (123) (87) (197) (163) Bad debts: - Recovered (82) (5,112) (95) (6,913) (135) (4,976) (110) (6,761) 26 Writeback for impairment loss 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Writeback for impairment loss on securities: - Available-for-sale (1,421) - (1,529) (956) 17
27 Capital This unaudited adequacy quarterly financial report of the Group trading has to been available-for-sale: prepared on a historical cost basis, unless otherwise disclosed The following is the computation of the capital adequacy ratio of the Bank: (a) Risk weighted capital ratios and Tier I and Tier II capital 31-Jul-12 31-Jan-12 RM 000 RM 000 Tier 1 Capital Paid-up share capital 513,000 513,000 Retained profit 69,055 69,055 Statutory reserve 80,787 80,787 Other reserves 212 212 General reserve 4,957 - Total Tier 1 capital (a) 668,011 663,054 Tier 2 Capital Collective assessment 2,688 2,376 Total Tier 2 capital (b) 2,688 2,376 Total capital base (a) + (b) 670,699 665,430 Total risk-weighted assets 1,256,707 1,314,270 % Core capital ratio 53.2% 50.5% Risk weighted capital ratio 53.4% 50.6% The capital adequacy ratios of the Bank are computed in accordance with BNM's revised Risk-Weighted Capital Aqeduacy Framework (RWCAF-Basel II). The Bank have adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8.0% (Jan 2012: 8%) for the risk-weighted capital ratio. The breakdown of risk-weighted assets (RWA) by each major risk category is as follows: 31-Jul-12 31-Jan-12 For In Diluted Stepping There Performance the the Group's nomal were are EPS credit financial into no is has course changes equivalent profit the corporate material the Review not same quarter of new entered in of before business, changes as the amount proposals on financial the under composition into tax basic the the is any of contingent review, arrived the is Results EPS Bank year announced arrived RM12.5 scheme Group of as makes at and the using of liabilities at makes Bank that having million using the various during the requires during does Group various credit recorded the obtained commitments was the not assets credit the conversion quarter have RM19.4 commitments for to since a conversion present any the higher under the dilutive and investment factors million last forecast incurs profit review, review. audited and factors potential RM'000 lower certain specified before incurs Financial results bank balance other as ordinary specified than contingent certain tax status by than sheet guarantee Bank of RM31.6 Quarter shares the RM10.80 contingent by date. by Negara liabilities share one Bank RM'000 million any issue. against of Malaysia buy Negara million profits liabilities with the back recorded Credit risk 538,351 511,769 Market risk 469,925 528,595 Operational risk 248,431 273,906 1,256,707 1,314,270 18
28 Debt For Stepping Performance The & equity the Bank's financial into securities -maturity profit the Review quarter new before are on financial under tax securities the of Results review, RM10.8 year with and of the fixed the million having Bank Bank or recorded was determinable obtained for RM15.3 the a the lower million investment payments profit Financial lower before and bank than fixed Quarter tax status, RM26.0 of maturity RM10.8 the against million Bank that million Preceding the looks recorded Bank as forward compared has Year's during the to There was no issuance, cancellation, repurchase, resale and repayment of either debt or equity securities during the quarter under review. 29 Valuation of Property, Plant and Equipment There was no valuation of property, plant and equipment of the Group and the Bank in the quarter under review. 30 Material Subsequent Event There were no material events subsequent to 31 July 2012. 31 Changes in the Composition of the Bank There are no changes in the composition of the Group and the Bank during the quarter under review. 32 Commitments and Contingencies (a) Capital Commitments As at 31 July 2012, the has commitments in respect of capital expenditure as follows: - RM'000 Authorised and contracted for 424 (b) Other Commitments and Contingencies In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with legal recourse to its customers. No material losses are anticipated as a result of these transactions. The risk-weighted exposures of the Bank are as follows: Credit Risk Nominal Equivalent Weighted Amount Amount * Amount RM'000 RM'000 RM'000 As at 31 July 2012 Commitments to extend credits with maturity of less than 1 year: - margin facilities 721,705 144,341 127,953 - term loan facilities 23,420 5,734 5,734 Foreign exchange related contracts 6,597 33 33 751,722 150,108 133,720 As at 31 January 2012 Commitments to extend credits with maturity of less than 1 year: - margin facilities 492,574 98,515 87,694 - term loan facilities 60,667 13,183 13,183 Foreign exchange related contracts 5,814 91 35 559,055 111,789 100,912 * The credit equivalent amount is arrived at using the credit conversion factors as specified by Bank Negara Malaysia. Diluted EPS is the same as the basic EPS as the Bank does not have any dilutive potential ordinary shares in issue. 19
33 Diluted Performance Stepping There EPS are is credit Review the into no same corporate the equivalent on as new the Results financial basic proposals amount EPS of year the as is announced the arrived Bank and Bank having Group at does during using RM19.4 not obtained have the million credit any quarter the dilutive investment conversion lower under potential than review, bank factors RM31.6 ordinary status other as million shares specified than by one the in recorded issue. of share by the Bank Group's buy during For the current quarter under review, the Bank Group recorded a profit before tax of RM3.9 million. This is largely contributed by net brokerage income of RM10.7 million, fee income of RM3.8 million, net gain from sale of trading and investment securities of RM4.6 million and net interest income of RM7.1 million; partially offset by operating expenses of RM19.9 million and unrealised revaluation loss of RM4.8 million. 34 Review of Performance of Financial Quarter against Preceding Financial Quarter For the financial quarter under review, the Bank Group achieved a profit before tax of RM3.9 million as compared to the RM8.4 million registered for the immediate preceding quarter. The decrease in profit is mainly due to decline in net brokerage generated of RM2.0 million and derivative revaluation loss of RM4.5 million which is closely correlated to the underlying market price of securities. This has been partially offset by higher net interest income of RM0.6 million, lower operating expense of RM1.0 million and higher writeback of impairment loss on securities of RM1.3 million. 35 Bank s Prospects The Bank anticipates that the investment banking landscape will remain challenging and competitive in the current financial year. Barring unforseen circumstances the Bank is expected to maintain its performance at current level. 36 Income tax expense 31-Jul-12 31-Jul-11 31-Jul-12 31-Jul-11 Income tax: period provision 1,146-1,644 - Deferred taxation: period transfer from deferred tax (106) 4,322 1,778 8,691 1,040 4,322 3,422 8,691 37 Changes in accounting policies (a) Transition to the MFRS Framework These unaudited interim financial statements are for part of the period covered by the Bank Group's first annual financial statements prepared under the MFRS framework. Accordingly, the Bank Group has applied MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards in their transition to the MFRS framework on 1 February 2012. The policy elections made on transition date are listed in the audited financial statements of the Bank Group for the financial year ended 31 January 2012. The MFRS did not result in any financial impact to the Group other than the financial impact arising from the change in accounting policy on collective assessment allowance, as the accounting policies adopted under the previous FRS framework were already in line with the requirements of the MFRS framework. 20
37 Changes in accounting policies (cont'd.) (a) Transition to the MFRS Framework The transition to the MFRS framework has resulted in the following changes: MFRS 139 Financial Instruments: Recognition and Measurement ("MFRS 139") - Accounting policy on collective assessment allowance for loans, advances and financing ("loans") Prior to the transition to MFRS 139, the Bank Group had maintained its collective assessment allowance at 1.5% of total outstanding loans, net of individual assessment allowance, in line with Bank Negara Malaysia's transitional provisions under its Guidelines on Classification and Impairment Provisions for Loans/Financing. Upon the transition to MFRS 139 on 1 February 2012, these transitional provisions, which were allowed under the previous FRS framework, were removed and the Bank Group has applied the requirements of MFRS 139 in the determination of collective assessment allowance. Under MFRS 139, collective assessment is performed on loans which are not individually significant based on the incurred loss approach. Loans which are individually assessed and where there is no objective evidence of impairment are also included in the group of loans for collective assessment. These loans are pooled into groups with similar credit risk characteristics and the future cash flows for each group is estimated on the basis of the historical loss experience for such assets and discounted to present value. Collective assessment allowance is made on any shortfall in these discounted cash flows against the carrying value of the group of loans. This change in accounting policy has been accounted for retrospectively and has resulted in a decrease in the collective assessment allowance charged in the income statement and a writeback of collective assessment allowance to the opening retained profits and opening collective assessment allowance in the statement of financial position. BNM requires ELIBB to classify the write back of collective assessment allowance into regulatory reserve until the validation is completed. A summary of the financial impact of the change in accounting policy on the financial statements of the Bank Group are as follows: 31-Jan-12 1-Feb-11 Statement of Financial Position RM'000 RM'000 Loans, advances and financing - collective assessment allowance As previously stated 8,704 10,176 Effect of change in accounting policy (6,328) (8,471) As restated 2,376 1,705 Retained profits As previously stated 73,678 73,446 Effect of change in accounting policy 4,746 6,353 As restated 78,424 79,799 2nd quarter ended ended 31-Jul-11 31-Jul-11 Statement of Comprehensive Income RM'000 RM'000 Allowance for impairment on loans, advances and financing - collective assessment allowance As previously stated 1,194 2,160 Effect of change in accounting policy (1,823) (2,420) As restated (629) (260) 21
37 Changes in accounting policies (cont'd.) (b) Financial impact of changes in accounting policies In the preparation of the Group's and the Bank's opening MFRS statements of financial position, the amounts previously reported in accordance with the previous FRS framework have been adjusted for the financial effects of the adoption of the MFRS framework. A reconciliation of these changes is summarised in the following tables: (i) Statement of Financial Position Under the Effect of Under the FRS transition to MFRS Group Framework MFRS 139 Framework As at 31 January 2012 RM'000 RM'000 RM'000 ASSETS Cash and short-term funds 403,218 403,218 Deposits with financial institutions 20,631 20,631 Securities held-for-trading 360,985 360,985 Securities available-for-sale 673,363 673,363 Securities held-to-maturity 200,000 200,000 Derivative financial assets 6,688 6,688 Loans, advances and financing 550,242 6,328 556,570 Trade receivables 360,809 360,809 Other assets 26,697 26,697 Statutory deposit with Bank Negara Malaysia 27,165 27,165 Property, plant and equipment 21,714 21,714 Intangible assets 52,500 52,500 TOTAL ASSETS 2,704,012 2,710,340 LIABILITIES AND EQUITY LIABILITIES Deposits from customers 1,110,065 1,110,065 Deposits and placements of banks and other financial institutions 341,371 341,371 Derivative financial liabilities 57 57 Trade payables 482,878 482,878 Other liabilities 74,214 1,582 75,796 Amount owing to related companies 234-234 Deferred tax liabilities 7,470 7,470 TOTAL LIABILITIES 2,016,289 2,017,871 EQUITY Share capital 513,000 513,000 Reserves 174,723 4,746 179,469 TOTAL EQUITY 687,723 692,469 TOTAL LIABILITIES AND EQUITY 2,704,012 2,710,340 Net assets per share (RM) 1.34 1.35 22
37 Changes in accounting policies (cont'd.) (b) Financial impact of changes in accounting policies (cont'd.) (i) Statement of Financial Position (cont'd.) Under the Effect of Under the FRS transition to MFRS Group Framework MFRS 139 Framework As at 1 February 2011 RM'000 RM'000 RM'000 ASSETS Cash and short-term funds 389,669 389,669 Deposits with financial institutions 21,489 21,489 Securities held-for-trading 353,818 353,818 Securities available-for-sale 519,479 519,479 Securities held-to-maturity 70,000 70,000 Derivative financial assets 9,552 9,552 Loans, advances and financing 649,880 8,471 658,351 Trade receivables 482,122 482,122 Other assets 15,602 15,602 Statutory deposit with Bank Negara Malaysia 8,834 8,834 Investment in associated company - - Deferred tax assets 10,687 10,687 Property, plant and equipment 25,534 25,534 Intangible assets 52,500 52,500 TOTAL ASSETS 2,609,166 2,617,637 LIABILITIES AND EQUITY LIABILITIES Deposits from customers 1,075,123 1,075,123 Deposits and placements of banks and other financial institutions 201,008 201,008 Derivative financial liabilities - - Trade payables 576,600 576,600 Other liabilities 103,189 2,118 105,307 Amount owing to related companies 234 234 TOTAL LIABILITIES 1,956,154 1,958,272 EQUITY Share capital 513,000 513,000 Reserves 140,012 6,353 146,365 TOTAL EQUITY 653,012 659,365 TOTAL LIABILITIES AND EQUITY 2,609,166 2,617,637 Net assets per share (RM) 1.27 1.29 23
37 Changes in accounting policies (cont'd.) (b) Financial impact of changes in accounting policies (cont'd.) (ii) Reconciliation of Statement of Comprehensive Income Under the Effect of Under the FRS transition to MFRS Group Framework MFRS 139 Framework Period ended 31 July 2011 RM'000 RM'000 RM'000 Revenue 86,618 86,618 Interest income 41,447 41,447 Interest expense (23,901) (23,901) Net interest income 17,546 17,546 Non-interest income 45,171 45,171 Other non-operating income 1,092 1,092 Net income 63,809 63,809 Operating expenses (36,360) (36,360) Operating profit 27,449 27,449 Share of loss of an associated company - - Writeback of losses on loans, advances and financing 2,160 (2,420) (260) Writeback of impairment allowance for bad and doubtful debts 6,761 6,761 Writeback of impairment loss Writeback of impairment loss 956 956 Profit before tax 37,326 34,906 Income tax expense (9,296) 605 (8,691) Profit after tax 28,030 26,215 Other comprehensive income: Net gain on available-for-sale financial assets 15,142 15,142 of other comprehensive income (3,786) (3,786) Other comprehensive income for the period, net of tax 11,356 11,356 Total comprehensive income for the period 39,386 37,571 Earnings per share ("EPS"): Sen Sen - basic / diluted * 5.46 5.11 (iii) Statement of Cash Flow There are no material differences between the statement of cash flow presented under the MFRSs and the statement of cash flow presented under FRSs. 24
37 Changes in accounting policies (cont'd.) (b) Financial impact of changes in accounting policies (cont'd.) (iv) Capital adequacy The adjustments to the financial statements of the Group as a result of the transition to the MFRS framework and the changes in accounting policies, as discussed above, also had consequential effects on the comparative capital adequacy ratios of the Bank. These are summarised below: As at 31 January 2012 As at 1 February 2011 As previously As restated: As previously As restated: stated: Under Under the stated: Under Under the the FRS MFRS the FRS MFRS Bank Framework Framework Framework Framework Tier 1 capital (RM'000) 663,054 663,054 637,622 637,622 Capital base (RM'000) 671,758 665,430 647,798 639,327 Tier 1 capital ratio 50.5% 50.5% 81.8% 81.8% Risk-weighted capital ratio 51.1% 50.6% 83.1% 82.0% 25