68 calendar of significant events - malaysiastock.biz Alliance Privilege Banking hosted the “New Era for Property Investment Talk” in Penang for over 150 privileged customers in

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calendar of significant events

Activities Date

ANNOUNCEMENT OF RESULTS• FirstFinancialQuarterended30June2008 8August2008• SecondFinancialQuarterended30September2008 27November2008• ThirdFinancialQuarterended31December2008 24February2009• FourthFinancialQuarterended31March2009 28May2009

DIVIDEND

• FirstInterimDividendof2.5senpershare,taxexemptunderthesingletiertaxsystem– Declaration 25 July 2008– Entitlement 13 August 2008– Payment 27 August 2008

• SecondInterimDividendof3.75senpershare,taxexemptunderthesingletiertaxsystem– Declaration 22 January 2009– Entitlement 17 February 2009– Payment 3 March 2009

ISSUEOF2009ANNUALREPORT 3July2009

43rdANNUALGENERALMEETING 29July2009

financial calendar for financial year ended 31 march 2009

ALLIANCE FINANCIAL GROUP BERHAD (6627-X) • 2009 annual report 69

19 April 2008 Alliance Family Day 2008The Group’s annual family day event for staff kicked off in the Klang Valley with the presence of over 3,700 staff and their family. The Carnival 2008 featured a host of fun-filled activities and was made more meaningful with the participation of children from a local orphanage.

12 May 2008 Staff-for-Staff Fund: Funding A Dialysis TreatmentThe Alliance family put their hands together to collect funds for a staff at its Penang branch who had appealed for financial assistance for her daughter to undergo dialysis treatment. A sizeable amount was collected from staff nationwide and Alliance Bank Malaysia Berhad (ABMB or the Bank) topped-up the amount to a reasonable figure.

16 May 2008 Alliance Affinity Card – Teacher’s DayIn conjunction with Teacher’s Day, the Bank presented hampers to schools under the Alliance Affinity Card Programme. The programme is the first to incorporate a micro-donation feature which enables card members to make cashless donations to schools of their choice to further assist schools to fund their respective activities.

18 May 2008 Alliance Community Day 2008In line with ABMB’s value proposition as a bank for the community, some 180 staff members gathered at a handicapped and disabled children’s association in Selangor to help residents create a more conducive environment to live in. In total, the Bank’s staff members invested over 1,000 hours of community work in a single day.

corporate calendar for financial year ended 31 march 2009

Alliance Family Day 2008

Alliance Community Day 2008

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27 May 2008 Analysts Briefing The Group shared its Fourth Quarter 2008 financial results and business performance with analysts from various research houses in Kuala Lumpur.

5 June 2008 Alliance Observes World Environment DayIn conjunction with World Environment Day, the Bank launched a bank-wide campaign to create awareness amongst staff on the effects of daily operational activities on the environment. The campaign was also held in response to the pressing global need to conserve energy, reduce carbon emissions, waste and the benefits of recycling at the workplace and home. Employees were informed via staff communications and notice boards to care for the environment by carrying out environmental friendly activities like conserving water, recycling, planting trees and car-pooling.

9 June 2008 Alliance Islamic Bank-Okachi MOU SigningAlliance Islamic Bank Berhad (AIS) launched its new Islamic fixed deposit product, the Alliance Fixed Investment-i (AFI), which offers fixed returns to customers based on the Inter-bank Money Market rate. A Shariah-compliant account based on the Tawarruq concept, the AFI is the first of such Islamic banking product in Malaysia which uses commodities traded under the Tokyo Grain Exchange and Central Japan Commodity Exchange for deposit placement.

7-11 June 2008 Alliance Islamic Bank at the MIHASAIS participated at the Malaysia International Halal Showcase 2008 (MIHAS) to showcase its products and services. This event, which was organised by the Malaysia External Trade Development Corporation (MATRADE) and hosted by the Ministry of International Trade and Industry (MITI), served as a platform for the Bank to cross-sell and create awareness for its products and services.

12 June 2008 Alliance Bowling Tournament 2008Over 120 staff participated in the Alliance Bowling Tournament organised by the AFG Recreational & Sports Club in Kuala Lumpur. Staff had a whale of a time unwinding while competing with each other for a chance at the grand trophy. The ESON team emerged as the Overall Team Champion.

14-15 June 2008 Alliance Badminton Challenge 2008The AFG Recreational & Sports Club organised a badminton tournament to promote healthy lifestyles and teambuilding among staff members. This inaugural event attracted a total of 108 participants from across the Group with participants from Johor, Terengganu and Pahang. Mr Shim Kon Teck, the Bank’s Group Chief Operating Officer, presented the medals to the winners of the event.

Alliance Islamic Bank-Okachi MOU Signing

Alliance Badminton Challenge 2008

Alliance Observes World Environment Day

Alliance Bowling Tournament 2008

calendar of significant events (cont’d)


Alliance Raises Funds for Down Syndrome Centre

Hari Koperasi Sekolah with Alliance

Group Finance Conference

Commercial Banking Durian Party

19 June 2008 Commercial Banking Durian PartyThe Bank’s Commercial Banking treated its 250 staff to a durian party at Capital Square to celebrate the division’s achievements. Winning teams from Commercial Banking Partnership were also recognised for their achievements and awarded with a trip abroad for having achieved pre-determined loan acceptances.

22 June 2008 Alliance Raises Funds for Down Syndrome CentreStaff members of a branch in Selangor participated in a local bazaar to help raise funds for a Down Syndrome centre in Selangor. Staff supported the event by purchasing coupons and patronising the charity sales booths.

26 June 2008 Alliance with RolexABMB and Rolex jointly hosted an exclusive cocktail for Alliance Bank Platinum card members at the Rolex Boutique at the Pavilion. Privileged guests were treated to an exclusive showing of Rolex and Tudor’s finest timepieces.

23-27 June 2008 Hari Koperasi Sekolah with AllianceIn conjunction with the Association of Banks Malaysia-endorsed Hari Koperasi Sekolah, ABMB staff members from selected branches within Klang Valley visited local area schools to encourage savings and promote financial literacy among school-going children. ABMB’s staff disseminated information on financial literacy and the Bank’s very own financial literacy book “Solve the Quagmire of Money” as well as organising quizzes for students.

28-29 June 2008 Group Finance ConferenceThe Bank’s Group Finance division held a two-day teambuilding conference themed “Growing with the Business” in Bukit Tinggi, Selangor. Group Chief Financial Officer and Group Finance Head presented the Group Finance Score Card while business heads spoke about their respective businesses. Representatives from Ernst & Young were also on hand to talk about the latest developments pertaining to financial reporting requirements.

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April-June 2008 New Branch Openings at Aman Suria, Jalan Laksamana, Ampang Point and Bandar Puteri PuchongIn line with the Group’s strategy of offering service and banking convenience to customers, we continued to expand our branch footprint in the first quarter of financial year 2008/09 via the opening of four branches, namely Aman Suria (Selangor), Jalan Laksamana (Sarawak), Ampang Point (Selangor) and Bandar Puteri Puchong (Selangor). The event received strong support from invited guests, customers, business partners and members of the media.

26-27 July 2008 Alliance Sponsors The Edge-Haven My Dream Home Contest 2008For the second consecutive year, the Bank teamed up with Haven to be the main sponsor for The Edge-Haven My Dream Home Contest 2008. The event served to showcase beautiful homes and recognise the efforts of home owners who had put much thought and effort into the design and creation of a sustainable living environment for their homes.

28 July 2008 Alliance Bank – Sunway Apprentice Challenge 2008For the second consecutive year, ABMB sponsored the Sunway Apprentice Challenge for aspiring entrepreneurial students from Sunway University College. Participants hada brief taste of what it was like to be high-rolling property magnates. The simulations of a real-life environment replete with challenges and obstacles not only exposed the students to various scenarios and case studies, but also enabled them to live the Bank’s core values of creativity, conviction, resilience, integrity and caring during each exercise.

30 July 2008 42nd Annual General MeetingThe Group tabled its financial performance for the year ended 31 March 2008 at its 42nd Annual General Meeting.

Alliance sponsored The Edge-Haven My Dream Home Contest 2008

Alliance Bank – Sunway Apprentice Challenge 2008

42nd Annual General Meeting



31 July 2008 Alliance Contributes to Myanmar and Sichuan Relief FundsIn line with our commitment to being a caring corporate citizen, we initiated a Group-wide fund-raising campaign across our subsidiaries and branches to assist victims of the cyclone and earthquake disasters in Myanmar and Sichuan to rebuild their lives. For every Ringgit contributed by staff, the Group matched this with an equal amount. The month-long campaign which kicked-off in early June 2008 proved successful with RM25,033.78 and RM21,020.66 in cash donations channelled to MERCY Malaysia and the Malaysian Red Crescent Society respectively.

12 July 2008 Alliance Supports ParalympiadsIn the spirit of sportsmanship and in support of the disabled, the Bank sponsored football jerseys for the Kuala Lumpur Football Contingent who participated in the 14th Paralympic Championship in Kuala Lumpur.

August 2008 New Branch Openings at Jalan Mega Mendung and Seri Kembangan As part of ABMB’s strategy of developing long-term partnerships by working closely with customers to provide them with the right financial solutions, the Bank added two more branches to its branch network via the opening of the Jalan Mega Mendung (Kuala Lumpur) and Seri Kembangan (Selangor) branches in August 2008.

28 August 2008 Privilege Banking Property Investment TalkAlliance Privilege Banking hosted the “New Era for Property Investment Talk” in Penang for over 150 privileged customers in the northern region. The event aimed to educate customers about the importance of diversifying their cash holdings to hedge against the increase in inflation and economic adversity.

30 August 2008 Merdeka Blood Donation CampaignABMB branch in Sabah organised a blood donation campaign at their premises on the eve of Merdeka. Medical staff from a local hospital were on hand to help out at the campaign which carried the slogan, “The smallest act of CARING has the potential to turn a LIFE around.”

6 September 2008 Alliance Islamic Bank Fetes OrphansDuring the holy month of Ramadan, AIS staff hosted aone-day outing for 35 orphans from a local children’s home. It was a day of fun and excitement for the children where they were treated to a shopping spree for their baju raya, games and rides at the arcade as well as a berbuka puasa session at a nearby McDonald’s Restaurant. Tuan Haji Yahya Ibrahim, Chief Executive Officer of AIS, distributed Hari Raya packets to the children.

New Branch Opening

Alliance Contributes to Myanmar and Sichuan Relief Funds

Alliance Islamic Bank Fetes Orphans

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8 September 2008 Launch of Alliance Debit MasterCardThe Bank led the way in effective cash management with the launch of the Alliance Debit MasterCard card. The card is linked to the interest-bearing Alliance Hybrid Account which offers interest rates of up to 2.8%, one of the highest rates offered in the market. The Alliance Debit MasterCard Platinum and Premium cards, are the first of such products introduced in Asia, whilst the Standard card is specifically for the mass market segment.

10 September 2008 Commercial Banking Post Budget Talk 2008To further improve and enhance our existing business relationship with small-and-medium sized enterprises (SMEs), ABMB’s Commercial Banking hosted a Post-Budget 2009 Talk in Kuala Lumpur. Speakers from Ernst & Young, Alliance Research and the Associated Chinese Chambers of Commerce and Industry of Malaysia SMEs shared their insights and views on the industry, economy, taxation and funding with an audience of more than 200 Alliance Bank’s SME customers.

15 October 2008 Alliance Conquers Mount KinabaluA team of Bank’s staff went on a gruelling three-day hiking and climbing adventure which involved months of preparations and strong presence of mind to conquer the highest peak in Malaysia. The team demonstrated the Bank’s core value of resilience during the expedition with their strong team spirit, determination and discipline seeing them through to end of their expedition.

28 October 2008 Anti-Money Laundering ConferenceAs part of the Anti-Money Laundering and Anti-Terrorism Financing (AMLATF) annual training plan for AFG, the Group Legal & Compliance and Group Organisational Learning divisions organised a two-day conference to highlight the latest trends in money laundering and the financing of terrorism. Participants were reminded that as employees of the Group, it is their responsibility to report and assist to combat this global issue.

30 October 2008 Alliance In Support of Down SyndromeIn the spirit of caring, ABMB’s Melaka branch donated basic necessities to a Down Syndrome child and his family to help ease their financial burden.

Commercial Banking Post Budget Talk 2008

Anti-Money Laundering Conference

Launch of Alliance Debit MasterCard



31 October 2008 Technology Business Review Awards 2008ABMB was awarded two prestigious technology awards, The Corporate Award for Excellence and The CEO Award for Leadership in the ASEAN Banking & Finance Sector at the Technology Business Review ASEAN Awards 2008. These awards demonstrate the Bank’s continuous efforts to ensure sustainability in its IT delivery and support activities whilst incorporating the best practice framework for managing IT services.

31 October 2008 Nanyang Golden Bull Awards 2008Alliance Bank has always stood by the SME community in Malaysia. For the sixth consecutive year, the Bank was the main sponsor for the prestigious Nanyang Golden Bull Award 2008. This event recognises outstanding enterprises which have excelled in their field of expertise and helped in the growth and development of the economy.

1 December 2008 Commercial Banking Business Club TalkABMB’s Commercial Banking team organised a talk entitled “Amidst the Current Turmoil” to share insights on the opportunities available during the current economic turmoil. The event was well attended by Commercial Banking, Privilege Banking and Platinum Card customers.

2 January 2009 New Alliance Staff MasterCardThe Bank enhanced the benefits of the new Alliance Staff MasterCard credit card. Staff now enjoy a reduced interest rate from 18% p.a. to 12% p.a. and received Double Timeless Bonus Points (TBP) for every Ringgit they spend. They also enjoy special merchant tie-up promotions/privileges which are exclusive only to Alliance Bank staff.

8 January 2009 Launch of You:nique Picture CardABMB’s Consumer Banking team successfully launched Malaysia’s first personalised picture credit card, the You:nique Picture Card. The new picture card underscores our continuous effort to make banking personal by providing customers the choice to select the type of images to appear on their credit cards. Customers are further offered an irresistible menu of value plans, namely the 3Rs: Rebates, Rates and Rewards. They may select from cash Rebates of up to 2% on all retail purchases, an all-time low flat interest Rate of 9% per annum (existing market charges 18%) or double TBP for every Ringgit spent.

Technology Business Review

Awards 2008

Nanyang Golden Bull Awards 2008

Commercial Banking Business Club Talk

Launch of You:nique Picture Card

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16 January 2009 Alliance Personal Concept Store, Sunway PyramidThe Alliance Personal Concept Store, a revolutionary banking convenience platform for customers who are always on the move, was launched at Sunway Pyramid. The concept store which operates beyond normal banking hours for customers’ convenience is the first of its kind in Southeast Asia and raises the bar on personalised services.

17 January 2009 Alliance Treasure Hunt 2009Organised by the AFG Recreational & Sports Club, more than 400 staff in over 100 cars participated in the Alliance Treasure Hunt 2009. The two-day/one-night hunt began in Kuala Lumpur and ended in Lumut, Perak.

February 2009 New Branch Openings at Bandar Baru Air Itam and Jalan Tun Tan Cheng LockABMB further expanded its branch network with the official opening of the Bandar Baru Air Itam branch in Penang and the Jalan Tun Tan Cheng Lock branch in the heart of Kuala Lumpur. Both branches offer a full suite of Consumer and Commercial banking services and products in addition to other banking facilities for the mass market and mass affluent segments.

2 February 2009 The Edge-Lipper Malaysia Fund Awards 2009Alliance Investment Management Berhad (AIMB) bagged the “The Best Equity Malaysia Islamic Fund” in the three-year category for the year ended 31 December 2008 for its Alliance Dana Adib (ADA) fund at The Edge-Lipper Malaysia Fund Awards 2009 award presentation. The award is a strong testimony to AIMB’s strict adherence to the Group’s investment methodology, meticulous fundamental research and robust investment processes.

18 February 2009 Long Service AwardsAs an employer of choice, in recognition of the loyalty of our long-serving employees, 80 members of staff who served 15 years and 20 years service were presented with Certificates of Merit by Group CEO, Datuk Bridget Lai with senior management in attendance in Klang Valley.

Alliance Personal Concept Store, Sunway Pyramid

New Branch Openings at Bandar Baru Air Itam and Jalan Tun Tan Cheng Lock

Alliance Treasure Hunt 2008

The Edge-Lipper Malaysia Fund Awards 2009



21 February 2009 Alliance Annual Dinner 2009Tagged as the event of year by staff, over 2,500 staff members attended the annual dinner themed “Denim and Diamonds.” The event was attended by the Board of Directors. Datuk Bridget Lai shared the Group’s achievements and expansion plans.

27 February 2009 Financial Insights Innovation Award 2009ABMB was awarded the ‘Innovation in Enterprise Transformation Award’ at the Asian Financial Services Congress in Singapore by a leading independent research and advisory firm, Financial Insights, an IDC Company. This significant recognition bears testimony to the Bank’s efforts in applying technology excellence to create sustainable business values.

2 March 2009 New Branch Opening at Taman Desa Cheng Perdana, MelakaThe Bank officially opened the Taman Desa Cheng Perdana in Melaka which constitutes the fifth branch in 2009. The new branch aims to accommodate the growing financial needs of consumers offering a full range of Consumer, Commercial and Islamic Banking products. It is complemented by self-service terminals such as automated teller machines, cash deposit machines and cheque express service in the 24-hour e-banking lobby. It also boast a safe deposit box facility and a Kid’s Corner for customers’ banking conveniences.

17 March 2009 LOS Signing CeremonyThe Bank officially announced that it has successfully embarked on its plan to roll out two key banking solutions, the TradeSpring facilities and Phase 1 of the Group Loans Origination System (GLOS). Totalling approximately RM15 million, these solutions are in line with the Bank’s strategy to continuously grow amidst the current global competitive market and to mitigate risks in its advance credit processing and loans origination system. The successful simultaneous implementation of trade financing solutions covering credit card, personal loan, and mass market modules continue to serve and improve the Bank’s ability to service its trade finance customers effectively.

Financial Insights Innovation Award 2009

LOS Signing Ceremony

New Branch Opening at Taman Desa Cheng Perdana, Melaka

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Staying on course...We help empower your dreams, so you can be all that you want to be.“ ”


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The Board of Directors of Alliance Financial Group Berhad has adopted the best practice of corporate governance in all areas of its activities with the objective of achieving business prosperity and corporate accountability. The ultimate objective is to safeguard the interests of all stakeholders and to enhance shareholders’ value. The Board is committed to ensure that the Company is in compliance with the guidelines on Best Practices in Corporate Governance set out in the Malaysian Code on Corporate Governance.

1. The Board of Directors

1.1 Composition

The Board comprises nine (9) members, who are all Non-Executive Directors, of whom six (6) are Independent Directors. The Board is constituted of individuals of high calibre and diverse experience and collectively has the necessary skills and qualifications to effectively manage the Company and to discharge the responsibilities of the Board. The current board members are all very experienced in the management of businesses and in terms of academic background have skills in the areas of law, banking, finance, accounting, economics and business management.

The presence of a majority of Independent Non-Executive Directors also provides the necessary checks and balances to ensure that the interests of all shareholders and the general public are given due consideration in the decision-making process.

A brief profile of each Director is presented on pages 14 to 17 of this Annual Report.

1.2 Duties and Responsibilities

The Board is led by the Chairman, Datuk Oh Chong Peng, who is an Independent Non-Executive Director.

The Chairman receives strong and positive support from the Group Company Secretary in discharging his duties and responsibilities to ensure the effective functioning of the Board.

There are matters specifically reserved for the Board’s decision to ensure that the direction and control of the Group are firmly in hand. The day-to-day conduct of the Group’s business is delegated to the employees of the Group subject to the authority limit given. The Board is ultimately responsible for the overall performance of the Company and of the Group.

The principal duties and responsibilities of the Board are:

• formulatingthebusinessdirectionandobjectivesoftheGroup;

• reviewing, adopting and approving the Group’s annual budgets, strategic plans, keyoperationalinitiatives,majorinvestmentsandfundingdecisions;

• overseeingtheconductofbusinessoftheGroup;

• reviewingtheriskmanagementprocesseswithintheGroup;

• assumingitsresponsibilityinsuccessionplanningwithintheGroup;and

• reviewing the adequacy and integrity of internal control systems and managementinformation systems to ensure compliance with relevant laws, rules, regulations, directives and guidelines.

The Board also assumes various functions and responsibilities that are required of them by regulatory authorities, as specified in guidelines and directives issued from time to time.

1.3 Directors’ Code of Ethics

The Directors in the Group adhere to the code of ethics as set out in the Bank Negara Malaysia’s BNM/GP7 – Part 1 Code of Ethics: Guidelines on the Code of Conduct for Directors, Officers and Employees in the Banking Industry and the Code of Ethics for Company Directors established by the Companies Commission of Malaysia.

1.4 Board Meetings

The Board meets on a regular basis to review business performance, strategies, business plans and significant policies as well as to consider business and other proposals which require the Board’s approval. Ad-hoc Board meetings are held to deliberate on corporate proposals or urgent issues which require the Board’s consideration between scheduled meetings.

The Board met eight times during the financial year ended 31 March 2009. Details of each Director’s attendance for the financial year ended 31 March 2009 are as follows:

Name of Director Attendance

1. Datuk Oh Chong Peng (Chairman) 8/8

2. Dato’ Thomas Mun Lung Lee 7/8

3. Tan Yuen Fah 8/8

4. Tee Kim Chan 8/8

5. Stephen Geh Sim Whye 8/8

6. Phoon Siew Heng 8/8

7. Megat Dziauddin bin Megat Mahmud 8/8

8. Kung Beng Hong 8/8

9. Datuk Bridget Lai 8/8

statement on corporate governance

81ALLIANCE FINANCIAL GROUP BERHAD (6627-X) • 2009 annual report

1.5 Access to Information

Board members are provided with relevant proposal papers and supporting documents well in advance of Board meetings to enable them to discharge their duties effectively. Senior management and advisers are invited to attend Board meetings, where necessary, to provide additional information and insights on the relevant agenda items tabled at Board meetings.

The Directors have full access to the services of the Company Secretary, whose role includes ensuring that Board procedures, applicable rules and regulations are complied with.

Every Director has the right to resources, whenever necessary and reasonable, for the performance of his duties at the cost of the Company. Directors may seek external independent professional advice at the expense of the Company, to assist them in making well-informed decisions whether as a full Board or in their individual capacity.

1.6 Appointment and Re-election of Directors

Pursuant to the guidelines issued by Bank Negara Malaysia (BNM), the appointment of new Directors and re-appointment of Directors upon the expiry of their respective tenure of office as approved by BNM, are subject to the prior approval of BNM.

Any proposed appointment of new Board members and proposed re-appointment will be assessed by the Nomination Committee. The Nomination Committee will, upon its assessment, submit its recommendation to the Board for approval subject to BNM’s consent.

Upon appointment, new Directors are advised of their legal and statutory responsibilities. All Directors are also regularly being updated on new requirements affecting their responsibility and are constantly reminded of their obligations.

In accordance with the Articles of Association of the Company, newly appointed Directors shall hold office only until the next Annual General Meeting (AGM), and shall then be eligible for re-election. Additionally, one-third of the remaining existing Directors shall retire from office at each AGM and be eligible to offer themselves for re-election provided always that all Directors shall retire from office at least once every three years.

Directors of the Company who are over the age of 70 years would vacate their office and submit themselves for re-appointment annually at each AGM in accordance with Section 129(6) of the Companies Act, 1965.

1.7 Directors’ Training

The Board places the responsibility for training of directors on the Nomination Committee which on a continuous basis, evaluates and determines the training needs of Directors.

All the Directors have completed the Mandatory Accreditation Programme and attended various training programmes under the Continuing Education Programmes pursuant to the requirements of Bursa Securities.

The Company has in place a Directors’ Orientation Programme for newly appointed Directors to familiarise themselves with the Group’s business operations. The Directors are provided with the opportunity for relevant training programmes on an ongoing basis on areas relating to the banking and financial industry to keep themselves abreast with the latest developments in the marketplace.

During the financial year, the Directors attended seminars, conferences, courses and briefings organised in-house as well as by professional bodies and regulatory authorities.

The seminars and courses attended by the Directors during the financial year ended 31 March 2009 are as follows:

Accounting & Tax• AccountingStandardsupdateseminar• Conferenceon“Budget2009andTaxIssuesfortheCorporateSector”• TaxBudget2009updateseminar

Corporate Governance• CompanyLawupdates• BriefingonDirectors’andOfficers’Insurance• BNMFinancialInstitutionsDirectors’EducationProgramme

Finance & Management• “LeadingChangeinToughTimes”seminarbyProf.JohnKotter• “FinancingforSmallandMediumEnterprises”seminar• AsessionwithMrJimRogerson“HowISeeTheWorldToday”• “BlueOceanStrategy”seminar

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Islamic Banking• BriefingonHighCourtJudgementonAl-Bai’BithamanAjil• “BasicsofLegalDraftingofIslamicBankingandFinancingDocuments”seminar• Conferenceon“EnhancingtheResilienceandStabilityoftheIslamicFinancialSystem”

Orientation Programme• AllianceBankMalaysiaBerhadOrientationProgramme

Risk Management• “The EVAApproach toValue Creation & Risk Management: Challenges & Opportunities”

seminar• “BoardResponsibilitiesforInternalControl&EnterpriseRiskManagement”seminar• Acourseon“Adeepdive intoGuidebookforauditcommittees inSingapore(III): Internal

ControlsandFraud”• InstituteofBankersMalaysiaTrainingProgramme:“EffectiveRiskManagement:Treasury,

AssetLiabilityManagementandDerivatives”

1.8 Board Committees

The Board has established various Board Committees to assist and complement the Board in the execution of its responsibilities. Each Board Committee operates within its terms of reference, which clearly defines its functions and authority. The Board Committees of the Company are as follows:

(a) Audit Committee

The Terms of Reference and the composition of the Audit Committee are presented in the Audit Committee Report on pages 87 to 88 of this Annual Report.

(b) Nomination Committee

The Nomination Committee reviews the existing mix of skills, experience, size, effectiveness of the Board and contribution of each individual Director. It also considers and recommends to the Board, the candidates for directorships.

The salient Terms of Reference of the Nomination Committee are as follows:

• toestablishminimumrequirementsfortheBoardi.e.requiredmixofskills,experience,qualification and other core competencies required of a Director. The Committee is also responsible for establishing minimum requirements for the Chief Executive Officer (CEO).Therequirementsandcriteriashouldbeapprovedbythefullboard;

• torecommendandassessthenomineesfordirectorship,boardcommitteemembersas well as nominees for the CEO. This includes assessing directors for re-appointment, before an application for approval is submitted to BNM. The actual decision as to who shallbenominatedshouldbetheresponsibilityofthefullboard;

• tooverseetheoverallcompositionoftheBoard,intermsoftheappropriatesizeandskills, and the balance between executive directors, non-executive directors and independentdirectorsthroughannualreview;

• torecommendtotheBoardtheremovalofaDirector/CEOfromtheBoard/managementiftheDirector/CEOisineffective,errantandnegligentindischarginghisresponsibilities;

• toestablishamechanismfortheformalassessmentontheeffectivenessoftheBoardas a whole and the contribution of each Director to the effectiveness of the Board, the contribution of the Board’s various committees and the performance of the CEO and other key senior management officers. Annual assessment is conducted based on an objective performancecriterion.SuchperformancecriteriaareapprovedbythefullBoard;

• toensurethatallDirectorscontinuetoreceiveappropriatetraininginordertokeepabreastwiththelatestdevelopmentintheindustry;

• to oversee the appointment, management succession planning and performanceevaluationofkeyseniormanagementofficers;

• torecommendtotheBoardtheremovalofkeyseniormanagementofficersiftheyareineffective,errantandnegligentindischargingtheirresponsibilities;and

• toassess,onanannualbasis,toensurethattheDirectorsandkeyseniormanagementofficers are not disqualified under Section 56 of the Banking and Financial Institutions Act, 1989.

The Nomination Committee annually assesses the effectiveness of the Board as a whole and the contribution of each individual Director. The Nomination Committee upon conducting its annual review on the Board, was satisfied that the current Board members and the Board size of nine, constitute an effective composition in terms of background and core competencies which commensurate with the size and complexity of the Company. The Nomination Committee was also satisfied that the Board comprises individuals of calibre and diverse experience and has the necessary skills and qualifications and collectively provide a good mixture of core competencies in finance, accounting, legal, business management, information technology and investment management.

statement on corporate governance (cont’d)


The Nomination Committee comprises entirely of non-executive directors with the majority being independent. For the financial year ended 31 March 2009, a total of two meetings were held by the Nomination Committee. The members of the Nomination Committee and the details of attendance during the financial year ended 31 March 2009 are as follows:

Committee Members Attendance

• DatukOhChongPeng(Chairman) 2/2

• TeeKimChan 2/2

• Dato’ThomasMunLungLee 1/2

• PhoonSiewHeng 2/2

• MegatDziauddinbinMegatMahmud 2/2

(c) Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on the remuneration package of Non-Executive Directors. The reviews cover all aspects of remuneration, including but not limited to Directors’ fees, allowances and benefits-in-kind based on the level of responsibilities undertaken by the particular Director concerned.

The salient Terms of Reference of the Remuneration Committee are as follows:

• to recommend a framework of remuneration for Directors, CEO and key seniormanagement officers of the Company for the full Board’s approval. The remuneration framework should support the Company’s culture, objectives and strategy and should reflect the responsibility and commitment, which goes with the board membership and responsibilities of the CEO and senior management officers. There should be a balance in determining the remuneration package, which should be sufficient to attract and retain the employees and/or directors of calibre, and yet not excessive to the extent of the Company’s funds are used to subsidise the excessive remuneration. This framework should cover all aspects of remuneration including Directors’ fees, salaries, allowances,bonuses,optionsandbenefits-in-kind;

• to provide oversight on remuneration matters of operating subsidiaries and torecommend specific remuneration packages for executive director(s) and CEO. The remuneration package should be structured such that it is competitive and consistent with the Company’s culture, objectives and strategy. Salary scales drawn up should be within the scope of the general business policy and not be dependant on short-term performance to avoid incentives for excessive risk-taking. As for non-executive directors and independent directors, the level of remuneration should be linked to their level of responsibilities undertaken and contribution to the effective functioning of the board. In addition, the remuneration of each board member may differ based on their levelofexpertise,knowledgeandexperience;

• toreviewannuallytheGroupPolicyonremunerationofnon-executivedirectorsofthesubsidiaries and to recommend the remuneration of the non-executive directors for the board’sapproval;

• to approve new key senior management appointments and remuneration package,transfers and promotions of senior management officers and assessing the performanceofkeyseniormanagementofficersoftheCompany;and

• toreviewandapproveannualsalaryincrementandperformancebonusforemployeesof the Company.

The Remuneration Committee comprises entirely non-executive directors with the majority being independent. For the financial year ended 31 March 2009, a total of four meetings were held by the Remuneration Committee. The members of the Remuneration Committee and the details of attendance during the financial year ended 31 March 2009 are as follows:



• TeeKimChan 4/4



• MegatDziauddinbinMegatMahmud 4/4

(d) Employees’ Share Participating Scheme Committee

The AFGB Employees’ Share Participating Scheme Committee (ESPS Committee) is a sub-committee of the Remuneration Committee established to implement and administer the AFGB Employees’ Share Scheme (ESS) in accordance with the Bye-Laws approved by the shareholders of the Company on 28 August 2007.

The members of the ESPS Committee and the details of the attendance during the financial year ended 31 March 2009 are as follows:



• TeeKimChan 2/2



• MegatDziauddin bin Megat Mahmud 2/2

The minutes of all Board Committees are circulated to the Board for notation.

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1.9 Directors’ Remuneration

The objective of the Company’s policy on Directors’ remuneration is to attract and retain Directors needed to steer the Company towards achieving its goal effectively. The determination of the Non-Executive Directors’ remuneration is a matter for the Board as a whole.

The level of remuneration of Non-Executive Directors is linked to their level of responsibilities undertaken.

Non-Executive Directors are paid annual Directors’ fees and sitting allowances for attendance to Board/Committee meetings. The members of Board Committees are also paid annual fees for additional responsibilities undertaken. Directors of the Company who are employees within the Group are remunerated separately in accordance with their employment contracts.

Details of the Company’s Directors’ Remuneration (including benefits-in-kind) for each Director in the Company and the Group for the financial year ended 31 March 2009 are set out below:


COMPANY SUBSIDIARIES

ABMB AIBB AIS AIMB

Salary, Salary, Salary, Salary, Salary, Allowances, Allowances, Allowances, Allowances, Allowances, Benefits- Benefits- Benefits- Benefits- Benefits- in-kind Company in-kind in-kind in-kind in-kind Group Fees and others Total Fees and others Fees and others Fees and others Fees and others Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors – – – – – – – – – – – –

Non-Executive Directors

Datuk Oh Chong Peng (Chairman) 96 77 173 – – – – – – – – 173

Dato’ Thomas Mun Lung Lee 48 39 87 120 70 120 6 – – – – 403

Tan Yuen Fah 48 39 87 60 33 – – – – – – 180

Tee Kim Chan 48 57 105 – – – – – – 15 12 132

Stephen Geh Sim Whye 48 31 79 – – – – – – – – 79

Phoon Siew Heng 48 35 83 60 55 60 34 – – – – 292

Megat Dziauddin bin Megat Mahmud 48 55 103 60 71 60 7 96 6 24 16 443

Kung Beng Hong 48 30 78 60 65 60 26 – – – – 289

Datuk Bridget Lai – – – – *5,076 – – – – – – *5,076

Total 432 363 795 360 5,370 300 73 96 6 39 28 7,067

* This includes the fair value of share options and share grants offered/awarded to Datuk Bridget Lai under the Employees’ Share Scheme amounting to RM633,861.

ABMB: Alliance Bank Malaysia Berhad AIS : Alliance Islamic Bank Berhad AIBB : Alliance Investment Bank Berhad AIMB: Alliance Investment Management Berhad


2. Accountability and Audit

2.1 Financial Reporting

The annual financial statements and quarterly results are reviewed by the Audit Committee and approved by the Board of Directors for BNM’s clearance prior to public release. A statement by the Directors explaining the Board’s responsibility for preparing the annual financial statements is set out on page 122 of this Annual Report.

2.2 Risk Management Framework

A Risk Management report, which provides an overview of the risk management framework within the Group, is disclosed on pages 91 to 96 of this Annual Report.

2.3 Internal Control

A Statement on Internal Control, which provides an overview of the state of internal control within the Group, is disclosed on page 90 of this Annual Report.

2.4 Policy against Fraud

All employees are entrusted with the responsibility to stay alert to risk of fraud and assist in the combat against fraud. The Group has in place reporting procedures with regards to fraud, robbery/burglary and including breach of the Code of Ethics.

The Group also has in place a Whistle Blower Policy which is designed to provide an avenue for staff to report any possible financial improprieties such as manipulation of financial results, misappropriation of assets, intentional circumvention of internal controls, inappropriate influence on related party transactions by related parties, or other improprieties. The Whistle Blower Policy is also an avenue for employees to raise concerns in relation to the specific issues which are in the interest of integrity and justice, and which fall outside the scope of other Group policies and procedures.

2.5 Anti-Money Laundering and Counter-Financing of Terrorism

The Anti-Money Laundering and Anti-Terrorism Financing Act 2001 provides the legal framework to counter money laundering and terrorism financing in reporting institutions. In order to reduce the likelihood of any of the entities within the Group becoming vehicles for money laundering, terrorism financing and other unlawful activities, the Group has a policy on anti-money laundering and counter-financing of terrorism setting out the minimum standards that are to be adopted and implemented by the entities within the Group.

The key features of the policy are:

• auniformcustomeracceptancepolicywhichrequires,amongstothers,establishmentofabusiness relationship only after satisfactory verification of a new customer or persons acting ontheirbehalf;

• customerduediligencetobeconductedwiththeapplicationofarisk-basedapproach;

• ongoingmonitoringoftransactionstodetectunusualandsuspiciouspatternsofactivityandintensifiedmonitoringforhigherriskcustomers;

• clear enunciation of the roles and responsibilities of various persons within the Group,includingtheBoardofDirectors;

• requirementforreportingofsuspicioustransactionsandprohibitionagainstdisclosureofsuspicioustransactionreportsmade;

• co-operationwiththeFinancialIntelligenceUnit,BNMandotherregulatoryauthoritieswithnocompromiseonconfidentialityofcustomerinformation;

• properretentionofrecordsfortheprescribedretentionperiod;and

• ensuringstaffawarenessandtraining.

The standards expected by the Group are upheld and reinforced by annual training programmes on anti-money laundering and counter-financing of terrorism.

2.6 Relationship with the Auditors

Through the Audit Committee, the Company has established a formal and transparent relationship with the auditors, both internal and external. The external auditors are invited to discuss the annual financial statements, their audit plan, audit findings and other special matters that require the Board’s attention. The Audit Committee meets with the external auditors and internal auditors twice a year, without the presence of the Management.

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3. Corporate ResponsibilityThe Board has adopted the best practices in corporate governance in all its activities to ensure that we achieve business prosperity for the benefit of all stakeholders. Whilst we are committed to achieving our business and financial goals in a responsible and sustainable manner, we are also mindful of the need to fulfil our responsibilities to the marketplace, workplace, community and the environment in which we operate.

4. Investors Relations and Shareholders CommunicationThe Company acknowledges the importance of regular communication with shareholders and investors. The Company endeavours to maintain constant and effective communication with shareholders through timely and comprehensive announcements. The Board regards the AGM as an opportunity to communicate directly with shareholders and encourages attendance and participation. The notice of AGM is despatched to shareholders, together with explanatory notes or circulars on items of special business, at least 21 days prior to the meeting date.

Briefings for analysts are conducted every quarter in conjunction with the release of the quarterly financial results to provide consistent dialogues between the Group’s Senior Management and the investment community. During the last 12 months, the Group has participated at roadshows and dialogues both locally and internationally to share with the investment community the latest updates and pertinent information on the Group’s progress. These platforms enabled the investment community to express their views on the Group’s performance and in turn, the Group had the opportunity to manage investors’ expectations and strengthen their understanding of the Group.

Shareholders, potential investors and members of the public can access the Company’s website at www.alliancegroup.com.my for information of the Group. They can also convey their concerns and queries to the Senior Independent Non-Executive Director of the Company, Dato’ Thomas Mun Lung Lee at fax no. 03-2694 6200 or by e-mail to [email protected], or by mail to the registered office of the Company at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8 JalanMunshi Abdullah, 50100 Kuala Lumpur, Malaysia.

5. Corporate DisclosureThe Corporate Disclosure Policies and Procedures for the Group (CDPP) provides timely, consistent and fair disclosure of corporate information to enable informed decisions by investors.

The objectives of the CDPP are:

(a) raising awareness of directors, management and employees on disclosure requirements and practices;

(b) providing guidance in disseminating corporate information to, and in dealing with investors, analysts,mediarepresentativesandthepublic;and

(c) ensuring compliance with the disclosure obligations under the Listing Requirements of Bursa Securities and other applicable laws.

The Group Company Secretary being the Corporate Disclosure Manager (CDM), serves as the primary contact person for matters referenced in the CDPP. He oversees and co-ordinates disclosure of material information to Bursa Securities. The CDM also ensures compliance with the CDPP and undertakes reviews of any violations, including assessment and implementation of appropriate consequences and remedial action.

Certain designated senior management staff of the Group are authorised to communicate Group information to the investing public. The authorised spokespersons are regularly reminded of their responsibility to exercise due diligence in making sure that the information to be disseminated to the investing public is accurate, clear, timely and complete, and that due care is observed when responding to analysts, the media and the investing public.

To take advantage of current information technology to disseminate relevant information to the investing public, all announcements released by the Company are made accessible via the Company’s website, www.alliancegroup.com.my.

6. Dealings in Securities The Group has in place an internal procedure governing dealings in securities by the Directors and employees to prevent contravention of applicable rules and requirements, including the provisions of the Listing Requirements of Bursa Securities and insider trading laws.

“WatchList”and“RestrictedList”arecirculatedregularly to therelevantDirectorsandemployeesreminding them to refrain from dealing with relevant securities. Directors and principal officers of the Group are also reminded on a quarterly basis in relation to restriction in dealings in securities of the Company during Closed Periods.

This Statement on Corporate Governance is made in accordance with a resolution of the Board of Directors dated 29 May 2009.



audit committee report

Audit Committee The Audit Committee comprises the following Directors:

Tan Yuen Fah (Chairman) Independent Non-Executive Director

Stephen Geh Sim WhyeIndependent Non-Executive Director

Tee Kim Chan Independent Non-Executive Director

Megat Dziauddin bin Megat Mahmud Independent Non-Executive Director

Kung Beng Hong Non-Independent Non-Executive Director

Terms of Reference1. Policy

It is the policy of the Company to establish an Audit Committee to ensure that internal and external audit functions are properly conducted and that audit recommendations are being carried out effectively.

2. Objectives

The objectives of this policy are:

(a) tocomplywiththerelevantregulatoryandstatutoryrequirementsonauditcommittee;and

(b) to provide independent oversight of the Company and subsidiaries’ financial reporting and internal control system and ensuring checks and balances within the Company and subsidiaries.

3. Composition of the Audit Committee

The Audit Committee shall be appointed by the Directors which shall fulfil the following requirements:

(a) theAuditCommitteemustbecomposedofnofewerthanthreemembers;

(b) all the Audit Committee members must be non-executive directors, with a majority of them being independentdirectors;

(c) the members of the Audit Committee shall elect a Chairman from among themselves who shall beanIndependentDirector;and

(d) at least one member of the Audit Committee:

(i) mustbeamemberoftheMalaysianInstituteofAccountants;or

(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least three years’workingexperience;and

(aa) he must have passed the examinations specified in Part I of the 1st Schedule of the AccountantsAct1967;or

(bb) he must be a member of one of the associations of accountants specified in Part II of the1stScheduleoftheAccountantsAct1967;or

(iii) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

No alternate Director shall be appointed as a member of the Audit Committee.

4. Secretary to the Audit Committee

The Company Secretary shall be the Secretary to the Committee.

5. Quorum

Two members of the Audit Committee shall constitute a quorum at any meeting and majority of members present must be Independent Directors to form a quorum.

6. Attendance at Meetings

• TheHeadofGroupInternalAuditisinvitedtoattendallmeetingsoftheAuditCommittee.

• TheHeadofFinanceandExternalAuditorsarenormallyinvitedtoattendmeetingsasandwhennecessary.

• OtherBoardmembersmayattendmeetingsupontheinvitationoftheAuditCommittee.

• TheSecretaryoftheAuditCommitteeshallprovidethenecessaryadministrativeandsecretarialservices for the effective functioning of the Committee. The minutes of meetings are circulated to the Committee Members and to all other members of the Board.

7. Frequency of Meetings

The Committee shall meet at least four times a year. However, the frequency of meetings would increase depending on the scope of the audit activities and the number of audit reports produced.

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audit committee report (cont’d)

8. Functions of the Audit Committee

The functions of the Audit Committee are as follows:

(a) To consider the appointment of the External Auditors, the audit fee and any questions of resignation or dismissal and whether there is reason (supported by grounds) to believe that the ExternalAuditorsarenotsuitableforre-appointment;

(b) To discuss with the External Auditors before the audit commences, the nature and scope of the audit,andensureco-ordinationwheremorethanoneauditfirmisinvolved;

(c) TorecommendthenominationofapersonorpersonsasExternalAuditors;

(d) To review:

• withtheExternalAuditors,theauditplan;

• withtheExternalAuditors,theirevaluationofthesystemofinternalcontrols;

• withtheExternalAuditors,theirauditreport;

• theassistancegivenbytheCompany’sofficerstotheExternalAuditors;

• theconsolidatedfinancialstatementsoftheCompany;and

• anyrelatedpartytransactionsthatmayarisewithintheGroup;

(e) To review the quarterly and year-end financial statements of the Company, prior to the approval of the Board of Directors, focusing particularly on:

• anychangesinaccountingpoliciesandpractices;

• significantadjustmentsarisingfromtheaudit;

• anyothersignificantandunusualevents;

• thegoingconcernassumption;and

• compliancewithaccountingstandardsandotherlegalrequirements;

(f) To discuss problems and reservations arising from the interim and final audits, and any matter theExternalAuditorsmaywishtodiscuss(intheabsenceofManagementwherenecessary);

(g) ToreviewtheExternalAuditors’ManagementletterandManagement’sresponse;

(h) TomeetwiththeExternalAuditorswithoutexecutiveBoardmemberspresenceatleasttwiceayear;

(i) To propose best practices on disclosure in financial results and annual reports of the Company in line with the principles set out in the Malaysian Code on Corporate Governance, other applicable laws,rules,directivesandguidelines;

(j) Toreviewtheeffectivenessofinternalcontrolsandriskmanagementprocesses;

(k) To do the following where an internal audit function exists:

• reviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunction,andthatithasthenecessaryauthoritytocarryoutitswork;

• reviewtheinternalauditplanandresultsoftheinternalauditprocessandwherenecessaryensure that appropriate action is taken on the recommendations of the internal audit function;

• reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;

• toconsiderthemajorfindingsofinternalinvestigationsandManagement’sresponses;

(l) To consider and examine any other matters as defined by the Board.

9. Authority

The Committee is authorised by the Board to:

(a) investigateanymatterwithinthescopeoftheCommittee’sduties;

(b) havefullandunrestrictedaccesstoanyinformationintheCompany;

(c) obtainindependentprofessionaladviceorotheradvice,wheneverdeemednecessary;

(d) make recommendations for improvements of operating performance and management control arisingfrominternalandexternalauditrecommendations;

(e) havetheresourceswhicharerequiredtoperformitsduties;

(f) have direct communication channels with the External Auditors and person(s) carrying out the internalauditfunctionoractivity,ifany;and

(g) be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

The Chairman and/or members of the Audit Committee are authorised by the Board to engage on a continuous basis with senior management, the Chairman, the Chief Executive Officer, the Head of Finance, the Head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Company.


Audit Committee Meetings held for the Financial Year Ended 31 March 2009During the financial year ended 31 March 2009, a total of six Audit Committee meetings were held. The details of attendance of the Committee members are as follows:

Name of Committee Member Attendance

Tan Yuen Fah 6/6

Stephen Geh Sim Whye 6/6

Tee Kim Chan 6/6

Megat Dziauddin bin Megat Mahmud 6/6

Kung Beng Hong 6/6

Summary of ActivitiesThe Audit Committee has during the financial year ended 31 March 2009 discharged the following duties:

(a) ReviewedthequarterlyresultsandmaderecommendationstotheBoardforapproval;

(b) Reviewed with the External Auditors, the draft Audited Financial Statements of the Company and the Groupforthefinancialyearended31March2008;

(c) ReviewedwiththeExternalAuditors,theirreportontheLimitedReviewofHalfYearAccounts;

(d) Reviewed with the External Auditors, their management letter together with Management’s responses tothefindingsforthefinancialyearended31March2008;

(e) ReviewedwiththeExternalAuditors,theirauditplanforthefinancialyearended31March2009;

(f) Considered the re-appointment of the External Auditors and their audit fee for the financial year ended 31March2009;

(g) Considered the adoption of policy for rotation of external audit firm every five years with effect from thefinancialyearending31March2010;

(h) Reviewedtheinternalauditreports;

(i) Reviewed the Statement on Internal Control, Audit Committee Report, Risk Management Report, Statement on Corporate Governance and Corporate Responsibility Report for inclusion in the 2008 AnnualReport;

(j) Reviewed the allocation of share options and share grants pursuant to the Employees’ Share Scheme oftheCompanyduringthefinancialyearended31March2008;

(k) Reviewed with the Internal Auditors, the internal audit plan for the Company and its non-bank subsidiariesforthefinancialyearended31March2009;

(l) ReviewedBankNegaraMalaysia’sexaminationreportsonsubsidiaries;

(m) ReviewedrecurrentrelatedpartytransactionsenteredintobytheCompanyanditssubsidiaries;

(n) ReviewedtheTermsofReferenceofAuditCommittee;

(o) ReviewedtheimplementationofWhistleBlowerPolicy–ReportingofWrongfulActsoftheCompany;

(p) ReviewedtheCompany’sbankingsubsidiaries’BusinessPerformanceReport;

(q) MetwiththeExternalAuditorswithoutthepresenceoftheexecutivememberstwiceayear;

(r) MetwiththeInternalAuditorswithoutthepresenceoftheexecutivememberstwiceayear;and

(s) Reviewed Functional Proposals from accounting firms pursuant to competitive bidding of External Auditors exercise and recommended the appointment of External Auditors for financial year ending 31 March 2010.

Subsequent to the financial year ended 31 March 2009, the Audit Committee discharged the following duties:

(a) Reviewed with the External Auditors, the draft Audited Financial Statements of the Company and the Groupforthefinancialyearended31March2009;

(b) Reviewed with the External Auditors, their management letter together with Management’s responses tothefindings;

(c) Reviewed the allocation of share options and share grants pursuant to the Employees’ Share Scheme oftheCompanyduringthefinancialyearended31March2009;and

(d) Reviewed the Statement on Internal Control, Audit Committee Report and Risk Management Report for inclusion in the 2009 Annual Report.

Internal Audit Function The internal audit function is undertaken by the Group Internal Audit Department. The Head of Group Internal Audit Department reports directly to the Audit Committee.

The Internal Audit Department is responsible for the provision of independent audit reports to the Audit Committee on the Group’s system of internal control and its authority is provided in the Audit Charter, which formally documents the roles, duties and responsibilities of the internal auditors. The cost incurred for the Group internal audit function during the financial year amounted to RM4.6 million.

Statement on Employees’ Share Scheme (ESS)The Audit Committee confirms that the share options and share grants offered/awarded to eligible employees of the Company and its subsidiaries pursuant to the ESS during the financial year under review had been made in accordance with the criteria of allocation pursuant to the Bye-Laws of the ESS.

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Responsibility The Board acknowledges its overall responsibility for the Group’s system of internal control and for reviewing its adequacy and integrity. The system of internal control is designed to manage the Group’s risks within an acceptable risk profile, rather than eliminate the risk of failure to achieve the policies and business objectives of the Group. It can therefore only provide a reasonable but not absolute assurance of effectiveness against material misstatement of management and financial information or against financial losses and fraud.

The Board regularly receives and reviews reports on internal control and is of the view that the system of internal control that has been instituted throughout the Group is sound and adequate to safeguard the shareholders’ investments and the Group’s assets.

The Group has instituted an on-going process for identifying, evaluating and managing the significant risks faced by the Group and this process includes updating the system of internal control when there are changes to the business environment or regulatory guidelines. The process is regularly reviewed by the Board and is in accord with the ‘Statement on Internal Control: Guidance for Directors of Public Listed Companies’, issued by the Task Force on Internal Control. The role of Management is to implement the Board’s policies, procedures and guidelines on risk and control to identify and evaluate the risks faced and design, operate and monitor a suitable system of internal control to manage these risks.

The Board has extended the responsibilities of the Audit Committee to include the role of monitoring all internal controls on behalf of the Board, including identifying risk areas and communicating critical risk issues to the Board. The Audit Committee is supported by an internal audit function which is independent of the activities they audit. The internal auditors have performed their duties with impartiality, competency and due professional care.

Risk Management Framework The Board ensures that the Group manages risk within clearly defined guidelines and provides an independent oversight to ensure that risk management policies are complied with, through a framework of established control and reporting process.

The Group Risk Management Committee reviews and recommends risk management strategies, policies and risk tolerance for subsequent approval by the Boards of the Group’s Banking subsidiaries. In addition, the committee also oversees the activities of the management committees such as the Group Assets and Liabilities Management Committee, Group Credit Risk Management Committee and Group Operational Risk Management Committee, which assume the responsibility of overseeing specific areas of risks pertaining to the Group’s business activities and implement various risk management policies and procedures.

Major risks arising from the Group’s day-to-day activities in the financial services industry comprise credit risk, liquidity risk, market risk and operational risk. For more information on the risks and relevant guidelines and policies, please refer to Note 44 under the Financial Statements.

System of Internal Control To ensure that a sound system of control is in place, the Board has established primary processes in reviewing the adequacy and integrity of the system of internal controls. The primary processes include:

• RegularandcomprehensivemanagementreportsaremadeavailabletotheBoardonamonthlybasis,covering financial performance and key business indicators, which allow for effective monitoring of significantvariancesbetweenactualperformanceagainstbudgetsandplans;

• ClearlydefineddelegationofresponsibilitiestocommitteesoftheBoardandtoManagementincludingorganisationstructuresandappropriateauthoritylevels;

• Acodeof conduct, human resourcepoliciesandperformance reward system to supportbusinessobjectives,riskmanagementandthesystemofinternalcontrol;

• Aproperproceduretocontrolapplicationsandtheenvironmentofcomputerinformationsystems;

• Regularupdateof internalpoliciesandprocedures, toadapt tochanging riskprofilesandaddressoperationaldeficiencies;

• RegularreviewofthebusinessprocessesbytheGroup’sinternalaudit,toassesstheeffectivenessofthecontrolenvironmentandhighlightsignificantrisksimpactingtheGroup;

• Documentationandperiodicassessmentofcontrolsandprocessesbyallbusinessunitsformanagingkeyrisks;and

• Regular senior management meetings are held to review, identify, discuss and resolve strategic,operational, financial and key management issues.

Review of the Statement by External AuditorsAs required by Paragraph 15.24 of the Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report for the financial year ended 31 March 2009. Their review was performed in accordance with Recommended Practice Guide 5: Guidance for Auditors on the Review of Directors’ Statement on Internal Control issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the processes the Board has adopted in the review of the adequacy and integrity of internal controls of the Group.

statement on internal control


risk management

IntroductionAs Alliance Financial Group Berhad (AFGB) is principally an investment holding company, the risk management function for the day-to-day operations of the Group is carried out by its wholly-owned and main operating subsidiary, Alliance Bank Malaysia Berhad (ABMB or the Bank). The Group Risk Management Committee (GRMC) has been established at the ABMB Group level for risk oversight within the Group. At AFGB, the Board carries out high level risk management of its investments in all operating subsidiaries as well as the capitalisation needs of the AFGB Group.

OverviewThe Group has established an Integrated Risk Management Framework (IRMF) which incorporates risk management and compliance frameworks. The IRMF ensures all practices are consistent with industry’s best practices and that we are well placed to deal with challenges arising from the global financial turmoil. Under the IRMF, we have a structured Risk Governance Framework which strongly incorporates Board and Senior Management oversight.

Risk Management Infrastructure The Group’s IRMF infrastructure outlines the fundamental principles upon which accountability and responsibility for effective risk management are based. These principles stipulate that:

• theGRMCisresponsibleforriskoversightwhichincludesapprovingandperiodicallyreviewingriskmanagement policies, risk exposures and limits whilst ensuring the necessary infrastructure and resourcesareinplace;

• specialisedriskcommittees,namelytheGroupCreditRiskManagementCommittee(GCRMC),GroupOperational Risk Management Committee (GORMC) and Group Assets and Liabilities Management Committee (GALCO) assist the GRMC in managing credit risk, operational risk as well as market and liquidity risk respectively. These specialised committees are responsible for the development and implementationofriskpoliciesaswellastheassessmentoftheeffectivenessofpolicies;

• business units form the first line of defence against risk, by managing the risk versus reward trade-off within the scope of risk tolerance and policies that the Group has laid down. Business risk units are responsible for monitoring business activities and ensuring that they are carried out within theapprovedproductprogrammeparametersandbusinessmodels;

• GroupRiskManagementformsthesecondlineofdefence.GroupRiskManagementisresponsiblefor assisting the Group in formulating the risk management framework and policies; developingtoolsandmethodologies for the identification,measurement,monitoringandvaluationof risk;andrecommendingriskmitigationmeasures;

• GroupRiskManagementassiststheGRMCandtheBoardinperformingindependentmonitoringandreporting to ensure that the approved risk policies, directives and limits are implemented and complied with;and

• GroupInternalAuditformsthethirdlineofdefencebyprovidinganindependentassessmentofriskmanagement processes and infrastructure as well as the adequacy and effectiveness of risk policies and internal controls.

The Group’s Risk Governance Framework encompassing the “three lines of defence” concept is depicted below:

3rd Line of Defence

The Board/ Senior

Management

The Board/ Senior

Management

GAC/BOD

GRMC

• Oversightoftheintegrityand effectiveness of the CORM Framework

• InternalAudit–Provideindependent assurance to Senior Management/Board, and Risk Management Committee on the effectiveness of internal control

2nd Line of Defence

Risk Type Heads

Group Legal &

Compliance

Group Risk Management

GORMC

GCRMC

GALCO

GPMC

Shariah Committee

• Theeffectivenessandintegrity of the CORM Framework by reviewing adequacy of ongoing monitoring by line management

• Updatingofstandardsandgroup level policies

• Inlinewithchangestoexternal regulations and the Bank’s risk principles as set by the Board

1st Line of Defence

Line Managers in the Business

Line Management

Business Risk Officers/

Unit Risk Officers

Business Managers

(including Support Functions)

Management Meetings

• Ensuringcomplianceto laws, regulations, standards, policies, procedures, etc. via timely and effective monitoring and management

RESPONSIBLE FORGOVERNANCE COMMITTEES

92

Index Table

GAC : Group Audit Committee

BOD : Board of Directors

CORM : Compliance and Operational Risk Management

GRMC : Group Risk Management Committee

GORMC : Group Operational Risk Management Committee

GCRMC : Group Credit Risk Management Committee

GALCO : Group Assets and Liabilities Management Committee

GPMC : Group Product Management Committee

Stress TestingThe Group carries out stress testing to estimate the potential impact of extreme events on the Group’s earnings, balance sheet and capital. These stress tests also aim to gauge our sensitivity and vulnerability to a sector, customer or product segment.

The Group has a stress testing framework which is applied to identify:

• potentialvulnerableriskareasoftheBank’sportfoliotostressevents.Itexaminesanalternativefuturethat could cause problems to the Bank’s portfolio, thus enabling the Bank to assess the potential worst casescenariosandprepareforthem;and

• possibleeventsorfuturechangesinfinancialandeconomicconditionsthatcouldhaveunfavourableeffects on the Bank’s ability to withstand such changes (particularly in relation to the Bank’s capital and earnings capacity to absorb potentially significant losses), thus enabling the Bank to take steps to manage these risks and conserve capital.

The Stress Test Working Group has a team comprising Group Risk, Business Risk, Group Finance and the Lines of Business.

The stress test parameters are formulated internally, taking into account the economic scenario, plus current and forecasted key indicators over a rolling one year period. The scenario and parameters are presented to the Stress Test Working Group and to the GRMC for deliberation before being rolled out to the respective business units to run portfolio and segmental stress tests.

In collaboration with Group Finance, the results are then centrally consolidated by the Lines of Business at the banking entity and banking group levels, analysed and reported to the Stress Test Working Group, GRMC/the Board and to the central bank. These results are not reviewed in isolation. Where it is appropriate, proactive action is taken to realign our product programmes, lending guidelines and contingency plans with the stress test results.

Risk Culture• Anorganisation’sriskculture,thesoftsideofitsriskmanagementactivities,isoftentakenforgranted,

even though it is a critical dimension for building an effective risk management architecture.

• Atabasiclevel,anorganisation’sriskculturerelatestotheunderlyingawarenessthatmanagementand all employees in the organisation have in relation to risk and risk-taking matters.

• Theriskculturesetsthetoneofanorganisationandthisshouldbeclearlyinstilledintoemployeesinthe organisation when they conduct their daily activities and pursue their objectives.

• Astrongriskcultureprovidesanessential foundationuponwhichanorganisationcanbuildariskmanagement architecture to manage risks and opportunities in a rapidly changing environment.

Key Attributes of an Effective Risk Culture

risk management (cont’d)

Demonstrate ethics and values• Sharedethicalpractices• Toneatthe“top”Communicate mission and objectives• Top-downalignmentofstrategies• Policiesandguidelines

Assign individual accountability• Assignmentofownership• DemonstratedaccountabilityMeasure and reward performance• Incentiveanddiscipline• Performanceindicators• Monitoring

Promote competence• Competenceandresources• TrainingShare information and knowledge• Informationquality• Top-downcommunication• Communicationacrossprocesses

Assess and measure risk• Riskassessmentpractices• RisktoolsandprocessesEstablish process and controls• Processreliabilityandefficiency• Controleffectivenessandefficiency• Systemsaccessandsecurity

1. Leadership & Strategy

2. Accountability & Reinforcement

3. People & Communication

4. Risk Management & Infrastructure


The Group Risk Management contains three central risk functions, namely Credit Risk Management, Market Risk Management and Operational Risk Management. The roles and responsibilities of each department are outlined below.

Credit Risk ManagementThe Group’s Credit Risk Management focuses on managing the risk of financial loss as a result of a customer or counterparty’s failure to discharge their contractual obligations. For this purpose, we have established a common platform for the centralisation of core credit policies to ensure that the overall risk philosophy, risk strategies, risk appetite and tolerance limits, and control measures are consistently applied across the Group.

The Group Credit Risk Policies Framework is implemented to ensure effective governance and control over the risk management processes. The framework clearly defines the roles and responsibilities with regards to policy development, review, approval and revision of the Group’s core risk policies. It also sets the infrastructure for the different levels and types of risk policies for consistency and harmonisation.

The role of Group Credit Risk Management is further differentiated between Group Credit Risk and the respective business risk units, in that the Group Credit Risk handles risk controls on broad policies, sets risk standards, risk appetite and tolerance limits for the Group. The business risk units, on the other hand, assume the ownership as well as management of the risks inherent in their respective business activities, which they must understand and control, guided by the policies and standards set by Group Credit Risk.

Specific product and credit programmes have been developed to manage various products and class of lending. Exposure limits, macro-economic condition triggers and asset quality tripwires are among the parameters set within each product or credit programme. Additionally, we ensure that there is a clear segregation of duties between loan originators, evaluators and approvers in the Risk Management function.

Risk Infrastructure/Methodology/Tools

• GroupLoansOriginationSystem • InternalRatingSystems• ProductProgrammes• RiskAcceptanceCriteria

• CollateralManagement& Limit Monitoring System

• DocumentationChecklist• StandardLoanDocuments

• CollateralManagement& Limit Monitoring System

• AccountPerformance&Review• RiskConcentration

• DebtManagementSystem• CollectionStrategies• TrackingofCollectionand

Recoveries.

• RevampedtheLoansOriginationSystem to ensure a common platform for the Group.

• PhaseIcoveringCards,PersonalLoans and Mass Market went ‘live’ in October 2008.

• PhaseIIcoveringHousingLoansand Hire Purchase is targeted togo‘live’inJuly2009asplanned.

• PhaseIIIcoveringCorporateandCommercial units is targeted to go ‘live’ at the end of 2009.

• NewRatingScorecardsweredeveloped/is being developed to cover the following product segments:– Personal Loans– Housing Loans– Hire Purchase– SME Loans

• ApprovedthespecificationsforPhase 2B to equip the Group with a documentation checklist for efficient and effective credit operations to attain productivity and minimise operational oversights. This module would have a custodian function to track the legal documents.

• PhaseIIIonstraightthroughprocessing for limit activation is targeted to be ready by early next year.

• Thelimitmonitoringmoduleisunder the testing phase.

• PhaseIIofDebtManagementSystem covering Commercial and Mass Market units went ‘live’ in March 2009.

Achievements (Last year)/In-Progress

Prospecting& Account Planning

RiskAssessment& Credit Approval

Documentation/Disbursement

Monitoring Collection&Recovery

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Market Risk ManagementThe Group’s Market Risk Management department essentially focuses on managing market risk, which comprises Price Risk and Liquidity Risk. Price Risk is the risk of loss of earnings arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and in their implied volatilities.

Liquidity Risk takes two forms: funding liquidity risk and market liquidity risk. Funding liquidity risk could arise if the Group or Bank is unable to meet its financial commitments when due. Market liquidity risk arises if the Group or Bank is unable to unwind or offset its position in the market within a short span of time, at or near the previous market price, because of inadequate market depth or disruptions to the marketplace.

Within the Group, market risk in the Banking Book is supervised primarily by the GALCO and executed through Financial Markets. Market risk in the Trading Book is managed primarily by Financial Markets based on policies and limits approved by the GRMC or Board. ABMB’s current market risk exposures in the Trading Book are relatively small, typically with less than 1% impact on the Bank’s Core Capital Ratio and Risk-Weighted Capital Ratio (RWCR), on a month-to-month basis.

The bulk of the Group’s treasury positions comprise short-term money market instruments and longer-term capital market instruments, including Malaysian Government Securities, followed by foreign exchange contracts, which are primarily entered into to meet the needs of our commercial and corporate customers. While the Group offers share financing, stockbroking and unit trust management services to our retail customers, the treasury arm did not undertake proprietary trading of equities and commodities in the financial year ended 31 March 2009.

Group Market Risk Management undertakes the following support roles:

• formulatesandenhancestheGroup’smarketriskmanagementframeworkandpoliciesaswellastheasset-liability management framework and policies in accordance with the Group’s business direction andrevisedregulatoryrequirements;

• carriesoutindependentmonitoringoftreasuryactivitiesonadailybasis,inaccordancewithapprovedpoliciesandlimits.Thisincludesreportingofanylimitexcessesorbreaches;

• provides independent marked-to-market valuation of treasury positions and risk exposures, usingdataobtainedfromvarioussources,suchasindependentmarketprice/informationproviders;

• reviewsNewProductApprovalPapers(inconjunctionwithotherriskmanagementunits),toassessthemarketandliquidityriskspriortolaunchingnewproducts;and

• providesintegratedriskmanagementsupportactivitiesinconjunctionwithotherRiskManagementfunctions and participates with other departments on joint assignments and projects involving market risk, liquidity risk and asset-liability management and stress testing exercises.

The following are among the many projects and initiatives related to market and liquidity risk management:

Treasury System

We have implemented a Group-wide treasury system to enable the Group to effectively manage the risk exposures for existing and new treasury products. The treasury system encompasses the front, middle and back offices, with functional capabilities covering deal capture and processing, limits monitoring, risk management(includingValue-at-Riskfunctionality),accountingandmanagementreporting;plusinterfacesto the settlement systems.

Under Phase 1 of this project, the Group has successfully set up the system to handle conventional and Islamic banking treasury instruments, covering traditional forex and money market instruments, interest rate swaps and dual currency investments. For the next phase of the project, we plan to cover other forex and interest rate structured products.

Summarised Treasury Workflow


Processing&settlementmanaged by the

Back Office

Daily reporting to Senior Management

Monthly reporting to GALCO&GRMC

Pre-deal risk limit checks

Dealer inputs deals into the Treasury System

Prepares daily compliance reports&monthlyrisk

dashboards

Independent monitoring by Middle Office

Deals negotiated with clients and counterparties


Asset-Liability Management & Funds Transfer System

Under the Funds Transfer Pricing (FTP) Module, the Group has also set up the functionality to perform matched-term FTP to measure the relative performance of deposit-taking and loan-generation units. Through the FTP process, the interest rate risks in the Banking Book will be managed by the GALCO via Financial Markets, thus allowing the other business units to concentrate on managing their portfolio credit risk exposures.

UndertheAssets&LiabilitiesManagement(ALM)Module,theBankhassetupthefunctionalitytogovernitsstatic liquidity and interest rate risk exposures. The next phase of this project is intended to cover dynamic simulations and projections.

Operational Risk ManagementOperational risks arise from inadequate or failed internal processes, people and systems or from external events. These risks are managed by the Group through the following key measures:

• soundriskmanagementpracticesinaccordancewithBaselIIandregulatoryguidelines;

• Boardandseniormanagementoversight;

• well-definedresponsibilitiesforallstaffconcerned;

• establishedstandardsinriskidentification,controlsandmonitoring;and

• fosteringabetterriskawarenessculture.

Having revised our Operational Risk Management Framework which forms the bedrock for operational risk governance, we are now embedding the discipline of operational risk management within our operations. The Group has strengthened its infrastructure and applied several techniques for the administration of operational risks together with the use of rating matrixes. These tools are system-driven and have been constantly used to aid in self assessment, control and monitoring. Moreover, incidents of loss events are tracked and captured for analytical risk profiling and to further enhance our controls.

Escalation and reporting processes are well instituted through various management committees notably the GORMC and GRMC as well as the Board. The responsibilities of the committees and the Board include the following:

• oversightandimplementationoftheOperationalRiskManagementFramework;

• establishmentofriskappetiteandtheprovisionofstrategicandspecificdirections;

• regularreviewofoperationalrisksreportsandprofiles;

• addressingoperationalriskissues;

• ensuringcompliancewithregulatoryandinternalrequirementsincludingdisclosures.

To inculcate a stronger risk culture throughout our organisation, the Group ensures that staff training in this area is constant and ongoing. This training includes the all-important elements of business continuity planning while business continuity and disaster recovery procedures are regularly conducted.

As part of our initiative to ensure that new products are duly managed, we revised our Guidelines during the year in compliance with regulatory changes.

Internal audit plays its part in ensuring an independent assurance of the implementation of the Framework through their conduct of regular reviews and reports to the Board.

Monthly GRMC meeting (Board level)

Prepare GALCO reports/dashboard

Pre-GALCO meeting (Working Group level)

Gather data from source systems, general ledger

and management information systems

Monthly GALCO meeting (Senior Management level)

Proposal papers, policy papers&informationpapers submitted by

business and support units

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The illustration below summarises the foundation of the Group’s management of operational risks:

Business Risk TeamsIn the Group, besides Group Risk as outlined above, the Group has dedicated Business Risk Teams that are embedded within the Consumer Banking, Commercial Banking, Corporate Banking and Investment Banking businesses. These respective teams have contributed to building the best-in-class risk infrastructure and analytics for managing risk in the businesses.

These Business Risks Teams form an integral part of the Business Model with direct and independent reporting lines to Group Chief Credit Officer. They provide core credit functions such as credit underwriting, policy setting, credit documentation and administration, portfolio management, credit analytics and loan monitoring and recovery. They also identify changes in Key Risk Indicators and other risk concentrations and mitigate critical risk concerns.

With these Business Risk Teams in place, the Group has benefited in terms of improved turnaround time, better credit quality and more effective monitoring of Key Risk Indicators through risk dashboard monitoring/reporting and credit analytics.

Basel II AccordThe Group monitors its capital adequacy position closely to ensure compliance with Bank Negara Malaysia’s (BNM) requirements and international best practices. In this regard, we are guided by the Basel II Accord which provides guidance on the amount of regulatory capital that banks need to put aside in proportion to their risk profile arising from a bank’s lending, investment and trading activities. We are committed towards adhering to such international standards that are established to protect shareholders and customers against the risk of bank failure.

The Group adheres to the Basel II’s rigorous risk and capital management requirements and continually strives to ensure the efficient use of capital. The Group is fully committed to progressively building up its capabilities to align with the advanced approaches Basel II takes in relation to credit risk, market risk and operational risk. In this regard, we have allocated the necessary budgets and resources to undertake the relevant tasks.

We have established a Group Project Management Office to coordinate the overall implementation of the various Basel II initiatives. Thus far, the Group has successfully rolled out the Basel II Solution which comprises the Basel II Capital Adequacy Calculator and the Collateral Management module of the Collateral Management&LimitMonitoringSystem,whichiscrucialfortheimplementationofBNM’sStandardisedApproachforbanksinMalaysia(effective1January2008).

Key Basel II projects:

Basel II Solution

This project focuses on regulatory compliance and lays the foundation to go beyond Basel II, through risk-based pricing, economic profit, and risk-adjusted return on capital (RAROC).

Operational Risk Management (ORM) Solution

A comprehensive Group-wide integrated ORM Solution with Loss Data Capture, Risk Control & SelfAssessment and Key Risk Indicators Modules, which will help to provide a foundation that will be in line with best-in-class risk governance.

Collateral Management Module

Phase 1 addresses the operational and monitoring requirements of the Basel II Accord and BNM’s guidelines in order for the collateral to be eligible for credit risk mitigation.

Phase 2 covers the Limit Management Module and is intended to enable the Bank to better manage its credit risk concentrations.

The following table highlights the elements of the Basel II approaches adopted as at 31 March 2009:


Credit Risk Standardised Approach

Market Risk Standardised Approach

Operational Risk Basic Indicator Approach


corporate responsibility report

Our Commitment to Responsible Corporate ConductAs a leading integrated financial solutions provider that advocates the concept of Relationship Banking, Alliance Financial Group Berhad (AFGB) is committed to conducting our business in a manner that builds strong relationships with our many stakeholders as well as adds sustainable value to them. In a similar manner, we are committed to undertaking responsible corporate conduct that helps build robust partnerships and elevates the standing of our shareholders, customers, employees, business partners as well as the communities and environment in which we operate.

In line with the broad guidelines set out in Bursa Malaysia’s Corporate Responsibility Framework, all the Group’s corporate responsibility activities and initiatives are guided by principles of accountability, honesty, transparency and sustainability. In carrying out our corporate responsibility agenda in the areas of the marketplace, workplace, stakeholder engagement as well as the community and environment, we have established these key themes as our core corporate responsibility pillars:

• engagingthemarketplace;

• maintainingaconduciveworkplace;

• developingourcommunity;and

• conservingourenvironment.

(a) Engaging the Marketplace In our bid to engage with our shareholders, investors and customers to strengthen our relationship with and create value for them, we continue to roll out several initiatives.

(i) Strong Shareholder and Investor Relations

In line with our core values of practicing integrity and ethics in all our business dealings as well as to be transparent and accountable to our shareholders and investors, the Group undertakes the provision of consistent, accurate, transparent and timely information to the investment community. To build and strengthen the Group’s credibility in the marketplace and to enable more proactive engagement with our shareholders, fund managers and research analysts, we have established a Group Investor Relations unit which is tasked with disseminating information to as wide an audience as possible on the local an international fronts.

In the year under review, our investor relations team arranged several roadshows with leading international stockbrokers at regional financial centres to share the latest updates and pertinent information on the Group’s progress. Our proactive approach to investor relations has made Alliance Bank Malaysia Berhad (ABMB or the Bank) one of the most widely covered small-mid cap banks in the country. The intensity of communications is well reflected in the number of meetings that the team conducted in the period under review. Over the course of the year, the investor relations team had a total of 96 requests for meetings which included face-to-face meetings, luncheon updates and conference calls, in comparison to 66 requests in the preceding financial year. These platforms enabled the investing community to express their views on the Group’s performance to senior management while we in turn had the opportunity to manage investor expectations and strengthen their understanding of the Group.

To ensure information is disseminated to the investing community, fund managers and analysts in a timely manner, the investor relations team is committed to responding to questions within three working days. The Internet is proving to be an excellent vehicle for us in a number of ways, with the number of visits to our website growing and the content on the site being steadily built up. In addition to making the statutory announcement of financial results to Bursa Malaysia, our quarterly financial results are also released to members of the media.

Our Directors are kept well informed of grassroot-level issues at Board meetings. During the year, ABMB held two Board meetings offsite in Kota Kinabalu and Penang in September and December 2008 respectively. The Minority Shareholder Watchdog Group is also invited to AFGB’s annual general meetings whereby we openly respond to their queries pertaining to the Group and its businesses. AFGB remains committed to maintaining open dialogue with the investment community to ensure a thorough understanding of the Group and its business strategies.

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Snapshot of Investor Relations Activities for the Financial Year Ended 31 March 2009

1st Quarter 2008/2009• Publicationof1Q2008/2009Results• MediaStatementandAnalystsBriefingbyTeleconference• CLSARoadshow(Singapore)• CreditSuisseRoadshow(HongKong)• AnalystsBriefing(May2008)

2nd Quarter 2008/2009• PublicationofAnnualReport2008• AnnualGeneralMeeting• PublicationofHalfYear2008/2009Results• MediaStatementandAnalystsBriefing

3rd Quarter 2008/2009• Publicationof3Q2008/2009Results• MediaStatementandAnalystsBriefingbyTeleconference• AnalystsBriefing(Nov2008)

4th Quarter 2008/2009• PublicationofFullYear2008/2009Results• MediaStatementandAnalystsBriefing• CreditSuisseRoadshow(Singapore)

(ii) Top Quality Shareholder Value

The Group is committed to pushing the envelope on innovation and business excellence as well as delivering top quality returns to our investors. Our efforts culminated in garnering several awards and accolades over the course of the financial year.

In recognition of commitment to excellence in the business world, the Bank received two awards under the banner of the Technology Business Review (TBR) ASEAN Awards. The Bank wasawardedtheCorporateAwardforExcellenceintheASEANBanking&FinanceSector,whileour Group Chief Executive Officer (GCEO), Datuk Bridget Lai was conferred the CEO Award for Leadership. The former award honours organisations whose exemplary business models have ledtothesuccessfulachievementofbusinessgoalsandfinancialaccomplishments;whilethelatter leadership excellence award is bestowed upon CEOs who have contributed to the growth or turnaround of their respective organisations during their tenure.

To further demonstrate our commitment to delivering top quality returns to our investors, Alliance Investment Management Berhad’s (AIMB)Alliance DanaAdib fund was recently ranked“TheBestEquityMalaysiaIslamicFundover3Years”fortheyearended31December2008atThe Edge-Lipper Malaysia Fund Awards 2009.

In recognition of ABMB’s commitment to the effective application of technology in day-to-day businessoperationstotransformitself,theBankreceivedtheawardfor“InnovationinEnterpriseTransformation”byleadingindependentresearchandadvisoryfirm,Financial Insights(anIDCcompany) at the Asian Financial Services Congress in Singapore in February 2009. The Bank’s strategy of applying technology excellence to create sustainable business value saw it deploying an impressive enterprise-wide transformation ranging from enterprise architecture to risk management.

(iii) Small and Medium-Sized Enterprise Growth

In Malaysia, the SME sector is a key driver of growth for the economy as it constitutes 99% of the nation’s total business establishments. To demonstrate our commitment to the development of SMEs, the Group undertook these initiatives to help nurture and grow the SME segment:

• played the role of Main Sponsor for theGolden Bull Award organised by Nanyang Siang Pau for the sixth consecutive year. Acknowledged as the most prestigious annual business award for SMEs, the Golden Bull Award honours Malaysia’s best performing and most resilient SMEs as well as recognises the importance of SMEs in spearheading the continued economic growth of Malaysia;

• continue to make available a dedicated telephone hotline at 1 300 88 0880 and emailresponseserviceforSMEs;

• conductedsurveystogaugecustomersatisfactionlevelsandenhancethequalityofservicetotheSMEsegment;

• established26AllianceBusinessCentresand29TradeServicecountersacrossthecountrytoenableallbranchestoprovidegreateraccesstobankingservicestoSMEs;and

• conducted complimentary business talks, seminars and workshops on topical issuesincluding the Post-Budget 2009 Talk. During the economic turbulence, we also held a talk entitled“Amidst the CurrentTurmoil” to keep SMEs abreast of the latest developmentsaffecting their businesses.

corporate responsibility report (cont’d)


(iv) Easy-To-Access Micro-Financing

In response to Bank Negara Malaysia’s (BNM) call to promote micro-financing amidst the Malaysian financial landscape, we continue to establish Alliance Rakan branches in selected locations throughout the KlangValley.TheAlliance Rakan concept adopts a community bankmodel and is committed to providing simple-to-understand and easy-to-access financial products and services to small traders and individuals.

Alliance Rakan has steadily established its foothold as a banking partner that provides financial facilities to a segment within the community which is often neglected by other financial institutions. To date, we have 10 Alliance Rakan branches and Alliance Rakan desks within our network of branches that cater to the business community.

(v) Innovative Islamic Banking

To tap the huge potential in the local Islamic banking industry and meet the needs of customers looking for innovative Shariah-compliant products and services, we established Alliance Islamic Bank Berhad (AIS) in the month of April 2008 as a wholly-owned subsidiary of ABMB and a licensed Islamic bank. To date, seven Islamic Banking Centres within ABMB branches have been setup,namelyinKualaLumpur,Selangor,Sabah,Melaka,PulauPinangandJohor.InlinewithABMB’s tagline, Banking Made Personal, AIS launched Malaysia’s first Alliance Islamic Debit MasterCard, which is linked to the high profit-bearing Alliance Hybrid Account.

As part of its commitment to drive product innovation, elevate the performance of Islamic finance, as well as create a substantial pool of talented and highly skilled professionals, AIS encourages its staff to enhance their knowledge and skills by attending Islamic banking and professional courses. These courses include those conducted by the Islamic Banking and Finance Institute Malaysia (IBFIM), the Association of Islamic Banking Institutions Malaysia (AIBIM) and the International Centre for Education in Islamic Finance (INCEIF).

(vi) Good Corporate Governance Best Practices

The Group recognises that Corporate Governance is the hallmark of a well-run organisation where we are committed to adopting and implementing best-in-class standards and international best practices. It is our firm belief that proactive stakeholder communications enables us to fulfil our corporate governance responsibilities. Through regular Board meetings of the various entities, the Board is kept abreast and in control of the respective businesses. In addition, there are Board committees such as the Audit Committee, Group Risk Management Committee, Nomination Committee, Executive Committee as well as the Group Management and Remuneration Committee to provide further supervisory oversight of the Group.

The Group also has an ongoing process for identifying, evaluating and managing the significant risks faced in the ever changing environment which is reviewed regularly by the Board in accordance with the “Statement on Internal Control: Guidance for Directors of Public ListedCompanies” issued by the Task Force on Internal Control. Our Management is tasked withimplementing these policies, procedures and guidelines and they are monitored independently by the Board’s Audit Committee.

The Group has in place a Compliance & Operational Risk Management Framework (CORMFramework) that complies with the laws, regulations, rules, directives and guidelines applicable to the Group. To ensure our businesses and support units fully comply with the CORM Framework, risk officers undertake timely and effective monitoring and management. To enhance business standardsandethics,theGrouphasestablishedalistofpoliciesincludingtheCodeofConduct;PolicyonPublicationsandCommunications;PolicyonEntertainmentandGifts;PolicyonChineseWalls,ConfidentialInformation,InsideInformationandConflictsofInterest;ComplianceCharter;ConsumerSalesComplianceGuidelines;andWhistleBlowerPolicy.

To prevent or minimise the likelihood of the Group being used as a vehicle for money laundering, terrorist financing and other unlawful activities, a robust Anti-Money Laundering and Counter Financing of Terrorism Policy Framework has been rolled out. Compliance standards are enforced within all the Bank’s businesses and all activities are stringently monitored and reported to the Board of Directors who make specific revisions if necessary.

(vii) Meaningful Customer Engagement

We are committed to developing long-term partnerships with our customers by truly understanding their needs. This enables us to grow with them and provide a complete range of products and services that pre-empts their needs at different stages through their respective life cycles and business cycles. The Group’s commitment to providing consistent, distinctive and effective customer service has enabled ABMB to become one of the best-managed and most profitable consumer banks in Malaysia.

During the year under review, we continued to undertake various innovative customer-centric strategies and initiatives to reach out and serve our customers more efficiently and effectively. To encourage and facilitate customer feedback, we continued to implement various communication channels such as dedicated telephone hotlines and e-mail response services as well as undertook a yearly survey to gauge customer satisfaction levels.

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In line with the Bank’s tagline Banking Made Personal and in our efforts to create value, we have established the Customer Fulfilment Unit with the aim of monitoring and enhancing the customer service experience across all touch points at pre and post-sales levels. This also forms part of the Bank’s service initiative journey to improve the current standards of customer service. As an added facility to customers, the Alliance Bank Business Club was set up to provide customers with daily market information and research as well as updates on business networking events, while mailers and SMS services provide updates on the latest products and development. Privilege cards continue to be issued to customers offering them additional special benefits and discounts from selected merchants.

As part of our continuous improvement efforts and to provide value-added services to our customers, we recently revamped our businesses to be more aligned with customers’ needs. In ordertoeffectivelymanageourrelationshipwithourcustomers,wenowpracticea“customersegmentapproach”wherebyourRelationshipManagersare trained tounderstandandservethese different segments effectively.

The establishment of a Group Customer-Centric Strategy has enabled us to respond faster and effectively to customers’ needs and we are now better poised to cater to the future expectations of our chosen customer segments via:

• developinginnovativeproductsthatresonatewiththeirneedsthroughouttheirlifecyclesthusenablingthebanktodominatepreferredcustomersegments;and

• goingbeyondtransactionalbankingwhereweproactivelyportfolio,manageandstrengthenour customers financial standing via new customer on-boarding programmes, activation initiatives, up-selling/cross-selling activities as well as loyalty and customer win-back programmes.

Our Contact Centre is equipped with the latest solutions that include intelligent call routing and screen pops that route calls to skilled customer service officers. The centre is also equipped with technologies that provide multiple channels for customers to contact the Bank via our Interactive VoiceResponseSystem(IVRsystem),faxande-mail.

In order to raise the bar on customer service, a Service Quality Committee has been vestedwith the responsibility for identifying opportunities to enhance the servicing platform, upgrade servicing competencies and harness feedback from internal and external stakeholders. In line withthisobjective,athree-monthServiceQualityCampaignwasheldamongstafftoinculcatethe importance of excellent customer service with winners receiving attractive prizes.

To ensure that customers with children in tow have a pleasant banking experience, several Kid’s Corners have been set up at various branches. To date we have established a total of 31 Kid’s Corners nationwide that are equipped with various attractions for customers’ children.

In line with providing value added services to our customers, from time to time, we organise various talks, seminars and conferences to educate and update customers on financial topics related to investment diversification, taxation, and funding for SMEs, among other topics, as well as keep them abreast of the latest economic developments.

(b) Maintaining a Conducive WorkplaceRecognising that our workforce is the engine that drives the Group forward, we remain committed to providing a safe, conducive and healthy working environment. As the Group’s employees are key to our competitive advantage, we strive to source for the best people from diverse backgrounds and cultures within our Malaysian heritage. During the year under review, the Group had over 4,500 employees on its payroll.

(i) Robust Human Capital Development

As human capital development is critical to the long-term success of the Group, we are committed to continuously investing in learning and development programmes that align with our business objectives. The strategic value of investing and developing human capital forms an integral part of the Group’s policies, financial commitment and business framework, where our robust investments to date have done much for the Group’s organisational growth and our effectiveness.

We believe in opening up learning opportunities to all levels of staff whereby the Group Organisational Learning unit is responsible for facilitating access to such learning and training. Learning is also supported by the annual Individual Developmental Plan (IDP) which was revamped to take on a more proactive approach to support our business requirements. The IDP incorporates a map outlining individual training needs within the various business units and a focus on the development and management of talent. During the year under review, the Group invested a total of RM7 million on learning and development programmes.

In view of the changing business landscapes, the year’s training focused on Customer Relationship Management (CRM) and Marketing courses where ample opportunities were provided to facilitate horizontal mobility and the learning of new skills through job rotation and job enlargement. As we are very much a customer responsive organisation, these CRM courses help ensure the speed and reliability of service delivery efforts and facilitate the Group’s continuous expansion of various units like our Call Centre, Alliance Direct Marketing, Micro-Financing (Alliance Rakan) and Islamic Banking.



The Group’s Talent Development Plan incorporates processes for identifying, developing, promoting and retaining current and future leaders. Leaders are developed through job rotation within and across business units and through development activities at every level to advance their skills and knowledge. We also have developed an e-learning system which enables our staff to log on to our intranet system for self-learning. Through staff engagement platforms such as the periodic Employee Engagement Survey, Management obtains feedback on the needs and expectations of staff on a host of issues, including career development.

Our Alliance Young Executive Programme is a business-centric trainee programme that aims to produce bankers who are well rounded in their selected business streams. Comprising classroom training and on-the-job attachments, the programme ensures that each trainee’s progress is closely monitored by an appointed mentor. In 2008, we trained and graduated 18 trainees.

The Group provides employees with opportunities for overseas trainings and field trips for them to leapfrog or extend the learning process. Besides this, we also provide financial support for employees seeking professional certification such as the Certified Credit Professional (CCP), Chartered Financial Analyst (CFA) and Certified Information Systems Auditor (CISA) qualifications.

We also support staff who wish to attend external leadership programmes or pursue specialised certification programmes to enhance their respective expertise in financing, Islamic banking and other related areas, as well as their career advancement prospects. To ensure the effective assimilation of new recruits into the work culture, we also conduct induction programmes.

(ii) Competitive Employee Benefits

In fostering a culture of entrepreneurship, learning and development, the Group strives to be an employer of choice by offering each employee a competitive compensation and benefits package that aims to attract the best talent and optimise the unique abilities of each employee. With the underlying aim of promoting a better quality of life for our employees, and to ensure that each employee receives a competitive, comprehensive as well as fair remuneration and benefits package, we constantly explore ways to improve the benefits package by benchmarking this against the market.

As part of our commitment to nurture, reward and build strong long-term relationships with our employees, the Group implemented the second tranche of the Employees’ Share Scheme in September 2008 with the objective of rewarding employees for their exemplary performance and contributions while motivating them to work towards achieving our corporate goals. The benefitsoftheAllianceBankStaffVisaandMasterCreditCardwerealsofurtherenhancedoverthe year. The enhanced benefits saw our employees enjoying a reduced interest rate from 18% p.a. to 12% p.a. and Double Timeless Bonus Points for every Ringgit spent on top of the special merchant tie-up promotions and privileges.

We continue to provide our employees with a host of other attractive and competitive benefits to reinforce their importance to us. In addition to a competitive compensation and benefits package, we provide birthday leave, refunds and rebates on commission for the purchase of insurance, as well as a reduction on housing loan interest rates.

As a caring employer, we have to date awarded scholarships amounting to RM168,000 to eight deserving children of our employees under the annual Cahaya Mata Scholarship Scheme. Initiated in 2007, the scholarship programme provides an opportunity for awardees to kick-start their career with the Group upon graduation.

To recognise the loyalty and dedication of our employees, the year saw us awarding certificates and cash awards to 224 long-service employees for their 15 and 25 years of service. A total of 147 employees clocked up 15 years of service while another 77 employees clocked up 25 years of service in the year under review. The Group takes pride that our efforts in inculcating a conducive workplace and nurturing our employees have paid off with many seeing Alliance as the ideal place of employment to fulfil their long-term career goals.

(iii) Healthy Recreational Initiatives

The AFG Recreational & SportsClub was set up to encourage a healthy lifestyle as well as to promote sports and camaraderie among the Group’s employees. The club organises various activities such as bowling tournaments, badminton games, futsal and football competitions with other organisations to

unleash hidden sporting talent and build camaraderie among employees.

To demonstrate our support and commitment towards sports activities, the Group sponsored the Alliance Bank football team’s annual participation at the National Banks Sports Council Football Tournament and the Governor’s Cup. In addition, the Club’s pro-tem committee conducted an internal survey to gauge employees’ feedback on the various sports and recreational activities.

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Besides sports activities, the Group organised several recreational activities in the year under review to promote harmony and camaraderie amongst employees. Among the many activities weretheAllianceFamilyDay2008heldatBukitJalilStadiumwithapproximately3,700staffand their families in attendance. The carnival received overwhelming response, which was made more meaningful with the presence of children from a local orphanage. During the Alliance Treasure Hunt 2009, more than 400 staff in over 100 cars participated in the event between Kuala Lumpur and Lumut, Perak. The teams made a stop at a local charity home in Perak to contribute provisions and groceries.

Our Directors too were invited for staff activities like family days, annual dinners as well as customer appreciation gatherings to foster ties with employees at every level of the organisation.

(iv) Stringent Safety and Health Practices

We remain committed to implementing stringent safety and health practices at the workplace. During the year under review, several initiatives including training programmes relating to safety and health issues were organised to inculcate an understanding of the need for high safety standards among the Group’s employees.

At our headquarters, employees abide by the building management’s non-smoking house-rule within the building. A designated smoking area has been set apart from the main entrance to keep non-smokers from inhaling second-hand smoke when entering and exiting the building.

To ascertain our employees have a safe, healthy and conducive working environment, the Group continuously implements the following measures:

• ensuresthatallpremisesareequippedwiththenecessarysafetyequipmentwhichareingood working condition. All respective floors at the head office or branches have at least one first aid kit to be used in instances of staff or customers experiencing minor injuries or mild sickness;

• ensures that all department heads and branch managers are conversant with crisismanagement reporting procedures and that designated fire officers and wardens are responsibleformanagingemergencysupplies;

• providesbasicamenities,facilitiesandequipmentsoouremployees,customers,suppliers,vendors and other persons who have access to the premises, can carry out their duties and businessinasafemanner;

• ensuresthatemployeesaregivenadequateinformation,instructionandsupervisiontocarryouttheirdutiesinasafemanner;and

• adheres to the Occupational Safety & Health Act 1994 legislation and other relatedregulations as may be enforced by the authorities from time to time.

Upon attending their induction programmes, all staff are provided with the“Staff Safety andEmergency Handbook” which provides guidance on how to respond in the event of naturaldisasters, fires, bomb threats, floods or bank robberies. The handbook also outlines safety evacuation plans, measures to safeguard customer and staff property as well as procedures for minimising damage in the event of any untoward incident. The Group also ensures safety drills and programmes are in place and conducted regularly to promote safety awareness among our employees.

(v) Proactive Employee Engagement

In line with the Group’s aspiration to be an employer of choice to our employees, the area of employee engagement is a key pillar of our strategic thrust. Moving towards this goal, the Group conducted an Employee Engagement Survey undertaken by an independent consulting firm in May 2008, which saw 85% of our workforce participating. The overall results of the survey highlighted that the Group performed comparatively well in comparison to the Malaysian national norm and that the initiatives carried out since the preceding survey in 2006 have been well received.

Even as we focus on providing a positive work environment for our employees, we recognise the importance of two-way communication and are constantly nurturing this through several key initiatives that include:

• distributionofthequarterlystaffnewsletter,“ScalingNewHeights”;

• staffengagementdayssuchastheFamilyDay,AnnualDinnerandTreasureHunt;

• theformationoftheAFGSports&RecreationalClub;and

• monthlystafflunchmeetingswiththeGCEO.

To further illustrate the caring spirit of the Group, the Alliance family has in place a Staff-for-Staff Fund that aims to lend financial assistance to staff in need. In the year under review, the Alliance family put their hands together to make a sizeable collection for ABMB’s staff member at the Penang branch who appealed for financial assistance for her daughter’s dialysis treatment. The Group supported this cause by topping up the total contribution.

Similarly, a donation drive was also initiated for two children of a staff member in Sabah suffering from Thalassemia. This cause too received overwhelming response from members of our staff who contributed generously towards the treatment of the two children.

To inculcate a positive work environment and to prevent and mitigate operational risk, we initiated several courses to educate staff on relevant issues. These courses included those that created awareness on measures to combat sexual harassment and define offensive behaviour.



(c) Developing Our CommunityAs a hands-on bank in the many local communities we operate in, we believe in going beyond mere philanthropical pursuits to focus our efforts on programmes and activities which promote sustainable economic development and self-sufficiency and which align with our core values, mission and vision. Fundamental to our corporate vision is our determination to care for the communities and environment in which we operate and we constantly seek to align our business activities as well as social and environmental best practices with this for the benefit of all our stakeholders.

As part of our corporate responsibility initiatives, we continue to dedicate considerable resources to the community and employee welfare in areas which encourage staff volunteerism and the promotion of educational initiatives.

(i) Elevating Our Communities

The year under review saw us fulfilling our responsibility towards society by continuing to provide financial support to many worthy causes such as orphanages, the disabled, the poor, victims of natural disasters both in Malaysia and abroad, as well as to deserving recipients in the fields of education and healthcare.

The Group is constantly listening to our customers and looking for opportunities to add value as well as build stronger ties with them and their respective communities. In response to our customers’ requests to establish a platform which would enable them to contribute towards the schools of their choice, we initiated the Alliance CIS Affinity Card programme, the first micro-donation programme which is a joint effort between the Bank and its respective credit card customers. The funds generated from the programme are channelled to various schools of customers’ choice to fund school activities and projects.

The programme also gives customers the choice of pledging 50% or 100% of the accumulated reward points on their cards as donations with a monthly auto-debit facility for regular donations. Since the programme’s inception in 2005, approximately RM531,618.64 has been donated to date to various schools via the Affinity Card programme.

The Group supported the Myanmar and Sichuan Disaster Relief Fund through donations of RM25,033.78 and RM21,020.66 to MERCY Malaysia and the Malaysian Red Crescent Society respectively. The Group equally matched every Malaysian Ringgit contributed by staff members.

In our efforts to promote financial literacy, the Group published “Quagmire of Money”, afinancial literacy magazine, targeted at children between the ages of 10 and 14. Featuring the fundamentals of saving and budgeting, the magazine was distributed to schools adopted by ABMB throughout the country.

To facilitate a healthy and constructive expression of creativity and to inculcate the habit of reading, the Group through ABMB contributed RM30,000 as a co-sponsor to the MPH-Alliance Bank National Short Story competition. Similarly, the Group, through AIS, made donations to the Yayasan Pembangunan Anak Yatim dan Miskin (PEMANGKIN) to facilitate the development of orphanages in Malaysia and Indonesia.

Being a proponent of gender equality for women in society, especially at the workplace, our GCEO conducts public presentations and talks at professional establishments on various issues ranging from women at the workplace to leadership and talent management. She is also a regular contributorto“MadamChair”,alocalmagazinewhichhighlightsherviewsontopicspertainingto gender issues and women’s role in the corporate world.

To support the spirit of sportsmanship, the Group sponsored football jerseys to the Kuala Lumpur football contingent for the 14th Paralympic Championship in Kuala Lumpur. For the second consecutive year, ABMB sponsored the Sunway Apprentice Challenge for entrepreneurial students from Sunway University College where participants had a brief taste of what it was like to be high-rolling property magnates over the course of the challenge.

(ii) Passionate Employee Volunteerism

Employee volunteerism has become a significant group-wide phenomenon at Alliance. It is helping to unleash the power of the human spirit, fuelling individual passions, facilitating teamwork and strengthening the bonds between the organisation and the communities where we live and do business. It is no secret that it is our people that make our organisation great, and as such the Group empowers our employees to make a difference in their communities through backing our employees’ desire to volunteer in their local communities.

In the spirit of staff volunteerism, 180 employees of ABMB gathered at a home for disabled children in Selangor to spruce up the existing living conditions of the home. Some cleaned the home and the surrounding areas while others painted and conducted some minor repairs to the home. Collectively, over 1,000 hours of community work were invested in that one day.

Living up to its tagline of being a community banker, the Bank’s employees organised a community event at another children’s home for the disabled in Penang. Staff worked to clean the home, organise lunch and entertain the children as well as contributed provisions and household items.

Theyearsawalsostaffmembersorganisingafund-raisingeventcalled“HealtheWorld”wherebycash was raised, converted and donated in kind to a nursing home in Selangor. These same staff members,undertheauspicesof theWorldVision InternationalChildSponsorshipProgramme,have since 2007, been sponsoring six children from Indonesia and providing them access to basic education, healthcare and amenities.

104


Our staff participated in a one-day bazaar event by purchasing coupons and patronising charity sales booths to raise funds for a Down Syndrome centre in Klang.

In Sabah, we organised a blood donation campaign in collaboration with a local hospital at their premises on the eveofMerdekaDay.Promotingtheslogan“ThesmallestactofCARINGhasthepotentialtoturnaLIFEaround”,thecampaign attracted a good turnout.

During the holy month of Ramadan, staff of AIS hosted a one-day outing for some orphans who were treated to a shopping spree for their baju raya, games and rides at the arcade and breaking of fast at McDonald’s Restaurant.

Demonstrating the Group’s spirit of caring, ABMB employees at the Melaka branch contributed basic necessities to a Down Syndrome child and his family, to help them ease their financial burden.

In conjunction with Hari Koperasi Sekolah endorsed by the Association of Banks Malaysia, and to promote a savings culture among school-going children as well as promote financial literacy, ABMB staff members joined hands to disseminate information on financial literacy during the five-day exhibition.

The recent Thaipusam celebrations saw Hindu staff of ABMB together with well-wishers distributing 24,000 soft drink packets and light refreshments sponsored by ABMB to devotees following a procession to Batu Caves. This constitutes the tenth consecutive year, whereby ABMB, staff and well-wishers have worked together on this charitable activity.

(d) Conserving Our EnvironmentThe Group believes that every small step we take can make a difference towards the sustainability of the environment and planet. As such, we are committed to conducting our business in a sensible way that protects and preserves the natural environment by supporting solutions that positively address the environmental impact of our operations.

While our environmental conservation initiatives are still at its infancy, to kick start our efforts, we have to-date established policies to reduce the direct impact of our operations on the environment and to promote the safety and health of our employees. These include initiatives such as energy and water conservation, among other responsible programmes. Moving in this direction, ABMB launched a bank-wide internal environmental campaign in conjunction with World Environment Day to inculcate awareness among staff about the effects of daily activities on the environment. Periodic staff communications were disseminated to educate and generate awareness among employees on the various methods of energy and water conservation as well as paper recycling.

In line with the conservation of the environment, and to inculcate and promote a savings culture among the young generation, the Bank in partnership with the World Wide Fund for Nature (WWF), organisedtheVirtualPetSavingsCampaign.Duringtheyearunderreview,theGroupcontributedatotal of RM40,000 to the WWF for conservation efforts. The campaign mechanics saw us donating RM2.00totheWWFforevery“virtualpet”coinboxgivenawaytoeverynewcustomerwithaminimumof RM3,000 in their Alliance Bank Savings. The 20,000 units of limited edition WWF coin boxes took the form of turtles, orang utans and tigers and came with serialised certificates.

To further instil awareness among staff about the importance of environmental conservation, an “Eco-Quiz”competitionwasorganisedandfeaturedonaquarterlybasisinthein-housenewsletter,“ScalingNewHeights”wherewinnerswererewardedaccordingly.OtherGroup-widemeasuresthatare currently in practice see air-conditioning units being automatically shut-off at 5.45pm to restart at 8.45am when the work day begins, and the Group realigning all administrative services by instituting automated banking systems to save paper and conserve electricity.

Moving Forward ResponsiblyMoving forward, the Group continues to evolve its approach to corporate responsibility even as we remain committed to devoting significant resources and executive expertise to all future corporate responsibility initiatives. Our end desire is to conduct our business responsibly in a manner that will help build robust and sustainable relationships with our shareholders, customers, employees, partners as well as the communities and environment in which we operate.


The following additional compliance information is provided in accordance with Paragraph 9.25 of the Bursa Securities Listing Requirements:

1. Utilisation of ProceedsThere were no proceeds raised from any corporate proposal during the financial year ended 31 March 2009.

2. Non-Audit FeesNon-audit fees paid/payable to the external auditors, Messrs Ernst & Young by the Group for the financial year ended 31 March 2009 amounted to RM262,000.

3. Variations in ResultsThere were no variances of 10% or more between the audited results for the financial year ended 31 March 2009 and the unaudited results previously announced.

4. Material ContractsThere were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Group involving Directors’ and major shareholders’ interests, either still subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year.

5. Profit GuaranteeThere was no profit guarantee given by the Company in respect of the financial year ended 31 March 2009.

6. Revaluation of Landed PropertiesThe Group does not adopt a policy of regular revaluation of its landed properties.

7. Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company which were exercised during the financial year ended 31 March 2009.

8. Share Buy-BackThe Company did not buy back any of its shares during the financial year ended 31 March 2009.

9. American Depository Receipt (ADR) or Global Depository Receipt (GDR)The Company did not sponsor any ADR or GDR programmes during the financial year ended 31 March 2009.

10. Sanctions and/or PenaltiesThere were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 March 2009.

additional compliance information

106

Remaining Age of Built-Up Net Book Year of Lease Period Property Area Value Location Current Use Purchase Tenure (Expiry Year) (Years) (Sq Ft) (RM’000)

11A, Jalan Raja Chulan Alliance Bank’s branch/ 1982 Freehold – 38 26,882 2,77150200 Kuala Lumpur Office premises

1, Jalan Tembaga SD5/2A Alliance Bank’s branch/ 1992 Freehold – 15 9,694 73552100 Kepong, Kuala Lumpur Office premises

150 – 152, Jalan Cerdas Alliance Bank’s branch/ 1997 Leasehold 69 years 30 12,012 2,593Taman Connaught Office premises 99 years 207856000 Kuala Lumpur

43 & 45, Jalan Bunga Tanjung 6A Alliance Bank’s branch/ 1997 Leasehold 72 years 27 4,060 1,287Taman Putra Office premises 99 years 208168000 Ampang, Selangor

1960 E & F, Jalan Stadium Alliance Bank’s branch/ 1995 Leasehold 69 years 28 4,125 48705100 Alor Setar, Kedah Office premises 99 years 2078

Ground & Mezzanine Floor, Wisma Malvest Alliance Bank’s branch/ 1995 Freehold – 14 5,667 1,52720 & 20A Jalan Tun Dr Awang Office premises Sungai Nibong Kecil 11900 Bayan Lepas, Pulau Pinang

71, Lot 3175 & 3176 Alliance Bank’s branch/ 2007 Leasehold 36 years 2 10,200 2,400Block 10, Jalan Laksama Cheng Ho Office premises 99 years 2045 93200 Kuching, Sarawak

B-400, Jalan Beserah Alliance Bank’s branch/ 1996 Freehold – 18 6,735 48325300 Kuantan, Pahang Office premises

LG/134/135/128/F89 Alliance Bank’s branch/ 1984 Freehold – 25 5,454 941Holiday Plaza, Jalan Dato Sulaiman Office premises 80250 Johor Bharu, Johor

1-01 & 1A-01, Menara Sarawak Enterprise Alliance Bank’s branch/ 1996 Freehold – 11 13,742 6,121Jalan Bukit Meldrum Office premises 80300 Johor Bahru, Johor

Lot 1 & 3, Jalan Permas Jaya 10/2 Alliance Bank’s branch/ 1996 Freehold – 16 24,286 1,863Bandar Baru Permas Jaya, Pelentong Office premises 81750 Masai, Johor Bahru, Johor

list of propertiesas at 31 march 2009



3 & 5, Jalan Bentara 1 Vacant 1996 Freehold – 17 6,160 1,086Tun Aminah 81308 Johor Bahru, Johor

Unit 01-G & 01-1, Seremban City Alliance Bank’s branch/ 1997 Freehold – 10 7,250 1,869Jalan Tunku Munawir Office premises 70000 Seremban, Negeri Sembilan

Lot 6 & 7, Block A Alliance Bank’s branch/ 1996 Leasehold 85 years 11 7,520 641Taman Melaka Raya Office premises 99 years 2094 75000 Melaka

Lot 1 & 2, Block D Alliance Bank’s branch/ 1996 Leasehold 914 years 15 7,500 975 Nountun Industrial Estate Office premises 999 years 2923 88450 Inanam, Kota Kinabalu, Sabah

Lot 4-6, Block K, Sinsuran Complex Alliance Bank’s branch/ 1980 Leasehold 62 years 31 14,800 723W.D.T. 132 Office premises 99 years 2071 88999 Kota Kinabalu, Sabah

Lot 1086 Jalan Utara Alliance Bank’s branch/ 1981 Leasehold 51 years 36 15,450 701W.D.T. 127 Office premises 99 years 2060 91000 Tawau, Sabah

Lot 8, Block A, Beaufort Jaya Com Centre Alliance Bank’s branch/ 1984 Pending – 23 4,500 25189800 Beaufort, Sabah Office premises Issuance of Titles

Lot 1, Block D Alliance Bank’s branch/ 1993 Leasehold 71 years 24 4,800 458Mile 4 1/2 Jalan Labuk Office premises 99 years 2080 Bandar Kim Fung 90000 Sandakan, Sabah

1 & 2, Block A, Jalan Jungkat Alliance Bank’s branch/ 1993 Leasehold 915 years 15 8,400 341Pangie Light Ind. Complex Office premises 999 years 2924 89989 Tenom, Sabah

Lot 8 & 9, Section 11 Alliance Bank’s branch/ 1993 Freehold – 15 9,080 1,106Jalan Kulas Satu Office premises 93400 Kuching, Sarawak

17, 19 & 21, Jalan USJ 9/5 Alliance Bank’s branch/ 1996 Leasehold 987 years 13 4,620 2,88847620 Subang Jaya, Selangor Office premises 999 years 2996

108


2 & 3 Block A, Phase III Alliance Bank’s branch/ 1994 Pending – 14.5 10,000 1,090 Luyang Com Centre Office premises Issuance of Title Damai Plaza, Jalan Damai 88300 Kota Kinabalu, Sabah

59-60, Jalan Tiga Alliance Bank’s branch/ 1963 Leasehold 880 years 51 7,575 724 90702 Sandakan, Sabah Office premises 999 years 2889

Lot B1 & B2, 6th Floor, Block 45 Alliance Bank’s store 1985 Leasehold 886 years 37 1,500 56Church Road 999 years 2895 90702 Sandakan, Sabah

MPWPL U 0072 & 0073 Alliance Bank’s branch/ 1979 Leasehold 48, 54 years 43 6,000 75624-25 Jalan Merdeka Office premises 99 years 2057, 2063 43 87007 Labuan

MDLD 0090, Block 39, Jalan Panji Alliance Bank’s branch/ 1985 Leasehold 52 years 29 4,600 53191100 Lahad Datu, Sabah Office premises 99 years 2061

Mt. Kinabalu Golf Vacant land 1983 Leasehold 83 years – 1 acre 108Course Kundasang, Sabah 99 years 2092

Lot 84 Jalan Gaya Alliance Bank’s branch/ 1987 Leasehold 873 years 51 2,510 1,750 88000 Kota Kinabalu, Sabah Office premises 999 years 2882

A1 & A2, Block 44 Vacant 1983 Leasehold 892 years 49 1,700 821 Jalan Lebuh Tiga 999 years 2901 90090 Sandakan, Sabah

21 Lot 2, Block E Alliance Bank’s 1996 Leasehold 914 years 9 1,248 397Nountun Industrial Estate premises 999 years 2923 Jalan Tuaran 89350 Inanam, Kota Kinabalu, Sabah

45, Jalan Sungai Besi Indah 1/21, Alliance Bank’s branch/ 2001 Leasehold 82 years 8 9,909 1,46943300 Balakong, Selangor Office premises 99 years 2091

3, Jalan SS 15/2A, Wisma Projass Alliance Bank’s branch/ 2005 Freehold – 23 34,820 7,76147500 Subang Jaya, Selangor Office premises

Lot 2, 48, 515 & 877 Vacant land 1992 Freehold – – 1,167 27,748Kuala Pahang, District of Pekan, Pahang acres

list of propertiesas at 31 march 2009 (cont’d)

ALLIANCE FINANCIAL GROUP BERHAD (6627-X) • 2009 annual report

group

directoryas at 29 may 2009

KEDAH

PULAU PINANG

PERAK

SELANGOR

KUALA LUMPUR

NEGERI SEMBILAN

MELAKA

JOHOR

SARAWAK

SABAH

PAHANG

TERENGGANU

WILAYAH PERSEKUTUAN LABUAN

109

110

ALLIANCE BANK MALAYSIA BERHAD

BRANCHES

KEDAH

Alor Setar1960 E & F, Jalan Stadium05100 Alor Setar, KedahTel : 04-731 0744Fax : 04-733 8055

Lunas, Kulim888 & 889, Jalan AmanTaman Sejahtera09600 Lunas, Kulim, KedahTel : 04-484 3275/76/78Fax : 04-484 3277

Sejati Indah, Sungai PetaniGround Floor, Wisma Uni-Green18, Jalan Permatang GedongTaman Sejati Indah08000 Sungai Petani, KedahTel : 04-431 1673/81 04-431 2139Fax : 04-431 1687

Sungai PetaniAlliance Rakan116A, Ground FloorJalan Pengkalan, Taman Pekan Baru08000 Sungai Petani, KedahTel : 04-420 7700Fax : 04-420 7701

PULAU PINANG

Bandar Baru Air ItamNo. 37, Jalan AngsanaBandar Baru Air Itam11500 Pulau PinangTel : 04-8273 288Fax : 04-8273 688

Beach StreetGround Floor, Bangunan Barkath21, Beach Street10300 Georgetown, Pulau PinangTel : 04-262 8100Fax : 04-261 3300

Bukit MertajamGround & 1st Floor, Wisma Ng Ah Yan42, Lebuh Nangka 2, Taman Mutiara14000 Bukit Mertajam, Pulau PinangTel : 04-530 3130Fax : 04-530 7433

Bukit MertajamAlliance Rakan3195, Ground FloorMaju Utama Business Centre, Jalan Maju14000 Bukit Mertajam, Pulau PinangTel : 04-540 1100Fax : 04-540 1101

Butterworth 4105-4107, Jalan Bagan Luar12000 Butterworth, Pulau PinangTel : 04-331 4863/64Fax : 04-331 3904

JelutongAlliance Rakan9-1-13A, Taman Kheng Tian Business CentreJalan Van Praagh, Bandar Jelutong11600 Pulau PinangTel : 04-288 7888Fax : 04-288 7889

Sungai Nibong KecilGround & Mezzanine FloorWisma Malvest, 20 & 20AJalan Tun Dr Awang, Sungai Nibong Kecil11900 Bayan Lepas, Pulau PinangTel : 04-642 5918Fax : 04-642 5924

PERAK

Ipoh40 & 42, Persiaran Greenhill30450 Ipoh, PerakTel : 05-241 2342/3 05-241 2346/8Fax : 05-241 2355

Sitiawan23 & 24, Jalan Raja OmarTaman Selamat, 32000 Sitiawan, PerakTel : 05-691 1212Fax : 05-691 7975

SELANGOR

Aman Suria DamansaraJ-G-23 & J-G-25, Block JJalan PJU 1/43, PJU1Aman Suria Damansara47301 Petaling Jaya, SelangorTel : 03-7880 8842Fax : 03-7880 4299

Ampang PointGround & Mezzanine Floor65, Jalan Mamanda 9, Ampang PointTaman Dato Ahmad Razali68000 Ampang, SelangorTel : 03-4252 3822Fax : 03-4252 3877

Balakong45, Jalan Sungai Besi Indah 1/21Taman Sungai Besi Indah43300 Seri Kembangan, SelangorTel : 03-8948 6972Fax : 03-8948 9530

Bandar Bukit Tinggi56, Lorong Batu Nilam 4BBandar Bukit Tinggi41200 Klang, SelangorTel : 03-3324 1122Fax : 03-3324 3311

Bandar Puteri Puchong11 & 13, Jalan Puteri 2/1Bandar Puteri Puchong47100 Puchong, SelangorTel : 03-8063 2833Fax : 03-8063 2711

group directoryas at 29 may 2009 (cont’d)


SELANGOR

CP Tower, Petaling JayaUnit 1-2, Right WingLevel 1, CP Tower11, Jalan 16/11, Off Jalan Damansara46350 Petaling Jaya, SelangorTel : 03-7957 3366Fax : 03-7957 3360

Damansara UptownUnit 102 & 103, Level 1, Uptown 22, Jalan SS21/37, Damansara Uptown47400 Petaling Jaya, SelangorTel : 03-7660 9798Fax : 03-7660 9799

KajangLot 4 & 5, Jalan Jeloh 3Off Jalan Bukit43000 Kajang, SelangorTel : 03-8733 5966Fax : 03-8736 4004

KlangGround Floor1, Lorong Kasawari 4BTaman Eng Ann41150 Klang, SelangorTel : 03-3345 3700Fax : 03-3345 3733

Kota Damansara 7-G & 9-G, Jalan PJU 5/20Pusat Perdagangan Kota DamansaraPJU5 Kota Damansara47810 Petaling Jaya, SelangorTel : 03-6142 8632Fax : 03-6142 8732

Mutiara Damansara G19, IKANO Power Centre2, Jalan PJU 7/2, Mutiara Damansara47800 Petaling Jaya, SelangorTel : 03-7727 1041Fax : 03-7727 1478

Puchong Jaya11, Jalan Kenari 5, Bandar Puchong Jaya47100 Puchong Jaya, SelangorTel : 03-8075 9185Fax : 03-8075 9200

Rawang71, Jalan Bandar Rawang 2Bandar Baru Rawang48000 Rawang, SelangorTel : 03-6091 7622Fax : 03-6091 7922

Selayang71 & 73, Jalan 2/3APusat Bandar Utara Selayang KM 12, Jalan Ipoh68100 Batu Caves, SelangorTel : 03-6135 1800Fax : 03-6135 1787

Seri Kembangan31-1 & 31-2Jalan Serdang Perdana 2/1Taman Serdang Perdana43300 Seri KembanganSelangorTel : 03-8941 6610Fax : 03-8941 6620

Seri KembanganAlliance Rakan1503B, Ground FloorJalan Besar43300 Seri Kembangan, SelangorTel : 03-8945 5616Fax : 03-8945 5646

Shah AlamGround & 1st Floor2, Jalan Murni 25/61Taman Sri Muda, Seksyen 2540400 Shah Alam, SelangorTel : 03-5121 9336Fax : 03-5121 9373

SS2, Petaling JayaGround & 1st Floor55, Jalan SS2/5547300 Petaling Jaya, SelangorTel : 03-7875 8255Fax : 03-7874 0973

Subang Jaya3 Alliance3, Jalan SS15/2A47500 Subang Jaya, SelangorTel : 03-5634 2870/1Fax : 03-5634 1128

Sunway PyramidLot 1.96A, Ground Floor, New WingSunway Pyramid, Bandar Sunway46150 Petaling Jaya, SelangorTel : 03-5636 0870Fax : 03-5636 0670

Taman Putra43-45, Jalan Bunga Tanjung 6ATaman Putra68000 Ampang, SelangorTel : 03-4291 7740Fax : 03-4292 9836

USJ, Subang JayaGround & 1st Floor17, 19 & 21, Jalan USJ 9/5N47620 UEP Subang Jaya, SelangorTel : 03-8024 1300Fax : 03-8024 1090

KUALA LUMPUR

Bangsar28, Lorong Ara Kiri 2Lucky Garden, Bangsar59100 Kuala LumpurTel : 03-2095 3185Fax : 03-2095 3184

Binjai Privilege Banking CentreGround Floor, No. 8, Jalan Binjai Off Jalan Ampang50450 Kuala LumpurTel : 03-2054 7718Fax : 03-2054 7738

Capital SquareGround Floor Menara Multi-PurposeCapital Square No. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2694 8800Fax : 03-2694 6867

112

KUALA LUMPUR

Jalan ImbiMezzanine FloorMenara Prudential10, Jalan Sultan Ismail50250 Kuala LumpurTel : 03-2070 4477Fax : 03-2070 4900

Jalan Ipoh41 & 43, Jalan Ipoh51200 Kuala LumpurTel : 03-4041 2288Fax : 03-4041 7918

Jalan IpohAlliance Rakan729, Ground FloorBatu 41/2, Jalan Ipoh51200 Kuala LumpurTel : 03-6250 2610Fax : 03-6250 2710

Jalan Mega Mendung116, Jalan Mega MendungBandar ParkOff Jalan Klang Lama58200 Kuala LumpurTel : 03-7983 1177Fax : 03-7987 3511

Jalan Sultan IsmailMezzanine Floor Menara Prudential10, Jalan Sultan Ismail50250 Kuala LumpurTel : 03-2070 4477Fax : 03-2070 4900

Jalan Tun Tan Cheng Lock15, Jalan Tun Tan Cheng Lock50000 Kuala LumpurTel : 03-2072 0978Fax : 03-2072 0968

KepongGround Floor, 52, Jalan PrimaVista Magna, Metro Prima Kepong52100 Kuala LumpurTel : 03-6257 9997Fax : 03-6257 9996

Kuchai Entrepreneurs Park1, Jalan 1/116B, Kuchai Entrepreneurs Park58200 Kuala LumpurTel : 03-7984 8800Fax : 03-7981 6486

Mid Valley15-G & 15-1, The Boulevard OfficesMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel : 03-2283 1849Fax : 03-2287 8217

Mont’KiaraUnit A-0G-02, Block APlaza Mont’Kiara 2, Jalan Kiara, Mont’Kiara50480 Kuala LumpurTel : 03-6203 1543Fax : 03-6201 2607

Pandan IndahGround & Mezzanine Floor11 & 13, Jalan Pandan Indah 4/34Pandan Indah55100 Kuala LumpurTel : 03-4295 7300Fax : 03-4296 4107

Pandan IndahAlliance RakanMezzanine Floor11 & 13, Jalan Pandan Indah 4/34Pandan Indah55100 Kuala LumpurTel : 03-4280 1196Fax : 03-4280 3411

SegambutGround & 1st Floor, 22 Wisma Sin Hoh HuatPersiaran Segambut Tengah51200 Kuala LumpurTel : 03-6257 2105Fax : 03-6257 2680

Setapak86, Jalan 2/23A, Taman Danau KotaOff Jalan Genting Kelang, Setapak53300 Kuala LumpurTel : 03-4143 9643Fax : 03-4143 9568

Sri Damansara1, Jalan Tembaga SD 5/2ABandar Sri Damansara52100 Kuala LumpurTel : 03-6275 0144/0529/0684 03-6272 0834/8384Fax : 03-6275 0457 03-6272 1732

Taman Connaught150-152, Jalan CerdasTaman Connaught56000 Kuala LumpurTel : 03-9102 3973Fax : 03-9102 3740

Taman Maluri254 & 254A, Jalan MahkotaTaman Maluri, Cheras55100 Kuala LumpurTel : 03-9285 4133Fax : 03-9283 1397

Taman Tun Dr Ismail24, Jalan Tun Mohd Fuad 1Taman Tun Dr Ismail60000 Kuala LumpurTel : 03-7729 8239Fax : 03-7729 8237

Wisma MCAGround Floor, Wisma MCA163, Jalan Ampang50450 Kuala LumpurTel : 03-2164 8240Fax : 03-2168 8390



JOHOR

Batu PahatGround, 1st & 2nd Floor2 & 4, Jalan Kundang 3Taman Bukit Pasir83000 Batu Pahat, JohorTel : 07-431 4088Fax : 07-434 0033

Bukit Bakri, Muar88, Jalan Tepi PasarBukit Bakri84200 Muar, JohorTel : 06-986 7633Fax : 06-986 6721

Holiday Plaza, Johor BahruUnit G128, Holiday PlazaJalan Dato Suleiman, Century Garden80250 Johor Bahru, JohorTel : 07-331 1200Fax : 07-331 1207

Jalan Tebrau396B & 396B-1, Jalan TebrauTaman Majidee80250 Johor Bahru, JohorTel : 07-332 2331Fax : 07-331 1310

Johor Jaya50 & 52, Jalan Dedap 13Taman Johor Jaya81100 Johor Bahru, JohorTel : 07-353 5388Fax : 07-355 7377

Johor JayaAlliance Rakan33, Jalan Dedap 21, Taman Johor Jaya81100 Johor Bahru, JohorTel : 07-353 7105Fax : 07-353 7106

Kelapa Sawit, Kulai16 & 17, Jalan Susur Satu26th Mile, Jalan Air Hitam, Kelapa Sawit81030 Kulai, JohorTel : 07-652 3704/5/7Fax : 07-652 3706

Permas Jaya1 & 3, Jalan Permas Jaya 10/2Bandar Baru Permas Jaya81750 Johor Bahru, JohorTel : 07-386 2480Fax : 07-386 2482

SegamatNo. 115, Jalan Genuang85000 Segamat, JohorTel : 07-931 1170Fax : 07-931 2727

Sri Gading, Batu Pahat1 & 2, Jalan Ria 1Taman Ria Jaya, Sri Gading83000 Batu Pahat, JohorTel : 07-455 9406Fax : 07-455 9411

Taman Molek1 & 1-01, Jalan Molek 1/29Taman Molek81100 Johor Bahru, JohorTel : 07-355 6577Fax : 07-355 4677

Taman Nusa Bestari1-G & 1-01, Jalan Bestari 6/2 Taman Nusa Bestari 81300 Skudai, JohorTel : 07-237 8626Fax : 07-237 8621

Taman PelangiGround Floor, Shoplot Nos. 1 & 3Jalan Perang, Taman Pelangi80400 Johor Bahru, JohorP.O. Box 61, Taman Sri Tebrau80057 Johor Bahru, JohorTel : 07-333 2064/2177Fax : 07-333 7411

Tesco Desa TebrauLot F09, 1st FloorTesco Desa TebrauTaman Desa Tebrau81100 Johor Bahru, JohorTel : 07-357 1127Fax : 07-357 0027

Tun Aminah3 & 5, Jalan Bentara 1Taman Ungku Tun Aminah81300 Skudai, JohorTel : 07-554 0031Fax : 07-554 0173

Ulu TiramGround Floor, Lots 34 & 36,Jalan Johar 3, Desa Cemerlang81800 Ulu Tiram, JohorTel : 07-861 5143Fax : 07-861 5157

MELAKA

Melaka99, 101 & 103, Jalan Melaka Raya 24Taman Melaka Raya75000 MelakaTel : 06-284 9249Fax : 06-284 9248

Taman Desa Cheng PerdanaG-1, Ground Floor, Bangunan KKJalan Cheng Perdana 1/1ATaman Desa Cheng Perdana 175260 MelakaTel : 06-3365 111Fax : 06-3365 110

NEGERI SEMBILAN

Seremban1G & 1-1, Arab Malaysian Business CentreJalan Tuanku Munawir70000 Seremban, Negeri SembilanTel : 06-762 5610/21Fax : 06-762 5612

PAHANG

KuantanB400, Jalan Beserah25300 Kuantan, PahangTel : 09-567 2508Fax : 09-567 3307

114

TERENGGANU

Kuala TerengganuGround & Mezzanine FloorWisma Kam Choon101, Jalan Kampong Tiong20100 Kuala Terengganu, TerengganuTel : 09-623 5244Fax : 09-623 6379

Kuala TerengganuAlliance RakanMezzanine FloorWisma Kam Choon101, Jalan Kampong Tiong20100 Kuala Terengganu, TerengganuTel : 09-630 1290/91/92/93Fax : 09-624 0261

SABAH

Bandar Kim Fung, SandakanLot 1, Block C, Bandar Kim FungMile 41/2, Jalan Utara P.O. Box 163Post Office, Mile 11/2, Jalan Utara90307 Sandakan, SabahTel : 089-275 020/21/22Fax : 089-275 027

BeaufortLot B, Block A, Beaufort JayaCommercial Centre, P.O. Box 22089808 Beaufort, SabahTel : 087-211 721Fax : 087-212 392

DonggongonWisma PPSDonggongon New TownshipW.D.T. No. 5680509 Penampang, SabahTel : 088-713 411/2 088-718 980Fax : 088-718 634

Federal House, Kingfisher’s Park, KK(Service Centre)Aras 1, Blok A,Kompleks Pentadbiran Kerajaan Persekutuan Sabah, Jalan UMS88400 Kota Kinabalu, SabahTel : 088-484 718Fax : 088-484 712

Inanam, Kota KinabaluGround, 1st & 2nd FloorLot 7 & 9, Block D, Nountun Industrial Estate89350 Inanam, Kota Kinabalu, SabahTel : 088-435 754/820Fax : 088-435 770

InanamAlliance RakanA-1-10, Ground FloorLot 10, Block A, Lorong Inanam Sentral 1 Inanam New Township88450 Inanam, SabahTel : 088-432 420Fax : 088-432 421

Jalan Gaya82 & 84, Jalan Gaya88000 Kota Kinabalu, SabahTel : 088-251 177Fax : 088-223 629

KeningauLot No. 1, Block B-8, Jalan Arusap89000 Keningau, SabahTel : 087-330 301Fax : 087-330 294

Kota MaruduShoplot No. 8, Block ESedco Shophouses, P.O. Box 26089108 Kota Marudu, SabahTel : 088-661 104 011-816 715Fax : 088-661 106

KundasangShoplot No. 6, Block BSedco Shophouses, P.O. Box 15289308 Ranau, SabahTel : 088-889 679Fax : 088-889 676

Lahad DatuLot 1 MDLD 4709, Jalan Kastam Lama91100 Lahad Datu, SabahTel : 089-883 911/5Fax : 089-883 916

Luyang DamaiGround & 1st Floor, Shoplot No. 2 & 3Block A, Luyang Commercial CentreDamai Plaza, Phase III, Jalan Damai88300 Kota Kinabalu, SabahTel : 088-249 073/084/085/109Fax : 088-249 064

Sandakan59-61, Jalan TigaP.O. Box 22490702 Sandakan, SabahTel : 089-275 193 089-216 771/089-222 693Fax : 089-271 641

SinsuranLot 4, 5, & 6, Block KSinsuran Complex88000 Kota Kinabalu, SabahTel : 088-237 758Fax : 088-212 511

TambunanLot 1, Block BSedco Shophouses, W.D.T. 5589659 Tambunan, SabahTel : 087-771 171Fax : 087-771 157

Tawau1086, Jalan Utara, W.D.T. 12791009 Tawau, SabahTel : 089-776 483/4Fax : 089-763 287

TenomGround & Mezzanine FloorShoplot Nos 1 & 2, Block APangie Light Industrial ComplexJalan Jungkat, Tenom New TownshipP.O. Box 379, 89909 Tenom, SabahTel : 087-737 757/60/61Fax : 087-737 762



SARAWAK

Kuching178, Jalan Chan Chin Ann93100 Kuching, SarawakTel : 082-257 129Fax : 082-257 275

Laksamana70 & 71, Block 10Jalan Laksamana Cheng Ho93200 Kuching, SarawakTel : 082-230 888Fax : 082-238 889

MiriGround & 1st FloorLot 353, Block 7Miri Concession Land District(Pelita Commercial Centre)Jalan Miri Pujut98000 Miri, SarawakTel : 085-427 535Fax : 085-439 535

SibuGround Floor, 32, Jalan BakoBrooke Drive 396000 Sibu, SarawakTel : 084-317 628Fax : 084-317 148

LABUAN

Labuan MPWPL U 0072 & 0073Jalan Merdeka, P.O. Box 39687008 LabuanTel : 087-412 826/087-414 355Fax : 087-415 446

ALLIANCE INVESTMENT BANK BERHAD(A participating organisation ofBursa Malaysia Securities Berhad)

HEAD OFFICE

20th Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2692 7788Fax : 03-2692 8787www.allianceinvestmentbank.com.my

BRANCHES

PERLIS

Kangar2nd Floor, Podium BlockBangunan KWSP01000 Kangar, PerlisTel : 04-976 5200Fax : 04-977 0868

KEDAH

Alor SetarLot T-30, 2nd Floor, Wisma PKNKJalan Sultan Badlishah05000 Alor Setar, KedahTel : 04-731 7088Fax : 04-731 8428

PULAU PINANG

Pulau PinangSuite 2.1 & Suite 2.4, Level 2Wisma Great EasternNo. 25, Leboh Light10200 Pulau PinangTel : 04-261 1688Fax : 04-261 6363

PERAK

SitiawanNo. 43 & 44, Taman SentosaJalan Lumut32000 Sitiawan, PerakTel : 05-691 0910Fax : 05-691 0908

KUALA LUMPUR

Kuala LumpurNo. 8, Jalan Binjai, Off Jalan Ampang50450 Kuala LumpurTel : 03-2166 7922Fax : 03-2166 7909

JOHOR

KluangNo. 46 & 48Jalan Dato’ Kapten Ahmad86000 Kluang, JohorTel : 07-771 7922Fax : 07-777 1079

PAHANG

KuantanA-397, A-399 & A-401Taman Sri Kuantan III, Jalan Beserah25300 Kuantan, PahangTel : 09-566 0800Fax : 09-566 0801

TERENGGANU

Kuala TerengganuNo.1D & 1E, Jalan Air Jerneh20300 Kuala Terengganu, TerengganuTel : 09-631 7922Fax : 09-631 3255

116

ALLIANCE ISLAMIC BANK BERHAD

HEAD OFFICE

22nd Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2730 2357Fax : 03-2698 4691www.allianceislamicbank.com.my

ISLAMIC BANKING CENTRES

PULAU PINANG

Beach StreetGround Floor, Bangunan Barkath21, Beach Street10300 GeorgetownPulau PinangTel : 04-262 8100Fax : 04-261 3300

SELANGOR

Kota Damansara 7-G & 9-G, Jalan PJU 5/20Pusat Perdagangan Kota DamansaraPJU5 Kota Damansara47810 Petaling Jaya, SelangorTel : 03-6142 8632Fax : 03-6142 8732

Ampang PointGround & Mezzanine Floor65, Jalan Mamanda 9, Ampang PointTaman Dato Ahmad Razali68000 Ampang, SelangorTel : 03-4252 3822Fax : 03-4252 3877

KUALA LUMPUR

Capital SquareGround FloorMenara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2694 8800Fax : 03-2694 6867

JOHOR

Taman PelangiGround Floor, Shoplot Nos. 1 & 3Jalan Perang, Taman Pelangi80400 Johor Bahru, JohorP.O. Box 61, Taman Sri Tebrau80057 Johor Bahru, JohorTel : 07-333 2064/2177Fax : 07-333 7411

MELAKA

Taman Desa Cheng PerdanaG-1, Ground Floor, Bangunan KKJalan Cheng Perdana 1/1ATaman Desa Cheng Perdana 175260 MelakaTel : 06-3365 111Fax : 06-3365 110

SABAH

SinsuranLot 4, 5, & 6, Block KSinsuran Complex88000 Kota KinabaluSabahTel : 088-237 758Fax : 088-212 511

ALLIANCE INVESTMENT MANAGEMENT BERHAD

23.01, 23rd FloorMenara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTollfree: 1-800-88-3065Tel : 03-2698 4299Fax : 03-2693 0792 (General) 03-2691 9403 (Operations)www.allianceimb.com.my

ALLIANCE TRUSTEE BERHAD

3rd Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2694 4888Fax : 03-2694 6200



Class of securities : Ordinary shares of RM1.00 each

Authorised share capital : RM2,000,000,000

Issued and paid-up share capital : RM1,548,105,929

Voting rights : One vote per ordinary share

Shareholdings Distribution ScheduleSize of Shareholdings No. of Shareholders % of Shareholders No. of Shares Held % of Issued Shares

Less than 100 1,712 9.06 38,367 0.00100 – 1,000 4,575 24.21 3,688,401 0.241,001 – 10,000 9,826 51.99 41,333,586 2.6710,001 – 100,000 2,400 12.70 68,959,401 4.45100,001 – less than 5% of issued shares 383 2.03 797,809,959 51.545% and above of issued shares 3 0.01 636,276,215 41.10

Total 18,899 100.00 1,548,105,929 100.00

Thirty (30) Largest Shareholders Name No. of Shares Held % of Issued Shares

1. Mayban Nominees (Tempatan) Sdn Bhd – DBS Bank for Vertical Theme Sdn Bhd 350,475,175 22.64

2. Employees Provident Fund Board 186,418,440 12.04

3. CIMSEC Nominees (Tempatan) Sdn Bhd – CIMB Bank Bhd for Vertical Theme Sdn Bhd 99,382,600 6.42

4. Malaysia Focus Investment Fund Limited 71,228,700 4.60

5. HSBC Nominees (Asing) Sdn Bhd – BBH (LUX) SCA for Genesis Smaller Companies 60,102,281 3.88

6. Medimetro (M) Sdn Bhd 56,000,000 3.62

7. ABB Nominee (Tempatan) Sdn Bhd – Pledged Securities Account for Caizhi Development Sdn Bhd 46,235,776 2.99

8. Cartaban Nominees (Asing) Sdn Bhd – Exempt AN for Barclays Bank PLC, Singapore 41,470,900 2.68

9. HSBC Nominees (Asing) Sdn Bhd – Exempt AN for RBS Coutts Bank Ltd 36,313,376 2.34

10. CIMB Group Nominees (Tempatan) Sdn Bhd – Pledged Securities Account for Dato’ Chua Ma Yu 35,000,000 2.26

analysis of shareholdingsas at 29 may 2009

118

Thirty (30) Largest Shareholders (cont’d)Name No. of Shares Held % of Issued Shares

11. Eden Engineering Sdn Bhd 22,295,763 1.44

12. Atlasplus Sdn Bhd 21,927,408 1.42

13. HSBC Nominees (Asing) Sdn Bhd – Exempt AN for Credit Suisse 21,147,076 1.37

14. HSBC Nominees (Asing) Sdn Bhd – Exempt AN for Clariden Leu Ltd 20,400,000 1.32

15. Multi-Purpose Holdings Berhad 17,471,600 1.13

16. HSBC Nominees (Asing) Sdn Bhd – Exempt AN for JPMorgan Chase Bank, National Association 15,293,600 0.99

17. Public Nominees (Tempatan) Sdn Bhd – PB Trustee Services Berhad 15,181,500 0.98

18. Citigroup Nominees (Asing) Sdn Bhd – Chase Manhattan Trustees Limited for Pacific Trust 14,603,000 0.94

19. HSBC Nominees (Tempatan) Sdn Bhd – Nomura Asset Management Malaysia for Employees Provident Fund 11,405,000 0.74

20. Cartaban Nominees (Asing) Sdn Bhd – SSBT Fund D26J for Emerging Markets Global Small Capitalization Fund 10,458,900 0.67

21. Citigroup Nominees (Tempatan) Sdn Bhd – Exempt AN for American International Assurance Berhad 10,250,300 0.66

22. Citigroup Nominees (Asing) Sdn Bhd – CBNY for DFA Emerging Markets Fund 9,328,300 0.60


24. SBB Nominees (Tempatan) Sdn Bhd – Employees Provident Fund Board 8,882,500 0.57

25. Malaysia Nominees (Tempatan) Sendirian Berhad – Great Eastern Life Assurance (Malaysia) Berhad 7,575,600 0.49

26. HSBC Nominees (Asing) Sdn Bhd – BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund 7,115,217 0.46

27. Citigroup Nominees (Tempatan) Sdn Bhd – Exempt AN for Prudential Fund Management Berhad 6,013,800 0.39

28. Citigroup Nominees (Asing) Sdn Bhd – CBLDN for Standard Life Investment Funds 5,973,900 0.39


30. Maybest Enterprise Sdn Bhd 5,315,800 0.34

Total 1,227,828,731 79.31

analysis of shareholdingsas at 29 may 2009


No. of Ordinary Shares

Name of Substantial Shareholder Direct Interest % of Issued Shares Indirect Interest % of Issued Shares Total % of Issued Shares

Vertical Theme Sdn Bhd 449,857,775 29.06 – – 449,857,775 29.06

Langkah Bahagia Sdn Bhd – – 449,857,7751 29.06 449,857,775 29.06

Duxton Investments Pte Ltd – – 449,857,7751 29.06 449,857,775 29.06

Lutfiah Binti Ismail – – 449,857,7752 29.06 449,857,775 29.06

Fullerton Financial Holdings Pte Ltd – – 449,857,7753 29.06 449,857,775 29.06

Fullerton Management Pte Ltd – – 449,857,7754 29.06 449,857,775 29.06

Temasek Holdings (Private) Limited – – 449,857,7755 29.06 449,857,775 29.06

Minister for Finance (Incorporated) of Singapore – – 449,857,7756 29.06 449,857,775 29.06

Employees Provident Fund Board 214,972,440 13.89 – – 214,972,440 13.89

Notes:1 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Vertical Theme Sdn Bhd. 2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Langkah Bahagia Sdn Bhd.3 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Duxton Investments Pte Ltd.4 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Fullerton Financial Holdings Pte Ltd.5 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Fullerton Management Pte Ltd.6 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Temasek Holdings (Private) Limited.

substantial shareholdersas at 29 may 2009

120

Direct Interest Indirect InterestShares held in the Company No. of Shares % of Issued Shares No. of Shares % of Issued Shares

Megat Dziauddin bin Megat Mahmud 3,000 negligible – –

Dato’ Thomas Mun Lung Lee (held through spouse, Datin Teh Yew Kheng) – – 35,000 negligible

Datuk Bridget Lai 160,000 0.01 – –

Share Options offered in the Company Exercise Price No. of Share Options offered

Datuk Bridget Lai RM3.07 992,100#

RM2.70 1,222,900#

# Subject to the achievement of performance conditions

Share Grants awarded in the Company Date of Grant No. of Share Grants awarded

Datuk Bridget Lai 12 December 2007 140,400* 2 September 2008 182,800*

* 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.

Other than as disclosed above, none of the other Directors have any interests in the Company or in any of the Company’s related corporation.

directors’ shareholdingsas at 29 may 2009

Financial Statements

122 Statement of Board ofDirectors’ Responsibilities

123 – 129 Directors’ Report

130 Statement by Directors

130 Statutory Declaration

131 Independent Auditors’ Report

132 – 133 Balance Sheets

134 Income Statements

135 Consolidated Statement ofChanges in Equity

136 Statement of Changes in Equity

137 – 139 Consolidated Cash Flow Statement

140 – 141 Cash Flow Statement

142 – 250 Notes to the Financial Statements

The Companies Act, 1965 requires Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group

and the Company for the financial year.

In preparing the financial statements, the Directors are responsible for the adoption of suitable accounting policies that comply with the provisions of the Companies

Act, 1965, applicable Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines. The Directors are also responsible to ensure their

consistent use in the financial statements, supported where necessary by reasonable and prudent judgements.

The Directors hereby confirm that suitable accounting policies have been consistently applied in the preparation of the financial statements. The Directors also confirm

that the Company maintains adequate accounting records and an effective system of internal control to safeguard the assets of the Group and the Company and

prevent and detect fraud or any other irregularities.

Statement of Board of Directors’ Responsibilitiesfor preparing the Annual Audited Financial Statements

122

The Directors present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2009.

PRINCIPAL ACTIVITIESThe principal activities of the Company are investment holding and provision of management services to the subsidiaries.

The principal activities of the subsidiaries are commercial banking and financing, Islamic banking, investment banking including provision of stockbroking services, unit trusts and fund management, and the provision ofrelated financial services. On 1 April 2008, the Islamic banking operations, previously included in Alliance Bank Malaysia Berhad’s operations, were transferred to its wholly-owned subsidiary, Alliance Islamic Bank Berhad.

There have been no significant changes in the nature of the principal activities during the financial year.

RESULTSGroup Company

RM’000 RM’000

Profit before taxation and zakat 303,312 121,234Taxation and zakat (74,424) (25,436)

Profit for the year 228,888 95,798

Attributable to:Equity holders of the Company 229,121 95,798Minority interests (233) –


There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

DIVIDENDSThe amount of dividends declared and paid by the Company since 31 March 2008 were as follows:

RM’000

(i) First interim dividend of 2.5 sen per share, tax exempt under the single tier tax system, on 1,548,105,929 ordinary shares of RM1.00 each,in respect of financial year ended 31 March 2009, was paid on 27 August 2008. 38,434

(ii) Second interim dividend of 3.75 sen per share, tax exempt under the single tier tax system, on 1,548,105,929 ordinary shares of RM1.00 each,in respect of financial year ended 31 March 2009, was paid on 3 March 2009. 57,621

96,055*

* Dividends paid on the shares held in Trust pursuant to the Company's ESS which are classified as shares held for ESS are not accounted for in the shareholders’ equity. The amount of RM269,000 and RM433,000being dividends paid for those shares were added back to the appropriation of retained profits in respect of the first and second interim dividends respectively.

Directors’ Report


EMPLOYEES’ SHARE SCHEMEThe Alliance Financial Group Berhad Employees’ Share Scheme (“ESS”) is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 28 August 2007. The ESS which comprisesthe Share Option Plan, the Share Grant Plan and the Share Save Plan took effect on 3 December 2007 and is in force for a period of 10 years.

On 2 September 2008, the Company 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 participationin the ESS:

(i) 2,452,100 share grants under the Share Grant Plan. The first 50% of the share grants are to be vested at the end of the second year and the remaining 50% of the share grants are to be vested at the end of thethird year from the date on which an award is made.

(ii) 10,328,400 share options under the Share Option Plan at an option price of RM2.70 per share which will be vested subject to the achievement of performance conditions.

There were no share options offered under the Share Save Plan during the financial year.

The salient features of the ESS are disclosed in Note 30 to the financial statements.

Save for Datuk Bridget Anne Chin Hung Yee, who is the Group Chief Executive Officer of Alliance Bank Malaysia Berhad, none of the other directors of the Company were offered/awarded any share options/share grantsduring the financial year.

Details of share options/share grants offered/awarded to Directors are disclosed in section on Directors’ Interests in this report.

SHARES HELD FOR EMPLOYEES’ SHARE SCHEMEDuring the financial year, the Trustee of the ESS had purchased 4,930,800 ordinary shares of RM1.00 each fully paid in the Company from the open market at an average price of RM2.00 per share. The total considerationpaid for the purchase including transaction costs was RM9,873,777. The shares purchased are being held in trust by the Trustee of ESS in accordance with the Trust Deed dated 3 December 2007.

As at 31 March 2009, the Trustee of the ESS held 14,305,500 of ordinary shares representing 0.92% of the issued and paid-up capital of the Company. Such shares are held at a carrying amount of RM36,127,587 andfurther relevant details are disclosed in Note 29 to the financial statements.

Directors’ Report

124

BUSINESS REVIEW FOR FINANCIAL YEAR ENDED (“FYE”) 31 MARCH 2009Malaysia has not been spared from the effects of the global economic downturn. Exports have been impacted and loan demand has decreased. Revenue enjoyed by banks previously from the capital market, includingunit trust funds and wealth management products, have been severely impacted.

In response to the deteriorating global and local economic conditions, the Group focussed on further strengthening its risk management practices to sustain good credit portfolio quality, to maintain high liquidity, strongcapital level and to improve productivity, efficiency and services levels.

Our loans portfolio quality continued to improve as shown by the positive trend in the asset quality ratios. However, given the current economic environment, where the bottoming out is not yet evident, we have taken amore prudent approach in our provisioning for impairment of loans and securities. Regular stress test of our business portfolio enabled us to proactively manage risks.

During the financial year, we strengthened our branch footprint to a total of 100 branches inclusive of our Alliance Rakan branches, with a total of 19 Privilege Banking Centres and increased the number of SME BusinessCentres to 26, to cater to the needs of both individual customers and the business community.

In line with our efforts to meet the expectations of our customers, we have introduced the Alliance Personal Concept Stores at the end of 2008 at three pilot locations: Desa Tebrau (Johor), Sunway Pyramid ShoppingCentre (Selangor) and Ikano Power Centre at Mutiara Damansara (Selangor). The Alliance Personal Concept Store raises the bar on personalised service allowing customers to drop by and have a cup of hot beveragewhile enjoying complimentary access to Alliance’s ONEPAY terminals to settle their bills, ticketing, mobile phone reloads and many more. There is also a full suite of Automated Teller Machines, Cash Deposit Machinesand Cheque Express Service for the customers’ banking convenience, and PlayStation 3 to pass the time.

In line with our tagline, Banking Made Personal, we launched two new products which are personalised for our customers:

• Malaysia’s first Alliance Debit MasterCard, which is linked to the interest-bearing Alliance Hybrid Account with rates of up to 1.8%, one of the highest currently offered in the market.

• Malaysia’s first personalised picture credit card, the Alliance Bank You:nique Picture Card, that comes with a customised value plan that offers options of rebates, rates or rewards.

Alliance Investment Bank Berhad continued its transformation exercise to integrate its stockbroking business into the Consumer Banking business of Alliance Bank Malaysia Berhad (“ABMB”). This provides greateroperational efficiency and complements the integrated suite of financial products and services we offer to our customers.

During the year, the Group achieved loans growth of 18.4% (31 March 2008: 14.2%), with the loans portfolio mix in line with the desired mix.

The quality of our loan asset portfolio continued to improve quarter on quarter, with both net non-performing loan and loan loss ratios at 1.8% and 99.7% respectively as at 31 March 2009 being better-than-industryaverage (31 March 2008: 3.3% and 79.9% respectively). Our loan-deposit ratio is healthy and the Group’s risk-weighted capital ratio remained strong.

At present, ABMB remains well-capitalised with our Core Capital of 12.6% and at Alliance Financial Group (“AFG”) level of 10.3% (31 March 2008: 12.5% and 11.2% at AFG level), and our capital adequacy ratio (“CAR”)is at 13.1% and at AFG level is 14.7% as at 31 March 2009 (31 March 2008: 14.7% and 16.1% at AFG level). AFG’s CAR of 14.7% is ahead of industry average of 13.4%. In addition, in view of the current economicconditions, Alliance Financial Group Berhad, the listed holding company of the Group, has made available an additional RM600 million standby funds for any opportunistic investment.

During the year, ABMB received several local and regional awards, most notably for its leadership and information technology initiatives during the transformation journey.

Datuk Bridget Lai was honoured with the “CEO Award for Leadership” at the Technology Business Review (TBR) ASEAN Awards 2008 in October 2008. This is a leadership excellence award given to CEOs who have greatlycontributed to the growth or turnaround of the organisation during his/her tenure.

For our work in technology enterprise, ABMB was awarded the “Corporate Award for Excellence” in the ASEAN Banking & Finance Sector at the Technology Business Review (TBR) ASEAN Awards 2008 in October 2008 andan award for “Innovation in Enterprise Transformation” by the leading independent research and advisory firm, Financial Insights (an IDC company) at the Asian Financial Services Congress in Singapore in February 2009.

Alliance Investment Management Berhad (“AIMB”)’s flagship Islamic growth fund, Alliance Dana Adib, emerged as the ‘Best Equity Malaysia Islamic Fund’ in the 3-year category for the period ended December 2008 forthe second consecutive year. The Fund was recognised as ‘Leader’ in terms of total returns and consistent returns and continues to be ranked in the top quartile out of 36 funds in the same category since February 2006to February 2009. (Source: The Edge, 9 March 2009 issue, Edge-Lipper Fund Performance Table).

AIMB’s strategic alliances with external fund manager, Fullerton Fund Management Company Limited, which co-manages AIMB’s global funds have resulted in them being recognised at The Edge-Lipper Singapore FundAwards 2009.

Directors’ Report


ECONOMIC OUTLOOK AND PROSPECTS FOR FYE 31 MARCH 2010 The global recession is expected to continue to exert downward pressure on international trade and financial markets. The Government has responded with expansionary fiscal and monetary policies to mitigate decliningexports and slowing consumer spending. The Government predicts that the Malaysian economy is expected to remain challenging and may contract between 4% and 5% in 2009, from the previously forecasted -1% and1%. This outlook is dependent on stability being restored in the crisis-affected economies in the second half of the year as well as effective implementation of stimulus measures.

BUSINESS OUTLOOK FOR FYE 31 MARCH 2010 At the macro level, we are confident that the pro-growth government policy and initiatives will minimise some of the global shocks while further equity and trade liberalization augurs well for companies to take advantageof the opportunities to grow more profitably.

At the Group level, we approach the financial year with cautious optimism, having recognised the challenging times ahead. In this period of uncertainty, we believe that the business transformation and consolidationexercise that we undertook three years ago will provide us with an added advantage from a financial stand point and business positioning.

The Group will continue to strengthen its risk management practices to maintain the credit quality of its loan portfolios, improve cost efficiencies and ensure liquidity and capital positions stay strong.

Human capital development and talent management will continue to remain a key management agenda for the Group. We will continue to increase the bench-strength of employees, increase competency levels throughrigorous training, development and recruitment programmes, motivating employees in promoting a performance culture in providing quality customer service and in meeting customer satisfaction.

In the light of the continued challenging economic environment, the Group expects to record a reasonable performance for the financial year ending 31 March 2010.

RATING BY EXTERNAL AGENCYThe banking subsidiary Alliance Bank Malaysia Berhad (“ABMB”) is rated by Rating Agency Malaysia Berhad (“RAM”). Based on RAM’s rating in November 2008, ABMB’s short-term and long-term ratings are reaffirmedat P1 and A1 respectively. RAM has classified these rating categories as follows:

P1 – Financial institutions in this category have superior capacities for timely payments of obligations.

A1 – Financial institutions rated in this category are adjudged to offer adequate safety for timely payments of financial obligations. This level of rating indicates financial institutions with adequate credit profiles, butwhich possess one or more problem areas, giving rise to the possibility of future riskiness. Financial institutions rated in this category have generally performed at industry average and are considered to bemore vulnerable to changes in economic conditions than those rated in the higher categories.

DIRECTORSThe names of the Directors of the Company in office since the date of the last report and at the date of this report are:

Datuk Oh Chong PengDato’ Thomas Mun Lung LeeTan Yuen FahTee Kim ChanStephen Geh Sim WhyePhoon Siew HengMegat Dziauddin Bin Megat MahmudKung Beng HongDatuk Bridget Anne Chin Hung Yee

Directors’ Report

126

DIRECTORS’ BENEFITSNeither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisitionof shares in, or debentures of, the Company or any other body corporate, other than those arising from the share options and share grants under the ESS.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by theDirectors or the fixed salary of a full-time employee of the Company or related corporations as shown in Note 35(b) and Note 48(c) to the financial statements of the Company or financial statements of related corporations)by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

According to the Register of Directors’ Shareholdings, the interests of Directors in office at the end of the financial year in shares, share options and share grants in the Company were as follows:

Number of Ordinary Shares of RM1.00 Each1.4.2008 Acquired Sold 31.3.2009

The Company

Megat Dziauddin Bin Megat Mahmud– Direct 3,000 – – 3,000

Datuk Bridget Anne Chin Hung Yee– Direct – 160,000 – 160,000

Dato' Thomas Mun Lung Lee– Indirect (held through spouse, Datin Teh Yew Kheng) 35,000 – – 35,000

Number of Options Over Ordinary Shares of RM1.00 EachExercise Price 1.4.2008 Offered Vested Exercised 31.3.2009

RM

Datuk Bridget Anne Chin Hung Yee 3.07 992,100 – – – 992,100#

Datuk Bridget Anne Chin Hung Yee 2.70 – 1,222,900# – – 1,222,900

# Subject to the achievement of performance conditions

Number of Grants Over Ordinary Shares of RM1.00 EachDate of grant: 1.4.2008 Awarded Vested 31.3.2009

Datuk Bridget Anne Chin Hung Yee 12 December 2007 140,400 – – 140,400*

Datuk Bridget Anne Chin Hung Yee 2 September 2008 – 182,800* – 182,800

* 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. Furtherdetails are as disclosed in Note 30 to the financial statements.

By virtue of their shareholdings in the Company, the above Directors are deemed to have beneficial interests in the shares of the subsidiary companies of the Company. None of the other Directors in office at the end ofthe financial year had any interest in shares, share options and share grants in the Company or its related corporations during the financial year.

Directors’ Report


ISSUE OF SHARESThere was no change in the issued and paid-up capital of the Company during the financial year.

BAD AND DOUBTFUL DEBTSBefore the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of baddebts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of theGroup and of the Company inadequate to any substantial extent.

CURRENT ASSETSBefore the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ensure that any current assets, which were unlikely to realise their value asshown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

VALUATION METHODAt the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Companymisleading or inappropriate.

CONTINGENT AND OTHER LIABILITIESAt the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year other than in the ordinary course of business.

No contingent or other liability of the Group or of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of theDirectors, will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.

Directors’ Report

128

CHANGE OF CIRCUMSTANCESAt the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in thefinancial statements misleading.

ITEMS OF AN UNUSUAL NATUREIn the opinion of the Directors:

(i) the results of the operations of the Group or of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the Islamic bankingoperations, previously included in Alliance Bank Malaysia Berhad’s operations, were transferred to its wholly-owned subsidiary, Alliance Islamic Bank Berhad; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature which is likely to affect substantially the results ofthe operations of the Group or of the Company for the financial year in which this report is made.

SIGNIFICANT EVENTSThe significant events during the financial year are disclosed in Note 52 to the financial statements.

EVENTS SUBSEQUENT TO BALANCE SHEET DATEThe subsequent event is as dislcosed in Note 53 to the financial statements.

AUDITORSThe auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 29 May 2009.

Datuk Oh Chong Peng Dato’ Thomas Mun Lung Lee

Kuala Lumpur, Malaysia


Directors’ Report

We, Datuk Oh Chong Peng and Dato' Thomas Mun Lung Lee, being two of the Directors of Alliance Financial Group Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements setout on pages 132 to 250 are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a trueand fair view of the financial position of the Group and of the Company as at 31 March 2009 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 29 May 2009.

Datuk Oh Chong Peng Dato’ Thomas Mun Lung Lee

Kuala Lumpur, Malaysia

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965

I, Philip Goh Teck Siang, being the officer primarily responsible for the financial management of Alliance Financial Group Berhad, do solemnly and sincerely declare that the accompanying financial statements set out onpages 132 to 250 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declaredby the abovenamed Philip Goh Teck Siangat Kuala Lumpur in the Federal Territoryon 29 May 2009 Philip Goh Teck Siang

Before me,

T. Thandonee RajagopalCommissoner for Oaths

Kuala Lumpur, Malaysia29 May 2009

Statement By DirectorsPursuant to Section 169(15) of the Companies Act, 1965

130

Report on the financial statementsWe have audited the financial statements of Alliance Financial Group Berhad, which comprise the balance sheets as at 31 March 2009 of the Group and of the Company, and the income statements, statements ofchanges in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 132 to 250.

Directors’ responsibility for the financial statements

The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards as modified by Bank Negara Malaysia Guidelinesand the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards as modified by Bank Negara Malaysia Guidelines and the Companies Act, 1965 in Malaysia so asto give a true and fair view of the financial position of the Group and of the Company as at 31 March 2009 and of their financial performances and cash flows of the Group and of the Company for the year then ended.

Report on other legal and regulatory requirementsIn accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparationof the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(c) The auditors’ reports on the accounts of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other mattersThis report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any otherperson for the content of this report.

Ernst & Young Chan Hooi LamAF: 0039 No.2844/02/10 (J)Chartered Accountants Chartered Accountant


Independent Auditors’ Report to the members of Alliance Financial Group Berhad (Incorporated in Malaysia)


Group Company2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

ASSETSCash and short-term funds 3 4,998,175 5,774,055 453,878 66,299 Deposits and placements with banks and other financial institutions 4 198,523 532,835 200,000 –Securities held-for-trading 5 46,055 100,129 – –Securities available-for-sale 6 6,320,122 3,091,018 – –Securities held-to-maturity 7 314,620 821,294 – –Derivative financial assets 8 17,310 19,393 – –Loans, advances and financing 9 18,718,097 15,618,971 – –Balances due from clients and brokers 10 69,525 119,333 – – Land held for investment 11 28,922 28,922 – –Other assets 12 233,930 258,732 38,929 37,077Tax recoverable 71,397 31,066 475 950Statutory deposits 13 199,024 622,086 – –Investment in subsidiaries 14 – – 1,729,142 1,729,142Leasehold land 15 12,136 12,275 – –Property, plant and equipment 16 137,567 129,615 473 579Intangible assets 17 368,512 353,665 – –Deferred tax assets 18 120,517 161,537 – –

TOTAL ASSETS 31,854,432 27,674,926 2,422,897 1,834,047

Balance Sheetsas at 31 March 2009

132

The accompanying notes form an integral part of the financial statements.

Group Company2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

LIABILITIES AND EQUITYDeposits from customers 19 25,575,441 21,351,760 – –Deposits and placements of banks and other financial institutions 20 1,190,782 1,454,124 – –Derivative financial liabilities 8 26,016 23,276 – –Recourse obligations on loans sold to Cagamas 21 58,391 255,391 – – Bills and acceptances payable 22 2,215 161,418 – –Balances due to clients and brokers 23 76,701 112,626 – –Other liabilities 24 954,930 1,120,527 6,098 6,972Subordinated bonds 25 600,000 600,000 – –Long term borrowings 26 600,000 – 600,000 –Provision for taxation 2,213 – – –Deferred tax liabilities 18 1,205 1,416 32 242

TOTAL LIABILITIES 29,087,894 25,080,538 606,130 7,214

Share capital 27 1,548,106 1,548,106 1,548,106 1,548,106Reserves 28 1,249,906 1,067,586 304,788 304,981Shares held for Employees’ Share Scheme 29 (36,127) (26,254) (36,127) (26,254)

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 2,761,885 2,589,438 1,816,767 1,826,833Minority interests 4,653 4,950 – –

TOTAL EQUITY 2,766,538 2,594,388 1,816,767 1,826,833

TOTAL LIABILITIES AND EQUITY 31,854,432 27,674,926 2,422,897 1,834,047

COMMITMENTS AND CONTINGENCIES 42 15,081,294 13,976,101 – –

Balance Sheets as at 31 March 2009 (cont’d)



Group Company2009 2008 2009 2008

Note RM’000 RM’000 RM’000 RM’000

Operating revenue 31 1,636,361 1,586,010 127,971 114,696

Interest income 32 1,250,187 1,216,363 4,405 10,973Interest expense 33 (588,618) (579,475) (2,460) (4,268)

Net interest income 661,569 636,888 1,945 6,705Net income from Islamic banking business 54 163,935 115,162 – –

825,504 752,050 1,945 6,705Other operating income 34 232,618 265,439 123,665 103,738

Net income 1,058,122 1,017,489 125,610 110,443Other operating expenses 35 (564,429) (470,082) (3,685) (3,834)

Operating profit 493,693 547,407 121,925 106,609(Allowance)/write-back for losses on loans, advances and financing 36 (112,042) 60,718 – –Impairment net of write-back 37 (78,339) (106,075) (691) (5,661)

Profit before taxation and zakat 303,312 502,050 121,234 100,948 Taxation and zakat 38 (74,424) (121,955) (25,436) (27,699)

Profit for the year 228,888 380,095 95,798 73,249

Attributable to:Equity holders of the Company 229,121 379,956 95,798 73,249Minority interests (233) 139 – –


Earnings per share (sen):Basic 39(a) 14.9 25.4Diluted 39(b) 14.8 25.4

Net dividends per ordinary share in respect of the year (sen): 40 6.20 4.69

Income Statementsfor the year ended 31 March 2009

134


Attributable to Equity Holders of the CompanyNon-Distributable < Distributable >

SharesEmployees’ held for (Accumulated

Share Employees’ Losses)/ TotalShare Share Statutory Capital Revaluation Scheme Share Retained Shareholders’ Minority Total

Capital Premium Reserve Reserve Reserve Reserve Scheme Profits Equity Interests EquityGroup Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2007 1,217,670 491,238 268,125 7,013 12,905 – – (54,229) 1,942,722 4,811 1,947,533Profit for the year – – – – – – – 379,956 379,956 139 380,095Exercise of warrants 27 330,436 69,392 – – – – – – 399,828 – 399,828Unrealised net loss on revaluation

of securities available-for-sale – – – – (35,681) – – – (35,681) – (35,681)Transfer to statutory reserve – – 98,785 – – – – (98,785) – – –Dividends paid to shareholders 40 – – – – – – – (72,571) (72,571) – (72,571)Share-based payment under Employees’ Share Scheme 35 – – – – – 1,438 – – 1,438 – 1,438Purchase of shares pursuant to Employees’ Share Scheme 29 – – – – – – (26,254) – (26,254) – (26,254)Share premium reduction – (256,341) – – – – – 256,341 – – –

At 31 March 2008 1,548,106 304,289 366,910 7,013 (22,776) 1,438 (26,254) 410,712 2,589,438 4,950 2,594,388

At 1 April 2008 1,548,106 304,289 366,910 7,013 (22,776) 1,438 (26,254) 410,712 2,589,438 4,950 2,594,388Profit/(loss) for the year – – – – – – – 229,121 229,121 (233) 228,888Unrealised net loss on revaluation of

securities available-for-sale – – – – (3,612) – – – (3,612) – (3,612)Transfer from revaluation reserve to income statement – – – – 46,562 – – – 46,562 – 46,562Transfer to statutory reserve – – 63,005 – – – – (63,005) – – –Dividends paid to shareholders 40 – – – – – – – (96,055) (96,055) – (96,055)Dividends paid to Minority interests – – – – – – – – – (64) (64)Share-based payment under Employees’ Share Scheme 35 – – – – – 6,304 – – 6,304 – 6,304Purchase of shares pursuant to

Employees’ Share Scheme 29 – – – – – – (9,873) – (9,873) – (9,873)

At 31 March 2009 1,548,106 304,289 429,915 7,013 20,174 7,742 (36,127) 480,773 2,761,885 4,653 2,766,538

Consolidated Statement of Changes in Equityfor the year ended 31 March 2009



Attributable to Equity Holders of the Company

Non-Distributable < Distributable >Shares

Employees’ held for (AccumulatedShare Employees’ Losses)/ Total

Share Share Scheme Share Retained Shareholders’Capital Premium Reserve Scheme Profits Equity

Company Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2007 1,217,670 491,238 – – (256,341) 1,452,567Exercise of warrants 27 330,436 69,392 – – – 399,828Profit for the year – – – – 73,249 73,249Dividends paid 40 – – – – (72,571) (72,571)Share-based payment under Employees’ Share Scheme 35 – – 14 – – 14Purchase of shares pursuant to Employees’ Share Scheme 29 – – – (26,254) – (26,254)Share premium reduction – (256,341) – – 256,341 –

At 31 March 2008 1,548,106 304,289 14 (26,254) 678 1,826,833

At 1 April 2008 1,548,106 304,289 14 (26,254) 678 1,826,833Profit for the year – – – – 95,798 95,798Dividends paid 40 – – – – (96,055) ( 96,055)Share-based payment under Employees’ Share Scheme 35 – – 64 – – 64Purchase of shares pursuant to Employees’ Share Scheme 29 – – – (9,873) – (9,873)

At 31 March 2009 1,548,106 304,289 78 (36,127) 421 1,816,767

Statement of Changes in Equityfor the year ended 31 March 2009

136


2009 2008RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation and zakat 303,312 502,050Adjustments for:

Accretion of discount less amortisation of premium of securities (99,244) (63,992)Depreciation of property, plant and equipment 36,494 34,934Dividends from securities held-to-maturity (5,390) (3,905)Gain on disposal of property, plant and equipment (203) (774)Gain on disposal of leasehold land – (184)Gain on disposal of foreclosed properties (7,414) (1,332)Net gain from redemption of securities held-to-maturity (16,841) (9,776)Net gain from sale of securities held-for-trading (420) (1,652)Net gain from sale of securities available-for-sale (20,197) (43,010)Unrealised (gain)/loss on revaluation of securities held-for-trading (244) 269Unrealised foreign exchange loss 4,823 8,283Interest expense on subordinated bonds 36,540 36,540Interest expense on long/short-term borrowings 2,460 4,268Interest income from securities held-to-maturity (13,085) (29,045)Interest income from securities available-for-sale (111,492) (87,615)Interest income from deposits and placements with banks and other financial institutions (5) (110)Return on capital from investment (88) (15)Impairment on other assets 40 –Allowance for bad and doubtful debts (net of recoveries) 182,868 60,542(Write-back)/allowance for bad and doubtful on other assets (net of recoveries) (2,956) 5,001Impairment net of write-back of securities available-for-sale 76,128 79,790Impairment net of write-back of securities held-to-maturity (42) 17,891Impairment net of write-back of securities held-for-trading 1,398 4,138Impairment net of write-back of foreclosed properties 815 300 Impairment net of write-back of property, plant and equipment – 3,956Amortisation of leasehold land 139 126Amortisation of computer software 14,654 14,510Profit Equalisation Reserve (1,867) 35,312Share options/grants under Employees’ Share Scheme 6,304 1,438Property, plant and equipment written-off 3,218 186Computer software written-off 76 34

Operating profit before working capital changes carried forward 389,781 568,158

Consolidated Cash Flow Statementfor the year ended 31 March 2009


2009 2008RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (cont’d)Operating profit before working capital changes brought forward 389,781 568,158Changes in working capital:

Deposits from customers 4,223,681 2,247,348Deposits and placements of banks and other financial institutions (263,342) 971,766Obligations on securities sold under repurchase agreements – (2,010,098)Bills and acceptances payable (159,203) (319,853)Balance due from clients and brokers 16,843 9,556Other liabilities (163,729) 212,620Securities held-for-trading 50,001 (86,354)Loans, advances and financing (3,281,993) (2,250,773)Other assets 31,358 (12,745)Statutory deposits with Bank Negara Malaysia 423,062 (40,131)Recourse obligations on loans sold to Cagamas (197,000) (58,187)

Cash generated from/(used in) operations 1,069,459 (768,693)Taxes and zakat paid (85,338) (150,461)

Net cash generated from/(used in) operating activities 984,121 (919,154)

CASH FLOWS FROM INVESTING ACTIVITIESNet dividends received from securities held-to-maturity 4,678 2,981Interest received from securities held-to-maturity 13,085 29,045Interest received from securities available-for-sale 111,492 87,615Interest received from deposits and placements with banks and other financial institutions 5 110Return on capital from investment 88 15Purchase of property, plant and equipment (47,880) (55,902)Purchase of computer software (29,577) (23,239)Purchase of leasehold land – (1,500)Purchase of shares from market (9,873) (26,254)Proceeds from disposal of property, plant and equipment 419 2,417Proceeds from disposal of leasehold land – 250Purchase of securities held-to-maturity, net of maturity and redemption proceeds 566,600 1,622,267Purchase of securities available-for-sale, net of sale proceeds (3,168,231) (1,076,833)

Net cash (used in)/generated from investing activities (2,559,194) 560,972

Consolidated Cash Flow Statementfor the year ended 31 March 2009 (cont’d)

138

2009 2008RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIESDrawdown of long-term borrowing 600,000 –Repayment of short-term borrowing – (200,000)Proceeds from exercise of warrants – 399,828Interest paid on subordinated bonds (36,540) (36,540)Interest paid on long/short-term borrowings (2,460) (4,268)Dividends paid to shareholders of the Company (96,055) (72,571)Dividends paid to minority interests (64) –

Net cash generated from financing activities 464,881 86,449

NET CHANGE IN CASH AND CASH EQUIVALENTS (1,110,192) (271,733)CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,306,890 6,578,623

CASH AND CASH EQUIVALENTS AT END OF YEAR 5,196,698 6,306,890

Cash and cash equivalents comprise the following:Cash and short-term funds 4,998,175 5,774,055Deposits and placements with banks and other financial institutions 198,523 532,835

5,196,698 6,306,890

Consolidated Cash Flow Statementfor the year ended 31 March 2009 (cont’d)



2009 2008RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 121,234 100,948Adjustments for:

Depreciation of property, plant and equipment 98 165Interest income from deposits and placements with banks and other financial institutions (4,405) (10,973)Interest expense on long/short-term borrowings 2,460 4,268Return on capital from investment (88) (15)Impairment on other assets 40 –Allowance for doubtful debts due from subsidiaries 651 5,661Gain on disposal of property, plant and equipment (11) –Share options/grants under Employees’ Share Scheme 64 14 Gross dividend income from subsidiary (122,601) (103,653)

Operating loss before working capital changes (2,558) (3,585)Changes in working capital:

Receivables (1,948) 4,314Payables (664) 3,936Subsidiaries (805) (47)

Cash (used in)/generated from operations (5,975) 4,618Taxes refund/(paid) 479 (792)

Net cash (used in)/generated from operating activities (5,496) 3,826

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (30) (87)Interest received from deposits and placements with banks and other financial institutions 4,405 10,973Return on capital from investment 88 15 Purchase of shares from market (9,873) (26,254)Acquisition of additional shares in a subsidiary – (200,000)Net dividend received 96,951 83,675Proceed from disposal of property, plant and equipment 49 –

Net cash generated from/(used in) investing activities 91,590 (131,678)

Cash Flow Statementfor the year ended 31 March 2009

140

2009 2008RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIESDrawdown of long-term borrowing 600,000 –Repayment of short-term borrowing – (200,000)Proceeds from exercise of warrants – 399,828Dividends paid (96,055) (72,571)Interest paid on long/short-term borrowings (2,460) (4,268)

Net cash generated from financing activities 501,485 122,989

NET CHANGE IN CASH AND CASH EQUIVALENTS 587,579 (4,863)CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 66,299 71,162

CASH AND CASH EQUIVALENTS AT END OF YEAR 653,878 66,299

Cash and cash equivalents comprise the following:Cash and short-term funds 453,878 66,299Deposits and placements with banks and other financial institutions 200,000 –

653,878 66,299

Cash Flow Statementfor the year ended 31 March 2009 (cont’d)



1. CORPORATE INFORMATIONThe Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 3rdFloor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.

The principal activities of the Company are investment holding and provision of management services to the subsidiaries.

The principal activities of the subsidiaries are commercial banking and financing, Islamic banking, investment banking including provision of stockbroking services, unit trusts and fund management, and the provision ofrelated financial services. On 1 April 2008, the Islamic banking operations, previously included in Alliance Bank Malaysia Berhad’s operations, were transferred to its wholly-owned subsidiary, Alliance Islamic Bank Berhad.

There have been no significant changes in the nature of the principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 29 May 2009.

2. SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted by the Group are consistent with those adopted in the annual audited financial statements for the previous financial year.

The following Financial Reporting Standards ("FRSs") and interpretations of the Issues Committee ("IC") issued by the Malaysian Accounting Standards Board ("MASB") are not yet effective. All the following newFRSs and IC Interpretations will be effective for financial periods beginning on or after 1 January 2010, except FRS 8 which is effective for financial periods beginning on or after 1 July 2009:

Standard/Interpretation

– FRS 4 Insurance Contracts

– FRS 7 Financial Instruments: Disclosures

– FRS 8 Operating Segments

– FRS 139 Financial Instruments: Recognition and Measurement

– IC Interpretation 9 Reassessment of Embedded Derivatives

– IC Interpretation 10 Interim Financial Reporting and Impairment

As at the date of authorisation of the financial statements, the above FRSs and IC Interpretations have not been adopted by the Group:

(i) FRS 4 Insurance Contracts – This standard is not applicable to the Group.

(ii) FRS 7 Financial Instruments: Disclosures – This new standard requires disclosures in financial statements that enable users to evaluate the significance of financial instruments for the entity’s financial positionand performance, and the nature and extent of risks arising from financial instruments to which an entity is exposed and how these risks are managed. This standard requires both qualitative disclosuresdescribing management’s objectives, policies and processes for managing those risks, and quantitative disclosures providing information about the extent to which an entity is exposed to risk, based oninformation provided internally to the entity’s key management personnel. An entity shall not apply this standard for annual periods beginning prior to 1 January 2010 unless it also applies FRS 139. The impactof applying FRS 7 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors is not required tobe disclosed by virtue of exemptions provided under paragraph 44AB of FRS 7.

(iii) FRS 8 Operating Segments – This new standard requires disclosures in the financial statements, financial and descriptive information about its reportable segments. Reportable segments are operating segmentsthat meet specified criteria. Operating segments are distinguishable components of the Group about which separate financial information is available that is evaluated regularly by the management of the Groupin deciding how to allocate resources and in assessing performance. The application of this standard is not expected to have any material impact on the financial statements of the Group.

Notes to the Financial Statements– 31 March 2009

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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(iv) FRS 139 Financial Instruments: Recognition and Measurement – This standard establishes the principles for the recognition, derecognition and measurement of an entity’s financial instruments and for hedge

accounting. The impact of applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimatesand Errors is not required to be disclosed by virtue of exemptions provided under paragraph 103AB of FRS 139.

With effect from financial year commencing 1 April 2005, upon the Group’s adoption of the Bank Negara Malaysia’s ("BNM") revised BNM/GP8 – Guidelines on Financial Reporting for Licensed Institutions, certainprinciples in connection with the recognition, derecognition and measurement of financial instruments which are similar to those prescribed by FRS 139 have been adopted by the Group. These accountingpolicies are set out in Notes 2(h).

(v) IC Interpretation 9 Reassessment of Embedded Derivatives – This interpretation clarifies that the reassessment of an embedded derivative after its initial recognition is forbidden unless the instrument’s termshave changed and this has affected its cash flows significantly. This IC Interpretation is not expected to have any material impact on the financial statements of the Group.

(vi) IC Interpretation 10 Interim Financial Reporting and Impairment – This interpretation clarifies that an entity shall not reverse impairment on goodwill and investments in equity instruments and financial assetscarried at cost recognised in an interim period. This interpretation is not applicable to the annual financial statements of the Group.

In August 2008, the MASB announced its plan to bring Malaysia to full convergence with International Financial Reporting Standards ("IFRS") by 1 January 2012. The financial impact and effects on disclosure andmeasurement ensuing from such convergence are currently still being assessed pending the issuance of such revised FRSs incorporating the full convergence.

On 20 October 2008, BNM had issued a circular setting out the limited circumstances in which banking institutions are allowed to reclassify financial instruments currently held in the securities held-for-tradingportfolio into the securities available-for-sale and securities held-to-maturity portfolios. This concession is only effective for the period from 1 July 2008 to 31 December 2009. As at 31 March 2009, the Group hastransferred one (1) of its security from securities held-for-trading portfolio to securities available-for-sale portfolio. The transfer was made at its market value. This reclassification is disclosed in Note 6.

(a) Basis of Preparation

The financial statements comply with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia ("BNM") Guidelines.

The financial statements of the Group and the Company have also been prepared under the historical cost convention, except the following assets which are stated at fair value: securities held-for-trading,securities available-for-sale and derivative financial instruments.

The financial statements incorporate all activities relating to the Islamic banking business which have been undertaken by the Group. Islamic banking business refers generally to the acceptance of depositsand granting of financing under the Shariah principles.

The financial statements are presented in Ringgit Malaysia ("RM") and all numbers are rounded to the nearest thousand (RM’000), unless otherwise stated.

In the preparation of the financial statements, management is required to make certain judgements, estimates and assumptions that affect the application of accounting policies and the reported amount ofassets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognisedin the financial statements in the period in which the estimate is revised and in any future periods affected.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(a) Basis of Preparation (cont’d)

In particular, information about significant areas of critical judgements and estimation uncertainty in applying accounting policies that have the most significant effects on the amount recognised in the financialstatements are described in the following notes:

(i) Annual testing for impairment of goodwill and intangible assets (Note 17) – the measurement of the recoverable amount of cash-generating units are determined based on the value-in-use method, whichrequires the use of estimates for cash flow projections approved by management covering a 5-year period, estimates growth rates for cash flows beyond the fifth year extrapolated inperpetuity and discountrates applied to the cash flow projections.

(ii) Fair value estimation for securities held-for-trading (Note 5) and securities available-for-sale (Note 6) and derivative financial assets and liabilities (Note 8) – the fair value of financial instruments that arenot traded in active market are determined using valuation techniques based on assumptions of market conditions existing at the balance sheet date, including reference to quoted market prices andindependent dealer quotes for similar financial instruments and discounted cash flows method.

(iii) Income taxes (Note 38) – Significant management judgement is required in estimating the provision for income taxes, as there may be differing interpretations of tax law for which the final outcome willnot be established until a later date. Liabilities for taxation are recognised based on estimates of whether additional taxes will be payable. The estimation process may involve seeking the advise of expert,where appropriate. Where the final liability for taxation assessed by the Inland Revenue Board is different from the amounts that were initially recorded, these differences will affect the income tax expenseand deferred tax provisions in the period in which the estimate is revised or when the final tax liability is established.

(iv) Deferred tax assets (Note 18) – deferred tax assets are recognised for all unutilised tax losses to the extent that it is probable that taxable profit will be available against which the tax losses can be utilised.Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with futuretax planning strategies.

(v) Allowance for losses on loans, advances and financing (Note 36) – whilst the assessment of allowance for losses required for loans, advances and financing is made in accordance with the requirementsof BNM/GP3 Guidelines on the Classification of Non-Performing Loans and Provisions for Substandard, Bad and Doubtful Debts, the Group exercise judgement in ascertaining the recoverable amount whenassessing the levels of loan loss allowance required.

(vi) Impairment of assets – assessment of impairment of securities available-for-sale (Note 6) and securities held-to-maturity (Note 7) is made in line with the guidance in the revised BNM/GP8 Guidelines onFinancial Reporting for Licensed Institutions to determine when the investment is impaired. Management judgement is required to evaluate the duration and extent by which the fair value of the financialinstruments are below its carrying value and when there is indication of impairment in the carrying value of the financial instruments. The assessment of impairment of property, plant and equipment(Note 16) and foreclosed properties also requires management judgement in the assessment of whether negative fluctuations in values of similar properties in the same location represent an indication ofimpairment in the value of the properties.

(vii) Fair value estimation and impairment assessment of certain unquoted shares (Note 6) – ABMB received a free allocation of certain unquoted shares of which some had been subsequently redeemed bythe said issuer. The remaining unquoted shares are valued at the redemption price of those shares redeemed, being the closest available estimate of the fair value of these shares after being recognisedas an asset of ABMB.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(b) Subsidiaries and Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rightsthat are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment. The policy for recognition and measurement of impairment is in accordance with Note 2(l)(iv).

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(ii) Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for thesame reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing theconsolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statementsfor like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired andliabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilitiesincurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assetsand liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ entity since then.

(c) Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operatingpolicy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidatedbalance sheet at cost adjusted for cost-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated incomestatement. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses ontransactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary torecognise any additional impairment with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date theGroup ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilitiesand contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’sprofit or loss in the period in which the investment is acquired.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(c) Associates (cont’d)

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long term interests that, in substance, form part of the Group’s net investment in the associate,the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous withthose of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting policiesare adopted for like transactions and events in similar circumstances.

On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in profit or loss.

(d) Intangible Assets

(i) Goodwill

Goodwill is measured at cost less accumulated impairment, if any. Goodwill is no longer amortised. Instead it is allocated to cash-generating units which are expected to benefit from the synergies of thebusiness combination. Each cash-generating unit represents the lowest level at which the goodwill is amortised and is not larger than a reportable business segment. The carrying amount of goodwill istested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Gains and losses on the disposal of an entity include the carrying amount ofgoodwill relating to the entity sold. The policy for the recognition and measurement of impairment is in accordance with Note 2(l)(iii).

(ii) Computer Software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring the specific software to use. The costs are amortised over their useful lives which is five yearsand are stated at cost less accumulated amortisation and accumulated, if any. Computer software is assessed for impairment whenever there is an indication that it may be impaired. The amortisationperiod and amortisation method are reviewed at least at each balance sheet date.

The policy for the recognition and measurement of impairment is in accordance with Note 2(l)(iii).

Costs associated with maintaining computer software programmes are recognised as expenses as incurred. Costs that are directly associated with production of identifiable and unique software productscontrolled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. These costs include software development employee costsand appropriate portion of relevant overhead.

(iii) Other Intangible Assets

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Followinginitial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment. The useful lives of intangible assets are assessed to be either finite or indefinite.Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset maybe impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may beimpaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continuesto be suportable.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(e) Allowance for Losses on Loans, Advances and Financing

Loans, advances and financing are stated at cost less any allowance for losses on loans, advances and financing.

Specific allowance for losses on loans, advances and financing are made with regard to specific risks and relate to those loans or trade receivables that have been individually reviewed and specifically identifiedas bad and doubtful debts.

A general allowance based on a percentage of total outstanding loans and financing (including unearned interest/income), net of specific allowance for losses on loans, advances and financing, is maintainedby the Group against risks which are not identified.

An uncollectible loan/financing or portion of a loan/financing classified as bad is written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the management,there is no prospect of recovery.

Values assigned to collateral held for non-performing loans secured by properties is determined based on the realisable values of the properties, being the forced sale value provided by independentparties/valuers, on the following basis:

(i) assigning only fifty percent (50%) of the realisable value of the properties held as collateral for non-performing loans which are in arrears for more than five (5) years but less than seven (7) years; and

(ii) no value assigned to the realisable value of the properties held as collateral for non-performing loans which are in arrears for more than seven (7) years.

The allowance for losses on loans, advances and financing are computed in conformity with BNM/GP3. Consistent with previous years, the Group has adopted a more stringent classification policy onnon-performing loans, whereby loans are classified as non-performing when repayments are in arrears for more than three (3) months from the first day of the default or after maturity date.

The Group has also adopted a more stringent basis for specific allowances on non-performing loans by making a 100% specific allowance on balance of the non-performing loans which are more than three(3) months-in-arrears and not covered by realisable value of collateral. The Directors are of the view that such treatment will reflect a more prudent provisioning policy on loans, advances and financing.

For margin balances of the stockbroking business, the accounts are classified as non-performing loans when the closing market value of the counter(s) so financed has fallen below 130% of the outstandingbalance, and 100% specific allowance is make on the non-performing loans, net of collateral held, if any.

(f) Provisions for Liabilities

Provisions for liabilities are recognised when the Company and the Group have a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits willbe required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effectof the time value of money is material, the provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in theprovision due to the passage of time is recognised as finance cost.

(g) Repurchase Agreements

Securities purchased under resale agreements are securities which the Group have purchased with a commitment to resell at future dates. The commitment to resell the securities is reflected as an asset onthe balance sheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group have sold from their portfolio, with a commitment to repurchase at future dates. Such financing transactionsand the obligations to repurchase the securities are reflected as liabilities on the balance sheet.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(h) Securities

The holdings of securities portfolio of the Group are recognised based on the following categories and consequently their valuation methods:

(i) Securities Held-for-trading

Securities are classified as held-for-trading if they are acquired principally for the purpose of selling or repurchasing in the near term. Securities held-for-trading are stated at fair value and any gain or lossarising from a change in their fair values and the derecognition of securities held-for-trading are recognised in profit or loss. Securities classified as held-for-trading are not reclassified to securities held-to-maturity or securities available-for-sale while they are held. However, for the period from 1 July 2008 to 31 December 2009, BNM’s circular dated 20 October 2008 allows the reclassification of securitiesheld-for-trading to securities available-for-sale and securities held-to-maturity under certain limited circumstances.

(ii) Securities Held-to-maturity

Securities held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that the Group have the positive intent and ability to hold to maturity. Unquoted shares in organisationsset up for socio-economic purposes and equity instruments received as a result of loan restructuring or loan conversion which do not have a quoted market price in an active market and whose fair valuecannot be reliably measured are also classified as securities held-to-maturity.

The securities held-to-maturity are measured at accreted/amortised cost based on the effective yield method. Amortisation of premium, accretion of discount and impairment as well as gain or loss arisingfrom derecognition of securities held-to-maturity are recognised in profit or loss.

Any sale or reclassification of a significant amount of securities held-to-maturity not close to their maturity would result in the reclassification of all securities held-to-maturity to securities available-for-sale, and prevents the Group from classifying the similar class of securities as securities held-to-maturity for the current and following two (2) financial years.

(iii) Securities Available-for-sale

Securities available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity. The securities available-for-sale are measured at fair value or at amortised cost (lessimpairment) if the fair value cannot be reliably measured. The return and cost of the securities available-for-sale are credited and charged to profit or loss using accreted/amortised cost based on effectiveyield method. Any gain or loss arising from a change in fair value after applying the accreted/amortised cost method are recognised directly in equity through the statement of changes in equity, until thefinancial asset is sold, collected, disposed of or impaired, at which time the cumulative gain or loss previously recognised in equity will be transferred to profit or loss.

(i) Investments in Subsidiaries and Associates

The Company’s investments in subsidiaries and associates are stated at cost less impairment. The policy for the recognition and measurement of impairment is in accordance with Note 2(l)(iv).

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in profit or loss.

(j) Investment Properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or both.

Such property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment property is carried at cost less any accumulated depreciation and any accumulatedimpairment. The policy for the recognition and measurement of impairment is in accordance with Note 2(l)(iv).

Freehold land has unlimited useful life and therefore, is not depreciated.

Such property is derecognised when either it has been disposed and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal is recognised in profit or loss in theyear in which they arise.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(k) Property, Plant and Equipment and Depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probablethat future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs andmaintenance are charged to profit or loss during the financial period in which they are incurred.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Subsequent to initial recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and accumulated impairment, if any. The policy for the recognition andmeasurement of impairment is in accordance with Note 2(l)(iv).

Freehold land has an unlimited useful life and therefore is not depreciated.

Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 2%Renovations 20%Office equipment, furniture and fittings 10%Computer equipment 33.3%Motor vehicles 10% – 16.6%

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and expectedpattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any andthe net carrying amount is recognised in profit or loss.

(l) Impairment of Assets

The carrying amount of the Group’s assets, except for deferred tax assets and financial assets (other than securities held-to-maturity and available-for-sale) are reviewed at each balance sheet date to determinewhether there are any indications of impairment. If any such indications exist, the asset’s recoverable amount is estimated to determine the amount of impairment. The policy of the impairment of assets aresummarised as follows:

(i) Securities Held-to-maturity

For securities carried at amortised cost in which there are objective evidence of impairment, impairment is measured as the difference between the securities’ carrying amount and the present value ofthe estimated future cash flows discounted at the securities’ original effective interest rate. The amount of the impairment is recognised in profit or loss.

Subsequent reversals in the impairment is recognised when the decrease can be objectively related to an event occurring after the impairment was recognised, to the extent that the securities’ carryingamount does not exceed its amortised cost if no impairment had been recognised. The reversal is recognised in profit or loss.

For securities carried at cost, impairment is measured as the difference between the securities’ carrying amount and the present value of estimated future cash flows discounted at the current market rateof return for similar securities. The amount of impairment is recognised in profit or loss and such impairment is not reversed subsequent to its recognition.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(l) Impairment of Assets (cont’d)

(ii) Securities Available-for-sale

For securities available-for-sale in which there are objective evidence of impairment, the cumulative impairment that had been recognised directly in equity shall be transferred from equity to profit or loss,even though the securities have not been derecognised. The cumulative impairment is measured as the difference between the acquisition cost (net of any principal repayment and amortisation) and thecurrent fair value, less any impairment previously recognised in profit or loss.

Impairment recognised on investment in equity instruments classified as available-for-sale is not reversed subsequent to its recognition. Reversals of impairment on debt instruments classified as available-for-sale are recognised in profit or loss if the increase in fair value can be objectively related to an event occurring after the recognition of the impairment in profit or loss.

(iii) Goodwill/Intangible Assets

Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Forimpairment testing, goodwill from business combinations or the intangible assets is allocated to cash-generating units ("CGU") which are expected to benefit from the synergies of the business combinationor intangible asset.

The recoverable amount is determined for each CGU based on its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount ratethat reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised in profit or loss when the carrying amount of the CGU, includingthe goodwill or intangible asset, exceeds the recoverable amount of the CGU. The total impairment is allocated, first, to reduce the carrying amount of goodwill or intangible assets allocated to the CGU andthen to the other assets of the CGU on a pro-rata basis.

An impairment on goodwill is not reversed in subsequent periods. An impairment for intangible assets is reversed if and only if there has been a change in the estimates used to determine the intangibleasset’s recoverable amount since the last impairment was recognised and such reversal is through profit or loss to the extent that the intangible asset’s carrying amount does not exceed the carryingamount that would have been determined, net of amortisation, if no impairment had been recognised.

(iv) Other Assets

Other assets such as property, plant and equipment, foreclosed properties and investments in subsidiaries and associate are reviewed for objective indications of impairment at each balance sheet date orwhenever there is any indication that these assets may be impaired. Where such indications exist, impairment is determined as the excess of the asset’s carrying value over its recoverable amount (greaterof value in use or fair value less costs to sell) and is recognised in profit or loss. An impairment for an asset is reversed if and only if there has been a change in the estimates used to determine the asset’srecoverable amount since the last impairment was recognised.

The carrying amount is increased to its revised recoverable amount, provided that the amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation)had no impairment been recognised for the asset in prior years. A reversal of impairment for an asset is recognised in profit or loss.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(m) Leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. All leases that do not transfer substantially all the risks and rewards are classifiedas operating leases.

(i) Finance Leases

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases,less accumulated depreciation and impairment. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discountfactor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carryingamount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fairvalue of the assets acquired, are recognised in profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for eachaccounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2(k). The policy for the recognition and measurement of impairmentis in accordance with Note 2(l)(iv).

(ii) Operating Leases

Operating lease payments are recognised in profit or loss on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reductionof rental expenses over the lease term on a straight-line basis.

The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. Leasehold land that normally has an indefinite economic life and wheretitle is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid leasepayments at the balance sheet date. In the case of a lease of land and buildings, the prepaid lease payments or the upfront payments made are allocated, whenever necessary, between the land andbuildings elements in proportion to the relative fair values for leasehold interest in the land element and buildings element of the lease at the inception of the lease. The prepaid lease payments are amortisedover the lease term in accordance with the pattern of benefits provided.

(n) Bills and Acceptances Payable

Bills and acceptances payable represent the Group’s own bills and acceptances rediscounted and outstanding in the market.

(o) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classifiedas a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly to equity. Financial instruments are offset when the Group has alegally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

The accounting policies for financial instruments recognised on the balance sheet are disclosed in the individual policy statements associated with each item.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(o) Financial Instruments (cont’d)

(i) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to theequity transaction which would otherwise have been avoided.

When issued shares of the Company are repurchased, the consideration paid, including any attributable transaction costs is presented as a change in equity. Repurchased shares that have not beencancelled are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares.When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount of the treasury shares is shown as a movement in equity.

(ii) Subordinated Bonds

The interest-bearing subordinated bonds are recognised as liability and are recorded at face value. Interest expenses are accrued based on the effective interest rate method.

(iii) Interest-bearing Borrowings

Interest-bearing bank borrowings are recorded at the amount of proceeds received. All the borrowing costs are recognised as expenses in profit and loss in the period in which they are incurred.

(iv) Other Assets

Other receivables are carried at anticipated realisable values. Bad debts are written-off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at thebalance sheet date.

(v) Liabilities

Deposits from customers, deposits and placements of banks and other financial institutions are stated at placement values. Other liabilities are stated at cost which is the fair value of the consideration tobe paid in the future for goods and services received.

(vi) Balances Due From Clients and Brokers

In accordance with the Rules of Bursa Malaysia Securities Berhad (the "Bursa"), clients’ accounts for the Group are classified as non-performing (doubtful or bad) under the following circumstances:

Criteria for classification as non-performingTypes Doubtful Bad

Contra losses When account remains outstanding for When the account remains outstanding for more than16 to 30 calendar days from the date 30 calendar days from the date of contra transaction.of contra transaction.

Overdue purchase contracts When the account remains outstanding from When the account remains outstanding for more thanT+5 market days to 30 calendar days. 30 calendar days.

Bad debts are written off when identified. Specific allowances are made for balances due from clients and brokers which are considered doubtful or which have been classified as non-performing aftertaking into consideration collateral held by the Group and deposits of and amounts due to dealer’s representative in accordance with the Rules of the Bursa. General allowance is made based on a certainpercentage of balances due from clients and brokers (excluding outstanding purchase contracts which are not due for payment) net of specific allowances already made.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(p) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

(i) Dividend Income

Dividend income from securities held-to-maturity, securities available-for-sale and investment in subsidiaries and associates are recognised when the right to receive payment is established.

(ii) Interest Income

Interest income is recognised in profit or loss for all interest-bearing assets on an accrual basis. Interest income includes the amortisation of premium or accretion of discount. Interest income on securitiesare recognised on an effective yield basis.

Interest income on overdrafts, housing loans and term loans is accounted for on accrual basis by reference to rest periods as stipulated in the loan agreements, which are either monthly or daily. Interestincome on hire purchase, block discounting and leasing business is recognised on the ‘Rule of 78’ method. Income from the Islamic banking business is recognised on the accrual basis in accordance withthe Shariah principles.

Where an account is classified as non-performing, interest/income accrued and recognised as income prior to the date the loan is classified as non-performing is reversed out of interest income and set-off against the accrued interest/income receivable account in the balance sheet. Thereafter, interest/income on the non-performing loan shall be recognised as income on a cash basis. Customers’ accountsare deemed to be non-performing where repayments are in arrears for more than three (3) months from the first day of default or after maturity date.

The policy on interest income recognition on non-performing loans is in conformity with the revised Guidelines on Financial Reporting for Licensed Institutions (BNM/GP8) issued by BNM on 5 October 2004.

(iii) Brokerage Income

Brokerage is charged to the clients and is recognised on the day when the contracts are executed.

(iv) Fees and Other Income

Loan arrangement fees and commissions, management and participation fees and underwriting commissions are recognised as income when all conditions precedent are fulfilled.

Commitment, guarantee, portfolio management and corporate advisory fees which are material are recognised as income based on time apportionment.

As allowed under Bank Negara Malaysia’s Circular on "Accounting Treatment of Handling Fees for Hire Purchase Loans" dated 16 October 2006, the Group has continued to expense off upfront handlingfee paid to hire purchase dealers for hire purchase loans and hire purchase financing to profit or loss in the year which they are incurred, the method previously required under Bank Negara Malaysia’scircular dated 8 August 2003.

(v) Recognition of Interest and Financing Expenses

Interest expense and attributable profit (on activities relating to Islamic banking business) on deposits and borrowings of the Group are recognised on an accrual basis.

(q) Derivative Financial Instruments

Derivative financial instruments are initially recognised at fair value, which is normally zero or negligible at inception except for options and subsequently re-measured at their fair value. The fair value of optionsat inception is normally equivalent to the premium received (for options written) or paid (for options purchased). All derivatives are carried as assets when fair value is positive and as liabilities when fair valueis negative. Changes in the fair value are recognised in profit or loss.

Interest income and expenses associated with interest rate swaps are recognised over the life of the swap agreement as a component of interest income or interest expense.



2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(r) Foreign Currency Translations

Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translatedinto Ringgit Malaysia at exchange rates ruling at that date.

All exchange rate differences are taken to profit or loss.

The financial statements are presented in Ringgit Malaysia, which is also the Company’s primary functional currency.

(s) Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured usingthe tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements.In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax creditsto the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognisedif the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction,affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at thebalance sheet date. Deferred tax is recognised as income or an expenses in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferredtax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

(t) Foreclosed Properties

Foreclosed properties are stated at cost less impairment losses, if any, of such properties. The policy for the recognition and measurement of impairment is in accordance with Note 2(l)(iv).

(u) Cash and Cash Equivalents

Cash and cash equivalents as stated in the cash flow statements comprise cash and short-term funds and deposits and placements with financial institutions which have an insignificant risk of changes in value.

(v) Zakat

This represents business zakat. It is an obligatory amount payable by the Group to comply with the Shariah principles.

(w) Profit Equalisation Reserve ("PER")

PER refers to the amount appropriated out of the total Islamic Banking gross income in order to maintain a certain level of return to depositors in conformity with BNM’s “The Framework of the Rate of Return”(BNM/GP2-i). PER is appropriated from and written back to the total Islamic Banking gross income in deriving the net distributable gross income. This amount appropriated is shared by the depositors and ABMBGroup. The PER is deducted at a rate which does not exceed the maximum amount of total of 15% monthly Islamic Banking gross income, monthly net trading income, other income and irregular income. PERis maintained up to the maximum of 30% of total Islamic Banking capital fund.


154



155

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)(x) Employee Benefits

(i) Short-Term Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short-term accumulatingcompensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-termnon-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligations to pay furthercontributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised asan expense in profit or loss as incurred. As required by law, companies in Malaysia make contributions to the Employees Provident Fund ("EPF").

(iii) Equity Compensation Benefits

The ESS comprise the Share Option Plan, the Share Grant Plan and the Share Save Plan. The ESS are an equity-settled, share-based compensation plans, in which the Group’s Directors and employees aregranted or are allowed to acquire ordinary shares of the Company.

The total fair value of the share options/share grants offered/awarded to the eligible Directors and employees are recognised as an employee cost with a corresponding increase in the share scheme reservewithin equity over the vesting period and taking into account the probability that the scheme will vest. The fair value of the shares options/share grants are measured at grant date, taking into account, ifany, the market vesting conditions upon which the share options/share grants were offered/awarded but excluding the impact of any non-market vesting conditions. Non-market vesting conditions areincluded in assumptions about the number of share options/share grants that are expected to become exercisable/to vest.

At each balance sheet date, the Group revises its estimates of the number of share options/share grants that are expected to become exercisable/to vest. It recognises the impact of the revision of originalestimates, if any, in profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share scheme reserve until the share options/sharegrants are exercised/vested.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

3. CASH AND SHORT-TERM FUNDSGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Cash and balances with banks and other financial institutions 464,743 497,178 298 1,699Money at call and deposit placements maturing within one month 4,533,432 5,276,877 453,580 64,600

4,998,175 5,774,055 453,878 66,299

Included in the cash and balances with banks is an amount of RM182,000 (2008: RM167,000) being a bank account maintained by PB Trustee Services Berhad pursuant to the Company’s ESS.

The cash and balances and deposits of the Company amounting to RM110,000 (2008: RM1,531,000) and RM453,580,000 (2008: RM64,600,000) respectively are placed with its subsidiaries.

4. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONSGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Licensed banks 198,523 399,500 200,000 –Bank Negara Malaysia – 100,000 – –Other financial institutions – 33,335 – –

198,523 532,835 200,000 –

The deposits of the Company with maturity more than one month amounting to RM200,000,000 (2008: Nil) are placed with its subsidiaries.

5. SECURITIES HELD-FOR-TRADINGGroup

2009 2008RM’000 RM’000

At fair valueMoney market instruments:Bank Negara Malaysia bills – 14,756Commercial papers 9,951 27,917Malaysian Government securities 24,690 –

Quoted securities in Malaysia:Shares 2,470 3,088Debt securities 8,942 13,141

Unquoted securities:Debt securities 2 41,227

46,055 100,129


156

6. SECURITIES AVAILABLE-FOR-SALEGroup

2009 2008RM’000 RM’000

At fair valueMoney market instruments:Malaysian Government securities 1,647,355 10,088Malaysian Government investment certificates 113,849 200,428Malaysian Government treasury bills 132,492 –Bank Negara Malaysia bills 74,525 –Cagamas bonds – 5,012Negotiable instruments of deposits 1,696,057 1,109,897Commercial papers 98,906 35,972Bankers acceptances 1,578,533 1,190,807Khazanah bonds 9,909 –

Quoted securities in Malaysia:Shares [Note (a)] 3,010 –Debt securities 6,071 10,383

Unquoted securities:Shares [Note (b)] 6,877 6,711Debt securities 952,538 521,720

6,320,122 3,091,018



6. SECURITIES AVAILABLE-FOR-SALE (cont’d)Note:

(a) Disclosures of the reclassification from securities held-for-trading ("HFT") to securities available-for-sale ("AFS") portfolio in the financial statements of the Group is as follows:

(i) Amount reclassified from securities HFT to AFS portfolio with effect from 31 December 2008:

GroupRM’000

Fair value of securities HFT reclassified to AFS portfolio 3,419

(ii) Carrying amount and fair value of securities HFT reclassified to AFS portfolio as at the financial year ended 31 March 2009:

GroupRM’000

Securities HFT reclassified to AFS portfolio Carrying amount 3,010Fair value 3,010

(iii) The fair value loss recognised in respect of the securities HFT reclassified to AFS portfolio for the financial year ended 31 March 2009:

GroupRM’000

Unrealised loss recognised in equity 409

(iv) Effective interest rate for the security reclassified from HFT to AFS portfolio is not applicable as the security reclassified is an equity portfolio.

(b) Included in unquoted shares were shares allocated to a subsidiary and out of which a portion had been redeemed by the issuer on the same date. The shares are generally non-voting and is non-transferableuntil three years after the close of the issuer’s Initial Public Offering (“IPO”), subject to limited exceptions stipulated by the issuer.

The remaining units of shares have been valued based on the redemption price of the shares, being the closest available estimate of the fair value of these shares.


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7. SECURITIES HELD-TO-MATURITYGroup

2009 2008RM’000 RM’000

At amortised costMoney market instruments:Malaysian Government securities – 108,606Malaysian Government investment certificates 53,770 53,046Cagamas bonds 20,000 94,983Khazanah bonds 53,896 278,756Bankers acceptances – 124

Quoted securities in Malaysia:Debt securities 4,902 4,932

Unquoted securities:Shares 22,021 22,021Debt securities 266,865 396,274

421,454 958,742Accumulated impairment (106,834) (137,448)

314,620 821,294

(i) Market value of money market instruments and quoted securities:

Malaysian Government securities – 108,601Malaysian Government investment certificates 55,160 53,588Cagamas bonds 20,102 95,339Khazanah bonds 54,395 278,954Bankers acceptances – 123Debt securities 1,471 3,452

(ii) The maturity structure of money market instruments held are as follows:

Within one year 88,693 410,501One year to three years 33,976 111,433Three years to five years 4,997 13,581

127,666 535,515



8. DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)Derivative financial instruments are off-balance sheet financial instruments whose values change in response to changes in prices or rates (such as foreign exchange rates, interest rates and security prices) of theunderlying instruments. These instruments allow the Group and the banking customers to transfer, modify or reduce their foreign exchange and interest rate risk hedge relationships. The Group also transacts in theseinstruments for proprietary trading purposes. The risks associated with the use of derivative financial instruments, as well as management’s policy for controlling these risks are set out in Note 44.

The table below shows the Group’s derivative financial instruments as at the balance sheet date. The contractual or underlying principal amounts of these derivative financial instruments and their correspondinggross positive (derivative financial asset) and gross negative (derivative financial liability) fair values at balance sheet date are analysed below.

2009 2008Contract/ Fair Value Contract/ Fair ValueNotional NotionalAmount Assets Liabilities Amount Assets Liabilities

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Foreign exchange contracts:– Currency forwards 326,032 2,490 (294) 163,056 2,114 (288)– Currency swaps 2,143,376 14,116 (19,902) 3,397,918 17,279 (22,988)– Currency options 4,815 20 (11) – – –

Interest rate related contracts:– Interest rate swaps 1,050,000 684 (5,809) – – –

Total derivative assets/(liabilities) 3,524,223 17,310 (26,016) 3,560,974 19,393 (23,276)

9. LOANS, ADVANCES AND FINANCINGGroup

2009 2008RM’000 RM’000

Overdrafts 1,610,636 1,787,614Term loans/financing– Housing loans/financing 7,842,479 5,775,875– Syndicated term loans/financing 314,794 297,179– Hire purchase receivables 1,360,731 1,427,178– Lease receivables 104 4,053– Other term loans/financing 5,857,500 4,749,197Bills receivables 71,906 152,046Trust receipts 154,941 138,705Claims on customers under acceptance credits 1,735,910 1,553,982Staff loans [include RM1,437,000 loans to Directors of banking subsidiary (2008: RM389,000)] 119,127 112,779

Carried forward 19,068,128 15,998,608


160

9. LOANS, ADVANCES AND FINANCING (cont’d)Group

2009 2008RM’000 RM’000

Brought forward 19,068,128 15,998,608Credit/charge card receivables 645,058 546,659Revolving credits 995,713 600,847Other loans 257,432 360,325Less: Unearned interest and income (1,376,192) (961,743)

Gross loans, advances and financing 19,590,139 16,544,696Less: Allowance for losses on loans, advances and financing

– Specific (531,824) (636,429)– General (340,218) (289,296)

Total net loans, advances and financing 18,718,097 15,618,971

(i) By maturity structure:

Within one year 5,758,320 5,562,335One year to three years 947,862 911,458Three years to five years 1,485,367 1,374,964Over five years 11,398,590 8,695,939

Gross loans, advances and financing 19,590,139 16,544,696

(ii) By type of customer:

Domestic non-bank financial institutions– Stockbroking companies – 21– Others 276,429 168,373Domestic business enterprises– Small and medium enterprises 4,185,864 4,106,594– Others 3,861,118 3,170,758Government and statutory bodies 17,345 17,955Individuals 10,886,992 8,894,371Other domestic entities 4,356 6,356Foreign entities 358,035 180,268





2009 2008RM’000 RM’000

(iii) By interest/profit rate sensitivity:

Fixed rate– Housing loans/financing 171,467 164,468– Hire purchase receivables 1,197,050 1,256,672– Other fixed rate loans/financing 1,503,071 1,416,703Variable rate– Base lending rate plus 13,223,436 10,803,036– Cost plus 3,381,339 2,658,754– Other variable rates 113,776 245,063


(iv) By economic purposes:

Purchase of securities 273,737 395,644Purchase of transport vehicles 1,190,384 1,260,738Purchase of landed property 10,494,962 8,262,346

of which: – Residential 7,743,389 5,814,952– Non-residential 2,751,573 2,447,394

Purchase of fixed assets excluding land and buildings 61,094 73,329Personal use 1,157,966 915,170Credit card 645,058 546,769Purchase of durable goods 15 –Construction 313,843 350,927Working capital 4,825,071 4,082,329Others 628,009 657,444



162


2009 2008RM’000 RM’000

(v) Movements in non-performing loans, advances and financing ("NPL") are as follows:

At beginning of year 1,158,506 1,568,510Non-performing during the year 775,826 762,791Reclassified as performing during the year (493,941) (626,319)Loans/financing converted to securities – (11,726)Recoveries (328,770) (352,592)Amount written off (236,551) (182,158)

At end of year 875,070 1,158,506Specific allowance (531,824) (636,429)

– on non-performing loans (451,554) (549,901)– on performing loans (80,270) (86,528)

Net non-performing loans, advances and financing 343,246 522,077

Net NPL as % of gross loans, advances and financing less specific allowance– Including specific allowance on performing loans 1.8% 3.3%– Excluding specific allowance on performing loans 2.2% 3.8%

(vi) Movements in the allowance for losses on loans, advances and financing are as follows:

General AllowanceAt beginning of year 289,296 245,582Allowance made during the year 78,854 69,252Amount written back (27,932) (25,538)

At end of year 340,218 289,296

As % of gross loans, advances and financing less specific allowance 1.8% 1.8%

Specific AllowanceAt beginning of year 636,429 813,485Allowance made during the year 416,100 342,536Amount written-back in respect of recoveries (284,154) (325,708)Loan/financing converted to securities – (11,726)Amount written off (236,551) (182,158)

At end of year 531,824 636,429

Included in specific allowance of the Group are allowances made for high risk accounts which are still performing amounting to RM80,270,000 (2008: RM86,528,000).




2009 2008RM’000 RM’000

(vii) Non-performing loan, advances and financing analysed by economic purposes are as follows:

Purchase of securities 16,543 62,099Purchase of transport vehicles 26,521 32,069Purchase of landed property 417,210 552,440

of which: – Residential 285,926 367,546– Non-residential 131,284 184,894

Purchase of fixed assets excluding land and buildings 630 766Personal use 58,082 50,051Credit card 17,519 11,855Construction 22,965 37,034Working capital 286,466 383,060Others 29,134 29,132

875,070 1,158,506

10. BALANCES DUE FROM CLIENTS AND BROKERSGroup

2009 2008RM’000 RM’000

Due from clients 59,688 95,717Due from brokers 27,367 48,281

87,055 143,998Less: Allowance for bad and doubtful debts (17,530) (24,665)

69,525 119,333

These represent amount receivable by Alliance Investment Bank Berhad ("AIBB") from non-margin clients and outstanding contracts entered into on behalf of clients where settlements via the Central DepositorySystem has yet to be made.

AIBB’s normal trade credit terms for non-margin client is three (3) market days in accordance with the Bursa Malaysia Securities Berhad’s Fixed Delivery and Settlement System ("FDSS") trading rules.


164

10. BALANCES DUE FROM CLIENTS AND BROKERS (cont’d)Group

2009 2008RM’000 RM’000

Included in the balances due from clients and brokers are non-performing accounts, as follows:

Classified as doubtful 841 825Classified as bad 18,091 25,290

18,932 26,115

The movements in allowance for bad and doubtful debts are as follows:

At beginning of year 24,665 21,367Allowance made during the year 2,828 4,219Reversal of allowance (5,789) (921)Bad debts written off against allowance (4,174) –

At end of year 17,530 24,665

11. LAND HELD FOR INVESTMENTGroup

2009 2008RM’000 RM’000

Freehold land, at cost 23,114 23,114Development costs 8,943 8,943

32,057 32,057

Accumulated impairment:At beginning/end of year (3,135) (3,135)

Carrying amount at end of year 28,922 28,922



12. OTHER ASSETSGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Other receivables, deposits and prepayments [Note (a)] 165,748 225,146 419 310Interest/income receivable 76,408 38,147 1,889 90Trade receivables 34 15 – –Manager’s stocks [Note (b)] 1,243 3,257 – –Foreclosed properties 4,883 6,756 – –Amount due from subsidiaries [Note (c)] – – 50,460 49,865

248,316 273,321 52,768 50,265Less: Allowance for bad and doubtful debts (14,386) (14,589) (13,839) (13,188)

233,930 258,732 38,929 37,077

(a) Other receivables, deposits and prepayments

Included in other receivables, deposits and prepayments of the Group is an amount of RM33,004,000 (2008: RM39,272,000) being the principal balance of housing loans and hire purchase loans acquired bythe banking subsidiary from a state owned entity and which have been sold to Cagamas Berhad, with recourse obligations.

(b) Manager’s stocks

The manager’s stock represents units held by the Group in the trust funds it manages and is stated at the lower of cost and market value. Cost is determined using the weighted average method of valuation.Market value of unit trust stock is determined by the Group as manager of the trust funds based on the underlying value of the trust funds.

Group2009 2008

RM’000 RM’000

Manager’s stock, at cost 1,243 3,257

Market value 1,248 3,257

The Group have no significant concentration of credit risk that may arise from the exposure to a single debtor or group of debtors.


166

12. OTHER ASSETS (cont’d)(c) Amount due from subsidiaries

Group Company2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Non-interest bearing – – 50,460 49,865Less: Allowance for doubtful debts – – (13,839) (13,188)

– – 36,621 36,677

The amounts due from subsidiaries of RM50,460,000 (2008: RM49,865,000) are unsecured, interest-free and have no fixed terms of repayment.

13. STATUTORY DEPOSITSStatutory deposits comprise the following:

(a) Non-interest bearing statutory deposits of RM198,924,000 (2008: RM621,986,000) relating to the banking subsidiaries, maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the CentralBank of Malaysia Act, 1958 (revised 1994), the amounts of which are determined as a set percentage of total eligible liabilities.

(b) Interest bearing statutory deposits of RM100,000 (2008: RM100,000) relating to a subsidiary, Alliance Trustee Berhad which is maintained with the Accountant-General in compliance with Section 3(f) of theTrust Companies Act, 1949.

14. INVESTMENT IN SUBSIDIARIESCompany

2009 2008RM’000 RM’000

Unquoted shares, at costAt beginning of year 1,767,198 1,567,198Subscription of additional shares in a subsidiary – 200,000

1,767,198 1,767,198Less: Accumulated impairment (38,056) (38,056)

1,729,142 1,729,142

During the previous financial year, the Company had subscribed for 200,000,000 Preference Shares of RM0.01 each at an issue price of RM1.00 per Irredeemable Non-Cumulative Convertible Preference Shares inABMB for cash pursuant to a right issue by ABMB, a wholly-owned subsidiary of the Company.



14. INVESTMENT IN SUBSIDIARIES (cont’d)Details of the subsidiaries, which are incorporated in Malaysia, are as follows:

Effective EquityName Principal Activities Interest Held (%)

2009 2008

Subsidiaries of the Company

Alliance Bank Malaysia Berhad Banking and finance businesses and the provision of related financial services 100 100

Syabas Sutra Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Hijauan Setiu Sdn. Bhd. Investment holding 100 100

Setiu Integrated Resort Sdn. Bhd. Investment holding 100 100

Pridunia Sdn. Bhd. Dormant 100 100

Matrix Core Options & Futures Sdn. Bhd. Dormant 100 100

Setiu Sea Resort Sdn. Bhd. Liquidated – 100

Alliance Trustee Berhad Trustee services 100 100

Kota Indrapura Development Corporation Berhad Property holding 100 100

Subsidiary of Syabas Sutra Sdn. Bhd.

ABG Capital Management Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Subsidiaries of Alliance Bank Malaysia Berhad

Alliance Investment Bank Berhad Investment banking business including Islamic banking, provision of stockbroking 100 100services and related financial services

Alliance Islamic Bank Berhad Islamic banking and the provision of related financial services 100 100

Alliance Direct Marketing Sdn. Bhd. Dealing in sales and distribution of consumer and commercial banking products 100 100

AllianceGroup Nominees (Asing) Sdn. Bhd. Nominee services 100 100

AllianceGroup Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

AllianceGroup Properties Sdn. Bhd. Real property investment 100 100

Alliance Investment Management Berhad Management of unit trusts funds, provision of fund management and investment advisory services 70 70

Alliance International Berhad Liquidated – 100

Alliance International Nominees (Tempatan) Sdn. Bhd. Liquidated – 100

Alliance International Nominees (Asing) Sdn. Bhd. Liquidated – 100

AFB Nominees (Tempatan) Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)


168

14. INVESTMENT IN SUBSIDIARIES (cont’d)Effective Equity

Name Principal Activities Interest Held (%)2009 2008

Subsidiaries of Alliance Investment Bank Berhad

Alliance Merchant Nominees (Tempatan) Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Alliance Merchant Nominees (Asing) Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Alliance Capital Asset Management Sdn. Bhd. Dormant 70 70(under members’ voluntary winding up)

Rothputra Nominees (Tempatan) Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Rothputra Nominees (Asing) Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

KLCS Sdn. Bhd. Dormant 100 100

Alliance Research Sdn. Bhd. Investment advisory 100 100

KLCity Ventures Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

Alliance Asset Management (L) Limited Dormant 100 100(under members’ voluntary winding up)

Alliance Investment Futures Sdn. Bhd. Dormant 100 100

KLCS Asset Management Sdn. Bhd. Dormant 100 100(under members’ voluntary winding up)

KLCity Unit Trust Bhd. Dormant 94.94 94.94(under members’ voluntary winding up)

AIBB Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

AIBB Nominees (Asing) Sdn. Bhd. Nominee services 100 100



15. LEASEHOLD LANDGroup

2009 2008RM’000 RM’000

Long-term leasehold land

CostAt beginning of year 15,472 –Reclassification from property, plant and equipment upon adoption of FRS 117 (Note 16) – 14,072

As restated 15,472 14,072Additions – 1,500Disposals – (100)

At end of year 15,472 15,472

Accumulated AmortisationAt beginning of year (3,197) –Reclassification from property, plant and equipment upon adoption of FRS 117 (Note 16) – (3,105)

As restated (3,197) (3,105)Charge for the year (139) (126)Disposals – 34

At end of year (3,336) (3,197)

Net Carrying Amount 12,136 12,275

The leasehold land is stated at recoverable amount subject to impairment test in accordance with the policy on impairment of assets of the Group. The fair value less costs to sell off the leasehold land was determinedwith reference to qualified external valuer’s valuation.


170

16. PROPERTY, PLANT AND EQUIPMENTOffice

equipment,Freehold furniture Computer Motor

land Buildings Renovations and fittings equipment vehicles TotalGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2009CostAt beginning of year 2,962 50,442 138,538 85,637 131,362 5,908 414,849Additions – – 23,711 10,317 13,702 150 47,880Disposals – – (81) (1,516) (7) (859) (2,463)Written off – – (37,031) (13,498) (2,816) (4) (53,349)

At end of year 2,962 50,442 125,137 80,940 142,241 5,195 406,917

Accumulated DepreciationAt beginning of year – 12,866 100,643 62,897 101,590 3,282 281,278Charge for the year – 1,009 14,848 4,557 15,823 257 36,494Disposals – – (80) (1,478) (7) (682) (2,247)Written off – – (34,822) (12,794) (2,511) (4) (50,131)

At end of year – 13,875 80,589 53,182 114,895 2,853 265,394

Accumulated ImpairmentAt beginning of year – 3,956 – – – – 3,956Charge for the year – – – – – – –

At end of year – 3,956 – – – – 3,956

Net Carrying Amount 2,962 32,611 44,548 27,758 27,346 2,342 137,567



16. PROPERTY, PLANT AND EQUIPMENT (cont’d)Office

Long-term equipment,Freehold leasehold furniture Computer Motor

land land Buildings Renovations and fittings equipment vehicles TotalGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2008CostAt beginning of yearAs previously stated 2,962 3,484 60,665 115,026 82,698 106,993 10,758 382,586Reclassification to leasehold land (Note15) – (3,484) (10,588) – – – – (14,072)

As restated 2,962 – 50,077 115,026 82,698 106,993 10,758 368,514Additions – – 1,000 25,123 4,312 24,769 698 55,902Disposals – – (635) (1,342) (801) (209) (5,482) (8,469)Written off – – – (269) (572) (191) (66) (1,098)

At end of year 2,962 – 50,442 138,538 85,637 131,362 5,908 414,849

Accumulated DepreciationAt beginning of yearAs previously stated – 389 14,700 91,965 56,892 85,772 7,469 257,187Reclassification to leasehold land (Note15) – (389) (2,716) – – – – (3,105)

As restated – – 11,984 91,965 56,892 85,772 7,469 254,082Charge for the year – – 1,004 10,112 7,340 16,217 261 34,934Disposals – – (122) (1,326) (773) (208) (4,397) (6,826)Written off – – – (108) (562) (191) (51) (912)

At end of year – – 12,866 100,643 62,897 101,590 3,282 281,278

Accumulated ImpairmentAt beginning of year – – – – – – – –Charge for the year – – 3,956 – – – – 3,956

At end of year – – 3,956 – – – – 3,956

Net Carrying Amount 2,962 – 33,620 37,895 22,740 29,772 2,626 129,615


172

16. PROPERTY, PLANT AND EQUIPMENT (cont’d)Office

equipment,Computer furniture and Motor

equipment fittings vehicles Renovations TotalRM’000 RM’000 RM’000 RM’000 RM’000

Company

2009CostAt beginning of year 276 567 492 599 1,934Additions – – – 30 30Disposals – – (96) – (96)

At end of year 276 567 396 629 1,868

Accumulated DepreciationAt beginning of year 232 483 127 513 1,355Charge for the year 26 13 32 27 98Disposals – – (58) – (58)

At end of year 258 496 101 540 1,395

Net Carrying Amount 18 71 295 89 473

2008CostAt beginning of year 255 560 492 540 1,847Additions 21 7 – 59 87

At end of year 276 567 492 599 1,934

Accumulated DepreciationAt beginning of year 202 442 97 449 1,190Charge for the year 30 41 30 64 165

At end of year 232 483 127 513 1,355

Net Carrying Amount 44 84 365 86 579



17. INTANGIBLE ASSETSGroup

Note 2009 2008RM’000 RM’000

GoodwillAt beginning/end of year (a) 304,149 304,149

Computer software

CostAt beginning of year 137,654 115,141Additions 29,577 23,239Written off (641) (726)

At end of year 166,590 137,654

Accumulated AmortisationAt beginning of year (88,138) (74,320)Charge for the year (14,654) (14,510)Written off 565 692

At end of year (102,227) (88,138)

Net Carrying Amount 64,363 49,516

Total carrying amount of goodwill and computer software 368,512 353,665

(a) Impairment Test on Goodwill

Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred. Goodwill have been allocated to the Group’s cash-generating units ("CGU") thatexpected to benefit from the synergies of the acquisitions, identified according to the business segment as follows:

GroupRM’000

Corporate banking 44,758Commercial banking 56,080Consumer banking 101,565Treasury 83,284Corporate finance and equity capital market 1,838Stockbroking business 12,433Debt capital market 2,084Asset management 2,107

304,149


174

17. INTANGIBLE ASSETS (cont’d)(a) Impairment Test on Goodwill (cont’d)

For annual impairment testing purposes, the recoverable amount of the CGUs, which are reportable business segments, are determined based on their value-in-use. The value-in-use calculations apply adiscounted cash flow model using cash flow projections based on financial budget and projections approved by management. The key assumptions for the computation of value-in-use include the discountrates, cash flow projection and growth rates applied are as follows:

(i) Discount rate

The discount rate of 7.3% (2008: 10.1%) are based on the pre-tax weighted average cost of capital plus an appropriate risk premium, that reflect specific risks relating to the Group. The pre-tax weightedaverage cost of capital is generally derived from an appropriate capital asset pricing model, which itself depends on inputs reflecting a number of financial and economic variables including the risk-freerate in the country.

(ii) Cash flow projections and growth rate

Cash flow projections are based on five-year financial budget and projections approved by management. Cash flows beyond the fifth year are extrapolated in perpetuity using a nominal long term growthrate of 6.5% (2008: 6.5%) based on average annual Gross Domestic Product growth rate forecasted for the 10 years from year 2011 to 2020 reported in the Third Industrial Master Plan. Cash flows areextrapolated in perpetuity due to the long term perspective of these businesses within the Group.

Impairment is recognised in profit and loss when the carrying amount of a CGU exceeds its recoverable amount. This annual impairment test review reveals that there was no evidence of impairment.

(b) Sensitivity to Changes in Assumptions

Any reasonable possible change in the key assumptions would not cause the carrying amount of the goodwill to exceed the recoverable amount of the CGU, which would warrant any impairment to be recognised.



18. DEFERRED TAXGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

At beginning of year (160,121) (115,534) 242 186Recognised in the income statement (Note 38) 26,492 (32,485) (210) 56Recognised in equity 14,317 (12,102) – –

At end of year (119,312) (160,121) 32 242

Presented after appropriate offsetting as follows:Deferred tax assets, net (120,517) (161,537) – –Deferred tax liabilities, net 1,205 1,416 32 242

(119,312) (160,121) 32 242

Deferred tax assets and liabilities prior to offsetting are summarised as follows:Deferred tax assets (141,089) (174,090) – –Deferred tax liabilities 21,777 13,969 32 242

(119,312) (160,121) 32 242

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:

Allowancefor losseson loans, Unabsorbedadvances tax losses Other

and and capital temporaryfinancing allowances differences Total

Group RM’000 RM’000 RM’000 RM’000

Deferred tax assets:

At 1 April 2007 (106,643) (4,884) (23,799) (135,326)Recognised in income statement (13,445) 3,813 (17,030) (26,662)Recognised in equity – – (12,102) (12,102)

At 31 March 2008 (120,088) (1,071) (52,931) (174,090)

At 1 April 2008 (120,088) (1,071) (52,931) (174,090)Recognised in income statement 23,846 (5,269) 107 18,684Recognised in equity – – 14,317 14,317

At 31 March 2009 (96,242) (6,340) (38,507) (141,089)


176

18. DEFERRED TAX (cont’d)Fair value

adjustment Property,arising from plant and

consolidation equipment TotalGroup RM’000 RM’000 RM’000

Deferred tax liabilities:

At 1 April 2007 7,630 12,162 19,792Recognised in income statement (6,456) 633 (5,823)

At 31 March 2008 1,174 12,795 13,969

At 1 April 2008 1,174 12,795 13,969Recognised in income statement – 7,808 7,808

At 31 March 2009 1,174 20,603 21,777

Other Property,temporary plant and

differences equipment TotalCompany RM’000 RM’000 RM’000

Deferred tax liabilities:

At 1 April 2007 186 – 186Recognised in income statement (29) 85 56

At 31 March 2008 157 85 242

At 1 April 2008 157 85 242Recognised in income statement (187) (23) (210)

At 31 March 2009 (30) 62 32

Group2009 2008

RM’000 RM’000

Deferred tax assets of the Group has not been recognised in respect of:Unabsorbed tax losses 26,280 26,280



19. DEPOSITS FROM CUSTOMERSGroup

2009 2008RM’000 RM’000

Demand deposits 6,815,306 5,790,214Savings deposits 1,628,580 1,648,957Fixed/investment deposits 14,085,022 12,868,850Money market deposits 2,063,280 979,283Negotiable instruments of deposits 979,604 64,456Structured deposits [Note (a)] 3,649 –

25,575,441 21,351,760

Note:

(a) Structured deposits represent foreign currency time deposits with embedded foreign exchange option.

(i) The maturity structure of fixed/investment deposits, money market deposits and negotiable instruments of deposits are as follows:

Due within six months 12,547,616 10,058,979Six months to one year 4,343,188 3,363,014One year to three years 195,586 439,876Three years to five years 41,516 50,720

17,127,906 13,912,589

(ii) The deposits are sourced from the following types of customers:

Government and statutory bodies 1,360,896 932,413Business enterprises 9,552,952 7,631,613Individuals 13,660,573 12,018,644Others 1,001,020 769,090

25,575,441 21,351,760

20. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONSGroup

2009 2008RM’000 RM’000

Licensed banks 433,391 783,829Licensed investment banks 140,000 255,000Bank Negara Malaysia 617,391 415,295

1,190,782 1,454,124


178

21. RECOURSE OBLIGATIONS ON LOANS SOLD TO CAGAMASThis relates to proceeds received from conventional housing loans and hire purchase loans sold directly to Cagamas Berhad with recourse to the Group. Under the agreement, the Group undertakes to administer theloans on behalf of Cagamas Berhad and to buy back any loans which are regarded as defective based on pre-determined and agreed upon prudential criteria set by Cagamas Berhad.

22. BILLS AND ACCEPTANCES PAYABLEBills and acceptances payable represents the Group’s own bills and acceptances rediscounted and outstanding in the market.

23. BALANCES DUE TO CLIENTS AND BROKERSGroup

2009 2008RM’000 RM’000

Due to clients 51,856 52,249Due to brokers 24,845 60,377

76,701 112,626

These mainly relate to amounts payable to non-margin clients and outstanding contracts entered into on behalf of clients where settlement via the Central Depository System has yet to be made.

AIBB’s normal trade credit terms for non-margin clients is three (3) market days according to Bursa Malaysia Securities Berhad’s FDSS trading rules.

24. OTHER LIABILITIESGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Other payable and accruals 743,088 935,870 3,181 5,116Interest/income payable 138,384 105,301 1,271 –Remisier’s accounts [Note (a)] 23,400 27,431 – –Profit equalisation reserve 50,058 51,925 – –Amount due to subsidiaries [Note (b)] – – 1,646 1,856

954,930 1,120,527 6,098 6,972

(a) Included in remisier’s accounts are deposits of RM5,103,000 (2008: RM5,762,000) which bear weighted average effective interest rate of 3.08% (2008: 3.28%) per annum.

(b) The amount due to subsidiaries are unsecured, interest-free and have no fixed terms of repayment.



25. SUBORDINATED BONDSGroup

2009 2008RM’000 RM’000

At face value 600,000 600,000

The following are the salient features of the said bonds:

• Description : 10-year from the Issue Date on a non-callable 5-year basis• Tenure : 10 years• Settlement date : 26 May 2016• Anniversary date : 26 May• Maturity date : 26 May 2011• Interest coupon : 6.09% per annum, subject to revision of rate in year six• Revision of interest : The bonds, unless redeemed at the end of five (5) years from the settlement date, shall bear interest of 7.59% per annum from the sixth year onwards until the final redemption• Redemption option : The issuer may redeem the bonds in part or in whole, at any anniversary date after five (5) years from the settlement date; namely on 26 May in year 2011 or thereafter• Final redemption : At par on maturity date

26. LONG TERM BORROWINGSGroup and Company2009 2008

RM’000 RM’000

UnsecuredFixed rate term loan [Note (a)] 400,000 –Floating rate term loan [Note (b)] 200,000 –

600,000 –

(a) On 29 January 2009, the Company drawndown a fixed rate term loan amounted to RM400 million. The term loan bears a fixed interest rate at 3.5% per annum repayable by way of a bullet payment at the endof the third year with extension option of one (1) year.

(b) On 27 March 2009, the Company drawndown a floating rate term loan amounted to RM200 million. The term loan bears interest at Cost of Fund plus 0.5% per annum repayable by way of a bullet payment atthe end of the fourth year.


180

27. SHARE CAPITALNumber of Ordinary Shares

of RM1 each (in ‘000) Amount2009 2008 2009 2008

RM’000 RM’000

AuthorisedAt beginning and end of the year 2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paidAt beginning of the year 1,548,106 1,217,670 1,548,106 1,217,670Exercise of warrants – 330,436 – 330,436

At end of the year 1,548,106 1,548,106 1,548,106 1,548,106

During the previous financial year, the issued and paid-up share capital of the Company was increased from RM1,217,669,947 comprising 1,217,669,947 ordinary shares of RM1.00 each to RM1,548,105,929comprising 1,548,105,929 ordinary shares of RM1.00 each by the issuance of 330,435,982 new ordinary shares of RM1.00 each at an exercise price of RM1.21 per RM1.00 ordinary share arising from the exerciseof 330,435,982 2002/2007 Warrants.

The 2002/2007 Warrants of the Company had expired on 8 June 2007 and was removed from the Official List of Bursa Malaysia Securities Berhad on 11 June 2007.

28. RESERVESGroup Company

2009 2008 2009 2008Note RM’000 RM’000 RM’000 RM’000

Non-distributable:Statutory reserve (a) 429,915 366,910 – –Capital reserve (b) 7,013 7,013 – –Revaluation reserve (c) 20,174 (22,776) – –Employees’ share scheme reserve (d) 7,742 1,438 78 14Share premium 304,289 304,289 304,289 304,289

769,133 656,874 304,367 304,303Distributable:Retained profits (e) 480,773 410,712 421 678

1,249,906 1,067,586 304,788 304,981



28. RESERVES (cont’d)(a) The statutory reserve is maintained by the Group, in compliance with Section 36 of the Banking and Financial Institutions Act, 1989 and Section 15 of the Islamic Banking Act, 1983 and the amount of

RM429,915,000 (2008: RM366,910,000) represents the group’s share of the post acquisition statutory reserve. The statutory reserve is not distributable as dividends.

(b) The capital reserve is in respect of retained profit capitalised for a bonus issue by a subsidiary company.

(c) The revaluation reserve is in respect of unrealised fair value gains and losses on securities available-for-sale.

(d) The employees’ share scheme reserve relates to the equity-settled share options/grants to Directors and employees. This reserve is made up of the estimated fair value of the share options/share grants basedon the cumulative services received from Directors and employees over the vesting period.

(e) Prior to 1 January 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deducttax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ("single tier system"). However, there is a transitional period ofsix years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders using their Section 108 balance under limited circumstances. Companies also have an irrevocableoption to disregard their accumulated tax credit under Section 108 of the Income Tax Act, 1967 and opt to pay dividends under the single tier system. The change in the tax legislation also provides for theSection 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007.

The Company has elected to distribute dividends out of its entire retained earnings under the single tier tax system.

29. SHARES HELD FOR EMPLOYEES’ SHARE SCHEMEA trust has been established for the ESS and is administrated by an appointed trustee. The Trustee will be entitled from time to time to accept financial assistance from the Company upon such terms and conditionsas stipulated in the Trust Deed dated 3 December 2007 and the Trustee may purchase the Company’s shares from the open market for the purpose of the ESS. The Trustee shall refrain from exercising any votingrights attached to these shares. In accordance with FRS 132 Financial Statements - Presentation and Disclosure, the share purchased for the benefit of the ESS are recorded as “Share Held for ESS” in the equity onthe balance sheet.

During the financial year, the Trustee of the ESS had purchased 4,930,800 ordinary shares of RM1.00 each fully paid in the Company from the open market at an average price of RM2.00 per share. The totalconsideration paid for the purchase including transaction costs was RM9,873,777.

As at 31 March 2009, the Trustee of the ESS held 14,305,500 of ordinary shares representing 0.92% of the issued and paid-up capital of the Company. Such shares are held at a carrying amount of RM36,127,587.There were no share options or share grants being vested during the financial year.


182

30. EMPLOYEES’ SHARE SCHEME ("ESS")The Alliance Financial Group Berhad Employees’ Share Scheme (“ESS”) is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 28 August 2007. The ESS whichcomprises of the Share Option Plan, the Share Grant Plan and the Share Save Plan took effect on 3 December 2007 and is in force for a period of 10 years.

There were no share options offered under the Share Save Plan during the financial year.

The salient features of the ESS are as follows:

(i) The ESS is implemented and administered by the Employees’ Share Participating Scheme Committee (“ESPS Committee”) in accordance with the Bye-Laws.

(ii) The total number of shares which may be available under the ESS shall not exceed in aggregate 10% of the total issued and paid-up share capital of the Company at any one time during the existence of theESS and out of which not more than 50% of the shares available under the ESS shall be allocated, in aggregate, to Directors and senior management. In addition, not more than 10% of the shares availableunder the ESS shall be allocated to any individual Director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company.

(iii) The subscription price for each share under the Share Option Plan, Share Grant Plan and Share Save Plan may be at a discount (as determined by the ESPS Committee or such other pricing mechanism as mayfrom time to time be permitted by Bursa Malaysia Securities Berhad or such other relevant regulatory authorities), provided that the discount shall not be more than 10% from the 5-day weighted average marketprice of the shares of the Company transacted on Bursa Malaysia Securities Berhad immediately preceding the date on which an offer is made or at par value of the shares, whichever is higher.

(iv) The ESPS Committee may at its discretion offer to any Director or employee of a corporation in the Group to participate in the ESS if the Director or employee:

(a) has attained the age of 18 years;

(b) in the case of a Director, is on the board of directors of a corporation in the Group;

(c) in the case of an employee, is employed by a corporation in the Group; and

(d) is not a participant of any other employee share option scheme implemented by any other corporation within the Group which is in force for the time being

provided that the non-executive directors of the Group who are not employed by a corporation in the Group shall not be eligible to participate in the Share Save Plan.

(v) Under the Share Option Plan and Share Grant Plan, the ESPS Committee may stipulate the performance targets, performance period, value and/or other conditions deemed appropriate.

(vi) Under the Share Save Plan, the ESPS Committee may at its discretion offer Share Save Option(s) to any employees of the Group to subscribe for the shares of the Company and the employee shall authorisedeductions to be made from his/her salary.

(vii) The Company may decide to satisfy the exercise of options/awards of shares under the ESS through the issue of new shares, transfer of existing shares or a combination of both new and existing shares of theCompany.

(viii) The Company may appoint or authorise the trustee of the ESS to acquire the Company’s shares from the open market to give effect to the ESS.

Save for Datuk Bridget Anne Chin Hung Yee, who is the Group Chief Executive Officer of Alliance Bank Malaysia Berhad, none of the other directors of the Company were offered/awarded any share options/sharegrants during the financial year.



30. EMPLOYEES’ SHARE SCHEME ("ESS") (cont’d)The following table illustrates the number and weighted average exercise prices ("WAEP") of, and movements in, share options/grants during the financial year:

Group Share Options Share Grants2009 Number of Share Options Number of Share Grants

At At At Atbeginning Offered/ end beginning Offered/ end

of year awarded Lapsed of year of year awarded Lapsed of year‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 ‘000

2008 Share Scheme 8,669 – (729) 7,940 1,985 – (194) 1,7912009 Share Scheme – 10,328 (452) 9,876 – 2,452 (127) 2,325

8,669 10,328 (1,181) 17,816 1,985 2,452 (321) 4,116

WAEP 3.07 2.70 2.93 2.86

Share Options Share Grants2008 Number of Share Options Number of Share Grants



2008 Share Scheme – 8,738 (69) 8,669 – 2,007 (22) 1,985

WAEP 3.07


184

30. EMPLOYEES’ SHARE SCHEME ("ESS") (cont’d)The following table illustrates the number and weighted average exercise prices ("WAEP") of, and movements in, share options/grants during the financial year (cont’d):

Company Share Options Share Grants2009 Number of Share Options Number of Share Grants



2008 Share Scheme 94 – – 94 18 – – 182009 Share Scheme – 92 – 92 – 19 – 19

94 92 – 186 18 19 – 37

WAEP 3.07 2.70 – 2.89

Share Options Share Grants2008 Number of Share Options Number of Share Grants



2008 Share Scheme – 94 – 94 – 18 – 18

WAEP 3.07

(a) Details of share options/grants at the end of financial year:

WAEP Exercise PeriodRM

2008 Share Options 3.07 12.12.2010 – 12.12.20172009 Share Options 2.70 02.09.2011 – 02.09.2018

Vesting Dates

2008 Share Grants – First 50% of the share grants 12.12.2009– Second 50% of the share grants 12.12.2010

2009 Share Grants – First 50% of the share grants 02.09.2010– Second 50% of the share grants 02.09.2011



30. EMPLOYEES’ SHARE SCHEME ("ESS") (cont’d)(b) Fair value of share options/share grants offered/awarded:

The fair value of share options/share grants under the Share Option Plan and the Share Grant Plan during the financial year was estimated by an external valuer using a binomial model, taking into account theterms and conditions upon which the share options/share grants were offered/awarded. The fair value of share options and share grants measured at offer/award date and the assumptions are as follows:

Share Options

2008 2009

Fair value of the shares as at grant date,– 12 December 2007 (RM) 0.8072 –– 2 September 2008 (RM) – 0.7040Weighted average share price (RM) 3.1000 2.6600Weighted average exercise price (RM) 3.0696 2.6989Expected volatility (%) 0.2617 0.2709Expected life (years) 7 7Risk free rate (%) 3.57 to 4.57 3.79 to 5.22Expected dividend yield (%) 1.78 1.78

Share Grants

2008 2009

Fair value of the shares as at grant date,– 12 December 2007 (RM) 2.9639 –– 2 September 2008 (RM) – 2.5432Weighted average share price (RM) 3.1000 2.6600Expected volatility (%) 0.2617 0.2709Risk free rate (%) 3.57 to 4.57 3.79 to 5.22Expected dividend yield (%) 1.78 1.78

The expected life of the share options is based on the exercisable period of the share options and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumptionthat the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the share options/share grants were incorporated into the measurement offair value.

The risk-free rate is employed using a range of risk-free rates for Malaysian Government Securities ("MGS") tenure from 1-year to 20-year MGS.


186

31. OPERATING REVENUEOperating revenue of the Group comprises revenue derived from commercial banking, investment banking, stockbroking, Islamic banking, sale of trust units, trustee services and dividend income from investment,but excludes all related company transactions.

Operating revenue of the Company comprises gross interest income, dividend income and interest income derived from subsidiary companies.

32. INTEREST INCOMEGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Loans, advances and financing– Interest/income other than recoveries from NPLs 850,313 776,224 – –– Recoveries from NPLs 67,548 88,253 – –Money at call and deposit placements with financial institutions 127,624 189,045 4,405 10,973Securities held-for-trading 134 1,156 – –Securities available-for-sale 111,492 87,615 – –Securities held-to-maturity 13,085 29,045 – –Others 1,109 1,384 – –

1,171,305 1,172,722 4,405 10,973Accretion of discount less amortisation of premium 99,244 63,992 – –Net interest/income suspended (20,362) (20,351) – –

1,250,187 1,216,363 4,405 10,973

33. INTEREST EXPENSEGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Deposits and placements of banks and other financial institutions 23,522 10,271 – –Deposits from customers 526,972 488,391 – –Loans sold to Cagamas 3,426 8,422 – –Subordinated bonds 36,540 36,540 – –Short term borrowing – 4,268 – 4,268Long term borrowings 2,460 – 2,460 –Others (4,302) 31,583 – –

588,618 579,475 2,460 4,268



34. OTHER OPERATING INCOMEGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(a) Fee income:

Commissions 22,921 22,112 – –Service charges and fees 31,379 23,450 – –Portfolio management fees 6,044 7,066 – –Corporate advisory fees 3,638 5,047 – –Underwriting commissions 81 3,667 – –Brokerage fees 13,842 44,310 – –Guarantee fees 8,674 10,359 – –Processing fees 10,000 13,345 – –Commitment fees 13,259 13,474 – –Other fee income 22,144 15,816 – –

131,982 158,646 – –

(b) Investment income:

Gain arising from sale/redemption of:– Securities held-for-trading 420 1,652 – –– Securities available-for-sale 20,197 43,010 – –– Securities held-to-maturity 16,841 9,776 – –Unrealised gain/(loss) on revaluation of:– Securities held-for-trading 244 (269) – –– Derivative instruments (4,823) (8,283) – –Realised gain on revaluation of derivative instruments 64,022 54,709 – –Gross dividend income from:– Securities held-to-maturity 5,390 3,905 – –– Subsidiaries – – 122,601 103,653

102,291 104,500 122,601 103,653

(c) Other income:

Foreign exchange loss (10,740) (5,941) – –Rental income 224 327 – –Gain on disposal of property, plant and equipment 203 774 11 –Gain on disposal of leasehold land – 184 – –Gain on disposal of foreclosed properties 7,414 1,332 – –Return on capital from investment 88 15 88 15Others 1,156 5,602 965 70

(1,655) 2,293 1,064 85

Total other operating income 232,618 265,439 123,665 103,738


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35. OTHER OPERATING EXPENSESGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Personnel costs

– Salaries, allowances and bonuses 257,990 205,895 1,169 1,177– Contribution to EPF 42,877 36,096 245 245– Share options/grants under ESS 6,304 1,438 64 14– Others 31,176 32,243 162 219

338,347 275,672 1,640 1,655

Establishment costs

– Depreciation of property, plant and equipment 36,494 34,934 98 165– Amortisation of computer software 14,654 14,510 – –– Amortisation of leasehold land 139 126 – –– Rental of premises 27,641 25,601 242 248– Water and electricity 7,661 5,835 4 5– Repairs and maintenance 9,916 7,074 20 28– Information Technology expenses 36,625 24,185 4 8– Others 11,161 14,964 – –

144,291 127,229 368 454

Marketing expenses

– Promotion and advertisement 4,770 6,722 – –– Branding and publicity 7,333 1,525 – –– Others 6,192 6,264 – –

18,295 14,511 – –

Administration and general expenses

– Communication expenses 14,531 14,382 8 11– Printing and stationery 6,127 5,980 – 5– Insurance 2,773 2,362 3 3– Professional fees 20,276 14,783 224 159– Others 19,789 15,163 1,442 1,547

63,496 52,670 1,677 1,725

Total other operating expenses 564,429 470,082 3,685 3,834



35. OTHER OPERATING EXPENSES (cont’d)Group Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Included in the other operating expenses are the following:

Auditors’ remuneration [Note (a)] 857 916 44 46Directors’ remuneration [Note (b)] 9,943 6,121 757 635Hire of equipment 1,710 613 10 5Property, plant and equipment written-off 3,218 186 – –Rental of premises 27,641 25,601 242 248Amortisation of leasehold land 139 126 – –Depreciation on property, plant and equipment 36,494 34,934 98 165Amortisation of computer software 14,654 14,510 – –Computer software written-off 76 34 – –

(a) Auditors’ remuneration

Statutory audit 595 567 27 29Non-audit/other services 262 349 17 17

Total 857 916 44 46

(b) Directors’ remuneration

Directors of the Company:Non-Executive Directors– Allowances 702 383 325 203– Fees 1,227 957 432 432– Benefits-in-kind 62 54 38 28

1,991 1,394 795 663

Directors of Subsidiaries:Executive Directors– Salaries and allowances 2,579 1,557 – –– Bonuses 2,963 1,697 – –– Contribution to EPF 722 411 – –– Share options/grants under ESS 877 129 – –– Benefits-in-kind 51 62 – –

7,192 3,856 – –


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35. OTHER OPERATING EXPENSES (cont’d)Group Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(b) Directors’ remuneration (cont’d)

Directors of Subsidiaries: (cont’d)

Non-Executive Directors– Allowances 352 348 – –– Fees 372 522 – –

724 870 – –

9,907 6,120 795 663

Past Directors– Salaries and allowances 51 38 – –– Fees 98 79 – –

149 117 – –

Total 10,056 6,237 795 663

Total Directors’ remuneration excluding benefits-in-kind 9,943 6,121 757 635

36. ALLOWANCE/(WRITE-BACK) FOR LOSSES ON LOANS, ADVANCES AND FINANCINGGroup

2009 2008RM’000 RM’000

Allowance/(write-back) for bad and doubtful debts and financing:

(a) Specific allowance– Made during the year 416,100 342,536– Written back during the year (284,154) (325,708)

(b) General allowance– Made during the year 78,854 69,252– Written back during the year (27,932) (25,538)

(c) Bad debts on loans and financing– Recovered (69,742) (131,671)– Written off 1,872 5,410

114,998 (65,719)

(d) (Write-back)/allowance on other assets (2,956) 5,001

112,042 (60,718)



37. IMPAIRMENT NET OF WRITE-BACKGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Provision/(write-back) of impairment on securities:– Securities available-for-sale 76,128 79,790 – –– Securities held-to-maturity (42) 17,891 – –– Securities held-for-trading 1,398 4,138 – –Impairment on foreclosed properties 815 300 – –Impairment on property, plant and equipment – 3,956 – –Impairment on debt due from subsidiaries – – 651 5,661Impairment on other assets 40 – 40 –

78,339 106,075 691 5,661

38. TAXATION AND ZAKATGroup Company

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Income tax:Provision for current year 101,300 172,683 25,900 30,343Over provision in prior years (53,398) (18,273) (254) (2,700)Deferred tax (Note 18):Relating to origination and reversal of temporary differences (18,295) (33,850) (50) 39Relating to change in tax rate (1) 5,467 – (14)Reversal in prior years 44,788 (4,102) (160) 31

Taxation 74,394 121,925 25,436 27,699Zakat 30 30 – –

74,424 121,955 25,436 27,699

Income tax is calculated at the Malaysian Statutory tax rate of 25% (2008: 26%) of the estimated assessable profit for the year.


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38. TAXATION AND ZAKAT (cont’d)A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

Group Company2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Profit before taxation 303,312 502,050 121,234 100,948

Taxation at Malaysian statutory tax rate of 25% (2008: 26%) 75,828 130,533 30,309 26,246Effect of income subject to tax rate of 20% – (6) – –Effect on deferred tax for reduction in income tax rate (1) 4,348 – (14)Deferred tax assets recognised at different tax rate – 1,119 – –Effect of expenses not deductible for tax purposes 7,492 5,774 566 1,690Effect of income not subject to tax (315) (214) (5,025) (4)Effect of changes in tax rates on dividend income taxed on receipt basis – 2,122 – 2,450Reversal of deferred tax provided in prior years 44,788 (4,102) (160) 31Over provision of tax expense in prior years (53,398) (18,273) (254) (2,700)Effect of utilisation of previously unrecognised tax losses – (1,706) – –Deferred tax assets not recognised – 2,330 – –

Tax expense for the year 74,394 121,925 25,436 27,699

Tax savings during the year arising from:– utilisation of current year tax losses 804 – – –– utilisation of previously unrecognised tax losses – 1,706 – –



39. EARNINGS PER SHARE(a) Basic

The calculation of the basic earnings per share is based on net profit attributable to equity holders of the Company for the financial year divided by the weighted average number of ordinary shares of RM1.00each in issue during the financial year excluding the weighted average shares held for ESS.

Group2009 2008

Net profit attributable to equity holders of the Company (RM’000) 229,121 379,956

Weighted average number of ordinary shares in issue (‘000) 1,548,106 1,496,004Effect of shares bought back for ESS (‘000) (11,033) (822)

1,537,073 1,495,182

Basic earnings per share (sen) 14.9 25.4

(b) Diluted

The calculation of the diluted earnings per share is based on the net profit attributable to equity holders of the Company for the financial year divided by the weighted average number of ordinary shares ofRM1.00 each in issue during the financial year, excluding the weighted average shares held for ESS and taken into account the assumed Share Grants to employees under ESS was vested with the employeesas at 31 March 2009.

Group2009 2008

Net profit attributable to equity holders of the Company (RM’000) 229,121 379,956

Weighted average number of ordinary shares in issue (‘000) 1,548,106 1,496,004Effect of shares bought back for ESS (‘000) (11,033) (822)Effect of Share Grants under ESS (‘000) 4,116 –

1,541,189 1,495,182

Diluted earnings per share (sen) 14.8 25.4


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40. DIVIDENDSDividend Net Dividends

in respect of year per Ordinary Share2009 2008 2009 2008

RM’000 RM’000 Sen Sen

Recognised during the year:

First interim dividend

2.5 sen per share, tax exempt under the single tier tax system, on 1,548,105,929 ordinary shares of RM1.00 each,declared in the financial year ended 31 March 2009, paid on 27 August 2008 38,434* – 2.48* –

1.75 sen (less 27% taxation), on 1,548,105,929 ordinary shares of RM1.00 each, declared in the financial year ended 31 March 2008,paid on 20 September 2007 – 19,777 – 1.28

Second interim dividend

3.75 sen per share, tax exempt under the single tier tax system, on 1,548,105,929 ordinary shares of RM1.00 each,declared in the financial year ended 31 March 2009, paid on 3 March 2009 57,621* – 3.72* –

4.15 sen (less 26% taxation) and 0.35 sen tax exempt under the single tier tax system, on 1,548,105,929 ordinary shares of RM1.00 each,declared in the financial year ended 31 March 2008, paid on 26 March 2008 – 52,794* – 3.41

96,055 72,571 6.20 4.69

* Dividends paid on the shares held in Trust pursuant to the Company’s ESS which are classified as shares held for ESS are not accounted for in the shareholders’ equity. The amount of RM269,000 and RM433,000(2008: second interim dividend – RM167,000) being dividends paid for those shares were added back to the appropriation of retained profits in respect of the first and second interim dividends respectively.

41. CAPITAL COMMITMENTSGroup

2009 2008RM’000 RM’000

Capital expenditure:

Authorised and contracted for 37,474 55,229Authorised but not contracted for 4,242 35,235

41,716 90,464



42. COMMITMENTS AND CONTINGENCIESIn the normal course of business, the Group makes various commitments and incurs certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of thesetransactions.

Risk-weighted exposure of the Group are as follows:

2009 2008Credit Risk- Credit Risk-

Principal Equivalent Weighted Principal Equivalent WeightedAmount Amount * Amount Amount Amount * Amount


Direct credit substitutes 448,370 448,370 448,370 417,859 417,859 416,969Transaction-related contingent items 505,920 252,960 252,960 593,608 296,804 296,804Short-term self-liquidating trade-related contingencies 112,406 22,481 22,481 121,493 24,299 24,298Irrevocable commitments to extend credit:

– maturity exceeding one year 2,051,099 1,025,549 825,344 1,964,122 982,061 789,060– maturity not exceeding one year 8,439,276 1,687,856 1,437,642 7,318,045 1,463,608 1,250,607

Foreign exchange related contracts:– less than one year 2,474,223 58,004 27,695 3,560,974 107,963 51,475

Interest rate related contracts:– one year or less 100,000 250 50 – – –– over one year to five years 890,000 27,324 5,465 – – –– over five years 60,000 7,019 1,404 – – –

15,081,294 3,529,813 3,021,411 13,976,101 3,292,594 2,829,213

* The credit equivalent amount is arrived at using the credit conversion factor as per BNM guidelines. The foreign exchange related contracts are all forward contracts. Foreign exchange contracts are subject tomarket risk and credit risk.


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43. MATERIAL LITIGATIONS(i) On 31 July 2008, the Company announced that Alliance Investment Bank Berhad (“AIBB”), a wholly-owned subsidiary of Alliance Bank Malaysia Berhad, which in turn is a wholly-owned subsidiary of the

Company, had been served with a Writ of Summons and Statement of Claim dated 10 July 2008 (“the Suit”) by Celcom (Malaysia) Berhad (“Celcom”).

The Suit was filed by one Mohd Shuaib Ishak as a derivative action on behalf of Celcom pursuant to S181A(1) of the Companies Act, 1965.

The Suit arises from the Amended and Restated Supplemental Agreement dated 4 April 2002 entered into between among others Celcom and DeTe Asia Holding GmbH (“DeTeAsia”), the acquisition of Celcomshares by Telekom Enterprise Sdn Bhd (“TESB”), the consequent Mandatory General Offer exercise implemented by Telekom Malaysia Berhad (“TM”) and the de-merger exercise of the mobile and fixed-linebusinesses of the TM Group.

AIBB has been named as one of the 21 defendants in the Suit for its role as advisor to Celcom. Celcom is claiming against the defendants jointly and/or severally for the sum of US$232,999,745.80 plus damagesand interest.

The proceedings in the Suit has since been stayed by the High Court on the application of Celcom pending its appeal to the Court of Appeal against the leave granted for the derivative action by the plaintiff.

The Court of Appeal had on 27 March 2009 allowed the appeal against the leave granted to Mohd Shuaib Ishak to commence the derivative action on behalf of Celcom.

Following from the above, AIBB’s solicitors would take steps to strike out the Suit.

(ii) A corporate borrower of Alliance Bank Malaysia Berhad (“ABMB”), a wholly-owned subsidiary of the Company had issued a Writ of Summons in 2005 against an agent bank for a syndicate of lenders comprisingthree banks of which ABMB is one of them, claiming for general, special and exemplary damages alleging a breach of duty and contract.

The credit facilities consist of a bridging loan of RM58.5 million and a revolving credit facility of RM4.0 million which were granted by the syndicate lenders of which ABMB’s participation was RM18.5 million.In 2002, the credit facilities were restructured to a loan of RM30.0 million, of which ABMB’s participation was RM8.31 million, payable over seven years. The syndicated lenders had also filed a suit against thecorporate borrower for the recovery of the above-mentioned loan.

The two suits were then consolidated and heard together. On 6 May 2009, judgment was delivered against the agent bank for special damages amounting to RM115.0 million together with interest at the rateof 6% per annum from date of disbursement to date of realization with general damages to be assessed by the Court.

The agent bank's solicitors have since filed an appeal against the said decision and also for a stay of execution of the judgment. At the hearing of the stay application on 13 May 2009, an interim stay order wasgranted pending the hearing of the application for stay of execution on 24 June 2009.

The advice from the agent bank's solicitors, is that they have a better than even chance of succeeding in the said appeal.

(iii) ABMB had in 1999 filed a suit against a corporate borrower, hereinafter referred to as the first defendant and the second defendant as guarantor (collectively called "Defendants") for money outstanding due toa default in banking facility amounting to RM2.36 million. The Defendants in turn counter-claimed against ABMB for special damages amounting to RM15.5 million and general damages to be assessed by theCourt for negligence and/or wrongful termination of the banking facilities, statutory interest on judgment sum, costs and such other and/or further relief deemed fit by the Court.

On 4 May 2009, High Court in Kota Kinabalu granted judgment in favour of the Defendants with damages to be assessed by the Deputy Registrar.

ABMB is appealing the said decision and is also applying for a stay of the execution of the judgment.

Based on the advice from our solicitors, ABMB has a good chance of success in its appeal.



44. FINANCIAL RISK MANAGEMENT POLICIESThe Group manages risk within clearly defined guidelines that are approved by the Directors. In addition, the Board of Directors of the Group provides independent oversight to ensure that risk management policiesare complied with, through a framework of established controls and reporting process.

The guidelines and policies adopted by the Group to manage the main risks that arise in the conduct of its business activities are as follows:

(a) Credit Risk

Credit risk is the potential loss of revenue and/or principal arising from defaults by borrowers or counterparties through business activities in lending, trading, investing and hedging. Exposure to credit risk maybe categorised as primary or secondary.

Primary exposure to credit risk arises from loans, advances and financing. The amount of credit exposure is represented by the carrying amount of loans, advances and financing in the balance sheet. The lendingactivities in the Group are guided by the Group’s Credit Policies and Guidelines, in line with Best Practices in the Management of Credit Risk, issued by Bank Negara Malaysia. These credit policies and guidelinesalso include an Internal Grading model adopted by the Group to grade its loan and financing accounts according to their respective risk profiles.

On the other hand, secondary credit exposure arise from financial transactions with counterparties (including interbank market activities, derivative instruments used for hedging and debt instruments), of whichthe amount of credit exposure in respect of these instruments is equal to the carrying amount of these assets in the balance sheet. This exposure is monitored on an on-going basis against predeterminedcounterparty limits.

The credit exposure arising from off-balance sheet activities, i.e. commitments and contingencies is set out in Note 42 to the financial statements.

Credit risk arising from Treasury activities are managed by appropriate policies, counterparty limits and supported by the Group’s Risk Management Framework.

(b) Market Risk

Market risk refers to the potential loss arising from the movement in the market rates or prices; the main components being interest rate risk and foreign exchange risk.

The Group has developed an internal Risk Management Frameworks, which includes policies and guidelines to manage market risk in general. Market risk arising from the trading activities is controlled viaposition limits, sensitivity limits and regular revaluation of positions versus current market quotations.

The Group is also susceptible to exposure to market risk arising from changes in prices of the shares quoted on Bursa Malaysia, which will impacts on the Group’s balances due from clients and brokers. Therisk is controlled by application of credit approvals, limits and monitoring procedures.

(i) Interest Rate Risk

As a subset of market risk, interest rate risk refers to the volatility in net interest income as a result of changes in interest rate levels and shifts in the composition of the assets and liabilities. Interest raterisk is managed through interest rate sensitivity analysis. The potential reduction in net interest income from an unfavourable interest rate movement is monitored and reported to Management. In additionto pre-scheduled meetings, Group Assets, and Liabilities Committee ("ALCO") members will also deliberate on revising the Bank’s lending and deposit rates in response to changes in the benchmark ratesset by the central bank.

The effects of changes in the levels of interest rates on the market value of securities are monitored closely and mark-to-market valuations are regularly reported to Management.

(ii) Foreign Currency Exchange Risk

Foreign exchange risk refers to the potentially adverse movements in the exchange rates for foreign exchange positions taken by the Group from time to time. Foreign exchange risk is managed via approvedrisk limits and open positions are regularly revalued against current exchange rates and reported to Management.


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199

44. FINANCIAL RISK MANAGEMENT POLICIES (cont’d)(c) Liquidity Risk

Liquidity risk relates to the Group’s ability to maintain adequate liquid assets so as to punctually meet its financial obligations and commitments when due. Market liquidity risk refers to the potential risk thatthe Group is unable to liquidate its assets/securities at or near the previous market price due to inadequate market depth or disruptions to the marketplace.

The Group’s liquidity risk profile is managed using Bank Negara Malaysia’s New Liquidity Framework, other internal policies and ALCO benchmarks. A contingency funding plan is also established by the Groupas a forward-looking measure to ensure that liquidity risk can be addressed according to the degrees of key risk indicators, and which incorporates alternative funding strategies which are ready to beimplemented on a timely basis to mitigate the impact of unforseen adverse changes in liquidity in the marketplace.

(d) Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

Operational risk management identifies the inherent and residual risks in the Group’s processes and activities, monitors and controls risk impacts. It analyses the risk profile of the Group, determines any causesof failure, assesses potential loss and enhances controls to reduce/avoid risks.

Individual business and support departments are responsible for the management of their day-to-day operational risks while support, monitoring and reporting is provided by the Operational Risk ManagementDepartment. Group Internal Audit plays the role of providing independent compliance assurance to senior management and the Board.

Among the activities undertaken to manage operational risks are general scoping of bank-wide risks; developing risk control self assessments and key indicators for the various business and support functions;executing operational risk awareness internal training and workshops; reviews of documentation of the Bank’s processes and procedures and managing potential crisis events via business continuity plans.

The Group has implemented regulatory and Basel II requirements for capital charge for operational risk under the Basic Indicator Approach.

45. INTEREST RATE RISKIn macro terms, interest rate risk refers to the overall sensitivity of the Group’s earnings and/or economic values of the Group’s portfolio to changes in interest rates. Interest rate risk is managed through various riskmanagement techniques including re-pricing gap, net interest income simulation and stress testing.

The Group is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The effect of changes in the levels of interestrates on the market value of securities are monitored regularly and the outcome of mark-to-market valuations are escalated to Management regularly. The table below summarises the effective interest rates at thebalance sheet date and the periods in which the financial instruments will re-price or mature, whichever is the earlier.

45. INTEREST RATE RISK (cont’d)Non-trading book

Non- EffectiveUp to >1-3 >3-6 >6-12 >1-5 Over 5 interest Trading interest

Group 1 month months months months years years sensitive book Total rate2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 4,533,432 – – – – – 464,743 – 4,998,175 2.00Deposits and placements with banks and other financial institutions – 195,860 2,663 – – – – – 198,523 1.57Securities held-for-trading – – – – – – – 46,055 46,055 3.30Securities available-for-sale 682,878 1,915,832 951,476 233,214 2,303,189 220,770 – 12,763 6,320,122 3.11Securities held-to-maturity 15,337 116,000 40,130 26,366 93,044 5,227 18,516 – 314,620 5.12Loans, advances and financing 13,724,402 929,957 512,891 618,787 2,131,856 797,176 3,028 * – 18,718,097 5.45Balances due from clients and brokers 51,130 – – – – – 18,395 – 69,525 12.00Other non-interest sensitive balances – – – – – – 1,172,005 17,310 1,189,315 –

Total assets 19,007,179 3,157,649 1,507,160 878,367 4,528,089 1,023,173 1,676,687 76,128 31,854,432

LiabilitiesDeposits from customers 16,714,389 2,115,330 2,295,656 4,212,964 237,102 – – – 25,575,441 2.22Deposits and placements of banks and other financial institutions 465,137 129,973 5,834 5,283 584,555 – – – 1,190,782 1.43Recourse obligations on loans sold to Cagamas – 12,051 15,914 30,426 – – – – 58,391 3.66Bills and acceptances payable 2,097 45 73 – – – – – 2,215 2.91Balances due to clients and brokers 76,015 – – – – – 686 – 76,701 2.50Subordinated bonds – – – – 600,000 – – – 600,000 6.09Long term borrowings – – – – 600,000 – – – 600,000 3.33Other non-interest sensitive balances – – – – – – 958,348 26,016 984,364 –

Total liabilities 17,257,638 2,257,399 2,317,477 4,248,673 2,021,657 – 959,034 26,016 29,087,894Equity – – – – – – 2,761,885 – 2,761,885 –Minority interests – – – – – – 4,653 – 4,653 –

Total liabilities and equity 17,257,638 2,257,399 2,317,477 4,248,673 2,021,657 – 3,725,572 26,016 31,854,432

On-balance sheet interest sensitivity gap 1,749,541 900,250 (810,317) (3,370,306) 2,506,432 1,023,173 (2,048,885) 50,112 –Off-balance sheet interest sensitivity gap – – – – – – – – –

Total interest sensitivity gap 1,749,541 900,250 (810,317) (3,370,306) 2,506,432 1,023,173 (2,048,885) 50,112 –

* Non-performing loans, specific allowance and general allowance of the Group are classified as non-interest sensitive.


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Non- EffectiveUp to >1-3 >3-6 >6-12 >1-5 Over 5 interest interest

Company 1 month months months months years years sensitive Total rate2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 453,580 – – – – – 298 453,878 2.22Deposits and placements with banks and other financial institutions – 200,000 – – – – – 200,000 2.63Other non-interest sensitive balances – – – – – – 1,769,019 1,769,019 –

Total assets 453,580 200,000 – – – – 1,769,317 2,422,897

LiabilitiesLong term borrowings – – – – 600,000 – – 600,000 3.33Other non-interest sensitive balances – – – – – – 6,130 6,130 –

Total liabilities – – – – 600,000 – 6,130 606,130Equity – – – – – – 1,816,767 1,816,767 –

Total liabilities and equity – – – – 600,000 – 1,822,897 2,422,897

On-balance sheet interest sensitivity gap 453,580 200,000 – – (600,000) – (53,580) –Off-balance sheet interest sensitivity gap – – – – – – – –

Total interest sensitivity gap 453,580 200,000 – – (600,000) – (53,580) –




Non- EffectiveUp to >1-3 >3-6 >6-12 >1-5 Over 5 interest Trading interest

Group 1 month months months months years years sensitive book Total rate2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 5,276,877 – – – – – 497,178 – 5,774,055 3.54Deposits and placements with banks and other financial institutions – 532,835 – – – – – – 532,835 3.19Securities held-for-trading – – – – – – – 100,129 100,129 4.17Securities available-for-sale 928,435 1,028,391 428,524 5,049 423,090 264,185 1,113 12,231 3,091,018 4.08Securities held-to-maturity 25,183 149,437 282,944 27,840 311,521 5,253 19,116 – 821,294 4.67Loans, advances and financing 11,219,410 1,029,481 259,665 331,198 1,862,176 684,260 232,781* – 15,618,971 7.10Balances due from clients and brokers 98,481 – – – – – 20,852 – 119,333 12.00Other non-interest sensitive balances – – – – – – 1,597,898 19,393 1,617,291 –

Total assets 17,548,386 2,740,144 971,133 364,087 2,596,787 953,698 2,368,938 131,753 27,674,926

LiabilitiesDeposits from customers 13,498,073 1,893,926 2,083,198 3,385,967 490,596 – – – 21,351,760 2.53Deposits and placements of banks and other financial institutions 1,022,923 24,537 15,469 20,644 370,551 – – – 1,454,124 2.73Recourse obligations on loans sold to Cagamas – – 168,535 6,224 80,632 – – – 255,391 3.44Bills and acceptances payable 57,841 96,275 7,302 – – – – – 161,418 3.83Balances due to clients and brokers 112,123 – – – – – 503 – 112,626 2.50Subordinated bonds – – – – 600,000 – – – 600,000 6.09Other non-interest sensitive balances – – – – – – 1,121,943 23,276 1,145,219 –

Total liabilities 14,690,960 2,014,738 2,274,504 3,412,835 1,541,779 – 1,122,446 23,276 25,080,538Equity – – – – – – 2,589,438 – 2,589,438 –Minority interests – – – – – – 4,950 – 4,950 –

Total liabilities and equity 14,690,960 2,014,738 2,274,504 3,412,835 1,541,779 – 3,716,834 23,276 27,674,926

On-balance sheet interest sensitivity gap 2,857,426 725,406 (1,303,371) (3,048,748) 1,055,008 953,698 (1,347,896) 108,477 –Off-balance sheet interest sensitivity gap – – – – – – – – –

Total interest sensitivity gap 2,857,426 725,406 (1,303,371) (3,048,748) 1,055,008 953,698 (1,347,896) 108,477 –

* Non-performing loans, specific allowance and general allowance of the Group are classified as non-interest sensitive.


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Non- EffectiveUp to >1-3 >3-6 >6-12 >1-5 Over 5 interest interest

Company 1 month months months months years years sensitive Total rate2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 64,600 – – – – – 1,699 66,299 3.49Other non-interest sensitive balances – – – – – – 1,767,748 1,767,748 –

Total assets 64,600 – – – – – 1,769,447 1,834,047

LiabilitiesOther non-interest sensitive balances – – – – – – 7,214 7,214 –

Total liabilities – – – – – – 7,214 7,214Equity – – – – – – 1,826,833 1,826,833 –

Total liabilities and equity – – – – – – 1,834,047 1,834,047

On-balance sheet interest sensitivity gap 64,600 – – – – – (64,600) –Off-balance sheet interest sensitivity gap – – – – – – – –

Total interest sensitivity gap 64,600 – – – – – (64,600) –

46. CAPITAL ADEQUACYBNM guidelines on capital adequacy require the ABMB group to maintain an adequate level of capital to withstand any losses which may result from credit and other risks associated with financing operations. Thecapital adequacy ratio is computed based on the eligible capital in relation to the total risk-weighted assets as determined by BNM.

With effect from 1 January 2008, the capital adequacy ratios of the ABMB Group are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). TheABMB group has adopted the Standardised Approach for credit risk and market risk, and the Basic Indicator Approach for operational risk.

The detailed disclosure on the risk-weighted assets, as set out in Note 46(a), (b), (c) and (d) are presented in accordance with paragraph 4.3 of Bank Negara Malaysia’s Concept Paper, Risk-Weighted Capital AdequacyFramework (Basel II) and Capital Adequacy Framework of Islamic Bank (CAFIB) – Disclosure requirements (Pillar 3).

The ABMB group’s comparative figures has been restated based on the BNM Circular on Risk-Weighted Capital Adequacy Framework (General Requirements and Capital Components).



46. CAPITAL ADEQUACY (cont’d)The capital adequacy ratios of the ABMB Group are as follows:

Restated2009 2008

Before deducting proposed dividends Core capital ratio 10.41% 11.42%Risk-Weighted capital ratio 14.76% 16.29%

After deducting proposed dividendsCore capital ratio 10.30% 11.19%Risk-Weighted capital ratio 14.65% 16.06%

Components of Tier-I and Tier-II capital are as follows:

2009 2008RM’000 RM’000

Tier-I capitalPaid-up share capital 596,517 596,517Preference shares 4,000 4,000Share premium 597,517 597,517Retained profits 772,867 702,407Statutory reserves 671,953 608,948Other reserves 10,035 10,035Minority interests 4,652 4,949

2,657,541 2,524,373Less: Purchased goodwill/goodwill on consolidation (304,149) (304,149)

Deferred tax assets (119,305) (160,659)

Total Tier-I capital 2,234,087 2,059,565

Tier-II capitalSubordinated bonds 600,000 600,000General allowance for losses on loans, advances and financing 340,246 289,296

Total Tier-II capital 940,246 889,296Total Capital 3,174,333 2,948,861Less: Investment in subsidiaries (7,066) (11,275)

Total Capital Base 3,167,267 2,937,586


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46. CAPITAL ADEQUACY (cont’d)(a) The breakdown of risk-weighted assets ("RWA") by exposures in each major risk category are as follows:

Risk-Group Gross Net Weighted Capital2009 Exposures Exposures Assets RequirementsExposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit RiskOn-balance sheet exposures:

Sovereigns/Central banks 4,337,191 4,337,191 – –Banks, Development Financial Institutions ("DFIs") and Multilateral Development Banks ("MDBs") 6,093,539 6,093,539 1,310,282 104,823Insurance companies, Securities Firms and Fund Managers 288 288 302 24Corporates 6,927,567 6,752,815 6,273,511 501,881Regulatory retail 7,360,456 6,994,347 5,340,653 427,252Residential mortgages 5,907,724 5,896,671 2,792,111 223,369Higher risk assets 8,748 8,749 13,122 1,050Other assets 774,965 774,965 554,030 44,322Equity exposures 31,782 31,782 47,673 3,814

Total on-balance sheet exposures 31,442,260 30,890,347 16,331,684 1,306,535

Off-balance sheet exposures:Credit-related off-balance sheet exposures 3,437,216 3,407,295 2,986,797 238,944Derivative financial instruments 92,597 92,597 34,614 2,769

Total off-balance sheet exposures 3,529,813 3,499,892 3,021,411 241,713

Total on and off-balance sheet exposures 34,972,073 34,390,239 19,353,095 1,548,248

(ii) Market Risk – – 59,902 4,792

(iii) Operational Risk – – 2,041,388 163,311

Total RWA and capital requirements 34,972,073 34,390,239 21,454,385 1,716,351



46. CAPITAL ADEQUACY (cont’d)(a) The breakdown of RWA by exposures in each major risk category are as follows (cont’d):


(i) Credit RiskOn-balance sheet exposures:

Sovereigns/Central banks 4,804,793 4,804,793 – –Banks, DFIs and MDBs 4,461,199 4,461,199 935,067 74,805Insurance companies, Securities Firms and Fund Managers 617 617 649 52Corporates 6,129,710 5,405,661 4,785,519 382,842Regulatory retail 6,603,935 6,037,937 4,653,411 372,273Residential mortgages 4,213,860 4,204,343 1,947,524 155,802Higher risk assets 6,796 6,796 10,193 815Other assets 973,323 973,323 788,035 63,043Equity exposures 35,591 35,591 51,511 4,121

Total on-balance sheet exposures 27,229,824 25,930,260 13,171,909 1,053,753

Off-balance sheet exposures:Credit-related off-balance sheet exposures 3,184,631 3,156,318 2,777,738 222,219Derivative financial instruments 107,963 107,963 51,475 4,118

Total off-balance sheet exposures 3,292,594 3,264,281 2,829,213 226,337

Total on and off-balance sheet exposures 30,522,418 29,194,541 16,001,122 1,280,090

(ii) Market Risk – – 83,714 6,697

(iii) Operational Risk – – 1,944,266 155,541

Total RWA and capital requirements 30,522,418 29,194,541 18,029,102 1,442,328


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46. CAPITAL ADEQUACY (cont’d)(b) The breakdown of credit risk exposures by risk-weights are as follows:

Disclosures by risk-weights

Exposures after netting and Credit risk mitigationInsurance Total

companies, exposuresGroup Securities after Total2009 Sovereigns/ Banks, Firms and Higher netting and Risk-Risk-Weights Central DFIs and Fund Regulatory Residential risk Other Equity Credit risk Weighted

banks MDBs Managers Corporates retail mortgages assets assets Exposures mitigation AssetsRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 4,347,191 – – – – – – 220,935 – 4,568,126 –20% – 5,840,400 – 643,684 – – – – – 6,484,084 1,296,81735% – – – – – 2,795,907 – – – 2,795,907 978,56750% – 343,282 – 44,459 21,288 2,158,656 – – – 2,567,685 1,283,84375% – – – – 8,469,612 852,225 – – – 9,321,837 6,991,378100% – – 336 7,649,228 51,332 97,893 – 554,030 – 8,352,819 8,352,819150% – – 27 133,697 121,445 – 12,830 – 31,782 299,781 449,671

Total exposures 4,347,191 6,183,682 363 8,471,068 8,663,677 5,904,681 12,830 774,965 31,782 34,390,239 19,353,095

Risk-weighted assets by exposures – 1,339,721 377 8,000,740 6,596,352 2,794,957 19,245 554,030 47,673 19,353,095Average risk-weight – 22% 104% 94% 76% 47% 150% 71% 150% 56%Deduction from Capital base – – – – – – – – – –

2008Risk-Weights0% 4,814,793 – – – – – – 185,288 – 5,000,081 –20% – 4,348,819 – 641,978 – – – – – 4,990,797 998,15935% – – – – – 2,188,818 – – – 2,188,818 766,08650% – 211,126 – 389,498 19,698 1,408,210 – – – 2,028,532 1,014,26675% – – – – 7,323,216 528,423 – – – 7,851,639 5,888,730100% 1,869 7,632 707 5,791,621 60,412 82,231 – 788,035 3,751 6,736,258 6,736,258150% – – 64 197,425 158,314 – 10,773 – 31,840 398,416 597,623

Total exposures 4,816,662 4,567,577 771 7,020,522 7,561,640 4,207,682 10,773 973,323 35,591 29,194,541 16,001,122

Risk-weighted assets by exposures 1,869 982,959 803 6,410,901 5,800,145 1,948,740 16,159 788,035 51,511 16,001,122Average risk-weight – 22% 104% 91% 77% 46% 150% 81% 145% 55%Deduction from Capital base – – – – – – – – – –



46. CAPITAL ADEQUACY (cont’d)(c) The off-balance sheet exposures and their related counterparty credit risk of the Group are as follows:

Credit Risk-Principal Equivalent WeightedAmount Amount AssetsRM’000 RM’000 RM’000

Group

2009Credit-related exposures

Direct credit substitutes 448,370 448,370 448,370Transaction-related contingent items 505,920 252,960 252,960Short-term self-liquidating trade-related contingencies 112,406 22,481 22,481Irrevocable commitments to extent credit:– maturity exceeding one year 2,051,099 1,025,549 825,344– maturity not exceeding one year 8,439,276 1,687,856 1,437,642

11,557,071 3,437,216 2,986,797

Derivative financial instruments

Foreign exchange related contracts:– less than one year 2,474,223 58,004 27,695Interest rate related contracts:– one year or less 100,000 250 50– over one year to five years 890,000 27,324 5,465– over five years 60,000 7,019 1,404

3,524,223 92,597 34,614

15,081,294 3,529,813 3,021,411

2008Credit-related exposures

Direct credit substitutes 417,859 417,859 416,969Transaction-related contingent items 593,608 296,804 296,804Short-term self-liquidating trade-related contingencies 121,493 24,299 24,298Irrevocable commitments to extent credit:– maturity exceeding one year 1,964,122 982,061 789,060– maturity not exceeding one year 7,318,045 1,463,608 1,250,607

10,415,127 3,184,631 2,777,738


Foreign exchange related contracts:– less than one year 3,560,974 107,963 51,475

13,976,101 3,292,594 2,829,213


208



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46. CAPITAL ADEQUACY (cont’d)(d) The RWA and capital requirements for the various categories of risk under market risk are as follows:

Group

Risk-Weighted CapitalAssets Requirements

2009 RM’000 RM’000Interest rate risk– General interest rate risk 8,589 687– Specific interest rate risk 313 25

8,902 712

Equity risk– General interest rate risk 11,412 913– Specific interest rate risk 19,974 1,598

31,386 2,511

Foreign exchange risk 19,614 1,569

59,902 4,792

2008Interest rate risk– General interest rate risk 14,638 1,171– Specific interest rate risk 12,475 998

27,113 2,169

Equity risk– General interest rate risk 16,225 1,298– Specific interest rate risk 28,401 2,272

44,626 3,570

Foreign exchange risk 11,975 958

83,714 6,697

47. LEASE COMMITMENTSThe Group and the Company have lease commitments in respect of equipment on hire and premises, all of which are classified as operating leases. A summary of the non-cancellable long term commitments is as follows:

Group Company2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Within one year 34,710 28,843 410 393Between one and five years 50,289 49,811 626 749

The operating leases for the Group and the Company’s other premises typically cover for a initial period of three years with options for renewal. These leases are cancellable but are usually renewed upon expiry orreplaced by leases on other properties. Future minimum lease commitments are anticipated to be not less than the rental expense for 2009.

48. SIGNIFICANT RELATED PARTY TRANSACTIONSIn addition to related party disclosures mentioned elsewhere in the financial statements, set out below are the Group’s and the Company’s other significant related party transactions and balances:

Group Company2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

(a) TransactionsInterest income

– subsidiaries – – (4,399) (10,863)– key management personnel (26) (15) – –

Dividend income– subsidiary – – (122,601) (103,653)

Overhead expenses recharged– subsidiaries – – (1,372) (713)

Interest expenses– key management personnel 1,973 1,725 – –

Management fees paid– related companies 129 273 – –

(b) BalancesAmount due to deposits from customers

– key management personnel (63,779) (45,680) – –Money at call and deposit placements with financial institutions

– subsidiaries – – 653,690 66,132Loans, advances and financing

– key management personnel 1,950 963 – –Other assets

– subsidiaries – – 38,510 36,767Other liabilities

– subsidiaries – – (1,646) (1,856)


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48. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d)(i) The above transactions have been entered into in the normal course of business based on negotiated and mutually agreed terms, and have been established on terms and conditions that are not materially

different from those obtainable in transactions with unrelated parties.

(ii) The affiliated companies refer to the group of companies within a substantial corporate shareholder of the Company.

The transactions with affiliated companies are aggregated because these transactions are similar in nature and no single transaction is significant enough to warrant separate disclosure.

(iii) Key management personnel refer to those persons having authority and responsibility for planning, directing and controlling the activities of the Group and the Company, directly or indirectly, includingExecutive Directors and Non-Executive Directors of the Group and the Company (including close members of their families). Other members of key management personnel of the Group are the Group ChiefExecutive Officer, Group Chief Operating Officer, Group Chief Financial Officer, Group Chief Risk Officer, Group Chief Credit Officer and Group Company Secretary.

(c) Compensation of key management personnel

Remuneration of Directors and other members of key management for the year is as follows:

Group Company2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Short-term employee benefitsFees 1,471 1,479 432 432Salary and other remuneration, including meeting allowances 10,101 7,469 678 447Contribution to EPF 1,208 892 50 42Share options/grants under ESS 1,346 202 40 9

Benefits-in-kind 124 152 38 47

14,250 10,194 1,238 977

Included in the total key management personnel are:Directors’ remuneration (Note 35) 9,907 6,120 795 663


211

48. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d)(c) Compensation of key management personnel (cont’d)

Executive Directors of the Group and other members of key management have been offered/awarded the following number of share options/share grants under the ESS:

Share Options Share Grants2009 2008 2009 2008‘000 ‘000 ‘000 ‘000

GroupAt beginning of year 1,556 – 219 –Directors/Key management personnel appointed during the year 621 – 87 –Offered/awarded 2,516 1,556 376 219

At end of year 4,693 1,556 682 219

Share Options Share Grants2009 2008 2009 2008‘000 ‘000 ‘000 ‘000

CompanyAt beginning of year 68 – 9 –Offered/awarded 66 68 10 9

At end of year 134 68 19 9

The above share options/share grants were offered/awarded on the same terms and conditions as those offered to other employees of the Group (Note 30).


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49. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIESThe carrying amounts and the fair value of the financial assets and liabilities of the Group and of the Company are as follows:

2009 2008Carrying Fair Carrying Fairamount value amount value

Group RM’000 RM’000 RM’000 RM’000

Financial assetsCash and short-term funds 4,998,175 4,998,175 5,774,055 5,774,055Deposits and placements with banks and other financial institutions 198,523 198,523 532,835 532,835Securities held-for-trading 46,055 46,055 100,129 100,129Securities available-for-sale 6,320,122 6,320,122 3,091,018 3,091,018Securities held-to-maturity 314,620 373,207 821,294 912,465Derivative financial assets 17,310 17,310 19,393 19,393Loans, advances and financing 18,718,097 19,058,314 15,618,971 15,918,594Balances due from clients and brokers 69,525 69,525 119,333 119,333

Financial liabilitiesDeposits from customers 25,575,441 25,498,242 21,351,760 21,310,544Deposits and placements of banks and other financial institutions 1,190,782 1,163,375 1,454,124 1,437,294Derivative financial liabilities 26,016 26,016 23,276 23,276Recourse obligations on loans sold to Cagamas 58,391 56,985 255,391 249,038Bills and acceptances payable 2,215 2,215 161,418 161,418Balances due to clients and brokers 76,701 76,701 112,626 112,626Subordinated bonds 600,000 600,000 600,000 600,000Long term borrowings 600,000 600,000 – –

Company

Financial assetsCash and short-term funds 453,878 453,878 66,299 66,299Deposits and placements with banks and other financial institutions 200,000 200,000 – –

Financial liability Long term borrowings 600,000 600,000 – –

Note: The fair value of the other assets and other liabilities, which are considered short-term in nature, are estimated to be approximately their carrying values.



49. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (cont’d) The methods and assumptions used in estimating the fair values of financial instruments are as follows:

(i) Cash and short-term funds

The carrying amounts approximate fair values due to the relatively short maturity of the financial instruments.

(ii) Deposits and placements with banks and other financial institutions

The fair values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments. For those financialinstruments with maturity of more than one year, the fair values are estimated based on discounted cash flows using applicable prevailing market rates for placements of similar credit risk and similar remainingmaturity as at the balance sheet date.

(iii) Securities held-for-trading, Securities available-for-sale and Securities held-to-maturity

The fair values are estimated based on quoted or observable market prices at the balance sheet date. Where such quoted or observable market prices are not available, the fair values are estimated using pricingmodels or discounted cash flow techniques. Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for a similar instrument at the balancesheet date.

(iv) Derivative financial instruments

The fair values of derivative financial instruments are obtained from quoted market rates in active market, including recent market transactions and valuation techniques, such as discounted cash flow models,as appropriate.

(v) Loans, advances and financing

The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values. For fixed rate loans and Islamic financing with remainingmaturity of more than one year, the fair values are estimated based on expected future cash flows of contractual instalment payments and discounted at applicable prevailing rates at balance sheet date offeredto new borrowers with similar credit profiles. In respect of non-performing loans, the fair values are deemed to approximate the carrying values, net of specific allowance for losses on loans, advances and financing.

(vi) Deposits from customers

The fair values of deposit liabilities payable on demand (demand and savings deposits), or deposits with maturity of less than one year are estimated to approximate their carrying amounts. The fair values offixed deposits with remaining maturities of more than one year are estimated based on expected future cash flows discounted at applicable prevailing rates offered for deposits of similar remaining maturities.The fair values of Islamic deposits are deemed to approximate their carrying amounts as profit rates are determined at the end of their holding periods based on the profit generated from the assets invested.For negotiable instruments of deposits, the fair values are estimated based on quoted or observable market prices as at the balance sheet date. Where such quoted or observable market prices are not available,the fair values of negotiable instruments of deposits are estimated using the discounted cash flow technique.

(vii) Deposits and placements of banks and other financial institutions and Bills and acceptances payable

The carrying values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments.


214

49. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (cont’d) (viii) Recourse obligations on loans sold to Cagamas

The fair values of recourse obligations on loans sold to Cagamas are determined based on the discounted cash flows of future instalment payments at applicable prevailing Cagamas rates as at the balancesheet date.

(ix) Long-term borrowings

The fair values of variable rate borrowings are estimated to approximate carrying values. For fixed rate borrowings, the fair values are estimated based on discounted cash flow techniques using a current yieldcurve approximate for the remaining term to maturity.

(x) Subordinated bonds

The fair value of the subordinated bonds is estimated based on discounted cash flow techniques using a current yield curve appropriate for the remaining term to maturity.

(xi) Lending-related commitments

The unfunded portion of commitments to extend credit as well as standby and other letters of credit are stated at their carrying amounts, considering that estimating their fair value is not practicable within theconstraints of timeliness or cost to determine with sufficient reliability.

(xii) Balances due from/due to clients and brokers

The carrying amounts are reasonable estimates of the fair values because of their short tenor.



50. SEGMENTAL REPORTING31 March 2009

Inter-segmenteliminations/

Commercial Investment Islamic consolidationBanking Banking Banking Others* adjustments Consolidated

REVENUE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

External revenue 1,355,854 106,206 161,970 12,331 – 1,636,361Inter-segment revenue 39,628 2,500 (25,708) 144,656 (161,076) –

Total revenue 1,395,482 108,706 136,262 156,987 (161,076) 1,636,361

RESULTS

Segment results 459,980 14,776 80,398 123,782 (146,243) 532,693Unallocated corporate expenses –

Profit from operations 532,693Finance costs (39,000)Allowances for losses on loans, advances and financing (112,042)Impairment net of write-back (78,339)

Profit before taxation 303,312Taxation (74,394)Zakat (30)

Profit after taxation 228,888Minority interests 233

Net profit for the year 229,121

* Others comprises investment holding, unit trust, asset management and non-banking business.


216

50. SEGMENTAL REPORTING (cont’d) 31 March 2009

Commercial Investment IslamicBanking Banking Banking Others* ConsolidatedRM’000 RM’000 RM’000 RM’000 RM’000

Assets

Segment assets 26,459,402 1,644,855 3,148,356 41,393 31,294,006Unallocated corporate assets 191,914Intangible assets 368,512

31,854,432

Liabilities

Segment liabilities 24,885,522 1,627,322 1,957,506 614,126 29,084,476Unallocated corporate liabilities 3,418

29,087,894

Other information

Capital expenditure 66,797 9,651 882 127 77,457Depreciation of property, plant and equipment 31,413 4,727 84 270 36,494Amortisation of leasehold land 139 – – – 139Amortisation of computer software 13,993 340 174 147 14,654Other non-cash expenses 65,432 52,045 23,279 18,211 158,967





Inter-segmenteliminations/

Commercial Investment consolidationBanking Banking Others* adjustments Consolidated

REVENUE RM’000 RM’000 RM’000 RM’000 RM’000

External revenue 1,436,871 145,191 3,948 – 1,586,010Inter-segment revenue 253 206 135,451 (135,910) –

Total revenue 1,437,124 145,397 139,399 (135,910) 1,586,010

RESULTS

Segment results 531,680 71,159 116,745 (131,369) 588,215Unallocated corporate expenses –

Profit from operations 588,215Finance costs (40,808)Write-back for losses on loans, advances and financing 60,718Impairment net of write-back (106,075)

Profit before taxation 502,050Taxation (121,925)Zakat (30)

Profit after taxation 380,095Minority interests (139)

Net profit for the year 379,956



218


Commercial Investment Banking Banking Others* ConsolidatedRM’000 RM’000 RM’000 RM’000

Assets

Segment assets 24,903,958 2,181,343 43,357 27,128,658Unallocated corporate assets 192,603Intangible assets 353,665

27,674,926

Liabilities

Segment liabilities 23,227,273 1,836,163 15,686 25,079,122Unallocated corporate liabilities 1,416

25,080,538

Other information

Capital expenditure 78,101 2,079 461 80,641Depreciation of property, plant and equipment 31,232 3,033 669 34,934Amortisation of leasehold land 126 – – 126Amortisation of computer software 13,806 526 178 14,510Other non-cash expenses 39,531 67,263 832 107,626


51. COMPARATIVE FIGURESThe presentation and classifications of items in the current year’s financial statements are consistent with the previous financial year except for the following comparative figures which have been restated to conformwith current year’s presentation:

Group CompanyAs As previously As As previously

restated reported restated reportedRM’000 RM’000 RM’000 RM’000

(i) Balance Sheets as at 31 March 2008Derivative financial assets 19,393 – – –Other assets 258,732 254,849 – –Tax recoverable 31,066 71,359 950 31,691Deferred tax assets 161,537 151,985 – –Derivative financial liabilities (23,276) – – –Provision for taxation – (30,741) – ( 30,741)



52. SIGNIFICANT EVENTS(a) Establishment of an Islamic Banking Subsidiary – Alliance Islamic Bank Berhad

Alliance Islamic Bank Berhad ("AIS") was incorporated on 13 June 2007 as a wholly-owned subsidiary of ABMB following the approval-in-principle granted by Bank Negara Malaysia in March 2007 for ABMBto undertake Islamic banking business pursuant to the Islamic Banking Act, 1983.

AIS had received an Islamic Banking license from the Minister of Finance pursuant to Section 3(4) of the Islamic Banking Act, 1983 to carry out the Islamic banking business effective 1 April 2008.

Pursuant to the Vesting Order granted by the High Court of Malaya on 15 February 2008, the entire Islamic banking business of ABMB has been vested to AIS on 1 April 2008.

In conjunction with the vesting of the entire Islamic banking business of ABMB to AIS, the issued and paid-up share capital of AIS had been increased from RM2.00 comprising two (2) ordinary shares of RM1.00each to RM300,000,000 comprising of 300,000,000 ordinary shares of RM1.00 each on 1 April 2008.

(b) Dissolution of subsidiaries

The following subsidiaries of the Company had been dissolved pursuant to Section 272(5) of the Companies Act, 1965:

Wholly-owned subsidiary of the Company

(i) Setiu Sea Resort Sdn. Bhd. – dissolved with effect from 25 March 2009.

Wholly-owned subsidiaries of Alliance Bank Malaysia Berhad

(i) Alliance International Berhad – dissolved with effect from 23 March 2009;

(ii) Alliance International Nominees (Tempatan) Sdn. Bhd. – dissolved with effect from 23 March 2009; and

(iii) Alliance International Nominees (Asing) Sdn. Bhd. – dissolved with effect from 23 March 2009.

53. EVENTS SUBSEQUENT TO BALANCE SHEET DATE(a) Share Purchased Pursuant to ESS

The Trustee of the ESS acquired 876,000 ordinary shares of the Company between 1 April 2009 to 16 April 2009 from the open market for a total consideration of RM1,563,016.

(b) Dissolution of subsidiaries

The following subsidiaries of the Company had been dissolved pursuant to Section 272(5) of the Companies Act, 1965:

Wholly-owned subsidiaries of Alliance Investment Bank Berhad

(i) Alliance Capital Asset Management Sdn. Bhd. - dissolved with effect from 1 April 2009; and

(ii) Alliance Asset Management (L) Limited - dissolved with effect from 6 April 2009.


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54. ISLAMIC BANKING BUSINESSBALANCE SHEET AS AT 31 MARCH 2009

Group2009 2008

Note RM’000 RM’000

ASSETSCash and short-term funds (a) 323,975 724,084Deposits and placements with banks and other financial institutions (b) 150 20,000Securities held-to-maturity (c) 113,343 274,524Securities available-for-sale (d) 380,723 58,843Financing and advances (e) 2,319,579 2,020,503Other assets (f) 98,778 19,718Statutory deposits with Bank Negara Malaysia 21,503 63,383Deferred tax assets (g) 24,567 25,405Property, plant and equipment (h) 674 176Intangible assets (i) 755 630

TOTAL ASSETS 3,284,047 3,207,266

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers (j) 2,638,220 1,911,739Deposits and placements of banks and other financial institutions (k) 77,725 43,128Bills and acceptances payable 15 –Other liabilities (l) 142,964 133,655Provision for taxation and zakat (m) 6,803 96,722

TOTAL LIABILITIES 2,865,727 2,185,244

Islamic Banking Funds 356,000 792,100Reserves 62,320 229,922

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 3,284,047 3,207,266

COMMITMENTS AND CONTINGENCIES (u) 624,258 498,504



54. ISLAMIC BANKING BUSINESS (cont’d)INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

Group2009 2008

Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (n) 186,724 146,858Income derived from investment of Islamic Banking funds (o) 22,543 59,858Allowance for losses on financing and advances (p) (38,357) (1,131)Impairment on securities available-for-sale 2,500 (11,451)Transfer from/(to) profit equalisation reserve 1,867 (35,312)Other expenses directly attributable to the investment of the depositors and shareholders’ funds (4,038) (670)

Total distributable income 171,239 158,152Income attributable to the depositors and financial institutions (q) (69,668) (55,572)

Total net income 101,571 102,580Other operating expenses (r) (55,899) (3,780)

Profit before taxation and zakat 45,672 98,800Taxation and zakat (s) (11,522) (26,793)


Net income from Islamic banking business stated in the consolidated income statements is derived from:Income derived from investment of depositors’ funds and others 186,724 146,858Income derived from investment of Islamic Banking funds 22,543 59,858Transfer from/(to) profit equalisation reserve 1,867 (35,312)Income attributable to depositors and financial institutions (69,668) (55,572)Other expenses directly attributable to the investment of the depositors and shareholders’ funds (4,038) (670)

137,428 115,162Add: Income due to head office eliminated at Group level 26,507 –

163,935 115,162

Note:Net income from Islamic banking business comprises income generated from both Alliance Islamic Bank Berhad ("AIS"), a newly incorporated Islamic banking subsidiary and Islamic banking business currentlyresiding in Alliance Investment Bank Berhad ("AIBB"). Both AIS and AIBB are wholly-owned subsidiaries of ABMB, which in turn is a wholly-owned subsidiary of the Company.


222

54. ISLAMIC BANKING BUSINESS (cont’d)STATEMENT OF CHANGES IN ISLAMIC BANKING FUNDS FOR THE YEAR ENDED 31 MARCH 2009

Capital Statutory Revaluation RetainedFunds Reserves Reserves ESS Reserve Profits Total


At 1 April 2007 792,100 – 696 – 158,145 950,941Profit for the year – – – – 72,007 72,007Unrealised net loss on revaluation of securities available-for-sale – – (926) – – (926)

At 31 March 2008 792,100 – (230) – 230,152 1,022,022

At 1 April 2008 792,100 – (230) – 230,152 1,022,022Amount vested over to a subsidiary (736,100) – – – (204,471) (940,571)Issue of ordinary shares 300,000 – – – – 300,000Profit for the year – – – – 34,150 34,150Unrealised net gain on revaluation of securities available-for-sale – – 2,636 – – 2,636Share-based payment under ESS – – – 83 – 83Transfer to statutory reserve – 15,861 – – (15,861) –

At 31 March 2009 356,000 15,861 2,406 83 43,970 418,320



54. ISLAMIC BANKING BUSINESS (cont’d)CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

Group2009 2008

RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation and zakat 45,672 98,800Adjustments for:

Accretion of discount less amortisation of premium of securities (18,393) (16,637)Impairment on securities available-for-sale (2,500) 11,451Depreciation of property, plant and equipment 84 82Amortisation of computer software 174 107Gain on redemption of securities held-to-maturity – (7,302)Loss on sale of securities available-for-sale (461) 7,191Gain on disposal of property, plant and equipment – (84)Share options/grants under Employees’ Share Scheme 83 –Income from securities held-to-maturity (2,978) (4,691)Income from securities available-for-sale (3,694) (4,482)Profit equalisation reserve (1,867) 35,312Allowance for losses on financing and advances (net of recoveries) 40,459 1,788

Operating profit before working capital changes 56,579 121,535

Changes in working capital:Deposits from customers 726,481 (30,005)Deposits and placements of banks and other financial institutions 34,597 (118,377)Obligations on securities sold under repurchase agreements – (88,722)Bills and acceptance payable 15 (71)Other liabilities 20,304 6,305Financing and advances (339,535) 63,489Statutory deposits with Bank Negara Malaysia 41,880 9,795Amount due to holding company (75,364) –Other assets (3,694) 22,808

Cash generated from/(used in) operations 461,263 (13,243)Taxation and zakat paid (9,375) (30)

Net cash generated from/(used in) operating activities 451,888 (13,273)


224

54. ISLAMIC BANKING BUSINESS (cont’d)CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2009 (cont’d)

Group2009 2008

RM’000 RM’000

CASH FLOWS FROM INVESTING ACTIVITIESConsideration for the amount vested over from the holding company (1,041,809) –Income from securities held-to-maturity 2,978 4,691Income from securities available-for-sale 3,694 4,482Purchase of property, plant and equipment (582) (111)Proceeds from disposal of property, plant and equipment – 84Purchase of computer software (299) (320)Purchase of securities held-to-maturity, net of maturity and redemption proceeds 173,150 216,696Purchase of securities available-for-sale, net of sale proceeds (308,979) 90,530

Net cash (used in)/generated from investing activities (1,171,847) 316,052

CASH FLOW FROM FINANCING ACTIVITYProceeds from issuance of share capital 300,000 –

Net cash generated from financing activity 300,000 –

NET CHANGE IN CASH AND CASH EQUIVALENTS (419,959) 302,779CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 744,084 441,305

CASH AND CASH EQUIVALENTS AT END OF YEAR 324,125 744,084

Cash and cash equivalents comprise the following:Cash and short-term funds 323,975 724,084Deposits and placements with banks and other financial institutions 150 20,000

324,125 744,084



54. ISLAMIC BANKING BUSINESS (cont’d)Group

2009 2008 RM’000 RM’000

(a) CASH AND SHORT-TERM FUNDS

Cash and balances with banks and other financial institutions 34,815 45,554Money at call and deposit placements maturing within one month 289,160 678,530

323,975 724,084

(b) DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Licensed banks 150 –Bank Negara Malaysia – 20,000

150 20,000

(c) SECURITIES HELD-TO-MATURITY

At amortised cost

Money market instruments:Malaysian Government investment certificates 43,973 43,588Khazanah bonds 39,143 175,683

Unquoted securities:Debt securities 30,227 55,253

113,343 274,524Accumulated impairment – –

113,343 274,524

(i) Market value of money market instruments and quoted securities:Malaysian Government investment certificates 45,269 44,120Khazanah bonds 39,532 175,843

(ii) The maturity structure of money market instruments held are as follows:Within one year 44,143 137,948One year to three years 33,976 67,741Three years to five years 4,997 13,582

83,116 219,271


226


2009 2008 RM’000 RM’000

(d) SECURITIES AVAILABLE-FOR-SALE

At fair value

Money market instruments:Malaysian Government investment certificates 108,808 44,996Bank Negara Malaysia bills 24,909 –Negotiable instruments of deposits 104,059 –Banker acceptances 133,037 6,526Khazanah bonds 9,909 –

Unquoted debt securities:Debt securities 1 7,321

380,723 58,843

(e) FINANCING AND ADVANCES

(i) By type:Cash line financing 59,594 39,273Term financing– House financing 755,535 479,859– Hire purchase receivables 635,541 620,112– Lease receivables – 3,950– Other term financing 1,876,787 1,486,660Bills receivable 2,987 –Trust receipts 29,027 9,127Claims on customers under acceptance credits 210,639 209,773Staff financing 65,608 50,791Revolving credits 45,713 57,564

3,681,431 2,957,109Less: Unearned income (1,290,966) (862,111)

Gross financing and advances 2,390,465 2,094,998Less: Allowance for losses on financing and advances

– Specific (28,109) (38,985)– General (42,777) (35,510)

Total net financing and advances 2,319,579 2,020,503




2009 2008 RM’000 RM’000

(e) FINANCING AND ADVANCES (cont’d)

(ii) By maturity structure:Within one year 472,198 386,009One year to three years 327,063 354,740Three years to five years 514,440 576,439Over five years 1,076,764 777,810

Gross financing and advances 2,390,465 2,094,998

(iii) By Shariah concepts:Bai’ Bithaman Ajil (deferred payment sale) 1,106,408 919,807Al-Ijarah Thumma Ai-Bai/AITAB (finance lease) 564,530 558,382Murabahah (cost-plus) 204,689 204,471Qardhul Hassan (benevolent loan) 443 369Bai’ Al-Dayn (debt trading) 81,956 67,701Bai’ Al-Inah (personal finance) 431,116 340,201Others 1,323 4,067


(iv) By type of customer:Domestic non-bank financial institutions– Others 48 57Domestic business enterprises– Small and medium enterprises 663,131 636,271– Others 482,340 445,987Government and statutory bodies 2,251 2,314Individuals 1,233,296 1,005,135Other domestic entities 510 576Foreign entities 8,889 4,658



228


2009 2008 RM’000 RM’000


(v) By profit rate sensitivity:Fixed rate– House financing 132,421 118,276– Hire purchase receivables 556,902 549,071– Other fixed rate financing 770,477 766,677Variable rate– House financing 145,226 76,443– Hire purchase receivables 5,200 –– Other variable rate financing 780,239 584,531


(vi) By economic purposes:Purchase of transport vehicles 567,717 559,266Purchase of landed property 741,118 635,911


Purchase of fixed assets excluding land and building 28,323 53,144Personal use 445,082 350,061Construction 48,670 60,345Working capital 408,214 343,657Others 151,341 92,614


(vii) Movement in non-performing financing and advances ("NPF") including income receivable are as follows:At beginning of year 76,876 85,110Non-performing during the year 97,989 79,726Reclassified as performing during the year (56,553) (50,287)Recoveries (11,560) (21,437)Amount written off (44,068) (16,236)

At end of year 62,684 76,876Specific allowance (28,109) (38,985)

Net non-performing financing and advances 34,575 37,891

Net NPF as a % of gross financing and advances less specific allowance 1.5% 1.8%




2009 2008 RM’000 RM’000


(viii) Movements in the allowance for losses on financing and advances are as follows:

General AllowanceAt beginning of year 35,510 33,898Allowance made during the year 11,915 8,526Amount written back (4,648) (6,914)

At end of year 42,777 35,510

As % of total gross financing and advances less specific allowance 1.8% 1.7%

Specific AllowanceAt beginning of year 38,985 55,045Allowance made during the year 76,985 61,194Amount written back in respect of recoveries (43,793) (61,018)Amount written off (44,068) (16,236)

At end of year 28,109 38,985

(ix) NPF analysed by economic purpose are as follows:Purchase of transport vehicles 15,393 14,501Purchase of landed property 13,728 15,398


Personal use 11,001 7,251Construction 66 2,179Working capital 19,440 25,060Others 3,056 12,487

Gross non-performing financing and advances 62,684 76,876

(f) OTHER ASSETS

Other receivables, deposits and prepayments 97,694 17,230Income receivable 1,084 2,488

98,778 19,718


230


2009 2008 RM’000 RM’000

(g) DEFERRED TAX

At beginning of year 25,405 14,105Recognised in income statement [Note 54(s)] 40 11,052Recognised in equity (878) 248

At end of year 24,567 25,405

Presented after appropriate offsetting as follows:Deferred tax assets, net 24,567 25,405Deferred tax liabilities, net – –

24,567 25,405

The components and movements of deferred tax assets and liability during the financial year prior to offsetting are as follows:

Allowancefor losses on Unabsorbed Other

financing and tax temporaryadvances losses differences Total

Group RM’000 RM’000 RM’000 RM’000

Deferred tax assets:At 1 April 2007 8,813 290 5,036 14,139Recognised in income statement 64 2,396 8,618 11,078Recognised in equity – – 248 248

At 31 March 2008 8,877 2,686 13,902 25,465Recognised in income statement 1,885 (1,355) (446) 84Recognised in equity – – (878) (878)

At 31 March 2009 10,762 1,331 12,578 24,671

Propertyplant and

equipmentRM’000

Deferred tax liability:At 1 April 2007 34Recognised in income statement 26

At 31 March 2008 60Recognised in income statement 44

At 31 March 2009 104



54. ISLAMIC BANKING BUSINESS (cont’d)(h) PROPERTY, PLANT AND EQUIPMENT

Officeequipment

and Computer MotorRenovations furniture equipment vehicles Total

Group RM’000 RM’000 RM’000 RM’000 RM’0002009CostAt beginning of year 103 24 213 – 340Additions 558 2 22 – 582

At end of year 661 26 235 – 922

Accumulated DepreciationAt beginning of year 46 9 109 – 164Charge for the year 31 3 50 – 84

At end of year 77 12 159 – 248

Net Carrying Amount 584 14 76 – 674

2008CostAt beginning of year 103 24 102 279 508Additions – – 111 – 111Disposals – – – (279) (279)

At end of year 103 24 213 – 340

Accumulated DepreciationAt beginning of year 26 5 60 270 361Charge for the year 20 4 49 9 82Disposals – – – (279) (279)

At end of year 46 9 109 – 164

Net Carrying Amount 57 15 104 – 176


232


2009 2008 RM’000 RM’000

(i) INTANGIBLE ASSETS

Computer softwareCostAt beginning of year 853 533Additions 299 320

At end of year 1,152 853

Accumulated AmortisationAt beginning of year (223) (116)Charge for the year (174) (107)

At end of year (397) (223)

Net Carrying Amount 755 630

(j) DEPOSITS FROM CUSTOMERS

Non-Mudharabah FundDemand deposits 906,594 763,591Savings deposits 252,413 241,962Negotiable instruments of deposits 129,604 64,456

Mudharabah FundGeneral investment deposits 1,324,345 841,730Money market deposits 25,264 –

2,638,220 1,911,739

(i) The maturity structure of Mudharabah general investment deposits, money market deposits and negotiable instruments of deposits are as follows:Due within six months 444,749 673,235Six months to one year 285,751 206,491One year to three years 13,529 22,056Three years to five years 735,184 4,404

1,479,213 906,186

(ii) The deposits are sourced from the following customers:Domestic financial institutions 733,000 –Government and statutory bodies 114,329 214,389Business enterprises 1,076,401 1,164,012Individuals 459,792 376,644Others 254,698 156,694

2,638,220 1,911,739




2009 2008 RM’000 RM’000

(k) DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Non-Mudharabah FundBank Negara Malaysia 24,965 23,128

Mudharabah FundLicensed banks 60 –Licensed investment banks 52,700 20,000

77,725 43,128

(l) OTHER LIABILITIES

Other payables 74,695 71,857Income payable 18,211 9,873Profit equalisation reserves 50,058 51,925

142,964 133,655

The movements in profit equalisation reserves are as follows:

At beginning of year 51,925 16,613Provision made during the year 6,125 40,358Amount written back during the year (7,992) (5,046)

At end of year 50,058 51,925

(m) PROVISION FOR TAXATION AND ZAKAT

Taxation 6,773 96,722Zakat 30 –

6,803 96,722


234


2009 2008 RM’000 RM’000

(n) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS

Income derived from investment of:(i) General investment deposits 93,013 58,896(ii) Other deposits 93,711 87,962

At end of year 186,724 146,858

(i) Income derived from investment of general investment deposits:

Finance income and hibahFinancing and advances 71,307 40,729Securities available-for-sale 2,132 3,298Securities held-to-maturity 1,355 1,377Money at call and deposits with financial institutions 6,629 4,709

81,423 50,113

Amortisation of premium less accretion of discount 8,415 4,485

Total finance income and hibah 89,838 54,598Other operating income– Fee income 2,766 1,854– Other income 409 2,444

93,013 58,896

(ii) Income derived from investment of other deposits:

Finance income and hibahFinancing and advances 74,903 65,538Securities available-for-sale 760 –Securities held-to-maturity 1,276 1,958Money at call and deposits with financial institutions 5,924 7,102

82,863 74,598Amortisation of premium less accretion of discount 7,799 7,320

Total finance income and hibah 90,662 81,918Other operating income– Fee income 2,952 2,948– Other income 97 3,096

93,711 87,962




2009 2008 RM’000 RM’000

(o) INCOME DERIVED FROM INVESTMENT OF ISLAMIC BANKING FUNDS

Finance income and hibahFinancing and advances 16,654 43,467Securities available-for-sale 802 1,184Securities held-to-maturity 347 1,356Money at call and deposits with financial institutions 1,761 4,816

19,564 50,823Amortisation of premium less accretion of discount 2,179 4,832

Total finance income and hibah 21,743 55,655Other operating income– Fee income 636 1,963– Other income 164 2,240

22,543 59,858

(p) ALLOWANCE FOR LOSSES ON FINANCING AND ADVANCES

Allowance for losses on financing and advances:(a) Specific allowance

– Made during the year 76,985 61,194– Written back during the year (43,793) (61,018)

(b) General allowance– Made during the year 11,915 8,526– Written back during the year (4,648) (6,914)

(c) Bad debts on financing– Recovered (2,261) (831)– Written off 159 174

38,357 1,131

(q) INCOME ATTRIBUTABLE TO THE DEPOSITORS AND FINANCIAL INSTITUTIONSDeposits from customers– Mudharabah Fund 48,074 40,405– Non-Mudharabah Fund 18,037 12,400Deposits and placements of banks and other financial institutions– Mudharabah Fund 3,073 504– Non-Mudharabah Fund 380 347– Others 104 1,916

69,668 55,572


236


2009 2008 RM’000 RM’000

(r) OTHER OPERATING EXPENSES

Personnel costs– Salaries, allowances and bonuses 25,534 1,902– Contribution to EPF 4,134 309– Share options/grants under ESS 83 –– Others 3,404 165

33,155 2,376

Establishment costs– Depreciation on property, plant and equipment 84 82– Amortisation of computer software 174 107– Rental 2,427 15– Water and electricity 12 13– Repairs and maintenance 904 26– Information Technology expenses 3,620 183– Others 6,772 7

13,993 433

Marketing expenses– Promotion and advertisement 906 8– Branding and publicity 1,432 233– Others 616 25

2,954 266

Administration and general expenses– Communication expenses 1,220 57– Printing and stationery 941 171– Insurance 24 22– Professional fees 2,079 365– Others 1,533 90

5,797 705

Total other operating expenses 55,899 3,780

Included in the Group’s other operating expenses are the Shariah Committee’s remuneration of RM42,000 (2008: RM60,000).



54. ISLAMIC BANKING BUSINESS (cont’d)(r) OTHER OPERATING EXPENSES (cont’d)

Included in the current financial year’s other operating expenses are cross-charge amounts for the services rendered by the Alliance Bank Malaysia Berhad ("ABMB") to its wholly-owned subsidiary AllianceIslamic Bank Berhad ("AIS"), in accordance with the Service Level Agreement (“SLA”) signed on 18 March 2008.

The following represents a detailed breakdown of AIS’s share of the ABMB’s operating expenses which are included in AIS’s financial statements:

2009RM’000

Sharing of Expenses

Personnel costs– Salaries, allowances and bonuses 23,586– Contribution to EPF 3,836– Others 3,056

30,478

Establishment costs– Rental 2,318– Repairs and maintenance 847– Information Technology expenses 3,515– Others (Note a) 6,737

13,417

Marketing expenses– Promotion and advertisement 695– Branding and publicity 1,284– Others 625

2,604

Administration and general expenses– Communication expenses 1,139– Printing and stationery 572– Professional fees 1,471– Others 818

4,000

Total sharing of expenses 50,499

Note (a): Being essentially cross-charge amount for using the fixed assets of the ABMB. This includes computer software, computer equipment, furniture and fittings.


238


2009 2008 RM’000 RM’000

(s) TAXATION AND ZAKAT

Income tax :Provision for current year 11,532 37,815

Deferred tax [Note 54(g)]: (40) (11,052)

Relating to origination and reversal of temporary differences (40) (12,065)Relating to change in tax rate – 1,013

Taxation 11,492 26,763Zakat 30 30

11,522 26,793

Income tax is calculated at the Malaysian statutory tax rate of 25% (2008: 26%) of the estimated assessable profit for the year.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group is as follows:

Group2009 2008

RM’000 RM’000

Profit before taxation 45,672 98,800

Taxation at Malaysian statutory tax rate of 25% (2008: 26%) 11,418 25,688Effect on opening deferred tax for reduction in income tax rate – 1,013Effect of expenses not deductible for tax purposes 74 62

Tax expense for the year 11,492 26,763



54. ISLAMIC BANKING BUSINESS (cont’d)(t) CAPITAL ADEQUACY

With effect from 1 January 2008, the capital adequacy ratios of the ABMB Group are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework of Islamic Bank (CAFIB). The ABMBGroup has adopted the Standardised Approach for credit risk and market risk, and the Basic Indicator Approach for operational risk.

The detailed disclosure on the risk-weighted assets, as set out below are presented in accordance with CAFIB – Disclosure requirements (Pillar 3).

Group2009 2008

Capital RatiosCore capital ratio 15.24% 61.65%Risk-weighted capital ratio 16.91% 63.84%

2009 2008 RM’000 RM’000

Tier-I capitalCapital funds 356,000 792,100Retained profits 43,970 230,152Statutory reserves 15,861 –Deferred tax assets (24,567) (25,405)

Total Tier-I capital 391,264 996,847

Tier-II capitalGeneral allowance for losses on financing and advances 42,777 35,510

Total Tier-II capital 42,777 35,510

Total Capital Base 434,041 1,032,357


240

54. ISLAMIC BANKING BUSINESS (cont’d)(t) CAPITAL ADEQUACY (cont’d)

The breakdown of RWA by exposures in each major risk category are as follows:


(i) Credit RiskOn-balance sheet exposures:Sovereigns/Central banks 465,391 465,391 – –Banks, DFIs and MDBs 290,056 290,056 71,293 5,704Corporates 923,835 918,238 921,952 73,756Regulatory retail 1,274,300 1,266,153 965,572 77,246RRE financing 207,746 207,364 101,015 8,081Higher risk assets 154 154 230 18Other assets 99,076 99,076 99,076 7,926

Total on-balance sheet exposures 3,260,558 3,246,432 2,159,138 172,731

Off-balance sheet exposures:Credit-related off-balance sheet exposures 187,986 187,986 142,083 11,367

Total off-balance sheet exposures 187,986 187,986 142,083 11,367

Total on and off-balance sheet exposures 3,448,544 3,434,418 2,301,221 184,098

(ii) Operational Risk – – 266,055 21,285

Total RWA and capital requirements 3,448,544 3,434,418 2,567,276 205,383




242


The breakdown of RWA by exposures in each major risk category are as follows:


(i) Credit RiskOn-balance sheet exposures:Sovereigns/Central banks 616,892 616,892 – –Banks, DFIs and MDBs 242,548 242,548 48,693 3,895Insurance companies, Securities Firms and Fund Managers 57 57 57 5Corporates 1,058,043 633,668 463,303 37,064Regulatory retail 1,088,057 901,692 680,659 54,454RRE financing 144,207 143,896 69,706 5,576Other assets 38,364 38,364 38,364 3,069

Total on-balance sheet exposures 3,188,168 2,577,117 1,300,782 104,063

Off-balance sheet exposures:Credit-related off-balance sheet exposures 163,335 139,375 121,788 9,743

Total off-balance sheet exposures 163,335 139,375 121,788 9,743

Total on and off-balance sheet exposures 3,351,503 2,716,492 1,422,570 113,806

(ii) Operational Risk – – 194,451 15,556

Total RWA and capital requirements 3,351,503 2,716,492 1,617,021 129,362



243


The breakdown of credit risk exposures by risk-weights are as follows:

Disclosures by risk-weightsExposures after netting and Credit risk mitigation

Insurance Totalcompanies, exposures

Securities after TotalSovereigns/ Banks, Firms and Higher netting and Risk-

GROUP Central DFIs and Fund Regulatory RRE risk Other Credit risk Weighted2009 banks MDBs Managers Corporates retail financing assets assets mitigation AssetsRisk-Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 475,391 – – – – – – – 475,391 –20% – 245,781 – 25,048 – – – – 270,829 54,16635% – – – – – 85,659 – – 85,659 29,98050% – 44,275 – – 408 83,798 – – 128,481 64,24175% – – – – 1,306,035 36,411 – – 1,342,446 1,006,834100% – – – 1,000,572 1,170 2,020 – 99,076 1,102,838 1,102,838150% – – – 19,945 8,633 – 196 – 28,774 43,162

Total exposures 475,391 290,056 – 1,045,565 1,316,246 207,888 196 99,076 3,434,418 2,301,221

Risk-weighted assets by exposures – 71,293 – 1,035,500 993,849 101,208 295 99,076 2,301,221Average risk-weight – 25% – 99% 76% 49% 151% 100% 67%Deduction from Capital base – – – – – – – – –

2008Risk-Weights

0% 626,893 – – – – – – – 626,893 –20% – 241,938 – 205,728 – – – – 447,666 89,53335% – – – – – 60,483 – – 60,483 21,16950% – 611 – 13,118 33 58,511 – – 72,273 36,13675% – – – – 925,900 22,583 – – 948,483 711,363100% – – 57 511,609 958 2,357 – 38,364 553,345 553,345150% – – – 1,655 5,694 – – – 7,349 11,024

Total exposures 626,893 242,549 57 732,110 932,585 143,934 – 38,364 2,716,492 1,422,570

Risk-weighted assets by exposures – 48,693 57 561,795 703,942 69,719 – 38,364 1,422,570Average risk-weight – 20% 100% 77% 75% 48% – 100% 52%Deduction from Capital base – – – – – – – – –


The breakdown of credit risk exposures by Shariah concepts are as follows:

Disclosures by Shariah concepts

Type of Shariah ContractMurabahah Ijarah Mudharabah Other Contracts Total Total Risk-

Credit Risk- Credit Risk- Credit Risk- Credit Risk- Credit WeightedGroup Exposures Weighted Exposures Weighted Exposures Weighted Exposures Weighted Exposures Assets2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Exposure ClassOn and off-balance sheet exposures:Sovereigns/Central banks – – – – – – 475,391 – 475,391 –Banks, DFIs and MDBs – – – – 52,927 10,585 237,129 60,708 290,056 71,293Corporates 163,695 126,466 17,355 17,385 – – 864,515 891,649 1,045,565 1,035,500Regulatory retail 12,467 9,350 526,681 394,107 – – 777,098 590,392 1,316,246 993,849RRE financing – – – – – – 207,888 101,208 207,888 101,208Higher risk assets – – – – – – 196 295 196 295Other assets – – – – – – 99,076 99,076 99,076 99,076

Total on and off-balance sheet exposures 176,162 135,816 544,036 411,492 52,927 10,585 2,661,293 1,743,328 3,434,418 2,301,221

2008Exposure ClassOn and Off-balance sheet exposures:Sovereigns/Central banks – – – – – – 626,893 – 626,893 –Banks, DFIs and MDBs – – – – – – 242,548 48,693 242,548 48,693Insurance companies, Securities Firms and Fund Managers – – 57 57 – – – – 57 57Corporates 123,266 123,266 31,310 31,584 3,248 2,668 574,287 404,277 732,111 561,795Regulatory retail – – 504,856 378,643 – – 427,729 325,299 932,585 703,942RRE financing – – – – – – 143,934 69,719 143,934 69,719Other assets – – – – – – 38,364 38,364 38,364 38,364

Total on and off-balance sheet exposures 123,266 123,266 536,223 410,284 3,248 2,668 2,053,755 886,352 2,716,492 1,422,570


244


The off-balance sheet exposures and their related counterparty credit risk of the ABMB Group are as follows:

Credit Risk-Principal Equivalent Weighted

Group Amount Amount Assets2009 RM’000 RM’000 RM’000

Credit-related exposuresDirect credit substitutes 23,437 23,437 23,437Transaction-related contingent items 19,104 9,552 9,552Short-term self-liquidating trade-related contingencies 5,020 1,004 1,004Other commitments, such as formal standby facilities and credit lines, with an original maturity of:– exceeding one year 128,846 64,423 35,508– not exceeding one year 447,851 89,570 72,582

624,258 187,986 142,083

2008

Credit-related exposuresDirect credit substitutes 16,713 16,713 16,713Transaction-related contingent items 41,005 20,502 20,533Short-term self-liquidating trade-related contingencies 14,891 2,978 4,818Other commitments, such as formal standby facilities and credit lines, with an original maturity of:– exceeding one year 126,546 63,273 37,059– not exceeding one year 299,343 59,869 42,665Foreign exchange related contracts:– less than one year 6 – –

498,504 163,335 121,788



54. ISLAMIC BANKING BUSINESS (cont’d)(u) COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group makes various commitments and incurs certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of thesetransactions.

Risk-weighted exposures of the Group are as follows:

2009 2008Credit Risk- Credit Risk-

Principal Equivalent Weighted Principal Equivalent WeightedAmount Amount * Amount Amount Amount * Amount


Direct credit substitutes 23,437 23,437 23,437 16,713 16,713 16,713Transaction-related contingent items 19,103 9,552 9,552 41,005 20,502 20,533Short-term self-liquidating trade-related contingencies 5,020 1,004 1,004 14,891 2,978 4,818Irrevocable commitments to extend credit:– maturity exceeding one year 128,846 64,423 35,508 126,546 63,273 37,059– maturity not exceeding one year 447,852 89,570 72,582 299,343 59,869 42,665Foreign exchange related contracts:– less than one year – – – 6 – –

624,258 187,986 142,083 498,504 163,335 121,788

* The credit equivalent amount is arrived at using the credit conversion factor as per BNM’s guidelines. The foreign related contracts are all forward contracts. Foreign exchange contracts are subject tomarket risk and credit risk.


246

54. ISLAMIC BANKING BUSINESS (cont’d)(v) PROFIT RATE RISK

The following tables indicate the effective profit rates at the balance sheet date and the periods in which the financial instruments re-price or mature, whichever is earlier.

Non-trading bookEffective

Up to >1-3 >3-6 >6-12 >1-5 Over 5 Non-profit profitGroup 1 month months months months years years sensitive Total rate2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 289,160 – – – – – 34,815 323,975 2.06Deposits and placements with banks and other financial institutions – – – – 150 – – 150 4.45Securities available-for-sale 12,073 132,796 92,714 34,331 88,809 20,000 – 380,723 2.78Securities held-to-maturity 5,000 – 24,575 14,568 63,973 5,227 – 113,343 4.11Financing and advances 817,864 118,601 87,916 64,069 858,577 380,754 (8,202)* 2,319,579 7.03Other non-profit sensitive balances – – – – – – 146,277 146,277 –

Total assets 1,124,097 251,397 205,205 112,968 1,011,509 405,981 172,890 3,284,047

LiabilitiesDeposits from customers 1,432,739 233,286 67,335 156,147 748,713 – – 2,638,220 2.30Deposits and placements of banks and other financial institutions 54,640 4,169 1,458 3,000 14,458 – – 77,725 2.22Bills and acceptances payable – 1 14 – – – – 15 3.10Other non-profit sensitive balance – – – – – – 149,767 149,767 –

Total liabilities 1,487,379 237,456 68,807 159,147 763,171 – 149,767 2,865,727Islamic Banking funds – – – – – – 418,320 418,320

Total liabilities and Islamic Banking funds 1,487,379 237,456 68,807 159,147 763,171 – 568,087 3,284,047

On-balance sheet profit sensitivity gap (363,282) 13,941 136,398 (46,179) 248,338 405,981 (395,197) –Off-balance sheet profit sensitivity gap – – – – – – – –

Total profit sensitivity gap (363,282) 13,941 136,398 (46,179) 248,338 405,981 (395,197) –

* Non-performing financing, specific allowance and general allowance of the Group are classified as non-profit sensitive.



54. ISLAMIC BANKING BUSINESS (cont’d)(v) PROFIT RATE RISK (cont’d)

Non-trading bookEffective

Up to >1-3 >3-6 >6-12 >1-5 Over 5 Non-profit profitGroup 1 month months months months years years sensitive Total rate2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds 678,530 – – – – – 45,554 724,084 3.53Deposits and placements with banks and other financial institutions – 20,000 – – – – – 20,000 3.58Securities available-for-sale 5,434 1,092 2,476 – 34,808 15,033 – 58,843 4.76Securities held-to-maturity 20,000 39,703 93,501 9,745 106,322 5,253 – 274,524 3.73Financing and advances 534,704 104,719 40,092 70,481 953,227 314,899 2,381* 2,020,503 7.87Other non-profit sensitive balances – – – – – – 109,312 109,312 –

Total assets 1,238,668 165,514 136,069 80,226 1,094,357 335,185 157,247 3,207,266

LiabilitiesDeposits from customers 1,375,250 237,514 130,479 142,036 26,460 – – 1,911,739 2.39Deposits and placements of banks and other financial institutions – 20,008 865 1,606 20,649 – – 43,128 2.48Other non-profit sensitive balances – – – – – – 230,377 230,377 –

Total liabilities 1,375,250 257,522 131,344 143,642 47,109 – 230,377 2,185,244Islamic Banking funds – – – – – – 1,022,022 1,022,022

Total liabilities and Islamic Banking funds 1,375,250 257,522 131,344 143,642 47,109 – 1,252,399 3,207,266

On-balance sheet profit sensitivity gap (136,582) (92,008) 4,725 (63,416) 1,047,248 335,185 (1,095,152) –Off-balance sheet profit sensitivity gap – – – – – – – –

Total profit sensitivity gap (136,582) (92,008) 4,725 (63,416) 1,047,248 335,185 (1,095,152) –

* Non-performing financing, specific allowance and general allowance of the Group are classified as non-profit sensitive.


248

54. ISLAMIC BANKING BUSINESS (cont’d)(w) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The carrying amounts and the fair value of the financial assets and liabilities of the Group are as follows:

2009 2008Carrying Fair Carrying Fairamount value amount valueRM’000 RM’000 RM’000 RM’000

Group

Financial assetsCash and short-term funds 323,975 323,975 724,084 724,084Deposits and placements with banks and other financial institutions 150 150 20,000 20,000Securities available-for sale 380,723 380,723 58,843 58,843Securities held-to-maturity 113,343 116,353 274,524 276,384Financing and advances 2,319,579 2,362,356 2,020,503 2,052,748

Financial liabilitiesDeposits from customers 2,638,220 2,571,682 1,911,739 1,909,170Deposits and placements of bank and other financial institutions 77,725 76,797 43,128 42,163Bills and acceptances payable 15 15 – –

Note: The fair value of the other assets and other liabilities, which are considered short term in nature, are estimated to be approximately their carrying values.



54. ISLAMIC BANKING BUSINESS (cont’d)(w) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (cont’d)

The methods and assumptions used in estimating the fair values of financial instruments are as follows:

(i) Cash and short-term funds

The carrying amounts approximate fair values due to the relatively short maturity of the financial instruments.

(ii) Deposits and placements with banks and other financial institutions

The fair values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments. For thosefinancial instruments with maturity of more than one year, the fair values are estimated based on discounted cash flows using applicable prevailing market rates for placements of similar credit risk andsimilar remaining maturity as at the balance sheet date.

(iii) Securities held-for-trading, Securities available-for-sale and Securities held-to-maturity

The fair values are estimated based on quoted or observable market prices at the balance sheet date. Where such quoted or observable market prices are not available, the fair values are estimated usingpricing models or discounted cash flow techniques. Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for a similar instrument atthe balance sheet date.

(iv) Financing and advances

The fair values of fixed rate financing with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values. For fixed rate financing with remaining maturityof more than one year, the fair values are estimated based on expected future cash flows of contractual instalment payments and discounted at applicable prevailing rates at balance sheet date offered tonew borrowers with similar credit profiles. In respect of non-performing financing, the fair values are deemed to approximate the carrying values, net of specific allowance for bad and doubtful financing.

(v) Deposits from customers

The fair values of deposit liabilities payable on demand (demand and savings deposits), or deposits with maturity of less than one year are estimated to approximate their carrying amounts. The fair valuesof fixed deposits with remaining maturities of more than one year are estimated based on expected future cash flows discounted at applicable prevailing rates offered for deposits of similar remainingmaturities. The fair values of Islamic deposits are deemed to approximate their carrying amounts as profit rates are determined at the end of their holding periods based on the profit generated from theassets invested. For negotiable instruments of deposits, the fair values are estimated based on quoted or observable market prices as at the balance sheet date. Where such quoted or observable marketprices are not available, the fair values of negotiable instruments of deposits are estimated using the discounted cash flow technique.

(vi) Deposits and placements of banks and other financial institutions

The carrying values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments.


250

Abridged Financial Statements

252 Balance Sheets

253 Income Statements

254 – 255 Statements of Changes in Equity

256 – 258 Cash Flow Statements

259 – 273 Notes to the Financial Statements

274 Report of the Auditors on the Abridged Financial Statements

252

Balance Sheets of Alliance Bank Malaysia Berhadas at 31 March 2009

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000ASSETSCash and short-term funds 4,888,007 4,046,676 4,997,987 5,773,888Deposits and placements with banks and other financial institutions 1,001,373 512,835 198,523 532,835Securities held-for-trading 34,641 38,282 46,055 100,129Securities available-for-sale 4,378,893 2,633,595 6,320,122 3,091,018Securities held-to-maturity 170,667 511,639 314,620 821,294Derivative financial assets 17,310 19,393 17,310 19,393Loans, advances and financing 16,277,911 13,305,655 18,718,097 15,618,971Balances due from clients and brokers – – 69,525 119,333Other assets 287,923 276,964 304,406 288,611Statutory deposits with Bank Negara Malaysia 169,200 547,827 198,924 621,986Investment in subsidiaries 801,664 501,674 – –Investment in an associate 230 230 503 494 Leasehold land 12,136 12,275 12,136 12,275Property, plant and equipment 124,328 120,273 137,094 129,035Deferred tax assets 73,129 119,834 120,510 161,537Intangible assets 249,192 234,251 368,512 353,665

28,486,604 22,881,403 31,824,324 27,644,464Assets of disposal group classified as held for sale – 2,963,823 – –TOTAL ASSETS 28,486,604 25,845,226 31,824,324 27,644,464

LIABILITIES AND EQUITY Deposits from customers 23,224,565 18,211,867 26,230,317 21,419,080Deposits and placements of banks and other financial institutions 1,090,756 1,260,996 1,190,782 1,454,124Derivative financial liabilities 26,016 23,276 26,016 23,276Recourse obligations on loans sold to Cagamas 58,391 255,391 58,391 255,391Bills and acceptances payable 2,200 161,418 2,215 161,418Balances due to clients and brokers – – 76,701 112,626Other liabilities 828,961 929,177 954,523 1,115,528Subordinated bonds 600,000 600,000 600,000 600,000

25,830,889 21,442,125 29,138,945 25,141,443Liabilities directly associated with the assets classified as held for sale – 1,922,014 – –TOTAL LIABILITIES 25,830,889 23,364,139 29,138,945 25,141,443Share capital 600,517 600,517 600,517 600,517Reserves 2,055,198 1,880,569 2,080,210 1,897,555Amount recognised directly in equity relating to assets of disposal group classified as held for sale – 1 – –EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 2,655,715 2,481,087 2,680,727 2,498,072Minority interests – – 4,652 4,949TOTAL EQUITY 2,655,715 2,481,087 2,685,379 2,503,021TOTAL LIABILITIES AND EQUITY 28,486,604 25,845,226 31,824,324 27,644,464

COMMITMENTS AND CONTINGENCIES– for continuing operations 14,355,021 13,282,404 15,081,294 13,976,101– for discontinued operation – 498,004 – –

14,355,021 13,780,408 15,081,294 13,976,101


Income Statements of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Operating revenue 1,395,482 1,326,547 1,636,323 1,585,783

Interest income 1,204,584 1,138,387 1,250,182 1,216,253Interest expense (553,266) (548,612) (590,599) (586,114)

Net interest income 651,318 589,775 659,583 630,139Net income from Islamic banking business – – 163,935 115,162

651,318 589,775 823,518 745,301Other operating income 200,922 197,043 232,633 265,373

Net income 852,240 786,818 1,056,151 1,010,674Other operating expenses (428,800) (398,599) (561,309) (465,871) Share of results in an associate – – 9 (4)

Operating profit 423,440 388,219 494,851 544,799(Allowance)/write-back for losses on loans, advances and financing (51,070) 54,150 (111,731) 61,549Impairment net of write-back (58,318) (36,191) (78,299) (106,075)

Profit before taxation and zakat 314,052 406,178 304,821 500,273Taxation and zakat (76,974) (99,642) (74,638) (127,991)

Profit for the year from continuing operations 237,078 306,536 230,183 372,282Discontinued operationProfit for the year from a discontinued operation – 74,658 – –


Attributable to:Equity holders of the Bank 237,078 381,194 230,416 372,143Minority interests – – (233) 139


Earnings per share (sen)– Basic 39 62– Diluted 29 53

Net dividends per ordinary share in respect of the year (sen) 9.82 14.60

254

Statements of Changes in Equity of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009

Non-distributable Distributablereserves reserves

Held for Employees’sale related share scheme Total

Ordinary Preference Share Statutory Other Revaluation to disposal ("ESS") Retained shareholders’shares shares premium reserve reserves reserves group reserve profits equity

BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2007 596,517 2,000 399,517 459,119 17 5,675 – – 532,765 1,995,610Issue of shares – 2,000 198,000 – – – – – – 200,000Net profit for the year – – – – – – – – 381,194 381,194Unrealised net loss on revaluation of securities available-for-sale – – – – – (20,594) – – – (20,594)Share-based payment under ESS – – – – – – – 1,252 – 1,252Transfer to statutory reserve – – – 95,298 – – – – (95,298) –Dividends paid – – – – – – – – (76,375) (76,375)

At 31 March 2008 596,517 4,000 597,517 554,417 17 (14,919) – 1,252 742,286 2,481,087

At 1 April 2008As previously stated 596,517 4,000 597,517 554,417 17 (14,919) – 1,252 742,286 2,481,087Amount recognised directly in equity relating to the assets classified as held for sale – – – – – (1) 1 – – –

As restated 596,517 4,000 597,517 554,417 17 (14,920) 1 1,252 742,286 2,481,087Amount vested to a subsidiary – – – – – – (1) – – (1)Net profit for the year – – – – – – – – 237,078 237,078Unrealised net loss on revaluation of securities available-for-sale – – – – – (4,329) – – – (4,329)Transferred from revaluation reserve to income statement – – – – – 33,456 – – – 33,456Share-based payment under ESS – – – – – – – 5,375 – 5,375Transfer to statutory reserve – – – 47,144 – – – – (47,144) –Dividends paid – – – – – – – – (96,951) (96,951)

At 31 March 2009 596,517 4,000 597,517 601,561 17 14,207 – 6,627 835,269 2,655,715


Attributable to Equity Holders of the BankNon-distributable Distributable

reserves reservesTotal

Ordinary Preference Share Statutory Other Revaluation ESS Retained shareholders’ Minority Totalshares shares premium reserve reserves reserves reserve profits equity interests equity

GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2007 596,517 2,000 399,517 511,450 10,035 12,905 – 504,137 2,036,561 4,810 2,041,371Issue of shares – 2,000 198,000 – – – – – 200,000 – 200,000Net profit for the year – – – – – – – 372,143 372,143 139 372,282Unrealised net loss on revaluation of securities available-for-sale – – – – – (35,681) – – (35,681) – (35,681)Share-based payment under ESS – – – – – – 1,424 – 1,424 – 1,424Transfer to statutory reserve – – – 97,498 – – – (97,498) – – –Dividends paid – – – – – – – (76,375) (76,375) – (76,375)

At 31 March 2008 596,517 4,000 597,517 608,948 10,035 (22,776) 1,424 702,407 2,498,072 4,949 2,503,021

At 1 April 2008 596,517 4,000 597,517 608,948 10,035 (22,776) 1,424 702,407 2,498,072 4,949 2,503,021Net profit for the year – – – – – – – 230,416 230,416 (233) 230,183Unrealised net loss on revaluation of securities available-for-sale – – – – – (3,612) – – (3,612) – (3,612)Transferred from revaluation reserve to income statement – – – – – 46,562 – – 46,562 – 46,562Share-based payment under ESS – – – – – – 6,240 – 6,240 – 6,240Transfer to statutory reserve – – – 63,005 – – – (63,005) – – –Dividends paid to Holding Company – – – – – – – (96,951) (96,951) – (96,951)Dividends paid to Minority Interests – – – – – – – – – (64) (64)

At 31 March 2009 596,517 4,000 597,517 671,953 10,035 20,174 7,664 772,867 2,680,727 4,652 2,685,379

Statements of Changes in Equity of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009 (cont’d)

256

Cash Flow Statements of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation and zakat from:– Continuing operations 314,052 406,178 304,821 500,273– Discontinued operation – 102,232 – –

Profit before taxation and zakat 314,052 508,410 304,821 500,273Adjustments for:

Accretion of discount less amortisation of premium of securities (92,950) (59,688) (99,244) (63,992) Depreciation of property, plant and equipment 31,413 31,232 36,395 34,767Amortisation of computer software 13,993 13,806 14,654 14,510Amortisation of leasehold land 139 126 139 126 Dividends from securities held-to-maturity (4,343) (3,148) (5,390) (3,905) Dividends from subsidiaries (7,398) – – –Gain on disposal of property, plant and equipment (143) (262) (192) (774)Gain on disposal of leasehold land – (184) – (184)Property, plant and equipment written-off 2,209 76 3,218 186 Computer software written-off 10 – 76 34 Gain on disposal of foreclosed properties (7,414) (1,332) (7,414) (1,332) Net gain from redemption of securities held-to-maturity (13,992) (11,612) (16,841) (9,776) Loss/(gain) from sale of securities held-for-trading 203 (1,175) (420) (1,652) Net gain from sale of securities available-for-sale (18,531) (40,054) (20,197) (43,010) Unrealised (gain)/loss on revaluation of securities held-for-trading (100) 127 (244) 269 Interest expense on subordinated bonds 36,540 36,540 36,540 36,540Unrealised foreign exchange loss 4,823 8,283 4,823 8,283Interest income from securities held-to-maturity (12,065) (27,253) (13,085) (29,045) Interest income from securities available-for-sale (69,730) (62,964) (111,492) (87,615) Allowance for bad and doubtful debts (net of recoveries) 99,913 59,076 182,868 60,542Allowance for bad and doubtful debts on other assets (net of recoveries) 151 – (3,267) 4,170Impairment net of write-back of securities available-for-sale 54,419 21,074 76,128 79,790Impairment net of write-back of securities held-to-maturity 3,099 14,812 (42) 17,891Impairment net of write-back of securities held-for-trading – – 1,398 4,138Impairment net of write-back of foreclosed properties 800 300 815 300 Impairment net of write-back of property, plant and equipment – 3,956 – 3,956Share options/grants under Employees’ Share Scheme 5,375 1,252 6,240 1,424Profit Equalisation Reserve – 39,742 (1,867) 35,312Share of results in an associate – – (9) 4 Gain from dissolution of subsidiaries (8) – – –

Operating profit before working capital changes carried forward 340,465 531,140 388,411 561,230


Cash Flow Statements of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009 (cont’d)

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (cont’d)

Operating profit before working capital changes brought forward 340,465 531,140 388,411 561,230Changes in working capital:

Deposits from customers 5,012,698 2,180,101 4,811,237 2,249,418Deposits and placements of banks and other financial institutions (170,240) 901,139 (263,342) 971,766Obligations on securities sold under repurchase agreements – (1,974,421) – (2,010,098) Bills and acceptances payable (159,218) (319,853) (159,203) (319,853) Other liabilities (100,216) 230,090 (161,336) 201,415Securities held-for-trading 3,617 (36,430) 50,001 (86,354) Loans, advances and financing (3,072,170) (2,363,219) (3,281,993) (2,250,773) Other assets 12,427 (57,766) 31,809 (17,391) Balances due from clients and brokers – – 16,843 9,556Amount due from subsidiaries 6,930 (4,408) – –Amount due from holding company 203 – 203 –Statutory deposits with Bank Negara Malaysia 378,627 (53,650) 423,062 (40,131) Recourse obligations on loans sold to Cagamas (197,000) (58,187) (197,000) (58,187)

Cash generated from/(used in) operations 2,056,123 (1,025,464) 1,658,692 (789,402) Taxes and zakat paid (61,476) (140,369) (85,917) (149,669)

Net cash generated from/(used in) operating activities 1,994,647 (1,165,833) 1,572,775 (939,071)

CASH FLOWS FROM INVESTING ACTIVITIES

Net dividends from securities held-to-maturity 3,634 2,330 4,678 2,981Net dividends from subsidiaries 5,548 – – –Interest income from securities held-to-maturity 12,065 27,253 13,085 29,045Interest income from securities available-for-sale 69,730 62,964 111,492 87,615Additional investment in subsidiaries (300,000) (3,244) – –Purchase of property, plant and equipment (37,853) (53,541) (47,850) (55,815) Purchase of computer software (28,944) (23,060) (29,577) (23,239) Purchase of leasehold land – (1,500) – (1,500) Purchase of securities held-to-maturity, net of maturity and redemption proceeds 394,882 1,490,478 566,600 1,622,267Purchase of securities available-for-sale, net of sale proceeds (1,692,495) (1,268,338) (3,168,231) (1,076,833) Proceeds from disposal of property, plant and equipment 319 1,076 370 2,417Proceeds from disposal of leasehold land – 250 – 250 Proceeds from dissolution of subsidiaries 18 – – –Proceeds from vested over a subsidiary 460,726 – – –

Net cash (used in)/generated from investing activities (1,112,370) 234,668 (2,549,433) 587,188

258

Cash Flow Statements of Alliance Bank Malaysia Berhadfor the year ended 31 March 2009 (cont’d)

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of preference shares – 200,000 – 200,000Interest expense on subordinated bonds (36,540) (36,540) (36,540) (36,540) Dividends paid to shareholder of the Bank (96,951) (76,375) (96,951) (76,375) Dividends paid to minority interests – – (64) –

Net cash (used in)/generated from financing activities (133,491) 87,085 (133,555) 87,085

Net increase/(decrease) in cash and cash equivalents 748,786 (844,080) (1,110,213) (264,798) Cash and cash equivalents at beginning of year 5,140,594 5,984,674 6,306,723 6,571,521

5,889,380 5,140,594 5,196,510 6,306,723Cash and cash equivalents relating to Islamic banking operations transferred to a subsidiary – (581,083) – –

Cash and cash equivalents at end of year 5,889,380 4,559,511 5,196,510 6,306,723

Cash and cash equivalents comprise the following:

Cash and short-term funds 4,888,007 4,046,676 4,997,987 5,773,888Deposits and placements with banks and other financial institutions 1,001,373 512,835 198,523 532,835

5,889,380 4,559,511 5,196,510 6,306,723

Notes to the Financial Statements of Alliance Bank Malaysia Berhad– 31 March 2009


1. SECURITIES HELD-FOR-TRADINGBank Group

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

At fair valueMoney market instruments:Bank Negara Malaysia bills – – – 14,756Commercial papers 9,951 27,917 9,951 27,917Malaysian Government securities 24,690 – 24,690 –

Quoted securities in Malaysia:Shares – – 2,470 3,088Debt securities – – 8,942 13,141

Unquoted securities:Debt securities – 10,365 2 41,227

34,641 38,282 46,055 100,129

2. SECURITIES AVAILABLE-FOR-SALEBank Group

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

At fair valueMoney market instruments:Malaysian Government securities 1,203,288 – 1,647,355 10,088Malaysian Government investment certificates – 95,223 113,849 200,428Malaysian Government treasury bills 73,205 – 132,492 –Bank Negara Malaysia bills 49,616 – 74,525 –Cagamas bonds – 5,012 – 5,012Negotiable instruments of deposits 1,216,501 1,079,900 1,696,057 1,109,897Commercial papers 34,203 28,973 98,906 35,972Bankers acceptances 1,306,056 1,103,970 1,578,533 1,190,807Khazanah bonds – – 9,909 –

Quoted securities in Malaysia:Shares (Note (a)) – – 3,010 –Debt securities 6,071 10,383 6,071 10,383

Unquoted securities:Shares (Note (b)) 6,877 5,598 6,877 6,711Debt securities 483,076 304,536 952,538 521,720

4,378,893 2,633,595 6,320,122 3,091,018


260

2. SECURITIES AVAILABLE-FOR-SALE (cont’d)Note:

(a) Disclosures of the reclassification from securities held-for-trading (“HFT”) to securities available-for-sale ("AFS") portfolio in the financial statements of the Group is as follows:

(i) Amount reclassified from securities HFT to AFS portfolio with effect from 31 December 2008:

GroupRM’000

Fair value of securities HFT reclassified to AFS portfolio 3,419

(ii) Carrying amount and fair value of securities HFT reclassified to AFS portfolio as at the financial year ended 31 March 2009:

GroupRM’000

Securities HFT reclassified to AFS portfolioCarrying amount 3,010Fair value 3,010

(iii) The fair value loss recognised in respect of the securities HFT reclassified to AFS portfolio for the financial year ended 31 March 2009:

GroupRM’000

Unrealised loss recognised in equity 409

(iv) Effective interest rate for the security reclassified from HFT to AFS portfolio is not applicable as the security reclassified is an equity portfolio.

(b) Included in the unquoted shares were shares allocated to the Bank and out of which a portion had been redeemed by the issuer on the same date. The shares are generally non-voting and is non-transferableuntil three years after the close of the issuer’s Initial Public Offering (“IPO”), subject to limited exceptions stipulated by the issuer.

The Bank valued the remaining units of shares based on the redemption price of the shares, being the closest available estimate of the fair value of these shares.



3. SECURITIES HELD-TO-MATURITYBank Group

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

At amortised costMoney market instruments:

Malaysian Government securities – 108,606 – 108,606Malaysian Government investment certificates 9,798 9,458 53,770 53,046Cagamas bonds 20,000 94,983 20,000 94,983Khazanah bonds 14,752 103,073 53,896 278,756Bankers acceptances – – – 124

Quoted securities in Malaysia:

Debt securities – – 4,902 4,932

Unquoted securities:

Shares 17,981 17,981 22,021 22,021Debt securities 171,858 263,945 266,865 396,274

234,389 598,046 421,454 958,742Accumulated impairment (63,722) (86,407) (106,834) (137,448)

170,667 511,639 314,620 821,294

(i) Market value of money market instruments and quoted securities:

Malaysian Government securities – 108,601 – 108,601Malaysian Government investment certificates 9,891 9,468 55,160 53,588Cagamas bonds 20,102 95,339 20,102 95,339Khazanah bonds 14,863 103,111 54,395 278,954Bankers acceptances – – – 123 Debt securities – – 1,471 3,452

(ii) The maturity structure of money market instruments held are as follows:

Within one year 44,550 272,428 88,693 410,501One year to three years – 43,692 33,976 111,433Three years to five years – – 4,997 13,581

44,550 316,120 127,666 535,515


262

4. LOANS, ADVANCES AND FINANCINGBank Group

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

Overdrafts 1,551,626 1,747,634 1,610,636 1,787,614Term loans/financing– Housing loans/financing 7,086,945 5,296,016 7,842,479 5,775,875– Syndicated term loans/financing 309,204 281,385 314,794 297,179– Hire purchase receivables 725,190 807,066 1,360,731 1,427,178– Lease receivables 104 103 104 4,053– Other term loans/financing 3,937,992 3,176,598 5,857,500 4,749,197Bills receivables 68,918 152,046 71,906 152,046Trust receipts 125,914 129,578 154,941 138,705Claims on customers under acceptance credits 1,522,235 1,341,186 1,735,910 1,553,982Staff loans [included loans to Directors of a subsidiary RM1,437,317 (2008 : RM388,656)] 49,277 58,036 119,127 112,779Credit/charge card receivables 645,058 546,659 645,058 546,659Revolving credits 853,369 419,417 995,713 600,847Other loans 177,295 217,558 257,432 360,325

17,053,127 14,173,282 20,966,331 17,506,439Less: Unearned interest and income (85,226) (99,632) (1,376,192) (961,743)

Gross loans, advances and financing 16,967,901 14,073,650 19,590,139 16,544,696Less: Allowance for losses on loans, advances and financing

– Specific (394,418) (518,733) (531,824) (636,429) – General (295,572) (249,262) (340,218) (289,296)

Total net loans, advances and financing 16,277,911 13,305,655 18,718,097 15,618,971

(i) By maturity structure:

Within one year 5,165,936 4,873,993 5,758,320 5,562,335One year to three years 526,027 506,875 947,862 911,458Three years to five years 954,944 781,949 1,485,367 1,374,964Over five years 10,320,994 7,910,833 11,398,590 8,695,939

Gross loans, advances and financing 16,967,901 14,073,650 19,590,139 16,544,696



4. LOANS, ADVANCES AND FINANCING (cont’d)Bank Group

2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(ii) By type of customer:

Domestic non-bank financial institutions– Stockbroking companies – 21 – 21 – Others 276,382 168,316 276,429 168,373Domestic business enterprises– Small and medium enterprises 3,519,194 3,466,819 4,185,864 4,106,594– Others 3,209,216 2,475,271 3,861,118 3,170,758Government and statutory bodies 15,094 15,641 17,345 17,955Individuals 9,597,201 7,769,993 10,886,992 8,894,371Other domestic entities 3,846 5,780 4,356 6,356Foreign entities 346,968 171,809 358,035 180,268


(iii) By interest/profit rate sensitivity:

Fixed rate– Housing loans/financing 39,046 46,192 171,467 164,468– Hire purchase receivables 640,148 707,601 1,197,050 1,256,672– Other fixed rate loans/financing 728,628 633,731 1,503,071 1,416,703Variable rate– Base lending rate plus 12,544,399 10,411,585 13,223,436 10,803,036– Cost plus 2,982,040 2,175,238 3,381,339 2,658,754– Other variable rates 33,640 99,303 113,776 245,063


(iv) By economic purposes:

Purchase of securities 191,399 250,676 273,737 395,644Purchase of transport vehicles 622,291 700,839 1,190,384 1,260,738Purchase of landed property 9,745,182 7,589,281 10,494,962 8,262,346

of which: – Residential 7,456,223 5,609,256 7,743,389 5,814,952– Non-residential 2,288,959 1,980,025 2,751,573 2,447,394

Purchase of fixed assets excluding land and buildings 32,771 20,185 61,094 73,329Personal use 712,883 565,109 1,157,966 915,170Credit card 645,058 546,769 645,058 546,769Purchase of durable goods 15 – 15 –Construction 265,173 290,582 313,843 350,927Working capital 4,305,543 3,579,759 4,825,071 4,082,329Others 447,586 530,450 628,009 657,444



264


2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(v) Movements in non-performing loans, advances and financing are as follows:

At beginning of yearAs previously stated 1,055,634 1,458,081 1,158,506 1,568,510Amount vested to a subsidiary (57,310) – – –

As restated 998,324 1,458,081 1,158,506 1,568,510Non-performing during the year:– Continuing operations 593,603 667,590 775,826 762,791– Discontinued operation – 79,726 – –Reclassified as performing during the year:– Continuing operations (437,388) (576,032) (493,941) (626,319) – Discontinued operation – (50,287) – –Loans/financing converted to securities – (11,726) – (11,726) Recoveries:– Continuing operations (277,082) (308,123) (328,770) (352,592) – Discontinued operation – (21,437) – –Amount written off:– Continuing operations (177,918) (165,922) (236,551) (182,158)– Discontinued operation – (16,236) – –

At end of year 699,539 1,055,634 875,070 1,158,506Assets of disposal group classified as held for sale – (57,310) – –

At end of year 699,539 998,324 875,070 1,158,506Specific allowance (394,418) (518,733) (531,824) (636,429)

– on non-performing loans (335,289) (445,784) (451,554) (549,901)– on performing loans (59,129) (72,949) (80,270) (86,528)

Net non-performing loans, advances and financing 305,121 479,591 343,246 522,077

Net NPL as % of gross loans, advances and financing less specific allowance – Including specific allowance on performing loans 1.8% 3.5% 1.8% 3.3%– Excluding specific allowance on performing loans 2.2% 4.1% 2.2% 3.8%




2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(vi) Movements in the allowance for losses on loans, advances and financing are as follows:

General AllowanceAt beginning of yearAs previously stated 284,660 239,610 289,296 245,582Amount vested to a subsidiary (35,398) – – –

As restated 249,262 239,610 289,296 245,582Allowance made during the year:– Continuing operations 66,330 58,774 78,854 69,252– Discontinued operation – 8,526 – –Amount written back:– Continuing operations (20,020) (17,102) (27,932) (25,538) – Discontinued operation – (5,148) – –

295,572 284,660 340,218 289,296

Amount directly associated with the assets classified as held for sale – (35,398) – –

At end of year 295,572 249,262 340,218 289,296

As % of gross loans, advances and financing less specific allowance 1.8% 1.8% 1.8% 1.8%

Specific AllowanceAt beginning of yearAs previously stated 543,351 723,209 636,429 813,485Amount vested to a subsidiary (24,618) – – –

As restated 518,733 723,209 636,429 813,485Allowance made during the year:– Continuing operations 253,034 267,115 416,100 342,536– Discontinued operation – 59,034 – –Amount written-back in respect of recoveries:– Continuing operations (199,431) (251,105) (284,154) (325,708) – Discontinued operation – (61,018) – –Loan/financing converted to securities – (11,726) – (11,726) Amount written off:– Continuing operations (177,918) (165,922) (236,551) (182,158)– Discontinued operation – (16,236) – –

394,418 543,351 531,824 636,429Amount directly associated with the assets classified as held for sale – (24,618) – –

At end of year 394,418 518,733 531,824 636,429

Included in specific allowance of the Bank and the Group are allowances made for high risk accounts which are still performing amounting to RM59,129,000 (2008: RM72,949,000) and RM80,270,000 (2008:RM86,528,000) respectively.


266


2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000

(vii) Non-performing loans, advances and financing analysed by economic purposes are as follows:

Purchase of securities 6,809 54,475 16,543 62,099Purchase of transport vehicles 11,113 17,554 26,521 32,069Purchase of landed property 397,548 513,289 417,210 552,440

of which: – Residential 278,842 353,500 285,926 367,546– Non-residential 118,706 159,789 131,284 184,894

Purchase of fixed assets excluding land and buildings 630 766 630 766 Personal use 47,081 42,800 58,082 50,051Credit card 17,519 11,855 17,519 11,855Construction 22,899 34,855 22,965 37,034Working capital 183,005 321,211 286,466 383,060Others 12,935 1,519 29,134 29,132

699,539 998,324 875,070 1,158,506

5. CAPITAL ADEQUACYWith effect from 1 January 2008, the capital adequacy ratios of the Bank and the Group are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework(RWCAF-Basel II). The Bank and the Group have adopted the Standardised Approach for credit risk and market risk, and the Basic Indicator Approach for operational risk.

The Group’s comparative figures have been restated based on the BNM Circular on Risk-Weighted Capital Adequacy Framework (General Requirements and Capital Components).

(a) The capital adequacy ratios of the Bank and the Group are as follows:

Bank GroupRestated

2009 2008 2009 2008

Before deducting proposed dividendsCore capital ratio 12.67% 12.70% 10.41% 11.42%Risk-weighted capital ratio 13.18% 14.94% 14.76% 16.29%

After deducting proposed dividendsCore capital ratio 12.55% 12.45% 10.30% 11.19%Risk-weighted capital ratio 13.05% 14.70% 14.65% 16.06%



5. CAPITAL ADEQUACY (cont’d)(b) The components of Tier I and Tier II capital of the Bank and the Group are as follows:

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Tier I capitalPaid-up share capital 596,517 596,517 596,517 596,517Preference shares 4,000 4,000 4,000 4,000Share premium 597,517 597,517 597,517 597,517Retained profits 835,269 742,286 772,867 702,407Statutory reserves 601,561 554,417 671,953 608,948Other reserves 17 17 10,035 10,035Minority interests – – 4,652 4,949

2,634,881 2,494,754 2,657,541 2,524,373Less: Purchased goodwill/goodwill on consolidation (186,317) (186,317) (304,149) (304,149)

Deferred tax assetsContinuing operations (73,129) (119,834) (119,305) (160,659) Discontinued operation – (22,555) – –

Total Tier I capital 2,375,435 2,166,048 2,234,087 2,059,565

Tier II capitalSubordinated bonds 600,000 600,000 600,000 600,000General allowance for losses on loans, advances and financing

Continuing operations 295,572 249,262 340,246 289,296Discontinued operation – 35,398 – –

Total Tier II capital 895,572 884,660 940,246 889,296Total Capital 3,271,007 3,050,708 3,174,333 2,948,861Less: Investment in subsidiaries (801,664) (501,674) (7,066) (11,275)

Total Capital Base 2,469,343 2,549,034 3,167,267 2,937,586


268

5. CAPITAL ADEQUACY (cont’d)(c) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows:

Bank Risk-2009 Gross Net Weighted Exposure Class Exposures Exposures Assets

RM’000 RM’000 RM’000

(i) Credit Risk

On-balance sheet exposures 27,364,153 26,867,243 14,029,690Off-balance sheet exposures 3,294,247 3,291,868 2,834,437

Total on and off-balance sheet exposures 30,658,400 30,159,111 16,864,127

(ii) Market Risk – – 28,516

(iii) Operational Risk – – 1,848,721

Total RWA 30,658,400 30,159,111 18,741,364

Group 2009Exposure Class

(i) Credit Risk





Total RWA 34,972,073 34,390,239 21,454,385



5. CAPITAL ADEQUACY (cont’d)(c) The breakdown of RWA by exposures in each major risk category are as follows (cont’d):

Bank Risk-2008 Gross Net Weighted Exposure Class Exposures Exposures Assets

RM’000 RM’000 RM’000

(i) Credit Risk





Total RWA 28,289,331 27,086,165 17,061,889

Group 2008Exposure Class

(i) Credit Risk





Total RWA 30,522,418 29,194,541 18,029,102


270

5. CAPITAL ADEQUACY (cont’d)(d) The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follows:

Credit Risk–Principal Equivalent WeightedAmount Amount Assets

Bank RM’000 RM’000 RM’0002009Credit-related exposuresDirect credit substitutes 394,899 394,899 394,899Transaction-related contingent items 476,316 238,158 238,158Short-term self-liquidating trade-related contingencies 107,386 21,477 21,477Irrevocable commitments to extent credit:– maturity exceeding one year 1,922,253 961,127 789,837– maturity not exceeding one year 7,929,944 1,585,989 1,355,452

10,830,798 3,201,650 2,799,823

Derivative financial instrumentsForeign exchange related contracts:– less than one year 2,474,223 58,004 27,695Interest rate related contracts:– one year or less 100,000 250 50 – over one year to five years 890,000 27,324 5,465– over five years 60,000 7,019 1,404

3,524,223 92,597 34,614

14,355,021 3,294,247 2,834,437

Group2009Credit-related exposuresDirect credit substitutes 448,370 448,370 448,370Transaction-related contingent items 505,920 252,960 252,960Short-term self-liquidating trade-related contingencies 112,406 22,481 22,481Irrevocable commitments to extent credit:– maturity exceeding one year 2,051,099 1,025,549 825,344– maturity not exceeding one year 8,439,276 1,687,856 1,437,642

11,557,071 3,437,216 2,986,797

Derivative financial instrumentsForeign exchange related contracts:– less than one year 2,474,223 58,004 27,695Interest rate related contracts:– one year or less 100,000 250 50 – over one year to five years 890,000 27,324 5,465– over five years 60,000 7,019 1,404

3,524,223 92,597 34,614

15,081,294 3,529,813 3,021,411



5. CAPITAL ADEQUACY (cont’d)(d) The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follows (cont’d):

Credit Risk–Principal Equivalent WeightedAmount Amount Assets

Bank RM’000 RM’000 RM’0002008

Credit-related exposures


9,721,436 2,944,020 2,581,961



13,282,404 3,051,983 2,633,436Commitments and contingencies of disposal group classified as held for sale 498,004 163,235 121,637

13,780,408 3,215,218 2,755,073

Group2008

Credit-related exposures


10,415,127 3,184,631 2,777,738



13,976,101 3,292,594 2,829,213


272

6. ISLAMIC BANKING BUSINESSBALANCE SHEETS AS AT 31 MARCH 2009

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

ASSETSCash and short-term funds – 581,083 323,975 724,084Deposits and placements with banks and other financial institutions – – 150 20,000Securities available-for-sale – 6,526 380,723 58,843Securities held-to-maturity – 269,529 113,343 274,524Financing and advances – 2,013,114 2,319,579 2,020,503Other assets – 18,947 98,778 19,718Statutory deposits with Bank Negara Malaysia – 51,263 21,503 63,383Deferred tax assets – 22,555 24,567 25,405Property, plant and equipment – 176 674 176 Intangible assets – 630 755 630

TOTAL ASSETS – 2,963,823 3,284,047 3,207,266

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers – 1,755,721 2,638,220 1,911,739Deposits and placements of banks and other financial institutions – 43,128 77,725 43,128Bills and acceptances payable – – 15 –Other liabilities – 123,165 142,964 133,655Provision for taxation and zakat – 92,106 6,803 96,722

TOTAL LIABILITIES – 2,014,120 2,865,727 2,185,244

Islamic Banking Funds – 736,100 356,000 792,100Reserves – 213,603 62,320 229,922

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS – 2,963,823 3,284,047 3,207,266

COMMITMENTS AND CONTINGENCIES – 498,004 624,258 498,504



6. ISLAMIC BANKING BUSINESS (cont’d)INCOME STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

Bank Group2009 2008 2009 2008

RM’000 RM’000 RM’000 RM’000

Income derived from investment of depositors’ funds and others – 142,148 186,724 146,858Income derived from investment of Islamic Banking funds – 58,168 22,543 59,858Allowance for losses on financing and advances – (737) (38,357) (1,131) Impairment on securities available-for-sale – (3,951) 2,500 (11,451) Transfer (to)/from Profit Equalisation Reserve – (39,742) 1,867 (35,312) Other expenses directly attributable to the investment of the depositors and shareholders’ funds – (670) (4,038) (670)

Total distributable income – 155,216 171,239 158,152Income attributable to the depositors and financial institutions – (49,327) (69,668) (55,572)

Total net income – 105,889 101,571 102,580Other operating expenses – (3,657) (55,899) (3,780)

Profit before taxation and zakat – 102,232 45,672 98,800Taxation and zakat – (27,574) (11,522) (26,793)

Profit after taxation and zakat – 74,658 34,150 72,007

274

The full version of the financial statements is available at Alliance Bank’s website at www.alliancebank.com.my

We have audited the financial statements of Alliance Bank Malaysia Berhad for the year ended 31 March 2009, from which the abridged financial statements were derived, in accordance with applicable Approved Standardson Auditing in Malaysia. The financial statements were drawn up in accordance with the Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines. In our reportdated 29 May 2009, we expressed an unqualified opinion on the financial statements from which the abridged financial statements were derived.

In our opinion, the accompanying abridged financial statements, which have been prepared in accordance with the presentation and disclosure requirements as specified by Bank Negara Malaysia pursuant to Section 42of the Banking and Financial Institutions Act 1989, are consistent, in all material respects, with the financial statements from which they were derived.

For a better understanding of the Bank’s and of the Group’s financial position as at 31 March 2009, and of their financial performances and cash flows for the year then ended and of the scope of our audit, the abridgedfinancial statements should be read in conjunction with the financial statements from which the abridged financial statements were derived and our audit report thereon.

Ernst & Young Chan Hooi LamAF: 0039 No.2844/02/10 (J)Chartered Accountants Chartered Accountant


Report of the Auditors on the Abridged Financial Statements to the Members of

Alliance Bank Malaysia Berhad

(Incorporated in Malaysia)


notice of annual general meeting

AGENDA1. To receive the Audited Financial Statements for the financial year ended 31 March 2009 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees in respect of the financial year ended 31 March 2009.

3. To re-elect the following Directors who retire by rotation pursuant to Article 82 of the Company’s Articles of Association:(a) Tan Yuen Fah (b) Kung Beng Hong

4. To appoint Messrs PricewaterhouseCoopers as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and authorise the Directors to fix their remuneration.

As Special Business to consider and, if thought fit, to pass the following Ordinary Resolution:

5. Re-appointment of Director pursuant to Section 129(6) of the Companies Act, 1965“THAT Dato’ Thomas Mun Lung Lee, a Director who vacates his office pursuant to Section 129(2) of the Companies Act, 1965 be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company.”

6. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and/or the Companies Act, 1965.

BY ORDER OF THE BOARD

LEE WEI YEN (MAICSA 7001798)Group Company Secretary

Kuala Lumpur3 July 2009

Resolution 1

Resolution 2

Resolution 5

Resolution 6

Resolution 3Resolution 4

NOTICE IS HEREBY GIVEN THAT the 43rd Annual General Meeting of Alliance Financial Group Berhad will be held at the Ballroom 1, Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday, 29 July 2009 at 10.30 a.m. for the following purposes:

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead.

2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

3. To be valid, the Form of Proxy, duly completed must be deposited at the registered office of the Company at 3rd Floor, Menara Multi-Purpose, Capital Square,

No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than 48 hours before the time set for holding the meeting.

4. A member who is an authorised nominee may appoint one (1) proxy in respect of each securities account it holds with ordinary shares of the Company

standing to the credit of the said securities account.

5. A member other than an authorised nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting.

6. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by

each proxy.

7. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.

EXPLANATORY NOTES

(i) Retirement of DirectorMr Tee Kim Chan who is retiring by rotation pursuant to Article 82 of the Company’s Articles of Association has given notice that he does not wish to seek re-election and accordingly will retire at the conclusion of the forthcoming Annual General Meeting.

(ii) Appointment of AuditorsThe Company has received a Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965 for the nomination of Messrs PricewaterhouseCoopers as Auditors in place of the retiring Auditors, Messrs Ernst & Young. A copy of the Notice of Nomination is annexed as “Annexure A” on page 276 of the Annual Report.

(iii) Re-appointment of Director pursuant to Section 129(6) of the Companies Act, 1965Pursuant to Section 129(2) of the Companies Act, 1965, the office of Dato’ Thomas Mun Lung Lee, a Director who has attained the age of seventy (70) years, shall become vacant at the conclusion of the forthcoming 43rd Annual General Meeting. The proposed re-appointment of Dato’ Thomas Mun Lung Lee will require a resolution passed by a majority of not less than three-fourth (3/4) of the members of the Company who are entitled to vote at the forthcoming Annual General Meeting.

276

notice of nomination of new auditors Annexure A

I/We (full name in block capitals) _______________________________________________________________________________________________________________________________________

identity card no./company registration no. ________________________________________________________________________________________________________________________________

of ______________________________________________________________________________________________________________________________________________________________

being a member/members of ALLIANCE FINANCIAL GROUP BERHAD hereby appoint __________________________________________________ (NRIC No. ______________________________________

of ______________________________________________________________________________________________________________________________________________________________

or failing him ______________________________________________________________________________________________________ (NRIC No. ______________________________________

of ______________________________________________________________________________________________________________________________________________________________

as my/our proxy/proxies to vote for me/us on my/our behalf at the 43rd Annual General Meeting of the Company to be held at the Ballroom 1, Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday, 29 July 2009 at 10.30 a.m. and at any adjournment thereof.

RESOLUTIONS *FOR *AGAINST

1. To receive the Audited Financial Statements for the financial year ended 31 March 2009 together with the Reports of the Directors and Auditors thereon Resolution 1

2. To approve the payment of Directors’ fees in respect of the financial year ended 31 March 2009 Resolution 2

3. To re-elect the following Directors, who retire by rotation pursuant to Article 82 of the Company’s Articles of Association:(a) Tan Yuen Fah Resolution 3(b) Kung Beng Hong Resolution 4

4. To appoint Messrs PricewaterhouseCoopers as Auditors and authorise the Directors to fix their remuneration Resolution 5

5. To re-appoint Dato’ Thomas Mun Lung Lee, a Director who vacates his office pursuant to Section 129(2) of the Companies Act, 1965 Resolution 6

* Please indicate with an “X” on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his discretion.

As witness my/our hand(s) this _______________ day of ____________________ 2009.

Signature(s) of Member

form of proxy

Shareholding represented by Proxy

Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead.2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not

apply to the Company.3. To be valid, the Form of Proxy, duly completed must be deposited at the registered office of the Company at 3rd Floor,

Menara Multi-Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than 48 hours before the time set for holding the meeting.

4. A member who is an authorised nominee may appoint one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

5. A member other than an authorised nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting.

6. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

7. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.

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Alliance Financial Group Berhad (6627-X)

3rd Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala Lumpur, Malaysia

Tel : 03-2694 4888Fax : 03-2694 6200

www.alliancegroup.com.my

STAYING ON COURSE

2009 annual report

(6627-X)