AmMERCHANT BANK BERHAD AND ITS SUBSIDIARY COMPANIES · ammerchant bank berhad and its subsidiary companies (incorporated in malaysia) directors' report and audited financial statements

Company No: 23742-V

AmMERCHANT BANK BERHADAND ITS SUBSIDIARY COMPANIES

(Incorporated in Malaysia)(Company No. 23742-V)

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

(In Ringgit Malaysia)

AmMerchant Bank BerhadFinancial Statements For The Year Ended 31 March 2005

Company No: 23742-V

AmMERCHANT BANK BERHADAND ITS SUBSIDIARY COMPANIES(Incorporated in Malaysia)

DIRECTORS' REPORT AND AUDITED FINANCIAL STATEMENTS31 MARCH 2005

CONTENTS PAGE

DIRECTORS' REPORT 1 - 15

STATEMENT BY DIRECTORS 16

STATUTORY DECLARATION 17

REPORT OF THE AUDITORS 18 - 19

BALANCE SHEETS 20 - 22

INCOME STATEMENTS 23

STATEMENTS OF CHANGES IN EQUITY 24 - 25

CASH FLOW STATEMENTS 26 - 29

NOTES TO THE FINANCIAL STATEMENTS 30 - 139


Company No: 23742-V


DIRECTORS’ REPORT

PRINCIPAL ACTIVITIES

SIGNIFICANT EVENTS

(a)

(i)

(a)

(b)

The Bank and its subsidiary companies, as listed in Note 11 to the financial statements, provide a wide range ofmerchant banking and related financial services which also includes the Islamic Banking business, investmentadvisory and asset, property and unit trusts management.

There have been no significant changes in the nature of the activities of the Bank and its subsidiary companiesduring the financial year.

On 27 February 2004 and 31 May 2004, the ultimate holding company, AMMB Holdings Berhad("AHB") announced the following proposals:

The Privatisation of AMFB Holdings Berhad (“AMFB”) through the acquisition by AHB of188,927,911 ordinary shares of RM1.00 each (“Shares”) in AMFB, representing 35.72% of the issuedand paid-up share capital of AMFB, not already owned by AHB by way of a scheme of arrangementbetween AMFB and its shareholders under Section 176 of the Companies Act, 1965 (“AMFBPrivatisation”). The AMFB Privatisation was approved by the shareholders of AMFB at the CourtConvened Meeting held pursuant to the Order of the High Court of Malaya on 31 January 2005.Further, the Order of the High Court of Malaya ("Court Order") sanctioning the Scheme ofArrangement was obtained on 17 February 2005.

AHB has also received the approval from the Securites Commission ("SC") via its letter dated 31January 2005 for the purchase consideration price for the AMFB Privatisation amounting toRM1,360,280,959 or RM7.20 per AMFB Share to be satisfied as follows:-

RM623,462,106 by way of issuance of 188,927,911 new AHB Shares on the basis of one (1) newAHB Share valued at RM3.30 per new AHB Share for every one (1) existing AMFB MinorityShare held; and

RM736,818,853 in cash, on the basis of RM3.90 for every one (1) existing AMFB MinorityShare held.

On 17 March 2005, the AMFB Privatisation was completed following the listing of and quotation forthe 188,927,911 AHB Shares issued to the minority shareholders of AMFB. Consequently, AMFBbecame a wholly-owned subsidiary of AHB.

The entire issued and paid-up share capital of AMFB was delisted from the Official List of BursaMalaysia Securities ("Bursa Securities") with effect from 30 March 2005 pursuant to Paragraph8.15(6) of the Listing Requirements of Bursa Securities.

The directors have pleasure in presenting their report together with the audited financial statements ofAmMerchant Bank Berhad for the financial year ended 31 March 2005.

1AmMerchant Bank Berhad

Financial Statements For The Year Ended 31 March 2005

Company No: 23742-V

SIGNIFICANT EVENTS (CONTD.)

(ii)

1

2

3

(a)

(i)

(ii)

in direct proportion to their shareholdings in the Company;

(b)

(c)

(i)

(ii)

4

An internal reorganisation (“Internal Reorganisation”) involving the transfer of AHB’s 100%equity interest in the Bank for a consideration of RM1,109,442,000 wholly satisfied through theissuance of 1,109,441,998 new ordinary shares of RM1.00 each in AIGB (“Transfer ofAmMerchant Bank”), and 100% equity interest in AmSecurities Holding Sdn Bhd ("AMSH") fora consideration of RM214,400,000 to be wholly satisfied by AIGB in cash (“Transfer of AMSH”),prior to the completion of which the Bank and AMSH had separately declared dividends to AHBamounting to RM249,840,000 in aggregate;

The issue/offer of 646,800,000 Shares comprising 210,558,000 new Shares and 436,242,000existing Shares, as follows:-

488,400,000 Shares allocated to shareholders of AHB, by way of:-

A renounceable restricted offer for sale of 330,278,078 Shares by AHB to the entitledshareholders of AHB; and

A restricted issue of 158,121,922 new Shares to Tan Sri Dato’ Azman Hashim and hisrelated companies.

39,600,000 Shares allocated by way of a restricted offer for sale by AHB to eligible directorsand employees of AIGB and/or its Malaysian-incorporated subsidiary and associatedcompanies, eligible directors of AHB and business associates of AHB, which includes personswho have contributed to the success of the Group; and

118,800,000 Shares allocated to Tan Sri Dato’ Azman Hashim as an approved Bumiputerainvestor, by way of:-

An offer for sale of 66,363,922 Shares by AHB; and

A special issue of 52,436,078 new Shares

at an issue/offer price of RM1.40 per Share payable in full on application; and

The listing of and quotation for the entire enlarged issued and paid-up share capital of AIGB ofRM1,320,000,000, comprising 1,320,000,000 Shares, on the Main Board of Bursa Securities.

The listing of AHB’s investment banking group, via a newly incorporated company, which wasincorporated under the name of AmInvestment Group Berhad (“AIGB”) on the Main Board of theBursa Malaysia Securities Berhad (“Listing Scheme”), comprising the following:

The incorporation of AIGB, completed on 23 June 2004, as a wholly-owned subsidiary companyof AHB, to act as the holding company/listing vehicle of AHB’s investment banking group;



Company No: 23742-V

SIGNIFICANT EVENTS (CONTD.)

(b)

(c)

(d) On 13 October 2004, AHB entered into an agreement with the Bank for the acquisition of 47,116,000ordinary shares of RM1.00 each representing 47.116% of the issued and paid-up share capital ofAmAssurance Berhad ("AmAssurance") from the Bank for a cash consideration of RM75,762,537("Acquisition by AHB"). Subsequently, by way of a supplemental agreement dated 21 March 2005, thecash consideration was revised from RM75,762,537 to RM82,517,802, after taking into consideration theestimated share of profits from AmAssurance for a period of 12 months from 1 April 2004 up to 31 March2005.

The AMFB Privatisation and Listing Scheme were approved by the shareholders of AHB at theExtraordinary General Meeting held on 31 January 2005.

AHB has also obtained the approval of Bank Negara Malaysia and the Minister of Finance and the SC for,inter-alia, the AMFB Privatisation and the Proposed Listing of AIGB via their letters dated 10 December2004 and 16 December 2004, respectively.The AMFB Privatisation and the Listing Scheme are inter-conditional with each other.

On 24 June 2004, the Bank acquired 100% of the issued and paid-up ordinary capital of AM Nominees(Tempatan) Sdn Bhd and AM Nominees (Asing) Sdn Bhd for a cash consideration of RM2.00 each fromAmInvestment Management Sdn Bhd.

On 30 August 2004, Malaysian Ventures (Two) Sdn Bhd ("MV2") was wound up voluntarily pursuant toan Extraordinary General Meeting of the members of MV2 and placed under liquidation. On 10September 2004, MV2 declared and paid a first return to contributories in the amount of RM780,000representing 6,500 issued and paid-up ordinary capital held at a rate of return of RM120 per share.

The Acquisition was approved by the Minister of Finance on 23 September 2004 and SC on 23 February2005 and does not require the approval of AHB's shareholders as it is an excluded transaction pursuant toChapter 10.02(j) of the Listing Requirements of Bursa Malaysia Securities Berhad.The Acquisition byAHB was completed on 24 March 2005.



Company No: 23742-V

FINANCIAL RESULTS

Group BankRM'000 RM'000

Profit before share in results of associated companiesand taxation 225,261 238,914

Share in results of associated companies 16,314 -

Profit before taxation 241,575 238,914 Taxation (67,900) (62,333)

Profit before minority interests 173,675 176,581 Minority shareholders' interests in results of subsidiary

companies (2,292) -

Net profit attributable to the shareholder of the Bank 171,383 176,581 Unappropriated profit at beginning of year, as restated 709,107 671,485

Profit available for appropriation 880,490 848,066 Interest on ICULS (7,200) (7,200) Proposed preference dividends (7,200) (7,200) Ordinary dividends paid (162,000) (162,000)

Unappropriated profit at end of year 704,090 671,666

BUSINESS PLAN AND STRATEGY

In the opinion of the directors, the results of the operations of the Group and of the Bank during the financialyear were not substantially affected by any item, transaction or event of a material and unusual nature.

As part of the AmInvestment Group Berhad, the Bank’s primary short term objective is to transform itself froma merchant bank to an investment bank under the recently announced Investment Banking Framework. Thiswould entail the integration of the merchant banking operations with that of the stockbroking operations tocreate an investment bank. In the meantime, the Bank will also continue to consolidate its leadership positionsin the domestic capital markets by leveraging on its operational efficiencies, deep market knowledge and variedproduct range.

The Bank will continue to introduce more innovative products as a result of the relaxation of capital controls.This is to broaden the Bank’s product offerings so as to become a more complete investment bank in the Bank’slong tem objective in becoming a ‘one-stop’ investment bank to its clients.

The Bank will also look at opportunities to gradually expand its business activities and market presence in theregion. In the longer term, regional presence will be important for competitive advantage as a result of theliberalization of the global capital markets in which funds flows fluidly across borders.



Company No: 23742-V

OUTLOOK FOR NEXT FINANCIAL YEAR

ITEMS OF AN UNUSUAL NATURE

DIVIDENDS

Malaysia’s economic growth is expected to moderate from 7.1% for 2004 to around 6% for 2005 and can beattributed to the volatility of crude petroleum prices which have increased uncertainties to the sustainability ofeconomic growth globally. The higher levels of uncertainty, in turn, have resulted in the moderation of theexternal demand for Malaysian goods. However, our economic growth forecast is still one of the highest amongmajor Asian economies. Only China and India’s growth forecast are higher at 8.5% and 6.7% respectively asper International Monetary Fund (“IMF”) estimates.

A moderating economy coupled with ample liquidity in the banking system will further suppress theprofitability of the banking industry’s traditional lending business. Although inflationary pressures are pickingup, it is unlikely interest rates will rise appreciably in the short term. Therefore, the Group will continue toexperience downward pressure on lending margins.

The volatility of petroleum prices has also affected the capital markets. Activity in the equity market has beendepressed due to the uncertainties that loom over the global economy as a result of possible escalation ofpetroleum prices. Until there is more stability in energy prices, investors will remain cautious. As a result, theinvestment banking and stockbroking industries will face challenging conditions in bringing deals to the marketamid such uncertainties.

In the opinion of the directors, the results of operations of the Group and of the Bank for the financial yearhave not been substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely, in the opinion of the directors, to affectsubstantially the results of the operations of the Group and of the Bank for the succeeding twelve months.

During the financial year, the Bank paid a first and final ordinary dividend of 25.0%, less 28% taxation, and apreference dividend of 10.0%, less 28% taxation, in respect of the previous financial year amounting toRM36,000,000 and RM7,200,000 for the ordinary and preference shares, respectively, which amount has beendealt with in the directors’ report for that financial year.

In respect of the current financial year, the Bank paid an interim ordinary dividend of 87.5%, less 28%taxation, amounting to RM126,000,000 for the ordinary shares. The directors now recommend the payment ofa final ordinary dividend of 25.0%, less 28% taxation, and a preference dividend of 10.0%, less 28% taxation,amounting to RM36,000,000 and RM7,200,000 for the ordinary and preference shares, respectively. Thefinancial statements for the current financial year do not reflect this proposed ordinary dividend. Suchdividend, if approved by the shareholder, will be accounted for in shareholder's funds as an appropriation ofunappropriated profit in the next financial year ending 31 March 2006.



Company No: 23742-V

RESERVES AND ALLOWANCES

Note to the Financial

Statements Group BankRM'000 RM'000

Allowances / (Reversal of allowances) :

Net interest suspended 27 18,544 22,539

Net income suspended 1,786 1,786

Loan and financing (recoveries) / loss and (reversal of) / allowances :

General allowance 31 (11,313) (11,510)

Specific allowance - net 31 100,436 99,360

Allowance for diminution in value of investments - net 17,856 13,402

Allowance for doubtful sundry receivables - net 1,778 1,778

Transfer to profit equalisation reserve 2,195 2,195

BAD AND DOUBTFUL DEBTS AND FINANCING

The following material transfers to/(from) reserves, and allowances and provisions were made during thefinancial year :

Before the income statements and balance sheets of the Group and of the Bank were made out, the directorstook reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts andfinancing and the making of allowances for doubtful debts and financing and have satisfied themselves that allknown bad debts and financing had been written off and adequate allowance had been made for doubtful debtsand financing.

At the date of this report, the directors are not aware of any circumstances that would render the amountwritten off for bad debts and financing or the amount of the allowance for doubtful debts and financing in theGroup and the Bank inadequate to any substantial extent.



Company No: 23742-V

CURRENT ASSETS

VALUATION METHODS

CONTINGENT AND OTHER LIABILITIES

(a)

(b)

CHANGE OF CIRCUMSTANCES

ISSUE OF SHARES AND DEBENTURES

Before the income statements and balance sheets of the Group and of the Bank were made out, the directorstook reasonable steps to ascertain that current assets, other than debts and financing, which were unlikely torealise in the ordinary course of business, their values as shown in the accounting records of the Group and ofthe Bank, have been written down to their estimated realisable values.

At the date of this report, the directors are not aware of any circumstances that would render the valuesattributed to the current assets in the financial statements of the Group and of the Bank misleading.

At the date of this report, the directors are not aware of any circumstances which have arisen which renderadherence to the existing methods of valuation of assets or liabilities in the Group's and the Bank's financialstatements misleading or inappropriate.

At the date of this report, there does not exist:

any charge on the assets of the Group and of the Bank that has arisen since the end of the financial yearand which secures the liabilities of any other person; or

any contingent liability in respect of the Group and of the Bank that has arisen since the end of thefinancial year, other than those incurred in the normal course of business.

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

At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in thisreport or the financial statements of the Group and of the Bank, that would render any amount stated in thefinancial statements misleading.

The Bank has not issued any new shares or debentures during the year.



Company No: 23742-V

SHARE OPTIONS

(a)

(b)

(c)

(d)

Balance at Balance at1.4.2004 Issued Converted 31.3.2005

ICULS 2002 / 2007 - -

Nominal Amount of ICULS

120,000,000120,000,000

The salient features of the ICULS 2002/2007 issued to the ultimate holding company, AMMB Holdings Berhad(“AHB”), are as follows:

The ICULS 2002/2007 bear interest at 6.0% per annum payable semi-annually or such other interval asmay be determined by AHB .

The ICULS 2002/2007 are convertible into new ordinary shares at any time on the basis of one newordinary share of RM1.00 each for every RM4.00 nominal amount of ICULS held.

All new ordinary shares issued upon conversion of the ICULS 2002/2007 shall rank parri passu with thethen existing ordinary shares of the Bank except for any dividend, rights, allotments or other distributions,the entitlement date of which is before the relevant conversion date.

The ICULS 2002/2007 were for an initial period of five calendar years and has been extended for a furtherperiod of five years to mature on 15 January 2007.

There was no movement in the Bank's ICULS 2002/2007 during the financial year and the balances are asfollows:

INTEREST BEARING IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)2002/2007

There are no options granted by the Bank to take up unissued shares of the Bank.

No shares have been issued during the financial year by virtue of the exercise of any option to take up unissuedshares of the Bank. As at the end of the financial year, there were no unissued shares of the Bank underoptions.

Under the Internal Reorganisation involving the transfer of AHB's 100% equity interest in the Bank, the ICULS2002/2007 were transferred to AIGB as part of the equity.



Company No: 23742-V

DIRECTORS

Tan Sri Dato' Azman HashimProf Tan Sri Dato’ Dr Mohd Rashdan Haji Baba (Independent Director)Tan Sri Datuk Dr Aris Osman @ Othman (Independent Director)Tan Sri Datuk Clifford Francis Herbert (Independent Director)Dato’ Izham bin Mahmud (Independent Director)Cheah Tek KuangKok Tuck Cheong Pushparani A/P A Moothathamby (Appointed Executive Director on 1 January 2005)

DIRECTORS’ INTERESTS

DIRECT INTERESTS

In the Bank

The interests in shares, debentures and share options of related companies, of those who were directors at theend of the financial period as recorded in the Register of Directors’ Shareholdings kept by the Bank underSection 134 of the Companies Act, 1965, are as follows:

The directors who served on the Board since the date of the last report are:

In accordance with Article 87 of the Bank’s Articles of Association, Tan Sri Dato' Azman Hashim and MrCheah Tek Kuang retire and, being eligible, offer themselves for re-election.

None of the directors as at 31 March 2005 held any shares in the Bank during the financial year. Under theBank's Articles of Association, the directors are not required to hold shares in the Bank.

Redeemable Unsecured Balance at Balance at Subordinated Bonds 1.4.2004 Bought Sold 31.3.2005

Dato' Izham bin Mahmud 250,000 - - 250,000

Nominal Value of RM1.00 each



Company No: 23742-V

DIRECTORS’ INTERESTS (CONTD.)

DIRECT INTERESTS

In the holding company,AmInvestment Group Berhad

In the ultimate holding company,AMMB Holdings Berhad

* Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existingAMFB Holdings Berhad ("AMFB") share held by AMFB shareholders other than AHB.

Balance at1.4.2004/

Date of Rights/ Eligible Balance atRenounceable Rights appointment Allocation Employees Bought 31.3.2005

Tan Sri Dato' Azman Hashim - 118,954,848 - - 118,954,848Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba - 51,824 150,000 - 201,824Tan Sri Datuk Dr Aris Osman @ Othman - - 50,000 - 50,000 Tan Sri Datuk Clifford Francis Herbert - - 50,000 - 50,000 Dato’ Izham Mahmud - 1,070 100,000 - 101,070Cheah Tek Kuang - 120,075 2,500,000 - 2,620,075Kok Tuck Cheong - 4,584 1,500,000 - 1,504,584 Pushparani A/P A Moothathamby - 97,001 800,000 - 897,001

No. of Renouceable Rights of RM1.00 each

Offer for sale

Balance at1.4.2004/

Date of *Share Balance atShares appointment Bought Exchange Sold 31.3.2005

Tan Sri Dato' Azman Hashim - - 675,490 - 675,490 Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba 226,071 - - - 226,071 Dato' Izham bin Mahmud - - 4,670 - 4,670 Cheah Tek Kuang 485,800 - 38,000 500,000 23,800 Kok Tuck Cheong 20,000 - - 20,000 - Pushparani A/P A Moothathamby 420,663 - 2,486 - 423,149

No. of Ordinary Shares of RM1.00 each



Company No: 23742-V


DIRECT INTERESTS


Balance at1.4.2004/

Date of Exercised/ Balance atWarrants 1997/2007 appointment Bought Sold 31.3.2005

Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba 19,795 - - 19,795 Pushparani A/P A Moothathamby 15,508 - - 15,508

Balance at1.4.2004/

Date of Exercised/ Balance atWarrants 2003/2008 appointment Bought Sold 31.3.2005

Tan Sri Dato' Azman Hashim 245,793 - 245,793 - Cheah Tek Kuang 46,189 - - 46,189 Kok Tuck Cheong 11,547 - 11,547 - Pushparani A/P A Moothathamby 13,418 - - 13,418

No. of Warrants

No. of Warrants

Balance at Balance atShare Options 1.4.2004 Granted Expired 31.3.2005

Kok Tuck Cheong 65,984 - 65,984 -

No. of Options Over Ordinary Shares of RM1.00 each



Company No: 23742-V


DIRECT INTERESTS

*

DEEMED INTERESTS


*

Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existingAMFB Holdings Berhad ("AMFB") share held by AMFB shareholders other than AHB.


In the related finance company,AMFB Holdings Berhad

Balance at1.4.2004/

Date of *Share Balance atShares appointment Bought Sold Exchange 31.3.2005

Tan Sri Dato' Azman Hashim Held directly 211,505 - - 211,505 - Held through nominees 522,985 - 59,000 463,985 - Dato' Izham bin Mahmud 4,670 - - 4,670 - Cheah Tek Kuang 38,000 - - 38,000 -


Name of Balance at *Share Balance atShares Company 1.4.2004 Bought Exchange Sold 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Hashim Berhad 605,826,825 94,425,596 - 42,000,000 658,252,421

AMDB Equipment Trading Sdn Bhd 198,000 - 241,047 - 439,047Azman Hashim Holdings Sdn Bhd 5,713,905 - - 4,800,000 913,905Ginagini Sdn Bhd 12,184,809 - - 12,184,809 - Regal Genius Sdn Bhd 21,750,000 7,740,000 - - 29,490,000




Company No: 23742-V


DEEMED INTERESTS


In the holding company,AmInvestment Group Berhad

Warrants Name of Balance at Sold/ Balance at 2003/2008 Company 1.4.2004 Bought Exercised 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Hashim Berhad 75,214,328 - 69,260,231 5,954,097

AMDB Equipment Trading Sdn Bhd 22,682 - - 22,682 Azman Hashim Holdings Sdn Bhd 3,342,309 - - 3,342,309 Slan Sdn Bhd 82,132 - 82,132 - Ginagini Sdn Bhd 3,945,451 - 3,945,451 - Indigenous Capital Sdn Bhd 280,435 - 280,435 - Regal Genius Sdn Bhd 2,989,936 - - 2,989,936 Corporateview Sdn Bhd - 31,658,738 - 31,658,738

No. of Warrants

Renounceable Name of Balance at Balance as at Rights Company 1.4.2004 Bought Rights Sold 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Berhad - - 150,896,688 - 150,896,688 Hashim AMDB Equipment

Trading Sdn Bhd - - 100,646 - 100,646Azman Hashim Holdings Sdn Bhd - - 209,502 - 209,502Regal Genius Sdn Bhd - - 6,760,238 - 6,760,238AMMB Holdings Bhd 1,109,442,000 - - - 1,109,442,000

No.of Renounceable Rights of RM1.00 each



Company No: 23742-V


DEEMED INTERESTS

In the related finance company,AMFB Holdings Berhad

*

DIRECTORS’ BENEFITS

The share options in the ultimate holding company, which had an option period of five calendar years weregranted pursuant to AMMB Holdings Berhad Employees' Share Option Scheme II (“Scheme”) and the personsto whom the options are granted under the Scheme have no right to participate in any staff share option schemeof any other company in the Group.

By virtue of their shareholdings as mentioned above, the above directors are deemed to have an interest in theshares of the Bank and its related companies, to the extent that the ultimate holding company have interest.


Name of Balance at *Share Balance atShares Company 1.4.2004 Bought Sold Exchange 31.3.2005

Tan Sri Dato' AMDB Equipment Azman Hashim Trading Sdn Bhd 241,047 - - 241,047 -


Since the end of the previous financial year, no director of the Bank has received or become entitled to receiveany benefit (other than a benefit included in the aggregate amount of emoluments received or due andreceivable by directors shown in the financial statements) by reason of a contract made by the Bank or arelated corporation with the director or with a firm in which the director is a member, or with a company inwhich the director has a substantial financial interest, except for the related party transactions as shown in Note 32 to the financial statements.

Save for the benefits under the restricted offer for sale by AMMB Holdings Berhad to its shareholders andAmInvestment Group Berhad to eligible employees pursuant to the listing of AmInvestment Group Berhad onthe Main Board of the Bursa Malaysia Securities Berhad, and the share option granted to directors pursuant tothe ultimate holding company's Employees’ Share Option Scheme which expired during the year, neitherduring nor at the end of the financial year was the Bank a party to any arrangements whose object is to enablethe directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or anyother body corporate.



Company No: 23742-V

IMMEDIATE AND ULTIMATE HOLDING COMPANY

RATING BY EXTERNAL AGENCY

AUDITORS

Tan Sri Dato' Azman Hashim Kok Tuck Cheong

Kuala Lumpur, Malaysia16 May 2005

Signed on behalf of the Board in accordance with a resolution of the directors

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

The Bank’s sound financial health is reflected by the strong domestic credit ratings of A1/P1 from RatingAgency of Malaysia, and A+/MARC-1 from Malaysian Rating Corporation Berhad. This is complemented byinternational ratings of BB(Stable)/B from Standard and Poor’s, BB(Stable)/B from Capital Intelligence andBB-(Stable)/B from Fitch IBCA, Duff & Phelps. The Bank’s RM460.0 million Redeemable UnsecuredSubordinated Bonds have been accorded a long-term rating of A2 by Rating Agency Malaysia Berhad.

The directors regard AmInvestment Group Berhad and AMMB Holdings Berhad, both of which areincorporated in Malaysia, as the immediate holding company and the ultimate holding companyrespectively.AMMB Holdings Berhad is quoted on the Main Board of the Bursa Malaysia Securities Berhad.



Company No: 23742-V


STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

Signed on behalf of the Board in accordance with a resolution of the directors

TAN SRI DATO' AZMAN HASHIM KOK TUCK CHEONG

Kuala Lumpur, MalaysiaDate: 16 May 2005

We, TAN SRI DATO' AZMAN HASHIM and KOK TUCK CHEONG, being two of thedirectors of AMMERCHANT BANK BERHAD, do hereby state that, in the opinion of thedirectors, the accompanying financial statements set out on pages 20 to 139 are drawn up inaccordance with applicable Approved Accounting Standards in Malaysia, Bank NegaraMalaysia Guidelines and the provisions of the Companies Act, 1965 so as to give a true and fairview of the financial position of the Group and of the Bank as at 31 March 2005 and of theresults and the cash flows of the Group and of the Bank for the year then ended.



Company No: 23742-V


STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

ARUNASALAM MUTHUSAMY

Before me,

COMMISSIONER FOR OATHS

Lodged on behalf by :Address: 22nd Floor, Bangunan AmBank Group, No 55 Jalan Raja Chulan, 50200 Kuala LumpurTelephone Number : 03-20782633/44/55

I, ARUNASALAM MUTHUSAMY, being the officer primarily responsible for the financialmanagement of AmMERCHANT BANK BERHAD, do solemnly and sincerely declare that theaccompanying financial statements set out on pages 20 to 139 are in my opinion correct, and Imake this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed ARUNASALAM MUTHUSAMY at Kuala Lumpur in the Wilayah Persekutuan on 16 May 2005



REPORT OF THE AUDITORS TO THE MEMBERS OFAmMERCHANT BANK BERHAD(Incorporated in Malaysia)

In our opinion:

(a)

(i)

(ii)

(b)

the financial statements have been properly drawn up in accordance with the provisions of the Companies Act,1965, Bank Negara Malaysia Guidelines and applicable MASB Approved Accounting Standards in Malaysiaso as to give a true and fair view of:

We have audited the financial statements set out on pages 20 to 139. These financial statements are theresponsibility of the Bank’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to reportour opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no otherpurpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by the directors, as well as evaluating the overall presentation of the financialstatements. We believe that our audit provides a reasonable basis for our opinion.

the financial position of the Group and of the Bank as at 31 March 2005 and of the results and the cashflows of the Group and of the Bank for the year then ended; and

the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

the accounting and other records and the registers required by the Act to be kept by the Bank and by itssubsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions ofthe Act.

18

ERNST & YOUNG Yap Seng ChongAF:0039 No.2190/12/05(J)Chartered Accountants Partner

Kuala Lumpur, Malaysia16 May 2005

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financialstatements of the Bank are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations required by us forthose purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and inrespect of the subsidiaries incorporated in Malaysia, did not include any comment required to be made underSection 174(3) of the Act.

19

Company No: 23742-V


BALANCE SHEETS AS AT 31 MARCH 2005

Group Bank Group BankNote RM'000 RM'000 RM'000 RM'000

ASSETS

Cash and short-term funds 4 2,579,909 2,329,913 2,635,157 2,159,236 Securities purchased under

resale agreements 9,671 - 2,288 - Deposits and placements with

banks and other financial institutions 5 392,923 428,400 249,727 628,500

Dealing securities 6 2,769,827 2,459,851 3,150,922 3,131,922 Investment securities 7 3,073,107 2,939,301 3,407,340 3,117,166 Loans, advances and financing 8 4,528,871 4,350,433 5,268,797 5,096,297 Other assets 9 287,819 276,157 379,108 359,813 Deferred tax asset 35 78,548 78,548 22,176 22,176 Statutory deposit with Bank

Negara Malaysia 10 244,294 244,294 324,404 324,404 Investments in subsidiary

companies 11 - 38,617 - 38,617 Investments in associated

companies 12 39,432 21,950 145,960 112,598 Property and equipment 13 40,565 37,912 54,168 52,036 TOTAL ASSETS 14,044,966 13,205,376 15,640,047 15,042,765

2005 2004



Company No: 23742-V


BALANCE SHEETS AS AT 31 MARCH 2005 (CONTD.)


LIABILITIES ANDSHAREHOLDER'S FUNDS

Deposits from customers 14 5,294,436 4,705,300 5,929,859 5,382,465 Deposits and placements of

banks and other financial institutions 15 4,591,416 4,713,020 5,484,253 5,647,005

Obligations on securities sold under repurchase agreements 16 1,463,910 1,463,910 1,484,551 1,470,044

Acceptances payable 17 3,186 3,186 7,145 7,145 Amount due to Cagamas

Berhad 18 132,798 132,798 153,104 153,104 Other liabilities 19 92,563 76,444 93,238 83,815 Term loans 20 285,000 - 304,000 190,000 Subordinated certificates of

deposits 21 198,768 198,768 197,418 197,418 Redeemable unsecured

subordinated bonds 22 460,000 460,000 460,000 460,000 Total liabilities 12,522,077 11,753,426 14,113,568 13,590,996

Minority interests 23 6,083 - 4,655 -

Share capital 24 300,000 300,000 300,000 300,000 Interest Bearing Irredeemable

Convertible Unsecured LoanStocks 2002/2007 25 120,000 120,000 120,000 120,000

Reserves 26 1,096,806 1,031,950 1,101,824 1,031,769 Shareholder's funds 1,516,806 1,451,950 1,521,824 1,451,769

TOTAL LIABILITIES ANDSHAREHOLDER'S FUNDS 14,044,966 13,205,376 15,640,047 15,042,765

COMMITMENTS ANDCONTINGENCIES 41 14,821,270 14,807,056 9,720,691 9,704,828

2005 2004



Company No: 23742-V


BALANCE SHEETS AS AT 31 MARCH 2005 (CONTD.)


NET TANGIBLE ASSETS PERSHARE (RM) 44 7.55 7.26 7.50 7.26

NET TANGIBLE ASSETS PERSHARE, AFTER DEDUCTINGTHE NOMINAL AMOUNTSOF ICULS 2002/2007 ANDPREFERENCE SHARECAPITAL (RM) 44 6.45 6.16 6.40 6.16

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

2005 2004



Company No: 23742-V


INCOME STATEMENTSFOR THE YEAR ENDED 31 MARCH 2005


Revenue 826,471 773,451 854,853 808,497

Interest income 27 563,780 535,760 584,338 575,281 Interest expense 28 (410,401) (394,563) (435,233) (433,530) Net interest income 153,379 141,197 149,105 141,751 Net income from Islamic

Banking Business 49(xxii) 47,111 47,111 52,176 52,176 Non- interest income 29 227,783 226,044 249,315 222,073 Net income 428,273 414,352 450,596 416,000 Non-interest expense 30 (132,834) (110,978) (129,467) (106,216) Operating profit 295,439 303,374 321,129 309,784 Allowance for losses on loans and

financing 31 (48,286) (47,022) (109,307) (103,104) Allowance for diminution in

value of investments - net (17,856) (13,402) (45,098) (41,010) Transfer (to)/from profit

equalisation reserve (2,195) (2,195) 970 970 (Allowance)/Writeback of

allowance for doubtful sundry receivables - net (1,778) (1,778) 8,968 (2,676)

Provision for commitments (63) (63) - - Profit before share in results

of associated companies 225,261 238,914 176,662 163,964 Share in results of associated

companies 16,314 - 18,294 - Profit before taxation 241,575 238,914 194,956 163,964 Taxation: 34 (67,900) (62,333) (55,167) (49,978)

Bank and subsidiaries (63,284) (62,333) (50,657) (49,978) Associates (4,616) - (4,510) -

Profit before minority interests 173,675 176,581 139,789 113,986 Minority shareholders' interests

in results of subsidiarycompanies (2,292) - (3,453) -

Net profit attributable to theshareholder of the Bank 171,383 176,581 136,336 113,986

Earnings per share (sen) 37Basic 78.5 81.1 61.0 49.8 Fully diluted 51.9 53.5 41.3 34.5


2005 2004



Company No: 23742-V


STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2005

DistributableExchange Unapp-

Share Capital Share Statutory fluctuation ropriatedNote capital ICULS reserve premium reserve reserve profits Total

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2003As previously stated 300,000 120,000 2,815 60,284 300,000 29,618 614,443 1,427,160 Prior year adjustments 48 - - - - - - (5,652) (5,652)

At 1 April 2003 (restated) 300,000 120,000 2,815 60,284 300,000 29,618 608,791 1,421,508 Profit for the year - - - - - - 136,336 136,336 Interest on ICULS - - - - - - (7,220) (7,220) Proposed preference dividends - - - - - - (7,200) (7,200) Ordinary dividends paid 36 - - - - - - (21,600) (21,600)

At 31 March 2004 300,000 120,000 2,815 60,284 300,000 29,618 709,107 1,521,824

At 1 April 2004As previously stated 300,000 120,000 2,815 60,284 300,000 29,618 713,509 1,526,226 Prior year adjustments 48 - - - - - - (4,402) (4,402)

At 1 April 2004 (restated) 300,000 120,000 2,815 60,284 300,000 29,618 709,107 1,521,824 Translation adjustments - - - - - (1) - (1) Profit for the year - - - - - - 171,383 171,383 Interest on ICULS - - - - - - (7,200) (7,200) Proposed preference dividends - - - - - - (7,200) (7,200) Ordinary dividends paid 36 - - - - - - (162,000) (162,000)

At 31 March 2005 300,000 120,000 2,815 60,284 300,000 29,617 704,090 1,516,806

Non-distributable

24


Company No: 23742-V


STATEMENT OF CHANGES IN EQUITY (CONTD.)FOR THE YEAR ENDED 31 MARCH 2005

Non-distributable DistributableUnapp-

Share Share Statutory ropriatedNote capital ICULS premium reserve profits Total

Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2003As previously stated 300,000 120,000 60,284 300,000 599,171 1,379,455 Prior year adjustments 48 - - - - (5,652) (5,652)

At 1 April 2003 (restated) 300,000 120,000 60,284 300,000 593,519 1,373,803 Profit for the year - - - - 113,986 113,986 Interest on ICULS - - - - (7,220) (7,220) Proposed preference dividends 36 (7,200) (7,200) Ordinary dividends paid 36 - - - - (21,600) (21,600)

At 31 March 2004 300,000 120,000 60,284 300,000 671,485 1,451,769

At 1 April 2004As previously stated 300,000 120,000 60,284 300,000 675,887 1,456,171 Prior year adjustments 48 - - - - (4,402) (4,402)

At 1 April 2004 (restated) 300,000 120,000 60,284 300,000 671,485 1,451,769 Profit for the year - - - - 176,581 176,581 Interest on ICULS - - - - (7,200) (7,200) Proposed preference dividends 36 - - - - (7,200) (7,200) Ordinary dividends paid 36 - - - - (162,000) (162,000)

At 31 March 2005 300,000 120,000 60,284 300,000 671,666 1,451,950 The accompanying notes form an integral part of the financial statements.

25


Company No: 23742-V


CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 MARCH 2005

Group Bank Group BankRM'000 RM'000 RM'000 RM'000

CASH FLOWS FROMOPERATING ACTIVITIES

Profit before taxation 241,575 238,914 194,956 163,964 Add/(Less) adjustments for: Loan and financing loss and

allowances, net of recoveries 48,286 47,022 109,307 103,104 Net interest suspended 18,544 22,539 38,806 36,129 Allowance for diminution in value of

investments - net 17,856 13,402 45,098 41,010 Amortisation of premiums less

accretion of discounts – net 17,464 24,232 23,837 25,592 Depreciation of property and

equipment 11,990 11,209 14,105 13,173 Loss/(Gain) on sale of quoted

securities - net 3,514 3,514 (25,334) (25,295) Transfer to/(from) profit equalization

reserve 2,195 2,195 (970) (970) Net income suspended 1,786 1,786 3,950 3,950 Allowance/(Write back of allowance ) for

doubtful sundry receivables - net 1,778 1,778 (8,968) 2,676 Amortisation of premium on

acquisition 1,274 - 1,274 - Trading loss/(gain) on futures 495 495 (63) (63) Sundry bad debts written off - net 280 280 332 321 Provision for commitments 63 63 - - Property and equipment written off 1 1 104 96 Gross dividend income from

investments (41,846) (51,925) (37,473) (53,697) Share in results of associated

companies (16,314) - (18,294) - Net (income)/loss from derivatives (7,120) (7,120) 2,878 2,878 Gain on sale of unquoted

investments - net (2,934) (2,934) (9,143) (9,143) Gain on redemption of shares (773) (773) - - Gain on disposal of property and

equipment (151) (150) (314) (314) Gain on disposal of investment in an

associated company - (21,876) - - Operating profit before working capital

changes carried forward 297,963 282,652 334,088 303,411

2005 2004



Company No: 23742-V


CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 MARCH 2005 (CONTD.)


CASH FLOWS FROMOPERATING ACTIVITIES (CONTD.)

Operating profit before working capitalchanges brought forward 297,963 282,652 334,088 303,411

(Increase)/Decrease in operating assets: Securities purchased under resale

agreement (7,383) - 4,549 - Deposits and placements with

banks and other financial institutions (143,196) 200,100 151,529 (60,970)

Dealing securities 387,720 678,696 2,756,164 2,756,117 Loans, advances and financing 664,325 704,519 153,614 139,075 Other assets 32,538 27,453 115,420 110,763 Statutory deposit with Bank Negara

Malaysia 80,110 80,110 15,423 15,423 (Decrease)/Increase in operating liabilities: Deposits from customers (635,422) (677,165) 627,586 494,654 Deposits and placements of

banks and other financial institutions (892,836) (933,985) (1,688,953) (1,805,960)

Obligations on securities sold under repurchase agreements (20,641) (6,134) (45,852) (60,359)

Acceptances payable (3,959) (3,959) (9,677) (9,677) Amount due to Cagamas Berhad (20,306) (20,306) (90,653) (90,653) Other liabilities (547) (8,281) (12,126) (14,321)Cash (used in)/generated from operations (261,634) 323,700 2,311,112 1,777,503 Taxation paid (46,066) (44,074) (33,936) (31,382)Net cash (used in)/generated from

operating activities (307,700) 279,626 2,277,176 1,746,121

2005 2004



Company No: 23742-V




CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal/(Purchase) of investment securities – net 335,318 139,651 (1,328,700) (1,148,256)

Proceeds from disposal of an associatedcompany 82,518 82,518 638 638

Dividends received from otherinvestments 30,130 30,315 28,657 28,657

Dividends received from associatedcompanies 4,433 4,433 2,571 2,571

Capital repayment by an associatedcompany 780 780 10,395 10,395

Proceeds from disposal of propertyand equipment 287 285 331 331

Purchase of property and equipment (4,750) (3,447) (14,702) (13,379) Dividends received from subsidiary

companies - 2,916 - 9,112 Net cash generated from/(used in) investing

activities 448,716 257,451 (1,300,810) (1,109,931)

CASH FLOWS FROM FINANCINGACTIVITIES

Dividends paid by the Bank to itsshareholder (162,000) (162,000) (21,600) (21,600)

ICULS interest paid (7,200) (7,200) (7,220) (7,220) Preference dividends paid (7,200) (7,200) (7,200) (7,200) Dividends paid to minority interests (864) - (3,520) - Proceeds from Redeemable Unsecured

Subordinated Bonds - - 460,000 460,000 Repayment of subordinated term loans (19,000) (190,000) (76,000) (190,000) Net cash (used in)/generated from financing

activities (196,264) (366,400) 344,460 233,980

20042005



Company No: 23742-V




Net (decrease)/increase in cash and cashequivalents (55,248) 170,677 1,320,826 870,170

Cash and cash equivalents at beginning of year 2,635,157 2,159,236 1,314,331 1,289,066

Cash and cash equivalents at end of year (Note 1) 2,579,909 2,329,913 2,635,157 2,159,236

Note 1 : Cash and cash equivalents


Cash and short term funds 2,579,909 2,329,913 2,635,157 2,159,236


2005 2004

2005 2004

For the purpose of the cash flow statements, cash and cash equivalents consist of cash andshort-term funds net of bank overdraft. Cash and cash equivalents included in the cash flowstatements comprise the following balance sheet amounts:



Company No: 23742-V


NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2005

1. PRINCIPAL ACTIVITIES

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Bank and its subsidiary companies, as listed in Note 11, provide a wide range of merchant bankingand related financial services which also includes the Islamic Banking Business, investment advisory andasset, property and unit trusts management.

There have been no significant changes in the nature of the activities of the Bank and its subsidiarycompanies during the financial year.

The Bank is a public limited liability company, incorporated and domiciled in Malaysia. The registeredoffice and the principal place of business of the Bank is located at 22nd Floor, Bangunan AmBankGroup, 55 Jalan Raja Chulan, 50200 Kuala Lumpur.

The financial statements of the Group and of the Bank have been approved and authorised for issue bythe Board of Directors on 4 May 2005

The financial statements of the Group and of the Bank have been prepared under the historical costconvention unless otherwise indicated in the accounting policies below.

The financial statements of the Group and of the Bank have been prepared in accordance with theprovisions of the Companies Act, 1965, the Banking and Financial Institutions Act, 1989, Bank NegaraMalaysia Guidelines and the applicable approved accounting standards of the Malaysian AccountingStandards Board. The financial statements incorporate those activities relating to Islamic BankingBusiness which have been undertaken by the Bank. Islamic Banking Business refers generally to theacceptance of deposits and granting of financing under the Shariah Principles.

The following accounting policies adopted by the Group and the Bank are consistent with those adoptedin the previous years except for the adoption of the 3-month classification for non-performing loans fromthe previous 6-month classification which has been adopted retrospectively.

The effects of adopting the 3-month classification for non-performing loans retrospectively on theGroup's and the Bank's unappropriated profits are reflected as prior year adjustments in the statement ofchanges in equity and is disclosed in Note 48 to the financial statements.This change in accountingpolicy has been accounted for retrospectively and has resulted in an increase in interest income creditedto the income statements for the financial year by RM4.3 million.



Company No: 23742-V

Basis of Consolidation

Repurchase Agreements

Dealing Securities

Financial statements of subsidiary companies are consolidated using the acquisition method of accountingand the Group's financial statements include the financial statements of the Bank and all its subsidiarycompanies listed in Note 11 made up to the end of the financial year, except for Malaysian VenturesManagement Incorporated Sdn Bhd, the financial statements of which were made up to 31 December2004 with adjustments, where appropriate, made for any significant transactions that occured between 1January 2005 to 31 March 2005.

Under the acquisition method of accounting, the results of the subsidiary companies acquired or disposedof during the financial year are included in the Group financial statements from the effective date ofacquisition or to the effective date of disposal, as applicable. All significant intercompany transactions andbalances have been eliminated on consolidation.

Securities purchased under resale agreements are securities which the Group and the Bank had purchasedwith commitments to resell at future dates. The commitments to resell the securities are reflected as anasset on the balance sheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the Groupand the Bank had sold from its portfolio, with commitments to repurchase at future dates for fundingpurposes. The carrying values of the securities underlying these repurchase agreements remain in therespective asset accounts while the obligations to repurchase such securities at agreed prices on aspecified future dates are accounted for as a liability on the balance sheet.

Dealing securities are marketable securities that are acquired and held with the intention of reselling themin the short term.

Money market securities, debt equity conversion, quoted securities and private debt securities are stated atthe lower of cost and market value on a portfolio basis. On disposal of the dealing securities, thedifferences between the net disposal proceeds and their carrying amounts are charged or credited to theincome statement. Transfers, if any, between dealing and investment securities are made at the lower of cost and marketvalue.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and theGroup’s share of its net assets together with exchange differences which were not previously recognisedin the consolidated income statement.



Company No: 23742-V

Investment Securities

Allowance for doubtful debts and financing

Trade and Other Receivables

Foreclosed Properties

Investment securities are securities that are acquired and held for yield or capital growth or to meetminimum liquid assets requirements pursuant to Section 38 of the Banking and Financial Institutions Act,1989, and are usually held to maturity.

Malaysian Government Securities, Malaysian Government Investment Certificates, Cagamas bonds andother government securities and bank guaranteed private debt securities are stated at cost adjusted foramortisation of premium or accretion of discount, where applicable, to maturity dates. Other private debtsecurities are valued at lower of cost and market value.

Other investment securities are stated at cost and allowance is made in the event of any permanentdiminution in value.

On disposal of the investment securities, the differences between the net disposal proceeds and theircarrying amounts are charged or credited to the income statement.

Transfers, if any, between investment and dealing securities are made at the lower of carrying value andmarket value.

Based on management's evaluation of the portfolio of loans, advances and financing, specific allowancesfor doubtful debts and financing are made when the collectibility of receivables becomes uncertain. Inevaluating collectibility, management considers several factors such as the borrower's financial position,cash flow projections, management, quality of collateral or guarantee supporting the receivables as well asprevailing and anticipated economic conditions.

A general allowance based on set percentages of the net increase in receivables is also made. Thesepercentages are reviewed annually in the light of past experiences and prevailing circumstances and anadjustment is made to the overall general allowance, if necessary.

An uncollectible loan and financing or portion of a loan and financing classified as bad is written off aftertaking into consideration the realisable value of collateral, if any, when in the judgement of management,there is no prospect of recovery.

Trade and other receivables are stated at book value as reduced by the appropriate allowances forestimated irrecoverable amounts. Allowance for doubtful debts is made based on estimates of possiblelosses which may arise from non-collection of certain receivable accounts.

Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at cost lessallowance for diminution in value, if any, of such properties.



Company No: 23742-V

Amounts Recoverable from Pengurusan Danaharta Nasional Berhad ("Danaharta")

Goodwill/Premium on Consolidation

Investments in Subsidiary Companies

This relates to the loans sold to Danaharta where the total consideration is received in two portions; uponthe sale of the loans (initial consideration) and upon the recovery of the loans (final consideration). Thefinal consideration amount represents the Bank’s predetermined share of the surplus over the initialconsideration upon recovery of the loans.

The difference between the carrying value of the loans and the initial consideration is recognised as‘Amounts recoverable from Danaharta’ within the ‘Other Assets’ component of the balance sheet.Allowances against these amounts are made to reflect the Directors’ assessment on the realisable value ofthe final consideration as at the balance sheet date.

Goodwill on consolidation represents the excess of the purchase consideration over the share of the fairvalues of the identifiable net assets of a subsidiary company at the date of acquisition.

Goodwill is stated at cost less accumulated amortisation and impairment losses. Goodwill is generallyamortised evenly over an estimated useful life of twenty to fifty years. The policy for the recognition andmeasurement of impairment losses is in accordance with the policy on impairment of assets. Premium on consolidation on the acquisition of associated companies is included within the carryingamount of the associated companies and represents the excess of the purchase consideration over theGroup’s interest in the fair values of the identifiable net assets of associated companies at the date ofacquisition. The premium on consolidation on the acquisition of associated companies is amortised overan estimated useful life of twenty five years.

When an indication of impairment exists, the carrying amount of goodwill is assessed and written downimmediately to its recoverable amount.

Subsidiary companies are those companies in which the Group has power to exercise control over thefinancial and operating policies so as to obtain benefits from their activities.

Investments in subsidiary companies, which are eliminated on consolidation, are stated in the Bank'sfinancial statements at cost and are written down when the directors consider that there is an impairmentloss that is other than temporary on the value of such investments in the Bank’s financial statements. Theimpairment loss is charged to the income statement.

On disposal of such investments, the difference between the net disposal proceeds and their carryingamount is charged or credited to the income statement.

Minority interests in the Group represent that part of the net results of operations, or of net assets, ofsubsidiary companies attributable to shares and debentures owned, directly or indirectly other than by theCompany or subsidiary companies.



Company No: 23742-V

Investments in Associated Companies

Property and Equipment and Depreciation

Freehold building 2%Leasehold buildings 2%Motor vehicles 20%Leasehold improvements 20%Computer hardware and software 20% - 33 1/3%Office equipment, furniture and fittings 10% - 33 1/3%

An associated company is a company in which the Group has a long term equity interest of between 20%and 50% and where the Group has representation on the Board and is in a position to exercise significantinfluence in its management. Investments in associated companies are stated at cost and are written down when the directors considerthat there is an impairment loss that is other than temporary on the value of such investments in the Bank’sfinancial statements. The impairment loss is charged to the income statement. In the consolidated financialstatements, the results of associated companies are accounted for under the equity method whereby theGroup's share of post-acquisition profits less losses of associated companies is included in theconsolidated income statement. The Group's interest in associated companies is stated at cost plusadjustments to reflect changes in the Group's share of the net assets of the associated companies in theconsolidated balance sheet.

On disposal of such investments, the difference between the net disposal proceeds and their carryingamount is charged or credited to the income statement.

Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Thepolicy for the recognition and measurement of impairment losses is in acordance with the policy onimpairment of assets. Freehold land is not depreciated. Leasehold land is amortised over the shorter of the lease period or fiftyyears. Depreciation of other property and equipment is calculated using the straight-line method at ratesbased on the estimated useful lives of the various assets.

The annual depreciation rates for the various classes of property and equipment are as follows:

Gain or loss arising from disposal of an asset is determined as the difference between the estimated netdisposal proceeds and the carrying amount of the asset, and is recognised in the income statement.



Company No: 23742-V

Assets Purchased Under Lease

Impairment of Assets

Profit Equalisation Reserve ("PER")

Assets purchased under finance leases which in substance transfer the risks and benefits of ownership ofthe assets to the Group are capitalised under property and equipment. The assets and the correspondinglease obligations are recorded at the lower of the present value of the minimum lease payments or the fairvalue of the leased assets at the beginning of the lease terms, less accumulated depreciation andimpairment losses.

In calculating the present value of the minimum lease payments, the discount factor used is the interestrate implicit in the lease, when it is practicable to determine, otherwise the Group's incremental borrowingrate is used.

Leases which do not meet such criteria are classified as operating leases and the related rentals arecharged to the income statement as incurred.

When an operating lease is terminated before the lease period has expired, any payment required to bemade to the lessor by way of penalty is recognised as an expense in the period in which termination takesplace.

The carrying values of assets are reviewed for impairment when there is an indication that the asset mightbe impaired. Impairment is measured by comparing the carrying values of the assets with their recoverableamounts. The recoverable amount is the higher of net realisable value and value in use, which is measuredby reference to discounted future cash flows, if applicable. Recoverable amounts are estimated forindividual assets or, if it is not possible, for the cash generating unit.

An impairment loss is charged to the income statements immediately, unless the asset is carried atrevalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extentof previously recognised revaluation surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previousimpairment loss and is recognised to the extent of the carrying amount of the asset that would have beendetermined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal isrecognised in the income statements immediately, unless the asset is carried at revalued amount. Areversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, tothe extent that an impairment loss on the same revalued asset was previously recognised as an expense inthe income statements, a reversal of that impairment loss is recognised as income in the income statement.

PER refers to the amount appropriated, under the Islamic Banking Business, out of the total gross incomein order to maintain a certain level of return for depositors. PER is deducted from the total gross income(in deriving the net gross income) as approved and endorsed by the National Advisory Council for IslamicBanking and Takaful of Bank Negara Malaysia. The PER is generally deducted at a rate which does notexceed the maximum amount of 15% of the total gross income of each financial year and is maintained upto the maximum of 30% of total Islamic banking capital fund.



Company No: 23742-V

Provisions

Liabilties

Redeemable Unsecured Subordinated bonds

Interest Bearing Irredeemable Convertible Unsecured Loan Stocks (ICULS)

Employee Benefits

(i) Short-term Benefits

(ii) Defined Contribution Plan

(iii) Equity Compensation Benefits

A provision is recognised when it is probable that an outflow of resources embodying economic benefitswill be required to settle a present obligation as a result of a past event and a reliable estimate can be madeof the amount.

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued inthe period in which the associated services are rendered by employees of the Group.

As required by law, companies in Malaysia make contributions to the state pension scheme, theEmployees Provident Fund (“EPF”). Such contributions are recognised as an expense in the incomestatement as incurred. Once the contribution has been paid, the Group has no further paymentobligations.

The employees’ share option scheme allows the Group’s eligible directors and employees, except forexecutive directors who represent the Government or Government institutions/agencies andGovernment employees who are serving in the public service schemes defined under Article 132 ofthe Federal Constitution, to acquire shares of AHB and, when the granted options are exercised,equity is increased by the amount of the proceeds received.

These are long term debts with remaining maturity of more than one year. The issue proceeds arerecognised at cost and used to grant an unsecured term loan to its related licensed commercial bank forcapital refinancing purpose. The interest incurred is recognised on a straight-line accrual basis.

The ICULS are regarded as equity instruments and the full issuance proceeds reflected as equity. Theinterest is accrued on a straight-line basis and recognised in equity.

Trade and other payables are stated at cost which is the fair value of the consideration to be paid in thefuture for services received.

Deposits from customers are stated at placement values. Deposits and placement of banks and otherfinancial institutions are stated at placement values.



Company No: 23742-V

Forward Exchange Contracts

Interest Rate Swaps, Futures and Forward Rate Contracts

Sell and Buy Back Agreements

Financial Instruments

Equity Instruments

Unmatured forward exchange contracts are valued at forward rates prevailing at balance sheet date,applicable to their respective dates of maturity, and the resultant gains and losses are recognised in theincome statement.

The Bank acts as an intermediary with counterparties who wish to swap their interest obligations. TheBank also uses interest rate swaps, futures and forward rate contracts in its trading activities and overallinterest rate risk management.

Interest income or interest expense associated with interest rate swaps that qualify as hedges is recognisedover the life of the swap agreement as a component of interest income or interest expense. Gains andlosses on interest rate futures and forward rate contracts that qualify as hedges are generally deferred andamortised over the life of the hedged assets or liabilities as adjustments to interest income or interestexpense.

Gains and losses on interest rate swaps, futures and forward rate contracts that do not qualify as hedgesare recognised in the current year using the mark-to-market method and are shown in the incomestatement as trading gain or loss from derivatives.

These are obligations of the Group to perform its commitment to buy back specified Islamic Securities atmaturity. Gains and losses are recognised upon sale and shown as trading gain or loss from dealingsecurities.

Financial instruments are recognised in the balance sheet when the group has become a party to thecontractual provisions of the instrument.

Financial instruments are classified as liabilties or equity in accordance with the substance of thecontractual arrangement. Interest, dividends and gains and losses relating to a financial instrumentclassified as a liabilities, is reported as expense or income. Distributions to holders of financialinstruments classified as equity are charged directly to equity. Financial instruments are offset when theGroup has a legally enforceable right to offset and intends to settle either on a net basis or to realise theasset and settle the liability simultaneously.

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in the equitystatement in the year in which they are declared.

The transaction costs of an equity are accounted for as a deduction from equity, net of tax. Equitytransaction costs comprise only those incremental external costs directly attributable to the equitytranmsaction which would otherwise have been avoided.



Company No: 23742-V

Interest and Financing Income and Expense Recognition

Interest income is recognised in the income statement for all interest bearing assets on an accrual basis.Interest income includes the amortisation of premium or accretion of discount. Interest and financingincome on dealing and investment securities are recognised on an effective yield basis.

The Group and the Bank follow the financing method of accounting for income from leasing activities.Under the financing method, the excess of aggregate rentals over the cost (reduced by estimated residualvalue at the end of the lease) of the leased property is taken as income over the term of the lease indecreasing amounts proportionate to the declining balance of the unrecovered sum using the 'sum-of-digits' method.

While it is the Group's and the Bank's policy to recognise interest and financing income on the accrualbasis, interest and financing income on non-performing accounts is not recognised as income and issuspended unless received in cash or realisation in cash is assured.

An account is classified as non-performing where repayment is in arrears for more than three months andafter maturity dates for trade bills, bankers' acceptances and trust receipts.

Prior to this financial year, customers' accounts, other than trade bills, bankers' acceptances and trustreceipts, were deemed to be non-performing when repayment were in arrears for more than six months.The change in accounting policy has been accounted for retrospectively and the effect of this change isdisclosed in Note 48 to the financial statements.

The classification of non-performing loans and financing is in conformity with Bank Negara Malaysia’sGuideline on Classification of Non-Performing Loans and Provision for Bad and Doubtful Debts.

Interest expense and attributable income on deposits and borrowings (pertaining to activities relating toIslamic Banking Business) of the Group and the Bank are accrued on a straight-line basis.



Company No: 23742-V

Fee and Other Income Recognition

Income Taxes

Loan arrangement, management and participation fees and acceptance, commissions and underwritingcommissions, are recognised as income upon execution of contracts.

Fees from advisory and corporate finance activities are recognised as income on completion of each stageof the engagement.

Asset, property and unit trusts management, agency and commitment fees are recognised as income basedon time apportionment.

Revenue from sale of trust units is recognised upon allotment of units, net of cost of units sold. Profits andlosses on disposal of investments, are taken to the income statements. On disposal of investments, thedifference between the net disposal proceeds and their carrying amounts are taken to the incomestatements.

Guarantee fees are recognised as income upon issuance and, where the guarantee periods are longer thanone year, over the duration of the guarantee period.

Equipment and property rental are recognised on an accrual basis.

Dividends from dealing and investment securities are recognised when received. Dividends fromsubsidiary and associated companies are recognised when the right to receive payment is established.

Tax on profit or loss for the financial year comprises current and deferred taxes. Income tax is recognisedin the income statement except to the extent it relates to items recognised directly in equity, in which caseit is recognised in equity.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Groupoperates and includes all taxes based on the taxable profits. Deferred tax is provided, using the liability method, on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferredtax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognisedfor all deductible temporary differences and unutilised tax losses to the extent it is probable that taxableprofit will be available against which the deductible temporary differences and unutilised tax losses can beutilised. Temporary differences are not recognised for goodwill or negative goodwill or from the initialrecognition of assets and liabilities that at the time of transaction, affects neither accounting nor taxableprofits. The amount of deferred tax provided is based on the expected manner of realisation or settlementof the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at thebalance sheet date.



Company No: 23742-V

Foreign Exchange

31.3.2005 31.3.2004

Singapore Dollar (SGD) 2.30 2.26United States Dollar (USD) 3.80 3.80

Operating Revenue

Cash Flow Statements

Cash and Cash Equivalents

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used fortranslation are as follows:

Operating revenue of the Group and of the Bank comprise net interest and financing income after interestand income suspended or recovered but before amortisation of premiums less accretion of discounts, feeincome, net trading income from money market securities, net trading income from derivatives, netgain/loss on sale of quoted investments, gross dividend income from quoted investments, income fromIslamic Banking Business before income attributable to depositors, foreign exchange gain and netallowance or writeback for diminution in value of investments.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the closing rate.

The Group and the Bank adopt the indirect method in the preparation of the cash flow statements.

For the purpose of the cash flow statements, cash and cash equivalents consist of cash and short-termfunds net of bank overdrafts.

Transactions in foreign currencies are converted into Ringgit Malaysia at the rates of exchange prevailingat transaction dates or, if covered by foreign exchange contracts, at contracted rates. Where settlementhas not taken place at balance sheet date, translation into Ringgit Malaysia is at the approximateexchange rates prevailing at that date or at contracted rates. All foreign exchange gains or losses aretaken up in the income statement.

For the purpose of consolidation, assets and liabilities of subsidiary and associated companies expressedin foreign currencies are translated into Ringgit Malaysia at the rates of exchange ruling at the balancesheet date while income statement is translated into Ringgit Malaysia at the average exchange rate forthe year. Gains or losses arising on translation into Ringgit Malaysia are taken up in the exchangefluctuation reserve. Translation losses in excess of amounts in the exchange fluctuation reserve, if any,are taken up in the income statement.



Company No: 23742-V

4. CASH AND SHORT-TERM FUNDS


Cash and bank balances 38,885 24,604 6,375 3,906 Money at call and deposits maturing

within one month:Licensed bank: Related 47,672 205,409 2,105 - Others 1,055,952 662,500 868,747 397,400 Other licensed finance companies 5,000 5,000 - - Bank Negara Malaysia 1,432,400 1,432,400 1,700,500 1,700,500 Other financial institutions - - 57,430 57,430

2,579,909 2,329,913 2,635,157 2,159,236

5.


Licensed banks:Subsidiary company - 38,000 - 380,000 Related 2,523 - 1,227 - Others - - 30,000 30,000

Licensed merchant banks 25,000 25,000 - - Bank Negara Malaysia 129,800 129,800 - - Other financial institutions 235,600 235,600 218,500 218,500

392,923 428,400 249,727 628,500

2005 2004

2005 2004

DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Included in the above are interbank lendings of RM2,541,024,000 (RM2,628,782,000 as at 31 March 2004)and RM 2,305,309,000 (RM2,155,330,000 as at 31 March 2004) for the Group and the Bank, respectively.

The deposits and placements with banks and other financial institutions mature within one year.

Included in the above are interbank lendings of RM390,400,000 (RM248,500,000 as at 31 March 2004) andRM428,400,000(RM628,500,000 as at 31 March 2004) for the Group and the Bank, respectively.



Company No: 23742-V

6. DEALING SECURITIES


Money Market Securities:Treasury bills - - 28,463 28,463 Bank Negara Malaysia bills - - 150,011 150,011 Malaysian Government Securities 720,971 450,969 19,941 19,941 Malaysian Government Investment Certificates 8,174 8,174 127,728 127,728 Cagamas notes - - 87,442 87,442 Cagamas bonds - - 190,155 190,155 Negotiable Islamic Debt Certificates 48,112 48,112 381,447 381,447 Khazanah bonds 151,750 151,750 327,003 327,003 Islamic Bank Negara Malaysia bills 56,176 56,176 139,202 139,202 Cagamas Mudharabah bearer bonds 90,022 90,022 83,500 83,500 Danaharta bonds - - 19,162 19,162 Negotiable instruments of deposits 533,647 533,647 - -

1,608,852 1,338,850 1,554,054 1,554,054

Securities Quoted In Malaysia:Shares 84,120 84,120 156,893 156,893 Trust units 2,049 2,049 2,049 2,049 Transferable Subscription Rights/Warrants - - 112 112 Loan stocks 3,983 3,983 4,258 4,258 Corporate bonds 41,678 - 19,000 -

131,830 90,152 182,312 163,312

Unquoted Debt Equity ConversionOf Companies IncorporatedIn Malaysia: Corporate bonds 18,261 18,261 18,261 18,261

Unquoted Private Debt SecuritiesOf Companies IncorporatedIn Malaysia: Islamic corporate bonds 618,496 618,496 698,044 698,044 Corporate notes 71,916 71,916 95,428 95,428 Corporate bonds 243,096 243,096 465,316 465,316 Islamic corporate notes - - 33,012 33,012

933,508 933,508 1,291,800 1,291,800

20042005



Company No: 23742-V


Unquoted Guaranteed PrivateDebt Securities Of CompaniesIncorporated In Malaysia: Corporate bonds 67,825 67,825 67,825 67,825 Corporate notes - - 49,601 49,601 Islamic corporate notes 37,314 37,314 5,491 5,491

105,139 105,139 122,917 122,917

2,797,590 2,485,910 3,169,344 3,150,344

Allowance for diminution in value of investments (27,763) (26,059) (18,422) (18,422)

Total/Net 2,769,827 2,459,851 3,150,922 3,131,922

Market/Indicative Value:Money Market Securities:

Treasury bills - - 28,578 28,578 Bank Negara Malaysia bills - - 150,863 150,863 Malaysian Government Securities 717,534 448,830 19,708 19,708 Malaysian Government Investment Certificates 8,303 8,303 127,341 127,341 Cagamas notes - - 88,470 88,470 Cagamas bonds - - 188,874 188,874 Negotiable Islamic Debt Certificates 48,295 48,295 398,072 398,072 Khazanah bonds 152,276 152,276 327,227 327,227 Islamic Bank Negara Malaysia notes 56,323 56,323 139,636 139,636 Cagamas Mudharabah bearer bonds 90,361 90,361 82,693 82,693 Danaharta bonds - - 19,580 19,580 Negotiable instruments of deposits 533,549 533,549 - -

Securities Quoted In Malaysia:Shares 68,794 68,794 156,205 156,205 Trust units 2,249 2,249 1,727 1,727 Transferable Subscription Rights/Warrants - - 123 123 Loan stocks 1,613 1,613 2,329 2,329 Corporate bonds 41,628 - 19,380 -

Unquoted Debt Equity ConversionOf Companies IncorporatedIn Malaysia: Corporate bonds 18,261 18,261 18,261 18,261

2005 2004



Company No: 23742-V


Unquoted Private Debt SecuritiesOf Companies IncorporatedIn Malaysia: Islamic corporate bonds 613,174 613,174 675,454 675,454 Corporate notes 72,910 72,910 95,822 95,822 Corporate bonds 239,883 239,883 453,401 453,401 Islamic corporate notes - - 33,432 33,432

Unquoted Guaranteed PrivateDebt Securities Of CompaniesIncorporated In Malaysia: Corporate bonds 68,564 68,564 68,909 68,909 Corporate notes - - 49,915 49,915 Islamic corporate notes 36,872 36,872 5,461 5,461

2005 2004

Certain money market securities held have been sold under repurchase agreements for funding purposes.The carrying values of the securities underlying these repurchase agreements remain in the respective assetaccounts while the obligations to repurchase such securities at an agreed price on a specified future date areaccounted for as a liability as shown in Note 16.



Company No: 23742-V

7. INVESTMENT SECURITIES


Money Market Securities:Negotiable instruments of deposits 1,113,637 1,113,637 867,350 867,350 Bank Negara Malaysia bills - - 148,771 - Khazanah bonds - - 40,525 - Treasury bills 28,809 - - -

1,142,446 1,113,637 1,056,646 867,350

Quoted Securities: In Malaysia Shares 2 - 3 - Corporate bonds 57,000 - 38,000 - Outside Malaysia Corporate bonds 19,000 - 19,000 -

76,002 - 57,003 -

Debt Equity Conversion:Quoted in Malaysia Shares - with options 19,822 19,822 26,697 26,697 Shares 4,871 - 4,871 - Loan stocks - collateralised 971 - 13,901 - Loan stocks 194,005 194,005 181,005 181,005 Quoted outside Malaysia Shares - - 3,189 - Unquoted securities of companies incorporated : In Malaysia Shares 1,679 - 87,477 85,798 Corporate bonds 515,389 468,413 392,615 342,642 Outside Malaysia Shares 15,566 - 3,128 -

752,303 682,240 712,883 636,142

2005 2004



Company No: 23742-V


Unquoted Private Debt SecuritiesOf Companies Incorporated: In Malaysia Corporate bonds 69,629 69,629 30,000 30,000 Corporate bonds and notes denominated in USD 86,813 86,813 144,670 144,670 Outside Malaysia Corporate bonds and notes denominated in USD 114,000 114,000 123,073 123,073

270,442 270,442 297,743 297,743

Unquoted Guaranteed Private Debt Securities OfCompanies IncorporatedIn Malaysia: Corporate bonds 526,478 526,478 977,857 977,857

Investment In Related LicensedCommercial BankUnsecured subordinated term loan: Licensed commercial bank 460,000 460,000 460,000 460,000

Unquoted Securities Of Companies Incorporated: In Malaysia Corporate bonds 100 100 100 100 Shares 60,588 60,588 60,634 60,634 Outside Malaysia Shares 11,957 11,957 9,893 9,893

72,645 72,645 70,627 70,627

Total 3,300,316 3,125,442 3,632,759 3,309,719 Allowance for diminution in value

of investments for companies incorporated: In Malaysia (79,946) (60,940) (74,615) (55,999) Outside Malaysia (128,082) (106,020) (123,310) (109,060)

Amortisation of premium less accretion of discount (19,181) (19,181) (27,494) (27,494)

Total/Net 3,073,107 2,939,301 3,407,340 3,117,166

2005 2004



Company No: 23742-V


Market/Indicative Value:Money Market Securities:

Negotiable instruments of deposits 1,112,665 1,112,665 936,528 936,528 Bank Negara Malaysia bills - - 148,754 - Khazanah bonds - - 40,496 - Treasury bills 28,785 - - -

Quoted Securities: In Malaysia Shares 2 - 3 - Corporate bonds 57,599 - 38,354 - Outside Malaysia Corporate bonds 4,560 - 4,750 -

Debt Equity Conversion:Quoted in Malaysia Shares - with options 12,484 12,484 18,375 18,375 Shares 828 - 999 - Loan stocks - collateralised 954 - 12,988 - Loan stocks 107,571 107,571 108,715 107,954 Quoted outside Malaysia Shares - - 3,441 -

Unquoted Guaranteed Private Debt Securities OfCompanies IncorporatedIn Malaysia: Corporate bonds 495,413 495,413 937,549 937,549

2005 2004



Company No: 23742-V


Maturing within one year 1,016,877 988,068 421,308 232,012 One year to three years 103,990 103,990 412,219 412,219 Three to five years - - 201,540 201,540 Over five years 21,579 21,579 21,579 21,579

1,142,446 1,113,637 1,056,646 867,350

2005 2004

The maturity structure of money market securities held for investment by the Group and the Bank is asfollows:

Certain money market securities held have been sold under repurchase agreements for funding purposes andtheir carrying values remain in the respective asset accounts while the obligations to repurchase suchsecurities at an agreed price on a specified future date are accounted for as a liability as shown in Note 16.

The investment in related licensed commercial bank is in respect of a RM460 million 10-year unsecuredsubordinated term loan (“subloan”) to AmBank Berhad (“AmBank”) to refinance its RM460 millionexchangeable subordinated capital loan granted by Danamodal Nasional Berhad. In order to provide therefinancing arrangements to AmBank, the Bank has issued RM460 million redeemable unsecuredsubordinated bonds (“SubBonds”) as explained in Note 22. The subloan bears interest at 0.375% above theBank’s cost of SubBonds.



Company No: 23742-V

8. LOANS, ADVANCES AND FINANCING


Loans and financing:Customers 4,885,793 4,694,646 5,588,867 5,393,947 Related companies 30,000 30,000 292,110 281,470 Staff 27,137 26,427 26,569 25,879

Claims on customers under acceptance credits 3,407 3,407 9,746 9,746

Gross loans, advances andfinancing 4,946,337 4,754,480 5,917,292 5,711,042

Less: Allowance for bad and

doubtful debts andfinancing: General 69,091 66,278 80,404 77,788 Specific 157,720 153,321 378,375 362,969

226,811 219,599 458,779 440,757 Interest/Income-in-suspense 190,655 184,448 189,716 173,988

417,466 404,047 648,495 614,745

Net loans, advances and financing 4,528,871 4,350,433 5,268,797 5,096,297


Maturing within one year 3,138,673 3,092,436 3,602,273 3,451,912 One year to three years 582,764 565,017 991,196 975,311 Three to five years 439,500 340,993 726,762 687,237 Over five years 785,400 756,034 597,061 596,582

4,946,337 4,754,480 5,917,292 5,711,042

2005 2004

2005 2004

Claims on customers under acceptance credits represent the Bank's own acceptances created and discounted.Own acceptances discounted and held in hand by the Group and the Bank as at 31 March 2005 amounted toRM221,000 (RM2,601,000 as at 31 March 2004). The maturity structure of loans, advances and financing is as follows:



Company No: 23742-V


Construction 1,175,512 1,146,357 913,725 886,499 Investment holdings 782,084 782,084 931,676 931,676 Purchase of securities 722,735 722,735 761,863 761,863 Manufacturing 428,836 381,514 801,596 786,305 Finance, insurance and business services 149,531 114,560 433,051 319,889 Agriculture 320,790 307,287 417,800 399,258 General commerce 509,516 504,878 444,700 437,707 Real estate 241,098 241,098 312,524 312,524 Transport, storage and communication 199,241 156,064 583,456 574,111 Electricity, gas and water 259,772 259,772 125,062 125,062 Purchase of landed property :

(a) Residential 23,954 23,362 23,804 23,299 (b) Non-residential 66,688 56,267 85,948 74,294

Mining and quarrying 610 610 1,320 1,320 Others 65,970 57,892 80,767 77,235

4,946,337 4,754,480 5,917,292 5,711,042


Domestic :Other non-bank financial institutions: Stockbroking companies 12,437 - 11,816 - Others 38,073 50,510 294,645 294,645 Business enterprises: Small medium enterprises 592,935 592,935 767,395 767,395 Others 3,921,168 3,921,168 4,515,501 4,515,501

Government and statutory bodies 38,004 - 15,291 - Individuals 95,605 94,895 98,157 97,469 Other domestic entities 83,850 - 115,915 - Foreign entities 164,265 94,972 98,572 36,032

4,946,337 4,754,480 5,917,292 5,711,042

Loans, advances and financing analysed by interest rate sensitivity are as follows:


Variable rateCost-plus 3,363,335 3,279,565 3,874,743 3,725,170 Other variable rates 405,755 300,579 293,118 246,152

Fixed rateHousing loans 23,909 23,317 23,745 23,240 Hire purchase receivables 3,183 3,065 2,764 2,580 Other fixed rates 1,150,155 1,147,954 1,722,922 1,713,900

4,946,337 4,754,480 5,917,292 5,711,042

2005 2004

2005 2004

2005 2004Loans, advances and financing analysed by their economic purposes are as follows:

Net loans, advances and financing of the Group includes loans relating to the offshore banking companyamounting to USD46,846,000 (USD45,275,000 as at 31 March 2004) and are translated into RinggitMalaysia at the exchange rate of RM3.80 (RM3.80 as at 31 March 2004). Loans, advances and financing analysed by type of customers are as follows:



Company No: 23742-V


GrossBalance at beginning of year

As previously reported 988,080 873,360 1,112,828 930,374 Prior year's adjustments 284,938 284,938 186,850 186,850 As restated 1,273,018 1,158,298 1,299,678 1,117,224

Non-performing during the year 368,462 344,779 405,164 387,640 Amount written off (42,196) (29,784) (158,689) (108,821) Recoveries (138,865) (74,112) (132,531) (115,452) Reclassification to performing

loans and financing (350,424) (341,197) (93,905) (81,387) Debt equity conversion (80,115) (67,678) (46,699) (40,906) Balance at end of year 1,029,880 990,306 1,273,018 1,158,298

Less:Specific allowance 157,720 153,321 378,375 362,969 Interest/income-in-suspense 190,655 184,448 189,716 173,988

348,375 337,769 568,091 536,957 Non-performing loans and financing - net 681,505 652,537 704,927 621,341

Ratios of non-performing loans andfinancing to total loans, advancesand financing - net 14.82% 14.77% 13.18% 12.01%

2005 2004

Movements in non-performing loans and financing including interest and income receivables are as follows:-

During the financial year, for loans in arrears of more than 7 years, the Group and the Bank has not assignedany value as the realisable value for the property collaterals.



Company No: 23742-V


General allowance

Balance at beginning of year 80,404 77,788 86,186 82,026 Reversal of allowance

during the year (Note 31) (11,313) (11,510) (5,791) (4,238) Exchange fluctuation adjustment - - 9 - Balance at end of year 69,091 66,278 80,404 77,788

% of total loans, advances and financing less specific allowances andinterest/income-in-suspense 1.50% 1.50% 1.50% 1.50%

Specific allowance

Balance at beginning of year 378,375 362,969 339,333 308,111 Allowance during the year 106,361 104,495 195,518 192,359 Amount written back in respect

of recoveries and reversals (5,925) (5,135) (38,325) (37,316) Net charge to income statements

(Note 31) 100,436 99,360 157,193 155,043 Amount written off (321,628) (309,008) (127,434) (106,122) Reclassification from sundry

receivables 4,192 - 9,315 5,969 Debt equity conversion (3,655) - (32) (32) Balance at end of year 157,720 153,321 378,375 362,969

Interest/Income-in-suspense

Balance at beginning of yearAs previously reported 183,603 167,875 197,458 154,982 Prior year's adjustments 6,113 6,113 7,849 7,849 As restated 189,716 173,988 205,307 162,831

Interest/Income suspendedduring the year 93,975 86,137 97,504 86,659

Amount written back in respect of recoveries (72,836) (61,003) (54,442) (46,274)

Amount written back in respectof reversals (809) (809) (306) (306)

Net charge to income statements 20,330 24,325 42,756 40,079 Debt equity conversion (1,797) - - - Amount written off (17,594) (13,865) (58,413) (28,922) Exchange fluctuation adjustment - - 66 - Balance at end of year 190,655 184,448 189,716 173,988

2005 2004

Movements in allowances for bad and doubtful debts and financing and interest/income-in-suspense accountsare as follows:



Company No: 23742-V

9. OTHER ASSETS


Other receivables, deposits andprepayments, net of allowancefor doubtful debts for the Group of RM15,866,000(RM14,088,000 as at 31 March 2004) and the Bank of RM 10,677,000 (RM8,899,000 as at 31 March 2004) 69,083 62,472 137,783 120,104

Interest/Dividends receivable 42,495 35,243 55,545 51,154 Amount due from Originators 132,798 132,798 153,104 153,104 Amount due from brokers 10,496 10,496 3,584 3,584 Amount due from:

Holding company 194 194 179 179 Subsidiary companies - 2,074 - 2,023 Related companies 17,274 17,401 17,017 17,769 Associated companies - - 123 123

Assets acquired in exchange ofdebts 15,479 15,479 11,773 11,773

287,819 276,157 379,108 359,813

The movements in amount recoverable from Danaharta are as follows:


Balance at beginning of year - - 4,360 - Allowance made during the year - - (4,360) - Balance at end of year - - - -

10. STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA

2005 2004

2005 2004

Amount due from Originators represent loans, hire purchase and leasing receivables acquired from theOriginators for onward sale to Cagamas Berhad as mentioned in Note 18.

Amounts due from subsidiary companies and other related companies are unsecured, interest-free andrepresent expenses paid on behalf and interests receivable.

Amounts due from associated companies are unsecured, interest-free and represent expenses paid on behalf.

The non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance withSection 37(1)(c) of the Central Bank of Malaysia Act, 1958, the amounts of which are determined at setpercentages of total eligible liabilities.



Company No: 23742-V

11. INVESTMENTS IN SUBSIDIARY COMPANIES

Issued and Paid-up EffectivePrincipal Ordinary Capital Equity InterestActivities 2005 2004 2005 2004

RM'000 RM'000 % %Subsidiary Companies

AmInvestment Management of unit 5,539 5,539 70 70 Services Berhad trustsAMMB Consultant Investment consultant 500 500 100 100 Sdn BhdAMMB Nominees Nominee services 10 10 100 100 (Tempatan) Sdn BhdAMMB Nominees Nominee services 10 10 100 100 (Asing) Sdn BhdAmProperty Trust Management of 500 500 100 100 Management Bhd property trustsAmInvestment Asset management 2,000 2,000 70 70 Management Sdn BhdAMMB Properties Dormant -** -** 100 100 Sdn BhdMalaysian Ventures Management of 500 500 59 59 Management venture capital Incorporated Sdn BhdAM Nominees Nominee services -** -** 100 70 (Tempatan) Sdn BhdAM Nominees Nominee services -** -** 100 70 (Asing) Sdn Bhd

US$'000 US$'000

AMMB Labuan (L) Dormant 200 200 100 100 LtdAmInternational (L) Offshore banking 10,000 10,000 100 100 Ltd

** Subsidiary companies with an issued and paid up ordinary capital of RM2

On 24 June 2004, the Bank acquired 100% of the issued and paid-up ordinary capital of AM Nominees(Tempatan) Sdn Bhd and AM Nominees (Asing) Sdn Bhd for a cash consideration of RM2.00 eachfrom AmInvestment Management Sdn Bhd.

The subsidiary companies, all unquoted and incorporated in Malaysia, are:



Company No: 23742-V

12. INVESTMENTS IN ASSOCIATED COMPANIES


Unquoted shares, at cost 21,949 21,950 82,598 82,598 Share in net post acquisition

profits 13,182 - 29,748 - Exchange fluctuation adjustment 6,167 - 6,162 -

41,298 21,950 118,508 82,598 Less: Accumulated amortisation

of premium (1,866) - (2,548) - 39,432 21,950 115,960 82,598

Unsecured subordinated term loan - - 30,000 30,000 39,432 21,950 145,960 112,598

2005 2004RM'000 RM'000

Group's share of aggregate net tangible assets 29,434 92,462 Group's share of aggregate intangible assets 2,541 2,541 Premium on acquisitions, net of amortisation of RM1,866,000

(RM2,548,000 as at 31 March 2004) 7,457 20,957 39,432 115,960

Unsecured subordinated term loan - 30,000 39,432 145,960

The associated companies, all unquoted, are as follows:

Issued and Paid-upPrincipal Ordinary Capital Equity InterestActivities 2005 2004 2005 2004

RM'000 RM'000 % %

Incorporated in Malaysia

AmAssurance Berhad Life assurance and - 100,000 - 47.12 ("AmAssurance") general insuranceArab-Malaysian Dormant - 6,000 - 47.12 Services Berhad (wholly-owned by AmAssurance)Malaysian Ventures Venture capital 17 17 27.41 27.41 Sdn Bhd*Malaysian Ventures Venture capital 19 19 34.67 34.67 (Two) Sdn Bhd *AmTrustee Berhad Trustee services 500 500 20.00 20.00

2005 2004

Group

As at 31 March 2005, the carrying values of the investments in associated companies are represented by:



Company No: 23742-V

Issued and Paid-upPrincipal Ordinary Capital Equity InterestActivities 2005 2004 2005 2004

S$'000 S$'000 % %

Incorporated in Singapore

Frasers International Investment holding 14,856 14,856 49.00 49.00 Pte. Ltd. ("FIPL")#Fraser Securities Pte. Ltd. ("FSPL")# Stockbroking and 32,528 22,028 33.18 49.00 (wholly-owned by futures broker FIPL)Fraser Financial Financial planning 1,000 1,000 49.00 49.00 Planners Pte. Ltd.# advisory (wholly-owned by FIPL)Fraser Financial Insurance brokers 200 200 49.00 49.00 Advisory Pte. Ltd.# (wholly-owned by FIPL)Fraser-AMMB Research services 500 500 49.00 49.00 Research Pte. Ltd.# (wholly-owned by FSPL)Frasers Nominees Nominee Services 1 1 49.00 49.00 (Private) Limited# (wholly-owned by FSPL)

* Associated company under members' voluntary liquidation# Associated company not audited by Ernst & Young

During the financial year,

1 On 30 August 2004, Malaysian Ventures (Two) Sdn Bhd ("MV2") was wound up voluntarily pursuantto an Extraordinary General Meeting of the members of MV2 and placed under liquidation. On 10September 2004, MV2 declared and paid a first return to contributories in the amount of RM780,000representing 6,500 issued and paid-up ordinary capital held at a rate of return of RM120 per share.



Company No: 23742-V

2 On 13 October 2004, AHB entered into an agreement with the Bank for the acquisition of 47,116,000ordinary shares of RM1.00 each representing 47.116% of the issued and paid-up share capital ofAmAssurance Berhad ("AmAssurance") from the Bank for a cash consideration of RM75,762,537("Acquisition by AHB"). Subsequently, by way of a supplemental agreement dated 21 March 2005, thecash consideration was revised from RM75,762,537 to RM82,517,802, after taking into considerationthe estimated share of profits from AmAssurance for a period of 12 months from 1 April 2004 up to 31March 2005.

The Acquisition was approved by the Minister of Finance on 23 September 2004 and SC on 23February 2005 and does not require the approval of AHB's shareholders as it is an excludedtransaction pursuant to Chapter 10.02(j) of the Listing Requirements of Bursa Malaysia SecuritiesBerhad.The Acquisition by AHB was completed on 24 March 2005.



Company No: 23742-V

13. PROPERTY AND EQUIPMENT

Long Computer OfficeFreehold leasehold hardware equipment,land and land and Motor Leasehold and furniture

Group building buildings vehicles improvements software and fittings TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

COST

At beginning of year 280 20,620 3,947 19,229 76,311 18,772 139,159 Additions - - 176 1,412 2,393 769 4,750 Disposals - - (709) - (107) (39) (855) Write offs - - - - (1,634) (2) (1,636) Reclassification / Transfer - - - (6,605) 120 259 (6,226) At end of year 280 20,620 3,414 14,036 77,083 19,759 135,192

ACCUMULATED DEPRECIATION

At beginning of year 73 844 3,156 6,017 62,079 12,822 84,991 Additions 6 413 420 1,478 8,483 1,190 11,990 Disposals - - (613) - (74) (32) (719) Write offs - - - - (1,633) (2) (1,635) At end of year 79 1,257 2,963 7,495 68,855 13,978 94,627

NET BOOK VALUE

As at 31 March 2005 201 19,363 451 6,541 8,228 5,781 40,565

As at 31 March 2004 207 19,776 791 13,212 14,232 5,950 54,168

Depreciation charge for the year ended 31 March 2004 5 414 506 1,183 10,808 1,189 14,105

BALANCES AS AT 31 MARCH 2003

Cost 280 20,620 4,611 12,549 71,425 17,408 126,893 Accumulated depreciation 68 430 3,524 5,112 52,086 11,981 73,201



Company No: 23742-V

Long Computer OfficeFreehold leasehold hardware equipment,land and land and Motor Leasehold and furniture

Bank building buildings vehicles improvements software and fittings TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

COST

At beginning of year 280 20,133 3,206 19,221 69,973 15,390 128,203 Additions - - 11 1,412 1,784 240 3,447 Disposals - - (552) - (107) (31) (690) Write offs - - - - (1,634) (2) (1,636) Reclassification / Transfer - - - (6,605) 120 259 (6,226) At end of year 280 20,133 2,665 14,028 70,136 15,856 123,098


At beginning of year 73 768 2,469 6,009 56,903 9,945 76,167 Additions 6 403 358 1,478 7,979 985 11,209 Disposals - - (456) - (74) (25) (555) Write offs - - - - (1,633) (2) (1,635) At end of year 79 1,171 2,371 7,487 63,175 10,903 85,186

NET BOOK VALUE

As at 31 March 2005 201 18,962 294 6,541 6,961 4,953 37,912

As at 31 March 2004 207 19,365 737 13,212 13,070 5,445 52,036

Depreciation charge for the year ended 31 March 2004 5 404 453 1,184 10,172 955 13,173

BALANCES AS AT 31 MARCH 2003

Cost 280 20,133 3,870 12,541 65,608 14,355 116,787 Accumulated depreciation 68 364 2,890 5,103 47,092 9,327 64,844



Company No: 23742-V

The three pieces of long leasehold land, two located in the Federal Territory of Labuan and one located in theFederal Territory of Kuala Lumpur, are for lease periods of 99 years with unexpired lease periods of 53, 85and 86 years, respectively. Details of fully depreciated property and equipment which are still in use are as follows:

Computer Officehardware equipment,

Motor Leasehold and furniture2005 vehicles improvements software and fittings Total

RM'000 RM'000 RM'000 RM'000 RM'000

GroupCost 1,497 3,971 61,560 8,841 75,869

BankCost 1,139 3,962 56,851 6,314 68,266

2004

GroupCost 1,187 3,669 40,901 6,911 52,668

BankCost 774 3,669 37,124 5,543 47,110



Company No: 23742-V

14. DEPOSITS FROM CUSTOMERS


Term/Investment deposits fromCustomers 4,911,612 4,322,476 5,246,401 4,699,007

Negotiable instruments of deposit 382,824 382,824 683,458 683,458 5,294,436 4,705,300 5,929,859 5,382,465


Due within six months 5,161,661 4,572,525 5,607,001 5,060,226 Six months to one year 132,275 132,275 202,558 201,939 One year to three years 200 200 120,000 120,000 Three to five years 300 300 300 300

5,294,436 4,705,300 5,929,859 5,382,465


Business enterprises 4,153,137 3,564,809 5,008,109 4,460,715 Individuals 4,714 3,906 6,149 6,149 Others 1,136,585 1,136,585 915,601 915,601

5,294,436 4,705,300 5,929,859 5,382,465

2005 2004

2005 2004

2005 2004

The maturity structure of term/investment deposits and negotiable instruments of deposit is as follows:

The deposits are sourced from the following types of customers:



Company No: 23742-V

15. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks:Subsidiary - 159,604 - 215,196 Related 39,105 39,105 143,053 143,053 Others 836,461 798,461 1,236,023 1,183,579

Licensed merchant banks 90,265 90,265 216,698 216,698 Related licensed finance companies 528,702 528,702 1,121,408 1,121,408 Other financial institutions 3,096,883 3,096,883 2,767,071 2,767,071

4,591,416 4,713,020 5,484,253 5,647,005


Negotiable instruments of deposits 3,247,362 3,247,362 4,504,887 4,504,887 Interbank borrowings 273,140 394,744 1,054,744 1,217,496


Interbank lending (Notes 4 and 5) 2,931,424 2,733,709 2,877,282 2,783,830 Interbank borrowings (273,140) (394,744) (1,054,744) (1,217,496)

Net interbank lending 2,658,284 2,338,965 1,822,538 1,566,334

2005 2004

2005 2004

2005 2004

Included under deposits and placements of banks and other financial institutions of the Group and of theBank are the following:

As at the end of the financial year, the net interbank borrowings and lending position of the Group and theBank are as follows:



Company No: 23742-V

16. OBLIGATIONS ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS


Securities sold under repurchaseagreements to: Customers 1,314,724 1,314,724 1,416,605 1,402,098 Holding company 31,950 31,950 287 287 Related companies 117,236 117,236 67,659 67,659

1,463,910 1,463,910 1,484,551 1,470,044

17. ACCEPTANCES PAYABLE

18. AMOUNT DUE TO CAGAMAS BERHAD

2005 2004

Acceptances payable represent the Bank's own acceptances rediscounted and outstanding in the market.

Amount due to Cagamas Berhad represents the proceeds received from loans, hire purchase and leasingreceivables acquired from the Originators (excluding Islamic financing) as disclosed in Note 9 and solddirectly and indirectly to Cagamas Berhad with recourse. Under this back to back arrangement with theOriginators, the Bank acts as the intermediary financial institution and undertakes to administer thereceivables on behalf of Cagamas Berhad and to buy back any receivables which are regarded as defectivebased on prudential criteria with recourse against the Originators.



Company No: 23742-V

19. OTHER LIABILITIES


Trade payables 9,918 - 2,599 - Other payables and accruals 72,290 66,832 81,637 76,546 Provision for commitments 63 63 - - Amount due to :

Holding company 1 - 14 13 Subsidiary company - 31 - 3 Related companies 95 85 28 15 Associated companies 149 - 68 -

Taxation payable 420 - 1,494 - Zakat payable 38 38 38 38 Profit equalisation reserve 2,195 2,195 - - Proposed preference dividend 7,200 7,200 7,200 7,200 Deferred tax liabilities (Note 35) 194 - 160 -

92,563 76,444 93,238 83,815


Interest payable 42,403 41,201 46,531 47,877

The movements in profit equalisation reserve are as follows:


Balance at beginning of year - - 970 970 Provision during the year 6,042 6,042 3,025 3,025 Amount written back (3,847) (3,847) (3,995) (3,995) Balance at end of year 2,195 2,195 - -

2005 2004

2005 2004

2005 2004

Included under other payables and accruals of the Group and of the Bank are the following:

Amount due to holding company represents expenses paid on behalf.

Amount due to subsidiary company and related companies represent interest payable on depositplacements.



Company No: 23742-V

20. TERM LOANS

21. SUBORDINATED CERTIFICATES OF DEPOSITS

2005 2004RM'000 RM'000

Balance at beginning of year 200,000 200,000 Less: Unamortised discount (1,232) (2,582) Balance at end of year 198,768 197,418

Group and Bank

Included in the term loans of the Group and of the Bank in the previous financial year was a structuredarrangement between the Bank and a foreign offshore bank. The loan taken by the Bank amounted toUSD50,000,000 (equivalent to RM190,000,000) and is collateralised by an amount of RM218,500,000placed by the Bank with the counterparty. This placement was included as the Bank's deposits andplacements with other financial institutions and is reflected in Note 5. On the maturity date, the term loanwas to be settled by the Bank with a payment of USD50,000,000 and the placement with the counterpartywill be withdrawn by the Bank. The placement could not be withdrawn by the Bank unless the term loan isfirst settled by the Bank. The term loan which was interest bearing at 1.17% per annum above LIBOR wasfully repaid during the current financial year while the Bank's placement with the counterparty which wasinterest earning at 2.50% per annum was fully withdrawn.

The Subordinated Certificates of Deposits issued by the Bank represents RM200,000,000 nominal amount ofunsecured Negotiable Subordinated Certificates of Deposit (“NSCD”) issued at a discount of RM6,750,600for a total consideration of RM193,249,400. The accretion of discount of RM6,750,600 will be appliedevenly over 5 years. The NSCD has a coupon rate of 8.00 % per annum for the first five years and isredeemable on 1 March 2006 or on each anniversary date thereafter at nominal value. Subsequently, theinterest rate for year 6 is 9.00% per annum and will be increased by 0.5% per annum for years 7 to 10.

The short term loan facility of the offshore banking subsidiary company in Labuan is secured by a corporateguarantee by the holding company (2004: unsecured), with a tenure of 364 days (2004: 364 days) from 5January 2005. The short term loan facility bears interest at 0.20% per annum above LIBOR (2004: 0.775%per annum above LIBOR).



Company No: 23742-V

22. REDEEMABLE UNSECURED SUBORDINATED BONDS

(a)

(b)

(c)

23. MINORITY INTERESTS

2005 2004RM'000 RM'000

Balance at beginning of year 4,655 4,722 Share in net results of subsidiary companies 2,292 3,453 Dividends received (864) (3,520) Balance at end of year 6,083 4,655

Group

Pursuant to a Trust Deed dated 23 September 2003 , the Bank issued RM460,000,000 nominal amount ofRedeemable Unsecured Subordinated Bonds (“SubBonds”) to be used to grant a RM460,000,000 10-yearunsecured subordinated term loan to AmBank (Note 7), its related licensed commercial bank for the purposeof refinancing its RM460,000,000 exchangeable subordinated capital loan from Danamodal NasionalBerhad.

The salient features of the SubBonds are as follows:

The SubBonds bear interest at 6.5% per annum for the first five years and at 7.0% to 9.0% per annumor 3% above the yield of 5-year Malaysian Government Securities, whichever is higher for years 6 to 10.The interest is payable on a semi-annual basis.

The SubBonds are for a period of ten years maturing on 30 September 2013. However, subject to theprior approval of Bank Negara Malaysia, the Bank may redeem the SubBonds on 30 September 2008 oron each anniversary date thereafter.

The SubBonds are redeemable on 30 September 2008 or on each anniversary date thereafter at nominalvalue together with interest accrued to the date of redemption.

Minority interests in the Group represent that part of the net results of operations, or net assets, of subsidiarycompanies attributable to shares owned other than by the Bank.

The movements in minority interests in subsidiary companies are as follows:



Company No: 23742-V

24. SHARE CAPITAL

2005 2004RM'000 RM'000

Authorised: Shares of RM1.00 each Balance at beginning and end of year 2,000,000 2,000,000

Issued and fully paid: Ordinary shares of RM1.00 each 200,000 200,000 Non-cumulative convertible preference shares of RM1.00 each 100,000 100,000

300,000 300,000

Salient features of the Preference Shares are as follows:

(a) The Preference Shares shall rank in preference to the ordinary shares in issue.

(b) An annual gross dividend of 10% is payable on the shares.

(c)

(d)

25.

2005 2004RM'000 RM'000

Balance at beginning and end of year 120,000 120,000

(a)

(b)

(c)

(d)

Group and Bank

Group and Bank

The Bank shall at no time be obliged to redeem or purchase the Preference Shares or any part thereof.

Subject to approvals of the relevant authorities and holder of the Preference Shares, the PreferenceShares are convertible into new ordinary shares of RM1.00 each on the basis of one new ordinary shareof RM1.00 each for every Preference Share held.

INTEREST BEARING IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS(“ICULS”) 2002/2007

The salient features of the ICULS 2002/2007 issued to the holding company, AMMB Holdings Berhad("AHB"), are as follows:

The ICULS 2002/2007 bear interest at 6.0% per annum payable semi-annually or such other interval asmay be determined by AHB .

The ICULS 2002/2007 are convertible into new ordinary shares at any time on the basis of one newordinary share of RM1.00 each for every RM4.00 nominal amount of ICULS 2002/7 held.

The ICULS 2002/2007 were for an initial period of five years and has been extended for a further periodof five years to mature on 15 January 2007.

All new ordinary shares issued upon conversion of the ICULS 2002/7 shall rank pari passu with the thenexisting ordinary shares of the Bank except for any dividend, rights, allotments or other distributions, theentitlement date of which is before the relevant conversion date.

Under the Internal Reorganisation involving the transfer of AHB's 100% equity interest in the Bank, theICULS 2002/2007 were transferred to AIGB as part of the equity.



Company No: 23742-V

26. RESERVES

Reserves as at 31 March are analysed as follows:


Non-distributable reserves:Capital reserve 2,815 - 2,815 - Share premium 60,284 60,284 60,284 60,284 Statutory reserve 300,000 300,000 300,000 300,000 Exchange fluctuation reserve 29,617 - 29,618 -

Total non-distributable reserves 392,716 360,284 392,717 360,284

Distributable reserves:Unappropriated profit 704,090 671,666 709,107 671,485

Total distributable reserves 704,090 671,666 709,107 671,485

Total reserves 1,096,806 1,031,950 1,101,824 1,031,769

2005 2004

Movements in reserves are shown in the statements of changes in equity.

Capital reserve is in respect of dilution and accretion in net attributable assets of the Group arising fromcapitalisation of subsidiary companies’ bonus issues.

Share premium is used to record premium arising from new shares issued in the Bank.

The statutory reserve of the Bank is maintained in compliance with the provisions of the Banking andFinancial Institutions Act, 1989 and is not distributable as cash dividends.

Exchange fluctuation reserve arises on translation of foreign subsidiaries and associated company, asdescribed in the accounting policies.

Distributable reserves are those available for distribution by way of dividends.

The Bank has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment ofdividend out of all its distributable reserves as at 31 March 2005.



Company No: 23742-V

27. INTEREST INCOME


Short-term funds and depositswith financial institutions 61,133 66,592 46,474 53,581

Dealing securities 87,005 85,819 136,647 136,230 Investment securities 155,289 147,077 115,703 114,315 Loans and advances 280,355 267,199 347,520 332,517 Others 16,006 15,844 637 359 Gross interest income 599,788 582,531 646,981 637,002 Amortisation of premiums

less accretion of discounts (17,464) (24,232) (23,837) (25,592) Total before interest suspension 582,324 558,299 623,144 611,410

Interest suspended (92,188) (84,350) (93,553) (82,708) Interest recovered 73,644 61,811 54,747 46,579 Net interest suspension (18,544) (22,539) (38,806) (36,129)

Total after net interest suspension 563,780 535,760 584,338 575,281

28. INTEREST EXPENSE


Deposits from customers 251,207 229,902 270,512 264,844 Deposit of banks and other

financial institutions 33,839 44,827 56,835 62,341 Securities sold under repurchase

agreements 36,058 36,050 40,888 40,851 Subordinated deposits and term

loans 26,275 22,541 23,252 23,048 Redeemable unsecured

subordinated bonds 29,900 29,900 14,627 14,627 Others 33,122 31,343 29,119 27,819

410,401 394,563 435,233 433,530

2004

2005 2004

2005



Company No: 23742-V

29. NON-INTEREST INCOME


Fee income:Fees on loans and advances 10,723 9,747 16,120 15,477 Corporate advisory fees 24,900 24,368 21,174 20,712 Guarantee fees 11,312 9,902 15,215 12,217 Underwriting commissions 6,202 6,202 6,296 6,296 Portfolio management fees 9,829 - 8,492 - Unit trust management fees 20,009 - 24,939 - Property trust management fees 1,965 - 1,951 - Other fee income 14,005 15,725 17,573 16,283

98,945 65,944 111,760 70,985

Investment and trading income:Net income from: Dealing securities 73,346 73,609 64,691 64,691 Investment securities 5,304 4,928 1,730 - Net income/(loss) from derivatives 7,120 7,120 (2,878) (2,878) (Loss)/Gain on sale of quoted securities - net (3,514) (3,514) 25,334 25,295 Gain on sale of unquoted investments - net 2,934 2,934 9,143 9,143 Gain on disposal of investment in an associated company - 21,876 - - Gain on redemption of shares 773 773 - - Trading (loss)/gain on futures (495) (495) 63 63 Gross dividend income from: Unquoted subsidiary companies - 4,050 - 12,654 Unquoted associated company - 6,029 - 3,570 Quoted investments in Malaysia 4,100 4,100 2,855 2,855 Unquoted investments 37,746 37,746 34,618 34,618

127,314 159,156 135,556 150,011

Other income:Realised foreign exchange gain/(loss) 64 (1) 601 3 Gain on disposal of property and equipment - net 151 150 314 314 Rental income 795 795 760 760 Other non-operating income 514 - 324 -

1,524 944 1,999 1,077

227,783 226,044 249,315 222,073

2005 2004



Company No: 23742-V

30. NON-INTEREST EXPENSE


Personnel/Staff costs 84,866 72,152 74,227 60,595 Establishment costs 23,302 19,282 27,034 22,793 Marketing and communication

expenses 10,003 8,777 11,924 9,884 Administration and general

expenses 14,663 10,767 16,282 12,944 132,834 110,978 129,467 106,216

Included in the above expenditure are the following statutory disclosures:


Directors' remuneration (Note 33) 3,809 3,790 3,340 3,298 Rental of premises 8,732 8,184 8,751 8,305 Depreciation of property

and equipment (Note 13) 11,990 11,209 14,105 13,173 Amortisation of premium on

acquisition 1,274 - 1,274 - Hire of motor vehicles

and office equipment 1,082 728 872 591 Auditors' remuneration:

Statutory audit 184 130 182 130 Special audit/Limited review 112 91 52 52 Non audit fees - - 22 5

Property and equipmentwritten off 1 1 104 96

Sundry bad debts written off - net 280 280 332 321

2005 2004

2005 2004

The total number of employees of the Group and of the Bank (including executive directors) as at 31 March2005 was 1,071 (1,020 as at 31 March 2004) and 868 (828 as at 31 March 2004), respectively.

Personnel/staff costs include salaries, bonuses, contributions to employees provident fund and all other staffrelated expenses. Contributions to employees provident fund of the Group and of the Bank amounted toRM12,312,086 (RM10,518,969 for the year ended 31 March 2004) and RM10,756,469 (RM8,793,997 forthe year ended 31 March 2004), respectively.



Company No: 23742-V

31. ALLOWANCE FOR LOSSES ON LOANS AND FINANCING


Allowance/(Reversal of allowance) for bad and doubtful debts and financing: Specific allowance - net 100,436 99,360 157,193 155,043 General allowance (11,313) (11,510) (5,791) (4,238)

Bad debts and financing Written off 252 252 3,670 3,670 Recovered (30,112) (30,103) (51,371) (51,371)

Loss on disposal of loan assets - - 1,246 - (Recoveries of)/Allowance for

value impairment on amount recoverable from Danaharta (10,977) (10,977) 4,360 -

48,286 47,022 109,307 103,104

20042005



Company No: 23742-V

32. RELATED PARTY TRANSACTIONS

(a) Transactions and outstanding balances with ultimate and immediate holding companies and relatedcompanies.

Ultimate Immediate Ultimate Holding Holding Related Holding Related

Company Company Companies Company CompaniesRM'000 RM'000 RM'000 RM'000 RM'000

IncomeInterest on deposits and placements - - 20,183 - 13,813 Interest on loans - - 11,730 - 12,995 Recovery of management and other expenses - - 28,510 - 22,447 Rental income - - 102 - 96 Unsecured subordinated term loan - - 31,625 - 15,942 Fee income - 634 - - -

- 634 92,150 - 65,293

ExpenditureInterest on deposits and placements 1,186 - 19,068 1,006 45,767Interest on repo 663 - 860 - - Rental expenses - - 268 - - Interest on ICULS issued 6,766 434 - 7,220 -

8,615 434 20,196 8,226 45,767

AssetsLoans and advances - - 30,000 - 281,470 Subordinated term loan - - 460,000 - 460,000 Other assets 194 - 21,009 - 21,493

194 - 511,009 - 762,963

Liabilities/EquityDeposits and placements 21,582 - 749,971 71,017 1,491,808 Securities sold on repurchase agreements 31,950 - 117,236 287 67,659 Negotiable instrument of deposits 150,233 - - - - ICULS 2002/2007 - 120,000 - 120,000 -

203,765 120,000 867,207 191,304 1,559,467

20042005

The immediate holding and ultimate holding company of the Bank are AmInvestment Group Berhad andAMMB Holdings Berhad, both of which are incorporated in Malaysia. AMMB Holdings Berhad is quotedon the Main Board of the Bursa Malaysia Securities Berhad.

The significant transactions and outstanding balances of the Bank with its ultimate and immediateholding companies and related companies are as follows:

The above transactions have been entered into in the normal course of business and have beenestablished under terms that are no less favourable than those arranged with independent third parties.



Company No: 23742-V

(b) Directors related transactions

Company Types of transactions 2005 2004RM'000 RM'000

ExpenseAmFirst Property Trust Rental of premises 8,863 8,184 Bluestar Infotech (M) Sdn Computer maintenance 14 49 BhdMCM Consulting Sdn Bhd Computer maintenance 306 124 MCM Systems Sdn Bhd Computer maintenance 199 39 AON Insurance Broker (M) Sdn Bhd Insurance broker services 1,700 - Harpers Travel (M) Sdn Bhd Travelling expenses 818 72 Restaurant Sri Melayu Sdn Bhd Provision of food and 100 -

beveragesAmRealty Sdn Bhd Rental of premises 97 - Gubahan Impian Provision of flowers 10 -

Capital expenditure

Melawangi Sdn Bhd Purchase of four (4) units of office premises located at AMCORP Trade Centre - 7,239 Purchase of two (2) units of office lots at AMCORP

Trade Centre 3,624 - Taifab Properties Sdn Bhd Purchase of three (3) units of - 1,998

freehold office premises located at the Arab- Malaysian Business Centre ("AMBC")

Medan Delima Sdn Bhd Purchase of seven (7) units of - 2,477 freehold office premises located at the Arab- Malaysian Business Centre ("AMBC")

MCM Consulting Sdn Bhd Purchase of computer 95 2,626 hardware, software and related consultancy services

Bluestar Infotech (M) Sdn Purchase of computer - 290 Bhd hardware, software and

related consultancy services

MCM Systems Sdn Bhd Purchase of computer 653 701 hardware, software and related consultancy services

AmProperty Holdings Sdn Bhd Purchase of fourteen (14) office lots 18,620 -

The significant non-banking transactions of the Group with companies in which Tan Sri Dato’ AzmanHashim is deemed to have a substantial interest, are as follows:



Company No: 23742-V


ExpenseFinancial Park (L) Sdn Bhd Rental of premises 214 174


ExpenseComputer Systems Advisers Computer maintenance 164 3 (M) Berhad

Capital ExpenditureComputer Systems Advisers Purchase of computer 519 61 (M) Berhad hardware, software and

related consultancy services

The significant non-banking transaction of the Group with a company in which Mr. Cheah Tek Kuangis deemed to have a substantial interest, is as follows:

The significant non-banking transactions of the Group with a company in which Prof. Tan Sri Dato’ DrMohd Rashdan Haji Baba is deemed to have a substantial interest, are as follows:

The above transactions have been entered into in the normal course of business and have beenestablished on terms and conditions that are no less favourable than those arranged with independentthird parties. As at 31 March 2005 and 2004, there are no outstanding balances arising from Directors' relatedtransactions.



Company No: 23742-V

33. DIRECTORS' REMUNERATION


Executive directorsSalary and other remuneration 1,492 1,485 1,451 1,434 Bonuses 1,133 1,133 840 840 Gratuity payment 479 479 300 300 Benefits-in-kind 150 150 160 159

3,254 3,247 2,751 2,733

Non-executive directorsFees 131 119 119 95 Other remuneration 420 420 457 457 Benefits-in-kind 4 4 13 13

555 543 589 565

3,809 3,790 3,340 3,298

*

20042005

Forms of remuneration in aggregate for all the Bank's directors charged to the income statement for thefinancial year are as follows:

The remuneration attributable to the current managing director of the Bank, including estimated cash value ofbenefits-in-kind during the year amounted to RM232,127.

The remuneration attributable to the former managing director of the Bank who has been redesignated to anon-executive director during the financial year, including estimated cash value of benefits-in-kind duringthe year amounted to RM1,523,504 (RM1,747,648 for the year ended 31 March 2004).

Directors' fees for directors who are executives of companies of the Group are paid to their respectivecompanies.



Company No: 23742-V

34. TAXATION


Estimated current tax payable 60,514 59,532 53,190 52,406 Share in taxation of associated

companies incorporated inMalaysia 4,616 - 4,510 -

Transfer from deferred tax assets (Note 35 (a)) (29,943) (29,943) 1,722 1,722

Transfer to deferred tax liabilities(Note 35 (b)) 34 - (85) -

35,221 29,589 59,337 54,128 Under/(Over) provision of current

taxation in respect of prior years 32,679 32,744 (4,170) (4,150) Total 67,900 62,333 55,167 49,978


Profit before taxation 241,575 238,914 194,956 163,964

Taxation at Malaysian statutorytax rate of 28%(2004 : 28%) 67,641 66,896 54,588 45,910

Effect of different tax ratesin Labuan and certain subsidiaries (2,052) 48 (4,385) (1,172)

Interest expense on ICULS included in statementof changes in equitywhich is deductible fortax purposes (2,016) (2,016) (2,021) (2,021)

Income not subject to tax (2,322) (8,201) (7,259) (6,398) Expenses not deductible for

tax purposes 6,649 5,606 14,244 13,659 Tax expense for the year 67,900 62,333 55,167 49,978

2005 2004

2005 2004

As at the end of the current financial year, the Group has tax exempt income totalling RM2,021,000(RM2,021,000 as at 31 March 2004) respectively pertaining to subsidiary companies.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate toincome tax expense at the effective income tax rate of the Group and of the Bank is as follows:



Company No: 23742-V

35. DEFERRED TAXATION

(a) Deferred tax assets


Balance at beginning of year (22,176) (22,176) (23,898) (23,898) Net transfer (from)/to income statement (Note 34) (29,943) (29,943) 1,722 1,722 Reclassification from other assets (26,429) (26,429) - - Balance at end of year (78,548) (78,548) (22,176) (22,176)


The deferred taxation is in respect of the following: Temporary differences between depreciation and tax allowances on property and equipment 3,416 3,416 6,127 6,127 Allowance for diminution in value of investments (43,372) (43,372) (6,561) (6,561) General allowance for loans, advances and financing (18,264) (18,264) (21,742) (21,742) Allowance for value impairment - - on amount recoverable from Danaharta (19,713) (19,713) - - Profit equalisation reserve (615) (615) - -

(78,548) (78,548) (22,176) (22,176)

(b) Deferred tax liabilities


Balance at beginning of year 160 - 245 - Net transfer from income statements(Note 34) 34 - (85) - Balance at end of year 194 - 160 -

20042005

2005

20042005

2004

Deferred tax liabilities of the Group is in respect of temporary differences between tax capitalallowances and book depreciation of property and equipment.

All movements in the components of deferred tax assets are recognised in the income statement otherthan the reclassification from other assets which relates to deferred tax asset arising from allowancefor diminution in value of investments.



Company No: 23742-V

36. DIVIDENDS

BankRM'000

First and final ordinary dividend paid – 25.0%, less 28% taxation, on 200,000,000 ordinary shares of RM1.00 each in respect of financial year ended 2004 36,000 Interim ordinary dividend paid - 87.5%, less 28% taxation, on 200,000,000 ordinary shares

of RM1.00 each in respect of financial year ended 2005 126,000 Preference dividend proposed - 10%, less 28% taxation, on 100,000,000 preference

shares of RM1.00 each in respect of financial year ended 2005 7,200

169,200

First and final ordinary dividend paid - 15.0%, less 28% taxation, on 200,000,000 ordinary shares of RM1.00 each in respect of financial year ended 2003 21,600 Preference dividend proposed - 10%, less 28% taxation, on 100,000,000 preference

shares of RM1.00 each in respect of financial year ended 2004 7,200

28,800

37. EARNINGS PER SHARE

(a) Basic earnings per share


Net profit attributable to shareholder of the Bank after deducting interest on ICULS and preference dividends 156,983 162,181 121,916 99,566

Weighted average number of ordinary shares in issue ('000) 200,000 200,000 200,000 200,000

Basic earnings per share (sen) 78.5 81.1 61.0 49.8

2005

2005 2004

2004

Basic earnings per share is calculated by dividing the net profit attributable to shareholder of the Bankless interest on ICULS and preference dividends by the weighted average number of ordinary shares inissue during the financial year.

A proposed final ordinary dividend in respect of the financial year ended 31 March 2005 of 25.0%, less 28%taxation based on the issued and paid-up ordinary share capital of 200,000,000 of RM1.00 each amountingto a total dividend of RM36,000,000 have been proposed by the Directors for shareholder approval at theforthcoming Annual General Meeting. The financial statements for the current financial year do not reflectthis proposed dividend. Such dividend, if approved by the shareholder, will be accounted for inshareholder’s funds as an appropriation of retained earnings in the next financial year ending 31 March2006.



Company No: 23742-V

(b) Fully diluted earnings per share

The Bank has two categories of dilutive potential ordinary shares:(i) Preference share capital(ii) Interest Bearing Irredeemable Convertible Unsecured Loan Stocks 2002/2007


Net profit attributable to shareholder of the Bank after deducting interest on ICULS and preference dividends 156,983 162,181 121,916 99,566 Adjusted for: Interest on ICULS, 7,200 7,200 7,220 7,220 Preference dividend 7,200 7,200 7,200 7,200 Adjusted profit after taxation and minority interests 171,383 176,581 136,336 113,986

Weighted average number of ordinary shares in issue ('000) 200,000 200,000 200,000 200,000 Effect of ordinary shares issued pursuant to conversion : Preference shares ('000) 100,000 100,000 100,000 100,000 ICULS ('000) 30,000 30,000 30,000 30,000 Adjusted weighted average number of ordinary shares in issue and issuable ('000) 330,000 330,000 330,000 330,000 Fully diluted earnings per share (sen) 51.9 53.5 41.3 34.5

2005 2004

Fully diluted earnings per share is calculated by dividing the adjusted profit after taxation and minorityinterests for the financial year by the adjusted weighted average number of ordinary shares in issue andissuable during the financial year.

The adjusted weighted average number of ordinary shares in issue and issuable has been arrived atbased on the assumption that all the ICULS and Preference Shares issued and outstanding are convertedto ordinary shares at beginning of the year .



Company No: 23742-V

38.

39. CAPITAL COMMITMENTS


Authorised and contracted but not provided for: Uncalled portion of total subscription price in the share capital of AmTrustee Berhad 100 100 100 100 Purchase of office equipment, information technology equipment and solutions 3,933 3,933 19,251 19,251 Purchase of motor vehicle 1,044 1,044 - - Purchase of other investments 1,893 1,893 4,629 4,629

6,970 6,970 23,980 23,980 Authorised but not contracted for:

Purchase of office equipment, information technology equipment and solutions 5 5 - - Purchase of other investments 20,000 20,000 20,000 20,000

26,975 26,975 43,980 43,980

40. LEASE COMMITMENTS

Group BankRM'000 RM'000

Year ending 31 March2006 5,467 5,467 2007 591 591 2008 and thereafter 250 30

6,308 6,088

2005 2004

Investment portfolio funds managed on behalf of customers as at 31 March 2005 by the Group and the Bankamounted to RM7,066,876,000 (RM5,332,660,000 as at 31 March 2004) and RM140,969,000(RM132,058,000 as at 31 March 2004), respectively.

As at 31 March 2005, the capital commitments of the Group and of the Bank are as follows:

The Group and the Bank have lease commitments in respect of rental of premises and equipment on hire, allof which are classified as operating leases. A summary of the non-cancellable long-term commitments, netof sub-leases is as follows:

The lease commitments represent minimum rentals not adjusted for operating expenses which the Groupand the Bank are obligated to pay. These amounts are insignificant in relation to the minimum leaseobligations. In the normal course of business, leases that expire will be renewed or replaced by leases onother properties, thus it is anticipated that future annual minimum lease commitments will not be less thanrental expenses for the financial year.

FIDUCIARY DUTY IN RESPECT OF INVESTMENT PORTFOLIO MANAGEMENT SERVICES



Company No: 23742-V

41. COMMITMENTS AND CONTINGENCIES

Credit Risk Credit RiskPrincipal Equivalent Weighted Principal Equivalent Weighted

Group Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Derivative Financial InstrumentsInterest rate related contracts:

Interest rate futures 550,000 - - 685,000 - - Interest rate swaps: Related companies 1,700,000 34,063 6,813 636,013 13,425 2,686 Others 5,868,115 118,218 26,931 3,617,928 99,913 26,151

Foreign exchange related contracts: Forward exchange contracts 1,543,738 17,490 3,498 209,089 3,364 673 Cross currency swaps 463,600 32,512 6,502 304,000 18,525 3,705

Malaysian Government securities futures 27,900 - - 9,000 - - 10,153,353 202,283 43,744 5,461,030 135,227 33,215

CommitmentsIrrevocable commitments to extend credit maturing :

within one year 747,783 - - 579,812 - - more than one year 229,203 114,602 114,286 153,078 76,539 33,057

Sell and buy back agreements 1,797,884 1,797,884 965,427 1,451,451 1,451,451 759,285 Forward purchase commitments 113,040 113,040 20,285 363,012 363,012 322,634

2,887,910 2,025,526 1,099,998 2,547,353 1,891,002 1,114,976 Contingent LiabilitiesGuarantees given on behalf of customers 969,181 969,181 826,348 694,642 694,642 499,081 Underwriting liabilities 315,434 157,717 137,317 327,010 163,505 163,505 Certain transaction-related contingent items 495,392 247,696 216,302 690,656 345,328 344,174

1,780,007 1,374,594 1,179,967 1,712,308 1,203,475 1,006,760

14,821,270 3,602,403 2,323,709 9,720,691 3,229,704 2,154,951

20042005

In the normal course of business, the Group and Bank make various commitments and incur certain contingent liabilities with legal recourse to itscustomers. No material losses are anticipated as a result of these transactions. The commitments and contingencies are not secured against the Group'sasset.

As at 31 March 2005, the commitments and contingencies outstanding are as follows:



Company No: 23742-V

Credit Risk Credit RiskPrincipal Equivalent Weighted Principal Equivalent Weighted

Bank Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Derivative Financial InstrumentsInterest rate related contracts:

Interest rate futures 550,000 - - 685,000 - - Interest rate swaps: Related companies 1,702,092 34,160 6,832 636,013 13,425 2,686 Others 5,868,115 118,216 26,931 3,611,915 99,853 26,151

Foreign exchange related contracts: Forward exchange contracts 1,543,738 17,490 3,498 209,089 3,364 673 Cross currency swaps 463,600 32,512 6,502 304,000 18,525 3,705

Malaysian Government securities futures 27,900 - - 9,000 - - 10,155,445 202,378 43,763 5,455,017 135,167 33,215

CommitmentsIrrevocable commitments to extend credit maturing:

within one year 747,783 - - 579,812 - - more than one year 202,255 101,128 100,812 134,078 67,039 33,057

Sell and buy back agreements 1,797,884 1,797,884 965,427 1,451,451 1,451,451 759,285 Forward purchase commitments 113,040 113,040 20,285 363,012 363,012 322,634

2,860,962 2,012,052 1,086,524 2,528,353 1,881,502 1,114,976

Contingent LiabilitiesGuarantees given on behalf of customers 979,823 979,823 835,548 703,792 703,792 508,231 Underwriting liabilities 315,434 157,717 137,317 327,010 163,505 163,505 Certain transaction-related contingent items 495,392 247,696 217,744 690,656 345,328 344,174

1,790,649 1,385,236 1,190,609 1,721,458 1,212,625 1,015,910

14,807,056 3,599,666 2,320,896 9,704,828 3,229,294 2,164,101

2005 2004



Company No: 23742-V

42. RISK MANAGEMENT POLICY

MARKET RISK MANAGEMENT

The credit equivalent amount is arrived at using the credit conversion factor as per Bank Negara Malaysiaguidelines.

As required, the Bank has given a continuing guarantee to Bank Negara Malaysia on behalf of its offshorebanking subsidiary in Labuan, AmInternational (L) Ltd., to meet all its liabilities and financial obligationsand requirements.

Risk management is about managing uncertainties such that deviations from the Group’s intended objectivesare kept within acceptable levels. Sustainable profitability forms the core objectives of the Group’s riskmanagement strategy.

Every risk assumed by the Group carries with it potential for gains as well as potential to erode shareholders’value. The Group’s risk management policy is to identify, capture and analyse these risks at an early stage,continuously measure and monitor these risks and to set limits, policies and procedures to control them toensure sustainable risk-taking and sufficient returns.

The management approach towards the significant risks of the Group are enumerated below.

Market risk is the risk of loss from changes in the value of portfolios and financial instruments caused bymovements in market variables, such as interest rates, foreign exchange rates and equity prices.

The primary objective of market risk management is to ensure that losses from market risk can be promptlyarrested and risk positions are sufficiently liquid so as to enable the Group to reduce its position withoutincurring potential loss that is beyond the sustainability of the Group.

The market risk of the Group’s trading and non-trading portfolio is managed separately using value-at-riskapproach to compute the market risk exposure of non-trading portfolio and trading portfolio. Value-at-risk isa statistical measure that estimates the potential changes in portfolio value that may occur brought about bydaily changes in market rates over a specified holding period at a specified confidence level under normalmarket conditions. For the Group’s trading portfolio, the Group’s value- at-risk measurement takes a moresophisticated form by taking into account the correlation effects of various instruments in the portfolio.

The Group controls its market risk exposure of its trading and non-trading activities primarily through aseries of threshold limits. Stop loss, value-at-risk and position sensitivity limits are the primary means ofcontrol governing the trading activities of the Group while value at risk limits governs the non-tradingpositions.

To complement value-at-risk measurement, the Group also institutes a set of scenario analysis under variouspotential market conditions such as shifts in currency rates, general equity prices and interest ratemovements to assess the changes in portfolio value.



Company No: 23742-V

Non- EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest interest

month months months months years years sensitive Total rateRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETSCash and short-term funds 1,959,224 - - - - - 620,685 2,579,909 3.05 Securities purchased under

resale agreements 9,671 - - - - - - 9,671 2.87 Deposits and placements with

banks and other financial institutions - 321,823 38,000 - - - 33,100 392,923 2.87

Dealing securities 72,888 73,271 38,461 451,120 1,397,790 508,289 228,008 2,769,827 4.02 Investment securities 50,061 537,061 486,644 118,467 840,758 542,237 497,879 3,073,107 4.22 Loans, advances and financing:

- performing 2,270,516 301,276 102,739 439,854 199,868 102,389 499,815 3,916,457 6.20 - non-performing * 612,414 612,414 -

Amount due from Originators - 3,361 - 7,684 121,753 - - 132,798 4.29 Other non-interest sensitive balances - - - - - - 557,860 557,860 - TOTAL ASSETS 4,362,360 1,236,792 665,844 1,017,125 2,560,169 1,152,915 3,049,761 14,044,966


Deposits from customers 2,908,706 1,489,221 477,496 106,632 500 - 311,881 5,294,436 2.90 Deposits and placements of banks

and other financial institutions 1,204,973 660,229 698,548 362,784 709,999 599,260 355,623 4,591,416 3.39 Obligations on securities sold

under repurchase agreements 1,460,482 3,327 101 - - - - 1,463,910 2.59 Acceptances payable 996 1,456 734 - - - - 3,186 4.91 Amount due to Cagamas Berhad - 3,361 - 7,684 121,753 - - 132,798 4.29 Term loans - - 285,000 - - - - 285,000 2.98 Subordinated certificates of deposits - - - 198,768 - - - 198,768 8.85 Redeemable unsecured subordinated

bonds - - - - 460,000 - - 460,000 6.50

2005

The following table shows the interest rate sensitivity gap, by time bands, on which interest rates of instruments are next repriced on a contractual basis or, ifearlier, the dates on which the instruments mature.



Company No: 23742-V



Other non-interest sensitive balances - - - - - - 92,563 92,563 - Total Liabilities 5,575,157 2,157,594 1,461,879 675,868 1,292,252 599,260 760,067 12,522,077Minority interests - - - - - - 6,083 6,083 - Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 6.00 Shareholders' funds - - - - - - 1,396,806 1,396,806 - TOTAL LIABILITIES AND

SHAREHOLDERS' FUNDS 5,575,157 2,157,594 1,461,879 675,868 1,412,252 599,260 2,162,956 14,044,966

On-balance sheet interest sensitivitygap (1,212,797) (920,802) (796,035) 341,257 1,147,917 553,655 886,805 -

Off-balance sheet interest sensitivitygap (722,886) (1,090,609) (104,559) 875,362 776,189 266,503 - -

Total interest sensitivity gap (1,935,683) (2,011,411) (900,594) 1,216,619 1,924,106 820,158 886,805 -

Cumulative interest rate sensitivity gap (1,935,683) (3,947,094) (4,847,688) (3,631,069) (1,706,963) (886,805) -

2005



Company No: 23742-V



ASSETSCash and short-term funds 2,221,082 - - - - - 414,075 2,635,157 3.15Securities purchased under

resale agreements 2,288 - - - - - - 2,288 2.65Deposits and placements with

banks and other financial institutions - 1,227 - 218,500 - - 30,000 249,727 3.15

Dealing securities 263,344 291,882 174,194 125,520 1,425,218 667,290 203,474 3,150,922 2.99Investment securities 98,920 237,965 507,104 59,190 1,530,563 371,455 602,143 3,407,340 4.39Loans, advances and financing:

- performing 1,940,326 879,793 167,448 742,398 202,377 148,062 563,870 4,644,274 6.40- non-performing * - - - - - - 624,523 624,523 -

Amount due from Originators - - 43,723 6,218 103,163 - - 153,104 4.27Other non-interest sensitive balances - - - - - - 772,712 772,712 - TOTAL ASSETS 4,525,960 1,410,867 892,469 1,151,826 3,261,321 1,186,807 3,210,797 15,640,047


Deposits from customers 3,927,875 1,303,509 170,250 183,195 120,300 - 224,730 5,929,859 2.83Deposits and placements of banks

and other financial institutions 1,525,339 765,373 592,769 909,782 688,860 699,166 302,964 5,484,253 3.32Obligations on securities sold

under repurchase agreements 1,482,086 2,126 339 - - - - 1,484,551 2.67Acceptances payable 2,558 2,756 1,831 - - - - 7,145 4.94Amount due to Cagamas Berhad - - 43,723 6,218 103,163 - - 153,104 4.27Term loans - 114,000 - 190,000 - - - 304,000 2.29Subordinated certificates of deposits - - - - 197,418 - - 197,418 8.00Redeemable unsecured subordinated

bonds - - - - 460,000 - - 460,000 6.50

2004



Company No: 23742-V



Other non-interest sensitive balances - - - - - - 93,238 93,238 - Total Liabilities 6,937,858 2,187,764 808,912 1,289,195 1,569,741 699,166 620,932 14,113,568 Minority interests - - - - - - 4,655 4,655 - Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 6.00 Shareholders' funds - - - - - - 1,401,824 1,401,824 - TOTAL LIABILITIES AND

SHAREHOLDERS' FUNDS 6,937,858 2,187,764 808,912 1,289,195 1,689,741 699,166 2,027,411 15,640,047

On-balance sheet interest sensitivitygap (2,411,898) (776,897) 83,557 (137,369) 1,571,580 487,641 1,183,386 -

Off-balance sheet interest sensitivitygap (1,015,814) (36,184) (300,342) 47,985 1,052,866 251,489 - -

Total interest sensitivity gap (3,427,712) (813,081) (216,785) (89,384) 2,624,446 739,130 1,183,386 -

Cumulative interest rate sensitivity gap (3,427,712) (4,240,793) (4,457,578) (4,546,962) (1,922,516) (1,183,386) -

* This is arrived at after deducting the general allowance, specific allowance and interest/income-in-suspense from gross non-performing loans outstanding.

2004



Company No: 23742-V

Non- EffectiveBank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest interest


ASSETSCash and short-term funds 1,723,509 - - - - - 606,404 2,329,913 2.85 Deposits and placements with

banks and other financial institutions - 319,300 38,000 - - 38,000 33,100 428,400 2.87

Dealing securities 72,888 73,271 19,461 451,120 1,127,788 485,612 229,711 2,459,851 4.12 Investment securities 50,061 537,061 400,835 117,496 801,174 533,166 499,508 2,939,301 4.22 Loans, advances and financing:

- performing 2,218,216 272,837 31,599 439,836 199,727 102,144 499,815 3,764,174 6.26 - non-performing * - - - - - - 586,259 586,259 -

Amount due from Originators - 3,361 - 7,684 121,753 - - 132,798 4.29 Other non-interest sensitive balances - - - - - - 564,680 564,680 - TOTAL ASSETS 4,064,674 1,205,830 489,895 1,016,136 2,250,442 1,158,922 3,019,477 13,205,376

LIABILITIES ANDSHAREHOLDERS' FUNDS

Deposits from customers 2,320,758 1,488,070 477,459 106,632 500 - 311,881 4,705,300 2.83 Deposits and placements of banks

and other financial institutions 1,306,471 670,316 708,566 362,784 709,999 599,261 355,623 4,713,020 3.38 Obligations on securities sold

under repurchase agreements 1,460,482 3,327 101 - - - - 1,463,910 2.59 Acceptances payable 996 1,456 734 - - - - 3,186 4.91 Amount due to Cagamas Berhad 3,361 7,684 121,753 - - 132,798 4.29 Subordinated certificates of deposits - - - 198,768 - - - 198,768 8.85 Redeemable unsecured subordinated

bonds - - - - 460,000 - - 460,000 6.50

2005



Company No: 23742-V



Other non-interest sensitive balances - - - - - - 76,444 76,444 - Total Liabilities 5,088,707 2,166,530 1,186,860 675,868 1,292,252 599,261 743,948 11,753,426 Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 6.00 Shareholder's funds - - - - - - 1,331,950 1,331,950 - TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 5,088,707 2,166,530 1,186,860 675,868 1,412,252 599,261 2,075,898 13,205,376

On-balance sheet interest sensitivitygap (1,024,033) (960,700) (696,965) 340,268 838,190 559,661 943,579 -

Off-balance sheet interest sensitivitygap (722,886) (1,090,609) (104,559) 875,362 776,189 266,503 - -

Total interest sensitivity gap (1,746,919) (2,051,309) (801,524) 1,215,630 1,614,379 826,164 943,579 -

Cumulative interest rate sensitivity gap (1,746,919) (3,798,228) (4,599,752) (3,384,122) (1,769,743) (943,579) -

2005



Company No: 23742-V



ASSETSCash and short-term funds 1,747,630 - - - - - 411,606 2,159,236 3.15Deposits and placements with

banks and other financial institutions - - - 522,500 76,000 - 30,000 628,500 3.15

Dealing securities 263,344 291,882 155,194 125,520 1,425,218 667,290 203,474 3,131,922 2.99Investment securities - 150,113 466,578 59,190 1,483,338 365,884 592,063 3,117,166 4.39Loans, advances and financing:

- performing 1,898,874 834,522 167,440 742,382 202,201 143,455 563,870 4,552,744 6.40- non-performing * - - - - - - 543,553 543,553 -

Amount due from Originators - - 43,723 6,218 103,163 - - 153,104 4.27Other non-interest sensitive balances - - - - - - 756,540 756,540 - TOTAL ASSETS 3,909,848 1,276,517 832,935 1,455,810 3,289,920 1,176,629 3,101,106 15,042,765


Deposits from customers 3,491,929 1,192,062 170,250 183,195 120,299 - 224,730 5,382,465 2.83Deposits and placements of banks

and other financial institutions 1,627,291 826,173 592,769 909,782 688,860 699,166 302,964 5,647,005 3.32Obligations on securities sold

under repurchase agreements 1,467,579 2,126 339 - - - - 1,470,044 2.67Acceptances payable 2,558 2,756 1,831 - - - - 7,145 4.94Amount due to Cagamas Berhad - - 43,723 6,218 103,163 - - 153,104 4.27Term loans - - - 190,000 - - - 190,000 2.29Subordinated certificates of deposits - - - - 197,418 - - 197,418 8.00Redeemable unsecured subordinated

bonds - - - - 460,000 - - 460,000 6.50

2004



Company No: 23742-V



Other non-interest sensitive balances - - - - - - 83,815 83,815 - Total Liabilities 6,589,357 2,023,117 808,912 1,289,195 1,569,740 699,166 611,509 13,590,996 Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 6.00Shareholder's funds - - - - - - 1,331,769 1,331,769 - TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 6,589,357 2,023,117 808,912 1,289,195 1,689,740 699,166 1,943,278 15,042,765

On-balance sheet interest sensitivitygap (2,679,509) (746,600) 24,023 166,615 1,600,180 477,463 1,157,828 -

Off-balance sheet interest sensitivitygap (1,015,814) (36,184) (300,342) 47,985 1,052,866 251,489 - -

Total interest sensitivity gap (3,695,323) (782,784) (276,319) 214,600 2,653,046 728,952 1,157,828 -

Cumulative interest rate sensitivity gap (3,695,323) (4,478,107) (4,754,426) (4,539,826) (1,886,780) (1,157,828) -

* This is arrived at after deducting the general allowance, specific allowance and interest/income-in-suspense from gross non-performing loans outstanding.

2004



Company No: 23742-V

LIQUIDITY RISK

-

-

-

Liquidity risk is the risk that the organization will not be able to fund its day-to-day operations at a reasonablecost.

The primary objective of liquidity risk management framework is to ensure the availability of sufficient fundsat a reasonable cost to honour all financial commitments as it becomes due.

The secondary objective is to ensure an optimal funding structure and to balance the key liquidity riskmanagement objectives, which includes diversification of funding sources, customer base, and maturityperiod.

The ongoing liquidity risk management at the Group is based on the following key strategies:

Management of cash-flow; an assessment of potential cash flow mismatches that may arise over a periodof one-year ahead and the maintenance of adequate cash and liquefiable assets over and above thestandard requirements of Bank Negara Malaysia.

Scenario analysis; a simulation on liquidity demands of new business, changes in portfolio as well asstress scenarios based on historical experience of large withdrawals.

Diversification and stabilisation of liabilities through management of funding sources, diversification ofcustomer depositor base and inter-bank exposures.

In the event of actual liquidity crisis occurring, a Contingency Funding Plan provides a formal process toidentify a liquidity crisis and detailing responsibilities among the relevant departments to ensure orderlyexecution of procedures to restore the liquidity position and confidence in the Group.



Company No: 23742-V

Group Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificmonth months months months years years maturity Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

ASSETSCash and short-term funds 2,541,024 - - - - - 38,885 2,579,909 Securities purchased under

resale agreements 9,671 - - - - - - 9,671 Deposits and placements with

banks and other financial institutions - 354,923 38,000 - - - - 392,923

Dealing securities 90,081 73,271 35,326 486,353 1,409,667 612,740 62,389 2,769,827 Investment securities 71,482 537,061 429,644 124,138 873,762 1,018,142 18,878 3,073,107 Loans, advances and financing 1,743,479 1,015,516 65,137 520,852 816,632 52,765 314,490 4,528,871 Amount due from Originators - 3,361 - 7,684 121,753 - - 132,798 Other assets 13,301 4,862 1,132 4,160 13,222 7,214 111,130 155,021 Deferred tax assets - - - - - - 78,548 78,548 Statutory deposit with Bank

Negara Malaysia - - - - - - 244,294 244,294 Investments in associated companies - - - - - - 39,432 39,432 Property and equipment - - - - - - 40,565 40,565 TOTAL ASSETS 4,469,038 1,988,994 569,239 1,143,187 3,235,036 1,690,861 948,611 14,044,966


Deposits from customers 3,105,146 1,568,124 488,391 132,275 500 - - 5,294,436 Deposits and placements of banks

and other financial institutions 1,337,077 839,400 732,945 363,196 719,537 599,261 - 4,591,416 Obligations on securities sold

under repurchase agreements 1,460,482 3,428 - - - - - 1,463,910 Acceptances payable 996 1,456 734 - - - - 3,186 Amount due to Cagamas Berhad - 3,361 - 7,684 121,753 - - 132,798 Other liabilities 20,683 10,069 6,787 1,614 3,049 6,991 43,370 92,563 Term loans - - - 285,000 - - - 285,000

2005

The following table shows the maturity analysis of the Group’s assets and liabilities based on contractual terms.



Company No: 23742-V



Subordinated certificates of deposits - - - - - 198,768 - 198,768 Redeemable unsecured subordinated

bonds - - - - - 460,000 - 460,000 Total Liabilities 5,924,384 2,425,838 1,228,857 789,769 844,839 1,265,020 43,370 12,522,077 Minority interests - - - - - - 6,083 6,083 Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 Shareholders' funds - - - - - - 1,396,806 1,396,806 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 5,924,384 2,425,838 1,228,857 789,769 964,839 1,265,020 1,446,259 14,044,966

Net maturity mismatch (1,455,346) (436,844) (659,618) 353,418 2,270,197 425,841 (497,648) -

2005



Company No: 23742-V



ASSETSCash and short-term funds 2,628,782 - - - - - 6,375 2,635,157 Securities purchased under

resale agreements 2,288 - - - - - - 2,288 Deposits and placements with

banks and other financial institutions - 21,227 10,000 218,500 - - - 249,727

Dealing securities 266,686 288,542 146,345 135,320 1,550,090 619,049 144,890 3,150,922 Investment securities 217,669 199,965 507,103 83,087 1,526,549 849,572 23,395 3,407,340 Loans, advances and financing 2,101,674 769,021 45,697 626,158 1,356,291 369,956 - 5,268,797 Amount due from Originators - - 43,723 6,219 103,162 - - 153,104 Other assets 16,447 5,499 8,440 1,014 33,801 10,391 150,412 226,004 Deferred tax assets - - - - - - 22,176 22,176 Statutory deposit with Bank

Negara Malaysia - - - - - - 324,404 324,404 Investments in associated companies - - - - - - 145,960 145,960 Property and equipment - - - - - - 54,168 54,168 TOTAL ASSETS 5,233,546 1,284,254 761,308 1,070,298 4,569,893 1,848,968 871,780 15,640,047


Deposits from customers 4,076,476 1,332,108 199,037 201,938 120,300 - - 5,929,859 Deposits and placements of banks


under repurchase agreements 1,482,086 2,126 339 - - - - 1,484,551 Acceptances payable 2,558 2,756 1,831 - - - - 7,145 Amount due to Cagamas Berhad - - 43,723 6,219 103,162 - - 153,104 Other liabilities 17,244 10,765 3,164 12,777 6,900 7,987 34,401 93,238 Term loans - - - 114,000 190,000 - - 304,000

2004



Company No: 23742-V




bonds - - - - - 460,000 - 460,000 Total Liabilities 7,297,533 2,221,371 841,328 1,245,141 1,109,222 1,364,572 34,401 14,113,568 Minority interests - - - - - - 4,655 4,655 Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 Shareholders' funds - - - - - - 1,401,824 1,401,824 TOTAL LIABILITIES AND

SHAREHOLDERS' FUNDS 7,297,533 2,221,371 841,328 1,245,141 1,229,222 1,364,572 1,440,880 15,640,047

Net maturity mismatch (2,063,987) (937,117) (80,020) (174,843) 3,340,671 484,396 (569,100) -

2004



Company No: 23742-V

Bank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificmonth months months months years years maturity Total


ASSETSCash and short-term funds 2,305,309 - - - - - 24,604 2,329,913 Deposits and placements with

banks and other financial institutions - 390,400 38,000 - - - - 428,400

Dealing securities 90,081 73,271 35,326 486,353 1,120,665 590,062 64,093 2,459,851 Investment securities 50,061 537,061 400,835 117,496 782,989 1,011,353 39,506 2,939,301 Loans, advances and financing 1,700,652 1,011,588 58,488 508,438 710,799 32,560 327,908 4,350,433 Amount due from Originators - 3,361 - 7,684 121,753 - - 132,798 Other assets 2,733 550 390 4,130 13,326 7,214 115,016 143,359 Deferred tax assets - - - - - - 78,548 78,548 Statutory deposit with Bank

Negara Malaysia - - - - - - 244,294 244,294 Investments in subsidiary companies - - - - - - 38,617 38,617 Investments in associated companies - - - - - - 21,950 21,950 Property and equipment - - - - - - 37,912 37,912 TOTAL ASSETS 4,148,836 2,016,231 533,039 1,124,101 2,749,532 1,641,189 992,448 13,205,376


Deposits from customers 2,517,198 1,566,973 488,354 132,275 500 - - 4,705,300 Deposits and placements of banks


under repurchase agreements 1,460,482 3,428 - - - - - 1,463,910 Acceptances payable 996 1,456 734 - - - - 3,186 Amount due to Cagamas Berhad - 3,361 - 7,684 121,753 132,798 Other liabilities 11,209 10,045 4,667 1,566 3,049 6,991 38,917 76,444 Term loans - - - - - - - -

2005



Company No: 23742-V




bonds - - - - - 460,000 - 460,000 Total Liabilities 5,486,566 2,386,663 1,226,700 504,721 844,839 1,265,020 38,917 11,753,426 Irredeemable Convertible Unsecured

Loan Stocks 2002/2007 - - - - 120,000 - - 120,000 Shareholder's funds - - - - - - 1,331,950 1,331,950 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 5,486,566 2,386,663 1,226,700 504,721 964,839 1,265,020 1,370,867 13,205,376


2005



Company No: 23742-V



ASSETSCash and short-term funds 2,155,330 - - - - - 3,906 2,159,236 Deposits and placements with

banks and other financial institutions - 20,000 10,000 522,500 76,000 - - 628,500

Dealing securities 266,686 288,542 146,345 135,320 1,531,090 619,049 144,890 3,131,922 Investment securities 114,000 150,113 466,578 59,190 1,464,576 844,645 18,064 3,117,166 Loans, advances and financing 1,979,677 765,034 43,709 620,248 1,318,155 369,474 - 5,096,297 Amount due from Originators - - 43,723 6,219 103,162 - - 153,104 Other assets 9,362 925 6,233 973 33,801 10,391 145,024 206,709 Deferred tax assets - - - - - - 22,176 22,176 Statutory deposit with Bank

Negara Malaysia - - - - - - 324,404 324,404 Investments in subsidiary companies - - - - - - 38,617 38,617 Investments in associated companies - - - - - - 112,598 112,598 Property and equipment - - - - - - 52,036 52,036 TOTAL ASSETS 4,525,055 1,224,614 716,588 1,344,450 4,526,784 1,843,559 861,715 15,042,765


Deposits from customers 3,640,530 1,220,660 199,037 201,938 120,300 - - 5,382,465 Deposits and placements of banks


under repurchase agreements 1,467,579 2,126 339 - - - - 1,470,044 Acceptances payable 2,558 2,756 1,831 - - - - 7,145 Amount due to Cagamas Berhad - - 43,723 6,219 103,162 - - 153,104 Other liabilities 12,106 10,692 3,116 12,777 6,900 7,987 30,237 83,815 Term loans - - - - 190,000 - - 190,000

2004



Company No: 23742-V




bonds - - - - - 460,000 - 460,000 Total Liabilities 6,943,894 2,170,650 841,280 1,131,141 1,109,222 1,364,572 30,237 13,590,996 Irredeemable Convertible Unsecured

- - - - 120,000 - - 120,000 Shareholder's funds - - - - - - 1,331,769 1,331,769 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 6,943,894 2,170,650 841,280 1,131,141 1,229,222 1,364,572 1,362,006 15,042,765


2004



Company No: 23742-V

CREDIT RISK MANAGEMENT

OPERATIONAL RISK MANAGEMENT

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its paymentobligations. Exposure to credit risk arises primarily from lending and guarantee activities and, to a lesserextent, pre-settlement and settlement exposures of sales and trading activities.

The primary objective of the credit risk management framework is to ensure that exposure to credit risk isalways kept within its capability and financial capacity to withstand potential future losses.

For non-retail credits, risk measurement begins with an assessment and rating of the financial standing of theborrower or counterparty using an internally developed credit rating model. The model consists ofquantitative and qualitative scores which are translated into a rating grade, which ranges from “AAA”(lowest risk) to “C” (highest risk).

Credit risk is quantified based on Expected Default Frequencies and Expected Losses on default from itsportfolio of loans and off-balance sheet commitments. Expected Default Frequencies are calibrated to theinternal rating model while Loan Loss Estimates are based on past portfolio default experiences.

The Group’s lending activities are guided by internal credit policies and guidelines that are approved by theBoard of Directors. Within these policies, name limits restrict total exposure allowed to corporate groupsaccording to their level of creditworthiness, while sector limits ensure that the Group’s total credit exposureto each economic sector is within prudent thresholds.

Operational risk is the potential loss from a breakdown in internal process, systems, deficiencies in peopleand management or operational failure arising from external events. It is increasingly recognised thatoperational risk is the single most widespread risk facing financial institutions today.

Operational risk management is the discipline of systematically identifying the critical potential points andcauses of failure, assess the potential cost and to minimise the impact of such risk through the initiation ofrisk mitigating measures and policies.

The Group minimises operational risk by putting in place appropriate policies, internal controls andprocedures as well as maintaining back-up procedures for key activities and undertaking contingencyplanning. These are supported by independent reviews by the Group’s Internal Audit team.



Company No: 23742-V

LEGAL AND REGULATORY RISK

RISK MANAGEMENT POLICY ON FINANCIAL DERIVATIVES

Purpose of engaging in financial derivatives

The Group manages legal and regulatory risks to its business. Legal risk arises from the potential thatbreaches of applicable laws and regulatory requirements, unenforceability of contracts, lawsuits, or adversejudgement, may lead to the incurrence of losses, disrupt or otherwise resulting in financial and reputationalrisk.

Legal risk is managed by internal legal counsel and where necessary, in consultation with external legalcounsel to ensure that legal risk is minimised.

Regulatory risk is managed through the implementation of measures and procedures within the organizationto facilitate compliance with regulations. These include a compliance monitoring and reporting process thatrequires identification of risk areas, prescription of controls to minimize these risks, staff training andassessments, provision of advise and disseminating of information.

Financial derivative instruments are contracts whose value is derived from one or more underlying financialinstruments or indices. They include swaps, forward rate agreements, futures, options and combinations ofthese instruments. Derivatives are contracts that transfer risks, mainly market risks. Financial derivatives isone of the financial instruments engaged by the Group both for revenue purposes as well as to manage theGroup’s own market risk exposure. The Group’s involvement in financial derivatives is currently focussedon interest rate derivatives and foreign exchange rate derivatives.

The principal exchange rate contracts used are forward foreign exchange contracts and cross currency swaps.Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency ona specified future date at an agreed rate. A cross currency swap generally involves the exchange, or notionalexchange, of equivalent amounts of two currencies and a commitment to exchange interest periodically untilthe principal amounts are re-exchanged on a future date.

The principal interest rate contracts used are interest rate futures, interest rate swaps and forward rateagreements. Forward rate agreements are contracts for the payment of the difference between a specifiedinterest rate and a reference rate on a notional deposit at a future settlement date. There is no exchange ofprincipal. An interest rate futures is an exchange traded contract whose value is based on the differencebetween a specific interest rate and a reference rate on a notional deposit or fixed income security at a futuresettlement date. Interest rate swap transactions generally involve the exchange of fixed and floating interestpayment obligations without the exchange of the underlying principal amounts.

For revenue purposes, the Group maintains trading positions in these instruments and engages in transactionswith customers to satisfy their needs in managing their respective interest rate and foreign exchange rateexposures. Derivative transactions generate income for the Group from the buy-sell spreads. The Group alsotakes conservative exposures, within acceptable limits, to carry an inventory of these instruments in order toprovide market liquidity and to earn potential gains on fluctuations in the value of these instruments.



Company No: 23742-V

Fair value of financial derivatives

Group BankPrincipal Fair Principal Fair Amount Value Amount ValueRM'000 RM'000 RM'000 RM'000

Interest rate related contracts:Interest rate futures 550,000 448 550,000 448 Interest rate swaps 7,572,299 112 7,570,207 140

Malaysian Government Securities futures 27,900 (158) 27,900 (158) Foreign exchange related contracts:

Forward exchange contracts 1,543,738 (18) 1,543,738 (18) Cross currency swaps 463,600 (1,333) 463,600 (1,333)

10,157,537 (949) 10,155,445 (921)

Interest rate related contracts:Interest rate futures 685,000 (205) 685,000 (205) Interest rate swaps 4,253,941 3,444 4,247,928 3,444

Malaysian Government Securities futures 9,000 (26) 9,000 (26) Foreign exchange related contracts:

Forward exchange contracts 209,089 (212) 209,089 (212) Cross currency swaps 304,000 (2,732) 304,000 (2,732)

5,461,030 269 5,455,017 269

Risk associated with financial derivatives

Market risk of derivatives used for trading purposes

2004

2005

The estimated fair values of the Group’s outstanding derivative financial instruments are as below. These arestand-alone velues without taking into account their potential offsetting relationships with other non-derivatives exposures of the Group. As such, no adjustment is made in the financial statements.

As derivatives are contracts that transfer risks, they expose the holder to the same types of market and creditrisks as other financial instruments, and the Group manages these risks in a consistent manner under theoverall risk management framework.

As part of the asset and liability exposure management, the Group uses derivatives to manage the Group’smarket risk exposure. As the value of these financial derivatives are principally driven by interest rate andforeign exchange rate factors, the Group uses them to reduce the overall interest rate and foreign exchangerate exposures of the Group. These are performed by entering into an exposure in derivatives that producesopposite value movements vis-à-vis exposures generated by other non-derivative activities of the Group. TheGroup manages these risks on a portfolio basis. Hence, exposures on derivatives are aggregated or nettedagainst similar exposures arising from other financial instruments engaged by the Group.

Market risk arising from the interest rate-related and foreign exchange-related derivative contracts measuresthe potential losses to the value of these contracts due to changes in market rates/prices. Exposures to marketrisk may be reduced through offsetting on and off-balance sheet positions.



Company No: 23742-V

Credit risk of derivatives

The contractual amounts of these contracts provide only a measure of involvement in these types oftransactions and do not represent the amounts subject to market risk. Value-at-risk method is used tomeasure the market risk from these contracts. Value-at-risk, is a statistical measure that estimates thepotential changes in portfolio value that may occur brought about by daily changes in market rates over a 90-day period at a 99% confidence level under normal market condition.

As at 31 March 2005, value at risk of foreign exchange-related derivative contracts used for trading purposesof the Group was RM25,849 (RM28,650 as at 31 March 2004) and the Bank was RM25,849 (RM28,650 asat 31 March 2004).

The value at risk of the interest rate related derivative contracts used for trading purposes was RM5,392,001(RM2,475,127 as at 31 March 2004) and RM5,391,992 (RM2,471,680 as at 31 March 2004) for the Groupand the Bank, respectively.

Counterparty credit risk arises from the possibility that a counterparty may be unable to meet the terms of thederivative contracts. Unlike conventional asset instruments, the Group’s financial loss is not the entirecontracted principal value of the derivatives, but rather a fraction equivalent to the cost to replace thedefaulted contract with another in the market. The cost of replacement is equivalent to the differencebetween the original value of the derivatives at time of contract with the defaulted counterparty and thecurrent fair value of a similar substitute at current market prices. The Group will only suffer a replacementcost if the contract carries a fair value gain at time of default.

As at 31 March 2005, the amount of credit risk, measured in terms of the cost to replace the profitablecontracts, was RM20,257,362 (RM8,126,433 as at 31 March 2004) and RM20,286,719 (RM8,413,487 as at31 March 2004) for the Group and the Bank, respectively. This amount will increase or decrease over the lifeof the contracts, mainly as a function of movement in market rates and time.



Company No: 23742-V

43. FAIR VALUES OF FINANCIAL INSTRUMENTS

Group BankCarrying Fair Carrying FairAmount Value Amount ValueRM'000 RM'000 RM'000 RM'000

Financial AssetsCash and short-term funds 2,579,909 2,579,909 2,329,913 2,329,913 Securities purchased under

resale agreements 9,671 9,671 - - Deposits and placements with

banks and other financial institutions 392,923 392,121 428,400 427,598

Dealing securities 2,769,827 2,770,577 2,459,851 2,460,257 Investment securities 3,073,107 3,093,775 2,939,301 2,952,689 Loans, advances and financing * 4,597,962 4,648,155 4,416,711 4,466,846 Amount due from Originators 132,798 139,027 132,798 139,027 Other financial assets 139,542 139,542 127,880 127,880

13,695,739 13,772,777 12,834,854 12,904,210 Non-financial assets 349,227 370,522 TOTAL ASSETS 14,044,966 13,205,376

2005

Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financialliability or equity instrument of another enterprise. The fair value of a financial instrument is the amount atwhich the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’slength transaction, other than a forced or liquidated sale. The information presented herein represents bestestimates of fair values of financial instruments at the balance sheet date.

Where available, quoted and observable market prices are used as the measure of fair values. Where suchquoted and observable market prices are not available, fair values are estimated based on a number ofmethodologies and assumptions regarding risk characteristics of various financial instruments, discount rates,estimates of future cash flows and other factors. Changes in the assumptions could materially affect theseestimates and the corresponding fair values.

In addition, fair value information for non-financial assets and liabilities such as investments in subsidiarycompanies and taxation are excluded, as they do not fall within the scope of MASB 24, which requires thefair value information to be disclosed.

The estimated fair values of the Group’s and the Bank’s financial instruments are as follows:



Company No: 23742-V


Financial LiabilitiesDeposits from customers 5,294,436 5,295,085 4,705,300 4,705,949 Deposits and placements of

banks and other financial institutions ^ 4,591,416 4,544,645 4,713,020 4,666,130

Obligations on securities sold underrepurchase agreements 1,463,910 1,463,910 1,463,910 1,463,910

Acceptances payable 3,186 3,186 3,186 3,186 Amount due to Cagamas Berhad 132,798 139,027 132,798 139,027 Term loans 285,000 285,000 - - Subordinated certificates of

deposits 198,768 220,671 198,768 220,671 Redeemable unsecured

subordinated bonds 460,000 435,906 460,000 435,906 Other financial liabilities 89,754 89,754 74,249 74,249

12,519,268 12,477,184 11,751,231 11,709,028 Non-Financial LiabilitiesOther non-financial liabilities 2,809 2,195 Minority interests 6,083 - Shareholder's funds 1,516,806 1,451,950

1,525,698 1,454,145 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 14,044,966 13,205,376

Financial AssetsCash and short-term funds 2,635,157 2,635,157 2,159,236 2,159,236 Securities purchased under

resale agreements 2,288 2,288 - - Deposits and placements with

banks and other financial institutions 249,727 249,727 628,500 628,500

Dealing securities 3,150,922 3,151,460 3,131,922 3,132,080 Investment securities 3,407,340 3,621,408 3,117,166 3,330,616 Loans, advances and financing * 5,349,201 5,427,144 5,174,085 5,248,986 Amount due from Originators 153,104 153,901 153,104 153,901 Other financial assets 214,231 214,231 194,936 194,936


2004

2005



Company No: 23742-V


Financial LiabilitiesDeposits from customers 5,929,859 5,929,668 5,382,465 5,382,274 Deposits and placements of

banks and other financial institutions 5,484,253 5,399,693 5,647,005 5,382,445

Obligations on securities sold underrepurchase agreements 1,484,551 1,484,551 1,470,044 1,470,044

Acceptances payable 7,145 7,145 7,145 7,145 Amount due to Cagamas Berhad 153,104 153,901 153,104 153,901 Term loans 304,000 302,771 190,000 188,771 Subordinated certificates of

deposits 197,418 243,448 197,418 243,448 Redeemable unsecured

subordinated bonds 460,000 473,989 460,000 473,989 Other financial liabilities 91,584 91,584 83,815 83,815

14,111,914 14,086,750 13,590,996 13,385,832 Non-Financial LiabilitiesOther non-financial liabilities 1,654 - Minority interests 4,655 - Shareholder's funds 1,521,824 1,451,769

1,528,133 1,451,769 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 15,640,047 15,042,765

*

^

2004

The general allowance for loans, advances and financing for the Group and the Bank amounting toRM69,091,000 (RM80,404,000 as at 31 March 2004) and RM66,278,000 (RM77,788,000 as at 31March 2004) respectively has been included under non-financial assets.

The fair value of deposits with financial institutions is below its carrying amount as a result of anincrease in Klibor rates. The Group has not reduced the carrying values as uncertainties surrounding thecircumstances may change and any changes in uncertainties could affect the resulting fair valueestimates.



Company No: 23742-V

(a) Cash And Short-Term Funds

(b)

(c) Dealing And Investment Securities

(d) Loans, Advances And Financing And Subordinated Term Loans (“Loans And Financing”)

(e)

The fair values of derivatives financial instruments are shown in Note 43.

The fair values of contingent liabilities and undrawn credit facilities are not readily ascertainable. Thesefinancial instruments are presently not sold or traded. They generate fees that are in line with market prices forsimilar arrangements. The estimated fair value may be represented by the present value of the fees expected tobe received, less associated costs and potential losses that may arise should these commitments crystalise. TheGroup assesses that their respective fair values are unlikely to be significant from the carrying value given thatthe overall level of fees involved is not significant and no provision is necessary to be made.

The following methods and assumptions were used to estimate the fair value of assets and liabilities as at 31March 2005 and 31 March 2004:

The carrying values are a reasonable estimate of the fair values because of negligible credit risk and short-term in nature or frequent repricing.

The fair values of securities purchased under resale agreements and deposits and placements with banksand other financial institutions with remaining maturities less than six months are estimated toapproximate their carrying values. For securities purchased under resale agreements and deposits andplacements with financial institutions with maturities of more than six months, the fair values areestimated based on discounted cash flows using the prevailing Klibor rates and interest rate swap rates.

Securities Purchased Under Resale Agreements And Deposits And Placements With Banks AndOther Financial Institutions

The fair value of variable rate loans and financing are estimated to approximate their carrying values. Forfixed rate loans and financing, the fair values are estimated based on expected future cash flows ofcontractual instalment payments and discounted at prevailing indicative rates adjusted for credit risk. Inrespect of non-performing loans and financing, the fair values are deemed to approximate the carryingvalues, net of interest/income in-suspense and specific allowance for bad and doubtful debts andfinancing.

The fair values of deposits liabilities payable on demand (“current and savings deposits”) or withremaining maturities of less than six months are estimated to approximate their carrying values at balancesheet date.

Deposits From Customers, Deposits And Placements Of Banks And Other Financial InstitutionsAnd Obligations On Securities Sold Under Repurchase Agreements

The estimated fair value is based on quoted or observable market prices at the balance sheet date. Wheresuch quoted or observable market prices are not available, the fair value is estimated using discountedcash flow or net tangible assets techniques. The fair values of unquoted debt equity conversion securitieswhich are not actively traded, are estimated to be at par value, taking into consideration of the underlyingcollateral values.Where discounted cash flow techniques are used, the estimated future cash flows arediscounted using market indicative rates of similar instruments at the balance sheet date.



Company No: 23742-V

(f) Acceptances Payables

(g) Amount Due To Cagamas Berhad

(h)

(i) Interest Rate Swaps, Futures And Forward Rate Agreements

(j) Short Term Financial Assets and Financial Liabilities

The carrying values are a reasonable estimate of their fair values based on their short-term nature.

The fair values for amount due to Cagamas Berhad are determined based on discounted cash flows offuture instalment payments at prevailing rates quoted by Cagamas Berhad as at balance sheet date.

The fair values of borrowings with remaining maturities of less than six months are estimated toapproximate their carrying values at balance sheet date. The fair values of borrowings with remainingmaturities of more than six months are estimated based on discounted cash flows using market indicativerates of instruments with similar risk profiles at the balance sheet date.

Term Loans, Subordinated Certificates of Deposits And Subordinated Bonds

The estimated fair values is based on the market price to enter into an offsetting contract at balancesheet date.

The fair values of the other financial assets and other financial liabilities, which are considered shortterm in nature, are estimated to be approximately their carrying values.

As assumptions were made regarding risk characteristics of the various financial instruments, discount rates,future expected loss experience and other factors, changes in the uncertainties and assumptions couldmaterially affect these estimates and the resulting value estimates.

The fair value of term deposits, negotiable instrument of deposits and obligations on securities soldunder repurchase agreements with remaining maturities of more than six months are estimated basedon discounted cash flows using Klibor rates and interest rate swap rates.



Company No: 23742-V

44. NET TANGIBLE ASSETS PER SHARE (RM)


Total assets 14,044,966 13,205,377 15,640,047 15,042,765 Less :Total liabilities 12,522,077 11,753,426 14,113,568 13,590,996 Minority interests 6,083 - 4,655 - Unamortised premium on

acquisitions 7,457 - 20,957 - 12,535,617 11,753,426 14,139,180 13,590,996

Net tangible assets 1,509,349 1,451,951 1,500,867 1,451,769 Less :Interest Bearing Irredeemable Convertible Unsecured Loan Stocks 2002/2007 ("ICULS") 120,000 120,000 120,000 120,000 Preference share capital 100,000 100,000 100,000 100,000 Net tangible assets after deducting the nominal amounts of ICULS 2002/2007 and preference share capital 1,289,349 1,231,951 1,280,867 1,231,769

Issued and fully paid up ordinary shares of RM1.00 each 200,000 200,000 200,000 200,000

Net tangible assets per share (RM) 7.55 7.26 7.50 7.26

Net tangible assets per share, after deducting the nominal amounts of ICULS 2002/2007 and preference share capital (RM) 6.45 6.16 6.40 6.16

2005 2004

Net tangible assets per share represents the balance sheet total assets value less total liabilities, including long term loans and minority interests and goodwill/premium expressed as an amount per ordinary share.

Net tangible assets per share is calculated as follows:



Company No: 23742-V

45. SEGMENT ANALYSISGroup Total Elimination/

Merchant Islamic Offshore Fund Before Consolidation 2005 Banking Banking Banking Management Others Elimination Adjustments Total


External revenue 652,212 81,972 32,252 27,709 2,677 796,822 29,649 826,471 Revenue from other segments 35,809 533 18,364 - 85 54,791 (54,791) -

Operating revenue 688,021 82,505 50,616 27,709 2,762 851,613 (25,142) 826,471

Segments results 224,257 17,794 3,832 11,222 2,400 259,505 (32,970) 226,535 Amortisation of premium on acquisition - - - - - - (1,274) (1,274)

Profit from operations 224,257 17,794 3,832 11,222 2,400 259,505 (34,244) 225,261 Share in results of associated companies - - - - - - 16,314 16,314

Profit before taxation 224,257 17,794 3,832 11,222 2,400 259,505 (17,930) 241,575 Taxation (57,384) (5,035) - (3,289) (388) (66,096) (1,804) (67,900) Minority interest - - - - - - (2,292) (2,292)

Net profit for the year 166,873 12,759 3,832 7,933 2,012 193,409 (22,026) 171,383

Other InformationSegments assets 11,573,170 1,313,156 1,440,206 35,957 5,382 14,367,871 (362,337) 14,005,534 Investments in subsidiary companies 38,617 - - - - 38,617 (38,617) - Investments in associated companies 21,950 - - - - 21,950 17,482 39,432

Total assets 11,633,737 1,313,156 1,440,206 35,957 5,382 14,428,438 (383,472) 14,044,966

Segment liabilities 10,256,309 1,108,723 1,503,263 16,143 408 12,884,846 (362,769) 12,522,077

Property and equipment purchases 3,388 57 12 1,284 7 4,748 2 4,750 Depreciation 11,192 17 104 632 45 11,990 - 11,990 Amortisation of premium on acquisition - - - - - - 1,274 1,274

112


Company No: 23742-V

Group Total Elimination/Merchant Islamic Offshore Fund Before Consolidation

2004 Banking Banking Banking Management Others Elimination Adjustments TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 679,766 88,805 28,071 34,736 2,483 833,861 20,992 854,853 Revenue from other segments 31,096 516 6,452 1 216 38,281 (38,281) -

Operating revenue 710,862 89,321 34,523 34,737 2,699 872,142 (17,289) 854,853

Segments results 167,281 (7,573) 16,638 16,314 2,911 195,571 (17,635) 177,936 Amortisation of premium on acquisition - - - - - - (1,274) (1,274)

Profit from operations 167,281 (7,573) 16,638 16,314 2,911 195,571 (18,909) 176,662 Share in results of associated companies - - - - - - 18,294 18,294

Profit/(Loss) before taxation 167,281 (7,573) 16,638 16,314 2,911 195,571 (615) 194,956 Taxation (49,779) (199) - (4,806) (465) (55,249) 82 (55,167) Minority interest - - - - - - (3,453) (3,453)

Net profit/(loss) for the year 117,502 (7,772) 16,638 11,508 2,446 140,322 (3,986) 136,336

Other InformationSegments assets 13,604,808 1,103,104 1,356,433 27,088 5,032 16,096,465 (602,378) 15,494,087 Investments in subsidiary companies 38,617 - - - - 38,617 (38,617) - Investments in associated companies 112,598 - - - - 112,598 33,362 145,960

Total assets 13,756,023 1,103,104 1,356,433 27,088 5,032 16,247,680 (607,633) 15,640,047

Segment liabilities 12,328,149 951,429 1,424,242 12,326 359 14,716,505 (602,937) 14,113,568

Property and equipment purchases 13,367 12 38 1,283 1,177 15,877 (1,175) 14,702 Depreciation 13,153 20 244 639 47 14,103 2 14,105 Amortisation of premium on acquisition - - - - - - 1,274 1,274

113


Company No: 23742-V

46. CAPITAL ADEQUACY RATIO

(i) The capital adequacy ratio of the Bank as at 31 March 2005 is analysed as follows:

2005 2004RM'000 RM'000

Tier 1 capitalPaid-up ordinary share capital 200,000 200,000 Paid-up non-cumulative preference share capital 100,000 100,000 Share premium 60,284 60,284 Statutory reserve 300,000 300,000 Unappropriated profit at end of year 671,666 675,887

1,331,950 1,336,171 Less: Deferred tax assets (78,548) (22,176) Total Tier 1 capital 1,253,402 1,313,995

Tier 2 capitalRedeemable unsecured subordinated bonds 460,000 460,000 Interest bearing ICULS 120,000 120,000 Subordinated certificates of deposits 198,650 197,300 General allowance for bad and doubtful debts 66,278 77,788

Total 844,928 855,088 Less: Restriction on subordinated debt capital (31,949) (302) Total Tier 2 capital 812,979 854,786

Total capital funds 2,066,381 2,168,781 Less : Investment in subsidiary companies 38,617 38,617

Investment in capital of related financial institutions 460,000 462,829 Capital base 1,567,764 1,667,335

Capital Ratios:Core capital ratio 13.28% 12.70%Risk-weighted capital ratio 16.61% 16.12%

(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

Risk- Risk-Principal Weighted Principal WeightedRM'000 RM'000 RM'000 RM'000

0% 3,224,911 - 3,997,353 - 10% 84,684 8,468 467,472 46,74720% 4,284,469 856,894 3,775,929 755,18650% 257,826 128,913 102,560 51,280100% 8,444,280 8,444,280 9,492,050 9,492,050

16,296,170 9,438,555 17,835,364 10,345,263

2005 2004

The financial information by geographical segment is not presented as the Group’s activities are principallyconducted in Malaysia except for Frasers International Pte. Ltd. and its subsidiary companies, activities ofwhich are principally conducted in Singapore. These activities in Singapore are not significant in relation tothe Group’s activities in Malaysia.

The capital adequacy ratio of the Bank as at 31 March 2004 has not been restated for prior year adjustmentseffects in Note 48 to the financial statements.



Company No: 23742-V

47. SIGNIFICANT EVENTS

(a)

(i)

(a)

(b)

(ii)

1.

2.

The Privatisation of AMFB Holdings Berhad (“AMFB”) through the acquisition by AHB of188,927,911 ordinary shares of RM1.00 each (“Shares”) in AMFB, representing 35.72% of the issuedand paid-up share capital of AMFB, not already owned by AHB by way of a scheme of arrangementbetween AMFB and its shareholders under Section 176 of the Companies Act, 1965 (“AMFBPrivatisation”). The AMFB Privatisation was approved by the shareholders of AMFB at the CourtConvened Meeting held pursuant to the Order of the High Court of Malaya on 31 January 2005.Further, the Order of the High Court of Malaya ("Court Order") sanctioning the Scheme ofArrangement was obtained on 17 February 2005.

The listing of AHB’s investment banking group, via a newly incorporated company, which wasincorporated under the name of AmInvestment Group Berhad (“AIGB”) on the Main Board of theBursa Malaysia Securities Berhad (“Listing Scheme”), comprising the following:

The incorporation of AIGB, completed on 23 June 2004, as a wholly-owned subsidiary companyof AHB, to act as the holding company/listing vehicle of AHB’s investment banking group;

An internal reorganisation (“Internal Reorganisation”) involving the transfer of AHB’s 100%equity interest in the Bank for a consideration of RM1,109,442,000 wholly satisfied through theissuance of 1,109,441,998 new ordinary shares of RM1.00 each in AIGB (“Transfer ofAmMerchant Bank”), and 100% equity interest in AmSecurities Holding Sdn Bhd ("AMSH") fora consideration of RM214,400,000 to be wholly satisfied by AIGB in cash (“Transfer ofAMSH”), prior to the completion of which the Bank and AMSH had separately declareddividends to AHB amounting to RM249,840,000 in aggregate;lare dividends to AHB amountingto RM249,840,000 in aggregate;

AHB has also received the approval from the Securities Commission ("SC") via its letter dated 31January 2005 for the purchase consideration price for the AMFB Privatisation amounting toRM1,360,280,959 or RM7.20 per AMFB Share to be satisfied as follows:-

RM623,462,106 by way of issuance of 188,927,911 new AHB Shares on the basis of one (1)new AHB Share valued at RM3.30 per new AHB Share for every one (1) existing AMFBMinority Share held; and

RM736,818,853 in cash, on the basis of RM3.90 for every one (1) existing AMFB MinorityShare held.

On 17 March 2005, the AMFB Privatisation was completed following the listing of and quotationfor the 188,927,911 AHB Shares issued to the minority shareholders of AMFB. Consequently,AMFB became a wholly-owned subsidiary of AHB.

The entire issued and paid-up share capital of AMFB was delisted from the Official List of BursaMalaysia Securities ("Bursa Securities") with effect from 30 March 2005 pursuant to Paragraph8.15(6) of the Listing Requirements of Bursa Securities.

On 27 February 2004 and 31 May 2004, the ultimate holding company, AMMB Holdings Berhad ("AHB") announced the following proposals:



Company No: 23742-V

47. SIGNIFICANT EVENTS (CONTD.)

3.

(a)

(i)

(ii)

(b)

(c)

(i)

(ii)

4.

The issue/offer of 646,800,000 Shares comprising 210,558,000 new Shares and 436,242,000existing Shares, as follows:-

488,400,000 Shares allocated to shareholders of AHB, by way of:-

A renounceable restricted offer for sale of 330,278,078 Shares by AHB to theentitled shareholders of AHB; and

A restricted issue of 158,121,922 new Shares to Tan Sri Dato’ Azman Hashimand his related companies.

in direct proportion to their shareholdings in the Company;

39,600,000 Shares allocated by way of a restricted offer for sale by AHB to eligibledirectors and employees of AIGB and/or its Malaysian-incorporated subsidiary andassociated companies, eligible directors of AHB and business associates of AHB, whichincludes persons who have contributed to the success of the Group; and

118,800,000 Shares allocated to Tan Sri Dato’ Azman Hashim as an approvedBumiputera investor, by way of:-

An offer for sale of 66,363,922 Shares by AHB; and

A special issue of 52,436,078 new Shares

at an issue/offer price of RM1.40 per Share payable in full on application; and

The listing of and quotation for the entire enlarged issued and paid-up share capital of AIGB ofRM1,320,000,000, comprising 1,320,000,000 Shares, on the Main Board of Bursa Securities.

The AMFB Privatisation and Listing Scheme were approved by the shareholders of AHB at theExtraordinary General Meeting held on 31 January 2005.

AHB has also obtained the approval of Bank Negara Malaysia and the Minister of Finance and the SCfor, inter-alia, the AMFB Privatisation and the Proposed Listing of AIGB via their letters dated 10December 2004 and 16 December 2004, respectively.The AMFB Privatisation and the Listing Schemeare inter-conditional with each other.



Company No: 23742-V

48. PRIOR YEAR'S ADJUSTMENTS

Previouslystated Adjustments Restated

RM'000 RM'000 RM'000

GroupAs at 31 March 2003Unappropriated profit at end of year (614,443) 5,652 (608,791)

As at 31 March 2004Unappropriated profit at end of year (713,509) 4,402 (709,107) Gross non-performing loans and financing 988,080 284,938 1,273,018 Interest/Income-in-suspense (183,603) (6,113) (189,716)

For the financial year ended 31 March 2004Interest income (582,602) (1,736) (584,338) Taxation 54,681 486 55,167

BankAs at 31 March 2003Deferred tax assets 929 22,969 23,898 Unappropriated profit at end of year 599,171 (5,652) 593,519

As at 31 March 2004Unappropriated profit at end of year (675,887) 4,402 (671,485) Gross non-performing loans and financing 873,360 284,938 1,158,298 Interest/Income-in-suspense (167,875) (6,113) (173,988)

For the financial year ended 31 March 2004Interest income (573,545) (1,736) (575,281) Taxation 49,492 486 49,978

During the financial year, the Group and the Bank adopted the 3-month classification for non-performingloans instead of the 6-month classification in previous years.

The accounting change has been accounted for retrospectively and the effects on prior years have been takenup as prior year’s adjustments in the financial statements.

Accordingly, the following accounts in prior years have been restated to reflect the effects of the accountingchange:



Company No: 23742-V

49. ISLAMIC BANKING BUSINESS

BALANCE SHEETAS AT 31 MARCH 2005

Note 2005 2004RM'000 RM'000

ASSETS

Cash and short-term funds (ii) 581,950 407,761 Deposit with financial institutions (iii) 33,100 30,000 Dealing securities (iv) 165,618 58,583 Financing activities (v) 511,940 588,493 Statutory deposit with Bank Negara Malaysia 14,500 14,500 Other receivables, deposits and prepayments 3,218 1,226 Deferred tax assets (vi) 2,789 2,509 Property and equipment (vii) 41 32 TOTAL ASSETS 1,313,156 1,103,104

LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers (viii) 311,881 224,730 Deposits of banks and other financial

institutions (ix) 355,623 302,964 Converted fund (x) 301,677 328,321 Other liabilities (xi) 139,541 95,414 Total Liabilities 1,108,722 951,429

ISLAMIC BANKING FUNDSCapital funds (xii) 100,000 60,000 Unappropriated profit 104,434 91,675 Islamic Banking Funds 204,434 151,675

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,313,156 1,103,104

COMMITMENTS AND CONTINGENCIES (xix) 2,287,399 1,648,235

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

Group and Bank

The state of affairs as at 31 March 2005 and the results for the year ended 31 March 2005 of the IslamicBanking Business of the Group and the Bank and included in the financial statements are summarised asfollows:



Company No: 23742-V

INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2005

Note 2005 2004RM'000 RM'000

Income derived from investment ofdepositors' funds and others (xiii) 40,295 52,045

Reversal of allowance/(Allowance) fordiminution in value of investments 35 (35)

Financing loss and allowances (xiv) (23,385) (58,034) Transfer (to)/from profit equalization reserve (2,195) 970 Total attributable income/(loss) 14,750 (5,054) Income attributable to the depositors (xv) (35,358) (37,180) Loss attributable to the Group and the Bank (20,608) (42,234) Income derived from Islamic Banking Funds (xvi) 42,174 37,311 Total net income/(loss) 21,566 (4,923) Operating expenditure (xvii) (3,772) (2,650) Profit/(Loss) before taxation 17,794 (7,573) Taxation (xviii) (5,035) (199) Profit/(Loss) after taxation 12,759 (7,772)


Group and Bank



Company No: 23742-V

STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2005


DistributableCapital Unappropriated

Group and Bank Funds Profit TotalRM'000 RM'000 RM'000

At 1 April 2003 10,000 99,447 109,447 Increase during the year 50,000 - 50,000 Loss for the year - (7,772) (7,772)

At 31 March 2004 60,000 91,675 151,675

At 1 April 2004 60,000 91,675 151,675 Increase during the year 40,000 - 40,000 Profit for the year - 12,759 12,759

At 31 March 2005 100,000 104,434 204,434



Company No: 23742-V

CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2005

2005 2004RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 17,794 (7,573) Add/(Less) adjustments for:Specific allowance for bad and doubtful financing 32,509 58,743 Transfer to/(from) profit equalization reserve 2,195 (970) Net income suspended 1,786 3,950 Depreciation of property and equipment 48 20 Reversal of general allowance for bad and doubtful financing (1,166) (709) (Reversal of allowance)/Allowance for diminution in value of investments (35) 35

Operating profit before working capital changes 53,131 53,496 (Increase)/Decrease in operating assets

Deposits with financial institutions (3,100) (30,000) Dealing securities (107,000) 152,303 Financing activities 43,424 (15,421) Other receivables, deposits and prepayments (1,984) 623

Increase/(Decrease) in operating liabilitiesDeposits from customers 87,151 103,523 Deposits of banks and other financial institutions 52,659 (80,817) Converted fund (26,644) 23,301 Other liabilities 36,617 (12,952)

Net cash generated from operating activites 134,254 194,056

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (65) (12) Net cash used in investing activities (65) (12)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from increase in capital funds 40,000 50,000 Net cash generated from financing activities 40,000 50,000

Net increase in cash and cash equivalents 174,189 244,044 Cash and cash equivalents at beginning of year 407,761 163,717 Cash and cash equivalents at end of year 581,950 407,761


Group and Bank



Company No: 23742-V

NOTES TO THE ISLAMIC BANKING BUSINESS FINANCIAL STATEMENTS

(i) ISLAMIC BANKING BUSINESS

Disclosure of Shariah Advisor

(a)

(b)

Zakat obligations

The Bank does not pay zakat on behalf of the shareholder or depositors.

(ii) CASH AND SHORT TERM FUNDS

2005 2004RM'000 RM'000

Cash and bank balances 150 61 Money on call and deposits maturing within one month:

Licensed banks:Related 30,000 - Others 546,800 387,700

Other licensed finance companies 5,000 20,000 581,950 407,761

(iii) DEPOSITS WITH FINANCIAL INSTITUTIONS

2005 2004RM'000 RM'000

Other financial institutions 33,100 30,000

Group and Bank

Group and Bank

The Bank’s Islamic banking activities are subject to conformity with Shariah requirements andconfirmation by the Shariah Advisor, Professor Madya Dato’ Hj Md. Hashim bin Yahya, Dato’ SheikhGhazali bin Hj Abdul Rahman and Professor Dr Mohd Daud Bakar. The role and authority of the ShariahAdvisor are as follows:

Advise and provide guidance on all matters pertaining to Shariah principles including productdevelopment, marketing and implementation activities.

Assist in the setting up of business and operational procedures with respect to compliance withShariah principles.



Company No: 23742-V

(iv) DEALING SECURITIES

2005 2004RM'000 RM'000

Money Market Securities:Cagamas bonds 60,022 53,500 Khazanah bonds 139 - Negotiable Islamic debt certificates 48,112 -Malaysian Government Investment Certificates 668 927

108,941 54,427

Unquoted Private Debt Securities of Companies Incorporated In Malaysia:

Islamic corporate bonds 56,677 3,704 Islamic corporate notes - 487

56,677 4,191 165,618 58,618

Allowance for diminution in value of investments - (35) Total/Net 165,618 58,583

Market/Indicative Value:

Money Market Securities:Cagamas bonds 60,363 53,500 Khazanah bonds 138 - Negotiable Islamic debt certificates 48,295 -Malaysian Government Investment Certificates 671 932

Unquoted Private Debt Securities of Companies Incorporated In Malaysia:

Islamic corporate bonds 56,557 3,664 Islamic corporate notes - 487

Group and Bank



Company No: 23742-V

(v) FINANCING ACTIVITIES

2005 2004RM'000 RM'000

Term financing 550,101 615,134

Less:General allowance for bad and doubtful financing 7,796 8,962 Specific allowance for bad and doubtful financing 22,352 11,452 Income-in-suspense 8,013 6,227

38,161 26,641

Net financing 511,940 588,493

Financing analysed by concepts are as follows:

Bai Bithaman Ajil 514,471 546,944 Ijarah - 32,042 Murabahah 19,131 19,136 Wujuh 16,499 17,012

550,101 615,134

The maturity structure of financing are as follows:

Maturing within one year 504,253 516,166 One year to three years - 2,365 Three to five years 20,099 72,641 Over five years 25,749 23,962

550,101 615,134

Financing analysed by their economic purposes are asfollows:

Property investment holding 325,719 325,314 Electricity, gas and water 135,331 - Agriculture 19,131 198,035 Construction 25,749 23,962 Transport, storage and communication 20,099 28,962 Real estate 9,552 9,552 Purchase of non-residential landed property 7,966 8,477 Manufacturing 6,554 20,373 General commerce - 459

550,101 615,134

Financing analysed by type of customers are as follows:

Business enterprises 221,422 284,241 Small and medium size industries 328,679 330,893

550,101 615,134

Group and Bank



Company No: 23742-V

Financing analysed by profit rate sensitivity are as follows:

Fixed rateTerm loans 530,970 563,956

Variable rateCost-plus 19,131 51,178

550,101 615,134

2005 2004RM'000 RM'000

Movements in non-performing financing are as follows:

GrossBalance at beginning of year 51,264 31,475 Non-performing during the year 1,826 24,039 Debt equity conversion (2,178) - Recoveries (556) (18) Reclassification to performing financing (70) - Amount written off - (4,232) Balance at end of year 50,286 51,264

Less:Specific allowance 22,352 11,452 Income-in-suspense 8,013 6,227

30,365 17,679

Non-performing financing - net 19,921 33,585

Ratio of non-performing financing to total financing - net 3.83% 5.62%

Non-performing financing analysed by their economic purposes are as follows:

Construction 25,749 23,962Transport, storage and communication - 2,180Real estate 9,552 9,552Purchase of non-residential landed property 7,966 8,477Manufacturing 6,554 6,554Others 465 539

50,286 51,264

Group and Bank



Company No: 23742-V

2005 2004RM'000 RM'000

General AllowanceBalance at beginning of year 8,962 9,671 Reversal of allowance during the year (1,166) (709) Balance at end of year 7,796 8,962

% of total loans less specific allowance and income-in-suspense 1.50% 1.50%

Specific AllowanceBalance at beginning of year 11,452 1,204 Allowance made during the year 32,509 58,743 Reclassifications - 248 Amount written off (21,609) (48,743) Balance at end of year 22,352 11,452

Income-in-suspenseBalance at beginning of year 6,227 2,478

Income suspended during the year 1,787 3,951 Amount written back in respect of recoveries (1) (1)

Net charge to income statement 1,786 3,950 Amount written off - (201) Balance at end of year 8,013 6,227

Group and Bank

Movements in allowances for bad and doubtful financing and income-in-suspense accounts are as follows:



Company No: 23742-V

(vi) DEFERRED TAX ASSETS

2005 2004RM'000 RM'000

Balance at beginning of year 2,509 2,708 Net transfer from/(to) income statement (Note xviii) 280 (199) Balance at end of year 2,789 2,509

The deferred taxation is in respect of the following: General allowance for financing activites 2,184 2,509 Profit equalisation reserve 614 - Temporary difference between depreciation

and tax allowance (9) - 2,789 2,509

(vii) PROPERTY AND EQUIPMENT

Computer Officehardware equipment,

Leasehold and furniture andGroup and Bank improvements software fittings Total

RM'000 RM'000 RM'000 RM'000

COST

At beginning of year 3 40 104 147 Addition 36 27 2 65 Transfer - (8) - (8) At end of year 39 59 106 204


At beginning of year 1 37 77 115 Addition 36 - 12 48 At end of year 37 37 89 163

NET BOOK VALUE

As at 31 March 2005 2 22 17 41

As at 31 March 2004 2 3 27 32

Depreciation charge for the yearended 31 March 2004 1 10 9 20

Group and Bank



Company No: 23742-V

(viii) DEPOSITS FROM CUSTOMERS

2005 2004RM'000 RM'000

Mudarabah FundMudarabah Special Investment deposits 311,881 119,730

Non-Mudarabah FundNegotiable Islamic debt certificates - 105,000

311,881 224,730

The maturity structure of term/investment deposits is as follows:

2005 2004RM'000 RM'000

Due within six months 286,238 205,987 Six months to one year 25,643 18,743

311,881 224,730

The deposits are sourced from the following types of customers:

2005 2004RM'000 RM'000

Business enterprises 197,122 154,892 Others 114,759 69,838

311,881 224,730

Group and Bank

Group and Bank

Group and Bank



Company No: 23742-V

(ix) DEPOSITS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

2005 2004RM'000 RM'000

Mudarabah FundLicensed banks 99,614 25,576 Other financial institutions 226,009 197,388

Non-Mudarabah FundRelated licensed finance company 30,000 - Licensed banks - 20,000 Other financial institutions - 60,000

355,623 302,964

(x) CONVERTED FUND

(xi) OTHER LIABILITIES

2005 2004RM'000 RM'000

Other payables and accruals 92,700 56,083 Taxation and zakat payable 44,646 39,331 Profit equalisation reserve 2,195 -

139,541 95,414

The movements in profit equalisation reserve are as follows:

2005 2004RM'000 RM'000

Balance at beginning of year - 970 Provision during the year 6,042 3,025 Amount written back (3,847) (3,995) Balance at end of year 2,195 -

Group and Bank

Group and Bank

Group and Bank

This represent funds transferred from Non Islamic Banking Business to Islamic Banking Business for funding purposes at commercial terms.



Company No: 23742-V

(xii) CAPITAL FUNDS

2005 2004RM'000 RM'000

Allocated: Balance at beginning of year 60,000 10,000 Increase during the year 40,000 50,000 Balance at end of year 100,000 60,000

Utilised:Balance at beginning of year 60,000 10,000 Increase during the year 40,000 50,000 Balance at end of year 100,000 60,000

(xiii) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS

2005 2004RM'000 RM'000

Income derived from investment of:(i) general investment deposits 26,923 27,908 (ii) specific investment deposits 7,757 15,510 (iii) others 5,615 8,627

40,295 52,045

(i) Income derived from investment of general investment deposits

2005 2004RM'000 RM'000

Finance income and hibah: Financing activities 17,165 24,919 Dealing securities 2,122 2,531 Money at call and deposits with financial institutions 9,114 3,685

28,401 31,135 Income-in-suspense (1,478) (3,227)

26,923 27,908

Group and Bank

Group and Bank

Group and Bank



Company No: 23742-V

(ii) Income derived from investment of specific investment deposits

2005 2004RM'000 RM'000

Finance income and hibah: Financing activities 7,757 15,510

(iii) Income derived from investment of other deposits

2005 2004RM'000 RM'000

Finance income and hibah: Financing activities 3,580 4,389 Dealing securities 442 2,020 Money at call and deposits with financial institutions 1,901 2,941

5,923 9,350 Income-in-suspense (308) (723)

5,615 8,627

(xiv) FINANCING LOSS AND ALLOWANCES

2005 2004RM'000 RM'000

(Reversal of allowance)/Allowance for bad and doubtfulfinancing:- general allowance (1,166) (709) - specific allowance (net) 32,509 58,743

Bad debts recovered (7,958) - 23,385 58,034

Group and Bank

Group and Bank

Group and Bank



Company No: 23742-V

(xv) INCOME ATTRIBUTABLE TO DEPOSITORS

2005 2004RM'000 RM'000

Deposits from customers- Mudarabah Fund 15,285 9,755 - Non-Mudarabah Fund - 3,500

Deposits and placements of banks and other financialinstitutions- Mudarabah Fund 5,341 2,214 - Non-Mudarabah Fund - 1,942

Converted funds 14,732 19,769 35,358 37,180

(xvi) INCOME DERIVED FROM ISLAMIC BANKING FUNDS

2005 2004RM'000 RM'000

Finance income and hibah:Financing activities 5,265 7,155 Dealing securities 474 721 Money at call and deposits with financial institutions 2,035 1,051

7,774 8,927

Net gain from sale of dealing securities 26,582 22,380 Net gain from sale of investment securities - 293

Fee and commission incomeGuarantee fees 3,200 526 Other fee income 4,618 5,184

7,818 5,710

Other income - 1 Total 42,174 37,311

(xvii) OPERATING EXPENDITURE

2005 2004RM'000 RM'000

Personnel costs 1,478 1,170 Establishment costs 66 77 Marketing and communication expenses 397 231 Administration and general expenses 1,831 1,172

3,772 2,650

Group and Bank

Group and Bank

Group and Bank



Company No: 23742-V

(xviii)TAXATION

2005 2004RM'000 RM'000

Estimated current tax payable 5,315 - Transfer (to)/from deferred tax assets (Note vi) (280) 199 Total 5,035 199

Group and Bank



Company No: 23742-V

(xix) COMMITMENTS AND CONTINGENCIES

Credit Risk Credit Risk Principal Equivalent Weighted Principal Equivalent Weighted

Group and Bank Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

CommitmentsIrrevocable commitments to

extend credit maturingwithin one year 75,000 - - - - -

Sell and buy back agreements 1,797,882 1,797,882 965,427 1,451,451 1,451,451 759,285 1,872,882 1,797,882 965,427 1,451,451 1,451,451 759,285

Contingent LiabilitiesIslamic revolving underwriting

facilities 174,000 87,000 66,600 121,400 60,700 60700Certain transaction-related

contingent items 2,444 1,222 1,222 3,100 1,550 1550Al-Kafalah guarantees 238,073 238,073 126,637 72,284 72,284 43742

414,517 326,295 194,459 196,784 134,534 105,992

2,287,399 2,124,177 1,159,886 1,648,235 1,585,985 865,277

2005 2004

In the normal course of business, the Islamic Banking Business of the Group and the Bank make various commitments and incurcertain contingent liabilities with legal recourse to its customers. No material losses are anticipated as a result of these transactions.The commitments and contingencies are not secured against the Group’s assets.

134 AmMerchant Bank BerhadFinancial Statements For The Year Ended 31 March 2005

Company No: 23742-V

(xx) YIELD/PROFIT RATE RISK

Non- EffectiveGroup and Bank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit profit


ASSETSCash and short-term funds 581,800 - - - - - 150 581,950 2.74 Deposits with financial institutions - 33,100 - - - - - 33,100 2.81 Dealing securities 17,193 - 15,865 25,250 105,010 2,300 - 165,618 3.46 Financing activities - performing 2,275 393,850 20,920 70,390 12,380 - - 499,815 8.31 - non-performing* - - - - - - 12,125 12,125 - Other non-profit sensitive balances - - - - - - 20,548 20,548 - TOTAL ASSETS 601,268 426,950 36,785 95,640 117,390 2,300 32,823 1,313,156

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 196,440 78,903 10,895 25,643 - - - 311,881 2.75 Deposits of banks and other financial institutions 190,210 131,084 24,379 412 9,538 - - 355,623 2.75 Converted funds 5,704 152,741 5,370 1,073 - - 136,789 301,677 3.24 Other non-profit sensitive balances - - - - - - 139,541 139,541 - Total Liabilities 392,354 362,728 40,644 27,128 9,538 - 276,330 1,108,722 Islamic Banking Funds - - - - - - 204,434 204,434 - TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 392,354 362,728 40,644 27,128 9,538 - 480,764 1,313,156

On-balance sheet yield/profit rate sensitivity gap 208,914 64,222 (3,859) 68,512 107,852 2,300 (447,941) - Off-balance sheet yield/profit rate sensitivity gap (696,772) (764,617) (240,651) 410,362 1,048,074 243,604 - - Total yield/profit sensitivity gap (487,858) (700,395) (244,510) 478,874 1,155,926 245,904 (447,941) -

Cumulative yield/profit rate sensitivity gap (487,858) (1,188,253) (1,432,763) (953,889) 202,037 447,941 - -

2005

The following table shows the effective profit rates at the balance sheet date and the periods in which the financial instruments reprice or mature, whichever is earlier.

* This is arrived at after deducting the general allowance, specific allowance and income-in-suspense from gross non-performing financing outstanding.



Company No: 23742-V

Non- EffectiveGroup and Bank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit profit


ASSETSCash and short-term funds 407,700 - - - - - 61 407,761 2.70 Deposits with financial institutions - 20,000 10,000 - - - - 30,000 2.96 Dealing securities - 851 100 486 56,900 246 - 58,583 3.97 Financing activities - performing 374,546 18,892 2,607 86,088 62,761 18,976 - 563,870 6.93 - non-performing* - - - - - - 24,623 24,623 - Other non-profit sensitive balances - - - - - - 18,267 18,267 - TOTAL ASSETS 782,246 39,743 12,707 86,574 119,661 19,222 42,951 1,103,104

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 148,601 28,598 28,787 18,744 - - - 224,730 2.68 Deposits of banks and other financial institutions 193,830 108,243 465 426 302,964 4.50 Converted funds - - 328,321 - - - - 328,321 3.22 Other non-profit sensitive balances - - - - - - 95,414 95,414 -

Total Liabilities 342,431 136,841 357,573 19,170 - - 95,414 951,429 Islamic Banking Funds - - - - - - 151,675 151,675 - TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 342,431 136,841 357,573 19,170 - - 247,089 1,103,104

On-balance sheet yield/profit rate sensitivity gap 439,815 (97,098) (344,866) 67,404 119,661 19,222 (204,138) - Off-balance sheet yield/profit rate sensitivity gap (755,944) (311,481) (182,294) 108,127 895,103 246,489 - - Total yield/profit sensitivity gap (316,129) (408,579) (527,160) 175,531 1,014,764 265,711 (204,138) -

Cumulative yield/profit rate sensitivity gap (316,129) (724,708) (1,251,868) (1,076,337) (61,573) 204,138 - -

2004

* This is arrived at after deducting the general allowance, specific allowance and income-in-suspense from gross non-performing financing outstanding.



Company No: 23742-V

(xxi) FAIR VALUE OF ISLAMIC BANKING OPERATIONS FINANCIAL INSTRUMENTS

Carrying Fair Carrying FairGroup and Bank Value Value Value Value

RM'000 RM'000 RM'000 RM'000

Financial AssetsCash and short-term funds 581,950 581,950 407,761 407,761 Deposits with financial institutions 33,100 33,100 30,000 30,000 Dealing securities 165,618 166,024 58,583 58,583 Financing activities* 519,736 531,457 597,455 600,189 Other financial assets 3,218 6,007 1,226 1,226


Financial LiabilitiesDeposits from customers 311,881 311,968 224,730 224,652 Deposits of banks and other financial institutions 355,623 355,738 302,964 302,964 Converted fund 301,677 301,677 328,321 340,697 Other financial liabilities 92,700 92,700 56,083 56,083

1,061,881 1,062,083 912,098 924,396 Non-financial liabilities

Other non-financial liabilities 46,841 39,331 Islamic Banking Funds 204,434 151,675

251,275 191,006

TOTAL LIABILITIES AND ISLAMIC BANKINGFUNDS 1,313,156 1,103,104

2005 2004

The estimated fair values of the Group and the Bank’s Islamic Banking Business financial instruments areas follows:

* The general allowance for the Group and the Bank amounting to RM7,796,000 (RM8,962,000 as at 31 March 2004) has been included under non-financial assets.



Company No: 23742-V

(xxii) NET INCOME FROM ISLAMIC BANKING BUSINESS

2005 2004RM'000 RM'000

Income derived from investment of depositors' funds 40,295 52,045 Less : Income attributable to depositors (35,358) (37,180) Income attributable to the Group and the Bank 4,937 14,865 Income derived from Islamic Banking Funds 42,174 37,311

47,111 52,176

(xxiii)CAPITAL ADEQUACY RATIO

(i)

2005 2004RM'000 RM'000

Tier 1 capitalIslamic Banking Funds 100,000 60,000 Unappropriated profit at end of year, net of deferred tax assets 101,643 89,166

Total tier 1 capital 201,643 149,166

Tier 2 capitalGeneral allowance for bad and doubtful financing 7,796 8,962

Total tier 2 capital 7,796 8,962

Capital base 209,439 158,128

Capital Ratios:Core capital ratio 11.17% 9.75%Risk-weighted capital ratio 11.60% 10.33%

(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

Risk- Risk-Principal Weighted Principal WeightedRM'000 RM'000 RM'000 RM'000

0% 477,169 - 241,838 - 10% 54,433 5,443 54,336 5,43420% 1,249,864 249,973 1,057,530 211,50650% 222,873 111,437 57,084 28,542

100% 1,438,002 1,438,002 1,284,752 1,284,7523,442,341 1,804,855 2,695,540 1,530,234

2005 2004

Group and Bank

For consolidation with the conventional operations, net income from Islamic Banking Business comprisesthe following items:

The capital adequacy ratio of the Islamic Banking Business as at 31 March 2005 is analysedas follows:



Company No: 23742-V

50 COMPARATIVES

51 CURRENCY

All amounts are in Ringgit Malaysia.

The comparative figures in respect of financial year ended 31 March 2004 have been audited by a firm ofchartered accountants other than Ernst & Young.



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AmMERCHANT BANK BERHAD AND ITS SUBSIDIARY COMPANIES · ammerchant bank berhad and its subsidiary companies (incorporated in malaysia) directors' report and audited financial statements