Progressive growth strong FoundAtions...2013/04/23 · 16th AgM, the Company shall be requesting Bursa Malaysia depository sdn Bhd, in accordance with Article 41(a)(iii) of the Company’s

Progressive growth

AnnuAl rePort 2012

strong FoundAtions

strong FoundAtions

Synergy

Reliability

Strategy

Integrity

Sustainability

OveRvIewNotice of 16th Annual General Meeting

Statement Accompanying Notice of 16th Annual General Meeting

CORpORate FRamewORkCorporate Profile

Corporate InformationGroup Corporate Structure

LeadeRShIpBoard of Directors

Directors’ ProfileCEOs in the Group

Management Committee

peRFORmanCe RevIew5 -Year Group Financial Highlights

peRSpeCtIveSLetter to Shareholders

Corporate Responsibility2012 Event HighlightsaCCOuntabILIty

Statement of Corporate GovernanceStatement on Internal Control

Additional Compliance Information

audIted FInanCIaL StatementSFinancial Statements

addItIOnaL InFORmatIOnProperties owned by BHB Group

Shareholding StatisticsRegional Group Network

Form of Proxy for the 16th AGM of the Company

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Contents

Progressive growth

(Ordinary Resolution 1)


(Ordinary Resolution 3)(Ordinary Resolution 4)






aS ORdInaRy buSIneSS1. to receive the Audited Financial statements for the financial year ended 31 december 2012 together with the reports of the directors

and Auditors thereon.

2. to approve the payment of final single tier dividend of 5.00% in respect of the financial year ended 31 december 2012.

3. to re-elect the following directors who are retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible, have offered themselves for re-election:

a) tan sri ismail bin Adamb) encik Johan bin Abdullah

4. to consider and if thought fit, to pass the following resolution in accordance with section 129(6) of the Companies Act, 1965:

“that encik salih Amaran bin Jamiaan, who is retiring in accordance with section 129 of the Companies Act, 1965 be and is hereby re-appointed as a director of the Company to hold office until the conclusion of the next Annual general Meeting of the Company.”

5. to approve the payment of directors’ fees of rM855,000 for the financial year ended 31 december 2012 (rM495,000 for the financial year ended 31 december 2011).

6. to re-appoint Messrs. KPMg desa Megat & Co. as external Auditors of the Company until the conclusion of the next Annual general Meeting and to authorise the directors to fix their remuneration.

aS SpeCIaL buSIneSS Ordinary Resolution7. retention of independent director to retain encik Zahari @ Mohd Zin bin idris as independent non-executive director of the Company in accordance with

recommendation 3.3 of the Malaysian Code of Corporate governance 2012.

8. Proposed renewal of shareholders’ Mandate for recurrent related Party transactions of a revenue or trading nature.

“that subject to the Companies Act 1965, Memorandum and Articles of Association of the Company and the listing requirements of Bursa Malaysia securities Berhad approval be and is hereby given to BiMB holdings Berhad and its subsidiaries to enter into the category of recurrent related party transactions of a revenue or trading nature with those related parties as specified in section 2.1.3 of the Circular to shareholders dated 23 April 2013 which are necessary for the group’s day to day operations subject to the following:-

i) the transactions carried out are in the ordinary course of business and are on normal commercial terms that do not favour the related parties more than the general public;

ii) Are not detrimental to the minority shareholders of the Company; and

nOtICe IS heReby GIven that the SIXteenth (16th) annuaL GeneRaL meetInG of bImb holdings berhad (“bhb” or “the Company”) will be held at tun Rahah Grand hall, Level 1, menara yayasan tun Razak, 200 Jalan bukit bintang, 55100 kuala Lumpur on wednesday, 15 may 2013 at 10.00 a.m. for the following purposes:

OvERvIEwbImb hOLdInGS beRhad ANNuAL REPORt 2012

Notice of 16th Annual General Meeting

002

iii) will be disclosed in the annual report with the breakdown of the aggregate value of transaction conducted during the financial year pursuant to the shareholders’ mandate during the financial year (Mandate).

And that the Mandate conferred by this resolution shall commence immediately upon the passing of this resolution;

And that such Mandate shall continue to be in force until:

a) the conclusion of the next Annual general Meeting of the Company, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

b) the expiration of the period within which the next Annual general Meeting after the date is required to be held pursuant to section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to section 143(2) of Companies Act 1965); or

c) it is revoked or varied by a resolution passed by the shareholders in a general meeting.

whichever is the earlier.”

9. to transact any other business of which due notice shall have been given in accordance with the Companies Act 1965.

FuRtheR nOtICe IS heReby GIven that for the purpose of determining a member who shall be entitled to attend this 16th AgM, the Company shall be requesting Bursa Malaysia depository sdn Bhd, in accordance with Article 41(a)(iii) of the Company’s Articles of Association and section 34(1) of the securities industry (Central depositories) Act 1991, to issue a general Meeting record of depositors as at 8 May 2013. only a depositor whose name appears on the record of depositors as at 8 May 2013 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

nOtICe OF dIvIdend entItLement and payment

nOtICe IS aLSO heReby GIven that subject to shareholders’ approval at the 16th Annual general Meeting of the Company to be held on wednesday, 15 May 2013, a final single tier dividend of 5.00% in respect of the financial year ended 31 december 2012 will be paid on 19 June 2013 to depositors whose names appear in the record of depositors as at 27 May 2013.

shareholders of the Company will only be entitled to the dividend in respect of:

a) shares transferred to the depositor’s securities account before 4.00 p.m. on 27 May 2013 in respect of ordinary transfer.b) shares bought on Bursa Malaysia securities Berhad on a cum entitlement basis according to the rules of Bursa Malaysia securities

Berhad.

By order of the Board

maria binti mat Said (ls 0009400)Company secretary

Kuala lumpur23 April 2013

Notice of the 16th Annual General Meeting(continued)

003bImb hOLdInGS beRhad ANNuAL REPORt 2012

OvERvIEw

notes:1. A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies to attend and vote instead of himself/herself.2. A member shall not be entitled to appoint more than two proxies to attend and vote at the same general meeting. where a member appoints two proxies the appointments

shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.3. where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account

(“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the securities industry (Central depositories) Act 1991 (“siCdA”) which is exempted from compliance with the provisions of subsection 25A(1) of siCdA.

4. the instrument appointing a proxy shall: i) in case of individual, be signed by the appointer or by his attorney; and ii) in case of a corporation be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.5. All proxy forms should be deposited at the Company’s registered office, 31st Floor, Menara Bank islam, no. 22 Jalan Perak, 50450 Kuala lumpur not less than forty-eight

hours before the time fixed for holding of the meeting or any adjournment thereof.6. explanatory notes:

i) re-election of independent director in accordance with Article 61 of the Company’s Articles of Association

tan Sri Ismail bin adam

tan sri ismail was appointed as an independent non-executive director of the Company on 3 January 2011 and later as senior independent director on 25 May of the same year. he has satisfied the definition of ‘independent director’ and other requirements set out in Paragraph 1.01 of Bursa Malaysia securities Berhad listing requirements (“listing requirements”). during the 2012 directors’ Assessment, the Board was satisfied with tan sri ismail’s overall performance and contribution. tan sri ismail has demonstrated his commitment as a director of BhB by not only attending Board meetings held during the financial year but also actively participate and provide valuable inputs to the Board. the Board opined that tan sri ismail has the right skill set, qualities and experience for the benefits of BhB.

ii) retention of independent director in accordance with recommendation 3.3 of the Malaysian Code of Corporate governance

encik Zahari @ mohd Zin bin Idris

encik Zahari was appointed as an independent non-executive director of the Company on 20 september 2002. As at the date of the 16th Annual general Meeting of BhB, he has served as a director of the Company for 10 years. in this regard, the Board is cognizant of the recommendation by the Malaysian Code of Corporate governance 2012 that an independent non-executive director will be re-designated and no longer be treated as an independent director if he/she has been an independent director on the Board for more than (9) years. however, based on the directors’ Assessment for 2012, the Board is of the view that encik Zahari’s presence as a BhB’s independent director is pertinent to the Board collectively. he continue to demonstrate his independence by actively participating and providing independent views to the Board and other Board Committees particularly on the quarterly financial report and audited financial account although he has been an independent director for more than nine (9) years. his vast experience, i.e., 34 years in the banking industry is valuable. BhB will benefit from his vast experience and be able to tap on his expertise for the development of BhB and its subsidiaries. Apart from the positive feedback based on the peer evaluation, encik Zahari has also complied with the attendance requirements for Board meetings pursuant to the listing requirements. this testifies his dedication in discharging the responsibilities expected of an independent director.

Apart from the above, encik Zahari has satisfied the criteria of ‘independent director’ and other requirements set out in Paragraph 1.01 of Bursa Malaysia securities Berhad listing requirements. Based on the aforesaid, the Board strongly recommends to shareholders of BhB to retain encik Zahari as an independent non-executive director of the Company at the 16th Annual general Meeting of the Company.

iii) For further details on ordinary resolution 9, please refer to Circular to shareholders dated 23 April 2013.


Notice of the 16th Annual General Meeting(continued)

004

increasing shareholder valuewe uphold the highest levels of corporate governance and integrity in strict compliance with Shariah

principles which ensure the transparency of our operations. while building and inspiring investor

confidence in the Group, we also ensure accuracy in all our decisions and dealings, leading to a

culture of sustainability and increased shareholder value.

SynergyGrowing value

SynergyGrowing Value

Increasing Shareholder Valuewe uphold the highest levels of corporate governance and integrity in strict compliance with Shariah

principles which ensure the transparency of our operations. while building and inspiring investor

confidence in the Group, we also ensure accuracy in all our decisions and dealings, leading to a

culture of sustainability and increased shareholder value.

Pursuant to Paragraph 8.27(2) of the listing requirements of Bursa Malaysia securities Berhad, BhB wishes to highlight the directors who are standing for re-election at the 16th AgM of the Company are as follows:

1) Article 61 of the Company’s Articles of Association• TanSriIsmailbinAdam• EncikJohanbinAbdullah

2) section 129 of the Companies Act, 1965• EncikSalihAmaranbinJamiaan

3) recommendation 3.3 of the Malaysian Code of Corporate governance 2012• EncikZahari@MohdZinbinIdris

Profiles of the above directors are set out on pages 14 to 18 of this Annual report.

Statement Accompanying Notice of 16th

Annual General Meeting


006

BIMB Holdings Berhad (“BHB”) was established on 20 March, 1997 and listed on the Main Market of Bursa Malaysia on 16 September, 1997. BHB acts as an investment holding company for Malaysia’s pioneer Shariah-compliant business entities, involve mainly in Islamic banking, takaful and stockbroking. Being the premier Shariah-compliant financial services provider with an authorised capital of RM2 billion and paid-up capital of RM1,066,789,896.00, BHB is well-positioned to assist the Government’s aspirations in establishing the country as a vibrant International Islamic Financial Center. BHB has gained in strength and stature over the years as a champion of Islamic banking, takaful and stockbroking industries via its stable of strategic investments in Malaysia’s pioneer Shariah-compliant entities.

Corporate Profile


CORPORAtE FRAMEwORk

CORPORAtE FRAMEwORkbImb hOLdInGS beRhad ANNuAL REPORt 2012

008

bOaRd OF dIReCtORS

tan Sri Samsudin bin OsmanChairman/Non-Independent Non-Executive Director

en. Johan bin abdullahGroup Managing Director/Chief Executive Officer/ Executive Non-Independent Director

tan Sri Ismail bin adamSenior Independent Non-Executive Director

dato’ paduka Ismee bin IsmailNon-Independent Non-Executive Director

datuk Zaiton binti mohd hassanIndependent Non-Executive Director

en. Zahari @ mohd Zin bin IdrisIndependent Non-Executive Director

en. Salih amaran bin JamiaanNon-Independent Non-Executive Director

puan Rozaida bin OmarNon-Executive Non-Independent Director

audIt & eXamInatIOn COmmItteeEn. Zahari @ Mohd Zin bin Idris (Chairman)Datuk Zaiton binti Mohd HassanEn. Salih Amaran bin Jamiaan

nOmInatIOn & aSSeSSment COmmItteeDatuk Zaiton binti Mohd Hassan (Chairman)Dato’ Paduka Ismee bin IsmailEn. Zahari @ Mohd Zin bin Idris

RemuneRatIOn COmmItteeDatuk Zaiton binti Mohd Hassan (Chairman)Dato’ Paduka Ismee bin IsmailEn. Zahari @ Mohd Zin bin Idris

ShaRIah SupeRvISORy COunCIL,bank ISLam maLaySIa beRhadustaz Dr. Ahmad Shahbari @ Sobri bin Salamon(Chairman)ustaz Mohd Bakir bin Haji MansorSheikh Dr. Ahmed Mohieldin bin AhmedAssociate Professor Dr. uzaimah binti IbrahimProfessor Dr. Ahmad Hidayat bin Buangustaz Dr. Muhammad Syafii bin Antonio

ShaRIah advISORy bOdy,SyaRIkat takaFuL maLaySIa beRhadustaz Dr. Ahmad Shahbari @ Sobri bin Salamon(Chairman)ustaz Mohd Bakir bin Haji MansorDr. Aida binti OthmanAssociate Professor Dr. Muhamad Rahimi bin OsmanDato’ wan Mohamad bin Dato’ Sheikh Abdul Aziz

ShaRIah advISORy COmmIttee,bImb SeCuRItIeS Sdn. bhd.ustaz Mohd Bakir bin Haji Mansor (Chairman)Prof. Emeritus Dato’ Paduka Dr. Mahmood Zuhdi bin Haji Abd. MajidIr. Dr. Muhamad Fuad bin Abdullah

CeOs In the GROupEn. Johan bin AbdullahGroup Managing Director/Chief Executive OfficerBIMB Holdings Berhad

Dato’ Sri Zukri bin SamatManaging DirectorBank Islam Malaysia Berhad

Dato’ Mohamed Hassan bin Md. kamilGroup Managing DirectorSyarikat takaful Malaysia Berhad

En. Rashid bin IsmailChief Executive OfficerBIMB Securities Sdn. Bhd.

COmpany SeCRetaRyPn. Maria binti Mat Said (LS 0009400)

audItORSkpmG desa megat & Co. (aF0759)Level 10, kPMG tower8, First Avenue, Bandar utama47800 Petaling Jaya, Selangor Darul Ehsan

ReGISteRed OFFICe31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 kuala Lumpurtel. : +603 - 2781 2999 Fax : +603 - 2781 2998website : www.bimbholdings.com

ShaRe ReGIStRaRSymphony Share Registrars Sdn. bhd.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJu1A/4647301 Petaling JayaSelangor Darul Ehsantel. : +603 - 7841 8000Fax. : +603 - 7841 8152

StOCk eXChanGe LIStInGMain Market of Bursa Malaysia Securities Berhad16 September 1997

Corporate Information

improving Customer service efficiencywe strive to understand our customers’ diverse needs and are committed to deliver the most

innovative products to meet their expectations in a timely and professional manner. we aim to grow

our customer base whilst continuing to enhance our customer service efficiency.

reliabilityGrowing Relationships

ReliabilityGrowing Relationships

Improving Customer Service Efficiencywe strive to understand our customers’ diverse needs and are committed to deliver the most

innovative products to meet their expectations in a timely and professional manner. we aim to grow

our customer base whilst continuing to enhance our customer service efficiency.

CORPORAtE FRAMEwORkbImb hOLdInGS beRhad ANNuAL REPORt 2012

010

Amanah saham Bumiputera Permodalan nasional Berhad

dubai Financial group llC

6.66%

61.01%

51.31%

18.53%

30.47% 51%

5.11%

100%

100% 63.09% 51%

57.24% 42.73%

100%56%

52.67%

49%

100%

100%

100%

20%

100%

100%

100%

BiMB investment Management Bhd

BiMB Foreign Currency Clearing Agency sdn Bhd

Al-wakalah nominees (tempatan) sdn Bhd

Farihan Corporation sdn Bhd

Bank islam trust Co (labuan)

Amana Bank ltd

Asean retakafulinternational ltd

Pt syarikattakaful indonesia

Pt Ansuransitakaful Keluarga Pt Ansuransitakaful umum

BiMB securities sdn Bhd

BiMseC AssetsManagement sdn Bhd

BiMseC nominees(Asing) sdn Bhd

BiMseC nominees(tempatan) sdn Bhd

Group Corporate Structure


CORPORAtE FRAMEwORk

Group Corporate Structure(continued)

100% 48%

8.46% 28.46%

employees Provident Fund others

Core business units Other business units

Associate/investment subsidiaries of Core Business units

Syarikat al-Ijarah Sdn bhd islamic Banking & Finance institute Malaysia sdn Bhd

notes :shareholding structure as at 29 March 2013

LEADERSHIPbImb hOLdInGS beRhad ANNuAL REPORt 2012

Board of Directors

012


LEADERSHIP

tan Sri ismail bin adamSenior Independent Non-Executive Director

tan Sri Samsudin bin OsmanChairman/Non-Independent Non-Executive Director

encik Johan bin abdullahGroup Managing Director/Chief Executive OfficerNon-Independent Executive Director

Dato’ Paduka ismee bin ismailNon-Independent Non-Executive Director

encik Zahari @ Mohd Zin bin idrisIndependent Non-Executive Director

Puan rozaida binti OmarNon-Executive Non-Independent Director

Board of Directors(continued)Standing left to right:

Puan Maria binti Mat SaidCompany Secretary

encik Salih amaran bin JamiaanNon-Independent Non-Executive Director

Datuk Zaiton binti Mohd HassanIndependent Non-Executive Director


014

tan Sri Samsudin bin OsmanChairman/Non-Independent Non-Executive DirectorMaster of Public Administration, Pennsylvania State university (uSA)Bachelor of Arts (Hons), university of MalayaDiploma in Public Administration, university of Malaya

tan Sri Samsudin, 66, a Malaysian, was appointed as a Director and Chairman of the Board of BIMB Holdings Berhad (“BHB”) on 1 February 2007. He is currently the Chairman of the Employees Provident Fund (“EPF”) Board, the EPF Investment Panel and universiti utara Malaysia. tan Sri Samsudin is also a Director and Chairman of the Board of Sime Darby Berhad. Prior to his retirement, he was the Chief Secretary to the Government of Malaysia from 2001 to 2006.

He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB except by virtue of being a nominee Director of Lembaga tabung Haji. He has not been convicted of any offence within the past 10 years.

tan Sri Samsudin attended all seven Board Meetings held in the 12-month financial period ended 31 December 2012.

Directors’ Profile


LEADERSHIP

encik Johan bin abdullahGroup Managing Director/Chief Executive OfficerNon-Independent Executive DirectorMBA (Finance), Morehead State university (uSA)BBA (Finance), Eastern Michigan university (uSA)Diploma in Banking, university technology MARA

Encik Johan, 56, a Malaysian, was appointed as Group Managing Director/Chief Executive Officer of BHB on 15 May 2008. He is also a Director of Bank Islam Malaysia Berhad, Syarikat takaful Malaysia Berhad and other subsidiaries within BHB Group. He started his professional career with the kuala Lumpur Stock Exchange (now Bursa Malaysia Securities Berhad) as a Listing Officer. In 1989, he joined the Corporate Finance Division of Bumiputra Merchant Bankers Berhad and left the bank in early 1995 as a Senior Manager. He later served at Damansara Realty Berhad as General Manager, Corporate Planning until he re-joined Bursa Malaysia Securities Berhad in 1999, where he took up various senior positions including that of Deputy Chief Regulatory Officer, Group Regulation.

Encik Johan has no family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB. He has not been convicted of any offence within the past 10 years.

Encik Johan attended all seven Board Meetings held in the 12-month financial period ended 31 December 2012.

tan Sri ismail bin adamSenior Independent Non-Executive DirectorMaster of Arts (Economics), vanderbilt university (uSA)Bachelor of Arts (Hons), university of MalayaDiploma in Public Administration (Post-Baccalaureate Diploma), university of MalayaAdvanced Management Program, Harvard Business School

tan Sri Ismail, 62, a Malaysian, was appointed as a Director of BHB on 3 January 2011 and as a Senior Independent Director on 25 May 2011. He is currently an Advisor to the Hay Group Sdn Bhd and Chairman of Syarikat Prasarana Negara Berhad. He has 38 years of experience in policy management and administration, starting his career in the civil service where he held increasingly senior positions including that of Chief Administration Officer of the Department of Statistics, Director General of the National Productivity Corporation, and Secretary General of the Ministry of Health. He was the Director General of Public Service Malaysia from June 2006 until his retirement in 2010.

tan Sri Ismail does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB. He has not been convicted of any offence within the past 10 years.

tan Sri Ismail attended six out of seven Board Meetings held in the 12-month financial period ended 31 December 2012.

Directors’ Profile(continued)

Dato’ Paduka ismee bin ismailNon-Independent Non-Executive DirectorAssociate Member of Chartered Institute of Management AccountantsMember of Malaysian Institute of Accountants

Dato’ Paduka Ismee, 48, a Malaysian, was appointed as a Director of BHB on 9 October 2006. He is a member of the Nomination and Assessment Committee and Remuneration Committee of BHB. He is currently the Group Managing Director and Chief Executive Officer of Lembaga tabung Haji (“tH”). He is also the Chairman of Syarikat takaful Malaysia Berhad and Director of Bank Islam Malaysia Berhad, tH Plantations Berhad, Felda Global ventures Holdings Berhad, 1Malaysia Development Berhad and Johor Corporation. Prior to joining tH, he was the Chief Executive Officer of ECM Libra Securities and a Director of ECM Libra Capital Sdn Bhd. He has also served as Chief Accountant at Pengurusan Danaharta Nasional Berhad, General Manager of Business Development at Arab Malaysian Development Berhad and has held several finance-related positions at Shell Malaysia.

Dato’ Paduka Ismee does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB except by virtue of being a nominee Director of Lembaga tabung Haji. He has not been convicted of any offence within the past 10 years.

Dato’ Paduka Ismee attended five out of seven Board Meetings held in the 12-month financial period ended 31 December 2012.


016

datuk Zaiton binti mohd hassanIndependent Non-Executive DirectorFellow of the Association of Chartered Certified Accountants (FCCA)Member of the Malaysian Institute of Accountants (MIA)Member of the Malaysian Institute of Certified Public Accountants (MICPA)

Datuk Zaiton, 56, a Malaysian, was appointed as a Director of BHB on 2 February 2006. She is the Chairman of the Nomination and Assessment Committee and the Remuneration Committee, and a member of the Audit and Examination Committee of BHB. She is currently the Managing Director of Capital Intelligence Advisors Sdn Bhd. She is the Chairman of the Private Pension Administrator Malaysia and also a Director of Bank Islam Malaysia Berhad, Sime Darby Berhad, Malaysian Industrial Development Finance Berhad and Credit Guarantee Corporation Malaysia Berhad. She was formerly the President/Executive Director of Malaysian Rating Corporation Berhad (“MARC”). Prior to joining MARC, Datuk Zaiton served 12 years with Malayan Banking Berhad in various senior positions including that of General Manager, Group Strategic Planning, a post she held until her resignation in 1996.

She does not have any family relationship with any director and/or major shareholder of BHB nor does she have any conflict of interest with BHB. She has not been convicted of any offence within the past 10 years.

Datuk Zaiton attended five out of seven Board Meetings held in the 12-month financial period ended 31 December 2012.



LEADERSHIP

encik Salih amaran bin JamiaanNon-Independent Non-Executive DirectorMaster of Business Administration, wharton School, university of Pennsylvania (uSA)Postgraduate Diploma in Public Administration, victoria university, wellington

(New Zealand) Bachelor of Science (Economics), London School of Economics and Political

Science, university of London (uk)

Encik Salih, 73, a Malaysian, was appointed as a Director of BHB on 18 February 2005. He is a member of the Audit and Examination Committee of BHB. Prior to this, he had served as Deputy Secretary, Finance Division of the Ministry of Finance; General Manager, International Banking Division of Malayan Banking Berhad; Special Advisor (Economics) of the Commonwealth Secretariat, London; and Deputy Director, trade Finance and Promotion Department of the Islamic Development Bank (IDB) in Jeddah. He was also the Regional Representative of IDB for Brunei, Indonesia and Malaysia based in kuala Lumpur.

He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB except by virtue of being a nominee Director of Permodalan Nasional Berhad. He has not been convicted of any offence within the past 10 years.

Encik Salih attended all seven Board Meetings held in the 12-month financial period ended 31 December 2012.

encik Zahari @ mohd Zin bin IdrisIndependent Non-Executive DirectorSenior Cambridge Certificate

Encik Zahari, 69, a Malaysian, was appointed as a Director of BHB on 20 September 2002. He is the Chairman of the Audit and Examination Committee, and a member of the Nomination and Assessment Committee and the Remuneration Committee of BHB. He is also a Director of Bank Islam Malaysia Berhad. Encik Zahari began his career at Malayan Banking Berhad where, he spent 34 years with the bank before he retired in 1996 with his last position as General Manager, Commercial Banking Division. From 2000 to 2005, Encik Zahari was the Managing Director of Inter-City MPC (M) Sdn Bhd.

He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB. He has not been convicted of any offence within the past 10 years.

Encik Zahari attended six out of seven Board Meetings held in the 12-month financial period ended 31 December 2012.



018

Puan rozaida binti OmarNon-Executive Non-Independent DirectorMember of the Association of Chartered Certified Accountants (ACCA) uk

Puan Maria binti Mat SaidCompany Secretary

Puan Rozaida, 50, a Malaysian, was appointed as a Director of BHB on 1 December 2009. She is currently the Group Chief Financial Officer of Lembaga tabung Haji. She is also a Director of Syarikat takaful Malaysia Berhad and Pelikan International Corporation Berhad. She started her career as a financial accountant in FELDA in 1986. For a year from 1990, she was a Credit Manager at Citibank Berhad. Puan Rozaida then joined Guthrie trading Sdn Bhd as a Finance Manager from 1992-1993, following which she became a Finance Director of Glaxo Smithkline Consumer Healthcare Sdn Bhd from 1994 until 2003.

She does not have any family relationship with any director and/or major shareholder of BHB nor does she have any conflict of interest with BHB except by virtue of being a nominee Director of Lembaga tabung Haji. She has not been convicted of any offence within the past 10 years.

Puan Rozaida attended six out of seven Board Meetings held in the 12-month financial period ended 31 December 2012.

Puan Maria is the General Manager, Legal & Secretarial Division of Bank Islam Malaysia Berhad. Holder of a Bachelor of Law, Puan Maria Mat Said has been with Bank Islam since August 2005. with over 21 years of experience, she is responsible for providing legal and corporate secretarial services. Puan Maria was appointed as the Company Secretary of Bank Islam effective 29 January 2009 and is responsible for ensuring proper corporate governance. She was appointed as the Company Secretary of BHB on 31 December 2009.


setting the right directionIn order to grow, we strive to take our products to greater customer satisfaction and to discover new

markets. Islamic banking and takaful are gaining greater recognition globally and we plan to leverage

on this to explore foreign markets, beginning with the region and then beyond.

StrategyGrowing Performance

StrategyGrowing Performance

Setting the Right Directionin order to grow, we strive to take our products to greater customer satisfaction and to discover new

markets. islamic banking and takaful are gaining greater recognition globally and we plan to leverage

on this to explore foreign markets, beginning with the region and then beyond.


020

Standing left to right:

Dato’ Mohamed Hassan bin Md. KamilGroup Managing DirectorSyarikat takaful Malaysia Berhad

encik Johan bin abdullahGroup Managing Director/Chief Executive OfficerBIMB Holdings Berhad

Dato’ Sri Zukri bin SamatManaging DirectorBank Islam Malaysia Berhad

encik rashid bin ismailChief Executive OfficerBIMB Securities Sdn. Bhd.

CEOs in the Group

Standing left to right:

Cik nor aina binti Hj KamaruddinHead, Corporate Services

encik Junady bin nawawiHead, Corporate Strategy &Transformation Management

encik Johan bin abdullahGroup Managing Director/Chief Executive Officer

encik Mohamad azlan bin Mohamad alamChief Financial Officer

encik aidil Haznul bin ZulkifliHead, Legal, Secretarial & Compliance

encik Omar bin atinHead, Corporate Communications

Management Committee


LEADERSHIP

PERFORMANCE REvIEwbImb hOLdInGS beRhad ANNuAL REPORt 2012

022

5-Year GroupFinancial Highlights

2008 2009 2010 2011 2012 Rm’000 Rm’000 Rm’000 Rm’000 Rm’000 Restated Restated (note 1)

Share Capital 891,390 1,066,790 1,066,790 1,066,790 1,066,790

Shareholders’ Fund 1,005,284 1,272,533 1,654,358 1,832,601 2,019,578

Deposits from Customers 20,535,907 24,871,451 26,798,107 28,208,203 32,379,000

takaful Funds 3,197,799 3,177,493 3,816,352 4,072,990 4,419,630

Financing of Customers 9,055,028 9,661,864 11,858,599 14,161,837 19,507,799

Investments 3,734,094 9,092,943 18,755,334 16,311,797 19,162,529

total Assets 27,582,097 32,147,478 35,939,624 38,225,957 43,907,623

Revenue 1,426,814 1,490,180 2,596,313 2,078,979 2,473,953

Profit before Zakat and tax 379,615 299,132 588,155 588,924 717,439

Net Profit 236,198 113,659 230,837 212,140 252,269

Dividend Less taxation 9,693 9,601 24,802 114,679 128,015

(Note 2)

Financing to Deposit Ratio (%) 44.09 38.85 44.25 50.20 60.25

Gross Impaired/Non-Performing Financing (%) 18.65 12.70 4.50 2.61 1.55

Net Impaired/Non-Performing Financing (%) 7.82 4.90 1.06 -0.17 -0.67

Earnings per Share (Sen) 26.50 12.69 21.64 19.88 23.65

Net tangible Assets per Share (RM) 1.13 1.19 1.55 1.72 1.89

Gross Dividend per Share (%) 1.45 1.20 3.10 10.75 12.00

(Note 2)

Net Dividend per Share (%) 1.09 0.90 2.33 10.75 12.00

(Note 2)

Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.

Note 2: Including a proposed final single tier ordinary dividend of 5.00% for shareholders approval at the forthcoming Annual General Meeting.


PERFORMANCE REvIEw

5-Year Group Financial Highlights(continued)

Shareholders’ Fund (RM‘000)

takaful Funds(RM‘000)

Financing ofCustomers(RM‘000)

Note 1

Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.* Restated

Note 1 Note 1 Note 1

total assets(RM‘000)

2011* 20122010*20092008 2011* 20122010*20092008 2011* 20122010*20092008 2011* 20122010*20092008

2,01

9,57

8

1,83

2,60

1

1,65

4,35

8

1,27

2,53

3

1,00

5,28

4

4,41

9,63

0

4,07

2,99

0

3,81

6,35

2

3,17

7,49

3

3,19

7,79

9

19,5

07,7

99

14,1

61,8

37

11,8

58,5

99

9,66

1,86

4

9,05

5,02

8

43,9

07,6

23

38,2

25,9

57

35,9

39,6

24

32,1

47,4

78

27,5

82,0

97

bImb hOLdInGS beRhad ANNuAL REPORt 2012

024

5-Year Group Financial Highlights(continued)

PERFORMANCE REvIEw

Deposits fromCustomers(RM‘000)

earnings per Share(Sen)

net tangible assets per Share(RM)

Profit before Zakat and taxation(RM‘000)

2011* 20122010*20092008 2011* 2012201020092008 2011* 20122010*20092008

32,3

79,0

00

28,2

08,2

03

26,7

98,1

07

24,8

71,4

51

20,5

35,9

07

23.6

5

19.8

8

21.6

4

12.6

9

26.5

0

1.89

1.72

1.55

1.19

1.13

717,

439

588,

924

588,

155

299,

132

379,

615

2011* 2012201020092008Note 1

Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.* Restated

Note 1 Note 1 Note 1

integrityGrowing Potential

guided by our Past, looking towards the FutureOur pioneer status has given us a competitive edge. Being the first to provide Islamic financial services in Malaysia,

we have dedicated systems, processes and knowledge to serve our customers better. As we march steadily into the

future, we will be guided by lessons and experiences learnt in the past.

IntegrItyGrowing Potential

Guided by Our Past, Looking Towards the Futureour pioneer status has given us a competitive edge. Being the first to provide islamic financial services in malaysia,

we have dedicated systems, processes and knowledge to serve our customers better. As we march steadily into the

future, we will be guided by lessons and experiences learnt in the past.

PERSPECtIvESbImb hOLdInGS beRhad ANNuAL REPORt 2012

026

tan Sri Samsudin bin OsmanChairman


PERSPECtIvES

Letter to Shareholders

Dear Shareholders,It is an interesting period for the Islamic financial industry. On one hand there is greater acceptance of Islamic products and services. On the other, competition is intensifying as a number of conventional financial institutions are entering the market, along with new players. within this scenario, BIMB Holdings Berhad (“BHB”) and our group of companies (“BHB Group” or “the Group”) continue to build on our strengths to chart impressive growth. the Group’s Profit Before Zakat and tax (“PBZt”) hit a record high, supported by strong performances by our subsidiaries, which lived up to their status of being prime movers and innovators in the Islamic banking and takaful space. During the year, they introduced more firsts in the Malaysian market, further enhancing their customer delivery and strengthening their reputation. As they spread their brands, we are making our presence felt more strongly in the market.

Our activities in 2012 have borne positive results, and it gives me great pleasure to share the Group’s financial and operational performance for the financial year ended 31 December 2012.

earningsper Share(Sen)

23.6

5

19.8

8

21.6

4

12.6

9

26.5

0

2011* 2012201020092008

12.0

0

10.7

5

2.33

0.90

1.09

2011* 2012201020092008

2,47

3,95

3

2,07

8,97

9

2,59

6,31

3

1,49

0,18

0

1,42

6,81

4

2011* 2012201020092008

net Dividend per Share(%)

revenue(RM’000)

Note 1 Note 1 Note 2 Note 1

note 1: Change in accounting year from 30 June to 31 december, with transitional financial period of 18 months for 2010.

note 2: including a proposed final single tier ordinary dividend of 5.00% for shareholders approval at the forthcoming Annual general Meeting.

* restated


028

OpeRatInG envIROnment

the year 2012 was challenging for economies the world over, as countries in the Eurozone continued to grapple with the endemic sovereign debt crisis, and the uS faced mounting pressure from its fiscal cliff. Even BRIC countries (Brazil, Russia, India and China) experienced significant moderation in Gross Domestic Product (GDP) growth as a result of the global slowdown.

In Malaysia, trade was impacted by sluggish external demand and slow global conditions. However, domestic consumption remained robust, buoyed by initiatives under the Government transformation Programme (“GtP”) and Economic transformation Programme (“EtP”). these, coupled with the government-established economic corridors, resulted in investment growth of 21.8%, the strongest seen in 12 years.

BHB has stood to benefit from the bullish local environment that includes a vibrant Islamic finance industry. Although the presence of arguably larger conventional players has increased competition and pressure on net income margins, BHB continued to perform commendably. Our strategy for success has been simple: to focus on building our fundamental strengths while leveraging on our established brand names to further grow our business.

FInanCIaL peRFORmanCe

BHB posted a record PBZt of RM717.4 million for the financial year 2012, which is an increase of RM128.6 million or 21.8% over the RM588.9 million achieved in 2011. this growth was driven mainly by higher net income on healthy financing and deposits from customers, coupled with improved asset quality. Our consolidated net profit for the year grew by RM75.2 million or 17.8% to RM497.6 million compared to RM422.4 million in 2011.

As a result, the Group’s net profit attributable to the shareholders also trended upwards by RM40.1 million or 18.9% to RM252.3 million from RM212.2 million in 2011.

I am pleased to announce the Group’s exceptional growth in net financing of RM5.3 billion, or 37.7% which outperformed the domestic banking industry’s growth of 10.4%. Our growth in net financing in 2012 also outpaced BHB’s RM2.3 billion net financing growth achieved in 2011. this positive trend will ensure the sustainability of our future earnings.

Moreover, efforts to continuously improve our asset quality bore fruit as our gross impaired financing ratio as at end 2012 trended downwards to 1.55% from 2.61% at end December 2011. All of this was achieved while maintaining a healthy Risk weighted Capital Ratio (RwCR) of 14.0% as at 31 December 2012.

As part of our value creation to shareholders, we paid out a total of RM74.7 million, or 52.8% of our net profit for the financial year under review, in the form of two interim dividends of 3.5% each. these were paid on 31 October and 27 December 2012 respectively. In addition, the Board is also proposing for a final single tier dividend of 5% for each ordinary share held at our forthcoming Annual General Meeting.

ISLamIC bankInG

Financial performance2012 marked the completion of Bank Islam Malaysia Berhad’s (“Bank Islam” or “the Bank”) three-year Sustainable Growth Plan, which proved to be highly successful. For each year under this plan, the Bank has produced outstanding financial results, creating new records and then bettering them. Its profit for the year under review has been the Bank’s highest in its 29-year history. this can be partly attributed to a key component of the Sustainable Growth Plan, which was to reshape the Bank’s portfolio so as to create the right balance between the retail and non-retail business, secured and unsecured assets, and fixed and floating rate financing.

Bank Islam Group reported a PBZt of RM597.4 million, marking a 21.3% increase from RM492.5 million achieved in 2011. this was mainly due to financing growth and revenue from non-fund based income, as well as healthy asset quality.

the Bank’s net financing grew by RM5.3 billion to reach RM19.5 billion, which resulted in a 23.4% increase in fund based income from financing of RM215.4 million. Income from securities, both held-to-maturity and available-for-sale, also increased by RM84.0 million or 19.3%, while non-fund based income grew by 14.2% or RM33.5 million, mainly from fees, commissions and foreign exchange transactions.

Customer deposits recorded a year-on-year (YoY) growth of 15.1% or RM4.3 billion to reach RM32.6 billion as at end December 2012. Similarly, the low cost Current and Savings Accounts (“CASA”) also increased by RM1.1 billion or 9.3%. the CASA ratio as at end 2012 stood at 41.2%, well above the Islamic banking industry ratio of 26.9%. the Bank’s impaired financing ratio continued to improve, with the gross impaired financing ratio falling from 2.61% to 1.55%, and net impaired financing ratio improving from -0.17% to -0.67% as at end 2011 and end 2012 respectively. these were better than the Islamic banking industry gross and net impaired ratios of 1.7% and -0.3% respectively as at end December 2012.

Bank Islam’s key performance ratios as at end of 2012 also compared favourably against the industry. the Bank achieved a Return on Equity (ROE) of 20.21% against the industry’s 19.6%, and a Return on Asset (ROA) of 1.72% against the industry average of 1.4%.

Letter to Shareholders(continued)


PERSPECtIvES


key developmentsDuring the year, Bank Islam focused on two major strategies – to capitalise on its inherent strengths as a leading retail Islamic bank with more than 5 million customers and to grow its non-retail business thus creating more sources of revenue generation.

towards achieving the first objective, the Bank introduced a number of new products to cater for the different needs of its customers. this began in January with the introduction of floating rates for personal financing, making Bank Islam the first Islamic bank in Malaysia to offer this innovative concept. the service has proven very popular as it allows for additional savings due to lower monthly payments, hence lower total payments than typical personal financing with fixed rates. Additionally, customers can opt for either a fixed or floating rate financing while their monthly payment commitment remains fixed. As of year-end, the Bank had disbursed RM3 billion in floating rate personal financing.

Another pioneering innovation was the university Debit Card-i (uniDebit), an exclusive multipurpose, all-in-one card designed for the students and staff of universiti Malaysia kelantan (uMk). the card, the first of its kind developed for a public university in Malaysia, is essentially a Bank Islam visa Debit Card-i which comes with an additional chip that enables it to serve as an access card, library card and university ID card all rolled into one. the card debuted on 31 October 2012. Catering to customers’ investment needs, the Bank introduced two attractive products during the year. On 4 June 2012, it launched the Islamic Dual Currency Investment-i (“DCI-i”), a fixed deposit product linked to the performance of a pair of foreign currencies based on the concept of wakalah-lil-Istithmar (an agency contract for investment) that meets both local and international Shariah standards. with DCI-i, savers can expect to earn higher returns than they would from regular foreign currency deposits. this was followed by the launch of a money market fund by BIMB Investment Management Berhad (“BIMB Invest”), a wholly-owned subsidiary of Bank Islam, on 13 September 2012.

In addition to introducing new products, Bank Islam also initiated a number of campaigns to promote existing programmes and services. Most notably, from 19 September 2012 to 30 November 2012, it ran the Al-Awfar Million Ringgit Campaign, with the aim of attracting new subscribers to the Al-Awfar savings and investment account, and to encourage existing customers to increase their savings under the account. Each RM1,000 deposit into an Al-Awfar account entitled a customer to one entry in a lucky draw in which the top prize was a million ringgit.

the Spend and win Campaign, meanwhile, rewarded users of the Bank Islam Mastercard/visa Card who spent a minimum of RM50 on their cards during the six-month period from 1 January 2012 to 30 June 2012 with the opportunity to win attractive prizes that included two BMw 320i M Sport and three Proton Inspira 1.8 Cvt cars.

Having established its credentials in the Initial Public Offerings (IPO) scene in 2011, Bank Islam was appointed by an integrated electric power technology company, PEStECH International Berhad (“PEStECH”), to be the principal adviser, sole underwriter and placement agent for the company’s listing on the Main Market of Bursa Malaysia in 2011. PEStECH raised RM12.88 million via a public issue of 12,880,000 new ordinary shares of RM0.50 each at an issue price of RM1.00 per share. the floatation exercise also involved an offer for sale of 8,588,000 existing shares in the company.

During the year, the Bank also continued to strengthen its presence by expanding its delivery channels. It opened 5 new branches to bring its network to 127, installed 60 new self-service terminals making a total of 1,190 and launched 1 new Ar-Rahnu outlet bringing the total to 4. these consumer interfacing centres are supported by 8 banking centres and 4 currency exchange centres (“Bureaus de Change” or “BDC”).

A milestone was achieved when the Bandar Baru Perda branch of Bank Islam was relocated to the AEON Seberang Prai Shopping Centre in Penang, where it operates seven days a week. It is not only the first Bank Islam branch to open every day, but also the first to be located within a shopping mall, reflecting the Bank’s commitment to keeping up with the times and creating maximum convenience for its customers.

the performance of the Bank’s Management, and particularly the Managing Director, has been highly commendable and has done the Group proud by winning a number of notable awards. these included the Best Project Financing of the Year in Southeast Asia by Alpha Southeast Asia; the Best Islamic Bank in Malaysia by Islamic Finance News Best Banks Poll 2012; the Platinum trusted Brand Award 2012 (Islamic Financial Services) by Reader’s Digest and the BrandLaureate Awards 2011-2012 for Best Brand in Islamic Banking by the Asia Pacific Brands Foundation.

takaFuL

Financial performanceOver the past few years, Syarikat takaful Malaysia Berhad (“takaful Malaysia” or “the Company”) has been on a transformation journey to establish a stronger market presence by growing its assets and enhancing its revenue and profit. the Company’s financial results for the year 2012 would indicate success of this initiative. takaful Malaysia’s assets grew 9% to end the year at RM6.4 billion while its PBZt increased by 23.8% from RM101.4 million in 2011 to RM125.5 million. this was due mainly to higher surplus transfers as well as higher net income from wakalah fees.


030

Concerted efforts by the company to improve sales led to a 19.5% increase in operating revenue from RM1,345.5 million in the preceding year to RM1,607.5 million. this was contributed mainly by the Family takaful business, which generated gross earned contributions of RM987.7 million compared to RM694.7 million in 2011. Also contributing to the 42.2% growth in gross earned contribution was the release of unearned contribution reserves arising from the change in reserving estimates for Group Family takaful products.

Sales of General takaful products also increased, with gross earned contribution growing to RM457.1 million from RM401.7 million in 2011.

the surplus transferred from Family takaful recorded an increase of RM32.0 million to RM129.8 million in 2012 while the surplus transferred from General takaful is lower by RM19.0 million as compared to RM85.5 million in 2011. the higher surplus transfer from Family takaful was mainly due to better underwriting, investment results and release of unearned contribution reserves, while the lower figure reported by General takaful can be explained by a shift to wakalah model products.

Changing perceptionsDespite growing competition in the Islamic insurance sector, takaful Malaysia managed to grow its market share in both the Family takaful and General takaful businesses. It is a notable leader in the Family takaful business, having captured about 40% of the market, and accounts for 20% of the combined Family and General takaful market.

One of the biggest challenges faced in growing its business is the general public perception that Islamic insurance is a product only for Muslims. takaful Malaysia has therefore taken upon itself to communicate details and benefits of takaful products to all customers. During the year, it embarked on the second phase of its educational “we Should talk” campaign promoting its own unique 15% No Claim Rebate for all General takaful and selected Family takaful plans, an offer that is not made by any other existing insurance company in Malaysia.

the Company also launched its new investment-linked takaful myGenLife, comprising the most comprehensive range of Shariah-compliant funds in Malaysia – myGrowth Fund, myDividend Fund, myEquity Index Fund, myBlue Chips Fund and myBalanced Fund. takaful myGenLife also offers a wide range of supplementary benefits, including comprehensive medical coverage with one of the most competitive benefit limits in the country.

In addition to introducing innovative products, the year was marked by enhanced efforts at further strengthening takaful Malaysia’s service delivery via an improved It platform, an expanded agency force and the opening of new takaful myCare Centres. three new takaful myCare Centres were opened in Putrajaya, Melaka and Sungai Petani, bringing the total number to 20 as at end 2012. All the older centres have been refurbished in line with the Company’s vision of becoming the Preferred Choice for Insurance.

On 23 March 2012, takaful Malaysia became the first insurance company in Malaysia to implement the cutting-edge Document Management System (“DMS”). DMS, launched in 2011, involves a comprehensive It overhaul which will take three years to complete. Following completion of the first two phases, the system went live in March 2012. the system streamlines operating procedures, increases productivity and aids in business expansion by integrating a data capturing solution and an enterprise content management solution for both individual and group family operations, covering the end-to-end process cycle.

Meanwhile, a highly successful Be myAgent (BMA) campaign was held to promote career and business opportunities with takaful Malaysia, which led to the recruitment of 488 new agents, almost doubling the agency force by year end to 959. As part of its recruitment and retention drive, the Company is offering a financing scheme to selected and qualified new agents or agency leaders to provide their careers a head start.

In appreciation of its customers and the local communities that have continuously supported the Company’s vision and mission, takaful Malaysia organised a series of Open Days during the months of June and July in six locations across Malaysia namely Shah Alam, Selangor; Bandar Perda, Penang; kuantan, Pahang; Johor Bahru, Johor; kota kinabalu, Sabah; and kuching, Sarawak. At these events, it provided free health screening and talks, and business opportunities sharing sessions.

takaful Malaysia’s many successes in recent years have been due to an able and focused leadership. During the year, Group Managing Director of takaful Malaysia, Dato’ Mohamed Hassan Md. kamil did the Company and BHB proud by winning two prominent awards. the Asia Pacific Brands Foundation (APBF) presented him with the BrandLaureate transformational Corporate Leader Brand Icon Leadership Award 2012 in recognition of his outstanding leadership in spearheading takaful Malaysia’s growth. He was also presented the Jewels of Muslim world Award, which recognises individuals who have contributed to the development of the Muslim world economy.

StOCkbROkInG

During the year, various regulatory changes were introduced which liberalised the requirements for securities traders, encouraging a greater number of fresh talent to join the stockbroking industry. At the same time, the Capital Markets and Services Act (CMSA) 2012 introduced a new approval framework that will facilitate the offering of a broader array of capital market products to the advantage of issuers, intermediaries and investors.

BHB views these changes positively and intends to make the most of the more vibrant and liberal system to further grow our stockbroking business, which has been steadily gaining in strength over the years.

In 2012, BIMB Securities Sdn. Bhd. (“BIMB Securities”) increased its value of dealing by 39% as compared to 2011. this led to a 47% increase in brokerage income, and a 19% growth in total net income from the previous year.



PERSPECtIvES

Several technological innovations were deployed during the year. these included a Central Matching Facility (CMF), an auto settlement process between brokers and custodian banks which enhances the settlement process, thus improving BIMB Securities’ capability to manage more institutional settlements within a shorter time period. BIMB Securities also implemented its own Order Management System (OMS), in line with Bursa Malaysia directive for all Participating Organisations to install and maintain their own systems.

to further extend its customer reach, BIMB Securities launched the first fully Shariah-compliant online trading system, BISonline, which would benefit investors who prefer to trade directly and monitor their investments online.

LeaSInG

Syarikat Al Ijarah Sdn Bhd is the Group’s leasing arm. For the financial year ending December 2012, it posted a PBZt of RM0.51 million, which was 6.3% higher than the annualised PBZt of RM0.48 million for the previous corresponding period. Its Profit After Zakat and tax (PAZt), meanwhile, stood at RM0.30 million.

CORpORate GOveRnanCe

In pursuing our goal to be the premier Islamic financial services provider, the Board of Directors upholds the highest standards of corporate governance to enhance stakeholder value, maintain consumer trust and strengthen our competitive edge as an Islamic organisation. this involves strict observance of Islamic principles which ensure irreproachable business integrity, ethics and professionalism across the Group.

we continue to be guided by best practices in corporate governance as outlined in the Malaysian Code on Corporate Governance 2012 (MCCG 2012) , Bank Negara Malaysia’s Guidelines on Corporate Governance for Licensed Institutions, Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the Green Book on Enhancing Board Effectiveness by the Putrajaya Committee on GLC High Performance; and the Corporate Governance Guide (CG Guide) by Bursa Malaysia Securities Berhad.

to ensure our policies reflect best governance practices as they evolve, the former are continuously updated to reflect the changes made to the regulatory guidelines.

CORpORate ReSpOnSIbILIty

BHB believes firmly that all corporate organisations have a duty to uphold with integrity and respect towards their stakeholders, namely their clients, business partners, employees, shareholders and the community at large. As such, Corporate Responsibility (“CR”) is integral to the Group’s blueprint and is reflected in all organisational decisions and strategies. In addition to upholding the highest ethical conduct in accordance with the tenets of Islam, we undertake various initiatives to

empower the disenfranchised and to contribute towards the preservation of our environment. the CR actions of BHB and our subsidiaries are described in greater detail in the Corporate Responsibility section of this annual report.

OutLOOk

the year 2013 promises to be as challenging as 2012, as a result of prolonged global economic uncertainties which will impact economic growth, trade and performance. the world trade Organisation has cut its global trade growth forecasts to 4.5% from 5.6%, while the International Monetary Fund downgraded its global growth forecasts to 3.6% from 3.9%.

Malaysia, however, will continue to enjoy robust domestic demand, boosted by the implementation of projects under the EtP. the construction industry, in particular, is expected to see double-digit growth with benefits flowing to all other industries. the Group’s exceptional 4Q 2012 results have set the tone for a positive financial year 2013, and we are optimistic of benefiting from the vibrant environment buttressed by healthy consumer spending, better net profit margins and stable monetary policies.

At the same time, competition within the Islamic financial services market will increase. In anticipation of such competition, BHB has been gearing up to capitalise on growing acceptance of Islamic finance by expanding our operations into the region. we are exploring neighbouring countries and are looking into their regulatory environments, as these need to be able to support the requirements of Islamic banking and finance.

Islamic bankingwe feel confident of the prospects of our Islamic banking sector for a number of reasons. the Securities Commission in June 2012 issued a directive for all companies seeking to be listed as Shariah-compliant to have not more than 33% of total assets funded by conventional debt. this will increase the demand for Islamic financing, a boon for Islamic financial institutions such as Bank Islam.

In addition, consumer sentiment in general is upbeat, providing the ideal scenario for Bank Islam to offer more innovative products to attract a wider base of customers. there is also huge potential to finance Entry Point Projects under the EtP. For the period January 2011 to end-September 2012, only RM21 billion out of RM212 billion in investment commitments under the EtP have been materialised, with the balance to flow through from 2013 onwards. A number of major projects can therefore be expected to come on-stream.

while expanding its financing portfolio, the Bank will remain mindful of the challenging economic conditions and the importance of securing quality assets. As such, the Bank will continue to enhance its existing operational controls and practices, while expanding its non-fund based income by enhancing key sources of fee-based income.



032

there will also be concerted efforts to further expand its delivery channels to meet customers’ expectations. In 2013, Bank Islam plans to reach out to another 6 locations via new branches, and open 5 more Ar-Rahnu outlets in kubang krian, kelantan; kuala terengganu, terengganu; kuantan, Pahang; Ipoh, Perak and Alor Setar, kedah. It is also targeting to open another 108 self-service terminals, set up another 2 BDCs and 3 Consumer Business Centres while 4 branches will be relocated and 7 refurbished.

Internally, Bank Islam has embarked on a newly introduced strategic programme to take the organisation closer to its vision of becoming a global leader in Islamic banking. towards end 2012, the Bank launched its Hijrah to Excellence (H2E) Plan, focusing on 6 pillars of robust organic growth, service excellence, Shariah-led innovation, resource optimisation, being an employer of choice and regionalisation.

takafultakaful Malaysia is confident of the insurance market, and sees positive growth potential for takaful players as the penetration rate for takaful in the country is still low compared to conventional insurance, or when benchmarked against penetration rates in more mature markets. Competitively priced products, excellent customer service, operational efficiency and strong capital position will help in capturing the untapped market. Additionally, Government efforts to promote the takaful industry and strengthen the regulatory framework will contribute to growing acceptance and confidence among consumers and investors.

In addition to a generally conducive environment, takaful Malaysia has an edge as it is one of the few takaful operators in the country that has the financial strength to satisfy the requirements of the Risk-Based Capital (RBC) Framework, which is to be implemented in 2014.

In terms of business expansion, the Company will continue to enhance its multi-distribution channels and focus more intently on its relationships with existing Islamic bank partners. It also plans to further penetrate the Company’s group employee benefits business and broaden its non-motor general business, while improving sales with more attractive incentives and aggressive product innovation and development.

takaful Malaysia has also set an ambitious target of further increasing its agency force by more than double to 2,500 agents. Not to be contented on quantity, it will also ensure top-quality professional agents by providing continuous agency development training.

Stockbrokingthe Government intends for Malaysia to be an international Islamic capital market centre and has embarked on various initiatives to achieve this end. Accordingly, the country’s Islamic capital market is projected to grow at an average of 10.6% per annum to reach RM3 trillion by end 2020. this is good news for our stockbroking arm, which for its part has been developing its systems and processes to be more customer-friendly.

Efforts are currently in place to automate the trade confirmation process for institutional clients, thus improving efficiencies. to further develop its retail broking, the BISonline trading system is expanding into the mobile platform to capture a broader audience. under this e-broking platform, value added facilities such as e-Statements and e-Notifications will be made available to clients for more efficient investment monitoring. BIMB Securities has also stepped up its efforts to educate the public on the Islamic capital market via targeted programmes on tv and radio, while collaborating with Bursa Malaysia and local institutions of higher learning to reach out to young investors.

aCknOwLedGementS

BHB continued to grow from strength to strength in 2012, and for this, I would like to thank all our stakeholders for their contributions. On behalf of our Board of Directors, I would like to acknowledge our customers for their loyalty and support, and our business partners who have worked with us in line with our goals and principles. I would also like to thank our shareholders for their invaluable contributions that have helped us achieve our business targets.

Our successes are also due to a conducive operating environment, and for this I would like to thank the Government and various regulatory agencies such as Bank Negara Malaysia, the Securities Commission and Bursa Malaysia for upholding a fair, transparent and vibrant financial ecosystem.

Finally, I would like to express my heartfelt gratitude to fellow members of the Board of BHB as well as of our subsidiary companies for their support and contributions, which has kept the Group along its path of steady and sustainable growth. In particular, my sincere appreciation to tuan Syed Elias Abdul Rahman Alhabshi, our respected fellow Director who resigned from BHB’s Board on 1 July 2012, after serving two and a half years. BHB wishes him every success in his future endeavours.

the Management and all employees of the Group also deserve to be highly commended for their dedication and commitment, without which we would not be where we are today.

BHB has been performing well over the last few years, but I believe we are capable of taking the organisation to much greater heights. It is therefore my fervent wish to see all of us continue to rally our exceptional human capital resources to further push boundaries, thus realising the Group and our subsidiaries’ true potential.

thank you and

tan SRI SamSudIn bIn OSmanChairman


growing with our communitywe nurture our communities to grow with us. we have a tradition of supporting the less privileged, not only in terms

of financial aid but also in the personal time and energy spent by our employees to lend a helping hand. As part of our

commitment to local communities, we also contribute towards a healthier, more sustainable environment.

SuStainabilityGrowing Responsibly

SuStainabilityGrowing Responsibly

Growing with our communityWe nurture our communities to grow with us. We have a tradition of supporting the less privileged, not only in terms

of financial aid but also in the personal time and energy spent by our employees to lend a helping hand. As part of our

commitment to local communities, we also contribute towards a healthier, more sustainable environment.


034

Corporate Responsibility

As an Islamic financial holding company, BIMB Holdings Berhad (“BHB” or “the Group”) ensures that all its operations, processes, procedures and systems, as well as activities, are ethical and fair. In line with the principles and fundamentals of Islam, all stakeholders are treated equally and with the highest level of respect. Integrity and honesty are ingrained in the very fabric of the Group and are manifest in all its dealings, both internally and externally.

Being Shariah-compliant, BHB regularly pays zakat (tithes) to various organisations or parties that support the development of less privileged groups. However, as a responsible institution, the Group’s Corporate Responsibility (“CR”) initiatives go further than this to encompass a heightened sense of duty towards customers, business partners, employees and other stakeholders. the Group is also aware of the need to protect the environment for the betterment of society at large, hence environmental efforts also form an integral part of its CR programme.

In accordance with best practice, the Group’s CR initiatives have been categorised into the four pillars of Community, workplace, Marketplace and the Environment, and activities carried out under each will be described in the following pages.

COmmunIty

In addition to zakat payments to the state religious bodies and individual organisations, the Group contributes directly to the less privileged both through the provision of monetary support as well as in the spirit of volunteerism that sees employees invest their time and effort to help those in need.

During the year, BHB contributed RM5,000 worth of Giant Supermarket vouchers each to two organisations. the first donation was made to kAFA Integrasi Al-Insaniah, a religious school in Lembah Subang, Selangor, to aid the less privileged among its students. this was followed by a donation to the Persatuan kebajikan An-Najjah, to support the association’s food aid programme targeting low-income families during the holy month of Ramadan.

Further spreading the spirit of caring, BHB hosted an Aidil Fitri Open House for 30 children from kAFA Integrasi Al-Insaniah and 25 orphans from the Persatuan kebajikan An-Najjah at Hotel Maya kuala Lumpur. At this Open House, the young guests received ‘duit raya’ from the Chairman and Group Managing Director/Chief Executive Officer (“GMD/CEO”) of BHB.


PERSPECtIvES

Corporate Responsibility(continued)

In addition, BHB contributed RM50,000 to Sahabat Korporat Tabung Haji, a yearly charity event organised by Lembaga tabung Haji to help provide basic necessities for pilgrims performing the Hajj. Our subsidiary, Bank Islam Malaysia Berhad (“Bank Islam” or “the Bank”) has always contributed towards poverty reduction and empowering the disenfranchised. In line with its CR focus, Bank Islam regularly comes to the aid of organisations that appeal for funds. During the year, the Bank provided 4 hearses and 5 multi-purpose vans worth RM693,000 to NGOs from Selangor, kedah, Negeri Sembilan, Johor, Perak and Pahang. Bank Islam also donated RM250,000 to the Sahabat Korporat Tabung Haji programme for the provision of basic needs of pilgrims performing the Hajj; contributed RM25,000 towards the printing and distribution of Buku Agenda Islam Di Bawah Transformasi Najib to local universities; and donated RM20,000 to the Madrasah Al-Quran Sinaran Baru in Skudai, Johor.

More directly, the Bank contributed more than RM700,000 to rehabilitate the homes or provide new homes for 28 families in rural areas of Pahang, Negeri Sembilan, kedah and kelantan. Bank Islam also constructed four ‘Pondok Hafazan’ for use of Tahfiz students at the Madrasah Darul Hidayah in tawau, Sabah to study or conduct discussions.

In the klang valley, Bank Islam lent a helping hand to the homeless by supporting Reach Out Malaysia in its programmes. the Bank’s employees came out in force to donate and distribute food, clothes, toiletries and other essential items to the homeless. More than RM30,000 was channelled towards this cause.

During the month of Ramadan, Bank Islam contributed about RM140,000 to an ‘Iftar’ programme that benefitted about 770 recipients. It also collaborated with Berita Harian in a Semarak Ramadan programme targeting 1,000 residents of kampung kerinchi, Pantai Dalam, who received RM20,000 worth of food and beverages to carry out their ‘Iftar’.

In ensuring a better future for the younger generation, Bank Islam contributes to the khazanah Nasional-driven PINTAR school adoption programme, which inspires academic excellence. under this programme, the Bank has adopted 5 schools, and spent RM160,000 on developing key skills needed by the schoolchildren to thrive in today’s learning environment. At the tertiary level, the Bank has established a fund to assist poor students further their education at universiti teknologi MARA (uitM). to date, more than RM230,000 has been disbursed from this fund benefitting about 5,000 students.

Meanwhile, BIMB Investment Management Berhad (“BIMB Invest”), a subsidiary of the Bank, donated RM10,000 each to 3 charitable organisations: Aman Palestine, Persatuan kebajikan Al-Fikrah Malaysia and Pusat Rawatan Al-Hidayah. the funds were raised from BIMB Invest’s Perform Charity Through Investment in Unit Trust drive under which a percentage of proceeds from sales of BIMB iDividend Fund was channeled towards social welfare.

In addition, Bank Islam contributed a total of RM6,078,803 in business tithes to various zakat authorities throughout the year, and was presented the National Zakat Award 2012 in the public listed company category by Jabatan wakaf, Zakat dan Haji (JAwHAR).

Syarikat takaful Malaysia Berhad (“takaful Malaysia” or “the Company”), another subsidiary of BHB, has a tradition of supporting community and educational initiatives under its umbrella takaful myJalinan CSR programme, with takaful myJalinan kasih focused on providing aid to the needy and takaful myJalinan Ilmu concentrating on enhancing educational standards in the country, and especially among students in marginalised communities.


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In a show of appreciation to its customers and the local communities, takaful Malaysia organised a series of Open Days from June to July in the Northern, Southern, Central and East Coast regions, and Sabah and Sarawak. During these events, takaful Malaysia took the opportunity to provide aid in kind to the needy as they prepared for the much awaited month of Ramadan. takaful Malaysia distributed praying attire, the Al-Quran, Islamic educational books and other essentials worth a total of RM60,000 to one home in each of the 6 target regions. the homes were: • PusatJagaanKasihHarapan,ShahAlam,Selangor• PusatJagaanPermataKasih,BandarPerda,PulauPinang• PusatJagaanWargaEmasNurEhsan,JohorBahru,Johor• RumahPermataInsyirah,Kuantan,Pahang• YayasanKebajikanSuria,KotaKinabalu,Sabah• PusatJagaanNurMurni,Kuching,Sarawak

Continuing in the spirit of Aidil Fitri, takaful Malaysia hosted a breaking of fast dinner for 68 children at the Al-khadeem Home of Hope (“Al-khadeem”) in kampung Jalan kebun, Shah Alam, Selangor. the Company also donated RM50,000 to the Al-khadeem organisation and RM20,000 towards a charity dinner organised by Al-khadeem in aid of Al-khadeem Charity Funds. Another 44 children, from Persatuan Pendidikan Anak-Anak Yatim Lipis in kampung Pagar Sasak, Pahang, were treated to a special Aidil Fitri shopping spree while RM18,000 was donated to their home.

Also targeting children, takaful Malaysia, together with 2 facilitators from the National Academy of Arts, Culture and Heritage (ASwARA) organised a one-day Creative Art workshop for 50 children from Yayasan Harapan kanak-kanak Malaysia at the end of which 12 drawings were selected for the Company’s 2013 calendar design.

takaful Malaysia also joined forces with Briged Sukarelawan of the New Straits times Press (Malaysia) Berhad (NStP) and Media Prima Berhad (MPB) to participate in a Medical Outreach Programme from 22-24 June 2012, during which free cardio check-ups were provided for members of the public at the Dewan undangan Negeri Chini in Pahang.

In 2012, the Company enhanced its educational initiatives by launching the takaful myJalinan Ilmu Gemilang, under which takaful Malaysia presented braillers to five visually impaired students of Sekolah kebangsaan Pendidikan khas Jalan Batu in kuala Lumpur who were sitting for their ujian Penilaian Sekolah Rendah (uPSR) examination at the end of 2012. takaful Malaysia also presented the school with special reading material and library equipment.

In addition, takaful Malaysia under its myJalinan ilmu banner has sponsored RM50,000 to enhance the It laboratory at Sekolah Jenis kebangsaan (t) vivekananda in Petaling Jaya, Selangor. the sponsorship included 20 new desktop computers with software, three printers and wiFi transmitter facilities.

BIMB Securities Sdn. Bhd. (“BIMB Securities”) also contributes to the well-being of society via annual zakat payments. In 2012, BIMB Securities donated a total of RM202,016 to various charitable organisations.



PERSPECtIvES

maRketpLaCe

BHB is conscious of the need to engage with its stakeholders in order to maintain a healthy flow of information and to strengthen its stakeholder relationships. Other than regular announcements to Bursa Malaysia and the press, the Group made available corporate information on its website while reinforcing its ties with the investor community via a structured investor relations programme comprising one-on-one meetings and briefings to analysts and fund managers.

On 10 September 2012, BHB organised a corporate briefing at which GMD/CEO of BHB as well as Senior Management from Bank Islam, takaful Malaysia and BIMB Securities shared the Group’s latest corporate updates with analysts and fund managers. this was followed by a question and answer session, then lunch. the occasion provided an ideal platform for the Group to interact at a personal level with the analysts and fund managers, who are valued as important stakeholders of the Group.

the Group’s subsidiaries reinforced BHB’s strength in the marketplace via concerted efforts to provide the best to customers in terms of both products and services.

In 2010, Bank Islam launched its Ar-Rahnu microcredit programme which offers financing opportunities to small businesses in underserved communities. this programme has proven successful and in 2012, the Bank extended this service by opening a fourth Ar-Rahnu outlet in tanah Merah, kelantan, and aims to open at least five more in 2013, expanding the service beyond its stronghold in kelantan.

the Bank further reinforced its status as a pioneer in Islamic banking in the country by continuing to introduce more innovative products. these included the first floating rates for personal financing, and the first multi-purpose university debit card, designed especially for the students and staff of universiti Malaysia kelantan (uMk).

In its mission to become a global leader in Islamic banking, Bank Islam is committed to becoming the source of reference for Shariah-based financial products and services. to this effect, the Bank regularly receives delegations from other countries such as Indonesia, Nigeria and Iraq. In 2012, the Bank also participated in a number of international conferences and exhibitions, namely the Global Islamic Finance Forum, Asian Finance Forum and ISIS Praxis Seminar. More than RM200,000 was spent towards promoting Islamic financial services at the global level.

Recognising the important role the media can play as a partner in CR programmes, Bank Islam makes a concerted effort to enhance its relationship with the media community. A highlight of the Bank’s media activities in 2012 was the Media Treasure Hunt, which was organised for the second time in collaboration with BERNAMA. the programme saw members of the media participate in treasure hunting activities along the kL-kuantan route while also helping out in a home for the blind in tanjung Harapan, temerloh, and at a children’s centre in kuantan, Pahang.



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takaful Malaysia continues to educate the Malaysian public on Islamic insurance or takaful – with its emphasis on profit-sharing – via the “We Should Talk” campaign, which aims to dispel the notion that takaful caters only to Muslims. taking a further step to getting closer to the public and its customers, the Company also organised a series of 6 Open Days in June and July across Malaysia targeting Shah Alam, Selangor; Bandar Perda, Pulau Pinang; kuantan, Pahang; Johor Bahru, Johor; kota kinabalu, Sabah and kuching, Sarawak. At these events, fun activities were held for the children while free health screening was provided to the adults. takaful Malaysia also engaged with those interested in sharing business opportunities.

takaful Malaysia also invested in further improving its customer service by launching the cutting-edge Document Management System (“DMS”) which allows for quicker processing of applications, hence shorter waiting periods for customers. takaful Malaysia is the first Malaysian insurance company to launch and adopt the Document Management System.

wORkpLaCe

BHB is committed to attracting and retaining the best talent by offering attractive remuneration packages to its employees and maintaining a conducive workplace that encourages open communication, collaboration and creativity.

During the year, the Group relocated to its new corporate headquarters in Menara Bank Islam in the heart of kuala Lumpur, where staff enjoy an open-concept design that offers better working spaces and facilities. the new corporate headquarters aims to inspire staff to be more productive and contribute more to BHB. to alleviate stress and tension, there is an interaction area equipped with sofas, dining tables and chairs complete with a mini pantry for staff to prepare drinks and enjoy lunch or simply relax during lunchtime. the interaction area also provides separate prayer areas (surau) for women and men.

to foster a spirit of camaraderie among staff, BHB regularly organises ‘doa selamat’ sessions, especially during important Islamic events such as the beginning of the holy month of Ramadan and of a new Islamic calendar year, Maal Hijrah. BHB also holds ‘doa selamat’ in conjunction with the Group’s anniversary every 20 March. At these events, staff get together to recite prayers followed by a special luncheon. Bank Islam has always valued its employees and provided them with an attractive work proposition. this is reinforced in its newly launched Hijrah to Excellence (H2E) programme that will take it to year 2015, under which the Bank has included becoming an ‘Employer of Choice’ as one of its goals. towards this end, it is focusing more intently on nurturing a mindset of excellence via passionate leadership and engaging with employees to ensure greater unity in values and aspirations. the Bank also encourages employees to strike a good work-life balance by offering them opportunities to get involved in meaningful activities such as community outreach programmes. As a result of its employee-centric efforts, in 2012 the Bank increased its ranking (from 62 to 38) in Malaysia’s 100 Leading Graduate Employers. takaful Malaysia is undergoing a drive to increase its agency force; and to attract quality recruits in 2012, the Company launched a new financing scheme to kick-start the careers of existing and new qualified agents. takaful Malaysia also provides continuous training and professional development opportunities to agents in order to improve their knowledge and skills to drive greater sales.



PERSPECtIvES

envIROnment

BHB believes that all responsible organisations have a duty to protect and preserve our environment not only because Malaysia’s natural resources are inherently valuable for their rich and varied biodiversity, but also because human society relies on a healthy ecosystem in order to support the sustainability of life as we know it. the Group and its subsidiaries, therefore, play their part in minimising waste in the workplace, while also taking on opportunities to inculcate a love for the environment among youth and supporting other green initiatives.

During the year, Bank Islam fully funded Ocean Elements Sdn Bhd’s Project Aquatic World Awareness, Responsibility and Education (“Project AWARE”) under which four beaches in Dungun, terengganu, stretching 10km from Pantai teluk Gadong to Pantai tanah Lot, were cleaned. More than 100 Bank staff from the kuala Lumpur headquarters and the local branches took part in the clean-up, together with about 450 students from nearby schools, Politeknik Dungun, universiti teknologi MARA and government agencies including the Police, Fire Department and the Civil Defense Department. the volunteers worked hand-in-hand with the Dungun City Council contractors and managed to collect about 1 tonne of rubbish.

Also part of Project AWARE, Coral Reef Conservation talks were held at the Sekolah Menengah kebangsaan, Paka and at the Mayang Sari Resort in Dungun. In addition, snorkelers and divers were roped in to help clean the waters off Pulau tenggol, and successfully removed 20kg of trash from the seabed.

In addition, Bank Islam contributed RM28,400 towards a tree planting event, Love Your Mother Nature, held at the taman Rimba Riang forest reserve in kota Damansara, Selangor. the programme was in response to the Government’s call for the preservation of the environment, especially in densely populated areas.

CR is taken seriously at BHB and, every year, the Group invests increasing sums towards the betterment of society for the greater good of everyone.


2012 Event Highlights

6 Jan 2012Bank Islam Malaysia Berhad (“Bank Islam”)contributed RM3,000 to the Sports & welfare Club of the Federal territory Islamic Religious Council (MAIwP) for its Family Day.

27 Jan 2012Bank Islam contributed RM3,000 to the Ministry of Information, Communication and Culture for its Family Day.

15 maR 2012the new BIMB Holdings Berhad (“BHB”) corporate office on the 31st Floor of Menara Bank Islam in kuala Lumpur was officiated by BHB Chairman, tan Sri Samsudin Osman.

23 maR 2012Syarikat takaful Malaysia Berhad (“takaful Malaysia”) launched the Document Management System with partner, Serial Data Sdn Bhd. the new system integrates two software solutions to cover the end-to-end process cycle of individual and group family operations. takaful Malaysia is the first Malaysian insurance company to adopt this system.

28 maR 2012Bank Islam contributed RM58,000 in zakat to Masjid Darul Ibadah in Pulau Bruit, Sarawak.

16 Feb 2012Bank Islam presented four ‘Pondok Hafazan’ and organised a religious discourse for tahfiz students at the Madrasah Darul Hidayah in tawau, Sabah.

25 Feb 2012Bank Islam contributed RM28,400 to a Love Your Mother Nature tree planting event held in kota Damansara, Selangor.

28 maR 2012takaful Malaysia sponsored 5 braillers (braille typewriters) for visually impaired students scheduled to sit the Ujian Penilaian Sekolah Rendah examination 2012 at Sekolah kebangsaan Pendidikan khas, Jalan Batu, kuala Lumpur. takaful Malaysia also presented the school with special reading materials and library equipment.


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PERSPECtIvES

13 - 14 apR 2012Bank Islam collaborated with Ocean Elements Sdn Bhd in its Project Aquatic World Awareness, Responsibility and Education (Project AWARE), which saw a number of environmental conservation events in Dungun, terengganu.

24 apR 2012takaful Malaysia was listed as the top 5 companies in the 2012 edition of the OSK Top Malaysian Small Cap Companies – 30 Jewels. takaful Malaysia recently concluded its 2011 financial year on a high note with record profits since its inception in 1984, exceeding the RM100 million mark for the first time.

30 apR 2012takaful Malaysia Chairman Dato’ Paduka Ismee Ismail officially launched the Company’s advertising campaign, We Should Talk, and a new comprehensive investment-linked product, takaful myGenLife.

2 - 3 Jun 2012 Bank Islam contributed RM20,000 to the Madrasah Al-Quran Sinaran Baru in Skudai, Johor.

1 Jun 2012Bank Islam contributed RM25,000 for the printing and distribution of Buku Agenda Islam Di Bawah Transformasi Najib to local universities.

14 Jun 2012BHB GMD/GEO, En. Johan Abdullah, handed over RM5,000 worth of Giant Supermarket vouchers to kAFA Integrasi Al-Insaniah in Lembah Subang, Selangor, to aid the less privileged among its students.

8 may 2012BHB held its 15th Annual General Meeting (“AGM”) at Menara Yayasan tun Razak in kuala Lumpur. the AGM was attended by 9 Board Members, representatives from subsidiaries, the Minority Shareholder watchdog Group and approximately 250 shareholders. the AGM was followed by a media conference led by the Group Managing Director/Chief Executive Officer (“GMD/GEO”) of BHB, Managing Director (“MD”) of Bank Islam, Chief Financial Officer (“CFO”) of takaful Malaysia and Chief Executive Officer (“CEO”)of BIMB Securities.

8 may 2012Bank Islam won The BrandLaureate Award for Best Brands in Financial Services – Islamic Banking. Accepting the award on Bank Islam’s behalf is Dato’ wan Ismail wan Yusoh, General Manager (“GM”), Strategic Relations.

2012 Event Highlights(continued)

22 - 24 Jun 2012takaful Malaysia collaborated with Briged Sukarelawan New Straits time Press (NStP)-Media Prima Berhad (MPB) and National Heart Institute (IJN) by participating in the Medical Outreach Programme. this Corporate Responsibility programme aims to provide cardio checkups for the rakyat at Dewan undangan Negeri (DuN) Chini, Pahang. RM10,000.00 from its Charity Fund was extended in aid of this program.

28 Jun 2012takaful Malaysia sponsored RM50,000 to enhance an It Laboratory at Sekolah Jenis kebangsaan (t) vivekananda in Petaling Jaya, Selangor. the sponsorship included 20 new desktop computers, three printers and wiFi transmitter facilities. Dato’ Mohamed Hassan Md. kamil, takaful Malaysia’s Group Managing Director (“GMD”), presented a mock cheque to tan Sri Datuk Dr Ampikaipakan kandiah, Chairman of the vivekananda Ashrama kuala Lumpur, witnessed by the Deputy Prime Minister/Education Minister, tan Sri Muhyiddin Yassin.


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12 JuL 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM3,074,416 of Bank Islam’s zakat to Minister in the Prime Minister’s Department, Major General (R) Dato’ Seri Haji Jamil khir Haji Baharom at a zakat ceremony organised by the Zakat Collection Centre of the wilayah Persekutuan Islamic Religious Council.

13 JuL 2012BHB donated RM5,000 worth of Giant Supermarket vouchers to the Persatuan kebajikan An-Najjah for the association’s food aid programme targeting underprivileged families during Ramadan.

28 JuL 2012takaful Malaysia hosted a breaking of fast feast for 68 children of Al-khadeem Home of Hope (“Al-khadeem”) at their premises in Shah Alam. GMD of takaful Malaysia, Dato’ Mohamed Hassan Md. kamil, presented a mock cheque of RM50,000 to ustaz Hussein Yee, President of Al-khadeem. takaful Malaysia also contributed RM20,000 towards a charity dinner organised by Al-khadeem.

1 auG 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM60,529 in Bank Islam’s zakat to the Chief Minister of Melaka, Datuk Seri Haji Mohd Ali Rustam, at a zakat presentation ceremony held at the urban transformation Centre in Melaka.

5 auG 2012MD of Bank Islam, Dato’ Sri Zukri Samat, presented RM442,683 in zakat to Yang teramat Mulia tengku Muhammad Fa-Iz Petra Sultan Ismail Petra, the Regent of kelantan, at the Royale Chulan Hotel in kuala Lumpur.

5 auG 2012En. khairul kamaruddin, GM of Bank Islam’s Consumer Banking, presented RM120,979 in zakat to En. Mohd Zaratkhan Hj. Abdul Rahman, Assistant Chief Secretary of the Sabah Islamic Council at the Grand Dorsett Hotel in Labuan.



PERSPECtIvES

4 Sept 2012BHB and Bank Islam contributed a total of RM300,000 to a Sahabat Korporat Tabung Haji programme for the provision of basic needs and necessities to pilgrims performing the Hajj.

8 Sept 2012BHB organised an Aidil Fitri 2012 Open House celebration at Hotel Maya kuala Lumpur at which the special guests were 30 underprivileged children from kAFA Intergrasi Al-Insaniah and 25 orphans from the Persatuan kebajikan An-Najjah Malaysia.

6 auG 2012takaful Malaysia treated 44 orphans from Persatuan Pendidikan Anak-anak Yatim Lipis in kuala Lipis, Pahang, to a special Raya shopping spree.

13 auG 2012En. Faisal Jaafar, Head of Bank Islam’s Southern Regional Office, presented RM232,736 in zakat to the Chief Minister of Johor, Dato’ Haji Abdul Ghani Osman, at his official residence in Johor Bahru.

13 auG 2012BHB participated in The Star’s Newspaper in Education programme by sponsoring 6,250 copies of the Star newspaper worth RM5,000 to 10 schools; 3 in Perak, 4 in kelantan and 3 in Selangor.

9 auG 2012En. Jaafar Abu, Head of Bank Islam’s Business Support, presented RM625,309 of Bank Islam’s zakat to the Chairman of the Selangor Islamic Religious Council Dato’ Setia Hj. Mohamad Adzib Mohd Isa at a zakat ceremony held at the Concorde Hotel in Shah Alam, Selangor.

8 Sept 2012takaful Malaysia collaborated with the National Academy of Arts, Culture and Heritage (ASwARA) to organise a one-day Creative Art Workshop for 50 children from Yayasan Harapan kanak-kanak Malaysia (YHkM), at the end of which 12 drawings were selected for the Company’s 2013 calendar.



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10 Sept 2012BHB organised a Corporate Briefing for Analysts and Fund Managers at Menara Bank Islam in kuala Lumpur. the briefing was chaired by GMD/CEO of BHB, En. Johan Abdullah while the CFOs of Bank Islam and takaful Malaysia, and the CEO of BIMB Securities were present together with Management Committee members of BHB.

11 Sept 2012Bank Islam contributed RM42,278 in zakat to the Perlis State Islamic Religious Council at the Hotel Seri Malaysia in kangar, Perlis. Later the Bank presented RM287,768 in zakat to the kedah State Islamic Religious Council.

13 Sept 2012BIMB Investment Management Berhad (“BIMB Invest”) a wholly-owned subsidiary of Bank Islam donated RM10,000 each to Aman Palestine, Persatuan kebajikan Al-Fikrah Malaysia and Pusat Rawatan Al-Hidayah. the funds had been raised from BIMB Invest’s Perform Charity Through Investment in Unit Trust drive under which a percentage of proceeds from sales of BIMB i-Dividend Fund was channeled to welfare.

24 Sept 2012Chairman of Bank Islam, Dato’ Zamani Abdul Ghani, presented RM217,974 in zakat to Raja Dr Nazrin Shah, Regent of Perak, at the Istana Perak in kuala Lumpur.

27 Sept 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM158,562 in Bank Islam’s zakat to Dato’ Haji Mohd Salleh Man, Yang DiPertua Majlis Agama Islam Negeri Pulau Pinang.

4 OCt 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM175,042 of Bank Islam’s zakat to Dato’ Ir Daud Abdul Rahman, Sarawak Assistant Minister for Islamic Affairs, at the Bangunan Baitulmal Sarawak in kuching.

5 OCt 2012the Asia Pacific Brands Foundation (APBF), a world leading branding foundation has awarded Dato’ Mohamed Hassan Md. kamil, GMD of takaful Malaysia with The BrandLaureate Transformational Corporate Leader Brand Icon Leadership Awards 2012. this is in recognition of his outstanding and iconic leadership in spearheading the growth and development of takaful Malaysia.

15 OCt 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM218,477 of Bank Islam’s zakat to ke Bawah Duli Yang teramat Mulia tengku Abdullah Sultan Ahmad Shah, Regent of Pahang, at the Istana Abdul Aziz in Bandar Indera Mahkota, Pahang.

18 OCt 2012GMD/CEO of BHB, En. Johan Abdullah, presented a zakat cheque of RM7,079 from subsidiaries, Syarikat Al-Ijarah Sdn Bhd, to kAFA Integrasi Al-Insaniah, a religious school in Lembah Subang, Selangor.

31 OCt 2012ustaz Mohd Nazri Chik, Head of Bank Islam’s Shariah Division, presented RM91,112 in zakat to ustaz Nor Azmi Haji Musa, General Manager of the Negeri Sembilan Zakat Centre at his office in Seremban, Negeri Sembilan.

31 OCt 2012At the launch of the universiti Malaysia kelantan university Debit Card-i (uniDebit), Bank Islam made a zakat contribution worth RM50,000 to aid underprivileged students at the university.

3 nOv 2012Bank Islam contributed RM200,000.00 of its zakat to Yayasan Budiman uitM at Malam Simfoni kasih held at Dewan Agong tuanku Canselor, uitM Shah Alam, Selangor. the contribution is for a special project fund under Program Mengubah Destini Anak Bangsa championed by Yayasan Budiman.



PERSPECtIvES

26 nOv 2012takaful Malaysia continuously delivering its brand promise with RM70,000.00 death claim benefit payment to the beneficiary of its agent. this death claim benefit payment fulfils the Company’s brand promise ‘We Protect, We Care and We Share’ as it symbolizes the Company’s apprehension towards its departed agent’s family.

26 nOv 2012Bank Islam became one of the lead partners in Islamic Finance News (IFN) Issuers & Investors Asia Forum 2012, organised by RedMoney Events. the event saw the participation of various international corporation specialising in Islamic finance which includes banking, takaful and re-takaful.

10 deC 2012Bank Islam handed over the keys to recepients of Rumah Bantuan Bank Islam at Hotel Zenith in kuantan, Pahang. the keys were presented by Dato’ Sri Zukri Samat, MD of Bank Islam to the deserving recepients, witnessed by YAB Dato’ Sri DiRaja Haji Adnan Haji Yaakob, Chief Minister of Pahang. Bank Islam’s total contribution to this project is close to RM800,000.

27 deC 2012Dato’ wan Ismail wan Yusoh, GM, Strategic Relations presented RM324,938 of Bank Islam’s zakat to Dato’ Haji Omar Pilus, Yang DiPertua Majlis Agama Islam dan Adat Melayu terengganu (MAIDAM) at the Pusat Pentadbiran Islam Negeri terengganu in kuala terengganu.

27 deC 2012Bank Islam contributed RM30,000 as zakat to universiti Sultan Zainal Abidin (uNISZA) at its kampus kota, kuala terengganu, terengganu. the contribution was handed over by the GM, Strategic Relations, Dato’ wan Ismail wan Yusoh.


Statement of Corporate Governance(Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

the Board of Directors of BIMB Holdings Berhad (“BHB” or “the Company”) is committed in upholding the highest standards of corporate governance and practices to enhance stakeholders’ value and building consumer’s trust in line with BHB Group’s positioning as a premier Islamic financial services provider. this includes the practice of Islamic Principles for the benefit of society. the Board is also committed to achieve the highest standards of business integrity, ethics and professionalism across the BHB Group.

In order to achieve the said objectives, BHB adheres to the guidelines on corporate governance best practices as well as the following requirements:

i) Bank Negara Malaysia’s (“BNM”) Guidelines on Corporate Governance for Licensed Institutions (BNM GP1-i);

ii) Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”);

iii) the Malaysian Code on Corporate Governance 2012 (“the MCCG 2012”);

iv) Green Book on Enhancing Board Effectiveness (“Green Book”) by the Putrajaya Committee on Government Linked Company High Performance; and

v) Corporate Governance Guide (“CG Guide”) by Bursa Securities.

During the year under review, the Board deliberated on all 26 proposed recommendations enumerated in the Malaysian Code on Corporate Governance (MCCG) 2012. to date, 23 recommendations have been duly adopted by the Company, one recommendation is subject to shareholders’ approval at the forthcoming Annual General Meeting and the Company’s position on the remaining two recommendations, namely Recommendation 3.5 and Recommendation 3.2, will be explained on pages 47 and 48 of this Annual Report.

Based on the above, the Board is pleased to present the following report on the application of the principles and best practices as follows:

1. bOaRd OF dIReCtORS

1.1 board Charter

the Board of Directors (“the Board”) of BHB is constantly mindful of the need to protect the interest of its shareholders and other stakeholders. In discharging its duties effectively, the Board is guided by its terms of Reference (“tOR”), a document which specifies amongst others the Board’s role, powers, duties and functions.

the tOR reflects applicable rules and regulations, processes and procedures to ensure the effectiveness and efficiency of the Board and its committees. It is a dynamic document that is reviewed and updated from time to time to reflect relevant changes to policies, procedures and processes as well as amendments to rules and regulations.

1.2 Roles and Responsibility of the board

the Board has the responsibility to periodically review and approve the overall strategies, business and pertinent policies of the Company. there are specific matters that are reserved for the Board’s deliberation and approval. these include amongst others:

- Reviewing and approving all strategic and policy matters including the business plan and pertinent operating policies and monitoring the management performance based on key Performance Indicators;

- Monitoring and reviewing the overall performance of the Company and BHB Group against the targets and objectives;- Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed;- Reviewing the risk management practices within BHB Group and the Company to ensure there are adequate internal controls and

infrastructure and to identify and manage principal risks and ensuring the implementation of appropriate systems to manage these risks;- Reviewing and approving succession plan, including appointing, training, fixing the compensation of and where appropriate

replacement of senior management;- Approving policies pertaining to staff salary and benefits;


046 ACCOuNtABILItY

- Approving the appointment of Directors and Directors’ emoluments and benefits; - Approving investor relations programme or shareholder communication policy for the Company; - Reviewing the adequacy and integrity of the Company’s internal control systems and infrastructure and management information

systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;- Approving transactions in accordance with the authority limit and to ensure that the business operations of the Company are

conducted in accordance with the Shariah principles; and- Reviewing relevant reports or proposals to ensure the operations of the Company are in compliance with the securities laws, the

Companies Act 1965, Bursa Securities Listing Requirements, Articles of Association of the Company and any regulations and guidelines under the relevant laws.

the Management of the Company is headed by the Group Managing Director/Chief Executive Officer (“GMD/CEO”). He is accountable to the Board in ensuring the Company is operating effectively.

1.3 board Composition and balance

the Board of BHB currently consists of eight (8) members, with one (1) Executive Director and seven (7) Non-Executive Directors. Out of the seven (7) Non-Executive Directors, three (3) are Independent Non-Executive Directors. the four (4) Non-Independent Non-Executive Directors consist of three (3) nominees of Lembaga tabung Haji (“tH”) (including the Chairman) and one (1) nominee of Permodalan Nasional Berhad (“PNB”).

the current composition of the Board complies with Paragraph 15.02(1) of Bursa Securities Listing Requirements and BNM/GP1-i as one-third (1/3) of its members are Independent Non-Executive Directors.

Recommendation 3.5 of MCCG 2012 states that, where the Chairman of the Board is not an independent director, then the majority of the directors must be independent. However, the Board strongly believes that the present Chairman has the ability and capability to ensure proper check and balance to facilitate the Board proceedings and decision making. It is also pertinent to note that there is a separation of authority between the Chairman and the GMD/CEO. their duties and responsibilities are distinct and separate and this facilitates check and balance in the operations of the Company.

within the Board there is diversity and a wealth of knowledge, experience and skills in the field of accountancy, banking, regulation, international business operations and development, finance and risk management. A brief profile of each member of the Board are presented on pages 14 to 18 of this Annual Report.

the selection of Directors is based on merit, guided by the Company’s Policy on Fit and Proper Criteria for Appointment of Chairman, Directors and GMD/CEO based on the assessment by the Nomination and Assessment Committee (“NAC”).

the Board has taken note of recommendation 2.2 of MCCG 2012 on its approach to gender diversity and the number of female directors, in line with the recent announcement by the Government. For the year under review, BHB has two (2) female directors on its Board, representing 22% of its board composition.

the Board also took note of the expectation on time commitment to carry out their responsibilities outlined in Recommendation 4.1 of MCCG 2012. In this respect, members of the Board, in the future will notify the Chairman prior to their acceptance of any new directorship outside the Group. with effect from 1 June 2013, pursuant to Paragraph 15.06 of Bursa Securities Listing Requirements, a director must not hold more than 5 directorships in listed companies.


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1.4 Independent non-executive directors (“Ined”)

the proportion of INED within the current Board composition would facilitate the Board to ensure and provide effective and independent oversight over Management. the composition also reflects the interest of the Company’s majority shareholder which is adequately represented by the appointment of its nominee directors whilst balancing the interest of the minority shareholders.

the INED do not participate in the day-to-day management of the Company and do not engage in any business dealing or other relationship with the Company (other than in situations permitted by the applicable rules and regulations) in order to ensure that they are in a position to exercise independent judgment.

Pursuant to Recommendation 3.1 of the MCCG 2012, the Board is required to undertake an annual assessment on the independence of its INED. In its assessment, the Board focuses amongst others on economic and family relationships, beyond the independent director’s background and considers whether an independent director can continue to bring independent and objective judgment to board deliberations. For the year under review, the Board has approved and adopted a set of criteria for the purpose of conducting an assessment of independence of its Independent Directors.

Pursuant to Recommendation 3.2 of the MCCG 2012 (on the tenure of an Independent Director which should not exceed a cumulative term of 9 (nine) years), one of BHB’s Independent Directors (Encik Zahari @ Mohd Zin bin Idris) has reached a cumulative term of 9 (nine) years. upon due deliberation, the Board is of the view that his presence and contribution are pertinent considering his wealth of experience. He also actively participates and provides invaluable independent views to the Board and Board Committees particularly on the quarterly financial reports, audited financial statements and other operational aspects of the Group. His vast experience (34 years) in banking would enable BHB to tap on his expertise for the development of BHB and its subsidiaries. In addition, he had also complied with the attendance requirements for Board and Board Committees meetings under Bursa Securities Listing Requirements. this testifies his commitment and dedication in discharging his responsibilities as an independent director.

As provided in the Notice of the 16th AGM dated 23 April 2013, the Board is proposing to seek shareholders’ approval to retain the said Independent Director of the Company.

In line with paragraph 2.27 of BNM/GP1-i, none of the BHB’s INED has more than 5% equity interest in the licensed institution or in its related companies, or is connected to a substantial shareholder of the licensed institution.

the Board also ensures that all INED have the following attributes:

• Theabilitytochallengetheassumption,beliefsorviewpointofotherswithobjectivequestioning,constructiveandrigorouschallengingin the interest of the Company;

• Willingnesstostandupanddefendhis/herownviews,beliefsandopinionsfortheultimategoodoftheCompany;and• AgoodunderstandingoftheCompany’sbusinessactivitiesinordertoappropriatelyprovideresponsesonthevariousstrategicand

technical issues put forth and deliberated by the Board.

the Board is of the view that all three (3) INEDs of the Company comply with the above requirements.

1.5 Senior Independent non-executive director

In accordance with the best practices on corporate governance, tan Sri Ismail Adam continues to play his role as the Senior Independent Director (“SID”) of the Board to whom concerns of shareholders and other stakeholders can be conveyed to.

tan Sri Ismail can be reached at [email protected].


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(continued)

1.6 board appointment process

Appointment of a new director is set out in a formal and transparent process, whereby the primary responsibility is delegated to the NAC. the procedure is in line with the Company’s Fit and Proper Policy for key Responsible Persons (which has been implemented since August 2011) and BNM/GP1-i. under the said procedure, the NAC recommends to the Board, suitable candidates for directorship and appointment of key personnel of the Company. NAC is also responsible to ensure candidates satisfy the requisite skills and the core competencies to be deemed as fit and proper, in accordance with the Fit and Proper for key Responsible Person Policy (“kRP Policy”) of the Company, Bursa Securities Listing Requirements and the Corporate Governance Blueprint 2011 issued by Securities Commission.

the kRP Policy, outlines the attributes/qualifications required for a candidate in order to determine his/her suitability, which include amongst others, his/her skill set and leadership. In addition, the kRP Policy also takes into consideration the candidate’s overall experience in areas such as banking, insurance/takaful, finance/accounting, risk management etc.

the Board, with the assistance of the NAC, also considers the following criterion in the selection process:

a) Probity, personal integrity and reputation – the person must have key qualities such as integrity, diligence, independence of mind and fairness;

b) Competency and capability – the person must have the necessary skills, ability and commitment to carry out his/her role; and

c) Financial integrity – the person must manage his/her debts or financial affairs prudently.

the process flow for the appointment of new directors is as follows:

thereafter, the application for the appointment of such candidate would be submitted to BNM for approval pursuant to BNM/GP1-i .

1.7 board and Individual director’s effectiveness

Annually, the NAC undertakes a formal and transparent process, to assess the effectiveness of individual Directors and the Board as a whole. this is conducted through a Board evaluation process which consists of Board and Peer Annual Assessment (“Board Evaluation”).

the Board Evaluation process is a detailed set of questionnaires which covers amongst others, the responsibilities of the Board in relation to strategic planning, risk management, performance management, financial reporting, communication and corporate governance. the Board composition and size, the contribution of each and every member of the Board at meetings, the Board’s decision-making and output, information and support rendered to the Board as well as meeting arrangements were also incorporated in the questionnaires.

upon completion of the assessments, the results are tabulated and reviewed by the NAC for endorsement prior to deliberation by the Board. the Chairman, on need basis would then engage and discuss with individual members on peer assessment results.

1.8 Roles and Responsibilities of the Chairman and the Gmd/CeO

the roles and responsibilities of the Chairman and the GMD/CEO are distinct and separate, in accordance with the relevant best practice. this is to ensure appropriate supervision of the Management, with a clear hierarchical structure. this distinction allows for a better understanding and distribution of jurisdictional responsibilities and accountabilities. this clear structure and focused approach facilitates efficiency and expedites informed decision-making.


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(continued)

Identification of candidates

evaluation ofsuitability

of candidates

meeting withcandidates

deliberationby naC

Recommendationto board

1.8.1 Chairman

the Chairman provides leadership to the Board. His main duties and responsibilities are to steer the Board to achieve its objectives. In order to ensure that relevant issues are discussed, the Chairman will lead the agenda for Board meetings and would request for views and inputs from other directors.

timely dissemination of pertinent information and analysis is part of the Board meeting process where the Chairman shall encourage a healthy level of deliberation. this is to ensure that the Board discharges its responsibilities and that all directors participate in the discussion.

the Chairman also ensures that consensus is reached at Board meetings. where deemed necessary, the Chairman shall call for a vote such that a decision will be reached by a simple majority. In the event a consensus cannot be obtained, the Chairman may elect to defer the agenda, with further analysis conducted on the subject matter, to the next meeting.

1.8.2 Gmd/CeO

the GMD/CEO is responsible for the day-to-day operations of BHB and is accountable to the Board. He leads the BHB’s Management team and is also responsible for regulatory compliance. In managing the business affairs, the GMD/CEO is assisted by a Management Committee, which meets on a monthly basis. the GMD/CEO is also responsible for the implementation of the Board’s policies and decisions.

1.9 Company Secretary

the Company Secretary is responsible for advising the Board on issues relating to the relevant laws, rules, procedures and regulations affecting the Board, as well as best governance practices. She is also responsible for advising the directors of their obligations and duties, disclosure of their interest in securities, disclosure of any conflict of interest in a transaction involving the Company, prohibition on dealing in securities and restrictions on disclosure of price-sensitive information.

All directors have direct and unlimited access to the advice and services of the Company Secretary.

1.10 directors’ Retirement and Re-election

In accordance with the Company’s Articles of Association, one-third (1/3) of the Directors shall retire from office at each Annual General Meeting (“AGM”) and are eligible for re-election. Directors who are appointed by the Board in each financial year are subject to re-election by the shareholders at the next AGM following their appointment.

Details of directors who are due for re-election at the forthcoming AGM are disclosed on page 15 of the Annual Report.

1.11 board meetings

Board meetings are scheduled in advance at the beginning of a new calendar year to enable directors to plan ahead and fit the year’s meeting into their own schedules. the Board meets on a scheduled basis every quarter of the year. when the need arises, Special Board meetings are also convened. the Board continues to proactively engage with senior management or external advisors to advise the Board and to furnish the Directors with information and clarification needed on relevant matters to ensure that the various concerns and issues relevant to the operations of the Company are duly addressed.

All Board members have complied with Bursa Securities Listing Requirements on attendance for Board meetings held during the year under review.


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(continued)

During the financial year ended 31 December 2012, the Company had seven (7) Board meetings and the directors’ attendance are as follows:

directors no. of meetings

*held attended %

tan Sri Samsudin bin Osman 7 7 100Chairman/Non-Independent Non-Executive Director

tan Sri Ismail binadam 7 6 86Senior Independent Non-Executive Director

encik Johan bin abdullah 7 7 100Group Managing Director/Chief Executive Officer

dato’ paduka Ismee bin Ismail 7 5 71Non-Independent Non-Executive Director

encik Zahari @ mohd Zin bin Idris 7 6 86Independent Non-Executive Director

datuk Zaiton binti mohd hassan 7 5 71Independent Non-Executive Director

encik Salih amaran bin Jamiaan 7 7 100Non-Independent Non-Executive Director

puan Rozaida binti Omar 7 6 86Non-Independent Non-Executive Director

tuan Syed elias bin abd. Rahman alhabshi** 4 2 50Non-Independent Non-Executive Director

* reflects the number of meetings held during the time the Director held office.** tuan Syed Elias bin Abd. Rahman Alhabshi resigned as Director on 1 July 2012.

1.12 access to Information

the Board of Directors have full and unrestricted access to all information pertaining to BHB’s affairs including inter alia, financial results, annual budgets, business reviews against business plans and progress reports on BHB’s corporate developments to enable them to discharge their duties effectively. the schedules of Board Meetings would be circulated in advance to the Board members. the Agenda and Board meeting papers are disseminated to the Directors at least 5 days prior to the Board meeting to allow sufficient time for the Directors to study and review on the issues and, where necessary, to obtain further information and explanations to facilitate an informed decision making. During the Board meeting, the directors will deliberate the business as per the agenda at length prior to making their conclusions and decision.

Senior Management and external advisers may be invited to attend the Board meetings when necessary, to furnish the Board with explanations on the relevant agenda items tabled at the Board meetings or to provide clarification on issue(s) that may be raised by any director(s).

the deliberation and resolution passed by the Board will be properly recorded and subsequently the minutes of the meeting will be confirmed at the next Board Meeting.


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(continued)

the Board is also regularly updated from time to time by the Company Secretary and/or management on updates to the regulations and guidelines, as well as any amendments thereto issued by Bank Negara Malaysia, Bursa Securities, Securities Commission, Companies Commission of Malaysia and other relevant regulatory authorities.

All directors have direct and unlimited access to the advice and services of Senior Management and may seek independent professional advice at the Company’s expenses, if required, in furtherance of their duties.

1.13 number of directorships

In accordance with BNM/GP1-i, Directors must not hold more than ten (10) directorships in listed companies and not more than 15 directorships in non listed companies. Effective 1 June 2013, the new provision of Bursa Securities Listing Requirements would require that a Director of a listed issuer must not hold more than five (5) directorships in listed issuers.

At present, all directors of BHB have complied with the best practice recommendation of the Green Book which states that directors should not sit on the board of more than five (5) listed companies. this is to ensure that their commitment, resources and time are focused to enable them to discharge their duties more effectively.

Pursuant to the MCCG 2012 Recommendation 4.1, the Board had on 27 November 2012 agreed that all directors will be required to set out their expectations on time commitment before accepting a new directorship.

1.14 directors’ training

the Board recognizes the value of enhancing the skills and knowledge of its members on relevant new laws and regulations and changing business environment and risk profile, as well as aspects on the latest development and key challenges in the financial sector.

the Board is mindful of the need for continuous training to keep abreast of new developments and is encouraged to attend forums and seminars facilitated by external professionals in accordance with their respective needs in discharging their duties as directors. the Board will continue to evaluate and determine the training needs of its directors to enhance their skills and knowledge.

the Company provides a dedicated training budget for director’s continuing education. Relevant training programmes are arranged by the Company for the directors and members of the Board Committees. the directors may also request to attend additional training courses according to their specific requirements as a director or member of the Board Committees.

the key areas of focus for training programmes attended by the directors for the financial year ended 31 December 2012 are as follows:

i) Board Leadership and Management Effectivenes:

- MINDA training: “Building High Performance Director 2012”- MINDA Luncheon talk by Johan Cruyff: “Building a winning team – How Cruyff Changed the Game”- MINDA: Corporate Directors Advanced Programme 2012- Bursa Malaysia: Advocacy Session on Disclosure for Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs)- Malaysian Alliance of Corporate Directors: 1st Corporate Directors’ Conference 2011- Permodalan Nasional Berhad: Nominees Directors’ Convention & Executive Luncheon talk 2012- Permodalan Nasional Berhad: Quality Initiatives talk: “Balance Leadership for the 21st Century”- ICLIF: Dialogue Session with Christine Lagarde on woman and Leadership, the ICLIF Leadership & Governance Centre- Financial Institutions Directors’ Education (FIDE): “Human Capital Management in the Boardroom”- FIDE: Board of Directors: value Creation vs Compliance- FIDE Elective Program: Media Skill Programme


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(continued)

ii) Corporate Governance and Risk Management:

- 4th Annual Corporate Governance, kL 2012- Bursa Malaysia: Corporate Governance Programme 2012- Bursa Malaysia:“Governance, Risk Management and Compliance: what Directors Should know”

iii) Accounting, Finance and Capital Markets:

- Malaysian Institute of Accountant (MIA): MIA Conference 2012- MIA: Optimising Corporate tax Planning Strategies- Jabatan Peguam Negara Malaysia: Seminar on Islamic Banking and Finance: “the Importance of Shariah Governance in Islamic

Finance”- Bank Negara Malaysia (BNM): Global Islamic Finance Forum (GIFF)- kPMG: New Accounting Standards, Amendments and Interpretations Including New FRS- MFRS update 2012/2013 Seminar- CFO Summit- Malaysian Accounting Standards Boards (MASB): IFRS Conference 2012, kuala Lumpur- ACCA: Accountants for Business Forum: Diversity Driving Performance in Global Business- ACCA: 2nd ACCA train-the-trainer Conference in Malaysia- IABt: “New Ideas and Open Issues in Corporate Finance”- Asian Strategy & Leadership Institute (ASLI): the 17th Malaysian Capital Market Summit “Malaysia the Rising Star – Geared for

Growth”

iv) Others:

- Seminar on “Dynamic Evolution of the Pension world”- training by Group Legal, Felda Global ventures Holding Berhad on “ various Laws and Regulations applicable to a Listed

Company”- Malaysian Economic Association: Global Lecture by Christine Lagarde MD, International Monetary Fund on “ Asia and the

Global Economy: the Promise of Integration”- kDu university College: talk on “Building Blocks of a Successful Career”- khazanah Nasional Berhad: PCG: Bumiputra Economic transformation Roadmap (BEtR) workshop- khazanah Nasional Berhad: khazanah Megatrends Forum: “the Big Shift-traversing the Complexities of A New world”- Lembaga tabung Haji: LtH Business Plan Programme

All directors have attended the Mandatory Accreditation Programme as required by Bursa Securities.

1.15 Conflict of Interest

In accordance with statutory requirements on the disclosure of director’s interest, members of the Board would declare their interests, including whether such interest arises through close family members to relevant regulators, and will be subsequently noted at Board meetings.

Interested Director(s) would abstain from voting and not participate in any deliberations and decisions of the Board, and where appropriate, excused themselves from the meeting.


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1.16 directors trading during Closed period

Directors and principal officers of BHB are prohibited from trading in any affected securities based on price sensitive information and/or knowledge which have not been publicly announced in accordance with Bursa Securities Listing Requirements and the relevant provisions of the Capital Markets & Services Act 2007. Notices on the closed period for trading in BHB and/or any affected securities are circulated to directors and principal officers who are deemed to be privy to any price sensitive information in advance of the closed period, wherever applicable.

2. dIReCtORS’ RemuneRatIOn

the Remuneration Committee (“RC”) of BHB comprised solely of Non-Executive Directors. Amongst its duties is to recommend to the Board the remuneration package for the Executive Director. the remuneration package for Executive Director is structured on the basis of linking rewards to financial and individual performance. Performance is measured against the key Performance Indicators as approved by the Board. It is the ultimate responsibility of the Board to approve the remuneration of the Executive Director.

In the case of Non-Executive Directors, the remuneration package is determined by the Board as a whole, based on the experience and level of expertise and responsibilities undertaken by the Non-Executive Directors.

2.1 Remuneration package policy

the policy on remuneration package of directors is as follows:

Executive Director

(a) basic Salary the basic salary for Executive Director is recommended by the Remuneration Committee to the Board, taking into account the

responsibility, contribution and performance of the Executive Director, as well as the market-rate for similar positions in comparable companies.

(b) bonus Scheme the Group adopted a bonus schemes for all employees, including the Executive Director. the criteria for the scheme would include

the overall level financial achievements by the Group against the target, together with other qualitative assessment of individual’s performance during the period. the bonus payable to the Executive Director is reviewed and recommended by the Remuneration Committee and thereafter approved by the Board. there is no bonus scheme provided to Non-Executive Directors.

Non-Executive Director

(c) Fees and Other emoluments Non-Executive Directors are remunerated by way of monthly fee, sitting allowance and other emoluments. Fees payable to Non-

Executive Directors are subject to shareholders’ approval at the Annual General Meeting.

(d) benefits-In-kind Other benefits (such as Directors & Officers’ Liability insurance and travelling allowance) are made available as appropriate.

Remuneration of the Directors in office during the financial year is also disclosed in the BHB’s Financial Statements section Note 30(a) of the Annual Report.


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(continued)

A summary of the aggregate remuneration of the directors, distinguishing between Executive and Non-Executive Directors for the financial year ended 31 December 2012 are as follows:

Group Company 1.1.2012 to 1.1.2011 to 1.1.2012 to 1.1.2011 to 31.12.2012 31.12.2011 31.12.2012 31.12.2011 Rm’000 Rm’000 Rm’000 Rm’000

executive director:Fees and allowances 231 209 - -Salaries, bonuses and EPF contributions 1,749 1,001 1,749 1,001Benefit-in-kind 115 102 76 73

2,095 1,312 1,825 1,074

non-executive directors:Fees and allowances 1,826 1,498 771 455Benefit-in-kind 227 125 84 40

total 4,148 2,935 2,680 1,569

total (excluding benefits-in-kind) 3,806 2,708 2,520 1,456

Shariah Supervisory Council 330 309 - -

the number of Directors whose remuneration are paid/payable for their services, fall within the following bands:

Group 1.1.2012 to 1.1.2011 to 31.12.2012 31.12.2011

executive director:RM1,300,000 and RM1,500,000 - 1RM2,000,001 and RM2,500,000 1 -

non-executive directors:Below RM50,000 1 3RM50,001 and RM100,000 2 1RM100,001 and RM150,000 - 2RM150,001 and RM200,000 1 -RM200,001 and RM250,000 1 -RM300,001 and RM350,000 - 1RM350,001 and RM400,000 - 1RM400,001 and RM450,000 1 -RM450,001 and RM500,000 1 -RM500,001 and RM550,000 - 1RM550,001 and RM600,000 1 -

total 9 10


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3. bOaRd COmmItteeS

to assist the Board in discharging its duties and responsibilities, the Board delegates certain responsibilities to the following Board Committees, which operate within clearly defined terms of reference, primarily to assist the Board in the execution of its duties and responsibilities. Although the Board has delegated its authority to these Board Committees to deliberate and decide on certain key and operational matters, the ultimate responsibility for final decision on all matters lies with the entire Board.

3.1 nomination and assessment Committee (“naC” Or “Committee”)

the Committee comprises Non-Executive Directors, majority of whom are independent. Meetings are held every quarter and as and when necessary for the Committee to deliberate on relevant matters. Details of committee members attendance are as follows:

Committee members attendance %

datuk Zaiton binti mohd hassan (Chairman) 5/5 100Independent Non-Executive Director

encik Zahari@mohd Zin bin Idris 5/5 100Independent Non-Executive Director

dato’ paduka Ismee bin Ismail 4/5 80Non-Independent Non-Executive Director

the Committee is responsible to assess and recommend to the Board, candidates for directorships and/or executive directors to be appointed in the Company and its key subsidiaries. the other responsibilities of the Committee are as follow:

• AssessingtheoverallcompetencyrequirementsfortheBoardandtheperformanceoftheGMD/CEO;• Overseeingtheoverallcompositionof theBoardtoensureamongstothers,whether ithas theappropriatesize,mixofskillsand

gender diversity; • RecommendingandassessingtheoverallsuitabilityofdirectorsaswellasthenomineesfortheGMD/CEO’spositiontotheBoard

prior to submission of such application to Bank Negara Malaysia for approval;• EstablishingaformalmechanismtoassesstheeffectivenessoftheBoardasawhole,contributionbyeachrespectivedirectortothe

effectiveness of the Board/Board’s committees as well as the independence of Independent Non-Executive Directors;• Ensuringalldirectorsreceiveappropriatecontinuoustraining;• Overseeingtheappointment,managementsuccessionplanningandperformanceevaluationofDirectorsandKeySeniorManagement;and• Ensuring that the Board has the right balance between Executive Directors, Non-Independent Non-Executive Directors and

Independent Non-Executive Directors and other core competencies required throughout the annual review.


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(continued)

board of directors

audit and examination Committee nomination and assessment Committee Remuneration Committee

the Company has also conducted the annual assessment on the performance of the Board as a whole as well as on the effectiveness of all individual directors.

the Commitee had also complied with Recommendation 2.1 of the MCCG 2012, where the NAC should consist of Non Executive Directors, a majority of whom must be independent. the MCCG 2012 also recommended that the chairperson of the NAC shoud be occupied by the Senior Independent Director of the Company. In this regard however, the Board had deliberated and concluded that the current composition and expertise of the NAC are sufficient to meet the needs and requirements of the Company.

3.2 Remuneration Committee (“RC” or “Committee”)

the Committee comprises non-executive directors, majority of whom are independent. Meetings are scheduled in advance at the beginning of a new calendar year to enable directors to plan ahead and fit the year’s meeting into their own schedules. the Committee meets on a scheduled basis every quarter of the year. when the need arises, special meetings are convened. Details of the RC attendance are as follows:


datuk Zaiton binti mohd hassan (Chairman) 5/5 100Independent Non-Executive Director

encik Zahari @ mohd Zin bin Idris 5/5 100Independent Non-Executive Director

dato’ paduka Ismee bin Ismail 4/5 80Non-Independent Non-Executive Director

the Committee’s role is to assist and support the Board’s responsibility by recommending to the Board, remuneration of directors, executive directors and senior management of the Company. the responsibilities of the RC would include:

• RecommendingaframeworkofremunerationforDirectors,GMD/CEOandKeySeniorManagement;• RecommendingspecificremunerationpackagesforDirectors,GMD/CEOandKeySeniorManagement;• ReviewingandrecommendingtotheBoard,policiespertainingtostaffsalary,remunerationschemeandbenefits;and• ReviewingandrecommendingtotheBoard,thequantumofbonuspaymentstothestaffoftheCompany.

3.3 audit and examination Committee (“aeC” or “Committee”)

the AEC is authorised by the Board to conduct any activities within its terms of Reference and has unrestricted access to both the internal and external auditors and members of the Senior Management. the activities carried out by the Committee, which met five (5) times during the year under review, are summarized in the AEC’s Report and its terms of Reference as set out on pages 63 to 68 of this Annual Report. the composition of AEC are also disclosed on page 63 of this Annual Report.


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3.4 Group Shariah Committee

there are three (3) separate Shariah Committees that provide Shariah guidance and consultation for BHB’s respective key subsidiaries (Islamic Banking, takaful and Stockbroking).

In compliance with BNM’s Guidelines on the Governance Framework and the Company’s Memorandum and Articles of Association, the Shariah Committees responsibility is to ensure that the operations of the key subsidiaries are in accordance with Shariah principles.

a) the members of the Shariah Supervisory Council of Bank Islam:

members nationality

dr. ahmad Shahbari @ Sobri bin Salamon (Chairman) Malaysian

ustaz haji mohd bakir bin haji mansor Malaysian

Sheikh dr. ahmed mohieldin bin ahmed Sudanese

associate professor dr. uzaimah binti Ibrahim Malaysian

professor dr. ahmad hidayat bin buang Malaysian

ustaz dr. muhammad Syafii bin antonio Malaysian

b) the members of the Shariah Advisory Body of Syarikat takaful Malaysia Berhad:

members nationality

dr. ahmad Shahbari @ Sobri bin Salamon (Chairman) Malaysian

ustaz haji mohd bakir bin haji mansor Malaysian

dr. aida binti Othman Malaysian

professor madya dr. muhammad Rahimi bin Osman Malaysian

dato’ wan mohamad bin dato’ Sheikh abdul aziz Malaysian

c) the members of the Shariah Committee of BIMB Securities Sdn. Bhd.:

members nationality

ustaz haji mohd bin haji bakir mansor (Chairman) Malaysian

prof. emeritus dato’ paduka dr. mahmood Zuhdi bin haji abdul majid Malaysian

Ir. dr. muhammad Fuad bin abdullah Malaysian


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(continued)

4. ShaRehOLdeRS

the Board recognizes the importance of timely, complete, accurate and equal dissemination of information with regard to the Company and the Group’s performance and other matters affecting shareholders’ interest, investors and the general public.

4.1 Investor Relations

Investor Relations (“IR”) is an important part of BHB Corporate Governance framework to ensure that shareholders, stakeholders, investors and the investment community, both local and international are provided with relevant, timely and comprehensive information about BHB. the Company is committed to provide an effective and open communication in order to improve disclosure and transparency.

IR provides an important role to update stakeholders on the Group and the Company’s corporate activities, such as dialogues and discussions with fund managers, financial analysts and the media. these initiatives provide vital avenue and channel of communication for better understanding of the business and operation within the Group. where relevant, members of the media are also invited to attend the Company’s major events.

4.2 Conferences and Road Shows

the Company and its subsidiaries participated in various domestic and international conferences and road shows, whereby information on business outlook, strategy and direction are communicated to the relevant stakeholders.

4.3 Financial Results

the Company and Group’s unaudited quarterly and audited annual financial results are released within the stipulated regulatory timeline to Bursa Securities, together with the accompanying press release for the respective periods.

4.4 annual Report

One of the most important methods of communication to shareholders is through the Annual Report of the Company. the Annual Report contains comprehensive and sufficient details about the financial results and overall performance of the Company and BHB Group.

In addition, the Annual Report also contains the Chairman’s Statement which provides an overview of the Company and BHB Group’s performance, operations and other matters affecting the shareholders’ interest. the Company also disclosed its corporate governance and internal control statements in the Annual Report. the information stated in the Annual Report would allow shareholders and investors to make an informed investment decision on BHB Group.

4.5 annual General meeting (“aGm”)

the AGM is regarded as the main forum for dialogue and communication during which shareholders and investors are informed of the financial performance and current developments of the Group. Shareholders are encouraged to attend the AGM and participate in the proceedings. At the AGM, shareholders are invited to ask questions or seek clarifications before any resolutions are put forth for approval. the GMD/CEO will also conduct a presentation to brief shareholders on financial performance. All Board members, Senior Management, BHB Groups’ Management team and the Company’s external auditor are available to respond to shareholders’ enquiries during the AGM.

A press conference is held after each AGM, where the Company’s GMD/CEO together with the GMD/CEOs of major operating subsidiaries, shall brief the media on the financial performance and other corporate development of the Group. this would also enable the Board and Management to clarify issues and to answer questions raised by the members of the media.


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4.6 media Coverage

the Company’s major operating subsidiaries, namely Bank Islam, takaful Malaysia and BIMB Securities, do from time to time engage the media on matters pertaining to their respective events, products and services that are of interest to the public.

4.7 website

BHB’s corporate website at www.bimbholdings.com is also another channel of communication with the stakeholders. It contains amongst others, information on the Company and BHB Group such as corporate profile, senior management, investor information, financial results and corporate news.

Any queries or concerns relating to the Company and BHB Group can be conveyed to the following persons:

tan Sri Ismail bin adamSenior Independent DirectorEmail: [email protected]

encik Omar bin atinHead, Corporate CommunicationsEmail: [email protected]

5. aCCOuntabILIty and audIt

5.1 Financial Reporting and disclosure

the Board has a fiduciary responsibility to present a clear, balanced and comprehensive assessment of the Company and the Group’s performance and prospects. this is presented at the end of each financial year primarily through annual financial statements and quarterly announcement of results to shareholders as well as the Letter to Shareholders in the Annual Report. In order to meet the fiduciary responsibility expected of the Board, the Board is assisted by the AEC to ensure that the financial statement present a true and fair view of BHB Group’s financial performance and state of affairs.

the Board also ensures that the Company and BHB Group’s financial reporting are made in accordance with the Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and Companies Act, 1965 (“Act”).

5.2 directors’ Responsibility Statement

Pursuant to the Act, the Directors are required to provide annual financial statements which have been made out in accordance with the provisions of the Act and applicable approved accounting standards.

the Statement by Directors pursuant to Section 169(15) of the Act is set out on page 183 of this Annual Report.

5.3 Internal Control

the Board recognizes the importance for maintaining a sound internal control system that covers financial, operational and compliance controls to safeguard shareholders’ investments and the Company’s assets. the Statement of Internal Control which provides an overview of the state of internal control is set out on page 69 of this Annual Report.


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5.4 policies

(i) Corporate disclosure policyCorporate Disclosure Policy (“CDP”) is formulated to enhance the standard of BHB’s corporate governance particularly in the area of transparent disclosures to the public. the purpose of CDP is to enable shareholders and stakeholders to gain access to the Company’s business information not limiting to just financial reporting disclosure. In addition, it also maintains an effective communication tool which enable both the Board and Management to communicate effectively with its stakeholders in a timely manner.

(ii) Corporate Social Responsibilities (“CSR”) and the environmentthe Company has adopted an objective and positive stand by promoting a wide range of CSR activities through various community programs and use of natural resources.

the directors are of the view that the Company had adopted a good balance between value creation and corporate responsibility. Details of the Company’s corporate responsibility initiatives are set out on pages 34 to 39 of this Annual Report.

(iii) whistle blowing policyBHB is committed to the values of transparency, integrity, impartially and accountability in the conduct of its business and affairs. wrongdoings such as fraud, corruption, financial impropriety and gross mismanagement should be reported and dealt with in accordance with the Company’s established due process. A whistle blowing policy reflects BHB’s commitment to be vigilant at all times. It is also to assist BHB to manage its risks and contingencies as well as to avoid recurring wrongdoings.

BHB promotes an open communication and transparent work culture by setting up internal procedures to address concerns for any likely wrongdoing. the policy complements the normal channels of communication and reporting lines within BHB. It also provides an alternative route for employees to raise concerns if the usual lines of communication is not available when the complaint relates to his or her immediate supervisor or head of department.

BHB encourages its employees to aspire to achieve the highest possible compliance and ethical standards. whistle Blowing Policy is integrated into BHB’s practices and culture that helps to deter fraud, corruption and mismanagement. through an effective implementation of this policy, BHB is able to preserve its integrity and transparency. this in turn enhances and builds credibility with BHB’s stakeholders.

(iv) directors’ Code of Conduct and ethicsBHB adopted and practises the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia. the Code of Ethics provides guidance for proper standards of conduct with sound and prudent business practices as well as standards of ethical behaviour for directors, based on the principles of integrity, responsibility, sincerity and corporate social responsibility.

BHB’s Directors’ Code of Conduct and Ethics encompass three (3) major areas, namely:

a) Corporate Governance;b) Relationship with shareholders, employees, creditors and customers; andc) Social responsibilities and the environment.

Based on the aforesaid, BHB’s Directors are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders. this is in line with the Company’s core values which emphasize on behavioral ethics when dealing with third parties and employees.


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(v) Sustainability policyAs a pioneer Shariah-compliant financial services provider, BHB and its subsidiaries strive to be responsible corporate citizens. BHB is committed to uphold the Shariah principles in relation to its business and social responsibilities:

• MARKETPlACEBHB Group is committed in its effort to strengthen Shariah governance, adopting customer-centric philosophy for service excellence and promote literacy in the areas of our Shariah-compliant banking, takaful and stockbroking products.

• WORKPlACEBHB Group aspires to be an employer of choice by providing a conducive working environment, continuous education and development of talent, encouraging volunteerism and managing responsibly our most valuable asset which is our staff.

• COMMuNITYBHB Group is focused on its effort on enriching deserving communities via education, social development and economic inclusion, poverty alleviation and humanitarian relief.

• ENvIRONMENTBHB Group champions conservation and protection of the natural environment and educating its business constituents the importance of environmental preservation.

5.5 Relationship with auditors

i) Internal auditorsthe Company’s Internal Auditors (currently the function is outsourced to the Internal Audit Department of Bank Islam) reports directly to the AEC and has unrestricted access to the AEC. the internal audit function is independent of the activities or operations of other operating units. the Internal Auditors conduct regular audits to evaluate the operating effectiveness of internal controls, compliance with internal and regulatory requirements across the Company. the audit report, highlights any findings, along with the recommendations and management’s responses, are tabled to the AEC. Minutes of the AEC meetings are subsequently tabled to the Board for notation, which serves as useful reference on pertinent issues that the AEC wishes to highlight to the Board.

ii) external auditorsthe Board has established transparent and appropriate relationship with its external auditors through the AEC. the AEC and the Board maintain a strong emphasis on the objectivity and independence of the Auditors, in providing the relevant and transparent reports to shareholders. In ensuring full disclosure, the external auditor is regularly invited to attend AEC meetings as well as the AGM, apart from the bi-annual discussions with the AEC without the presence of the management. In this regard, the external auditors have an obligation to highlight any concerns in the Group’s system of internal control and compliance to the Management, AEC and the Board.

A report of the AEC outlining its role in relation to the internal and external auditors is set out on pages 63 to 68 of this Annual Report.


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6. audIt and eXamInatIOn COmmIttee RepORt (“aeC” or “Committee”)

6.1 Committee:

encik Zahari @ mohd Zin bin Idris (Chairman/Independent Non-Executive Director)(Senior Cambridge Certificate)

datuk Zaiton binti mohd hassan (Independent Non-Executive Director)(Fellow of the ACCA, Member of MIA and MICPA)

encik Salih amaran bin Jamiaan (Independent Non-Executive Director)(Master of Business Administration)

the Committee is authorised by the Board to conduct its activities within its terms of Reference and has full access to internal and external auditors and members of the management of the Company.

the terms of reference of the Committee are as follows:

6.2 Composition

i) the Committee shall comprise only non-executive Directors with at least three (3) members of which the majority must be independent directors. the Chairman shall be an independent non-executive director and at least one (1) member of the committee must be:

• AmemberoftheMalaysianInstituteofAccountant(MIA);or• Ifhe/sheisnotamemberofMIA,he/shemusthaveatleastthree(3)yearsworkingexperiencewiththefollowingconditions:-

- He/she, must have passed examinations specified in Part I of the First Schedule of the Accountants Act, 1967; or- He/she must be a member of one (1) of the association of accountants specified in Part II of the First Schedule of the

Accountants Act, 1967.

ii) the Committee shall not consist of any alternate director of the Company and shall be formally appointed and/or terminated by the Board.

iii) the members shall elect a Chairman from amongst themselves who must be an Independent Non-Executive Director.

iv) All members shall hold office only for so long as they serve as directors of the Company and members of the Committee may relinquish their membership in the Committee with prior written notice to the Secretary and may continue to serve as Directors of the Company.


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6.3 Chairman of the aeC

the following are the main duties and responsibilities of the Chairman of the AEC:

- to steer the Committee to achieve its objectives;- to provide leadership to the Committee and ensure proper flow of information to the Committee, review adequacy and timing of

documentation;- to provide a reasonable time for discussion at the Committee meetings. Organizes and leads the agenda for Committee meetings

based on input from the members and ensure that all relevant issues are on the agenda;- to ensure that consensus is reached on every Committee resolution and where considered necessary, call for a vote and the decision

will be made by simple majority; OR in the event a consensus cannot be obtained, the Chairman may elect to defer the agenda with further analysis conducted on the subject matter to the next meeting;

- to manage the process and working of the Committee and ensure that the Committee discharges its responsibilities; and- to ensure all Members participate in the discussion to enable and encourage effective decision making.

6.4 Committee members

Each AEC Member is expected:

- to provide independent opinion to the fact-finding, analysis and decision making process of the Committee, based on their experience and knowledge;

- to consider viewpoints from other Committee members, make decisions and recommendations in the best interest of the Company collectively;

- to keep abreast of the latest corporate governance guidelines in relation to the Committee as a whole; and- to continuously seek out best practices in terms of the processes utilized by the Committee, following which these should be discussed

with the rest of the Committee for possible adoption.

6.5 Secretary

the Secretary of the Committee shall be the Company Secretary and/or Joint Secretary of the Company and the Secretary shall record the proceedings and resolutions of all proceedings of AEC.

6.6 disclosure

the Committee shall assist the Board in making certain disclosures concerning the activities of the Committee pursuant to Bursa Securities Listing Requirements.

6.7 meetings and proceedings

i) Meetings shall be held not less than four (4) times a year with additional meetings for particular matters, convened as and when required. the external auditors may be requested to attend the meeting if it is necessary.

ii) the Chairman of the Committee, or the Secretary on the requisition of the members, shall at any time summon a meeting of the Members by giving due notice. It shall not be necessary to give notice of a Committee meeting to any Member for the time being absent from Malaysia.


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iii) No business shall be transacted at any meeting of the Committee unless a quorum is present. In order to form a quorum in respect of a meeting of an audit committee, the majority of members present must be independent directors.

iv) If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved. the meeting shall stand adjourned to such day and at such time and place as the Members may determine.

v) the Chairman of the Committee shall chair the Committee meetings and in his absence, the members present shall elect one Member among themselves to chair the meeting subject always that person must be an Independent Non-Executive Director.

vi) All decision and/or approvals are to be made on unanimous basis, whilst always adhering to the quorum of meeting.

vii) the Secretary shall draft out the agenda for each meeting, in consultation with the Chairman of the Committee. the agenda shall be sent to all Members of the Committee and any other persons who may be required to attend the meeting.

viii) All minutes of the meeting including the recommendations and findings of the Committee shall be submitted to the Board for notification.

ix) In appropriate circumstances, the Committee may deal with matters by way of circular reports and/or resolutions. A resolution in writing signed by all the members who may at the time be present in Malaysia, shall be as valid and effective as if had been passed by a meeting of the Committee duly called and constituted. the decision shall be presented at the next Committee subsequent meeting, for notation and minutes.

x) In order to avoid conflict of interest, a member of the Committee shall abstain from participating in discussions and/or decisions on matters directly involving him/her.

6.8 Quorum

the quorum shall be three (3) with majority must be Independent Directors.

6.9 attendance and Invitees

the GMD/CEO is invited to attend the meeting. Subject to Chairman’s consent with the advice from GMD/CEO, the Senior Management or any other persons shall be invited to attend the meeting as and when required. Other Board members shall also have the right to attend.

At least twice a year, the Committee shall meet with the external auditors without executive Board member/Senior Management presence.

A total of five (5) meetings were held during the financial year under review. the details of attendance of each of the members at the AEC meetings held during the year are as follows:


encik Zahari @ mohd Zin bin Idris (Chairman) 5/5 100Independent Non-Executive Director

datuk Zaiton binti mohd hassan 5/5 100Independent Non-Executive Director

encik Salih amaran bin Jamiaan 5/5 100Non-Independent Non-Executive Director


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6.10 authority of the aeC

the AEC is empowered by the Board to carry out the following:

i) Investigate any activity or matter within its terms of reference;

ii) Promptly report to Bursa Securities matters which have not been resolved satisfactorily thus resulting in a breach of the Listing Requirements;

iii) Obtain external independent professional advice, legal or otherwise deemed necessary;

iv) Maintain direct communication channels with external auditors, person(s) carrying out the internal audit function and senior management of the Company and its subsidiaries; and

v) Convene meetings with internal and external auditors, without the attendance of the management, whenever deemed necessary.

In discharging the above functions, the AEC is also empowered to:

i) Seek any information it requires from any employee of the Company in order to perform its duties;

ii) Obtain, at the Company’s expenses, any professional advice including the advice of independent consultant and to secure the attendance of the external advisers at its meeting if it considers necessary to help it fulfill its obligation;

iii) Have full and unrestricted access to the Company’s records, properties and personnel; and

iv) Have full and unrestricted access to advice and services of the Company Secretary.

6.11 duties and Responsibilities

the primary duties and responsibilities of the AEC are as follows:

i) Internal audit

• Reviewtheadequacyoftheinternalauditprogramme,internalauditfindingsandrecommendactionstobetakenbymanagementon deficiencies in controls and procedures that are identified.

• TorecommendtotheBoardontheappointmentorterminationoftheChiefInternalAuditor.• Assesstheperformanceoftheinternalauditorsanddetermineandrecommendtheremunerationandannualincrementofthe

internal auditors.• Takecognizanceoftheresignationsofinternalauditstaffmembersandprovidetheresigningstaffmemberanopportunityto

submit his reasons for resigning.

(Currently the function of Internal Audit is outsourced to the Internal Audit Department of Bank Islam)

ii) Internal Controls

• Reviewtheeffectivenessofinternalcontrolsandriskmanagementprocesses.• ReviewtheCompany’sstatementoninternalcontrolpriortoendorsementbytheBoard.


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(continued)

iii) external audit

• Reviewtheexternalauditors’auditscopeandplan.• Reviewtheappointmentofexternalauditorsandtheauditfeeandtodealwithanyissuespertainingtoresignationordismissal

and to make recommendations to the Board.• Reviewandmonitortheeffectivenessoftheexternalauditors’performanceandtheirindependenceandobjectivitybywayofan

assessment to be conducted annually.• Reviewtheexternalauditors’lettertoManagementandManagement’sresponses,includingthepreviousauditrecommendations

and make recommendations to the Board.• Approvetheprovisionofnon-auditservicebyexternalauditor.

iv) Financial Reporting

Review and recommend the quarterly and year-end financial statements of the Company before submission to the Board, focusing particularly on:

• Anychangesinaccountingpoliciesandpractice.• Significantadjustmentsresultingfromtheaudit.• Thegoingconcernassumption.• CompliancewithapplicableFinancialReportingStandardandotherlegalandregulatoryrequirements.

v) Related party transactions

Review and report to the Board any related party transactions that may arise within the Company or Group.

vi) annual Report

Annual reporting on the overall AEC’s activities and the number of audit meeting held in a year.

vii) General

• TheCommitteemayconsiderothermattersasreferredtotheAECbytheBoard.• TheCommitteeisnotdelegatedwithdecisionmakingpowerbutisrequiredtosubmititsrecommendationtotheBoardfordecision.• TheCommitteewill,incarryingoutitsactivitiesaswellasinmakingitsrecommendationtotheBoardofDirectors,takeinto

consideration the latest guidelines prescribed by Bursa Securities, Bank Negara Malaysia and other relevant regulatory bodies.• ToperformanyotherfunctionsasmaybeagreedbytheBoard.


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6.12 Functions and activities

i) Internal audit Function

the internal audit function for BHB and its wholly-owned subsidiaries has been outsourced to the Internal Audit Department of Bank Islam Malaysia Berhad (“Bank Islam”, a 51% subsidiary of BHB). the said function has been outsourced since December 2008.

the internal audit function for Bank Islam and Syarikat takaful Malaysia Berhad (“takaful Malaysia”) is carried out by their respective internal audit divisions.

the respective Internal Auditor’s core function is to perform a regular audit and provide an independent appraisal of the Bank Islam Group and takaful Malaysia Group activities, to provide assurance on compliance to internal controls and risk management processes, and compliance with laws, regulations and policies.

the management of BHB, Bank Islam and takaful Malaysia are responsible to ensure that corrective actions on reported weaknesses are undertaken within a reasonable time frame.

ii) activities during the year

the following is a summary of activities that were carried out by the AEC during the year under review:

a) Review of BHB Group’s quarterly financial statements prior to the submission to the Board for consideration and approval.

b) Review and approval of the external auditors’ scope of work and audit plan for the year.

c) Review of the audit report of BHB Group prepared by the external auditors and internal audit department, their findings and management responses thereto.

d) Monitor of the progress of the internal audit function in completing its audit plan and assessing the performance of the Internal Audit function.

e) Review of the recurrent related party transactions.


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ACCOuNtABILItY 069

Statement on Internal Control

IntROduCtIOn

Pursuant to Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors (“Board”) is pleased to provide the following Statement on Internal Control (“Statement”) which outlines the nature and scope of risk management and internal controls of the Group during the financial year ended 31 December 2012.

For the purpose of disclosure, this Statement is guided by the Statement on Risk Management & Internal Control : Guidelines for Directors of Listed Issuers. the Board is committed and acknowledges its overall responsibility to maintain the BIMB Holdings Berhad (“BHB”) and our group of companies (“BHB Group” or “the Group”) system of internal control and risk management as well as for reviewing its adequacy, integrity and effectiveness to safeguard shareholders’ investments and the Group’s assets.

ReSpOnSIbILIty

the Board recognises that a sound system of internal control and risk management practices is essential in ensuring good corporate governance. the system is designed to manage an acceptable risk profile rather than eliminate the risk of failure to achieve the business objectives of the BHB Group. the system of internal control can only provide reasonable but not absolute assurance against material misstatement, fraud or loss.

the Board has established appropriate controls and processes for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of its short term and long term business objectives. the control structure and processes which have been instituted throughout the BHB Group is updated and reviewed from time to time to suit the changes in the business environment, including mitigating measures taken by Management, via the respective subsidiary Board Risk Committee/Audit and Examination Committee (“AEC”) to address areas of key risks as identified. this process has been in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company.

In addition to the above, the Management is also responsible to ensure that the relevant key subsidiaries has performed the following:

• Identifytherisksrelevanttothebusinessandtheachievementofitsobjectives and strategies;

• Implementandmonitorriskmanagementreportingaspartoftheirrisk management framework; and

• Identify changes to risks or emerging risks, take actions asappropriate, and promptly bring these to the attention of the Board.

the BHB AEC assists the Board to review the adequacy and effectiveness of the systems of internal control and ensures that appropriate methods and procedures are in place to obtain the level of assurance required by the Board. the Group’s Islamic Banking and takaful subsidiaries’ Internal Control Statements were approved by their respective subsidiary AECs and Boards.

key InteRnaL COntROL StRuCtuRe

the key processes that the Board has established in reviewing the adequacy and effectiveness of the system of internal controls include the following:

• RiskManagementFramework

the Board has established an organisation structure and charters with clearly defined lines of responsibility, authority limits and accountability in association with its business and operational requirements in order to maintain a strong control environment.

Risk management is considered as an integral part of BHB Group’s day-to-day operations whereby the assessment and management of risks may affect the achievement of BHB’s business objectives as well as to protect shareholders and stakeholders value. In line with Recommendation 6.1 of the Malaysian Code on Corporate Governance (“MCCG 2012”), risk management is firmly embedded in the Group’s key processes and enforced through a Risk Management Dashboard (“RMD”) reporting tool. the Group’s major operating subsidiaries, namely Bank Islam Malaysia Berhad (“Bank Islam”), Syarikat takaful Malaysia Berhad (“takaful Malaysia”) and BIMB Securities Sdn. Bhd. (“BIMB Securities”) performs risk reporting via the RMD on a quarterly basis.

Both Bank Islam and takaful Malaysia have each respectively established Board Risk Committee as well as appointed Chief Risk Officers to remain responsible to monitor, assess and ensure the effective conduct of risk management.

As for BIMB Securities, the risk management function is directly supervised and managed by its AEC.

In this regard, risk management practices are inculcated and embedded in the activities of the Group’s major operating subsidiaries, which amongst others, requires establishing risk tolerance thresholds to actively identify, assess and monitor key business risk.


070

Risk Management principles, policies, procedures and practices are periodically reviewed and updated by the respective Boards through the AECs to ensure relevance and compliance with current/applicable laws and regulations.

In addition to the policies and standard operating procedures and processes, BHB Group has also adopted a whistle Blowing Policy, as an avenue for employees to report actual or suspected malpractice, misconduct or violation of the BHB Group’s policies and regulations.

• AuditandExaminationCommittee(“AEC”)

the AEC of BHB and its major operating subsidiaries periodically reviews the internal control issues identified by the respective internal auditors, external auditors, regulatory authorities and Management. the respective AECs would evaluate the adequacy and effectiveness of the risk management and internal control systems. In addition, relevant matters pertaining to Internal Accounting Controls are also reported to each respective AECs on a quarterly basis. the respective AECs also reviews the scope and quality of findings of the internal as well as external audit functions. the risk responses and internal controls that Management has taken and/or is taking are documented in the minutes of the Board Risk Committee/AEC meetings, as appropriate.

In addition, the AECs also assess the independence of internal auditors, their scope of work and resources.

where there are specific issues, Management of the subsidiaries or the Chief Internal Auditor/external auditors are invited to attend the BHB AEC meeting. Pursuant to Paragraph 15.17(f) of the Listing Requirements of Bursa Malaysia Securities Berhad, the BHB AEC had two (2) separate meetings with the external auditors, without the presence of any executive members, to discuss on any issues relating to BHB Group during the financial year ended 31 December 2012.

• InternalAudit

the internal audit function for BHB and its subsidiaries (save for Islamic Banking and takaful subsidiaries) is carried out by the Internal Audit Division of Bank Islam. the Head of Internal Audit is a qualified auditor and is responsible for providing assurance to the AEC that internal controls are operating effectively. the internal audit function is responsible to ensure compliance with policies and procedures and the effectiveness of the Group’s

internal control systems. this includes undertaking regular reviews of BHB and its subsidiaries’ operations and business processes; examining and evaluating the adequacy and efficiency of financial and operating controls; and highlighting significant risks and non-compliance. where applicable, the internal audit function will provide recommendations to improve on the effectiveness of risk management, control and governance processes. Management will follow up and review the status of actions on recommendations made by the internal and external auditors. the internal audit function also follows up and reports to the AEC the status of implementation by Management on the recommendations highlighted in the internal audit reports. Further details of the activities of the internal audit function are provided in the BHB AEC report.

Internal audit is performed for all key divisions in BHB Group, thus providing the respective AEC an independent assurance on the operational, financial, compliance and risk related activities within the Group. the risk-based internal audit plan is reviewed and approved by the respective AECs of the key subsidiaries. the respective AECs review the internal audit observations highlighted in the internal audit reports. For wholly owned subsidiaries, the internal audit reports are submitted to each subsidiaries’ Board before being escalated to the AEC of BHB.

For Islamic Banking and takaful subsidiaries, the internal audit function is carried out by its own independent internal audit department. the internal auditors report directly to the respective AECs.

OtheR key eLementS OF InteRnaL COntROL

the other key elements of the internal control systems are described below:

• ManagementCommittee

the day-to-day operation of BHB is managed by the GMD/CEO assisted by the Management Committee (“MANCO”) to ensure that the operations of BHB are conducted in accordance with corporate objectives, approved annual budget as well as approved policies and procedures.

the MANCO comprises the Heads of each department who are principally responsible for the performance of their respective departments.

Statement on Internal Control(continued)

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ACCOuNtABILItY

Statement on Internal Control(continued)

• StandardOperatingProcedures

Documented Standard Operating Procedures (“SOPs”) for all departments of BHB are approved by MANCO and endorsed by the BHB AEC. the SOP serves as a day-to-day operational guide to ensure compliance with financial and operational controls as well as the applicable laws and regulations. All SOPs are regularly updated to reflect changing risks or to resolve operational deficiencies, if any.

• HumanResourcesPoliciesandProcedures

the Human Resources SOP of BHB encompasses the full spectrum of human resources management such as the recruitment of new employees as well as performance appraisals and training and development.

• AnnualBusinessPlanandBudgetingProcess

the Group’s annual budget is prepared based on the annual business plans from BHB’s operating subsidiaries and subsequently tabled to the BHB Board for approval. Actual performances are reviewed against the targeted results on a quarterly basis allowing timely response and corrective actions to be taken to mitigate risks. the Board regularly reviews reports from Management on key operating statistics, as well as on legal and regulatory matters. the Board also approves any changes or amendments to BHB policies.

the major subsidiaries’ business plans and budgets are approved at their respective Boards. the subsidiaries’ performances are assessed against the budgets, and explanations are provided for significant variances on a regular basis to the respective Boards and BHB’s Board.

• InformationTechnology(“IT”)System

It is key in supporting the service efficiency and the delivery systems of the Group. the It Risk Framework was developed to ensure that risks are correctly identified and mitigated accordingly. BHB’s Islamic Banking and takaful subsidiaries continue to upgrade their It systems in order to enhance efficiency of their business operations and to facilitate the implementation of their risk-based capital frameworks.

• PerformanceReview

the Board receives and reviews reports from Management on the financial and operational performance, risk as well as legal and regulatory matters on a regular basis. Furthermore, a quarterly Financial Dashboard Report is presented by the respective Chief Executive Officers (“CEO”) or Chief Financial Officers (“CFO”) of the major subsidiaries within BHB Group, on profitability, capital adequacy, productivity and asset quality.

the actual performance of BHB and its operating subsidiaries are assessed against approved budgets and industry averages to indentify and diagnose significant deviations and gaps in order for the respective Management to take remedial measures, where necessary.

COnCLuSIOn

the Board has received assurance from BHB’s GMD/CEO and CFO that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement.

taking into consideration the assurance from Management and the input from the relevant assurance providers, the Board is of the view that the systems of risk management and internal control is satisfactory and is adequate to safeguard shareholders investments, customers’ interest and Group assets. the Group will continue to take measures to strengthen the internal control and risk management environment.

RevIew OF the Statement by eXteRnaL audItORS

the external auditors have reviewed this Statement for inclusion in the Annual Report for the financial year ended 31 December 2012.

Based on the review in accordance with Paragraph 15.23 of Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the risk management and internal control system.

ACCOuNtABILItYbImb hOLdInGS beRhad ANNuAL REPORt 2012

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Additional Compliance Information

1. Share buybacks BHB did not purchase any of its own shares during the financial year ended 31 December 2012.

2. Options, warrants or any Convertible Securities BHB did not issue any Options, warrants or convertible securities in respect of the financial year ended 31 December 2012.

3. american depository Receipt (adR) or Global depository Receipt (GdR) BHB did not sponsor any ADR or GDR programme in the financial year ended 31 December 2012.

4. non-audit Fees the amount of non-audit fees paid/payable to external auditors and their affiliated companies by BHB for the financial year ended 31 December

2012 is set out in Note 31 on page 132 of this Annual Report.

5. profit Guarantee there was no profit guarantee given by BHB during the financial year under review.

6. List of properties the list of properties is set out on pages 187 to 191 of the Annual Report.

7. material Contracts Involving directors and major Shareholders there were no material contracts entered into by BHB and its subsidiary companies involving Directors or Major Shareholders’ interest either

still subsisting at the end of the financial year or entered into since the end of the previous financial year except for related party transactions disclosed in Note 36 of the Financial Statements.

8. Imposition of Sanctions and/or penalties there were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management arising from any

significant breach of rules/guidelines/legislations by the relevant regulatory bodies during the financial year under review.

9. variation on Results there was no variation in results (differing by 10% or more) from any profit estimated forecast/projection of unaudited results announced.

10. General mandate BHB Group had at the last AGM obtained a general mandate from its shareholders to allow BHB and/or its subsidiaries in their normal course

of business, to enter into recurrent transactions of a revenue or trading nature with related parties (RRPts) which are necessary for its day to day operations, on terms not more favourable to the related party than those available in the general public and not to the detriment of the minority shareholders. the RRPts Mandate is valid until the conclusion of the forthcoming AGM of the Company. the Board proposes to seek renewal of the existing RRPts Mandate and new additional RRPts Mandate at the forthcoming 16th AGM of the Company which will be held on 15 May 2013 at 10.00 a.m. this Mandate, if approved by shareholders, would be valid until the conclusion of the next AGM of the Company in the year 2014.


ACCOuNtABILItY

Additional Compliance Information(continued)

nature of transaction Related Interested directors and/or actual value transacted party/principal activities major shareholders1 from 8 may 2012 (being the date of the last aGm) to 31 march 20132 Rm’000

• 3Rental of office premises payable by Bank Islam Malaysia Berhad (“Bank Islam”) to tH.

• 3Rental of office premises payable by Bank Islam to takaful Malaysia.

Lembaga tabung haji (“th”)tH is principally involved in providing pilgrimage management services, saving and depository services, investment holding and rental of buildings.

Syarikat takaful malaysia berhad (“takaful malaysia”)takaful Malaysia is principally involved in family and general takaful business.

Interested major shareholdertH is a major shareholder of BHB with 51.31% shareholding.

Interested directors 1) Dato’ Paduka Ismee bin Ismail, being the Group Managing

Director and Chief Executive Officer of tH is also a Director of BHB and Bank Islam. Dato’ Paduka Ismee has no direct/indirect shareholding in tH, BHB or Bank Islam.

2) tan Sri Samsudin bin Osman and Puan Rozaida Omar are nominee directors of tH in BHB. they have no direct/indirect shareholding in tH or BHB.

3) Encik Johan bin Abdullah, being the Group Managing Director/Chief Executive Officer of BHB is also a Director of Bank Islam. Encik Johan has no direct/indirect shareholding in BHB or Bank Islam.

4) Encik Zahari @ Mohd. Zin bin Idris and Datuk Zaiton Mohd. binti Hassan are Directors of Bank Islam and also Directors of BHB. they have no direct/indirect shareholding in Bank Islam or BHB.

Interested directors1) Dato’ Paduka Ismee bin Ismail is the Chairman/Director

of takaful Malaysia. Dato’ Paduka Ismee is also a Director of Bank Islam and BHB. Dato’ Paduka Ismee has no direct/indirect shareholding in takaful Malaysia, Bank Islam or BHB.

2) Encik Johan bin Abdullah is a Director of takaful Malaysia. Encik Johan is also Director of Bank Islam and Group Managing Director/Chief Executive Officer of BHB. Encik Johan has no direct/indirect shareholding in takaful Malaysia, Bank Islam or BHB.

3) Puan Rozaida binti Omar is a Director of takaful Malaysia and also a Director of BHB. Puan Rozaida has no direct/indirect shareholding in takaful Malaysia or BHB.

4) Encik Zahari @ Mohd. Zin bin Idris and Datuk Zaiton Mohd. binti Hassan are Directors of Bank Islam and also Directors of BHB. they have no direct/indirect shareholding in Bank Islam or BHB.

18,191

2,352

ACCOuNtABILItYbImb hOLdInGS beRhad ANNuAL REPORt 2012

074

nature of transaction Related Interested directors and/or actual value transacted party/principal activities major shareholders1 from 8 may 2012 (being the date of the last aGm) to 31 march 20132 Rm’000

• 3Rental of office premise payable by BHB to Bank Islam.

• 3Rental of office premise payable by Bank Islam to Syarikat Al-Ijarah Sdn Bhd (“SAISB”).

bank IslamBank Islam is principally involved in the provision of Islamic banking and related activities based on the principles of Shariah.

Interested directors1) Dato’ Paduka Ismee bin Ismail, Datuk Zaiton binti Mohd.

Hassan and Encik Zahari @ Mohd. Zin bin Idris are Directors of BHB and also Directors of Bank Islam. they have no direct/indirect shareholding in Bank Islam or BHB.

2) Encik Johan bin Abdullah, being the Group Managing Director/Chief Executive Officer of BHB is also a Director of Bank Islam and SAISB. Encik Johan has no direct/indirect shareholding in BHB, Bank Islam or SAISB.

3) Encik Salih Amaran bin Jamiaan is a Director of BHB. He is also Chairman/Director of SAISB. Encik Salih has no direct/indirect shareholding in SAISB or BHB.

774

153

there is no amount due and owing to BHB by its related parties pursuant to the RRPts.

Notes:1 the direct and indirect shareholdings of the related parties in BHB above are set out in Section 6 of the Circular to Shareholders dated 16 April 2013.2 the last practicable date before printing of Circular is 31 March 2013.3 the rental sum of the properties was arrived at or estimated based on the on-going or expected market rate at the time tenancy agreement was

or to be executed. Details of the rental of office premises are set out in the Circular to Shareholders dated 16 April 2013.

Additional Compliance Information(continued)

Financial StatementS

076079080081083085183184185

Directors’ Report

Statements of Financial Position

Statements of Profit or Loss and Other Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flow

Notes to the Financial Statements

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

audited financial statementsBimB Holdings BerHad annual RepoRt 2012

076

Directors’ Reportfor the financial year ended 31 December 2012

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.

PrinciPal activities

The Company is principally engaged as an investment holding company with business transacted in accordance with Islamic principles, whilst the principal activities of the subsidiaries are as stated in Note 14 to the financial statements.

There has been no significant change in the nature of these activities during the financial year.

results

Group company rM’000 rM’000

Profit for the year attributable to:Owners of the Company 252,269 141,466Non-controlling interests 245,362 -

497,631 141,466

reserves and Provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements.

issue of shares and debentures

There were no changes to the authorised, issued and paid–up capital of the Company during the financial year.

There were no debentures issued during the financial year.

oPtions Granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

dividends

The amount of dividends paid by the Company since 31 December 2011 are as follows:

rM’000

In respect of the financial year ended 31 December 2011: Final single tier dividend of 7.25% per ordinary share, paid on 13 June 2012 77,342

In respect of the financial year ended 31 December 2012: First interim single tier dividend of 3.50% per ordinary share, paid on 31 October 2012 37,338 Second interim single tier dividend of 3.50% per ordinary share, paid on 27 December 2012 37,338

152,018

The Directors recommend a final single tier ordinary dividend of 5.00% per ordinary share totalling RM53,339,495 for the financial year ended 31 December 2012.

077BimB Holdings BerHad AnnuAl RepoRt 2012

Audited finAnciAl stAtements

Directors’ Reportfor the financial year ended 31 December 2012

(continued)

iMPaired financinG

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that proper actions had been taken in relation to the writing off of bad financing and the making of impairment provisions for impaired financing, and have satisfied themselves that all known bad financing have been written off and adequate impairment provisions made for impaired financing.

At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad financing, or the amount of impairment provisions for impaired financing in the financial statements of the Group and of the Company, inadequate to any substantial extent.

current assets

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that any current assets, other than financing, which were unlikely to be realised in the ordinary course of business at their values as shown in the accounting records of the Group and of the Company have been written down to their estimated realisable value.

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

valuation Methods

At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company to be misleading or inappropriate.

continGent and other liabilities

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

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

(b) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year other than those incurred in the ordinary course of the banking business.

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

chanGe of circuMstances

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

iteMs of an unusual nature

The results of the operations of the Group and of the Company for the financial year were not, in the opinion of the Directors, 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 to affect substantially the results of the operations of the Group and of the Company for the current financial year in which this report is made.

siGnificant events durinG the year

The significant events during the financial year are as disclosed in Note 46 to the financial statements.


078

subsequent events after the financial year

There were no significant events subsequent to the financial year ended 31 December 2012.

directors

Directors who served since the date of the last report are:

Tan Sri Samsudin bin Osman Tan Sri Ismail bin Adam Dato’ Paduka Ismee bin Ismail Datuk Zaiton binti Mohd Hassan Johan bin Abdullah Zahari @ Mohd Zin bin Idris Salih Amaran bin Jamiaan Rozaida binti Omar Syed Elias bin Abd Rahman Alhabshi (resigned on 1.7.2012)

As at 31 December 2012, En. Zahari @ Mohd Zin bin Idris holds 90,000 interest in the ordinary shares of the Company.

directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a firm in which the Director has a substantial financial interest.

There was no arrangement during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

auditors

The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………tan sri saMsudin bin osMan

…………………………………………………………Johan bin abdullah

Kuala Lumpur,

Date:

Directors’ Reportfor the financial year ended 31 December 2012(continued)



Group company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

note rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assetsCash and short-term funds 3 2,063,444 3,785,354 3,076,068 68,329 89,898 63,815Deposits and placements with financial institutions 4 519,646 1,692,220 875,747 - - -Financial assets held-for-trading 5 1,831,606 1,403,344 2,464,462 - - -Derivative financial assets 6 16,736 15,877 80,108 - - -Financial assets available-for-sale 7 16,862,202 14,271,540 15,781,738 17,290 12,296 12,229Financial assets held-to-maturity 8 468,721 636,913 509,134 - - -Financing, advances and others 9 19,507,799 14,161,837 11,858,599 - - -Other assets 10 473,983 278,212 302,162 10,446 432 252Takaful assets 11 531,316 525,238 435,355 - - -Statutory deposits with Bank Negara Malaysia 12 1,059,900 912,000 10,000 - - -Current tax assets 6,604 8,226 30,824 2,463 1,826 1,682Deferred tax assets 13 55,830 41,201 59,023 10 10 1,659Investments in subsidiaries 14 - - - 1,704,433 1,711,113 1,557,642Investments in associates 15 22,913 21,181 1 1 1 1Property, plant and equipment 16 454,413 439,166 424,279 2,589 944 433Investment properties 17 29,136 32,980 32,124 - - -Assets classified as held for sale 3,374 668 - - - -

total assets 43,907,623 38,225,957 35,939,624 1,805,561 1,816,520 1,637,713

liabilities and equityDeposits from customers 18 32,379,000 28,208,203 26,798,107 - - -Deposits and placements of banks and other financial institutions 19 860,278 384,628 378,129 - - -Derivative financial liabilities 6 14,339 23,299 66,708 - - -Bills and acceptances payable 385,138 259,153 163,191 - - -Other liabilities 20 869,414 736,526 667,922 1,458 1,731 684Takaful liabilities 21 5,580,755 5,124,602 4,707,810 - - -Zakat and taxation 51,506 34,615 37,975 - - -

total liabilities 40,140,430 34,771,026 32,819,842 1,458 1,731 684

equityShare capital 22 1,066,790 1,066,790 1,066,790 1,066,790 1,066,790 1,066,790Reserves 23 952,788 765,811 587,568 737,313 747,999 570,239

Equity attributable to owners of the Company 2,019,578 1,832,601 1,654,358 1,804,103 1,814,789 1,637,029Non-controlling interests 1,747,615 1,622,330 1,465,424 - - -

total equity 3,767,193 3,454,931 3,119,782 1,804,103 1,814,789 1,637,029

total liabilities and equity 43,907,623 38,225,957 35,939,624 1,805,561 1,816,520 1,637,713

commitments and contingencies 45 10,928,790 9,423,109 13,544,287 - - -

Statements of Financial Positionas at 31 December 2012

The notes on pages 85 to 182 are an integral part of these financial statements.


080

Statements of Profit or Loss and Other Comprehensive Incomefor the financial year ended 31 December 2012


Group company 2012 2011 2012 2011 note rM’000 rM’000 rM’000 rM’000

Income derived from investment of depositors’ funds 24 1,650,642 1,393,918 - -Income derived from investment of shareholders’ funds 25 350,978 281,597 174,447 104,142Net income from Takaful business 26 472,333 403,464 - -Allowance for impairment on financing and advances 27 (66,073) (21,124) - -Reversal of/(Allowance for) impairment on investments 28 577 (15,406) - 156,027Allowance for impairment on other assets 3,413 - - -Provision for contingent liability (14,769) (15,231) - -Direct expenses (31,153) (28,425) - -

Total distributable income 2,365,948 1,998,793 174,447 260,169Income attributable to depositors 29 (590,595) (473,133) - -

Total net income 1,775,353 1,525,660 174,447 260,169Personnel expenses 30 (524,459) (456,043) (5,830) (5,569)Other overhead expenses 31 (535,187) (479,310) (2,843) (1,676)

715,707 590,307 165,774 252,924Share of results of associate company, net of tax 1,732 (1,383) - -

Profit before zakat and tax 717,439 588,924 165,774 252,924Zakat (10,121) (9,196) - -Tax expense 33 (209,687) (157,281) (24,308) (25,093)

Profit for the year 497,631 422,447 141,466 227,831

attributable to:Owners of the Company 252,269 212,140 141,466 227,831Non-controlling interests 245,362 210,307 - -


Earnings per share (sen) 34 23.65 19.88

Dividend per ordinary share-net (sen) 35 14.25 4.70


other comprehensive incomeItems that may be reclassified subsequently to profit or loss: Currency translation differences in respect of foreign operations 5,235 (8,491) - - Net gain on revaluation of financial assets available-for-sale 6,725 39,905 (134) 68

other comprehensive income for the year, net of tax 11,960 31,414 (134) 68

total comprehensive income for the year 509,591 453,861 141,332 227,899

attributable to:Owners of the Company 259,965 228,749 141,332 227,899Non-controlling interests 249,626 225,112 - -

total comprehensive income for the year 509,591 453,861 141,332 227,899



Statements of Changes in Equityfor the financial year ended 31 December 2012


attributable to owners of the company non-distributable non- share share other accumulated controlling total capital premium reserves losses total interests equityGroup note rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 1 January 2011 1,066,790 603,630 1,190,028 (1,206,090) 1,654,358 1,465,424 3,119,782

Profit for the year - - - 212,140 212,140 210,307 422,447Other comprehensive income Currency translation differences in respect of foreign operations - - (4,562) - (4,562) (3,929) (8,491) Net gain on revaluation of financial assets available-for-sale - - 21,171 - 21,171 18,734 39,905Total comprehensive income for the year - - 16,609 212,140 228,749 225,112 453,861Transfer to statutory reserve - - 89,381 (89,381) - - -Acquisition of additional interest from non-controlling interests - - - (367) (367) (533) (900)Dividends paid to shareholders 35 - - - (50,139) (50,139) - (50,139)Dividends paid to non-controlling interests - - - - - (67,673) (67,673)

at 31 december 2011 1,066,790 603,630 1,296,018 (1,133,837) 1,832,601 1,622,330 3,454,931

at 1 January 2012 1,066,790 603,630 1,296,018 (1,133,837) 1,832,601 1,622,330 3,454,931

Profit for the year - - - 252,269 252,269 245,362 497,631Other comprehensive income Currency translation differences in respect of foreign operations - - 4,061 - 4,061 1,174 5,235 Net gain on revaluation of financial assets available-for-sale - - 3,635 - 3,635 3,090 6,725Total comprehensive income for the year - - 7,696 252,269 259,965 249,626 509,591Transfer to statutory reserve - - 105,237 (46,266) 58,971 (58,971) -Dividends paid to shareholders 35 - - - (152,018) (152,018) - (152,018)Dividends paid to non-controlling interests - - - - - (85,530) (85,530)Disposal of interest in subsidiary - - - 20,059 20,059 20,160 40,219Zerorisation of accumulated losses in subsidiary - - (349,011) 349,011 - - -Transfer to accumulated losses - - (631,507) 631,507 - - -

at 31 december 2012 1,066,790 603,630 428,433 (79,275) 2,019,578 1,747,615 3,767,193

Note 22 Note 23


082

Statements of Changes in Equityfor the financial year ended 31 December 2012(continued)

non-distributable (accumulated losses)/ share share fair value retained total capital premium reserves earnings equitycompany note rM’000 rM’000 rM’000 rM’000 rM’000

at 1 January 2011 1,066,790 603,630 199 (33,590) 1,637,029Profit for the year - - - 227,831 227,831Other comprehensive income Net gain on revaluation of financial assets available-for-sale - - 68 - 68Total comprehensive income for the year - - 68 227,831 227,899Dividends paid to shareholders 35 - - - (50,139) (50,139)

at 31 december 2011/1 January 2012 1,066,790 603,630 267 144,102 1,814,789Profit for the year - - - 141,466 141,466Other comprehensive income Net gain on revaluation of financial assets available-for-sale - - (134) - (134)Total comprehensive income for the year - - (134) 141,466 141,332Dividends paid to shareholders 35 - - - (152,018) (152,018)

at 31 december 2012 1,066,790 603,630 133 133,550 1,804,103

Note 22




Statements of Cash Flowfor the financial year ended 31 December 2012

Group company

2012 2011 2012 2011

rM’000 rM’000 rM’000 rM’000

cash flows from operating activities Profit before zakat and tax 717,439 588,924 165,774 252,924 Adjustments for:

Depreciation 56,838 59,688 494 196Impairment losses on financial assets available-for-sale 8,304 18,158 - -Reversal of impairment losses on financial assets held-to-maturity (577) (2,752) - -Reversal of impairment on investment in subsidiaries - - - (156,027) Reversal of impairment on other assets (9,994) (240) - -Allowance for impairment on financing and others 66,073 21,124 - -Provision for contingent liability 14,769 15,231 - -Dividends from securities (38,382) (37,854) (500) (349)Dividends from subsidiaries - - (137,714) (100,869)Loss on disposal of investment properties - (3,088) - -(Gain)/Loss on disposal of property, plant and equipment (84) 297 39 -Gain on disposal of assets held for sale (62) - - -Net gain on sale of financial assets held-for-trading (4,351) (6,818) - -Net gain on sale of financial assets available-for-sale (142,708) (152,408) - -Fair value gain on financial assets held-for-trading (23,600) (29,043) - -Share of (profit)/losses of associate companies (1,732) 1,383 - -Net derivative (gain)/losses (9,805) 8,618 - -Property, plant and equipment write off 315 709 140 -Gain on disposal of interest in subsidiary - - (33,539) -Gain on redemption on financial assets held-to-maturity - (1,452) - -

Operating profit/(loss) before working capital changes 632,443 480,477 (5,306) (4,125)Changes in working capital: Deposits and placements of banks and other financial institutions 475,650 6,499 - - Financing of customers (5,426,804) (2,339,593) - (112) Statutory deposits with Bank Negara Malaysia (147,900) (902,000) - - Other assets (190,613) (208,337) - (65) Deposits from customers 4,170,797 1,410,096 - - Other liabilities 589,041 509,497 (25,200) (23,832) Bills payable 125,985 95,962 - -

Cash generated from/(used in) operations 228,599 (947,399) (30,506) (28,134)Zakat paid (6,737) (13,153) - -Tax paid (211,487) (136,246) (18) (51)Tax refund 2,300 3,816 - 996

net cash generated from/(used in) operating activities 12,675 (1,092,982) (30,524) (27,189)



084

Statements of Cash Flowfor the financial year ended 31 December 2012 (continued)

Group company

2012 2011 2012 2011

rM’000 rM’000 rM’000 rM’000

cash flows from investing activities Net proceeds from (purchase)/disposal of securities (2,681,075) 2,804,516 (5,128) - Purchase of property, plant and equipment (73,403) (79,012) (2,329) (707) Purchase of investment properties - (5,535) - - Proceeds from disposal of property, plant and equipment 435 3,281 11 - Proceeds from disposal of investment properties - 7,403 - - Proceeds from disposal of assets held for sale 596 - - - Dividends from securities 38,382 37,854 500 349 Dividends from subsidiaries - - 127,700 100,869 Redemption of investment in subsidiary - - - 2,900 Disposal of investment in subsidiary 40,219 - 40,219 - Acquisition of non-controlling interests - (900) - - Acquisition of investment in an associate company - (22,563) - -

net cash (used in)/generated from investing activities (2,674,846) 2,745,044 160,973 103,411

cash flows from financing activities Dividends paid to holding company (152,018) (50,139) (152,018) (50,139) Dividends paid to non-controlling interests (85,530) (67,673) - -

net cash used in financing activities (237,548) (117,812) (152,018) (50,139)

net (decrease)/increase in cash and cash equivalents (2,899,719) 1,534,250 (21,569) 26,083

cash and cash equivalents at 1 January 5,477,574 3,951,815 89,898 63,815

foreign exchange differences 5,235 (8,491) - -

cash and cash equivalents at 31 december 2,583,090 5,477,574 68,329 89,898

cash and cash equivalents comprise: Cash and short-term funds 2,063,444 3,785,354 68,329 89,898 Deposits and placements with financial institutions 519,646 1,692,220 - -

2,583,090 5,477,574 68,329 89,898




1. PrinciPal activities and General inforMation

BIMB Holdings Berhad is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business are as follows:

registered office and principal place of business

31st Floor, Menara Bank Islam22 Jalan Perak50450 Kuala Lumpur

The consolidated financial statements for the financial year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the Group) and the Group’s interest in an associate.

The Company is principally engaged in investment holding activities while the other Group entities are primarily involved in Islamic banking business, managing family and general takaful, and stock-broking businesses.

The ultimate holding corporation of the Company during the financial year is Lembaga Tabung Haji, a statutory body established under the Tabung Haji Act 1995 (Act 535).

These financial statements were authorised for issue by the Board of Directors on 22 March 2013.

2. suMMary of siGnificant accountinG Policies

The accounting policies set out below have been applied consistently in the preparation of these consolidated financial statements to all periods presented in these financial statements.

2.1 basis of preparation

(a) statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with the applicable Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS), the provisions of the Companies Act, 1965 and Shariah requirements. These are the Group’s and the Company’s first financial statements prepared in accordance with MFRS and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied.

In the previous years, the financial statements of the Group and the Company were prepared in accordance with Financial Reporting Standards (FRS). The financial impacts of transition to MFRS are disclosed in Note 47 to the financial statements.

The Group and the Company have early adopted the amendments to MFRS 101, Presentation of Financial Statements which are effective for annual periods beginning on or after 1 July 2012. The early adoption of the amendments to MFRS 101 has no impact on the financial statements other than the presentation format of the statement of profit or loss and other comprehensive income.

The following accounting standards, amendments and interpretations have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013• MFRS10,Consolidated Financial Statements• MFRS11,Joint Arrangements• MFRS12,Disclosure of Interests in Other Entities• MFRS13,Fair Value Measurement• MFRS119,Employee Benefits (2011)• MFRS127,Separate Financial Statements (2011)• MFRS128,Investment in Associates and Joint Ventures (2011)• ICInterpretation20,Stripping Costs in the Production Phase of a Surface Mine

Notes to the Financial Statements for the financial year ended 31 December 2012

BimB Holdings BerHad AnnuAl RepoRt 2012

086

Notes to the Financial Statementsfor the financial year ended 31 December 2012(continued)

auDiteD FiNaNcial StatemeNtS

2. suMMary of siGnificant accountinG Policies (continued)

2.1 basis of preparation (continued)

(a) statement of compliance (continued)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013 (continued)• AmendmentstoMFRS7,Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities• AmendmentstoMFRS1,First-time Adoption of Malaysian Financial Reporting Standards – Government Loans• AmendmentstoMFRS1,First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)• AmendmentstoMFRS101,Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)• AmendmentstoMFRS116,Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)• AmendmentstoMFRS132,Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)• AmendmentstoMFRS134,Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)• AmendmentstoMFRS10,Consolidated Financial Statements: Transition Guidance• AmendmentstoMFRS11, Joint Arrangements: Transition Guidance• AmendmentstoMFRS12,Disclosure of Interests in Other Entities: Transition Guidance

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014• AmendmentstoMFRS10,Consolidated Financial Statements: Investment Entities • AmendmentstoMFRS12,Disclosure of Interests in Other Entities: Investment Entities• AmendmentstoMFRS127,Separate Financial Statements (2011): Investment Entities• AmendmentstoMFRS132,Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015• MFRS9,Financial Instruments (2009)• MFRS9,Financial Instruments (2010)• AmendmentstoMFRS7,Financial Instruments: Disclosures – Mandatory Date of FRS 9 and Transition Disclosures

The Group and the Company plan to apply the abovementioned standards, amendments and interpretations:• Fromtheannualperiodbeginningon1January2013forthosestandards,amendmentsorinterpretationsthatareeffectivefor

annual periods beginning on or after 1 January 2013;• Fromtheannualperiodbeginningon1January2014forthosestandards,amendmentsorinterpretationsthatareeffectivefor

annual periods beginning on or after 1 January 2014; and• Fromtheannualperiodbeginningon1January2015forthosestandards,amendmentsorinterpretationsthatareeffectivefor

annual periods beginning on or after 1 January 2015.

Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are discussed below:

(i) Mfrs 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities.

The adoption of MFRS 9 may result in a change in accounting policy for financial assets. The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.


notes to the Financial Statementsfor the financial year ended 31 December 2012

(continued)

AuDiteD FinAnciAl StAtementS


2.1 basis of preparation (continued)

(a) statement of compliance (continued)

(ii) Mfrs 10, Consolidated Financial Statements

MFRS 10 introduces a new single control model to determine which investees should be consolidated. MFRS 10 supersedes MFRS 127, Consolidated and Separate Financial Statements and IC Interpretation 112, Consolidation – Special Purpose Entities. There are three elements to the definition of control in MFRS 10:

• Powerbyinvestoroveraninvestee;• Exposure,orrights,tovariablereturnsfrominvestor’sinvolvementwiththeinvestee;and• Investor’sabilitytoaffectthosereturnsthroughitspowerovertheinvestee.

The initial application of the other standards, amendments and interpretations are not expected to have any material financial impacts to the current and prior period financial statements of the Group and the Company upon their first adoption.

(b) basis of measurement

The financial statements have been prepared on the historical cost basis except for the following assets as explained in their respective accounting policy notes:

• Financialassetsheld-for-trading• Financialassetsavailable-for-sale• Derivativefinancialinstruments

(c) functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Group’s and the Company’s functional currency. All financial information presented in RM has been rounded to the nearest thousand (RM’000), unless otherwise stated.

(d) use of estimates and judgements

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

Significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following note:

• Note2.5 – Financialinstruments:Determinationoffairvalue• Note2.11 – Impairment• Note2.14 – GeneralTakafulFund

– Expense reserves – Provision for outstanding claims

• Note2.15 – FamilyTakafulFund – Actuarial reserves – Expenses reserves – Provision for outstanding claims• Note2.23 – Deferredtaxassets


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2.2 basis of consolidation

(a) subsidiary companies

Subsidiary companies are entities that the Group has power to govern the financial and operating policies of, in order to obtain benefits from their activities. Potential voting rights are considered when assessing control. The financial results of subsidiary companies are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases.

Investments in subsidiary companies are stated in the Company’s statement of financial position at cost less impairment loss, if any. Where there is indication of impairment, the carrying amount of the investment is assessed. A write down is made if the carrying amount exceeds its recoverable amount.

(b) business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

Acquisition on or after 1 January 2011For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as:

• Thefairvalueoftheconsiderationtransferred;plus• Therecognisedamountofanynon-controllinginterestsintheacquiree;plus• Ifthebusinesscombinationisachievedinstages,thefairvalueoftheexistingequityinterestintheacquiree;less• Thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed

When the excess is negative, a bargain purchase gain is recognised immediately in the profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Acquisition before 1 January 2011As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, i.e. 1 January 2011. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition.

(c) acquisition or disposal of non-controlling interest

The Group treats all changes in its ownership interest in subsidiary that do not result in loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(d) loss of control

Upon loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured as fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as a financial asset available-for-sale depending on the level of influence retained.



(continued)



2.2 basis of consolidation (continued)

(e) associate company

Associate company is an entity in which the Group has significant influence, but not control. Significant influence is the power to participate in the financial and operating policy decisions of the associate company, but not the power to exercise control over the policies.

Investment in an associate company is accounted for in the Group’s consolidated financial statements using the equity method less any impairment losses. The cost of investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in the associate company, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate company.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that associate, with a resulting gain or loss being recognised in the profit or loss. Any retained interest in the former associate at the date when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial asset.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss.

In the Company’s separate financial statements, the investment in associate company is stated at cost less impairment losses, if any. The cost of investment includes transaction costs.

(f) non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and other comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(g) transactions eliminated on consolidation

In preparing the consolidated financial statements, intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated.

Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.


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2.3 foreign currency

(a) foreign currency transaction and balances

In preparing the financial statements of the individual entities, transactions in foreign currencies are translated into the respective entity’s functional currency at the exchange rates prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the closing exchange rate ruling at the financial position date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments which are recognised in other comprehensive income.

(b) foreign operations

The assets and liabilities of operations in functional currencies other than RM, including fair value adjustments arising on acquisition, are translated to RM at exchange rates prevailing at the financial position date. The income and expenses of foreign operations are translated to RM at average exchange rates for the period.

All resulting exchange differences are recognised in other comprehensive income in Translation Reserve.

The closing rate used in the translation of foreign currency monetary assets and liabilities and the financial statements of foreign operations are as follows:

31.12.2012 31.12.2011 1.1.2011

1 USD RM3.05800 RM3.16845 RM3.08250

1 LKR RM0.02395 RM0.02782 RM0.02778

100 IDR RM0.03170 RM0.03460 RM0.03430

2.4 cash and cash equivalents

Cash and cash equivalents include cash and short-term funds, and deposits and placements with banks and other financial institutions.

2.5 financial instruments

Financial instruments are classified and measured using accounting policies as mentioned below.

Recognition and derecognition Purchases and sales of financial instruments are recognised on the date that the Group and the Company commits to purchase or sell the instruments. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company has transferred substantially all risks and rewards of ownership. A financial liability is derecognised from the statement of financial position when the obligation specified in the contract is expired.

Initial measurement A financial instrument is initially recognised at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to acquisition or issue of the financial assets.



(continued)



2.5 financial instruments (continued)

Financial assetsThe Group and the Company categorise financial assets as follows:

(a) financing and receivables

Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

These financial assets are subsequently measured at amortised cost using effective profit rate method, less any impairment loss.

(b) financial assets at fair value through profit or loss (“fvtPl”)

Financial assets at fair value through profit or loss are either:

(i) held-for-trading

Financial assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term or it is part of a portfolio that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

(ii) designated under fair value option

Financial assets meet at least one of the following criteria upon designation:

• iteliminatesorsignificantlyreducesmeasurementorrecognitioninconsistenciesthatwouldotherwisearisefrommeasuringfinancial assets, or recognising gains or losses on them, using different bases; or

• thefinancialassetcontainsanembeddedderivativethatwouldotherwiseneedtobeseparatelyrecorded

These financial assets are subsequently measured at their fair values and any gain or loss arising from a change in the fair value will be recognised in the profit or loss.

(c) financial assets held-to-maturity (“htM”)

Financial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. These financial assets are subsequently measured at amortised cost using effective profit rate method, less any impairment loss.

Any sale or reclassification of more than an insignificant amount of financial assets held-to-maturity not close to their maturity would result in the reclassification of all financial assets held-to-maturity to financial assets available-for-sale and the Group would be prevented from classifying any financial assets as financial assets held-to-maturity for the current and following two financial years.

(d) financial assets available-for-sale (“afs”)

Financial assets available-for-sale are financial assets that are either designated in this category or not classified in any other category and are measured at fair value.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are stated at cost less any impairment loss.

Any gain or loss arising from a change in the fair value is recognised in the fair value reserve through other comprehensive income until the securities are sold, disposed off or impaired, at which time the cumulative gains or losses previously recognised in equity will be transferred to the profit or loss. Profit or loss from sale of the available-for-sale securities is recognised in profit or loss.


092





Financial assets (continued)

(e) takaful receivables

Takaful receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, takaful receivables are measured at amortised cost, using the effective interest method.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment. See Note 2.11 on Impairment.

Derivative financial instruments The Group holds derivative financial instruments to hedge its foreign currency and profit rate exposures. Foreign exchange trading positions, including spot and forward contracts, are revalued at prevailing market rates at statement of financial position date and the resultant gains and losses for the financial year are recognised in the profit or loss.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

Financial liabilitiesFinancial liabilities are initially recognised at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost using the effective profit rate method, except for derivatives that are liabilities, which shall be measured at fair value with the gain or losses recognised in the profit or loss.

A financial liability is removed or derecognised from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash transferred or liabilities assumed, is recognised in the profit or loss.

Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee is initially recognised in the financial statements at fair value on the date the guarantee was given. Subsequent to initial recognition, each guarantee is measured at the higher of the initial amount less amortisation calculated to recognise the initial measurement in the profit or loss over the period of the financial guarantee and the best estimate of the amount required to settle the guarantee.

When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

Determination of fair valueThe fair values of financial instruments traded in active markets (such as over-the-counter securities and derivatives) are based on quoted market prices at the statement of financial position date. For unquoted financial instruments, fair value is determined using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models.



(continued)




Reclassification of financial assets A non-derivative financial asset held-for-trading may be reclassified if the financial asset is no longer held for the purpose of selling in the near term. In addition, a financial asset that meets the definition of financing and receivables may be reclassified out of held-for-trading or available-for-sale categories if the Group has the intention and ability to hold the financial asset for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. The fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective profit rates for financial assets reclassified to financing and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective profit rate prospectively.

2.6 Property, plant and equipment

Recognition and measurement Items of property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.

When significant parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other overhead expenses” respectively in the profit or loss.

Subsequent costsThe cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

DepreciationDepreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group and the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.


094




2.6 Property, plant and equipment (continued)

Depreciation (continued)

The estimated useful lives for the current and comparative years are as follows:

• Buildings 50years• Buildingimprovementandrenovations 6-10years• Furniture,fixturesandfittings 2-10years• Officeequipment 2-6years• Motorvehicles 4-5years• Computerequipmentandsoftware 2-7years

Depreciation methods, useful lives and residual values are reassessed at the statement of financial position date.

2.7 investment property

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both but not for sale in the ordinary course of business, use in the production of supply of goods or services or for administrative purposes. These include land held for a currently undetermined future use. Investment properties are stated at cost less accumulated depreciation and impairment losses, consistent with the accounting policy for property, plant and equipment as stated in accounting policy note 2.6.

Cost includes expenditure that is directly attributable to the acquisition of the investment property.

Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 50 years for buildings. Freehold land is not depreciated.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use or no future economic benefit are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

2.8 leased assets – finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic profit rate on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

2.9 leased assets – operating lease

Leases, where the Group does not assume substantially all risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.



(continued)



2.10 bills and other receivables

Bills and other receivables are stated at cost less any allowance for impairment.

2.11 impairment

Financial assetsThe Group and the Company assess at each reporting date whether there is objective evidence that financing and receivables, financial assets held-to-maturity or financial assets available-for-sale are impaired. A financial asset or a group of financial assets are impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the assets and prior to the statement of financial position date (“a loss event”) and that loss event or events has an impact on the estimated future cash flow of the financial asset or the group of financial assets as that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised.

(a) financing, advances and others

For financing, advances and others, the criteria that is used to determine that there is objective evidence of an impairment loss include:

i) significant financial difficulty of the issuer or obligor; orii) a breach of contract, such as default or delinquency in profit or principal payments; oriii) it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; oriv) consecutive downgrade of two notches for external ratings.

Financing is classified as impaired when the principal or profit or both are past due for three (3) months or more or where a financing is in arrears for less than three (3) months, the financing exhibits indications of credit weakness.

For financing and receivables, the Group first assesses whether objective evidence of impairment exists individually for financing and receivables that are individually significant, and collectively for financing and receivables that are not individually significant. If the Group determines that no objective evidence of impairment exist for an individually assessed financing and receivables, whether significant or not, it includes the assets in a group of financing and receivables with similar credit risk characteristics and collectively assesses them for impairment. Financing and receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in the collective assessment for impairment.

The amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective profit rate. The amount of the loss is recognised using an allowance account and recognised in the profit or loss.

For the purposes of a collective evaluation of impairment, financing and receivables are grouped on the basis of similar risk characteristics, taking into account the asset type, industry, geographical location, collateral type, past-due status and other relevant factors. These characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the counterparty’s ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows for a group of financing and receivables that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted based on current observable data to reflect the effects of current conditions that did not affect the year on which the historical loss experience is based and remove the effects of conditions in the historical year that do not currently exist.

When a financing is uncollectable, it is written off against the related allowance for impairment. Such financing are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequently recoveries of amounts previously written off are credited to the profit or loss.


096




2.11 impairment (continued)

Financial assets (continued)

(a) financing, advances and others (continued)

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance for impairment account. The amount of reversal is recognised in the profit or loss.

(b) available-for-sale financial assets

In the case of available-for-sale equity securities, a significant or prolonged decline in their fair value of the security below its cost is also considered in determining whether impairment exists. Where such evidence exists, the cumulative net loss that has been previously recognised directly in equity is removed from equity and recognised in the profit or loss. In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as all other financial assets. Reversals of impairment of debt instruments are recognised in the other comprehensive income. Reversals of impairment of equity shares are not recognised in the profit or loss, increases in the fair value of equity shares after impairment are recognised directly in equity.

(c) unquoted equity instruments

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

(d) takaful receivables

Takaful receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, takaful receivables are measured at amortised cost, using the effective interest method.

If there is objective evidence that the takaful receivable is impaired, the Group reduces the carrying amount of the takaful receivable accordingly and recognises that impairment loss in profit or loss. The Group gather the objective evidence that a takaful receivable is impaired using the same process adopted for financial assets carried at amortised cost. The impairment loss is calculated under the same method used for those financing, advances and others. These processes are described in Note 2.11 (a).

Other assets The carrying amounts of other assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the profit or loss.

Impairment losses recognised in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the profit or loss in the year in which the reversals are recognised.

2.12 bills and acceptances payable

Bills and acceptances payable represents the Group’s own bills and acceptances rediscounted and outstanding in the market.



(continued)



2.13 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

2.14 General takaful fund

The general takaful fund is maintained in accordance with the Takaful Act, 1984 (Amendment). Included in general takaful fund is fund arising from:

• Generaltakaful;and• Generalretakafulfunds

The general takaful underwriting results are determined for each class of takaful business after taking into account retakaful, unearned contributions, claims incurred and administrative fees.

Contribution incomeContributions are recognised in a financial year in respect of risks assumed during that particular financial year based on the inception date. Inward treaty retakaful contributions are recognised on the basis of periodic advices received from ceding takaful operators.

Unearned contributions reserveThe Unearned Contribution Reserves (“UCR”) represent the portion of the net contributions of takaful certificates written that relate to the unexpired years of the certificates at the end of the financial year/years.

In determining the UCR at the statement of financial position date, the method that most accurately reflects the actual unearned contributions is used, as follows:

a) 1/365th method for all General Takaful business within Malaysia.b) 1/8th method for all classes of General Treaty Inward Retakaful business

Provision for outstanding claimsA liability for outstanding claims is recognised in respect of direct takaful business. The amount of outstanding claims is the best estimate of the expenditure required together with related expenses less recoveries, if any, to settle the present obligation at the statement of financial position date. Any difference between the current estimated cost and subsequent settlement is dealt with in the takaful revenue accounts for the Group and Company in the year in which the settlement takes place.

Provision is also made for the cost of claims, together with related expenses, incurred but not reported (“IBNR”) at statement of financial position date, using a mathematical method of estimation by a qualified external actuary where historical claims experience are used to project future claims. As with all projections, there are elements of uncertainty and the projected claims may be different from actual. These uncertainties arise from changes in underlying risk, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.

Expense reservesThe expense liability is reported as a liability in Shareholder Fund. Arising from the adoption of guidelines on valuation basis for liabilities of General Takaful Business (issued by Bank Negara Malaysia (“BNM”)), with effect from 1 January 2012, for mudharabah certificates, the expense liability is calculated based on best estimate of the provision for unexpired expense risk (“UER”) and the provision of risk margin for adverse deviation (“PRAD ”). As for wakalah certificates, the expense liability refers to the higher of/aggregate of the Unearned Wakalah Fee (“UWF”) for all lines of business or best estimate of the provision for UER and the PRAD at total fund level.


098




2.15 family takaful fund

Included in family takaful fund is fund arising from:

• Familytakaful;• Groupfamilytakaful;and• Familyretakafulfunds.

The family takaful fund is maintained in accordance with the requirements of the Takaful Act, 1984 (Amendment) and includes the amounts attributable to participants which represents the participants’ share of the underwriting surplus and return on the investments, where applicable and are distributable in accordance with the terms and conditions prescribed by the Group.

The surplus transfer from the family takaful fund to the profit or loss is based on the predetermined profit sharing ratio of the underwriting surplus and return on investments.

Contribution incomeContribution is recognised as soon as the amount of the contribution can be reliably measured. Initial contribution is recognised from inception date and subsequent contribution is recognised when it is due. For individual family takaful contribution, recognition is up to the extent of one due amount.

At the end of each financial period, all due contributions are accounted for to the extent that they can be reliably measured.

Investment-linked businessInvestments of the investment-linked business are stated at closing market prices. Any increase or decrease in value of these investments is taken into the investment-linked business revenue accounts.

Actuarial reservesArising from the adoption of guidelines on valuation basis for liabilities of Family Takaful Business (issued by BNM), with effect from 1 January 2012, actuarial reserves comprise the Prospective Actuarial Valuation, Cash Flow Projection Valuation and Unearned Contribution Valuation as explained below :

(a) Prospect actuarial valuation

For credit-related products, the liabilities of family takaful fund shall be valued based on the sum of present value of future benefits and any expected future expenses payable from the takaful funds, less the present value of future gross tabarru’ arising from the certificate, discounted at the appropriate risk discount rate as defined in the valuation guidelines.

For a credit-related takaful certificate whose sustainability of tabarru’ deductions is depended on the performance of Participants Investment Fund (“PIF”), the calculation is subject to adjusting the future gross tabarru’ cash flow such that it is limited to the period where the PIF can sustain the tabarru’ and assuming that the takaful coverage is in force for the full duration of the takaful contract.

(b) cash flow Projection valuation

For products with PIF other than credit-related products, the liabilities shall be valued by projecting future cash flows to ensure that all future obligations can be met without recourse to additional finance or capital support at any future time during the duration of the certificate. The cash flow projection shall use a basis that is consistent with the requirements of the valuation guidelines.



(continued)



2.15 family takaful fund (continued)

Actuarial reserves (continued)

(c) unearned contribution valution

For yearly renewable products or extensions shall be valued according to the following:

(i) For a certificate covering death or survival, the liabilities shall be valued on an unexpired risk basis using a prospective estimate of expected future payments arising from future events covered as at the valuation date. These future payments shall include allowance for direct claims related expenses, direct investment-related expenses, cost of retakaful and expected future contribution refunds expected during the unexpired period.

(ii) For a certificate covering contingencies other than death or survival, the net liability is the maximum of unexpired risk reserve or unearned contribution reserve.

Before 1 January 2012, actuarial reserves comprise the unearned contribution reserves and the reserve computed under the net contribution valuation as explained below:

(i) unearned contribution reserve

The Unearned Contribution Reserve (“UCR”) of group family fund (except for Mortgage Reducing Term Takaful (“MRTT”) as detailed below) and family retakaful fund represents the portion of the net contributions of takaful certificates written that relate to the unexpired years of the certificates at the end of the financial year.

In determining the UCR at statement of financial position date, the method that most accurately reflects the actual unearned contributions is used, as follows:

(a) 1/365th method for all group family takaful business within Malaysia.(b) A pro-rata basis based on a time apportionment method for family retakaful business.

(ii) net contribution valuation

The actuarial liabilities for MRTT products managed under group family fund and Ordinary Participants’ Special Account (“PSA”) are calculated using the net contribution method of valuation (“NCV”). The liability is ascertained by deducting the present value of future net contribution from the present value of the future amount-at-risk. As with all projections, there are elements of uncertainty and the projected liability may be different from actual.

These uncertainties arise from changes in underlying risks, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.

AnnuAl RepoRt 2012

Audited finAnciAl stAtementsBimB Holdings BerHad

100



2.15 family takaful fund (continued)

Expense reservesThe expense liability is reported as a liability in Shareholder’s Fund.

Arising from the adoption of guidelines on valuation basis for liabilities of Family Takaful Business (issued by BNM), with effect from 1 January 2012, expense reserves consists the followings:

(a) expense liabilities

The method used to value expense liabilities shall be consistent with the method used to value takaful liabilities of the corresponding family takaful certificate (for example, for a long-term ordinary takaful certificate, the valuation method for expense liabilities should also be long-term in nature).

(b) deficiency reserve for skim anuiti takaful KWsP

In addition to the expense liabilities above, an additional requirement is also complied as stipulated below:

If PIF is expected to be insufficient to meet future annuity certain benefit and/or future life annuity tabarru’, another provision shall be set aside that is in line with requirement of the valuation guideline. Upon PIF insufficiency, the Shareholders’ Fund shall honour the annuity certain benefit payment to participants as well as the tabarru’ to PRF.

Before 1 January 2012, expense reserves consists the followings:

(i) investment-linked products

Provision is made to recognise future expected losses to the Shareholders’ Fund, if any, arising from servicing of individual certificate contracts with participants.

Provision is estimated based on the methodology stated in the Guidelines on Investment Linked Insurance/Takaful Business (BNM/RH/GL 010-15) issued by BNM where best estimated cash flows are discounted to ensure that there are no negative net cash flows arising in the future in the Shareholders’ Fund. The best estimate assumptions used are consistent with that used in the valuation of the Investment Linked Risk Fund.

(ii) single contribution Wakalah Plans (Mortgage and Group credit Wakalah)

Provision is estimated based on actuarial present value of future maintenance expense. The assumptions used in calculating the provision are best estimate assumptions.

Provision for outstanding claimsClaims and provisions for claims arising on family and group family takaful certificates, including settlement costs, are accounted for using the case basis method and for this purpose the benefits payable under a family takaful certificate are recognised as follows:

(a) Maturity or other policy benefit payments due on specified dates are accounted for as claims payable on the due dates.

(b) Death, surrender and other benefits without due dates are treated as claims payable on the date of receipts of intimation of death of the participant or occurrence of contingency covered.

(c) For individual family, group health and medical business, provision is made for the cost of claims (together with related expenses) and IBNR at the end of the reporting period, using a mathematical method of estimation by a qualified internal actuary where historical claims experience are used to project future claims. The provision includes a risk margin for adverse deviation. As with all projections, there are elements of uncertainty and the projected claims may be different from actual. These uncertainties arise from changes in underlying risk, changes in spread of risks, claim settlement pattern as well as uncertainties in the projection model and underlying assumptions.


Audited finAnciAl stAtements 101

Notes to the Financial Statementsfor the financial year ended 31 December 2012

(continued)


2.16 Product classification

The Family Takaful Fund and General Takaful Fund consist of certificate contracts that transfer takaful risk.

Takaful contracts are those contracts that transfer significant takaful risk. A takaful contract is a contract under which the fund has accepted significant takaful risk from another party (the certificate holders) by agreeing to compensate the participants if a specified uncertain future event (the takaful event) adversely affects the participants. As a general guideline, to determine whether a contract has significant takaful risk, benefits paid are compared with benefits payable if the takaful event did not occur.

Investment contracts are those contracts that do not transfer significant insurance risk. There are no contracts that are classified as investment contracts in the Family and General Takaful Funds.

Once a contract has been classified as a takaful contract, it remains a takaful contract for the remainder of its life-time, even if the takaful risk reduces significantly during this period, unless all rights and obligations are extinguished or expired.

Takaful contracts in the current portfolio are classified as being without discretionary participation features (“DPF”) as it does not satisfy the criteria for DPF. DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are:

• Likelytobeasignificantportionofthetotalcontractualbenefits;• whoseamountortimingiscontractuallyatthediscretionoftheissuer;and• thatarecontractuallybasedonthe:

- performance of a specified pool of contracts or a specified type of contract;- realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or- the profit or loss of the company, fund or other entity that issues the contract.

2.17 retakaful

The fund cedes takaful risk in the normal course of business. Retakaful assets represent balances receivable and recoverable from retakaful operators. Amounts recoverable from retakaful operators are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the retakaful’s certificates and are in accordance with the related retakaful contracts.

Ceded retakaful arrangements do not relieve the fund from its obligations to participants. Contributions and claims are presented on a gross basis for both ceded and assumed retakaful.

Retakaful assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting period. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the retakaful asset that the Family and General Takaful Fund may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the Family and General Takaful Fund will receive from the retakaful operator. The impairment loss is recorded in profit or loss.

Gains or losses on buying retakaful, if any, are recognised in profit or loss immediately at the date of purchase and are not amortised.

The fund also assumes retakaful risk in the normal course of business for Family Takaful and General Takaful contracts when applicable.

Contributions and claims on assumed retakaful are recognised as revenue or expenses in the same manner as they would be if the retakaful were considered direct business, taking into account the product classification of the retakaful business. Retakaful liabilities represent balances due to retakaful operators. Amounts payable are estimated in a manner consistent with the related retakaful contract.

Retakaful assets or liabilities are derecognised when the contractual rights are extinguished or expired or when the contract is transferred to another party.

Retakaful contracts that do not transfer significant takaful risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified contributions or fees to be retained by the retakaful operators. Investment income on these contracts is accounted for using the effective yield method when accrued.

AnnuAl RepoRt 2012


102



2.18 contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

2.19 contingent assets

Where it is not possible that there is an inflow of economic benefits, or the amount cannot be estimated reliably, the asset is not recognised in the statements of financial position and is disclosed as a contingent asset, unless the probability of inflow of economic benefits is remote. Possible benefits, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets unless the probability of inflow of economic benefits is remote.

2.20 segmental reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Group Managing Director cum Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

2.21 share capital

Ordinary shares are classified as equity in the statement of financial position. Cost directly attributable to the issuance of new equity shares are taken to equity as a deduction from the proceeds.

2.22 recognition of income

Financing income – banking businessFinancing income is recognised in the profit or loss on an accrual basis using the effective profit rate method. The effective profit rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instruments or, when appropriate, a shorter year to the net carrying amount of the financial instruments. When calculating the effective profit rate, the Group has considered all contractual terms of the financial instruments but does not consider future credit losses. The calculation includes all fees and transaction costs integral to the effective profit rate, as well as premium or discounts.

Once a financial asset or a group of financial assets has been written down as a result of an impairment loss, income is recognised using the profit rate used to discount the future cash flows for the purpose of measuring the impairment loss.

Financing income – Takaful businessIncome from financing are recognised on an accrual basis, except where financing is considered impaired, i.e. where repayments are in arrears for more than 90 days, in which case recognition of such income is suspended. Subsequent to suspension, income is recognised on the receipt basis until all arrears have been paid.

Income is recognised on a time propotion basis that takes into account the effective yield of the asset.

Wakalah feesWakalah fees are recognised as income or expenses by the respective funds based on a predetermined percentage of gross contributions upon inception of certificates. Wakalah surplus/(deficit) is arrived at after deducting commission and management expenses against the Wakalah fees charged.




(continued)


2.22 recognition of income (continued)

Fee and other income recognition Financing arrangement, management and participation fees, underwriting commissions and brokerage fees are recognised as income based on contractual arrangements. Fees from advisory and corporate finance activities are recognised net of service taxes and discounts on completion of each stage of the assignment.

Dividend income from subsidiary and associated companies and other investments are recognised when the Company’s rights to receive payment is established.

2.23 income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or loss, except to the extent that it relates to items recognised directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither, accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply to the temporary differences when they reverse, based on the laws that have been enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future profits will be available against which the unutilised tax incentive can be utilised.

Additional taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

2.24 Zakat

This represents business zakat. It is an obligatory amount payable by the Group and the Company to comply with the principles of Shariah.

AnnuAl RepoRt 2012


104



2.25 employee benefits

Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group and the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Group’s and the Company’s contributions to the Employee Provident Fund is charged to the profit or loss in the year to which they relate. Once the contributions have been paid, the Group and the Company has no further payment obligations.

2.26 non-current assets held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale.

Immediately before classification as held for sale, the assets (or components of a disposal group) are re-measured in accordance with the Group’s accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell.

Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in the profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets, property and equipment and investment properties once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity accounted investees ceases once classified as held for sale.

2.27 earnings per ordinary shares

The Group presents basic data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held.

3. cash and short-terM funds

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Cash and balances with banks and other financial institution 1,228,798 910,167 878,846Money at call and interbank placements with remaining maturity 834,646 2,875,187 2,197,222

2,063,444 3,785,354 3,076,068

company

Cash and balances with banks and other financial institutions 68,329 89,898 63,815

68,329 89,898 63,815

Included in cash and balances with banks and other financial institutions of the Group are clients’ monies held in trust of RM2,736,000 (31.12.2011: RM3,406,000; 1.1.2011: RM1,768,000)




(continued)

4. dePosits and PlaceMents With financial institutions

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Licensed banks 519,646 1,692,220 872,949Other financial institutions - - 2,798

519,646 1,692,220 875,747

5. financial assets held-for-tradinG

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

at fair value:quoted securities in Malaysia- Shares 40,502 29,747 26,927quoted securities outside Malaysia- Shares 32,330 31,251 -- Unit trusts 29,580 25,971 56,868

102,412 86,969 83,795

unquoted securities in Malaysia- Malaysian Government Investment Issues 20,190 71,804 50,573- Islamic Commercial Papers 49,884 9,852 -- Bank Negara Negotiable Notes 846,786 1,116,264 2,202,117- Islamic Debt Securities 698,158 46,292 40,795- Investment funds 59,662 63,906 79,649- Malaysian Islamic Treasury Bills 9,807 - -unquoted securities outside Malaysia- Islamic Debt Securities 44,707 8,257 7,533

1,729,194 1,316,375 2,380,667

1,831,606 1,403,344 2,464,462

AnnuAl RepoRt 2012


106


6. derivative financial assets/liabilities

The following tables summarise the contractual or underlying principal amounts of derivatives financial instruments held at fair value through profit or loss and hedging purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at financial position date, and do not represent amounts at risk.

Trading derivative financial instruments are revalued on a gross position and the unrealised gains or losses are reflected as derivative financial assets and liabilities respectively.

Principal fair value amount assets liabilitiesGroup rM’000 rM’000 rM’000

31 december 2012Forward contracts 680,789 2,523 (1,365)Profit rate swaps 1,434,000 12,200 (10,961)Structured deposits 114,095 2,013 (2,013)

2,228,884 16,736 (14,339)

31 december 2011Forward contracts 1,684,899 5,589 (4,854)Cross currency profit rate swaps 171,740 7,549 (7,509)Profit rate swaps 500,000 - (8,197)Structured deposits 137,005 2,739 (2,739)

2,493,644 15,877 (23,299)

1 January 2011Forward contracts 5,208,060 42,284 (26,788)Cross currency profit rate swaps 171,740 10,055 (9,964)Profit rate swaps 500,000 - (2,187)Structured deposits 462,995 27,769 (27,769)

6,342,795 80,108 (66,708)

7. financial assets available-for-sale

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

at fair value quoted securities in Malaysia- Unit trusts 88,253 52,236 51,247- Shares 516,460 410,633 390,461quoted securities outside Malaysia- Unit trusts 88,941 50,375 32,881- Shares 52 5,629 104

693,706 518,873 474,693




(continued)

7. financial assets available-for-sale (continued)

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

at fair value unquoted securities in Malaysia- Malaysian Government Islamic Papers 664,459 581,415 554,450- Malaysian Government Investment Issues 1,893,477 2,593,521 4,444,171- Negotiable Islamic Debt Certificates 2,239,370 1,170,238 2,277,443- Islamic Debt Securities 11,063,793 8,648,873 6,359,212- Promissory notes - 5,108 5,108- Bank Negara Negotiable Notes - - 149,364- Islamic Commercial Papers - 208,566 872,867- Accepted Bills - 243,500 384,155- Shares 380 380 604- Unit trusts 284,981 257,086 206,024unquoted securities outside Malaysia- Shares 43 47 46- Islamic Debt Securities 10,617 32,132 41,800- Islamic Development Bank Unit Trusts 1,530 1,923 1,923

16,158,650 13,742,789 15,297,167

at costunquoted securities in Malaysia- Unquoted shares in Malaysia 22,477 22,448 22,061 Less: Accumulated impairment loss* (13,761) (14,258) (13,871)

8,716 8,190 8,190

unquoted securities outside Malaysia- Unquoted shares outside Malaysia 1,130 1,688 1,688

total 16,862,202 14,271,540 15,781,738

* Movement in accumulated impairment loss due to translation differences.

31.12.2012 31.12.2011 1.1.2011company rM’000 rM’000 rM’000

at fair value quoted securities in Malaysia- Unit trusts 17,290 12,296 12,229

AnnuAl RepoRt 2012


108


8. financial assets held-to-Maturity

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

quoted securities outside Malaysia- Bonds - 63,369 61,650

unquoted securities in Malaysia- Malaysian Government Islamic Papers 145,502 145,609 145,712- Islamic Debt Securities 327,156 417,493 306,363 Less: Accumulated impairment loss (19,738) (20,315) (23,067)

unquoted securities outside Malaysia- Islamic Debt Securities 15,801 30,757 18,476

468,721 636,913 509,134

9. financinG, advances and others

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

(a) by type

at amortised cost Cash line 618,555 406,590 254,278 Term financing

House financing 5,186,253 4,393,020 3,911,363Syndicated financing 426,066 164,649 82,237Leasing financing 203,580 280,403 303,884Bridging financing 151,127 160,779 238,595Personal financing 6,608,116 3,786,432 3,001,049Other term financing 4,546,959 3,358,527 2,760,392Staff financing 165,380 157,510 148,425Credit cards 430,984 451,538 450,542Trade bills discounted 1,480,215 1,309,598 1,060,217Trust receipts 50,314 48,897 59,854Pawn broking 80,572 47,352 13,897

Gross financing, advances and others 19,948,121 14,565,295 12,284,733Allowance for impaired financing, advances and others

-collective assessment allowance (313,334) (327,688) (347,073)-individual assessment allowance (126,988) (75,770) (79,061)

net financing, advances and others 19,507,799 14,161,837 11,858,599




(continued)

9. financinG, advances and others (continued)

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

(b) by contract

Bai’ Bithaman Ajil 8,720,001 7,291,742 6,209,417Ijarah 206,889 295,881 334,106Ijarah Muntahiah Bit-Tamleek 30,627 22,648 11,657Mudharabah - 6,000 6,000Murabahah 1,403,165 1,316,853 1,120,380At-Tawarruq 7,530,581 3,903,981 2,573,328Bai Al-Inah 1,729,672 1,435,588 1,662,823Istisna’ 246,614 245,250 353,125Ar-Rahnu 80,572 47,352 13,897

19,948,121 14,565,295 12,284,733

(c) by type of customer

Domestic non-bank financial institutions 57,558 25,755 1,218Domestic business enterprise 4,327,447 2,683,710 2,082,941Small medium industries 493,352 391,947 401,119Government and statutory bodies 165,550 129,766 151,526Individuals 14,679,594 10,989,077 9,324,459Other domestic entities 5,646 73,239 57,741Foreign entities 218,974 271,801 265,729

19,948,121 14,565,295 12,284,733

(d) by profit rate sensitivity

Fixed rate House financing 1,552,555 2,087,060 2,198,946 Others 8,926,966 8,680,517 8,005,296Floating rate Others 9,468,600 3,797,718 2,080,491

19,948,121 14,565,295 12,284,733

(e) by remaining maturity

Maturity within one year 3,065,264 2,672,329 2,071,456More than one year to three years 969,154 863,680 705,542More than three years to five years 1,082,872 818,561 1,385,004More than five years 14,830,831 10,210,725 8,122,731

19,948,121 14,565,295 12,284,733

(f) by geographical distribution

Central Region 8,570,148 6,035,689 5,316,372Eastern Region 3,635,878 2,643,657 2,088,995Northern Region 3,165,074 2,321,457 1,968,232Southern Region 2,920,068 2,334,693 1,830,865East Malaysia Region 1,656,953 1,229,799 1,080,269

19,948,121 14,565,295 12,284,733

AnnuAl RepoRt 2012


110



31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

(g) by sector

Primary agriculture 223,163 149,182 182,111Mining and quarrying 5,334 48,249 897Manufacturing (including agro-based) 1,016,127 904,779 791,995Electricity, gas and water 175,743 7,221 150,860Wholesale & retail trade, and hotels & restaurants 673,210 558,811 479,868Construction 1,725,523 756,014 508,293Real estate 572,787 385,261 187,445Transport, storage and communications 208,945 233,766 408,349Finance, insurance and business activities 391,521 180,770 154,408Education, health and others 254,018 122,204 85,375Household sectors 14,693,126 11,016,473 9,321,823Other sectors 8,624 202,565 13,309

19,948,121 14,565,295 12,284,733

(h) Movement in impaired financing and advances (“impaired financing”) are as follows:

31.12.2012 31.12.2011Group rM’000 rM’000

At 1 January 2012 / 1 January 2011 379,790 552,221

Classified as impaired during the year 427,775 549,075Reclassified as not impaired during the year (254,872) (297,191)Amount recovered (92,264) (238,876)Amount written off (151,472) (187,141)Exchange differences (248) 1,702

At 31 December 2012 / 31 December 2011 308,709 379,790

Gross impaired financing as a percentage of gross financing, advances and others 1.55% 2.61%

(i) impaired financing by geographical distribution

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Central Region 130,400 155,544 202,422Eastern Region 26,053 45,950 64,264Northern Region 66,894 58,028 99,382Southern Region 22,199 44,940 80,780East Malaysia Region 63,163 75,328 105,373

308,709 379,790 552,221




(continued)


(j) impaired financing by sector

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Primary agriculture 207 3,511 10,947Mining and quarrying - - 851Manufacturing (including agro-based) 46,483 42,184 83,810Electricity, gas and water 160 - -Wholesale & retail trade, and hotels & restaurants 17,422 23,606 42,729Construction 74,341 71,680 130,925Real estate 101 1,203 1,263Transport, storage and communications 722 1,062 1,538Finance, insurance and business activities 9,977 16,255 -Education, health and others - 71 6,112Household sectors 159,273 217,371 270,847Other sectors 23 2,847 3,199

308,709 379,790 552,221

(k) Movement of allowance for impaired financing

31.12.2012 31.12.2011Group rM’000 rM’000

collective assessment allowanceAt 1 January 2012 / 1 January 2011 327,688 347,073Allowance made during the year 102,185 84,268Amount written off (116,848) (100,816)Exchange differences 309 (2,837)


individual assessment allowanceAt 1 January 2012 / 1 January 2011 75,770 79,061Allowance made during the year 85,042 87,101Amount written off (33,824) (90,392)


10. other assets

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Bills receivables - - 306Clients’ and dealers’ debit balances 160,871 79,693 94,560Deposits and prepayments 36,837 35,526 25,332Other financing 82,322 88,845 93,134Other receivables 193,953 74,148 88,830

473,983 278,212 302,162

AnnuAl RepoRt 2012


112


10. other assets (continued)

31.12.2012 31.12.2011 1.1.2011company rM’000 rM’000 rM’000

Amount due from subsidiaries 9,955 112 -Deposits and prepayments 491 320 252

10,446 432 252

Other financing of the Group are stated net of impairment allowances of RM1,935,000 (31.12.2011: RM4,070,000 ; 1.1.2011: RM8,975,000).

Other receivables of the Group are stated net of impairment allowances of RM92,967,000 (2011: RM96,330,000 ; 1.1.2011: RM96,330,000)

11. taKaful assets 31.12.2012 31.12.2011 1.1.2011Group note rM’000 rM’000 rM’000

Retakaful assets:- Claims liabilities 21(a)(i) 301,150 262,019 239,303- Contribution liabilities 21(a)(ii) 72,297 88,597 48,213- Actuarial liabilities 21(a)(iii) 63,856 64,808 40,617

437,303 415,424 328,133

Takaful receivables- Due contributions 82,378 96,402 112,324- Due from retakaful/co-takaful 22,518 28,501 31,051

104,896 124,903 143,375Less: Allowance for impaired receivables (10,883) (15,089) (36,153)

94,013 109,814 107,222

531,316 525,238 435,355

12. statutory dePosits With banK neGara Malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994), the amount of which are determined as set percentages of total eligible liabilities.




(continued)

13. deferred tax assets

recognised deferred tax assets and liabilitiesDeferred tax assets and liabilities are attributable to the following:

assets liabilities total 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Allowance for impairment on financing and advances - - 41,160 - - - - - 41,160Property, plant and equipment 63 148 81 (33,495) (27,906) (27,437) (33,432) (27,758) (27,356)Investment properties 783 121 121 - - - 783 121 121Unabsorbed capital allowances 30,246 34,589 21,694 - - - 30,246 34,589 21,694Provisions 58,233 37,737 23,404 - (3,488) - 58,233 34,249 23,404

tax assets/(liabilities) 89,325 72,595 86,460 (33,495) (31,394) (27,437) 55,830 41,201 59,023

company

tax assets 10 10 1,659 - - - 10 10 1,659

unrecognised deferred tax assetsDeferred tax assets have not been recognised in respect of the following items:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Unutilised tax losses - 7,457 7,457Unabsorbed capital allowances 30,424 30,424 43,784

30,424 37,881 51,241

14. investMents in subsidiaries

31.12.2012 31.12.2011 1.1.2011company rM’000 rM’000 rM’000

at costQuoted shares in Malaysia 100,306 106,986 106,986Unquoted shares in Malaysia 1,604,127 1,604,127 1,613,648

1,704,433 1,711,113 1,720,634Less: Accumulated impairment loss - - (162,992)

1,704,433 1,711,113 1,557,642

AnnuAl RepoRt 2012


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14. investMents in subsidiaries (continued)

Details of the subsidiaries are as follows:

effective ownership interestname of company Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

Bank Islam Malaysia Berhad Islamic banking business 51 51 51

Subsidiaries of Bank Islam Malaysia Berhad

BIMB Investment Management Berhad* Managing Islamic Unit Trust Funds 100 100 100

BIMB Foreign Currency Clearing Agency Sdn. Bhd. Foreign currency clearing house 100 100 100

Al-Wakalah Nominees (Tempatan) Sdn. Bhd. Provide nominee services 100 100 100 Farihan Corporation Sdn. Bhd. Managing Islamic pawn 100 100 80 broking business

Bank Islam Trust Company (Labuan) Ltd. Provide services as Labuan 100 100 100 registered trust company

Subsidiary of Bank Islam Trust Company (Labuan) Ltd.

BIMB Offshore Company Dormant 100 100 100Management Services Sdn. Bhd.

Syarikat Takaful Malaysia Berhad Family and General Takaful business 61.14 65.22 65.22

Subsidiaries of Syarikat Takaful Malaysia Berhad

ASEAN Retakaful International (L) Ltd ** Offshore retakaful business 63.09 63.09 63.09

P.T. Syarikat Takaful Indonesia £ # Investment holding 56 56 56

Subsidiaries of P.T. Syarikat Takaful Indonesia

P.T. Asuransi Takaful Umum £ # General Takaful business 64.70 64.70 64.70

P.T. Asuransi Takaful Keluarga £ # Family Takaful business 74.78 74.78 74.78

BIMB Securities (Holdings) Sdn. Bhd. Investment holding 100 100 100

Subsidiary of BIMB Securities (Holdings) Sdn. Bhd.

BIMB Securities Sdn. Bhd. Stockbroking 100 100 100

* The consolidated financial statements of the Group for the financial year ended 31 December 2012 include the management accounts of the subsidiary of Bank Islam Malaysia Berhad as at 31 December 2012, which is not material to the Group.




(continued)

14. investMents in subsidiaries (continued)

Details of the subsidiaries are as follows (continued):

effective ownership interestname of company Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

Subsidiaries of BIMB Securities Sdn. Bhd

BIMSEC Asset Management Sdn. Bhd. Investment management services 100 100 100

BIMSEC Nominees (Tempatan) Sdn. Bhd Nominee services 100 100 100

BIMSEC Nominees (Asing) Sdn. Bhd. Nominee services 100 100 100

Syarikat Al-Ijarah Sdn. Bhd. Leasing of assets 100 100 100

£ Incorporated in Indonesia. ^ Audited by a firm of auditors affiliated with KPMG Desa Megat & Co.# Audited by a firm of auditors other than KPMG Desa Megat & Co.

** Members’ Voluntary winding-up commenced on 21 May 2012. The subsidiary has been consolidated based on management accounts.

15. investMent in associates

Group company 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at costUnquoted shares 27,582 27,582 5,019 5,019 5,019 5,019Less: - Share of results of associate company 349 (1,383) - - - -- Accumulated impairment loss (5,018) (5,018) (5,018) (5,018) (5,018) (5,018)

22,913 21,181 1 1 1 1

The principal activities of the associates and the interest of the Group are as follows:

Place of effective interestname of company Principal activities incorporation 31.12.2012 31.12.2011 1.1.2011 % % %

Islamic Banking and Finance Provides training and Institute Malaysia Sdn Bhd consultancy services Malaysia 48 48 48

Amana Bank Limited Provides Islamic finance services Sri Lanka 20 20 -

The summarised financial information of Amana Bank Ltd. is not adjusted for the percentage ownership held by the Group as follows:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Total assets 405,556 402,133 -Total liabilities 329,797 320,020 -Operating revenue 21,772 6,306 -Profit/(Loss) after tax 8,622 (6,917) -

AnnuAl RepoRt 2012


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16. ProPerty, Plant and equiPMent

furniture, computer **land fixtures equipment and and office Motor and building fittings equipment vehicles software totalGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

costAt 1 January 2011 278,505 163,077 68,370 2,984 336,851 849,787Additions 4,439 34,190 9,756 603 30,024 79,012Reclassifications (1,486) 1,349 137 - - -Disposals (1,067) (175) (201) (328) (13,034) (14,805)Write off (1,816) (2,878) (4,583) - (6) (9,283)Transferred to investment properties (5,271) - - - - (5,271)Exchange difference 133 165 25 13 72 408

At 31 December 2011 / 1 January 2012 273,437 195,728 73,504 3,272 353,907 899,848Additions 4,460 27,472 11,078 1,190 29,203 73,403Reclassifications (658) 603 55 - - -Disposals (537) (433) (1,741) (427) (1,560) (4,698)Write off (579) (2,201) (3,430) - (187) (6,397)Exchange difference (1,283) (987) (32) (78) (91) (2,471)

at 31 december 2012 274,840 220,182 79,434 3,957 381,272 959,685

depreciationAt 1 January 2011 23,775 113,570 43,155 1,624 243,384 425,508Depreciation for the year 7,968 20,832 5,788 377 24,272 59,237Reclassifications - - (156) - 156 -Disposals (1,067) (156) (186) (225) (12,978) (14,612)Write off (1,615) (2,649) (4,304) - (6) (8,574)Transferred to investment properties (1,141) - - - - (1,141)Exchange difference 15 145 23 10 71 264

At 31 December 2011 / 1 January 2012 27,935 131,742 44,320 1,786 254,899 460,682Depreciation for the year 5,994 18,158 7,706 527 23,941 56,326Reclassifications (54) 2 52 - - -Disposals (429) (342) (1,669) (396) (1,511) (4,347)Write off (439) (2,151) (3,403) - (89) (6,082)Exchange difference (254) (885) (30) (47) (91) (1,307)

at 31 december 2012 32,753 146,524 46,976 1,870 277,149 505,272

carrying amountsAt 1 January 2011 254,730 49,507 25,215 1,360 93,467 424,279

At 31 December 2011 245,502 63,986 29,184 1,486 99,008 439,166

at 31 december 2012 242,087 73,658 32,458 2,087 104,123 454,413




(continued)

16. ProPerty, Plant and equiPMent (continued)

building improvements** land and building freehold freehold leasehold leasehold andGroup land building land building renovations total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

costAt 1 January 2011 57,394 122,932 12,375 52,084 33,720 278,505Additions - - - 208 4,231 4,439Reclassifications - - - - (1,486) (1,486)Disposals - - - - (1,067) (1,067)Write off - - - - (1,816) (1,816)Transferred to investment properties (1,660) (2,501) - (1,110) - (5,271)Exchange difference 1 1 - 128 3 133

At 31 December 2011/1 January 2012 55,735 120,432 12,375 51,310 33,585 273,437Additions - - - - 4,460 4,460Reclassifications - - - - (658) (658)Disposals - - - - (537) (537)Write off - - - - (579) (579)Exchange difference (11) (13) - (1,255) (4) (1,283)

at 31 december 2012 55,724 120,419 12,375 50,055 36,267 274,840

depreciationAt 1 January 2011 - 1,609 638 2,033 19,495 23,775Depreciation for the year - 2,564 174 1,452 3,778 7,968Reclassifications - - - - - -Disposals - - - - (1,067) (1,067)Write off - - - - (1,615) (1,615)Transferred to investment properties - (720) - (421) - (1,141)Exchange difference - - - 12 3 15

At 31 December 2011/1 January 2012 - 3,453 812 3,076 20,594 27,935Depreciation for the year - 2,553 174 1,468 1,799 5,994Reclassifications - - - - (54) (54)Disposals - - - - (429) (429)Write off - - - - (439) (439)Exchange difference - - - (250) (4) (254)

at 31 december 2012 - 6,006 986 4,294 21,467 32,753

carrying amountsAt 1 January 2011 57,394 121,323 11,737 50,051 14,225 254,730

At 31 December 2011 55,735 116,979 11,563 48,234 12,991 245,502

at 31 december 2012 55,724 114,413 11,389 45,761 14,800 242,087

AnnuAl RepoRt 2012


118


16. ProPerty, Plant and equiPMent (continued)

furniture, office fixtures equipment and Motor and fittings renovation vehicles computer totalcompany rM’000 rM’000 rM’000 rM’000 rM’000

costAt 1 January 2011 46 854 169 201 1,270Additions 9 690 - 8 707

At 31 December 2011/1 January 2012 55 1,544 169 209 1,977Additions 452 1,245 415 217 2,329Reclassifications 603 (658) - 55 -Disposals - (210) (169) - (379)Write off - (575) - (29) (604)

at 31 december 2012 1,110 1,346 415 452 3,323

depreciationAt 1 January 2011 40 493 148 156 837Depreciation for the year 7 143 21 25 196

At 31 December 2011/1 January 2012 47 636 169 181 1,033Depreciation for the year 205 162 69 58 494Reclassifications 2 (54) - 52 -Disposals - (160) (169) - (329)Write off - (435) - (29) (464)

at 31 december 2012 254 149 69 262 734

carrying amountsAt 1 January 2011 6 361 21 45 433

At 31 December 2011 8 908 - 28 944

at 31 december 2012 856 1,197 346 190 2,589




(continued)

17. investMent ProPerties freehold freehold leasehold leasehold land building land building totalGroup rM’000 rM’000 rM’000 rM’000 rM’000

costAt 1 January 2011 4,831 13,242 630 13,421 32,124Additions - 5,535 - - 5,535Disposals - (7,700) - - (7,700)Transferred from properties, plant, and equipment 1,660 2,501 - 1,110 5,271Reclassified to asset held for sale - - - (668) (668)Exchange difference - - 6 4 10

At 31 December 2011/1 January 2012 6,491 13,578 636 13,867 34,572Reclassified to asset held for sale - (1,490) - (1,750) (3,240)Exchange difference - - (51) (41) (92)

at 31 december 2012 6,491 12,088 585 12,076 31,240

depreciationAt 1 January 2011 - - - - -Depreciation for the year - 232 - 219 451Transferred from property plant, and equipment - 720 - 421 1,141

At 31 December 2011/1 January 2012 - 952 - 640 1,592Depreciation for the year - 226 - 286 512

at 31 december 2012 - 1,178 - 926 2,104

carrying amountsAt 1 January 2011 4,831 13,242 630 13,421 32,124

At 31 December 2011 6,491 12,626 636 13,227 32,980

at 31 december 2012 6,491 10,910 585 11,150 29,136

As at 31 December 2012, the fair value of the Group’s investment properties approximates RM32.1 million (31.12.2011: RM30.8 million ; 1.1.2011: RM29.9 million)

AnnuAl RepoRt 2012


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18. dePosits froM custoMers

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

(a) by type of deposit

non Mudharabah fundDemand deposits 8,962,434 8,412,372 7,090,732Savings deposits 2,515,341 2,599,243 2,576,870Negotiable Islamic Debt Certificates (NIDC) 1,638,528 1,690,306 2,434,020Waheed-i 2,217,203 3,812,710 2,969,517Ziyad * 101,664 104,736 105,299An-Najah * - 18,000 312,452Others 78,562 103,256 78,923

15,513,732 16,740,623 15,567,813

Mudharabah fundSavings deposits 1,942,190 1,263,591 987,346General investment deposits 2,173,818 1,851,695 2,449,607Special investment deposits 12,749,260 8,352,294 7,793,341

16,865,268 11,467,580 11,230,294

32,379,000 28,208,203 26,798,107

* Structured deposits

Maturity structure of NIDCs, Waheed-i, Ziyad, An-Najah and investment deposits are as follows:

Due within six months 16,813,222 13,335,657 10,366,464More than six months to one year 1,243,158 1,444,323 4,616,743More than one year to three years 775,333 1,020,357 638,204More than three years to five years 48,760 29,404 20,955More than five years - - 421,870

18,880,473 15,829,741 16,064,236

(b) by type of customer

Government and statutory bodies 7,378,695 7,769,225 6,795,607Business enterprises 8,771,118 7,191,916 8,538,290Individuals 5,263,990 4,750,716 4,510,064Others 10,965,197 8,496,346 6,954,146

32,379,000 28,208,203 26,798,107




(continued)

19. dePosits and PlaceMents of banKs and other financial institutions

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

non-Mudharabah fundLicensed banks 1,475 1,424 1,286Other financial institutions 50,153 81,506 19,667

51,628 82,930 20,953

Mudharabah fund Licensed banks 768,360 251,698 306,676Other financial institutions 40,290 50,000 50,500

808,650 301,698 357,176

860,278 384,628 378,129

20. other liabilities

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Accruals and other payables 714,982 657,060 577,165Clients’ and dealers’ credit balances 154,432 79,290 90,036Trust account - 176 721

869,414 736,526 667,922

company

Accruals and other payables 1,458 1,731 680Amount due to subsidiaries - - 4

1,458 1,731 684

The amount due to subsidiaries is non-trade, unsecured, not subject to financing charge and repayable on demand.

21. taKaful liabilities

31.12.2012 31.12.2011 1.1.2011Group note rM’000 rM’000 rM’000

Takaful contract liabilities 21(a) 5,448,143 5,059,326 4,644,854Expense reserves 21(b) 89,486 19,739 12,502Takaful payables 21(c), 38.3(b) 43,126 45,537 50,454

5,580,755 5,124,602 4,707,810

AnnuAl RepoRt 2012


122


21. taKaful liabilities (continued)

(a) takaful contract liabilities

The takaful contract liabilities comprise the following:


Provision for outstanding claims 21(a)(i) 733,074 634,182 516,460Provision for unearned contributions 21(a)(ii) 295,439 352,154 312,042Participants’ fund 21(a)(iii) 4,419,630 4,072,990 3,816,352

5,448,143 5,059,326 4,644,854

(i) Provision for outstanding claims

The provision for outstanding claims and its movements are further analysed as follows:

Gross retakaful netGroup note rM’000 rM’000 rM’000

31 december 2012Provision for claims reported by participants 38.3(b) 417,944 (224,743) 193,201Provision for IBNR* 315,130 (76,407) 238,723

Provision for outstanding claims 733,074 (301,150) 431,924

Note 11

31 december 2011Provision for claims reported by participants 38.3(b) 417,879 (216,653) 201,226Provision for IBNR* 216,303 (45,366) 170,937


Note 11

1 January 2011Provision for claims reported by participants 38.3(b) 383,047 (212,089) 170,958Provision for IBNR* 133,413 (27,214) 106,199


Note 11

* Incurred-but-not-reported (“IBNR”)




(continued)


(a) takaful contract liabilities (continued)

(i) Provision for outstanding claims (continued)

Movement of provision for outstanding claims:

Gross retakaful netGroup rM’000 rM’000 rM’000

at 1 January 2011 516,460 (239,303) 277,157Claims incurred during the year 662,803 (92,122) 570,681Adjustment to claims incurred in prior accident years (8,241) 25,765 17,524Claims paid during the year (618,544) 61,015 (557,529)Increase in IBNR 82,890 (18,152) 64,738Effect of movement in exchange rates (1,186) 778 (408)

at 31 december 2011/1 January 2012 634,182 (262,019) 372,163Claims incurred during the year 675,824 (81,515) 594,309Adjustment to claims incurred in prior accident years (18,639) 15,631 (3,008)Claims paid during the year (654,024) 55,998 (598,026)Increase in IBNR 98,827 (31,041) 67,786Effect of movement in exchange rates (3,096) 1,796 (1,300)

at 31 december 2012 733,074 (301,150) 431,924

(ii) Provision for unearned contributions

The provision for unearned contributions and its movements are further analysed as follows:


31 december 2012 295,439 (72,297) 223,142

Note 11

31 December 2011 352,154 (88,597) 263,557

Note 11

1 January 2011 312,042 (48,213) 268,829

Note 11

Movement of provision for unearned contributions:


at 1 January 2011 312,042 (48,213) 263,829Contributions written during the year 441,499 (154,871) 286,628Contributions earned during the year (401,357) 114,401 (286,956)Effect of movement in exchange rates (30) 86 56

at 31 december 2011/1 January 2012 352,154 (88,597) 263,557Contributions written during the year 400,960 (105,688) 295,272Contributions earned during the year (456,652) 121,955 (334,697)Effect of movement in exchange rates (1,023) 33 (990)

at 31 december 2012 295,439 (72,297) 223,142

AnnuAl RepoRt 2012


124



(a) takaful contract liabilities (continued)

(iii) Participants’ fund

Participants’ fund balance at end of the reporting period comprises the following:


31 december 2012Actuarial liabilities 3,273,504 (63,856) 3,209,648Unallocated surplus/accumulated surplus 877,426 - 877,426AFS reserve 107,790 - 107,790Translation reserve 1,335 - 1,335Net assets value attributable to unitholders 159,575 - 159,575

4,419,630 (63,856) 4,355,774

Note 11

31 december 2011Actuarial liabilities 3,124,963 (64,808) 3,060,155Unallocated surplus/accumulated surplus 676,659 - 676,659AFS reserve 120,090 - 120,090Translation reserve 1,678 - 1,678Net assets value attributable to unitholders 149,600 - 149,600

4,072,990 (64,808) 4,008,182

Note 11

1 January 2011Actuarial liabilities 2,909,664 (40,617) 2,869,047Unallocated surplus/accumulated surplus 621,741 - 621,741AFS reserve 124,005 - 124,005Translation reserve 1,590 - 1,590Net assets value attributable to unitholders 159,352 - 159,352

3,816,352 (40,617) 3,775,735

Note 11

(b) expense reserves

2012 2011Group rM’000 rM’000

at 1 January 19,739 12,502Provision for the year, net 70,110 7,317Effect of movement in exchange rates (363) (80)

At 31 December 89,486 19,739




(continued)


(c) takaful payables

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Due to retakaful companies 31,743 34,194 33,925Due to Intermediaries/Participants 11,383 11,343 16,529

43,126 45,537 50,454

22. share caPital

31.12.2012 31.12.2011 1.1.2011Group and company rM’000 rM’000 rM’000

Authorised:Ordinary shares of RM1 each 2,000,000 2,000,000 2,000,000

Issued and fully paid:Ordinary shares of RM1 each 1,066,790 1,066,790 1,066,790

23. reserves

23.1 share premium and reserves

Breakdown of share premium and reserves are as follows:


Share premium 603,630 603,630 603,630Other reserves 23.2 428,433 1,296,018 1,190,028Accumulated losses (79,275) (1,133,837) (1,206,090)

952,788 765,811 587,568

company

Share premium 603,630 603,630 603,630Fair value reserves 133 267 199Retained earnings / Accumulated losses 133,550 144,102 (33,590)

737,313 747,999 570,239

AnnuAl RepoRt 2012


126


23. reserves (continued)

23.2 other reserves

fair capital statutory value translation reserve reserve reserve reserve total

Group rM’000 rM’000 rM’000 rM’000 rM’000

at 1 January 2011 638,370 513,112 44,370 (5,824) 1,190,028Foreign exchange translation differences - - - (4,562) (4,562)Unrealised net gain on revaluation of financial assets available-for-sale - - 21,171 - 21,171Transfer from current year profit - 89,381 - - 89,381

at 31 december 2011/1 January 2012 638,370 602,493 65,541 (10,386) 1,296,018Foreign exchange translation differences - - - 4,061 4,061Unrealised net gain on revaluation of financial assets available-for-sale - - 3,635 - 3,635Transfer from current year profit - 105,237 - - 105,237Zerorisation of accumulated losses in subsidiary - (349,011) - - (349,011)Transfer to accumulated losses (631,507) - - - (631,507)

at 31 december 2012 6,863 358,719 69,176 (6,325) 428,433

The capital reserve arose out of the issuance of bonus issues in a subsidiary of RM6,863,000

The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not distributable as cash dividends.

24. incoMe derived froM investMent of dePositors’ funds

2012 2011Group rM’000 rM’000

Income derived from investment of:(i) General investment deposits 120,644 132,729(ii) Other deposits 1,529,998 1,261,189

1,650,642 1,393,918




(continued)

24. incoMe derived froM investMent of dePositors’ funds (continued)

(i) income derived from investment of general investment deposits

2012 2011Group rM’000 rM’000

financing income and hibahFinancing, advances and others 82,259 86,808Financial assets:- Held-for-trading 847 381- Available-for-sale 25,918 32,475- Held-to-maturity 4,360 747Money at call and deposit with financial institutions 4,004 6,347

117,388 126,758

other dealing incomeNet gain from sale of financial assets held-for-trading 321 641Net gain on revaluation of financial assets held-for-trading 1,273 2,015

1,594 2,656

other operating income Net gain from sale of financial assets available-for-sale 1,662 3,188Gain on redemption of financial assets held-to-maturity - 127

1,662 3,315

120,644 132,729

Of whichFinancing income earned on impaired financing 2,043 4,392

(ii) income derived from investment of other deposits

2012 2011Group rM’000 rM’000

financing income and hibahFinancing, advances and others 1,045,032 823,211Financial assets:- Held-for-trading 11,279 3,649- Available-for-sale 328,135 306,923- Held-to-maturity 55,732 7,417Money at call and deposits with financial institutions 49,974 59,849

1,490,152 1,201,049

other dealing incomeNet gain from sale of financial assets held-for-trading 4,009 6,177Net gain on revaluation of financial assets held-for-trading 15,993 18,858

20,002 25,035

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24. incoMe derived froM investMent of dePositors’ funds (continued)

(ii) income derived from investment of other deposits (continued)

2012 2011Group rM’000 rM’000

other operating incomeNet gain from sale of financial assets available-for-sale 19,844 33,780Gain on redemption of financial assets held-to-maturity - 1,325

19,844 35,105

1,529,998 1,261,189

Of whichFinancing income earned on impaired financing 26,408 42,120

25. incoMe derived froM investMent of shareholders’ funds

Group company 2012 2011 2012 2011 rM’000 rM’000 rM’000 rM’000

financing income and hibahFinancing, advances and others 6,796 8,714 - -Financial assets available-for-sale 104,320 86,929 - -Money at call and deposits with financial institutions 4,785 6,364 2,508 2,576

115,901 102,007 2,508 2,576

other dealing incomeNet gain from foreign exchange transactions 51,599 31,808 - -Net gain/(loss) from sale of financial assets held-for-trading 21 (44) - -Net gain on revaluation of financial assets held-for-trading 39 - - -Net derivatives gains/(losses) 9,805 (8,618) - -

61,464 23,146 - -

other operating incomeNet gain from sale of financial assets available-for-sale - 17,843 - -Profit on sale of foreign currencies 3,124 2,335 - -Reversal of allowance for diminution in value of investments - 38 80 346Reversal of allowance for doubtful debts 240 240 - -Gross dividend income from securities:- Quoted in Malaysia 8 - - -- Unit trusts in Malaysia 587 351 573 351- Unit trusts outside Malaysia 56 57 - -- Unquoted in Malaysia 3,217 10,426 - -Gross dividend income from subsidiary companies - - 137,714 100,869Fees and commission 164,116 119,885 - -Net gain/(loss) on disposal of property, plant and equipment 114 2,429 (146) -Net gain on disposal of shares in subsidiary - - 33,539 -Rental income 1,594 2,642 - -Others 557 198 179 -

173,613 156,444 171,939 101,566

350,978 281,597 174,447 104,142




(continued)

26. net incoMe froM taKaful business

2012 2011Group note rM’000 rM’000

net earned contributionsGross earned contributions 1,444,313 1,096,076Contribution ceded to retakaful (168,824) (143,072)

26(a) 1,275,489 953,004

other incomeAdministration income 23,345 24,708Investment income 231,034 201,988Realised gains and losses 121,289 97,329Fair value gains and losses 6,334 8,170Other operating income 16,543 86,979

398,545 419,174

net benefits and claimsGross benefits and claims paid (654,024) (618,544)Claims receded to retakaful 55,998 61,015Gross change to contract liabilities (101,988) (116,153)Change to contract liabilities ceded to takaful 40,927 21,771

26(b) (659,087) (651,911)

Expense reserves (70,110) (7,317)

income from takaful business 944,837 712,950Profits attributable to participants/takaful operator (472,504) (309,486)

net income from takaful business 472,333 403,464

(a) net earned contributions

2012 2011Group rM’000 rM’000

Gross contributions 1,373,965 1,140,843Change in actuarial reserves/unearned contributions reserves 70,348 (44,767)

Gross earned contributions 1,444,313 1,096,076

Retakaful (151,486) (182,479)Change in actuarial reserves/unearned contributions reserve (17,338) 39,407

Net earned contributions 1,275,489 953,004

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26. net incoMe froM taKaful business (continued)

(b) net benefits and claims

2012 2011Group rM’000 rM’000

Gross benefits/claims paid (654,024) (618,544)Retakaful recoveries 55,998 61,015

Net benefits/claims paid (598,026) (557,529)

Gross change in contract liabilities: At 31 December (733,074) (634,182) Less: At 1 January (634,182) (516,460) Effect of movement in exchange rates (3,096) 1,569

(101,988) (116,153)

Change in contract liabilities ceded to retakaful companies: At 31 December 301,150 262,019 Less: At 1 January 262,019 239,303 Effect of movement in exchange rates 1,796 (945)

40,927 21,771

(659,087) (651,911)

27. alloWance for iMPairMent on financinG and advances

2012 2011Group rM’000 rM’000

Allowance for impaired financing, advances and others- collective assessment allowance 102,185 84,268- individual assessment allowance 85,042 87,101Bad debts and financing recovered (121,154) (150,245)

66,073 21,124

28. (reversal of)/alloWance for iMPairMent on investMents


Financial assets:- available-for-sale - 18,158 - -- held-to-maturity (577) (2,752) - -

(577) 15,406 - -

Investments in subsidiaries - - - (156,027)

(577) 15,406 - (156,027)




(continued)

29. incoMe attributable to dePositors

2012 2011Group rM’000 rM’000

Deposits from customers- Mudharabah Fund 387,899 263,713- Non-Mudharabah Fund 190,924 190,205Deposits and placements of banks and other financial institutions- Mudharabah Fund 11,772 19,215

590,595 473,133

30. Personnel exPenses


Salaries and wages 419,514 375,873 2,280 2,713Employees’ Provident Fund 50,141 41,241 428 401Directors’ remuneration 16,193 11,821 2,680 1,569Others 38,611 27,108 442 886

524,459 456,043 5,830 5,569

(a) Aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as follows:


Directors of the Companyexecutive director:Fees and allowances 231 209 - -Salaries, bonuses and EPF contributions 1,749 1,001 1,749 1,001Benefits-in-kind 115 102 76 73

2,095 1,312 1,825 1,074Non-Executive Directors:Fees and allowances 1,826 1,498 771 455Benefits-in-kind 227 125 84 40

Total 4,148 2,935 2,680 1,569

Directors of the subsidiary companiesexecutive director:Salaries, bonuses and EPF contributions 10,129 7,402 - -Benefits-in-kind 301 234 - -

10,430 7,636 - -

non-executive directors:Fees and allowances 1,491 1,225 - -Benefits-in-kind 124 25 - -

Total 12,045 8,886 - -

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30. Personnel exPenses (continued)

(a) Aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as follows (continued):


Grand Total 16,193 11,821 2,680 1,569

Total (excluding benefits-in-kind) 15,426 11,335 2,520 1,456

(b) Shariah Supervisory Council 330 309 - -

31. other overhead exPenses


Promotion 166,694 141,645 206 188Establishment 207,554 194,772 1,654 910 General expenses 160,939 142,893 983 578

535,187 479,310 2,843 1,676

Included in other overhead expenses are:Auditors’ remuneration- Statutory audit - KPMG 1,222 1,107 60 55

- Other auditors 96 79 - -- Other services - KPMG 508 390 25 22Depreciation of property, plant and equipment 56,326 59,237 494 196Depreciation of investment properties 512 451 - -Rental of properties 48,976 37,230 592 391Property, plant and equipment write off 315 709 140 -(Gain)/loss on disposal of property, plant and equipment (84) (2,429) 39 -Rental of equipment 5,786 5,648 - -




(continued)

32. Key ManaGeMent Personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain senior management members of the Group.

The compensation for key management personnel other than Directors’ remuneration is as follows:


Other key management personnel:- Short-term employee benefits 35,668 22,538 1,049 837- Benefits-in-kind 579 437 52 51

36,247 22,975 1,101 888

33. tax exPense

Major components of tax expense


Current tax expense:Malaysia - current year 223,893 138,736 24,320 23,900 - prior years 423 723 (12) (456)

224,316 139,459 24,308 23,444

Deferred tax expense:Origination and reversal of temporary differences (14,437) 31,682 - (15)(Over)/Under provision in prior years (192) (13,860) - 1,664

(14,629) 17,822 - 1,649

209,687 157,281 24,308 25,093

A reconciliation of effective tax expense for the Group and Company are as follows:


Profit before tax 717,439 588,924 165,774 252,924

Income tax using Malaysia tax rate of 25% 179,360 147,231 41,444 63,231Non-deductible expenses 51,280 45,068 1,905 462Recognition of previously unrecognised deferred tax assets - (3,340) - -Non-taxable income (21,184) (18,541) (19,029) (39,808)

209,456 170,418 24,320 23,885Under/(Over) provision in prior years 423 723 (12) (456)(Over)/under provision of deferred tax (192) (13,860) - 1,664

Tax expense 209,687 157,281 24,308 25,093

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34. earninGs Per share

basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2012 was based on the profit attributable to owners of the Company and the weighted average number of ordinary shares in issue during the year:

2012 2011Group rM’000 rM’000

Profit attributable to owners of the Company 252,269 212,140

Weighted average number of ordinary shares 1,066,790 1,066,790

2012 2011Group sen sen

Basic earnings per ordinary share 23.65 19.88

35. dividends

Dividends recognised by the Company: sen total per share amount date of (net of tax) rM’000 payment

2012Final 2011 ordinary 7.25 77,342 13 June 2012First interim 2012 ordinary 3.50 37,338 31 October 2012Second interim 2012 ordinary 3.50 37,338 27 December 2012

Total amount 14.25 152,018

2011Final 2010 ordinary 1.20 12,802 15 June 2011Interim 2011 ordinary 3.50 37,337 6 October 2011

Total amount 4.70 50,139

After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial year upon approval by the owners of the Company.

sen total per share amount (net of tax) rM’000

2012Final ordinary 5.00 55,339




(continued)

36. related Party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions, or where the parties are subject to common control or common significant influence. Related parties may be individuals or other entities.

The Group or the Company has a related party relationship with its subsidiaries (see note 14), associates (see note 15) and holding corporation of the Company.

(a) The significant related party transactions of the Group and the Company, other than key management personnel compensation, are as follows:

Group company transactions for transactions for 2012 2011 2012 2011 rM’000 rM’000 rM’000 rM’000

Holding CompanyNet gain on forex transaction 150 133 - -Income payable attributable on deposits placed 30,126 43,087 - -Rental of premises payable 20,177 6,727 - -Brokerage income 1,838 1,417 - -Contribution income for Family Takaful - 452 - -Contribution income for General Takaful 2,204 2,149 - -Claims paid for Family Takaful 600 2,051 - -Claims paid for General Takaful 183 871 - -Others - 250 - -

SubsidiariesIncome receivable attributable on deposits placed - - 1,284 736Office rental payable - - 422 -

Related company of a substantial holderIncome receivable from financing, advances and others - 983 - -

Other related companiesIncome receivable from financing, advances and others 13,146 2,682 - -

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36. related Party transactions (continued)

(b) The significant outstanding balances of the Group and the Company with related party, are as follows:

Group company net balance net balance outstanding as at outstanding as at 2012 2011 2012 2011 rM’000 rM’000 rM’000 rM’000

Holding companyamount due toDemand and investment deposits 2,665,880 1,295,005 - -Profit payable to investment deposits 51 199 - -Commitment and contingencies 127 - - -Others - 9,922 - -

Subsidiariesamount due fromCurrent account and investment deposits - - 58,778 5,404

Related company of a substantial holderamount due fromFinancing, advances and others - 15,270 - -Allowance on impairment - (12,880) - -Financing after impairment * - 2,390 - -

Other related companiesamount due fromFinancing, advances and others 48,041 93,456 - -Commitment and contingencies 6,731 6,651 - -amount due todemand and investment deposits 209,601 299,800 - -

* The unsecured financing of RM53.4 million to a related company of a substantial shareholder had defaulted during the financial year ended 31 December 2011 which has since been settled.

37. caPital adequacy

The Risk Weighted Capital Ratio (“RWCR”) computation consists of the capital adequacy ratios of Bank Islam Malaysia Berhad and its subsidiaries (“Bank Islam” or “the Bank”).

The Company is not required to maintain any capital adequacy ratios.

capital adequacy ratios The Bank is required to comply with the core capital ratio and risk-weighted capital adequacy ratio prescribed by BNM. The Bank was in compliance with all prescribed capital ratios throughout the year.

The Bank’s capital adequacy ratios remained strong. The table below shows the composition of the regulatory capital and capital adequacy ratios as at December 2012 determined according to the requirements of the Capital Adequacy Framework for Islamic Banks (“CAFIB”) as required under the Islamic Banking Act (“IBA”) 1983.




(continued)

37. caPital adequacy (continued)

The RWCR of Bank Islam as at 31 December 2012 is as follows:

(a) the capital adequacy ratios of bank islam as at 31 december 2012:

31.12.2012 31.12.2011 1.1.2011 % % %

before proposed dividendTier 1 Capital Ratio 13.17 15.81 16.26Risk-Weighted Capital Ratio 14.21 16.98 17.46

after proposed dividendTier 1 Capital Ratio 12.94 15.55 15.71Risk-Weighted Capital Ratio 13.99 16.72 16.92

(b) tier i and tier ii capital components of bank islam as at 31 december 2012:

31.12.2012 31.12.2011 1.1.2011 rM’000 rM’000 rM’000

tier i capitalPaid-up share capital 2,265,490 2,265,490 2,265,490Share premium - 500,020 500,020Retained earnings/(Accumulated losses) 209,318 (1,040,270) (1,110,195)Other reserves 505,651 974,594 795,013Less: Deferred tax assets (18,455) (23,386) (44,224)

total tier i capital 2,962,004 2,676,448 2,406,104

tier ii capitalCollective assessment allowance* 257,769 218,864 177,889

total tier ii capital 257,769 218,864 177,889

total capital 3,219,773 2,895,312 2,583,993Less: Investments in subsidiaries (22,912) (21,180) -

capital base 3,196,861 2,874,132 2,583,993

* Excludes portion of collective assessment allowance restricted from Tier II capital by BNM amounting to RM55,565,000 (31.12.2011: RM108,824,000; 1.1.2011: RM169,184,000).

(c) the breakdown of risk-weighted assets by each major risk category is as follows:

31.12.2012 31.12.2011 1.1.2011 rM’000 rM’000 rM’000

Credit risk 19,369,281 14,495,066 12,507,496Market risk 917,234 501,309 572,562Operational risk 2,207,161 1,929,294 1,718,698

22,493,676 16,925,669 14,798,756

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(d) the off-balance sheet and counterparties credit risk for the Group of bank islam is as follows:

Positive fair value of credit risk Principal derivative equivalent Weighted31 december 2012 amount contracts amount assetnature of item rM’000 rM’000 rM’000 rM’000

Credit related exposuresDirect credit substitutes 562,654 562,654 555,499Assets sold with recourse 2 2 2Transaction related contingent items 910,688 455,344 444,161Short term self-liquidating trade related contingencies 338,488 67,698 64,913Other commitments, such as formal standby facilities and credit lines, with an original maturity of:- not exceeding one year 82 16 6- exceeding one year 662,657 331,329 302,722Unutilised credit card lines 949,115 189,823 142,367Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 5,276,220 - -

8,699,906 1,606,866 1,509,670

Derivative Financial InstrumentsForeign exchange related contracts less than one year 680,789 2,523 7,390 4,223Profit rate related contracts- less than one year 100,000 70 100 20- one year to less than five years 600,000 2,210 15,000 3,000- five years and above 734,000 9,920 42,462 23,262Equity related contracts- one year to less than five years 114,095 2,013 9,128 4,564

2,228,884 16,736 74,080 35,069

Other Treasury related exposuresObligations under an on-going underwriting agreement - - -

- - -

total 10,928,790 16,736 1,680,946 1,544,739




(continued)


(d) the off-balance sheet and counterparties credit risk for the Group of bank islam is as follows (continued):

Positive fair value of credit risk Principal derivative equivalent Weighted31 december 2011 amount contracts amount assetnature of item rM’000 rM’000 rM’000 rM’000

Credit related exposuresDirect credit substitutes 452,553 452,553 444,839Assets sold with recourse 2 2 2Transaction related contingent items 884,095 442,048 435,825Short term self-liquidating trade related contingencies 288,665 57,733 57,221Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 1 - - - exceeding one year 589,414 294,707 274,384Unutilised credit card lines 817,113 163,423 122,567Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 3,897,622 - -

6,929,465 1,410,466 1,334,838

Derivative Financial InstrumentsForeign exchange related contracts- less than one year 1,644,655 5,589 14,344 8,409- one year to less than five years 40,244 - 2,754 1,944Profit rate related contracts- less than one year 171,740 7,549 5,582 1,116- one year to less than five years 500,000 - 12,000 2,400Equity related contracts- less than one year 20,000 - 1,959 392- one year to less than five years 117,005 2,739 9,360 4,680

2,493,644 15,877 45,999 18,941

Other Treasury related exposuresObligations under an on-going underwriting agreement - - -

- - -

total 9,423,109 15,877 1,456,465 1,353,779

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(d) the off-balance sheet and counterparties credit risk for the Group of bank islam is as follows (continued):

Positive fair value of credit risk Principal derivative equivalent Weighted1 January 2011 amount contracts amount assetnature of item rM’000 rM’000 rM’000 rM’000

Credit related exposuresDirect credit substitutes 459,840 459,840 439,315Assets sold with recourse 242 242 242Transaction related contingent items 846,719 423,360 396,877Short term self-liquidating trade related contingencies 312,745 62,549 61,078Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 1,003 201 224 - exceeding one year 618,138 309,068 251,715Unutilised credit card lines 768,840 153,768 115,326Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 4,118,965 - -

7,126,492 1,409,028 1,264,777

Derivative Financial InstrumentsForeign exchange related contracts- less than one year 5,208,060 42,284 93,866 26,161Profit rate related contracts- one year to less than five years 671,740 10,055 27,304 7,007Equity related contracts- less than one year 324,800 20,239 19,488 3,898- one year to less than five years 138,195 7,530 11,404 5,117

6,342,795 80,108 152,062 42,183

Other Treasury related exposures Obligations under an on-going underwriting agreement 75,000 37,500 37,500

75,000 37,500 37,500

total 13,544,287 80,108 1,598,590 1,344,460




(continued)

38. financial risK ManaGeMent Policies

The Group has exposure to the following risks from its use of financial instruments:

• Creditrisk• Marketrisk• Liquidityrisk

The Group’s exposures to the above risks are mainly attributed to its main operating subsidiaries, Bank Islam Malaysia Berhad (“Bank Islam” or “the Bank”) and Syarikat Takaful Malaysia Berhad (“Takaful”). The Company’s exposure to these risks is not presented separately as it is not material to the Group. 38.1 credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its financing, advances and others and investment securities. The Company’s exposure to credit risk arises principally from investment securities.

(a) banking

Bank Islam’s credit risk arises from all transactions that could lead to actual, contingent or potential claims against any party, borrower or obligor. The Bank recognises four kinds of credit risk in its portfolio: Default Risk, Settlement Risk, Country Risk and Contingent Financing Risk.

credit risk governanceThe management of credit risk is principally carried out by using sets of policies and guidelines approved by Bank Islam’s Board Risk Committee (“BRC”), guided by the Risk Appetite Statement approved by Bank Islam’s Board of Directors.

The Bank’s Management Risk Control Committee (“MRCC”) is responsible under the authority delegated by the Bank’s BRC for managing credit risk at strategic level. The Bank’s MRCC reviews the Bank’s credit risk frameworks and guidelines, aligns credit risk management with business strategies and planning, reviews credit profile of the credit portfolios and recommends necessary actions to ensure that the credit risk remains within established risk tolerance level.

The Bank’s credit risk management includes the establishment of comprehensive credit risk policies, guidelines and procedures which documents the Bank’s financing standards, discretionary powers for financing approval, credit risk ratings methodologies and models, acceptable collaterals and valuation, and the review, rehabilitation and restructuring of problematic and delinquent financing.

Management of credit riskThe management of credit risk is being performed by two distinct departments within the Bank’s Risk Management Department (“RMD”), Credit Analysis and Credit Risk Management and three departments outside of the RMD domain, namely, Credit Administration, Credit Recovery and Credit Monitoring Unit of Internal Audit. The combined objectives are, amongst others:

• TobuildahighqualitycreditportfolioinlinewiththeBank’soverallstrategyandriskappetite;• ToensurethattheBankiscompensatedfortherisktaken,balancing/optimisingtherisk/returnrelationship;• Todevelopanincreasingabilitytorecognise,measureandavoidormitigatepotentialcreditriskproblemareas;• Toconformwithstatutory,regulatoryandinternalcreditrequirements.

The Bank monitors its credit exposures either on a portfolio basis or individual basis by annual reviews. Credit risk is proactively monitored through a set of early warning signals that could trigger immediate reviews of (certain part of) the portfolio. The affected portfolio or financing is placed on a watch list to enforce close monitoring and prevent financing from turning non-performing and to increase chances of full recovery.

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38. financial risK ManaGeMent Policies (continued)

38.1 credit risk (continued)

(a) banking (continued)

Management of credit risk (continued)

A comprehensive limit structure is in place to ensure that risks taken are within the risk appetite as set by the Bank Islam’s Board and to avoid credit risk contagion to a single customer, sector, product, Shariah contract, etc.

Credit risk arising from dealing and investing activities are managed by the establishment of limits which includes counter parties limits and permissible acquisition of private entities’ instruments, subject to specified minimum rating threshold. Furthermore, the dealing and investing activities are monitored by an independent middle office unit.

(b) takaful

Takaful has takaful and other receivables and investment securities balances that are subject to credit risk. To mitigate the risk of the counterparties not paying the amount due, Takaful has established certain business and financial guidelines for brokers/retakaful approval, incorporating ratings by major agencies where applicable and considering currently available market information. Takaful also periodically review the financial stability of brokers/retakaful companies from public and other sources and the settlement trend of amounts due from these parties.

Maximum exposure to credit risk

The following table presents the Group’s maximum exposure to credit risk of on-balance sheet and off-balance sheet financial instruments, without taking into account of any collateral held or other credit enhancements. For on-balance sheet assets, the exposure to credit risk equals their carrying amount. For contingent liabilities, the maximum exposure to credit risk is the maximum amount that the Group would have to pay if the obligations of the instruments issued are called upon. For credit commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Cash and short-term funds 2,063,444 3,785,354 3,076,068Deposits and placements with banks and other financial institutions 519,646 1,692,220 875,747Financial assets held-for-trading (excluding shares, unit trusts, and investment funds) 1,669,532 1,252,469 2,301,018Derivative financial assets 16,736 15,877 80,108Financial assets available-for-sale (excluding shares, unit trusts and investment funds) 15,888,332 13,500,393 15,113,707Financial assets held-to-maturity 468,721 636,913 509,134Financing, advances and others 19,507,799 14,161,837 11,858,599Other assets (net of prepayments) 460,265 259,605 285,955Takaful assets 531,316 525,238 435,355Statutory deposits with Bank Negara Malaysia 1,059,900 912,000 10,000

Sub-total 42,185,691 36,741,906 34,545,691

Credit related obligation:Credit commitments 8,699,906 6,929,465 7,126,492Other treasury related exposures - - 75,000

Sub-total 8,699,906 6,929,465 7,201,492

Total credit exposures 50,885,597 43,671,371 41,747,183




(continued)



(i) credit quality of gross financing and advances

Gross financing and advances of the main subsidiary, Bank Islam, are classified as follows:

• Neitherpastduenorimpairedfinancing Financing which the borrower has not missed a contractual payment (profit or principal) when contractually due and is not

impaired as there is no objective evidence of impairment.

• Pastduebutnotimpairedfinancing Those financing which its contractual profit or principal payments are past due, but the Group believes that impairment is not

appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the Group.

• Impairedfinancing Financing is classified as impaired when the principal or profit or both are past due for three months or more, or where a financing

is in arrears for less than three months, but the financing exhibits indications of significant credit weakness.

The table below summarises the credit quality of the Group’s gross financing according to the above classifications.

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

financing, advances and othersNeither past due nor impaired- Excellent to good 15,185,608 10,409,626 6,052,669- Satisfactory 3,722,405 2,945,123 3,657,993- Fair 338,170 511,297 1,625,518

19,246,183 13,866,046 11,336,180Past due but not impaired 393,229 319,459 396,332Impaired 308,709 379,790 552,221

19,948,121 14,565,295 12,284,733Allowance for impaired financing, advances and others- collective assessment allowance (313,334) (327,688) (347,073)- individual assessment allowance (126,988) (75,770) (79,061)

19,507,799 14,161,837 11,858,599

For management of credit risk, the Bank applies an internal credit risk rating for its neither past due nor impaired financing which is defined as follows:

• ExcellenttoGood:Soundfinancialpositionwithnodifficultyinmeetingitsobligations.• Satisfactory:Adequatesafetyofmeetingitsobligationsbutmoretimeisrequiredtomeetitsobligationinfull.• Fair:Highrisksonpaymentobligations.Financialperformancemaycontinuetodeteriorate.

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(i) credit quality of gross financing and advances (continued)

The aging of gross financing and advances past-due but not impaired as at the end of the reporting period is as follows:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

by agingMonth-in-arrears 1 268,737 210,518 255,656Month-in-arrears 2 124,492 108,941 140,676

393,229 319,459 396,332

(ii) credit quality of investments’ portfolio

Investments’ portfolio (excluding equity securities, unit trusts and investment units in closed end funds) of the Group by external party rating are as follows:

financial financial financial assets assets assets held-for- derivative available held-to trading assets -for-sale -maturity totalGroup rM’000 rM’000 rM’000 rM’000 rM’000

as at 31 december 2012AAA 508,543 - 3,849,231 - 4,357,774AA 113,890 - 2,916,795 - 3,030,685A - - 14,214 48,501 62,715Below A - - 1,800 112,854 114,654Unrated 634 - 342,655 161,863 505,152Sovereign 988,125 - 8,747,021 145,503 9,880,649Unit-linked 58,340 - - - 58,340Financial institution - 16,736 - - 16,736

1,669,532 16,736 15,871,716 468,721 18,026,705

as at 31 december 2011AAA 24,947 - 3,433,544 48,423 3,506,914AA 15,936 - 1,908,031 24,758 1,948,725A - - 25,846 149,980 175,826Below A - - 18,396 - 18,396Unrated - - 285,707 268,143 553,850Sovereign 1,188,069 - 7,811,829 145,609 9,145,507Unit-linked 23,517 - - - 23,517Financial institution - 15,877 - - 15,877

1,252,469 15,877 13,483,353 636,913 15,388,612

as at 1 January 2011AAA 10,450 - 3,793,566 48,352 3,852,368AA - - 2,072,070 - 2,072,070A - - 86,871 61,650 148,521Below A - - 10,084 - 10,084Unrated - - 285,879 253,420 539,299Sovereign 2,268,997 - 8,840,100 145,712 11,254,809Unit-linked 21,571 - - - 21,571Financial institution - 80,108 - - 80,108

2,301,018 80,108 15,088,570 509,134 17,978,830




(continued)



(iii) credit quality of takaful receivables

The table below summarises the credit quality of the Group’s Takaful receivables:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

takaful receivablesNeither past due nor impaired 77,408 91,047 105,140Past due but not impaired 16,605 18,767 2,082Impaired 10,883 15,089 36,153

104,896 124,903 143,375Allowance for impairment (10,883) (15,089) (36,153)

94,013 109,814 107,222

The aging of takaful receivables past-due but not impaired as at the end of the reporting period based on days past-due is as follows:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

days past-due1-30 days 2,341 1,490 45031-60 days 1,305 1,452 12261-90 days 753 1,102 8591-180 days 3,723 2,143 88> 180 days 8,483 12,580 1,337

16,605 18,767 2,082

impairment loss of takaful receivablesA reconciliation of the allowance for impairment loss for takaful receivables is as follows:

rM’000

at 1 January 2011 36,153Writeback of impairment loss (21,064)

at 31 december 2011/1 January 2012 15,089Writeback of impairment loss (4,206)

at 31 december 2012 10,883

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38.2 Market risk

overview

All the Group’s businesses are subject to the risk that market prices and rates will move, resulting in profit or losses to the Group. Furthermore, significant or sudden movements in rates could affect the Group’s liquidity / funding position. The Group is exposed to the following main market factors:

• rate of return or Profit rate risk: the potential impact on the Group’s profitability caused by changes in the market rate of return, either due to general market movements or due to issuer / borrower specific causes;

• foreign exchange risk: the impact of exchange rate movements on the Group’s currency positions;• equity investment risk: the profitability impact on the Group’s equity positions or investments caused by changes in equity prices or

values;• commodity inventory risk: the risk of loss due to movements in commodity prices;• displaced commercial risk: the risk arising from assets managed by the Group on behalf of depositors / investors as the Group

follows the practice of potentially foregoing part or all of its Mudharib share of profit on these assets.

The objective of the Group’s market risk management is to manage and control market risk exposures in order to optimise return on risk while maintaining a market risk profile consistent with the Group’s approved risk appetite.

The key features of the Group’s market risk management practices and policies are represented by the Banking and Takaful segments.

(a) banking

Bank Islam separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those positions arising from market making, proprietary position taking and other marked-to-market positions so designated as per the approved Trading Book Policy Statements. Non-trading portfolios primarily arise from the re-pricing mismatches of the Bank’s customer driven assets and liabilities and from the Bank’s investment of its surplus funds.

Market risk governanceThe management of market risk is principally carried out by using risk limits approved by the Bank’s BRC, guided by the Risk Appetite Statement approved by the Board of Directors of the Bank.

The Asset and Liability Management Committee (“ALCO”) is responsible under the authority delegated by the Bank’s BRC for managing market risk at strategic level.

Management of market riskBank Islam’s market risk exposures are managed by its Treasury. The aim is to ensure that all market risks are consolidated at Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits are set for portfolios, products and risk types, with market liquidity and credit quality being the principal factors in determining the level of limits set.

The Bank’s Market Risk Management Department (“MRMD”) is an independent risk control function, responsible for ensuring efficient implementation of market risk management policies. The Bank’s MRMD is also responsible for developing market risk management guidelines, measurement techniques, behavioural assumptions and limit setting methodologies. Any excesses against the prescribed limits are reported immediately to the Senior Management. Strict escalation procedures are documented and approved by the Bank’s BRC. In addition, the market risk exposures and limits are regularly reported to the Bank’s ALCO and BRC.

Other controls to ensure market risk exposures remain within tolerable levels include stress testing, rigorous new product approval procedures and a list of permissible instruments than can be traded. Stress test results are produced monthly to determine the impact of changes in profit rates, foreign exchange rates and other risk factors on the profitability, capital adequacy and liquidity of the respective operating subsidiaries. The stress test provides the Bank’s Management and the BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the respective businesses.




(continued)


38.2 Market risk (continued)


(i) Profit rate risk

The table below summarises the Bank’s exposure to profit rate risk. The table indicates average profits rates at the reporting date and the period in which the financial instruments reprice or mature, whichever is earlier.

non trading book non effective up to 1 >1-3 >3-12 1-5 over 5 profit trading profit month months months years years sensitive book total ratebank islam rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 %

as at 31 december 2012assetsCash, balances and placements with banks 903,366 10,004 - - - 782,538 - 1,695,908 2.74Financial assets held-for-trading - - - - - - 1,610,558 1,610,558 3.46Derivative financial assets - - - - - - 16,736 16,736 0.75Financial assets available-for-sale 749,025 1,615,996 2,108,217 5,438,251 3,004,566 - - 12,916,055 4.00Financial assets held-to-maturity 20,933 7,630 6,577 47,544 95,607 - - 178,291 6.33Financing, advances and others - non-impaired 11,170,474 738,517 613,625 3,089,041 4,027,755 - - 19,639,412 6.78 - impaired net of allowances * - - - - - (131,613) - (131,613) -Other assets - - - - - 1,497,544 - 1,497,544 -

total assets 12,843,798 2,372,147 2,728,419 8,574,836 7,127,928 2,148,469 1,627,294 37,422,891

Note 44

* This is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired financing.

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(i) Profit rate risk (continued)


as at 31 december 2012liabilitiesDeposits from customers 17,902,252 916,898 127,964 103,891 - 13,499,985 - 32,550,990 1.99Deposits and placements of banks and other financial institutions 858,802 1,476 - - - - - 860,278 1.37Derivative financial liabilities - - - - - - 14,339 14,339 0.64Bills and acceptances payable 65,414 111,416 - - - 208,308 - 385,138 -Other liabilities - - - - - 509,181 - 509,181 -

total liabilities 18,826,468 1,029,790 127,964 103,891 - 14,217,474 14,339 34,319,926

Note 44equityEquity attributable to equity holders of the Bank - - - - - 3,102,965 - 3,102,965

total equity - - - - - 3,102,965 - 3,102,965

total liabilities and shareholders’ equity of the bank 18,826,468 1,029,790 127,964 103,891 - 17,320,439 14,339 37,422,891




(continued)




(i) Profit rate risk (continued) non trading book non up to 1 >1-3 >3-12 1-5 over 5 profit trading month months months years years sensitive book totalbank islam rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

as at 31 december 2012On-balance sheet profit sensitivity gap (5,982,670) 1,342,357 2,600,455 8,470,945 7,127,928 (15,171,970) 1,612,955 -Off-balance sheet profit sensitivity gap (profit rate swaps) 400,000 600,000 - (600,000) (400,000) - - -

total profit sensitivity gap (5,582,670) 1,942,357 2,600,455 7,870,945 6,727,928 (15,171,970) 1,612,955 -


as at 31 december 2011assetsCash, balances and placements with banks 2,593,040 425,000 335,000 - - 871,321 - 4,224,361 2.63Financial assets held-for-trading - - - - - - 1,228,952 1,228,952 3.62Derivative financial assets - - - - - - 15,877 15,877 0.64Financial assets available-for-sale 497,432 1,252,541 1,514,284 5,382,883 2,342,995 14,986 - 11,005,121 4.19Financial assets held-to-maturity 23,287 9,000 153,461 35,000 106,586 - - 327,334 3.61Financing, advances and others- non-impaired 4,174,586 110,680 3,361,000 4,130,242 2,361,645 47,352 - 14,185,505 7.11- impaired net of allowances* - - - - - (23,668) - (23,668) -Other assets - - - - - 1,243,836 - 1,243,836 -

total assets 7,288,345 1,797,221 5,363,745 9,548,125 4,811,226 2,153,827 1,244,829 32,207,318

Note 44


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as at 31 december 2011liabilitiesDeposits from customers 13,720,453 1,832,130 236,327 104,736 - 12,386,032 - 28,279,678 1.83Deposits and placements of banks and other financial institutions 377,930 - 6,698 - - - - 384,628 1.92Derivative financial liabilities - - - - - - 23,299 23,299 0.93Bills and acceptances payable - - - - - 259,153 - 259,153 3.09Other liabilities - - - - - 452,717 - 452,717 -

total liabilities 14,098,383 1,832,130 243,025 104,736 - 13,097,902 23,299 29,399,475

Note 44

equityEquity attributable to equity holders of the Bank - - - - - 2,807,843 - 2,807,843

total equity - - - - - 2,807,843 - 2,807,843

total liabilities and shareholders’ equity of the bank 14,098,383 1,832,130 243,025 104,736 - 15,905,745 23,299 32,207,318




(continued)





non trading book non up to 1 >1-3 >3-12 1-5 over 5 profit trading month months months years years sensitive book totalbank islam rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

as at 31 december 2011On-balance sheet profit sensitivity gap (6,810,038) (34,909) 5,120,720 9,443,389 4,811,226 (13,751,918) 1,221,530 -Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 400,000 - (500,000) - - - -

total profit sensitivity gap (6,710,038) 365,091 5,120,720 8,943,389 4,811,226 (13,751,918) 1,221,530 -


as at 1 January 2011assetsCash, balances and placements with banks 1,949,340 - 100,000 - - 823,153 - 2,872,493 2.18Financial assets held-for-trading - - - - - - 2,279,447 2,279,447 2.54Derivative financial assets - - - - - - 80,108 80,108 1.26Financial assets available-for-sale 1,251,770 1,941,514 1,479,525 5,985,931 2,089,294 14,986 - 12,763,020 3.66Financial assets held-to-maturity - - - 146,742 69,202 - - 215,944 3.43Financing, advances and others - non-impaired 1,102,446 773,502 626,960 2,740,830 6,488,775 - - 11,732,513 7.39- impaired net of allowances* - - - - - 126,086 - 126,086 -Other assets - - - - - 314,917 - 314,917 -

total assets 4,303,556 2,715,016 2,206,485 8,873,503 8,647,271 1,279,142 2,359,555 30,384,528

Note 44


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as at 1 January 2011liabilitiesDeposits from customers 13,743,929 1,031,074 1,210,525 138,195 - 10,742,832 - 26,866,555 1.87Deposits and placements of banks and other financial institutions 371,431 - - 6,698 - - - 378,129 3.24Derivative financial liabilities - - - - - - 66,708 66,708 1.05Bills and acceptances payable 163,191 - - - - - - 163,191 2.23Other liabilities - - - - - 375,716 - 375,716 -

total liabilities 14,278,551 1,031,074 1,210,525 144,893 - 11,118,548 66,708 27,850,299

Note 44equityEquity attributable to equity holders of the Bank - - - - - 2,533,754 - 2,533,754Non-controlling interests - - - - - 475 - 475

total equity - - - - - 2,534,229 - 2,534,229

total liabilities and shareholders’ equity of the bank 14,278,551 1,031,074 1,210,525 144,893 - 13,652,777 66,708 30,384,528




(continued)




(i) Profit rate risk (continued) non trading book non up to 1 >1-3 >3-12 1-5 over 5 profit trading month months months years years sensitive book totalbank islam rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

as at 1 January 2011On-balance sheet profit sensitivity gap (9,974,995) 1,683,942 995,960 8,728,610 8,647,271 (12,373,635) 2,292,847 -Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 400,000 - (500,000) - - - -

total profit sensitivity gap (9,874,995) 2,083,942 995,960 8,228,610 8,647,271 (12,373,635) 2,292,847 -

(ii) Profit rate risk in the non-trading portfolio

Profit rate risk in the non-trading portfolio is managed and controlled using measurement known as economic value of equity (“EVE”) and earnings-at-risk (“EaR”). EVE and EaR limits are approved by the Bank’s BRC and independently monitored monthly by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

The table below shows the projected sensitivity at the Bank’s level to a 100 basis points parallel shift to profit rates across all maturities applied on the Bank’s profit rate sensitivity gap as at reporting date.

2012 2011 (reinstatement) -100bps +100bps -100bps +100bps increase/(decrease)

bank islam rM million

Impact on EaR 52.07 (52.07) 62.82 (62.82)Impact on EVE 225.22 (225.22) 227.98 (227.98)

Note: EVE and EaR as at 31 December 2011 were reinstated due to the new EVE behavioural assumptions that were approved by the Bank’s BRC in July 2012.

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(ii) Profit rate risk in the non-trading portfolio (continued)

Profit rate risk in the banking book is defined as the exposure of the non-trading products of the Bank to profit rates. Non-trading portfolios are subject to prospective profit rate movements which could reduce future earnings. Profit rate risk arises principally from mismatches between future yields on assets and their funding costs.

The Bank manages market risk in non-trading portfolios by monitoring the sensitivity of projected EaR and EVE under varying profit rate scenarios (simulation modelling). For simulation modelling, a combination of standard scenarios and non-standard scenarios relevant to the local market are used. The standard scenarios monitored monthly include a 100 and 200 basis points parallel fall or rise in profit rates and historical simulation of past events. The scenarios assume no management action. Hence, they do not incorporate actions that would be taken by the Bank’s Treasury to mitigate the impact of the profit rate risk. In reality, depending on the view on future market movements, the Bank’s Treasury would proactively seek to change the profit rate exposure profile to minimise losses and to optimize net revenues. The nature of the hedging and risk mitigation strategies corresponds to the market instruments available. These strategies range from the use of traditional market instruments, such as profit rate swaps, to more intricate hedging strategies to address inordinate profit rate risk exposures.

Other controls to contain profit rate risk in the non-trading portfolio include stress testing and applying sensitivity limits to the available-for-sale financial assets. Sensitivity is measured by the present value of a 1 basis point change (“PV01”) and is independently monitored by the Bank’s MRMD on a weekly basis against limits approved by the BRC. PV01 exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

(iii) Market risk in the trading portfolio

Market risk in the trading portfolio is monitored and controlled using Value-at-Risk (“VaR”). VaR limit is approved by the Bank’s BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

A summary of the VaR position of the Bank’s trading portfolios at the reporting date is as follows:

as at 1.1.2012 to 31.12.2012 31.12.2012 average Maximum Minimumbank islam rM’million rM’million rM’million rM’million

Profit rate risk 2.55 1.66 4.16 0.13Foreign exchange risk 0.03 0.16 0.93 0.01Overall 2.58 1.83 5.09 0.15

Value-at-riskVaR is a technique that estimates the potential losses that could occur on risk positions as a result of movements in market rates and prices over a specified time horizon and to a given level of confidence. The VaR models used by Bank Islam are based on historical simulation. These models derive plausible future scenarios from past series of recorded market rates and prices, taking into account inter-relationships between different markets and rates such as profit rates and foreign exchange rates.




(continued)



(a) banking (continued) (iii) Market risk in the trading portfolio (continued)

Value-at-risk (continued)The historical simulation models used by the Bank incorporate the following features:

• potentialmarketmovementsarecalculatedwithreferencetodatafromthepastfouryears;• historicalmarketratesandpricesarecalculatedwithreferencetoforeignexchangeratesandprofitrates;and• VaRiscalculatedtoa99percentconfidencelevelandforaone-dayholdingperiod.ThenatureoftheVaRmodelsmeansthat

an increase in observed market volatility will lead to an increase in VaR without any changes in the underlying positions.

Statistically, the Bank would expect to see losses in excess of VaR only 1 per cent of the time over a one-year period. The actual number of excesses over this period can therefore be used to gauge how well the models are performing.

Although a valuable guide to risk, VaR should always be viewed in the context of its limitations. For example:

• Theuseofhistoricaldataasaproxyforestimatingfutureeventsmaynotencompassallpotentialevents,particularlythosewhich are extreme in nature;

• Theuseofa1-dayholdingperiodassumesthatallpositionscanbeliquidatedorhedgedinoneday.Thismaynotfullyreflectthe market risk arising at times of severe illiquidity, when a 1-day holding period may be insufficient to liquidate or hedge all positions fully;

• Theuseofa99percentconfidencelevel,bydefinition,doesnottakeintoaccountlossesthatmightoccurbeyondthislevelofconfidence;

• VaRiscalculatedonthebasisofexposuresoutstandingatthecloseofbusinessandthereforedoesnotnecessarilyreflectintra-day exposures; and

• VaRisunlikelytoreflectthelosspotentialonexposuresthatmightariseundersignificantmarketmovements.

The Bank recognises these limitations by augmenting the VaR limits with other limits such as maximum loss limits, position limits and PV01 limits structures. These limits are approved by the Bank’s BRC and independently monitored daily by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

Other controls to contain market risk at an acceptable level are through stress testing, rigorous new product approval processes and a list of permissible instruments to be traded. Stress tests are produced monthly to determine the impact of changes in profit rates, foreign exchange rates and other main economic indicators on the Bank’s profitability, capital adequacy and liquidity. The stress-testing provides the Bank’s Management and BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the Bank.

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(iv) foreign exchange risk

Trading positionsIn addition to VaR and stress testing, the Bank controls the foreign exchange risk within the trading portfolio by limiting the open exposure to individual currencies, and on an aggregate basis.

Overall (trading and non-trading positions)The Bank controls the overall foreign exchange risk by limiting the open exposure to non-Ringgit positions on an aggregate basis.

Foreign exchange limits are approved by the Bank’s BRC and independently monitored daily by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

Sensitivity analysisConsidering that other risk variables remain constant, the foreign currency revaluation sensitivity for the Group as at reporting date is summarised as follows:

2012 2011 -1% +1% -1% +1% depreciation appreciation depreciation appreciationbank islam rM’000 rM’000 rM’000 rM’000

US Dollar 1,762 (1,762) (2,214) 2,214British Pound (35) 35 (8) 8Japanese Yen 5,371 (5,371) (533) 533Sri Lanka Rupee (29,994) 29,994 (25,713) 25,713Others (40,229) 40,229 (85,405) 85,405

(v) displaced commercial risk

overview

Displaced Commercial Risk (“DCR”) refers to the risk arising from assets managed on behalf of the Bank’s profit sharing investment account holders (“PSIAH”) which is effectively transferred to the Bank’s own capital because the Bank forgoes part or all of its Mudharib’s share (profit) of on such fund, when it considers this necessary as a result of commercial pressure in order to increase the return that would otherwise be payable to the Bank’s PSIAH’s.

In other words, the Bank’s DCR refers to the risk of losses which the Bank absorbs to make sure that PSIAH are paid in a rate of return (“ROR”) that exceeds the actual return that was supposedly to be earned by the Bank’s investment account holders based on the contractual profit sharing ratio.

the Management of displaced commercial riskThe Bank uses the following approach to manage the DCR:

a) Forgoing part or all of the Bank’s share of profit as Mudharib to the Bank’s PSIAH by way of varying the percentage of profit taken as the Mudharib share in order to increase the share attributed to the Bank’s PSIAH in any particular year;

b) Transferring the Bank’s current profits or retained earnings to the Bank’s PSIAH on the basis of hibah (gift); andc) Utilising the Waiver of Entitlement Clause based on the Tanazul (waiver) principle. In this context, when a partner who has

agreed to a certain profit sharing ratio may waive the rights to profits to be given to another partner on the basis of Tanazul at the time of profit realisation and distribution as well as at the time of the contract.

The Bank does not use or maintain Profit Equalisation Reserve to manage its DCR.




(continued)




(vi) capital treatment for Market risk

The Bank adopts the Standardised Approach to compute the market risk capital requirement under BNM’s Capital Adequacy Framework for Islamic Banks (CAFIB).

(b) takaful

The key features of Takaful’s market risk management practices and policies are as follows:

- A group-wide market risk policy setting out the evaluation and determination of components of market risk for the Takaful Group. Compliance with the policy is monitored and reported monthly to Takaful’s Risk Management Committee (“RMC”) and exposures and breaches are reported as soon as practicable.

- Set asset allocation, portfolio limit structure and diversification benchmark to ensure that assets back specific contract liabilities and that assets are held to deliver income and gains for certificate holders in line with terms of the respective contracts expectations of policies. Takaful’s policies on asset allocation, portfolio limit structure and diversification benchmark have been set in line with Takaful’s risk management policy after taking cognisance of the regulatory requirements in respect of maintenance of assets and solvency.

Takaful also issue unit-linked investment policies. In the unit-linked business, the certificate holders bear investment risk on the assets held in the unit-linked funds as the certificate benefits are directly linked to value of the assets in the funds. Takaful’s exposure to market risk on this business is limited to the extent that income arising from asset management charges is based on the value of the assets in the funds.

(i) Profit yield risk

Profit yield risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market profit yield.

Floating rate/yield instruments expose Takaful to cash flow profit risk, whereas fixed rate/yield instruments expose Takaful to fair value profit risk.

Takaful’s profit risk policy requires its Management to manage the risk by maintaining an appropriate mix of variable and fixed rate/yield instruments. The policy also requires the Takaful management to manage the maturities of profit-bearing financial assets and liabilities. Floating rate/yield instruments will be re-priced at intervals of not more than one (1) year. Profit on fixed rate/yield instruments is priced at inception of the financial instrument and is fixed until maturity.

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(b) takaful (continued)

(i) Profit yield risk (continued)

The profit yield profile of the Takaful Group and its subsidiaries’ significant profit-bearing financial instruments based on carrying amount as at the end of the reporting period was as follows:

takaful family General operator takaful takaful Groupfixed rate instruments rM’000 rM’000 rM’000 rM’000

31 december 2012AFS financial assets 220,743 2,318,556 430,967 2,970,266FVTPL financial assets 634 58,340 - 58,974HTM financial assets 1,585 253,271 35,575 290,431Loans and receivables 157,914 632,130 137,110 927,154

380,876 3,262,297 603,652 4,246,825

31 december 2011AFS financial assets 121,663 1,995,157 376,441 2,493,261FVTPL financial assets - 23,517 - 23,517HTM financial assets 4,152 270,931 34,496 309,579Loans and receivables 197,444 778,239 203,542 1,179,225

323,259 3,067,844 614,479 4,005,582

1 January 2011AFS financial assets 43,307 1,957,796 345,573 2,348,676FVTPL financial assets - 21,571 - 21,571HTM financial assets 2,916 258,666 34,524 296,106Loans and receivables 214,332 650,543 181,359 1,046,234

260,555 2,888,576 561,456 3,712,587




(continued)




(i) Profit yield risk (continued)

Takaful has no significant concentration of profit yield risk.

A change of 50 basis points in profit rates at the end of the reporting period would have increased/(decreased) other comprehensive income (“OCI”)/equity, Family and General Takaful participants’ fund by the amounts shown below. The analysis assumes that all other variables remain constant.

impact on impact on profit impact on operating Participants’ change in before tax equity* surplus fund variables rM’000 rM’000 rM’000 rM’000

31 december 2012AFS financial assets +50bps - (5,218) - (93,295)FVTPL financial assets +50bps - - (217) (217)

- (5,218) (217) (93,512)

AFS financial assets -50bps - 5,284 - 104,755FVTPL financial assets -50bps - - 223 223

- 5,284 223 104,978

31 december 2011 AFS financial assets +50bps - (1,580) - (73,034)FVTPL financial assets +50bps - - (285) (285)

- (1,580) (285) (73,319)

AFS financial assets -50bps - 2,347 - 78,534FVTPL financial assets -50bps - - 290 290

- 2,347 290 78,824

1 January 2011 AFS financial assets +50bps - (491) - (65,538)FVTPL financial assets +50bps - - (235) (235)

- (491) (235) (65,773)

AFS financial assets -50bps - 502 - 70,656FVTPL financial assets -50bps - - 240 240

- 502 240 70,896

* impact on equity reflects adjustments for tax, when applicable.

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(ii) other price risk

Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market.

Takaful’s equity price risk exposure relates to financial assets whose values will fluctuate as a result of changes in market prices (excluding those investment securities held for the account of unit-linked business).

Takaful’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also to such limits stipulated by BNM. Takaful and its subsidiaries comply with BNM stipulated limits during the financial year and has no significant concentration of price risk.

Equity price risk sensitivity analysisThe analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on OCI/Equity for Takaful Operator, and showing the impact on operating surplus/participants’ fund for Investment-linked Fund, and participants’ fund for Family Takaful Fund and General Takaful Fund accordingly. The correlation of variables will have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, variables had to be changed on individual basis. It should be noted that movements in these variables are non-linear.

impact on impact on profit impact on operating Participants’ change in before tax equity* surplus fund variables rM’000 rM’000 rM’000 rM’000

31 december 2012 Market price +15bps - 7,967 15,249 105,941Market price -15bps - (7,967) (15,249) (105,941)

31 december 2011 Market price +15bps - 6,432 13,045 80,259Market price -15bps - (6,432) (13,045) (80,259)

1 January 2011 Market price +15bps - 10,230 12,503 98,955Market price -15bps - (10,230) (12,503) (98,955)

* impact on equity reflects adjustments for tax, when applicable.




(continued)




(iii) foreign exchange risk

Takaful’s primary transactions are carried out in Ringgit Malaysia (RM) and its exposure to foreign exchange risk arises principally with respect to Indonesia Rupiah (Rp) and US Dollar (USD).

As Takaful’s business is conducted primarily in Malaysia, the Takaful Group and its subsidiaries’ financial assets are also primarily maintained in Malaysia as required under the Takaful Act, 1984, and hence, primarily denominated in the same currency (the local RM) as its takaful and investment contract liabilities. Accordingly, the main foreign exchange risk from recognised assets and liabilities arises from transactions other than those in which takaful and investment contract liabilities are expected to be settled.

As Takaful’s main foreign exchange risk from recognised assets and liabilities arises from retakaful transactions for which the balances are expected to be settled and realised in less than a year, the impact arising from sensitivity in foreign exchange rates is deemed minimal as Takaful has no significant concentration of foreign currency risk.

Takaful’s exposure to currency risk is immaterial in the context of the financial statements and hence, sensitivity analysis is not presented.

38.3 liquidity risk

overview

Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations when they fall due, or might have to fund these obligations at excessive cost. This risk can arise from mismatches in the timing of cash flows. Funding risk arises when the necessary liquidity to fund illiquid asset positions cannot be obtained at the expected terms when required.

The management reviews both Banking and Takaful business’ liquidity risk based on different maturity brackets due to the different nature of both businesses.

(a) banking

In respect of Bank Islam, the Bank maintains a diversified and stable funding base comprising core retail, commercial, corporate customer deposits and institutional balances. This is augmented by wholesale funding and portfolios of highly liquid assets.

The objective of the Bank’s liquidity and funding management is to ensure that all foreseeable funding commitments and deposit withdrawals can be met when due and that wholesale market access remains accessible and cost effective.

Current accounts and savings deposits payable on demand or at short notice form a significant part of the Bank’s funding, and the Bank places considerable importance on maintaining their stability. For deposits, stability depends upon preserving depositors’ confidence in the Bank and the Bank’s capital strength and liquidity, and on competitive and transparent pricing.

The management of liquidity and funding is primarily carried out in accordance with the BNM Liquidity Framework and practices and, limits and triggers approved by the Bank’s BRC and ALCO. These limits and triggers vary to take account of the depth and liquidity of the local market in which the Bank operates. The Bank maintains a strong liquidity position and manages the liquidity profile of its assets, liabilities and commitments to ensure that cash flows are appropriately balanced and all obligations are met when due.

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38.3 liquidity risk (continued)


The Bank’s liquidity and funding management process includes:

• DailyprojectionofcashflowsandensuringthattheBankhassufficientliquiditysurplusandreservestosustainasuddenliquidityshock;

• Projectingcashflowsandconsideringthelevelofliquidassetsnecessaryinrelationthereto;• Maintainliabilitiesofappropriatetermrelativetotheassetbase;• Maintainadiverserangeoffundingsourceswithadequateback-upfacilities;• Monitordepositors’concentrationinordertoavoidunduerelianceonlargeindividualdepositorsandensureasatisfactoryoverall

funding mix; and• Managethematuritiesanddiversifyfundingliabilitiesacrossproductsandcounterparties.

Liquidity and funding risk governanceThe management of liquidity and funding risk is principally undertaken using risk limit mandates approved by the Bank’s BRC and management action triggers assigned by the Bank’s ALCO.

The Bank’s ALCO is responsible under the authority delegated by the Bank’s BRC for managing liquidity and funding risk at strategic level.

Management of liquidity and funding riskAll liquidity risk exposures are managed by the Bank’s Treasury. The aim is to ensure that liquidity and funding risk are consolidated at the Bank’s Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits and triggers are set to meet the following objectives:

• Sufficientliquiditysurplusandreservestosustainasuddenliquidityshock;• Cashflowsarerelativelydiversifiedacrossallmaturities;• Depositbaseisnotoverlyconcentratedtoarelativelysmallnumberofdepositors;• Sufficientborrowingcapacityintheinterbankmarketandhighlyliquidfinancialassetstobackitup;and• Notover-extendingfinancingactivitiesrelativetothedepositbase.

The Bank’s MRMD is an independent risk control function and is responsible for ensuring efficient implementation of liquidity and funding risk management policies. It is also responsible for developing the Bank’s liquidity and funding risk management guidelines, measurement techniques, behavioural assumptions and limit setting methodologies. Any excess against the prescribed limits and triggers are reported immediately to the Bank’s Senior Management. Strict escalation procedures are documented and approved by the Bank’s BRC, with proper authorities to ratify or approve the excess in place. In addition, the market risk exposures and limits are regularly reported to the Bank’s ALCO and BRC.

Another control to ensure that liquidity and funding risk exposures remain within tolerable levels includes stress testing. Stress testing and scenario analysis are important tools in the Bank’s liquidity management framework. This will also include an assessment of asset liquidity under various stress scenarios. Stress test results are produced monthly to determine the impact of a sudden liquidity shock. The stress-testing provides the Bank’s Management and BRC with an assessment of the financial impact of identified extreme events on the liquidity and funding risk exposures of the Bank.

Another key control feature of the Bank’s liquidity and funding risk management are the approved and documented liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in the event of difficulties arising from systemic or other crises while minimising adverse long-term implications to the Bank.




(continued)




Maturity analysisThe table below summarises the Bank’s assets and liabilities based on remaining contractual maturities.

on up to >1 to 3 >3 to 6 >6 to 12 over demand 1 month months months months 1 year total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

as at 31 december 2012assetsCash, balances and placements with banks 782,538 903,366 10,004 - - - 1,695,908Securities portfolio - 1,084,696 2,001,491 1,333,789 1,015,240 9,269,688 14,704,904Derivative financial assets - 373 1,712 107 402 14,142 16,736Financing, advances and - 11,169,539 738,518 320,277 293,348 6,986,117 19,507,799 othersOther assets - - - - - 1,497,544 1,497,544

total assets 782,538 13,157,974 2,751,725 1,654,173 1,308,990 17,767,491 37,422,891

Note 44liabilitiesDeposits from customers 13,483,878 17,918,359 916,898 7,455 120,509 103,891 32,550,990Deposits and placements of banks and other financial institutions - 858,802 1,476 - - - 860,278Derivative financial liabilities - 576 631 103 162 12,867 14,339Other liabilities - - - - - 894,319 894,319

total liabilities 13,483,878 18,777,737 919,005 7,558 120,671 1,011,077 34,319,926

Note 44equityEquity attributable to equity holders of the Bank - - - - - 3,102,965 3,102,965

On-balance sheet net liquidity gap (12,701,340) (5,619,763) 1,832,720 1,646,615 1,188,319 13,653,449 -Commitments and contingencies 2,444,639 1,079,178 1,101,488 799,376 2,158,206 3,345,903 10,928,790

net liquidity gap (15,145,979) (6,698,941) 731,232 847,239 (969,887) 10,307,546 (10,928,790)

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Maturity analysis (continued)


as at 31 december 2011assetsCash, balances and placements with banks 3,364,180 100,181 425,000 285,000 50,000 - 4,224,361Securities portfolio - 820,251 1,335,998 1,967,349 452,523 7,985,286 12,561,407Derivative financial assets - 5,346 1,320 169 8,301 741 15,877Financing, advances and others - 4,174,586 110,680 1,730,274 1,678,078 6,468,219 14,161,837Other assets - - - - - 1,243,836 1,243,836

total assets 3,364,180 5,100,364 1,872,998 3,982,792 2,188,902 15,698,082 32,207,318

Note 44liabilitiesDeposits from customers 12,368,826 9,260,314 4,330,227 439,604 1,708,758 171,949 28,279,678Deposits and placements of banks and other financial institutions - 377,930 - - 6,698 - 384,628Derivative financial liabilities - 5,555 644 263 8,130 8,707 23,299Other liabilities - - - - - 711,870 711,870

total liabilities 12,368,826 9,643,799 4,330,871 439,867 1,723,586 892,526 29,399,475

Note 44

equityEquity attributable to equity holders of the Bank - - - - - 2,807,843 2,807,843

On-balance sheet net liquidity gap (9,004,646) (4,543,435) (2,457,873) 3,542,925 465,316 11,997,713 -Commitments and contingencies 822,145 1,458,399 1,242,637 643,234 1,856,794 3,399,900 9,423,109

net liquidity gap (9,826,791) (6,001,834) (3,700,510) 2,899,691 (1,391,478) 8,597,813 (9,423,109)




(continued)




Maturity analysis (continued)


as at 1 January 2011assetsCash, balances and placements with banks 2,519,695 252,798 - 100,000 - - 2,872,493Securities portfolio - 2,512,603 2,890,112 466,054 1,018,443 8,371,199 15,258,411Derivative financial assets - 24,952 9,192 8,106 27,804 10,054 80,108Financing, advances and others - 3,097,357 773,502 314,415 312,545 7,360,780 11,858,599Other assets - - - - - 314,917 314,917

total assets 2,519,695 5,887,710 3,672,806 888,575 1,358,792 16,056,950 30,384,528

liabilitiesDeposits from customers 10,742,832 9,100,751 4,327,025 624,120 1,887,361 184,466 26,866,555Deposits and placements of banks and other financial institutions - 371,430 - - - 6,699 378,129Derivative financial liabilities - 12,162 3,151 10,240 29,005 12,150 66,708Other liabilities - - - - - 538,907 538,907

total liabilities 10,742,832 9,484,343 4,330,176 634,360 1,916,366 742,222 27,850,299

equityEquity attributable to equity holders of the Bank - - - - - 2,533,754 2,533,754Non-controlling interests - - - - - 475 475

On-balance sheet net liquidity gap (8,223,137) (3,596,633) (657,370) 254,215 (557,574) 12,780,499 -Commitments and contingencies 1,359,102 2,435,647 1,931,970 2,181,283 1,901,751 3,734,534 13,544,287

net liquidity gap (9,582,239) (6,032,280) (2,589,340) (1,927,068) (2,459,325) 9,045,965 (13,544,287)

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(b) takaful

The following policies and procedures are in place to mitigate exposure to liquidity risk at Takaful level:

• Wideliquidityriskpolicysettingouttheevaluationanddeterminationofthecomponentsofliquidityrisk.Compliancewiththepolicy is monitored and reported monthly and exposures and breaches are reported to the Risk Management Committee as soon as practicable. The policy is regularly reviewed for pertinence and for changes in the risk environment.

• Settingupguidelinesonassetallocations,portfoliolimitstructuresandmaturityprofilesofassets,inordertoensuresufficientfunding is available to meet takaful contracts obligations.

• Settingupcontingencyfundingplanswhichspecifyminimumproportionsoffundstomeetemergencycallsaswellasspecifyingevents that would trigger such plans.

• TheTakaful’scatastropheexcess-of-lossretakafulcontractscontainsclausespermittingtheimmediatedrawdownoffundstomeetclaims payments should claims events exceed certain amount.

Maturity analysis

The table below summarises the maturity profile of the financial liabilities of the Takaful Group based on remaining undiscounted contractual obligations, including profit payable.

For takaful contract liabilities, maturity profiles are determined based on estimated timing of net cash outflows from the recognised takaful liabilities. Investment-linked liabilities are repayable or transferable on demand and are included in the “up to a year” column.

carrying up to >1 to 3 >3 to 5 More than no value a year* years years 5 years maturity total note rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

31 december 2012Provision for outstanding claims 21(a)(i) 417,944 158,727 181,398 54,683 23,136 - 417,944Takaful payables 21 43,126 41,423 1,703 - - - 43,126Other payables 236,013 217,965 2,965 83 5,964 9,036 236,013

697,083 418,115 186,066 54,766 29,100 9,036 697,083

31 december 2011Provision for outstanding claims 21(a)(i) 417,879 210,922 132,135 54,628 20,194 - 417,879Takaful payables 21 45,537 41,967 3,570 - - - 45,537Other payables 224,357 184,344 29,818 808 8,107 1,280 224,357

687,773 437,233 165,523 55,436 28,301 1,280 687,773

1 January 2011Provision for outstanding claims 21(a)(i) 383,047 197,151 118,189 48,017 19,690 - 383,047Takaful payables 21 50,454 46,313 4,141 - - - 50,454Other payables 213,124 202,749 2,951 109 6,729 586 213,124

646,625 446,213 125,281 48,126 26,419 586 646,625

* expected utilisation or settlement is within 12 months from the reporting date.




(continued)

39. fair value of financial assets and liabilities

Financial instruments comprise financial assets, financial liabilities and off-balance sheet instruments. Fair value is the amount at which the financial assets could be exchanged or a financial liability settled, between knowledgeable and willing parties in an arm’s length transaction. The information presented herein represents the estimates of fair values as at the financial position date.

Quoted and observable market prices, where available, are used as the measure of fair values of the financial instruments. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors.

Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of MFRS 132, “Financial Instruments: Presentation” which requires the fair value information to be disclosed.

The following summarises the carrying and the estimated fair values of the Group’s financial assets and liabilities on the financial position:

carrying value fair value 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Financial assets held-to-maturity 468,721 636,913 509,134 479,510 651,433 518,571Financing, advances and others 19,507,799 14,161,837 11,858,599 19,749,406 14,221,103 12,048,950

The carrying amounts of the remaining financial instruments of the Group and of the Company approximate fair value due to the relatively short-term nature of these financial instruments. It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs.

The fair values are based on the following methodologies and assumptions:

cash and short term funds and deposits and placements with banks and other financial institutionsFor cash and short-term funds and deposits and placements with others financial institutions with maturities of less than six months, the carrying value is a reasonable estimate of fair values. For deposits and placements with maturities six months and above, the estimated fair values are based on discounted cash flows using prevailing money market profit rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining year to maturity.

financial assets held-for-trading and financial assets available-for-sale The estimated fair values are generally based on quoted and observable market prices. Where there is no ready market in certain securities, fair values have been estimated by reference to market indicative yields or net tangible asset backing of the investee.

Non-market observable inputs also includes valuation technique based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The main asset class in this category are unquoted equity securities.

financing, advances and others Their fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of financings with similar credit risks and maturities. The fair values are represented by their carrying value, net of specific allowance and income-in-suspense, being the recoverable amount.

deposits from customersThe fair values of deposits are deemed to approximate their carrying amounts as rate of returns are determined at the end of their holding periods based on the profit generated from the assets invested.

deposits and placements of banks and other financial institutions The estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market profit rates for deposits and placements with similar remaining years to maturity.

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39. fair value of financial assets and liabilities (continued)

bills and acceptances payableThe estimated fair values of bills and acceptances payable with maturity of less than six months approximate their carrying values. For bills and acceptances payable with maturity of six months or more, the fair values are estimated based on discounted cash flows using prevailing market rates for borrowings with similar risks profile.

investment propertiesThe fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.

fair value hierarchyMFRS 7, “Financial Instruments: Disclosure” specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques adopted are observable or unobservable. Observable inputs reflect market data obtained from independent sources and unobservable inputs reflect the Group’s assumptions. The fair value hierarchy is as follows:

• Level1– Quotedprice(unadjusted)inactivemarketsfortheidenticalassetsorliabilities.Thislevelincludeslistedequitysecuritiesand debt instruments.

• Level2– InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices) or indirectly (i.e. derived from prices). This level includes profit rates swap and structured debts. The sources of input parameters include BNM indicative yields or counterparty credit risk.

• Level3– Inputsforassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).Thislevelincludesequity instruments and debt instruments with significant unobservable components.

The levels of fair value hierarchy into which fair value measurements are categorised in their entirety are as follows:

level 1 level 2 level 3 total rM’000 rM’000 rM’000 rM’000

31 december 2012Financial assets held-for-trading 102,412 1,669,532 59,662 1,831,606Financial assets available-for-sale* 690,477 15,856,675 305,204 16,852,356Derivative assets - 16,736 - 16,736Derivatives/liabilities - (14,339) - (14,339)

792,889 17,528,604 364,866 18,686,359

* excludes unquoted securities stated at cost and promissory notes stated at fair value.

31 december 2011Financial assets held-for-trading 86,969 1,252,469 63,906 1,403,344Financial assets available-for-sale* 515,644 13,465,001 275,909 14,256,554Derivative assets - 15,877 - 15,877Derivatives/liabilities - (23,299) - (23,299)

602,613 14,710,048 339,815 15,652,476

* excludes unquoted securities stated at cost and promissory notes stated at fair value.




(continued)

39. fair value of financial assets and liabilities (continued)

The following table presents the changes in Level 3 instruments for the year ended 31 December 2012 for the Group:

2012 2011 rM’000 rM’000

at 1 January 339,815 366,388Gains/(Losses) 12,318 (6,657)Settlement/Redemption (2,350) (111,013)Purchases 15,087 40,600Transfer in - 50,496Exchange differences (4) 1

At 31 December 364,866 339,815

The unrealised gains or losses have been recognised in other income or other overhead expenses in the profit or loss.

40. caPital coMMitMents

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Property, plant and equipment Contracted but not provided for in the financial statements 49,461 56,812 75,956 Approved but not contracted for and not provided 24,468 24,376 36,633

73,929 81,188 112,589

41. lease coMMitMents

leases as lesseeNon-cancellable operating lease rentals are payable as follows:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Within one year 3,049 9,086 1,195Between one and five years 11,342 9,094 1,585

14,391 18,180 2,780

leases as lessorThe Group leases out its investment properties (see Note 17). The future minimum lease receivables under non-cancellable lease are as follows:

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

Within one year 7,046 7,928 3,482Between one and five years 3,640 9,913 5,696

10,686 17,841 9,178

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42. caPital ManaGeMent

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor the adequacy of capital on an ongoing basis.

There were no changes in the Group’s approach to capital management during the financial year.

Under the Listing Requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

The capital requirements in respect of Bank Islam Malaysia Berhad, Syarikat Takaful Malaysia Berhad and BIMB Securities Sdn Bhd are subject to regulatory requirements from BNM and Bursa Malaysia Berhad.

43. continGent liability

bankingOn 20 April, 2010, Bank Islam has referred a dispute in connection with a Services Agreement and Software Agreement (Agreements) with a vendor for arbitration. The Bank claims rescission of the Agreements and a refund of the sum paid (to-date of RM19.03 million) and/or damages, compensation / cost of funds on all sums found to be due to it and an appropriate order as to costs. The vendor has subsequently also filed a counterclaim. The arbitration commenced on 15 February 2012. The arbitrator has yet to make the final award.

44. oPeratinG seGMent inforMation

Performance is measured based on segment profit/(loss) before zakat and taxation, as included in the internal management reports that are reviewed by the Group Managing Director/Chief Executive Officer. Segment profit/(loss) before zakat and taxation is used to measure performance as management believes that such information is the most relevant in evaluating segmental results relative to other entities that operate within these industries. In the preceding year, performance was measured based on segmental results from operating activities and included items directly attributable to a segment as well as those that could be allocated on a reasonable basis.

The Group operates predominantly in Malaysia and accordingly, information by geographical location on the Group’s operation is not presented.

Segment information is presented in respect of the Group’s main business segment.

Business segments

The Group comprises of the following main business segments:

Banking Islamic banking and provision of related services.Takaful Underwriting of family and general Islamic insurance (“Takaful”).Others Investment holding, currency trading, ijarah financing, stockbroking and unit trust.




(continued)

44. oPeratinG seGMent inforMation (continued)

banking takaful others elimination consolidated note rM’000 rM’000 rM’000 rM’000 rM’000

31 december 2012Business segmentssegment resultRevenue from external customers 1,990,478 594,769 11,142 - 2,596,389Inter-segment revenue - 2,535 174,852 (177,387) -

total revenue 1,990,478 597,304 185,994 (177,387) 2,596,389

Net income from operations (before allowance for impairment on financing and other assets) 1,397,424 597,304 185,994 (174,928) 2,005,794Operating overheads (724,924) (472,504) (18,639) 2,832 (1,213,235)

Operating results 672,500 124,800 167,355 (172,096) 792,559Allowance for impairment on financing (66,073) - - - (66,073)Allowance for contingent liability (14,769) - - - (14,769)Reversal of impairment on other assets 3,990 - - - 3,990Share of results of associate company 1,732 - - - 1,732

Profit before zakat and taxation 597,380 124,800 167,355 (172,096) 717,439

Segment assets 38.2 (a)(i) 37,422,891 6,349,415 2,155,519 (2,020,202) 43,907,623

Segment liabilities 38.3 (a) 34,319,926 5,831,326 184,533 (195,355) 40,140,430

31 december 2011 Business segmentssegment resultRevenue from external customers 1,666,313 406,687 8,056 - 2,081,056Inter-segment revenue - 2,946 262,633 (265,579) -

total revenue 1,666,313 409,633 270,689 (265,579) 2,081,056

Net income from operations (before allowance for impairment on financing and other assets) 1,189,206 409,633 270,689 (261,334) 1,608,194Operating overheads (643,595) (309,486) (14,514) 1,469 (966,126)

Operating results 545,611 100,147 256,175 (259,865) 642,068Allowance for impairment on financing (21,124) - - - (21,124)Allowance for contingent liability (15,231) - - - (15,231)Allowance for impairment on other assets (15,406) - - - (15,406)Share of results of associate company (1,383) - - - (1,383)

Profit before zakat and taxation 492,467 100,147 256,175 (259,865) 588,924

Segment assets 38.2 (a)(i) 32,207,318 5,837,275 2,067,638 (1,886,274) 38,225,957

Segment liabilities 38.3 (a) 29,399,475 5,359,412 85,286 (73,147) 34,771,026

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45. coMMitMents and continGencies

In the normal course of business, the Group makes various commitments and incur certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. These exclude all contracts cleared in the normal course of the takaful business.

31.12.2012 31.12.2011 1.1.2011Group rM’000 rM’000 rM’000

credit-related exposuresDirect credit substitutes 562,654 452,553 459,840Assets sold with recourse 2 2 242Transaction related contingent items 910,688 884,095 846,719Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 662,657 589,414 618,138Short-term self liquidating trade related contingencies 338,488 288,665 312,745Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 82 1 1,003Unutilised credit card lines 949,115 817,113 768,840Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 5,276,220 3,897,622 4,118,965

8,699,906 6,929,465 7,126,492

derivative financial instrumentsForeign exchange related contracts Less than one year 680,789 1,644,655 5,208,060 One year to less than 5 years - 40,244 -Profit rate related contracts Less than one year 100,000 171,740 - One year to less than 5 years 600,000 500,000 671,740 5 years and above 734,000 - -Equity related contracts Less than one year - 20,000 324,800 One year to less than 5 years 114,095 117,005 138,195

2,228,884 2,493,644 6,342,795

Obligations under an on-going underwriting agreement - - 75,000

10,928,790 9,423,109 13,544,287




(continued)

46. siGnificant events durinG the financial year

(a) Zerorisation of accumulated loss of bank islam Malaysia berhad (“the bank”)

A proposal approved by the Bank’s Board of Directors was submitted to BNM on 14 October 2010 requesting to write-off the accumulated losses in the books against the Share Premium and Statutory Reserves. BNM via their reply dated 25 February 2011 had no objections on the Bank’s proposal.

Nevertheless, the Bank was required to fulfil the requirements of Section 64 of the Companies Act 1965 prior to utilising the share premium which includes obtaining general meeting’s approval by way of special resolution and court’s approval.

On 23 February 2012, the High Court of Malaya granted the Bank approval to reduce the Bank’s Share Premium Account. The amount from the Share Premium account of RM 500.02 million and an amount of RM 684.34 million from the Statutory Reserve Account have been utilised to write off the outstanding accumulated losses as at 31 December 2011 of RM 1,184.36 million (after putting aside the final dividend payable for the financial year ended 31 December 2011 of RM 44.69 million).

(b) transfer of ar-rahnu business from farihan corporation sdn. bhd. (“fcsb”) to bank islam Malaysia berhad

FCSB is a wholly-owned subsidiary of the Bank which operates Ar-Rahnu (Islamic pawn broking) business under a licence granted by the Ministry of Housing and Local Government, Malaysia under the Pawnbrokers Act 1972.

On 8 July 2011, the Bank has been granted approval from BNM (with certain conditions) to commence Ar-Rahnu business. Consequently upon meeting BNM’s conditions, on 13 April 2012, the business, assets and liabilities of FCSB have been transferred to the Bank. FCSB continues to be in operation providing management services to the Bank for the Ar-Rahnu business.

(c) biMb foreign currency clearing agency sdn. bhd. (“bifca”)’s license

The management of Bank Islam Malaysia Berhad had on 21 November 2012 decided to surrender the wholesale license accorded to BIFCA, to BNM effective 25 November 2012, and to proceed with voluntary winding-up of the said entity.

Following this decision, BIFCA had ceased operation with its last trading day being Friday, 23 November 2012.

Presently, preparation is underway with all the needful processes in relation to the winding up process.

The share capital of RM 10 million and retained earnings will be paid to the Bank upon completion of the winding up processes.

47. exPlanation of transition to Mfrss

As stated in Note 2.1, these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs.

The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRS statement of financial position at 1 January 2011 (the group’s date of transition of MFRSs).

The transition to MFRSs does not have financial impact to the separate financial statements of the Company.

In preparing the opening consolidated statement of financial position at 1 January 2011, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous Financial Reporting Standards (“FRSs”).

AnnuAl RepoRt 2012


174


47. exPlanation of transition to Mfrss (continued)

An explanation of how the transition from previous FRSs to MFRSs has affected the Group’s financial position, financial performance and cash flows is set out as follows:

47.1 reconciliation of statements of financial Position

1.1.2011 31.12.2011 effect of transition effect of transition to Mfrs to Mfrs other Mfrs 127 other Mfrs 127 frss Mfrss note (h) Mfrss frss Mfrss note (h) MfrssGroup note rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assetsCash and short-term funds 2,762,195 - 313,873 3,076,068 3,460,092 - 325,262 3,785,354Deposits and placement with financial institutions 412,798 - 462,949 875,747 1,075,330 - 616,890 1,692,220Financial assets held-for-trading 2,279,891 - 184,571 2,464,462 1,228,952 - 174,392 1,403,344Derivative financial assets 80,108 - - 80,108 15,877 - - 15,877Financial assets available-for-sale 12,936,655 - 2,845,083 15,781,738 11,281,711 - 2,989,829 14,271,540Financial assets held-to-maturity 215,944 - 293,190 509,134 331,486 - 305,427 636,913Financing, advances and others (b) 11,860,631 (2,032) - 11,858,599 14,140,970 20,867 - 14,161,837Other assets 200,727 - 101,435 302,162 181,624 - 96,588 278,212Takaful assets - - 435,355 435,355 - - 525,238 525,238Statutory deposits with Bank Negara Malaysia 10,000 - - 10,000 912,000 - - 912,000Current tax assets (c) 30,316 508 - 30,824 7,718 508 - 8,226Deferred tax assets (d) 59,023 - - 59,023 39,429 1,772 - 41,201Investments in associates 1 - - 1 21,181 - - 21,181Property, plant and equipment (d) 207,617 614 216,048 424,279 225,632 614 212,920 439,166Investment properties 11,958 - 20,166 32,124 18,758 - 14,222 32,980Assets classified as held for sale - - - - - - 668 668General Takaful & Family Takaful assets 4,786,882 - (4,786,882) - 5,310,032 - (5,310,032) -

total assets 35,854,746 (910) 85,788 35,939,624 38,250,792 23,761 (48,596) 38,225,957




(continued)


47.1 reconciliation of statements of financial Position (continued)

1.1.2011 31.12.2011 effect of transition effect of transition to Mfrs to Mfrs other Mfrs 127 other Mfrs 127 note frss Mfrss note (h) Mfrss frss Mfrss note (h) Mfrss rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

liabilitiesDeposits from customers 26,798,107 - - 26,798,107 28,208,203 - - 28,208,203Deposits and placement with Banks and other financial institutions 378,129 - - 378,129 384,628 - - 384,628Derivative financial liabilities 66,708 - - 66,708 23,299 - - 23,299Bills and acceptance payable 163,191 - - 163,191 259,153 - - 259,153Other liabilities 490,560 - 177,362 667,922 578,378 - 158,148 736,526Takaful liabilities 12,502 - 4,695,308 4,707,810 19,739 (8,522) 5,113,385 5,124,602Zakat & taxation (e) 37,975 - - 37,975 28,890 5,725 - 34,615General & Family Takaful liabilities 1,078,867 - (1,078,867) - 1,210,991 - (1,210,991) -General & Family Takaful participants funds 3,708,015 - (3,708,015) - 4,099,041 - (4,099,041) -

total liabilities 32,734,054 - 85,788 32,819,842 34,812,322 (2,797) (38,499) 34,771,026

equityShare capital 1,066,790 - - 1,066,790 1,066,790 - - 1,066,790Reserves (a),(c),(e),(g) 587,945 (377) - 587,568 757,300 8,511 - 765,811

Total equity attributable to the shareholders 1,654,735 (377) - 1,654,358 1,824,090 8,511 - 1,832,601Non-controlling interests 1,465,957 (533) - 1,465,424 1,614,380 7,950 - 1,622,330

total equity 3,120,692 (910) - 3,119,782 3,438,470 16,461 - 3,454,931

total liabilities and equity 35,854,746 (910) 85,788 35,939,624 38,250,792 13,664 (38,499) 38,225,957

AnnuAl RepoRt 2012


176



47.2 reconciliation of statement of Profit or loss and other comprehensive income for the year ended 31 december 2011

effect of transition to Mfrs other Mfrs 127 frss Mfrss note (h) MfrssGroup note rM’000 rM’000 rM’000 rM’000

income statement Income derived from investment of depositors’ funds 1,393,918 - - 1,393,918Income derived from investment of shareholders’ funds 642,132 - (360,535) 281,597Net income from Takaful business (d) - (1,214) 404,678 403,464Allowance for impairment on financing and advances (b) (44,023) 22,899 - (21,124)Allowance for impairment on investments (15,406) - - (15,406)Provision for contingent liability (15,231) - - (15,231)Direct expenses (28,425) - - (28,425)

total distributable income 1,932,965 21,685 44,143 1,998,793Income attributable to depositors (473,133) - - (473,133)

total net income 1,459,832 21,685 44,143 1,525,660Personnel expenses (461,462) - 5,419 (456,043)Other overhead expenses (373,856) 140 (45,906) (419,622)Depreciation (55,531) (501) (3,656) (59,688)

operating profit 568,983 21,324 - 590,307Share of results of associate company (1,383) - - (1,383)

Profit before zakat and tax 567,600 21,324 - 588,924Zakat (9,196) - - (9,196)Tax expense (153,328) (3,953) - (157,281)

Profit for the year 405,076 17,371 - 422,447

attributable to:Owners of the Company 203,252 8,888 - 212,140Non-controlling interests 201,824 8,483 - 210,307





(continued)


47.2 reconciliation of statement of Profit or loss and other comprehensive income for the year ended 31 december 2011 (continued)

effect of transition to Mfrs other Mfrs 127 frss Mfrss note (h) MfrssGroup rM’000 rM’000 rM’000 rM’000

statement of comprehensive incomeProfit for the year 405,076 17,371 - 422,447

Other comprehensive income: Currency translation differences for foreign operations (8,491) - - (8,491) Net gain on revaluation of available-for-sale financial assets 39,905 - - 39,905

total comprehensive income for the year 436,490 17,371 - 453,861

attributable to:Owners of the Company 219,861 8,888 - 228,749Non-controlling interests 216,629 8,483 - 225,112


47.3 notes to the reconciliations

(a) foreign currency translation differences

Under the FRSs, the Group and the Company recognised foreign currency translation differences in other comprehensive income and accumulated the amount in the foreign currency translation reserve in equity.

Upon transition to MFRSs, one of the subsidiaries has elected to deem all foreign currency translation differences that arose prior to the date of transition, in respect of all foreign operations to be nil at the date of transition. However, the non-adoption of transitional exemption in the remaining subsidiaries of the Group has no material impact to the financial statements.

The impact arising from the change is summarised as follows:

1.1.2011 31.12.2011Group rM’000 rM’000

statements of financial positionForeign currency translation reserve (38,995) (38,995)

Adjustment to retained earnings (38,995) (38,995)

AnnuAl RepoRt 2012


178



47.3 notes to the reconciliations (continued)

(b) Mfrs 139, Financial Instruments: Recognition and Measurement

With the issuance of the MFRS framework, BNM has revised the Guidelines on Classification and Impairment Provisions for Loans/Financing to align the requirements on the determination of collective assessment allowance with that of MFRS 139. The transitional provision which was allowed under the earlier guidelines was removed with effect from 1 January 2012.

Financing and advances which are not individually significant are collectively assessed using the incurred loss approach. If it is determined that no objective evidence of impairment exists for an individually assessed financing or the individually assessed financing does not result in impairment provisions, the financing is also included in the group of financing with similar credit risk characteristics for collective impairment assessment. The future cash flows of each group of financing with similar credit risk characteristic are estimated on the basis of historical loss experience for such assets and discounted to present value. Collective assessment allowance is made on any shortfall in these discounted cash flows against the carrying value of the group of financing.

The adoption of the accounting policy has been accounted for retrospectively and the collective assessment allowances charged in the profit or loss have been restated. Consequently, the retained earnings and the collective assessment allowances in the statement of financial position have also been restated.

A summary of the financial impact of the change in accounting policy on the financial statements of the Group are as follows:

1.1.2011 31.12.2011Group rM’000 rM’000

statements of financial positionfinancing, advances and others - Collective assessment allowanceAs previously stated 345,041 348,555Effect of change in accounting policies 2,032 (20,867)

As restated 347,073 327,688

Profit or lossAllowances for impairment on financing and advancesAs previously stated (207,702) (44,023)Effect of change in accounting policies (2,032) 22,899

As restated (209,734) (21,124)

(c) current tax assets

1.1.2011 31.12.2011Group rM’000 rM’000

Allowance for impairment on financing and advance 508 -

Increase in tax recoverable 508 -




(continued)



(d) Mfrs 116, Property, Plant and Equipment (“PPE”) – Deemed Cost Exemption

Upon transition to MFRSs, Syarikat Takaful Malaysia Berhad Group (“STMB Group”), a subsidiary of the Group, had reclassified its self-occupied investment properties to PPE, and has elected to apply the exemption under MFRS 1 to measure them at fair value at the date of transition to MFRSs, and that the fair value is then taken as deemed cost under MFRS 116.

However, the Group maintains its cost model approach in the measurement of its PPE (as opposed to STMB Group which adopts the revaluation model approach).

Therefore subsequent revaluation to properties after the date of transition shall not be effected by the Group, the higher of the revalued amount against the carrying value as at the date of transition of RM614,000 shall be effected in the PPE as deemed cost, with the corresponding entry adjusted to accumulated losses. Furthermore, the properties shall be depreciated in accordance with the adopted policy based on the deemed cost as at the date of transition.

The financial impact arising from the change is summarised as follows:

1.1.2011 31.12.2011Group rM’000 rM’000

statements of financial positionProperty, plant and equipmentAs previously stated 219,575 244,390Adjustment where fair value is taken as deemed costs 614 614

As restated 220,189 245,004

Deferred taxAs previously stated 59,023 39,429Effect of changes in carrying value of PPE - 1,772

As restated 59,023 41,201

Profit or lossNet takaful incomeAs previously stated - 404,678Effect of changes in accounting policies, reversal of fair value gain from investment properties - (1,214)

As restated - 403,464

Other overhead expensesAs previously stated - (478,949)Effect of changes in accounting policies, reversal of fair value gain from investment properties - 140Amortisation of investment properties - (501)

As restated - (479,310)

AnnuAl RepoRt 2012


180




(e) Zakat & taxation

The changes that affected the provision of taxation is as follows:

1.1.2011 31.12.2011Group rM’000 rM’000

Allowance for impairment on financing and advances - 5,217

Increase in provision of taxation - 5,217

The effect on the profit or loss for the financial year ended 31 December 2011 for the Group was an increase in the previously reported tax charge for the financial year by RM5,725,000.

(f) retained earnings

The changes that affected the retained earnings are as follows:

1.1.2011 31.12.2011Group rM’000 rM’000

As previously stated (1,244,056) (1,182,896)Foreign currency translation reserve 38,995 38,995Share premium (652) (652)Collective assessment allowance (1,036) 7,982Property, plant and equipment 400 400Deferred tax asset - 1,156Zakat and taxation 259 -Income derived from investment of shareholders’ funds - (946)Depreciation - (81)Transfer from statutory reserve - 2,205

As restated (1,206,090) (1,133,837)

(g) reserves

1.1.2011 31.12.2011Group rM’000 rM’000

Foreign currency translation reserve (38,995) (38,995)Retained earnings 38,618 47,506

(Decrease)/Increase in reserves (377) 8,511




(continued)



(h) Mfrs 127, Consolidated and Separate Financial Statements

MFRS 127 requires an entity that prepares consolidated financial statements to combine the financial statements of the parent and its subsidiaries line-by-line by adding together like items of assets, liabilities, equity, income and expenses.

Prior to this, the financial statements of Takaful were prepared in accordance with BNM guidelines on financial reporting, where a Takaful Operator is required to separately report its assets and liabilities from the respective Takaful funds. The Group has been presenting the assets and liabilities that belong to life and takaful funds in the consolidated statement of financial position on an aggregated basis as “General Takaful and Family Takaful assets”, “General Takaful and Family Takaful liabilities” and “General Takaful and Family Takaful participants’ funds” respectively.

With the adoption of MFRS Framework, the Group is required to change the presentation of assets and liabilities that form part of life and takaful funds in the consolidated statement of financial position at 1 January 2011. The effects of the change in the presentation are detailed as follows:

i. Removal of line items namely “General Takaful and Family Takaful assets”, “General Takaful and Family Takaful liabilities” and “General Takaful and Family Takaful participants’ funds” from the consolidated statement of financial position;

ii. Addition of two new line items, namely “Takaful assets” and “Takaful liabilities” on the consolidated statement of financial position; and

iii. Consolidation of the other assets and liabilities of general and takaful funds within the consolidated statement of financial position on a line-by-line basis.

The financial effects of the change in the presentation of the life and takaful fund assets and liabilities to the financial statements of the Group are disclosed in Note 47.1 and Note 47.2 above.

47.4 capital adequacy

The adjustments to the financial statements of the Banking Group as a result of the transition to the MFRS framework and the changes in accounting policies, as discussed above, also had effects on the comparative capital adequacy ratios. These are summarised below:

1.1.2011 31.12.2011 frss Mfrss frss Mfrss rM’000 rM’000 rM’000 rM’000

banking GroupTier 1 Capital 2,331,168 2,406,104 2,584,337 2,676,448Capital base 2,513,619 2,590,588 2,787,933 2,874,132

before proposed dividendTier 1 Capital Ratio 15.75% 16.26% 15.27% 15.81%Risk Weighted Capital Ratio 16.99% 17.46% 16.47% 16.98%

after proposed dividendTier 1 Capital Ratio 15.21% 15.71% 15.00% 15.55%Risk Weighted Capital Ratio 16.44% 16.92% 16.21% 16.72%

AnnuAl RepoRt 2012


182


48. suPPleMentary inforMation on the breaKdoWn of realised and unrealised Profits or losses

The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2012, into realised and unrealised profits or losses, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:


Total retained earnings/(accumulated losses) of the Company and its subsidiaries- realised 652,449 (616,156) 133,540 144,092- unrealised 25,270 (31,506) 10 10

677,719 (647,662) 133,550 144,102Less: Consolidation adjustments (756,994) (486,175) - -

total (accumulated losses)/retained earnings (79,275) (1,133,837) 133,550 144,102

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.


In the opinion of the Directors, the financial statements set out on pages 79 to 181 are drawn up in accordance with Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS), and the requirements of the Companies Act, 1965 in Malaysia, and Shariah requirements so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012, 31 December 2011 and 1 January 2011 and of its financial performance and cash flows for the financial years ended 31 December 2012 and 31 December 2011.

In the opinion of the Directors, the information set out in Note 48 to the financial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………tan sri samsudin bin osman

…………………………………………………………Johan bin abdullah

Kuala Lumpur,

Date: 22 March 2013

Statement by Directorspursuant to Section 169(15) of the Companies Act, 1965

AUDITED FINANCIAL STATEMENTS

I, Mohamad azlan bin Mohamad alam, the officer primarily responsible for the financial management of BIMB Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 79 to 182 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Kuala Lumpur on 22 March 2013.

…………………………………………….Mohamad azlan bin Mohamad alam

Before me:

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

AUDITED FINANCIAL STATEMENTSbiMb holdinGs berhad ANNUAL REPORT 2012

184


AUDITED FINANCIAL STATEMENTS

rePort on the financial stateMents

We have audited the financial statements of BIMB Holdings Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 79 to 181.

Directors’ Responsibility for the Financial StatementsThe Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

rePort on other leGal and reGulatory requireMents

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

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

b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 14 to the financial statements.

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

d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Independent Auditors’ Reportto the members of BIMB Holdings Berhad


186 AUDITED FINANCIAL STATEMENTS

other rePortinG resPonsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 48 on page 182 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

other Matters

As stated in Note 47 to the financial statements, BIMB Holdings Berhad adopted Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards (“IFRS”) on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by the Directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report on the restated comparative information that is prepared in accordance with MFRS and IFRS, and hence it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash flows for the year then ended.

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

KPMG desa Megat & co. ow Peng liFirm Number: AF 0759 Approval Number: 2666/09/13(J)Chartered Accountants Chartered Accountant Petaling Jaya,

Date: 22 March 2013

Independent auditors’ reportto the members of BIMB Holdings Berhad(continued)


Properties owned by BHB Group

land, net book date of sale description of age of built-up value as at date of and Purchaseno. location existing use tenure building area 31.12.2012 revaluation agreement (years) (square feet) (rM)

1 No.325A & 325B Three units of 4 storey 999 years town 21 4,025/6,037 2,950,000 31.12.2012 12.07.1991 Blok 41, Kompleks commercial complex/ lease expiring Perniagaan Fajar office on 31.12.2895 91000 Tawau, Sabah

2 No. 64 & 65 Two units of 2 storey Freehold 26 3,095/6,935 1,025,000 31.12.2012 30.09.1991 Kompleks Jitra shophouse/office Jalan Sungai Korok 06000 Jitra Kedah Darul Aman

3 No. 23 One unit of 3 storey 99 years lease 17 1,539/4,255 550,000 31.12.2012 20.09.1995 Medan Istana 3 shophouse/office expiring on Bandar Ipoh Raya 30.03.2081 30450 Ipoh Perak Darul Ridzuan

4 No. 84 One unit of 5 storey Freehold 26 1,883/8,700 1,330,000 31.12.2012 22.12.1995 Batu 3 1/4 shophouse/office Jalan Gombak 53000 Kuala Lumpur

5 Lot 54 & 55 Two units of 3 storey 99 years town lease 17 2,400/7,200 1,680,000 31.12.2012 27.12.1995 Bandar Wilayah Jasa shophouse/office expiring on Jalan Bunga Raya 31.12.2090 91100 Lahad Datu, Sabah

6 No. 24 One unit of 3 storey Freehold 18 3,200/9,600 5,140,000 31.12.2012 08.06.1996 Jalan USJ 10/1B shophouse/office 47620 UEP Subang Jaya Selangor Darul Ehsan

7 No. 15 & 17 Two units of 2 storey Freehold 19 1,440/7,720 590,000 31.12.2012 17.07.1993 Jalan Kelibang shophouse/office Langkawi Mall 07000 Kuah, Langkawi Kedah Darul Aman

8 No. 26 & 28 Two units of 3 storey Freehold 14 3,293/8,840 1,200,000 31.12.2012 04.10.1996 Jalan Perda Barat shophouse/office Bukit Mertajam Seberang Prai 14000 Penang

9 No.433 & 434 Two units of 4 storey Freehold 17 3,589/12,855 3,550,000 31.12.2012 02.01.1996 Jalan Kulas shophouse/office 93400 Kuching, Sarawak

10 No. 312 One unit of 4 storey Freehold 18 1,920/7,070 1,600,000 31.12.2012 30.06.1994 Jalan Bandar 13 shophouse/office Taman Melawati 53100 Kuala Lumpur

11 No.20, Fasa 1A One unit of 4 storey 99 years lease 16 2,658/9,930 1,900,000 31.12.2012 27.03.1992 Jalan Haji Manan shophouse/office expiring on 86000 Kluang 10.12.2108 Johor Darul Takzim

Property Listing for STMB :

ADDITIONAL INFORMATION


188


12 Lot 13 & 14 Two units of 3 storey 999 years lease 18 2,504/7,200 2,200,000 31.12.2012 14.01.1997 Lazenda Commercial Centre office building expiring on Jalan Okk Abdullah 30.06.2902 87007 Wilayah Persekutuan Labuan

13 Lot 28, 30 & 32 Three units of 4 storey 99 years lease 25 4,447/16,800 2,850,000 31.12.2012 Lot No. 28 & 30 Jalan 2/3A, Pasar Borong shophouse/office expiring on 17.02.1997 68100 Selayang 11.03.2086 Lot No. 32 Selangor Darul Ehsan 12.05.1997

14 Lot 12680 Two floors of 13 storey 99 years lease 14 8,354* 1,730,000 31.12.2012 09.03.1998 Level 1 & Mezzanine office building expiring on Jalan Bukit Timbalan 26.07.2080 80000 Johor Bharu Johor Darul Takzim

15 Lot 12680 One floor of 13 storey 99 years lease 14 6,594* 1,000,000 31.12.2012 06.01.1999 Level 3, Jalan Bukit Timbalan office building expiring on 80000 Johor Bharu 26.07.2080 Johor Darul Takzim

16 No. 1 & 2, Jalan Kelicap Two units of 2 storey 99 years lease 25 3,956/7,044 790,000 31.12.2012 18.09.1999 Taman Pekan Baru shophouse/office expiring on 34200 Parit Buntar 05.09.2078 Perak Darul Ridzuan

17 No. 46 & 47, Darul Takaful Two units of 4 storey Freehold 23 3,220/12,092 1,480,000 31.12.2012 18.09.1999 Jalan Rahmat shophouse/office 83000 Batu Pahat Johor Darul Takzim

18 No. 180 & 181 Two units of 4 Storey Freehold 22 3,200/12,250 1,640,000 31.12.2012 18.09.1999 Jalan Tuan Hitam shophouse/office 22000 Jerteh Terengganu Darul Iman

19 Lot 82, 84 & 86 Three units of 2 storey 99 years lease 13 6,339/11,309 2,940,000 31.12.2012 07.05.1997 Jalan Rugbi 13/30 shophouse/office expiring on Seksyen 13 22.01.2102 40100 Shah Alam Selangor Darul Ehsan

20 No. 229, Jalan Shahab 2 One unit of 2 1/2 storey Freehold 16 1,400/3,570 450,000 31.12.2012 15.07.1999 Shahab Perdana shophouse/office Jalan Sultanah Sambungan 05350 Alor Star Kedah Darul Aman

21 Lot No. 3803 One unit of 3 storey 99 years lease 13 2,001/3,120 500,000 31.12.2012 01.07.1997 Jalan Dato’ Ulu Muar shophouse/office expiring on 72000 Kuala Pilah 06.10.2079 Negeri Sembilan Darul Khusus

22 No. 45 One unit of 4 storey 99 years lease 12 3,200/8,019 2,300,000 31.12.2012 15.09.2000 Jalan Teluk Sisek shophouse/office expiring on 25000 Kuantan 18.09.2068 Pahang Darul Makmur

Properties owned by BHB Group(continued)

Property Listing for STMB:(continued)





23 No.27, 29 & 31 Three units of 2 1/2 storey 99 years lease 12 4,195/15,050 1,880,000 31.12.2012 02.10.2000 Pusat Komersil Temerloh shophouse/office expiring on 28000 Temerloh 01.04.2095 Pahang Darul Makmur

24 No. 2 & 4, Jalan 6C/7 Two units of 2 storey 99 years lease 25 6,383/8,032 1,845,000 31.12.2012 08.09.1999 43650 Bandar Baru shophouse/office expiring on Bangi Selangor 08.07.2086 Darul Ehsan

25 Lot 14, Seremban City Centre One unit of 6 storey 99 years lease 16 1,500/14,589 3,469,000 31.12.2012 19.05.2000 Jalan Tuanku Munawir shophouse/office expiring on 70000 Seremban 07.04.2082 Negeri Sembilan Darul Khusus

26 No. 29, Jalan Delima One unit of 3 storey 99 years lease 11 3,899/10,248 1,570,000 31.12.2012 23.03.2002 Pusat Perdagangan Pontian shophouse/office expiring on 82000 Pontian 25.09.2097 Johor Darul Takzim

27 Lot 12, Kompleks Seri Temin One unit of 4 storey 99 years lease 27 1,400/5,510 550,000 31.12.2012 08.09.1999 Jalan Ibrahim shophouse/office expiring on 08000 Sungai Petani 03.10.2080 Kedah Darul Aman

28 Lot 1129 & 1130 One unit of 12 storey 35 years sub lease 10 3,600/23,637 6,010,000 31.12.2012 29.12.1997 Bangunan Darul Takaful office building expiring on Jalan Sultan Ismail 27.02.2037 20100 Kuala Terengganu Terengganu Darul Iman

29 No. 616 & 617, Jalan Besar Two units of 2 storey 99 years lease 20 4,498/8,685 1,470,000 31.12.2012 17.09.1999 73000 Tampin office building expiring on Negeri Sembilan 05.10.2088 Darul Khusus

30 No. 6, Jalan 6C/7 One unit of 2 storey 99 years lease 25 1,905/3,508 745,000 31.12.2012 09.08.2002 43650 Bandar Baru Bangi shophouse/office expiring on Selangor Darul Ehsan 08.07.2086

31 Suite 3B/G One floor of 22 storey Freehold 11 6,409* 7,900,000 31.12.2012 26.06.2001 Blok 3B, Plaza Sentral office building Jalan Stesen Sentral 5 50470 Kuala Lumpur

32 No. 26 & 27 Two units of 2 storey 66 years lease 31 1,600/4,000 680,000 31.12.2012 17.09.1999 Jalan Tanjung Pasar Baru office building expiring on 18500 Machang 18.02.2069 Kelantan Darul Naim

33 No. 330 & 331 Two units of 4 1/2 storey 99 years lease 30 3,200/15,200 1,950,000 31.12.2012 03.07.2002 Jalan Sultan Yahya Petra office building expiring on 15720 Kota Bharu 09.12.2069 Kelantan Darul Naim

34 Menara Takaful Malaysia Two units of office building Freehold Main Block-39 90,427/393,508 165,800,000 31.12.2012 08.10.2004 No.4, Jalan Sultan Main Block-26 storey Annex Block-32 Sulaiman Annex Block-29 storey 50000 Kuala Lumpur




190


35 No. 2408 One unit of 2 storey 99 years lease 16 2,800/5,300 800,000 31.12.2012 10.08.2004 Taman Samudera shophouse/office expiring on 32040 Sri Manjung 19.05.2091 Perak Darul Ridzuan

36 No. 76A & 76 Two units of 3 storey Freehold 9 3,134/18,304 1,530,000 31.12.2012 18.08.2003 Pusat Perniagaan office building Jalan Tupai, 34000 Taiping Perak Darul Ridzuan

37 No. 10 & 11 Two units of 3 storey 33 years lease 10 3,852/9,120 2,080,000 31.12.2012 03.07.2002 Jalan Sultan Yahya Petra office building expiring on 15200 Kota Bharu 08.09.2037 Kelantan Darul Naim

38 No. 4197, Jalan Teluk Wanjah One unit of 4 storey Freehold 10 8,716/18,440 2,624,400 31.12.2012 27.07.2002 05200 Alor Star office building Kedah Darul Aman

39 No. 10 & 8 Two units of 3 storey 99 years lease 7 3,080/8,024 1,800,000 31.12.2012 30.11.2004 Jalan Padi Emas 5/2 office building expiring on Bandar Baru UDA 16.02.2099 81200 Johor Bahru Johor Darul Takzim

40 No. 4, Kompleks Seri Temin One unit of 4 storey 99 years lease 27 1,400/5,510 640,000 31.12.2012 11.09.2005 Jalan Ibrahim office building expiring on 08000 Sungai Petani 03.10.2080 Kedah Darul Aman

41 No. 16, Jalan Cenderawasih One unit of 3 storey Freehold 13 1,600/4,172 400,000 31.12.2012 29.11.2005 Jalan Kilang Lama office building 09000 Kulim Kedah Darul Aman

42 Lot 1340, Miri One unit of 4 storey 60 years lease 8 1,400/5,500 1,320,000 31.12.2012 20.01.2006 Waterfront Commercial office building expiring on Centre, 98000 Miri Sarawak 30.09.2066

43 No. 6, Jalan Padi Emas One unit of 3 storey 99 years lease 7 1,540/4,012 900,000 31.12..2012 14.02.2006 5/2, Bandar Baru UDA office building expiring on 81200 Johor Bahru 16.02.2099 Johor Darul Takzim

44 No. 148, Kompleks One unit of 4 ½ storey 99 years lease 19 1,470/6,117 970,000 31.12.2012 21.03.2006 Munshi Abdullah office building expiring on 75200 Melaka 23.04.2102

45 No. 16474 & 16475, Two units of 3 storey 99 years lease 13 3.218/9,280 1,520,000 31.12.2012 27.10.2006 Pusat Perniagaan office building expiring on Inderapura, Jalan Tras, 29.06.2092 Raub, Pahang Darul Makmur

46 No.435, Jalan Kulas One unit of 4 Storey Freehold 17 1,214/4,262 1,250,000 31.12.2012 02.01.1996 93400 Kuching shophouse/office Sarawak

47 Lot 557 & 559 Two units of 4 ½ storey Freehold 29 3,485/14,434 1,340,000 31.12.2011 03.05.1985 Plaza Melaka shophouse/office Jalan Hang Tuah 75300 Melaka






48 Lot 6966 & Lot 6967, Two units of 3 storey 60 years lease 17 2,624/7,500 1,360,000 31.12.2012 07.07.1995 Blok 59, Muara Tuang shophouse/office expiring on (Lot 6966) Jalan Datok Mohd Musa 10.08.2053 09.04.1996 94300 Kota Samarahan (Lot 6967) Sarawak

49 Lot 14(S1) & 15(S1) Two units of 4 storey 99 years lease 13 3,300/10,560 540,000 31.12.2012 19.12.1996 Indah Point, Section 12 shophouse/office expiring on Pulau Indah Industrial Park 24.02.2097 42000 Klang, Selangor

* Build-up Area


land, net book date of sale description of age of built-up value as at date of and Purchaseno. location existing use tenure building area 31.12.2012 acquisition agreement (years) (square feet) (rM)

1 HS (D) 80625 Building site Leasehold for NA 6,597 13,165,522.67 30.12.1994 NA PT 45 Seksyen 87 99 years expiring on Jalan Tun Razak 29.12.2093 Kuala Lumpur

2 No PT 1708 & 1709 Vacant land Leasehold for NA 4,443 65,520.02 03.04.1986 NA H S (M) 2660 & 2661 99 years expiring on Batu 5 1/2 Jalan Cheras 02.04.2085 Kuala Lumpur

3 Lot No PT 805-HSD Vacant land Leasehold for NA 405,000 597,731.27 25.03.1999 NA 1323, Mukim Bagan 99 years expiring on Nakhoda Omar, 03.02.2101 Sabak Bernam, Selangor

Property Listing for BIMB Group:

Property Listing for SAISB:

land, net book date of sale description of age of built-up value as at date of and Purchaseno. location existing use tenure building area 31.12.2012 acquisition agreement (years) (square feet) (rM)

1 No. P.T. Lot 002600 & 4-storey shophouse/office Freehold 27 171 & 273 925,263.99 30.09.1985 NA H.S.(D) 815 & 816, for Bank Islam operation Lot 002601. No. 71 & 73, Jalan Taman Selat Off, Jalan Bagan Luar Butterworth Pulau Pinang




192

Shareholding StatisticsADDITIONAL INFORMATION

analysis of holdings as at 29 March 2013

Authorised Share Capital : RM2,000,000,000

Paid-up Capital : RM1,066,789,896

Class of Share : Ordinary Share of RM1.00 each

Voting Rights : One (1) vote per ordinary share

no. of holders no. of holdings %

size of shareholdings Malaysia foreign Malaysia foreign Malaysia foreign

Less than 100 331 6 4,022 71 0.00 0.00

100-1,000 1,268 14 992,683 10,800 0.09 0.00

1,001 - 10,000 2,978 49 12,767,256 268,900 1.20 0.02

10,001 - 100,000 620 62 17,123,864 2,740,400 1.60 0.26

100,001 - 53,339,493 (*) 152 54 241,260,498 38,812,418 22.62 3.64

53,339,494 (*) and above (**) 4 - 752,808,984 - 70.57 0.00

Directos’ Shareholdings - - - - 0.00 0.00

total 5,353 185 1,024,957,307 41,832,589 96.08 3.92

* Less than 5% of issued holdings

** 5% and above of issued holdings

directors’ shareholdings as at 29 March 2013

no. of shares

no. names of directors direct holdings %

1 Tan Sri Samsudin bin Osman - -

2 Tan Sri Ismail bin Adam - -

3 Encik Johan bin Abdullah - -

4 Dato’ Paduka Ismee bin Ismail - -

5 Encik Zahari @ Mohd Zin bin Idris - -

6 Datuk Zaiton binti Mohd Hassan - -

7 Encik Salih Amaran bin Jamiaan - -

8 Puan Rozaida binti Omar - -

9 Tuan Syed Elias bin Abdul Rahman Alhabshi - -


Shareholding Statistics(continued)


distribution table according to category of holders as at 29 March 2013

no. of holders no. of shares %

Malaysian foreign Malaysian foreign Malaysian foreign

category of bumiputra non bumiputra non bumiputra non shareholders bumiputra bumiputra bumiputra

1) Individual 1,238 3,236 51 6,778,216 22,990,934 496,835 0.64 2.16 0.05

2) Body corporate a) Banks/Finance Companies 42 3 0 699,926,684 1,780,000 0 65.61 0.17 0.00 b) Investment Trusts/ Foundation/ Charities 1 0 0 2,412,540 0 0 0.23 0.00 0.00 c) Other Types of Companies 40 35 0 22,885,136 4,348,450 0 2.15 0.41 0.00

3) Government Agencies/Institutions 19 0 0 90,256,172 0 0 8.46 0.00 0.00

4) Nominees 450 289 134 61,843,273 111,735,902 41,335,754 5.80 10.47 3.87

5) Others 0 0 0 0 0 0 0.00 0.00 0.00

total 1,790 3,563 185 884,102,021 140,855,286 41,832,589 82.87 13.20 3.92

no. of holders no. of shares %

Grand Total 5,538 1,066,789,896 100.00

holders with holdings of 5% and above as at 29 March 2013no. name holdings %

1 Lembaga Tabung Haji 547,385,839 51.31

2 Citigroup Nominees (Tempatan) Sdn Bhd 79,871,000 7.49

Employees Provident Fund Board

3 Amanahraya Trustees Berhad 71,000,000 6.66

Skim Amanah Saham Bumiputera

4 Permodalan Nasional Berhad 54,552,145 5.11


list of top 30 holders as at 29 March 2013no. name holdings %

1 Lembaga Tabung Haji 547,385,839 51.312 Citigroup Nominees (Tempatan) Sdn Bhd 79,871,000 7.49 Employees Provident Fund Board3 Amanahraya Trustees Berhad 71,000,000 6.66 Skim Amanah Saham Bumiputera4 Permodalan Nasional Berhad 54,552,145 5.115 Amsec Nominees (Tempatan) Sdn Bhd 29,654,000 2.78 Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI)6 Lembaga Kemajuan Tanah Persekutuan (FELDA) 24,947,998 2.347 Kumpulan Wang Persaraan (Diperbadankan) 18,621,400 1.758 Majlis Agama Islam dan Adat Melayu Terengganu 10,405,000 0.989 Majlis Ugama Islam Sabah 10,318,999 0.9710 Majlis Ugama Islam Sabah 9,178,000 0.8611 Citigroup Nominees (Tempatan) Sdn Bhd 8,931,900 0.84 Employees Provident Fund Board (CIMB Prin)12 Amin Baitulmal Johor 8,316,000 0.7813 CIMB Group Nominees (Tempatan) Sdn Bhd 5,688,400 0.53 Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund14 Majlis Agama Islam Negeri Pulau Pinang 5,544,000 0.5215 Majlis Amanah Rakyat 5,544,000 0.5216 Affin Nominees (Tempatan) Sdn Bhd 5,544,000 0.52 Affin Fund Management Sdn Bhd for Majlis Ugama Islam dan Adat Resam Melayu Pahang17 Majlis Agama Islam Selangor 5,223,488 0.4918 Citigroup Nominees (Asing) Sdn Bhd 4,700,400 0.44 CBNY For Dimensional Emerging Markets Value Fund19 Majlis Agama Islam dan Adat Istiadat Melayu Kelantan 4,532,799 0.4220 Citigroup Nominees (Tempatan) Sdn Bhd 4,456,700 0.42 Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities)21 Citigroup Nominees (Tempatan) Sdn Bhd 3,578,700 0.34 Exempt An for American International Assurance Berhad22 Universal Trustee (Malaysia) Berhad 3,530,100 0.33 CIMB-Principal Equity Fund23 HSBC Nominees (Asing) Sdn Bhd 3,426,528 0.32 BNY Brussels For Wisdomtree Emerging Markets SmallCap Dividend Fund24 Harakah Islamiah (Hikmah ) 3,056,000 0.2925 Warisan Harta Sabah Sdn Bhd 2,865,000 0.2726 HSBC Nominees (Asing) Sdn Bhd 2,700,300 0.25 BNY Brussels for Powershares DWA Emerging Markets Technical Leaders Portfolio27 Maybank Nominees (Tempatan) Sdn Bhd 2,500,000 0.23 Etiqa Insurance Berhad (Life Par Fund)28 Citigroup Nominees (Asing) Sdn Bhd 2,417,000 0.23 CBNY For DFA Emerging Markets Small Cap Series29 Yayasan Kelantan Darulnaim 2,412,540 0.2330 HSBC Nominees (Asing) Sdn Bhd 2,396,800 0.22 Exempt An For JPMORGAN Chase Bank, National Association (USA)

total 943,299,036 89.42

Shareholding Statistics(continued)

biMb holdinGs berhad ANNUAL REPORT 2012

194


Regional Group Network

biMb holdinGs berhad 31st Floor, Menara Bank IslamNo. 22 Jalan Perak50450 Kuala LumpurTel : +603 - 2781 2999Fax : +603 - 2781 2998Website : www.bimbholdings.com

banK islaM Malaysia berhad 32nd, Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603 - 2088 8000Fax : +603 - 2088 8033Website : www.bankislam.com.my

banK islaM investMentManaGeMent berhad19th Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala Lumpur Tel : +603 - 2161 2524 / 2924 Fax : +603 - 2161 2464

biMb foreiGn currencyclearinG aGency sdn bhd (bifca)32nd Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603 - 2088 8000Fax : +603 - 2088 8033

banK islaM trust coMPany(labuan) ltdLevel 5(A)Main Office TowerFinancial Park ComplexJalan Merdeka87000 F.T LabuanTel : +6087 - 451 806 Fax : +6087 - 451 808

farihan corPoration sdn bhd19th Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603 - 2782 1333 Fax : +603 - 2782 1355

al - WaKalah noMinees(teMPatan) sdn bhd21st Floor, Menara Bank IslamMenara Bank IslamNo 22, Jalan Perak50450 Kuala LumpurTel : +603 - 2726 7724 Fax : +603 - 2726 7733

aMÃna banK liMited480, Galle Road Colombo 3Sri LankaTel : +9411 - 775 6000Fax : +9411 - 257 4419

syariKat taKaful Malaysia berhad26th Floor, Annexe BlockMenara Takaful MalaysiaNo. 4, Jalan Sultan Sulaiman50000 Kuala LumpurP.O. Box 1148350746 Kuala LumpurTel : +603 - 2268 1984Fax : +603 - 2274 0237Toll Free : 1 - 300 - 8 - 825 2385Web : www.takaful-malaysia.com.my

asean retaKaful international (l) ltd(in members’ voluntary winding-up)Level 14, Blok 4Financial Park ComplexJalan Merdeka87000 Wilayah Persekutuan LabuanTel : +6087 - 451 301 : +6087 - 451 302Fax : +6087 - 451 300

Pt syariKat taKaful indonesiaGraha A, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100, Jakarta12790 IndonesiaTel : +6221 - 799 1234 : +6221 - 799 2345Fax : +6221 - 790 1435

Pt asuransi taKaful KeluarGaGraha B, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100, Jakarta12790 IndonesiaTel : +6221 - 799 1234 : +6221 - 799 2345Fax : +6221 - 790 1435

Pt asuransi taKaful uMuMGraha A, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100, Jakarta12790 IndonesiaTel : +6221 - 799 1234 : +6221 - 799 2345Fax : +6221 - 790 1944

biMb securities (holdinGs) sdn bhd 31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603 - 2781 2999Fax : +603 - 2781 2998

biMb securities sdn bhd 32nd Floor, Menara Multi PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603 - 2691 8887Fax : +603 - 2691 8854Website : www.bimbsec.com.my

biMsec noMinees (teMPatan) sdn bhd 32nd Floor, Menara Multi PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603 - 2691 8887Fax : +603 - 2691 8854

biMsec noMinees (asinG) sdn bhd 32nd Floor, Menara Multi PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603 - 2691 8887Fax : +603 - 2691 8854

biMsec asset ManaGeMent sdn bhd 32nd Floor, Menara Multi PurposeCapital Square8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603 - 2691 8887Fax : +603 - 2691 8854

syariKat al - iJarah sdn bhd31st Floor, Menara Bank Islam22, Jalan Perak50450 Kuala LumpurTel : +603 - 2781 2999Fax : +603 - 2781 2998

195biMb holdinGs berhad ANNUAL REPORT 2012

I/We............................................................................................NRIC No./Passport No./Company No...................................................................................

of.................................................................................................................................................................................................................................................... (ADDRESS)

telephone no.........................................................being a member/members of BIMB Holdings Berhad (“the Company”), hereby appoint

..................................................................................in respect of ................................................................................................................................................

shares of......................................................................................................................................................................................................................................... (ADDRESS)

and/or..................................................................................................................................in respect of......................................................................................

shares of......................................................................................................................................................................................................................................... (ADDRESS)

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the 16th Annual General Meeting of the Company to be held at Tun Rahah Grand Hall, Level 1, Menara Yayasan Tun Razak, 200 Jalan Bukit Bintang, 55100 Kuala Lumpur on Wednesday, 15 May 2013 at 10.00 a.m. and at any adjournment thereof. I/We indicate with an “x” in the appropriate spaces below as to how I/we wish my/our vote to be cast:

(Company No. 423858-X)(Incorporated in Malaysia under the Companies Act, 1965)

PROXY FORM

Seal

No. of shares held : ...............................................................................................................

Securities Account No. : .......................................................................................................

Date : .....................................................................................................................................

If appointment of proxy is under seal

The Common Seal of...................................................................................................was hereto affixed in accordance with its Articlesof Association in the presence of :-

......................................................... ................................................................. Director Director/Secretary

In its capacity as *member/*attorney of member/*authorised nominee of

.............................................................................................. (beneficial owner)

No. of shares held : ..............................................................................................................

Securities Account No. : ......................................................................................................

Date : .....................................................................................................................................

If appointment of proxy is under hand

..................................................................

Signed by *individual member/*officer or attorney of member/*authorised

nominee of ............................................................................. (beneficial owner)

For Against

ordinary resolution 1 To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Reports of the Directors and Auditors thereon.

ordinary resolution 2 To approve the payment of final single tier dividend of 5.00% in respect of the financial year ended 31 December 2012.

ordinary resolution 3 To re-elect Tan Sri Ismail bin Adam, a Director who is retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible has offered himself for re-election.

ordinary resolution 4 To re-elect Encik Johan bin Abdullah, a Director who is retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible has offered himself for re-election.

ordinary resolution 5 To re-appoint Encik Salih Amaran bin Jamiaan, a Director who is retiring pursuant to Section 129 of the Companies Act, 1965 and has offered himself for re-appointment.

ordinary resolution 6 To approve the payment of Directors’ fees of RM855,000 for the financial year ended 31 December 2012 (RM495,000 for the financial year ended 31 December 2011).

ordinary resolution 7 To re-appoint Messrs. KPMG Desa Megat & Co. as External Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.

ordinary resolution 8 To retain Encik Zahari @ Mohd Zin bin Idris as Independent Non Executive Director of the Company in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012.

ordinary resolution 9 To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

Subject to the abovestated voting instructions, my/our proxy may vote or abstain from voting on any resolution as *he/*she/*they may think fit.

Important Notes:1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and vote for him.2. A member shall not be entitled to appoint more than two proxies to attend and vote at the same general meeting. Where a member appoints two proxies the

appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.3. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities

account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. The instrument appointing a proxy shall :(i) in case of an individual, be signed by the appointor or by his attorney; and(ii) in case of a corporation, be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.

5. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 31st Floor, Menara Bank Islam, No. 22 Jalan Perak, 50450 Kuala Lumpur, Malaysia not less than 48 hours before the time fixed for holding of the meeting or any adjournment thereof.

6. A proxy may vote on a show of hands and on a poll. If the form of proxy is returned without an indication as to how the proxy shall vote on any particular matter, the proxy may exercise his discretion as to whether to vote on such matter.

7. The lodging of a form of proxy does not preclude a member from attending and voting in person at the meeting should the member subsequently decide to do so.

*Delete if inappropriate

biMb holdinGs berhad (423858-X)31st Floor,Menara Bank Islam22, Jalan Perak50450 Kuala Lumpur

STAMP

fold here

fold here

biMb holdinGs berhad (423858-x)

31st Floor, Menara Bank IslamNo. 22 Jalan Perak50450 Kuala Lumpur

Tel : +603 2781 2999Fax : +603 2781 2998

www.bimbholdings.com

Documents

Progressive growth strong FoundAtions...2013/04/23 · 16th AgM, the Company shall be requesting Bursa Malaysia depository sdn Bhd, in accordance with Article 41(a)(iii) of the Company’s