FINANCIAL STATEMENTSbimb.irplc.com/investor-relations/Online-Annual... · Dato’ Ghazali bin Awang...

FINANCIAL STATEMENTS

164 Directors’ Report171 Statements of Financial Position173 Statements of Profit or Loss and Other Comprehensive Income175 Statements of Changes in Equity178 Statements of Cash Flows181 Notes to the Financial Statements341 Statement by Directors342 Statutory Declaration343 Independent Auditors’ Report

164-349

SHAREHOLDERS INFORMATION

350 Properties Owned by BHB Group357 Share & Warrant Holdings Statistics363 Regional Group Network

350-363

SUSTAINABILITY PERFORMANCE DATA

364 FTSE4Good Bursa Malaysia (“F4GBM”)369 Global Reporting Inititative (“GRI”) G4

364-371

22ND AGM INFORMATION

372 Notice of 22nd Annual General Meeting376 Statement Accompanying Notice of 22nd AGM

Proxy Form

372-376

FINANCIALSTATEMENTS

164 Integrated Annual Report 2018 Financial Statements

directors’rePortfor the financial year ended 31 december 2018

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 2018.

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 16 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 682,055 278,764Non-controlling interests 119,366 –

801,421 278,764

issue of shares and debentures

During the financial year, the Company increased its issued and paid-up capital from 1,637,741,014 to 1,693,566,014 via the issuance of 55,825,000 new ordinary shares at a consideration of RM3.72 each arising from the Dividend Reinvestment Plan.

No warrants were converted during the financial year ended 31 December 2018 (2017: Nil).

There were no other changes in the 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. As at 31 December 2018, 426,715,078 warrants remained unexercised.

reserves and Provisions

During the financial year ended 31 December 2018, the Group has recognised the impact, net of tax on the opening balance of fair value reserves and retained earnings following transition to MFRS 9 Financial Instruments, amounting to RM8,412,000 and RM141,096,000, as disclosed in Note 2.1(b) (iii) and Note 27.

During the financial year ended 31 December 2018, the Group has also transferred RM54,645,000 from its regulatory reserve to retained earnings, as disclosed in Note 27.

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

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ion dividends

Since the end of the previous financial year, the amount of dividends paid by the Company were as follows:

rm’000

i) In respect of the financial year ended 31 December 2017 as reported in the Directors’ Report of that year:Dividend of 14.00% per ordinary share, declared on 30 November 2017,

ex-date on 27 December 2017, and paid on 25 January 2018 229,284

ii) In respect of the financial year ended 31 December 2018:Dividend of 15.50% per ordinary share, declared on 28 November 2018,

ex-date on 27 December 2018, and paid on 29 January 2019 262,503

491,787

The Directors do not recommend final dividend to be paid for the financial year under review.

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 render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company to be misleading or inappropriate.


Financial Statements166 Integrated Annual Report 2018


contingent and other liabilities

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

(a) any charge on the assets of the Group or of the Company that 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 or of the Company that has arisen since the end of the financial year other than those incurred in the ordinary course of the business.

No contingent liability 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 their 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

In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature, likely 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.

comPliance with bank negara malaysia’s Policy document on financial rePorting and guidelines

In the preparation of the financial statements, the Directors have taken reasonable steps to ensure that Bank Negara Malaysia (“BNM”)’s expectations on financial reporting have been complied with, including those as set out in the Financial Reporting for Islamic Banking Institutions, Circular on the Application of MFRS and Revised Financial Reporting Requirements for Islamic Banks.

subsequent events during the financial year

The subsequent events during the financial year are as disclosed in Note 54 to the financial statements.

directors

Directors of the Company who served during the financial year until the date of this report are:

Tan Sri Haji Ambrin bin Buang (appointed on 02.02.2018) (Chairman)Tan Sri Ismail bin AdamMohd Tarmidzi bin Ahmad NordinNoraini binti Che DanNik Mohd Hasyudeen bin Yusoff (appointed on 01.06.2018)Datuk Rozaida binti Omar (resigned on 06.09.2018)Rifina binti Md Ariff (resigned on 06.09.2018)Tan Sri Samsudin bin Osman (retired on 31.01.2018) (Chairman)Datuk Zaiton binti Mohd Hassan (retired on 01.02.2018)

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directors of the subsidiaries

Directors of the subsidiaries who served during the financial year until the date of this report are:

name of Company DireCtors

Bank Islam Malaysia Berhad Datuk Zamani bin Abdul Ghani (Chairman)Tan Sri Dato’ Dr. Abdul Shukor bin HusinDatuk Zaiton binti Mohd Hassan (resigned on 18.02.2019)Zahari @ Mohd Zin bin IdrisMohamed Ridza bin Mohamed AbdullaNoraini binti Che DanNik Mohd Hasyudeen bin YusoffDato’ Sri Khazali Ahmad (appointed on 02.01.2018)Azizan Ahmad (appointed on 02.01.2018)

Subsidiaries of Bank Islam Malaysia Berhad

BIMB Investment Management Berhad Nik Mohd Hasyudeen bin Yusoff (Chairman)Najmuddin bin Mohd LutfiDato’ Ghazali bin AwangDr. Mohd Hatta bin DagapMalkiat Singh @ Malkit Singh Maan A/L Delbara SinghDatuk Noripah binti Kamso (resigned on 14.12.2018)Mujibburrahman bin Abd Rashid (resigned on 20.07.2018)

Al-Wakalah Nominees (Tempatan) Sdn. Bhd. Maria binti Mat Said (Chairman)Mohammad Jamali bin Haron (appointed on 06.08.2018)Mohd Muazzam bin Mohamed (resigned on 06.08.2018)

Farihan Corporation Sdn. Bhd. Razman bin Ismail (Chairman)Maria binti Mat Said

Bank Islam Trust Company (Labuan) Ltd. Zahari @ Mohd Zin bin Idris (Chairman)and its subsidiary: Maria binti Mat Said

BIMB Offshore Company Management Services Sdn. Bhd.

Syarikat Takaful Malaysia Keluarga Berhad Tan Sri Dato’ Ahmad Fuzi bin Haji Abdul Razak (Chairman)Dato’ Othman bin AbdullahMahadzir bin AzizanZakaria bin IsmailMohd Tarmidzi bin Ahmad NordinDatin Sri Azlin binti ArshadDatuk Rozaida binti Omar (ceased office on 15.05.2018)



directors of the subsidiaries (continued)

Directors of the subsidiaries who served during the financial year until the date of this report are: (continued)

Subsidiaries of Syarikat Takaful Malaysia Keluarga Berhad

Syarikat Takaful Malaysia Am Berhad Tan Sri Dato’ Ahmad Fuzi bin Haji Abdul Razak (Chairman)Mahadzir bin AzizanDato’ Haji Che Pee bin Samsudin (appointed on 30.08.2018)Datin Dr. Nik Sarina binti Lugman Hashim (appointed on 30.08.2018)Abdul Rahman bin Talib (appointed on 30.08.2018)

P.T. Syarikat Takaful Indonesia Dato’ Sri Mohamed Hassan bin KamilIbrahim Ali Shoukry (appointed on 16.10.2018)Mohamed Zaffarullah bin Sathar (ceased office on 16.10.2018)

Subsidiaries of P.T. Syarikat Takaful Indonesia

P.T. Asuransi Takaful Keluarga Dato’ Sri Mohamed Hassan bin KamilTri Djoko SantosoMahadzir bin AzizanImran Nahar (appointed on 01.08.2018)Mohamad Harris (ceased office on 01.08.2018)

BIMB Securities (Holdings) Sdn. Bhd. Zahari @ Mohd Zin bin Idris (Chairman)Adi Asri bin Baharom (appointed on 30.12.2018)Mohd Muazzam bin Mohamed (resigned on 31.12.2018)

Subsidiary of BIMB Securities (Holdings) Sdn. Bhd.

BIMB Securities Sdn. Bhd. Zahari @ Mohd Zin bin Idris (Chairman)Rashid bin IsmailMustapha bin HamatDr. Mohd Hatta bin DagapMohd Muazzam bin Mohamed (resigned on 31.12.2018)

Subsidiaries of BIMB Securities Sdn. Bhd.

BIMSEC Nominees (Tempatan) Sdn. Bhd. Rashid bin IsmailAida Sharini binti Abdul WahabRoziah binti JaisKamaruzaman bin Abdullah

BIMSEC Nominees (Asing) Sdn. Bhd. Rashid bin IsmailAida Sharini binti Abdul WahabRoziah binti JaisKamaruzaman bin Abdullah

Syarikat Al-Ijarah Sdn. Bhd. Salih Amaran bin Jamiaan (Chairman)Khairuddin bin IdrisMohamad Azlan bin Mohamad Alam

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directors’ interests in shares

None of the Directors of the Company holding office at 31 December 2018 had any interest in the shares and options over shares of the Company and of its related corporations during the financial year.

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 remuneration received or due and receivable by the Directors as shown in Note 39 to financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a Company of which the Director is a member, or with a Company in which the Director has a substantial financial interest.

There were no arrangements 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.

indemnity and insurance costs

During the financial year, the total amount of insurance cost incurred for Directors and officers liability insurance of the Group and of the Company are RM275,307 and RM105,734 respectively.

ultimate holding comPany

The Company is a subsidiary of Lembaga Tabung Haji, a hajj pilgrims’ fund statutory body established in Malaysia and regarded by the Directors as the Company’s ultimate holding company, during the financial year and until the date of this report.

subsidiaries

The details of the Company’s subsidiaries are disclosed in Note 16 to the financial statements.

2019 business Plan and outlook business Plan, strategy and future outlook

islamic banking

The Malaysian banking sector is expected to remain stable in 2019, coupled with ongoing challenges such as moderating loan growth and margins. Industry loan growth is expected to moderate to 5.1% in 2019 from 6.2% in 2018. Despite the challenging outlook on the banking industry, Islamic finance continued to contribute major growth in the banking industry. In the past 10 years, Islamic banking assets has been growing at a Compounded Annual Growth Rate (“CAGR”) of 14.5%, surpassing conventional lending growth of 5.6%. The market share has also risen from 15.9% in 2007 to 26.8% in 2018. Islamic banking industry is expected to have 40% market share in total banking assets by 2020. The introduction of Value Based Intermediation (“VBI”) by BNM is expected to steer financial players towards sustainable impact on the economy, community and environment.

In addition, supportive measures adopted by the Malaysian government through the recent Budget 2019 announcement are put in place to ensure growth of Islamic economy. These include, the continued prioritisation on Islamic banking, enlargement on halal productivity industry, increasing Shariah-compliant Small Medium Enterprise (“SME”) Financing Scheme and digital initiatives.

In this regard, the Bank’s strategic plan for the next three years is to deliver sustainable performance with a strategic focus to support economy, community and environment. The Bank’s corporate direction is premised on VBI, at the heart of the Bank’s business model. With Shariah Principles/ Halal and Trustworthy being the key distinctive features, the Bank continues its journey adopting VBI principles such as Triple Bottom Line (“TBL”) considerations, of community, environment and prosperity.



2019 business Plan and outlook business Plan, strategy and future outlook (continued)

takaful

Despite business sentiments remaining cautious in 2019, the Takaful industry is expected to outperform the conventional insurers in view of the strong demand in the Takaful products. Takaful Malaysia is poised to further expand its market share in 2019. To sustain its market leading position, the company will continue with its innovative strategies via the implementation of its digital strategy, introduction of online solutions, expansion of its distribution capabilities, strategic partnerships with leading Islamic banks and Brand awareness initiatives. To support business growth and customer centricity, the company will continue its digital strategy to build the full digital ecosystem and to expand the business focus beyond credit-related business to reach out to the wide retail customer base of major partner banks.

It is the commitment of Takaful Malaysia to continue responding to the needs of customers with reliable and better protection solutions and services that they deserve to firmly establish the company as the preferred choice for insurance.

auditors

The auditors, Messrs KPMG Desa Megat PLT, retire at the forthcoming Annual General Meeting of the Group.

The auditors’ remuneration is disclosed in Note 38 to the financial statements.

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

tan sri Haji ambrin bin BuangDirector

noraini binti Che DanDirector

Kuala Lumpur,

Date: 27 March 2019

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statements offinancial Positionas at 31 december 2018

Group Company as at as at 31.12.2018 31.12.2017 31.12.2018 31.12.2017 note rm’000 rm’000 rm’000 rm’000

assetsCash and short-term funds 3 2,650,042 4,807,749 88,473 241,074Deposits and placements with financial institutions 4 3,637,084 1,159,085 – –Financial assets held-for-trading 5 – 607,431 – –Financial assets at fair value through profit or loss 6 1,402,603 – 6,623 –Derivative financial assets 7 34,148 68,319 – –Financial assets available-for-sale 8 – 13,497,437 – 174,546Financial assets at fair value through other comprehensive income 9 15,687,117 – – –Financial assets held-to-maturity 10 – 516,524 – –Financing, advances and others 11 45,680,680 42,113,420 – –Other financial assets at amortised cost 12 349,118 366,992 1,215 1,951Takaful assets 13 676,232 677,713 – –Statutory deposits with Bank Negara Malaysia 14 1,602,284 1,407,284 – –Current tax assets 55,277 34,333 198 20Deferred tax assets 15 94,115 72,023 10 10Investments in subsidiaries 16 – – 5,309,095 5,166,225Property and equipment 17 415,775 397,624 382 484Investment properties 18 10,698 10,868 – –Intangible assets 19 93,368 47,832 – –

total assets 72,388,541 65,784,634 5,405,996 5,584,310


Group Company as at as at 31.12.2018 31.12.2017 31.12.2018 31.12.2017 note rm’000 rm’000 rm’000 rm’000

Liabilities and equity Deposits from customers 20 49,433,546 45,870,596 – –Investment accounts of customers 21 5,037,653 3,969,344 – –Derivative financial liabilities 7 19,520 74,668 – –Bills and acceptances payable 41,114 420,258 – –Recourse obligations on financing sold to Cagamas 22 1,501,187 – – –Other liabilities 23 1,285,362 1,266,609 265,725 232,598Takaful liabilities 24 7,438,855 6,962,313 – –Sukuk liabilities 25 2,102,672 2,235,862 844,159 1,279,512Zakat and taxation 33,910 66,631 – 18

total liabilities 66,893,819 60,866,281 1,109,884 1,512,128

equityShare capital 26 4,082,939 3,875,270 4,082,939 3,875,270Reserves 27 942,780 658,669 213,173 196,912

equity attributable to owners of the Company 5,025,719 4,533,939 4,296,112 4,072,182Non-controlling interests 469,003 384,414 – –

total equity 5,494,722 4,918,353 4,296,112 4,072,182

total liabilities and equity 72,388,541 65,784,634 5,405,996 5,584,310

restricted investment accounts managed by the Bank 21 78,717 124,384 – –

total islamic banking assets 72,467,258 65,909,018 5,405,996 5,584,310

Commitments and contingencies 53 14,162,355 13,768,162 – –

net assets per share attributable to owners of the Company (rm) 2.97 2.77 2.54 2.49

statements offinancial Positionas at 31 december 2018

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

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statements of Profit or lossand other comPrehensive incomefor the financial year ended 31 december 2018

Group Company 2018 2017 2018 2017 note rm’000 rm’000 rm’000 rm’000

Income derived from investment of depositors’ funds 30 2,601,825 2,324,187 – –Income derived from investment account funds 31 242,823 237,192 – –Income derived from investment of shareholders’ funds 32 477,510 437,429 385,521 338,843Net income from Takaful business 33 879,834 720,195 – –Net allowance for impairment on financing

and advances, net of recoveries 34 (81,454) 15,613 – –Net allowance for impairment on other financial assets 43 (243) – –Direct expenses (17,870) (18,421) – –

Total distributable income 4,102,711 3,715,952 385,521 338,843Wakalah fees from restricted investment accounts 21 485 2,595 – –Income attributable to depositors 35 (1,279,638) (1,094,433) – –Income attributable to investment account holders 36 (79,467) (95,447) – –

Total net income 2,744,091 2,528,667 385,521 338,843Personnel expenses 37 (765,742) (729,771) (9,371) (9,277) Other overhead expenses 38 (769,386) (735,171) (4,687) (5,320)

1,208,963 1,063,725 371,463 324,246Finance cost (143,508) (115,395) (89,547) (76,849)

profit before zakat and tax 1,065,455 948,330 281,916 247,397Zakat (14,689) (14,459) – –Tax expense 41 (249,345) (230,241) (3,152) (1,938)

profit for the year 801,421 703,630 278,764 245,459

attributable to:Owners of the Company 682,055 619,838 278,764 245,459Non-controlling interests 119,366 83,792 – –


Earnings per share (sen) 42 40.36 37.94

Dividend per ordinary share-net (sen) 43 15.50 14.00



Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000


other comprehensive income, net of taxitems that will not be reclassified subsequently

to profit or loss:Remeasurement of defined benefit liabilities (302) (315) – –Movement in fair value reserve (equity instrument):

Net change in fair value (5,166) – – –items that may be reclassified subsequently to profit or loss:Currency translation differences in respect of foreign operations (11,112) 41,123 – –Movement in fair value reserve (debt securities):

Net change in fair value 51,190 – – –Net amount transferred to profit or loss (27,725) – – –

Movement in fair value reserve (available for sale):Net change in fair value – 50,390 – 142Net amount transferred to profit or loss – (7,148) – (45)

Income tax effect relating to components of other comprehensive income (3,633) (8,958) – –

other comprehensive income for the year, net of tax 3,252 75,092 – 97

total comprehensive income for the year 804,673 778,722 278,764 245,556

total comprehensive income attributable to:Owners of the Company 685,952 693,718 278,764 245,556Non-controlling interests 118,721 85,004 – –

total comprehensive income for the year 804,673 778,722 278,764 245,556

statements of Profit or lossand other comPrehensive incomefor the financial year ended 31 december 2018

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statements of changes in equity for the financial year ended 31 december 2018


ATTRIBUTABLE TO OwNERS OF THE COMPANY NON-DISTRIBUTABLE DISTRIBUTABLE NON- SHARE SHARE OTHER RETAINED CONTROLLING TOTAL CAPITAL PREMIUM RESERvES EARNINGS TOTAL INTERESTS EqUITY GROUP NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2017 1,588,680 2,102,611 (115,791) 307,352 3,882,852 334,285 4,217,137

Profit for the year – – – 619,838 619,838 83,792 703,630Other comprehensive income

Remeasurement of defined liabilities – – – (141) (141) (174) (315)

Currency translation differences in respect of foreign operations – – 42,376 – 42,376 (1,253) 41,123

Fair value reserve:Net change in fair value – – 47,298 – 47,298 3,092 50,390Net amount reclassified

to profit or loss – – (6,695) – (6,695) (453) (7,148) Income tax effect relating to

components of other comprehensive income – – (8,958) – (8,958) – (8,958)

Total comprehensive income for the year – – 74,021 619,697 693,718 85,004 778,722

Transfer of reserve fund to retained earnings 27.2 – – (1,124,774) 1,124,774 – – –

Transfer of retained earnings to regulatory reserve 27.2 – – 64,645 (64,645) – – –

Dividends payable to shareholders 43 – – – (229,284) (229,284) – (229,284)Dividends paid to non-controlling

interests – – – – – (39,528) (39,528)Share-based payment transactions – – 4,376 – 4,376 2,951 7,327Long Term Incentive Plan exercised – – (1,702) – (1,702) 1,702 –Issue of shares pursuant to

Dividend Reinvestment Plan 26 183,979 – – – 183,979 – 183,979Transfer of share premium to

share capital 26 2,102,611 (2,102,611) – – – – –

At 31 December 2017 3,875,270 – (1,099,225) 1,757,894 4,533,939 384,414 4,918,353

Note 26 Note 27



ATTRIBUTABLE TO OwNERS OF THE COMPANY NON-DISTRIBUTABLE DISTRIBUTABLE NON- SHARE SHARE OTHER RETAINED CONTROLLING TOTAL CAPITAL PREMIUM RESERvES EARNINGS TOTAL INTERESTS EqUITY GROUP NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2018– as previously stated 3,875,270 – (1,099,225) 1,757,894 4,533,939 384,414 4,918,353– adjustment on adoption of MFRS 9

(net of tax) – – 8,412 (141,096) (132,684) (1,494) (134,178)– Reclassification from retained earnings

to non-controlling interest – – – (9,318) (9,318) 9,318 –

At 1 January 2018, restated 3,875,270 – (1,090,813) 1,607,480 4,391,937 392,238 4,784,175

Profit for the year – – – 682,055 682,055 119,366 801,421Other comprehensive income

Remeasurement of defined liabilities – – – (135) (135) (167) (302)Currency translation differences in

respect of foreign operations – – (9,358) – (9,358) (1,754) (11,112)Fair value reserve:

Net change in fair value – – 44,635 – 44,635 1,389 46,024Net amount reclassified to

profit or loss – – (27,612) – (27,612) (113) (27,725)Income tax effect relating to

components of other comprehensive income – – (3,633) – (3,633) – (3,633)

Total comprehensive income for the year – – 4,032 681,920 685,952 118,721 804,673

Transfer from regulatory reserve to retained earnings 27.2 – – (54,645) 54,645 – – –

Dividends payable to shareholders 43 – – – (262,503) (262,503) – (262,503)Dividends paid to non-controlling

interests – – – – – (49,739) (49,739)Share-based payment transactions – – 6,231 – 6,231 4,216 10,447Long Term Incentive Plan exercised – – (3,567) – (3,567) 3,567 –Issue of shares pursuant to

Dividend Reinvestment Plan 26 207,669 – – – 207,669 – 207,669

At 31 December 2018 4,082,939 – (1,138,762) 2,081,542 5,025,719 469,003 5,494,722

Note 26 Note 27


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ATTRIBUTABLE TO OwNERS OF THE COMPANY NON-DISTRIBUTABLE DISTRIBUTABLE SHARE SHARE wARRANT FAIR vALUE RETAINED TOTAL CAPITAL PREMIUM RESERvES RESERvES EARNINGS EqUITYCOMPANY NOTE RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2017 1,588,680 2,102,611 129,300 81 51,259 3,871,931

Profit for the year – – – – 245,459 245,459Other comprehensive income

Fair value reserve:Net change in fair value – – – 142 – 142Net amount reclassified to profit or loss – – – (45) – (45)

Total comprehensive income for the year – – – 97 245,459 245,556Issue of shares pursuant to

Dividend Reinvestment Plan 26 183,979 – – – – 183,979Transfer of share premium to share capital 27.2 2,102,611 (2,102,611) – – – –Dividends payable to shareholders 43 – – – – (229,284) (229,284)

At 31 December 2017/1 January 2018 3,875,270 – 129,300 178 67,434 4,072,182– adjustment on adoption of MFRS 9 (net of tax) – – – (178) 178 –

At 1 January 2018, restated 3,875,270 – 129,300 – 67,612 4,072,182Profit for the year – – – – 278,764 278,764Issue of shares pursuant to

Dividend Reinvestment Plan 26 207,669 – – – – 207,669Dividends payable to shareholders 43 – – – – (262,503) (262,503)

At 31 December 2018 4,082,939 – 129,300 – 83,873 4,296,112

Note 26



statements of cash flows for the financial year ended 31 december 2018



Cash flows from operating activitiesProfit before zakat and tax 1,065,455 948,330 281,916 247,397Adjustments for:

Depreciation 61,673 67,014 166 296Net (gain)/loss on disposal of property and equipment (372) 71 – –Property and equipment written off 340 (18) 8 –Collective assessment allowance – 34,706 – –Individual assessment allowance – 71,735 – –Net allowance for impairment on other financial assets (43) 243 – –Allowance for impairment on financing, advances and others 186,402 – – –Net gain on sale of financial assets at FVTPL (4,897) – – –Net loss on sale of financial assets held-for-trading – 233 – –Net gain on sale of financial assets at FVOCI (27,444) – – –Net gain on sale of financial assets available-for-sale – (6,157) – –Net gain on sale of financial assets held-to-maturity – (31,551) – –Fair value loss/(gain) on financial assets at FVTPL 80,805 – (129) –Fair value loss on financial assets held-for-trading – 3,560 – –Net derivative (gain)/loss (52) 779 – –Dividends from securities (7,249) (7,727) (5,151) (5,080)Dividends from subsidiaries – – (366,783) (325,463)Change in actuarial reserves/unearned contributions reserve (5,576) (10,500) – –Equity settled share-based payment 10,447 7,327 – –Amortisation of intangible assets 22,464 13,115 – –Finance cost 143,508 115,395 89,547 76,849

Operating profit/(loss) before working capital changes 1,525,461 1,206,555 (426) (6,001)

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Operating profit/(loss) before working capital changes 1,525,461 1,206,555 (426) (6,001) Changes in working capital:

Deposits and placements of banks and other financial institutions – (30,000) – –

Financing of customers (3,942,761) (3,030,587) – –Statutory deposits with Bank Negara Malaysia (195,000) (32,408) – –Other assets 59,084 104,720 736 214Deposits from customers 3,562,950 378,843 – –Investment accounts of customers 1,068,309 395,473 – –Recourse obligations on financing sold to Cagamas 1,501,187 – – –Other liabilities 387,386 442,060 (92) (294)Bills and acceptances payable (379,144) 373,980 – –

Cash generated from/(used in) operations 3,587,472 (191,364) 218 (6,081)Zakat paid (13,178) (13,171) – –Tax paid (290,969) (268,185) (3,368) (1,917)Tax refund 113 45 20 –

net cash generated from/(used in) operating activities 3,283,438 (472,675) (3,130) (7,998)

Cash flows from investing activitiesNet proceeds from (purchase)/disposal of securities (2,458,409) 624,930 173,203 (33,795)Purchase of property and equipment (81,114) (45,761) (72) (209) Proceeds from disposal of property and equipment 508 498 – –Dividends from securities 2,098 2,647 – –Dividends from subsidiaries – – 366,783 325,463Subscription of ordinary shares pursuant to

Dividend Reinvestment Plan – – (142,870) (200,324)Intangible assets (68,000) (17,000) – –

net cash (used in)/generated from investing activities (2,604,917) 565,314 397,044 91,135




Cash flows from financing activitiesDividends paid (21,615) (22,550) (21,615) (22,550) Dividends paid to non-controlling interests (49,739) (39,528) – –Early partial redemption of Sukuk Liabilities (500,000) – (500,000) –Payment of coupon on Sukuk (76,698) (61,284) (24,900) (24,831) Subordinated Sukuk Murabahah 300,000 300,000 – –

net cash (used in)/generated from financing activities* (348,052) 176,638 (546,515) (47,381)

net increase/(decrease) in cash and cash equivalents 330,469 269,277 (152,601) 35,756Cash and cash equivalents at 1 January 5,966,834 5,655,408 241,074 205,318foreign exchange differences (10,177) 42,149 – –

Cash and cash equivalents at 31 December 6,287,126 5,966,834 88,473 241,074

Cash and cash equivalents comprise:Cash and short-term funds 2,650,042 4,807,749 88,473 241,074Deposits and placements with financial institutions 3,637,084 1,159,085 – –

6,287,126 5,966,834 88,473 241,074

* Net cash (used in)/generated from financing activities are solely attributable to changes from financing cash flows.


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notes to the financial statementsfor the financial year ended 31 december 2018

1. PrinciPal activities and general information

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

registered office and principal place of business

31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala Lumpur

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2018 comprise the Company and its subsidiaries (together referred to as the “Group”).

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 entity is Lembaga Tabung Haji (“LTH”), a hajj pilgrims’ fund statutory body established in Malaysia under the Tabung Haji Act, 1995 (Act 535).

These financial statements were authorised for issue by the Board of Directors on 27 March 2019.

2. summary of significant accounting Policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

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 requirements of Companies Act, 2016 in Malaysia and Shariah requirements.

This is the first set of the Group’s and of the Company’s annual financial statements in which MFRS 9 Financial Instruments has been applied. Changes to significant accounting policies are described in Note 2.1(b).

The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company.

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019• MFRS16,Leases• ICInterpretation23,Uncertainty over Income Tax Treatments• AmendmentstoMFRS3,Business Combinations (Annual Improvements to MFRS Standards 2015-2017 Cycle)• AmendmentstoMFRS9,Financial Instruments – Prepayment Features with Negative Compensation• AmendmentstoMFRS11,Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017 Cycle)• AmendmentstoMFRS112,Income Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle)• AmendmentstoMFRS119,Employee Benefits – Plan Amendment, Curtailment or Settlement• AmendmentstoMFRS123,Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017 Cycle)• AmendmentstoMFRS128,Investments in Associates and Joint Ventures – Long-term Interests in Associates

and Joint Ventures


NOTES TO THEFINANCIAL STATEMENTSfor the financial year ended 31 december 2018

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 2020• AmendmentstoMFRS3,Business Combinations – Definition of a Business• AmendmentstoMFRS101,Presentation of Financial Statements and MFRS 108, Accounting Policies, Changes

in Accounting Estimates and Errors – Definition of Material

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021• MFRS17,Insurance Contracts

MFRSs, Interpretations and amendments effective for a date yet to be confirmed• AmendmentstoMFRS10,Consolidated Financial Statements and MFRS 128, Investments in Associates and

Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

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

• from the annual period beginning on 1 January 2019 for those accounting standards, amendments andinterpretation that are effective for annual periods beginning on or after 1 January 2019.

• from the annual period beginning on 1 January 2020 for those accounting standards, amendments orinterpretations that are effective for annual periods beginning on or after 1 January 2020.

• fromtheannualperiodbeginningon1January2021fortheaccountingstandardthatiseffectiveforannualperiods beginning on or after 1 January 2021.

The initial application of the accounting standards, amendments and interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Company except as mentioned in the subsequent paragraphs:

mfrs 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

MFRS 16 introduces a single accounting model for a lessee and eliminates the distinction between finance lease and operating lease. Lessee is now required to recognise assets and liabilities for all leases. However, a lessee may elect not to apply the requirements for short-term leases which are for the term 12 months or less and leases for which the underlying asset is of low value. For such leases, lessees may elect to expense off the lease payments on a straight line basis over the lease term or using other systematic method. Upon adoption of MFRS 16, the Group is required to account for major part of their operating leases in the balance sheet by recognising the ‘right-of-use’ asset and the lease liability, thus increasing the assets and liabilities of the Group.

The Group has assessed the estimated impact that initial application of MFRS 16 will have on its consolidated financial statements. The recognition of the ‘right-of-use’ asset and the lease liability will increase the Group’s total assets by approximately 0.3% and total liabilities by approximately 0.5% as at 1 January 2019.

In terms of capital ratio, the Bank expect a marginal decrease of capital ratio by approximately 0.3% due to higher risk-weighted assets.

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ion 2. summary of significant accounting Policies (continued)


(b) Changes in significant accounting policies

mfrs 9 Financial Instruments

The Group and the Company have adopted the MFRS 9 “Financial Instruments” issued by the MASB which became effective on 1 January 2018, which resulted in changes in accounting policies and adjustments to the amounts previously recognised in the financial statements.

MFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces MFRS 139 Financial Instruments: Recognition and Measurement.

As permitted by the transitional provisions of MFRS 9, the Group and the Company elected not to restate comparative figures. Any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognised in the opening retained earnings and other reserves of the current period.

(i) Classification of financial assets

MFRS 9 largely retains the existing requirements in MFRS 139 for the classification and measurement of financial liabilities. As such, there is no change on the Group’s accounting policies related to financial liabilities. However, the standard eliminates the previous MFRS 139 categories of held-for-trading (“HFT”), held-to-maturity (“HTM”), financing and receivables (“F&R”) and available for sale (“AFS”).

Under MFRS 9, on initial recognition, a financial asset is classified and measured at:• Amortisedcost(“AC”);• Financialassetsatfairvaluethroughothercomprehensiveincome(“FVOCI”)–debtinvestment;• Financialassetsatfairvaluethroughothercomprehensiveincome(“FVOCI”)–equityinvestment;or• Fairvaluethroughprofitorloss(“FVTPL”).

The classification of financial assets under MFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

The impact on classification and measurement to the Group’s and the Company’s financial assets on the initial application of MFRS 9 on 1 January 2018 are summarised as follows:

MEASUREMENT CATEGORY CARRYING AMOUNT ORIGINAL NEw ORIGINAL CLASSIFICATION CLASSIFICATION UNDER NEw UNDER UNDER MFRS UNDER MFRS 139 MFRS 9 139 MFRS 9 GROUP NOTE RM’000 RM’000

Financial assetsCash and short term funds F&R AC 4,807,749 4,807,749Deposits and placements with banks

and other financial institutions (a) F&R FVTPL 360,000 351,322Deposits and placements with banks

and other financial institutions F&R AC 799,085 799,085Financial assets HFT FVTPL FVTPL 607,431 607,431Derivative financial assets FVTPL FVTPL 68,319 68,319





(b) Changes in significant accounting policies (continued)

mfrs 9 Financial Instruments (continued)

(i) Classification of financial assets (continued)

MEASUREMENT CATEGORY CARRYING AMOUNT ORIGINAL NEw ORIGINAL CLASSIFICATION CLASSIFICATION UNDER NEw UNDER UNDER MFRS UNDER MFRS 139 MFRS 9 139 MFRS 9 GROUP NOTE RM’000 RM’000

Financial assetsFinancial assets AFS– Debt securities (b) AFS FVOCI 12,454,199 12,454,199– Debt securities (c) AFS FVTPL 205,661 205,661– Equity instruments (d) AFS FVOCI 22,912 41,016– Equity instruments (e) AFS FVTPL 191,048 191,048– Unit trusts (f) AFS FVTPL 372,566 372,566– Institutional Trust Account (b) AFS FVOCI 251,051 251,051Financial assets HTM (g) HTM FVOCI 434,199 437,715Financial assets HTM (h) HTM FVTPL 82,325 86,379Financing, advances and others (i) F&R AC 42,113,420 41,924,321Other financial assets (i) F&R AC 366,992 366,400Retakaful assets (i) F&R AC 505,596 505,596Takaful receivable (i) F&R AC 172,117 170,425

a) Structured deposits classified as financing and receivables under MFRS 139 failed to meet the Solely Payment of Principal and Profit (“SPPI”) requirements under MFRS 9. As a result, these instruments were classified as FVTPL from the date of initial application.

b) Islamic debt securities, Malaysian Government Islamic Papers and Institutional Trust Account are held to meet everyday liquidity needs.

The Group seeks to minimise the costs of managing those liquidity needs and therefore actively manages the return on the portfolio. The return consists of collecting contractual payments as well as gains and losses from the sale of financial assets. The investment strategy often results in sales activity that is significant in value. The Group considers that under MFRS 9, these securities are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial asset.

These assets have therefore been classified as financial assets at FVOCI under MFRS 9.

c) Islamic debt securities categorised as AFS under MFRS 139 that failed to meet the SPPI requirement under MFRS 9 are classified as FVTPL.

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d) Comprise of non-traded equity investments for which the Group has elected to designate at FVOCI under MFRS 9. Accordingly, the assets will remain accounted for at FVOCI with no subsequent recycling of realised gains and losses permitted. Before the adoption of MFRS 9, these securities were measured at cost because their fair value was not considered to be reliably measureable. MFRS 9 has removed this cost measurement exception.

e) Investment in equity securities categorised as AFS under MFRS 139 are managed on fair value basis. These assets have been classified as mandatorily measured at FVTPL under MFRS 9.

f) Comprise of investments in unit trust & investment-linked funds previously classified as available-for-sale under MFRS 139. These investments were designated as at FVTPL because they were managed on a fair value basis and their performance was monitored on this basis. These assets have been classified as mandatorily measured at FVTPL under MFRS 9.

g) Investments in debt securities and Malaysian Government Islamic papers classified as held to maturity under MFRS 139 are classified as FVOCI under MFRS 9.

h) Investment in debt securities classified as held to maturity under MFRS 139 are classified as FVTPL under MFRS 9.

i) Financing, advances and others, other financial assets, retakaful assets and takaful receivables classified as financing and receivables under MFRS 139 are now classified as financial asset measured at amortised cost under MFRS 9.








The following table reconciles the carrying amounts under MFRS 139 to the carrying amounts under MFRS 9 on transition to MFRS 9 on 1 January 2018:

MFRS 139 MFRS 9 CARRYING CARRYING AMOUNT AT AMOUNT AS AT GROUP 31 DECEMBER 2017 RECLASSIFICATION REMEASUREMENT 1 JANUARY 2018 RM’000 RM’000 RM’000 RM’000Deposits and placements with banks

and other financial institutionsOpening balance 1,159,085 – – 1,159,085Structured deposits – (360,000) – (360,000)

Total Deposits and placements with banks and other financial institutions 1,159,085 (360,000) – 799,085

Financial assets at FvTPLInvestment securities 607,431 – – 607,431Derivative financial assets 68,319 – – 68,319Structured deposits – 360,000 – 360,000From financial assets available-for-sale – 769,275 – 769,275From financial assets held-to-maturity – 82,325 – 82,325Increase in expected credit losses – – (4,624) (4,624)

Total financial assets at FvTPL 675,750 1,211,600 (4,624) 1,882,726

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MFRS 139 MFRS 9 CARRYING CARRYING AMOUNT AT AMOUNT AS AT GROUP 31 DECEMBER 2017 RECLASSIFICATION REMEASUREMENT 1 JANUARY 2018 RM’000 RM’000 RM’000 RM’000Financial assets available-for-saleOpening balance 13,497,437 – – 13,497,437To FVOCI – debt – (12,454,199) – (12,454,199)To FVOCI – debt (Institutional Trust Account) – (251,051) – (251,051)To FVOCI – equity – (22,912) – (22,912)To FVTPL – (769,275) – (769,275)

Total financial assets available-for-sale 13,497,437 (13,497,437) – –

FvOCI – DebtOpening balance – – – –From financial assets available-for-sale – 12,454,199 – 12,454,199From financial assets held-to-maturity – 434,199 – 434,199Institutional Trust Account – 251,051 – 251,051Remeasurement arising from reclassifications – – 3,516 3,516

Total FvOCI – debt – 13,139,449 3,516 13,142,965

FvOCI – EquityOpening balance – – – –From financial assets available-for-sale – 22,912 – 22,912Remeasurement arising from reclassifications – – 18,104 18,104

Total FvOCI – Equity – 22,912 18,104 41,016

Total FvOCI – 13,162,361 21,620 13,183,981








MFRS 139 MFRS 9 CARRYING CARRYING AMOUNT AT AMOUNT AS AT GROUP 31 DECEMBER 2017 RECLASSIFICATION REMEASUREMENT 1 JANUARY 2018 RM’000 RM’000 RM’000 RM’000

Financial assets held-to-maturityOpening balance 516,524 – – 516,524To FVOCI - debt – (434,199) – (434,199)To FVTPL – (82,325) – (82,325)To amortised cost – – – –

Total financial assets held-to-maturity 516,524 (516,524) – –

Financing, advances and othersOpening balance 42,113,420 – – 42,113,420Increase in expected credit losses – – (189,099) (189,099)

Total financing, advances and others 42,113,420 – (189,099) 41,924,321

Other financial assets at amortised costOpening balance 366,992 – – 366,992From financial assets held-to-maturity – – – –Increase in expected credit losses – – (592) (592)

Total other financial assets at amortised cost 366,992 – (592) 366,400

Takaful receivablesRetakaful assets 505,596 – – 505,596Takaful receivables 172,117 – – 172,117Increase in expected credit losses – – (1,692) (1,692)

Total Takaful receivables 677,713 – (1,692) 676,021

Total change to financial assets at 1 January 2018 59,006 ,921 – (174,387) 58,832,534

Deferred tax assetsOpening balance 72,023 – – 72,023Remeasurement arising from reclassifications – – (2,775) (2,775)

Total deferred tax asset 72,023 – (2,775) 69,248

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(ii) impairment of financial assets

The ‘incurred loss’ model under MFRS 139 with the MFRS 9 ‘expected credit loss’ (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under MFRS 9, credit losses are recognised earlier than under MFRS 139 – see Note 2.11.

The financial assets at amortised cost consist of cash and short-term funds, deposits and placements with financial institutions, financing, advances and others, other financial assets, retakaful assets, takaful receivable and statutory deposits with Bank Negara Malaysia.

Impact of the new impairment model

For assets in the scope of the MFRS 9 impairment model, impairment losses are generally expected to increase and become more volatile. The Group has determined that the application of MFRS 9’s impairment requirements at 1 January 2018 results in an additional allowance for impairment as follows.

rm’000GroupLoss allowance at 31 December 2017 under mfrs 139 580,543Additional impairment recognised at 1 January 2018– Financing, advances and others 189,099– Islamic debt securities 4,442– Takaful receivables 1,692– Institutional Trust Account 813– Other receivables 527– Fixed and call deposits 65

Loss allowance at 1 January 2018 under mfrs 9 777,181







(iii) transition upon adoption of mfrs 9

The following table summarises the financial impact, net of tax, of transition to MFRS 9 on the opening balance of reserves and retained earnings.

impaCt of aDoptinG mfrs 9 on openinG BaLanCe Group Company 2018 2018 rm’000 rm’000

fair value reserveRemeasurement of equity investment at FVOCI 18,104 –Recognition of fair value gain under MFRS 9

for Islamic debt securities at FVOCI 319 –Reclassification of fair value gain from financial assets

designated at FVTPL under MFRS 9 (7,399) (178)Related tax (2,612) –

Impact at 1 January 2018 8,412 (178)

retained earningsRecognition of expected credit losses under MFRS 9 (189,835) –Adjustment of the deficits transferred from Takaful funds

arising from the initial application of MFRS 9 (3,004) –Recognition of fair value loss from financial assets

designated at FVTPL under MFRS 9 (220) –Reclassification of fair value gain from financial assets

designated at FVTPL under MFRS 9 7,399 178Related tax 44,564 –

Impact at 1 January 2018 (141,096) 178

non-controlling interestRecognition of fair value gain from financial assets

designated at FVTPL under MFRS 9 20 –Recognition of fair value gain under MFRS 9

for Islamic debt securities at FVOCI 215 –Recognition of expected credit losses under MFRS 9 (263) –Adjustment of the deficits transferred from Takaful funds

arising from the initial application of MFRS 9 (2,026) –Related Tax 560 –

Impact at 1 January 2018 (1,494) –

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(iii) transition upon adoption of mfrs 9 (continued)


Fair value reserveOpening balance (10,956) – – (10, 956)Remeasurement of equity investment

to FVOCI – – 18,104 18,104Recognition of fair value gain from

financial assets designated under FVOCI – debt under MFRS 9 – – 319 319

Available-for-sale reclassified to FVTPL – (7,399) – (7,399)Related tax – – (2,612) (2,612)

Total fair value reserve (10,956) (7,399) 15,811 (2,544)

Retained earningsOpening balance 1,757,894 – – 1,757,894AFS investments reclassified to FVTPL – 7,399 – 7,399Recognition of expected credit losses

under MFRS 9 – – (189,835) (189,835)Adjustment of the deficits transferred

from Takaful funds arising from the initial application of MFRS 9 – – (3,004) (3,004)

Recognition of fair value loss from financial assets designated under FVTPL under MFRS 9 – – (220) (220)

Related tax – – 44,564 44,564

Total retained earnings 1,757,894 7,399 (148,495) 1,616,798







(iii) transition upon adoption of mfrs 9 (continued)


Non-controlling interestOpening balance 384,414 – – 384,414Recognition of fair value gain from

financial assets designated under FVTPL under MFRS 9 – – 20 20

Recognition of fair value gain from financial assets designated under FVOCI – debt under MFRS 9 – – 215 215

Recognition of expected credit losses under MFRS 9 – – (263) (263)

Adjustment of the deficits transferred from Takaful funds arising from the initial application of MFRS 9 – – (2,026) (2,026)

Related tax – – 560 560

Total non-controlling interest 384,414 – (1,494) 382,920

(c) Basis of measurement

The financial statements have been prepared on the historical cost basis except for derivative financial instruments, financial assets at FVTPL and FVOCI (2017: held-for-trading and available-for-sale), which have been measured at fair value.

(d) functional and presentation currency

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

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(e) use of estimates and judgements

The preparation of the financial statements requires management 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 financial statements in the period in which the estimates are revised and in any future periods affected.

Significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have significant effect in determining the amount recognised in the financial statements are described in the following notes:

• Note2.5andNote48 – Fairvalueoffinancialinstruments• Note2.11 – Impairment• Note2.14and2.15 – ProvisionforoutstandingclaimsincludingIBNRclaimsandactuarialreserves• Note2.16 – Computationofexpensereserves• Note2.23andNote15 – IncomeTax/Deferredtaxassets

2.2 Basis of consolidation

(a) subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held-for-sale or distribution. The cost of investment includes transaction costs.

(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.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:

• thefairvalueoftheconsiderationtransferred;plus• therecognisedamountofanynon-controllinginterestintheacquiree;plus• ifthebusinesscombinationisachievedinstages,thefairvalueoftheexistingequityinterestintheacquiree;

less• thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.




2.2 Basis of consolidation (continued)

(b) Business combinations (continued)

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.

(c) acquisition or disposal of non-controlling interest

The Group accounts for all changes in its ownership interest in subsidiaries 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) acquisition from entities under common control

Business combinations arising from transfers of interest in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparativeperiodpresentedor, if later, at thedate that common controlwas established; for this purposecomparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any resulting gain/loss is recognised directly in equity.

(e) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. 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 former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as a financial asset at FVOCI (2017: available-for-sale) depending on the level of influence retained.

(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 the 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

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

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2.3 foreign currency

(a) foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that 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 are generally recognised in the profit or loss. However, foreign currency differences arising from the translation of an investment in equity securities designated as at fair value through other comprehensive income (FVOCI) are recognised in other comprehensive income (OCI) (2017: available for sale equity securities (except on impairment, in which case foreign currency differences that has been recognised in OCI are reclassified to profit or loss)).

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.

(b) operations denominated in functional currencies other than ringgit malaysia (“rm”)

The assets and liabilities of operations denominated in functional currencies other than RM, including fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss.

2.4 Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.




2.5 financial instruments

(i) initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its 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 the acquisition or issue of the financial instrument.

(ii) Classification and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets – Policy applicable from 1 January 2018

Oninitialrecognition,afinancialassetisclassifiedandmeasuredat:amortisedcost;FVOCI–debtinvestment;FVOCI–equityinvestment;orFVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group and the Company change its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(a) financial assets measured at amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• itisheldwithinabusinessmodelwhoseobjectiveistoholdassetstocollectcontractualcashflows;and

• itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandprofit on the principal amount outstanding.

These assets are subsequently measured at amortised cost using effective profit rate method. These assets are stated net of unearned income and any impairment loss.

Included in financial assets measured at amortised cost are financing, advances and others which consist of sale-based contracts (namely Bai’ Bithaman Ajil, Bai Al-Inah, Murabahah, Bai Al-Dayn and At-Tawarruq), lease-based contracts (namely Ijarah Muntahiah Bit-Tamleek and Ijarah Thumma Al-Bai), construction-based contract (Istisna’) and Ar-Rahnu contract.

These financing contracts are recorded in the financial statements as financial assets measured at amortised cost based on concept of ‘substance over form’ and in accordance with MFRS 9.

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2.5 financial instruments (continued)

(ii) Classification and subsequent measurement (continued)

Financial assets – Policy applicable from 1 January 2018 (continued)

(b) financial assets at fVoCi

(i) FVOCI – debt investment

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• itisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingfinancialassets;and

• itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipaland profit on the principal amount outstanding.

These assets are subsequently measured at fair value. Any gain or loss arising from a change in the fair value is recognised in the fair value reserve through other comprehensive income except for impairment losses and foreign exchange gains and losses arising from monetary items which are recognised in profit or loss. On derecognition or disposal, the cumulative gains or losses previously recognised in other comprehensive income is reclassified from equity into profit or loss. Profit calculated for a debt instrument using the effective profit method is recognised in the profit or loss.

(ii) FVOCI – equity investment

On initial recognition of an equity investment that is not held for trading, the Group and the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

(c) financial assets at fVtpL

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group and the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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.






Financial assets – Business model assessment: Policy applicable from 1 January 2018

The Group and the Company make an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• thestatedpoliciesandobjectivesfortheportfolioandtheoperationofthosepoliciesinpractice.Theseincludewhether management’s strategy focuses on earning contractual profit income, maintaining a particular profit rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cashoutflowsorrealisingcashflowsthroughthesaleoftheassets;

• howtheperformanceoftheportfolioisevaluatedandreportedtothemanagement;

• therisksthataffecttheperformanceofthebusinessmodel(andthefinancialassetsheldwithinthatbusinessmodel)andhowthoserisksaremanaged;and

• howmanagersofthebusinessarecompensated–e.g.whethercompensationisbasedonthefairvalueoftheassets managed or the contractual cash flows collected.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group’s and the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – Assessment whether contractual cash flows are solely payments of principal and profit (“SPPI”): Policy applicable from 1 January 2018

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Profit’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and profit, the Group and the Company consider the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group and the Company consider:

• contingenteventsthatwouldchangetheamountortimingofcashflows;

• termsthatmayadjustthecontractualcouponrate,includingvariable-ratefeatures;

• prepaymentandextensionfeatures;and

• termsthatlimittheGroup’sclaimtocashflowsfromspecifiedassets(e.g.non-recoursefeatures).

A prepayment feature is consistent with the solely payments of principal and profit criterion if the prepayment amount substantially represents unpaid amounts of principal and profit on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual profit (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

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Financial assets – Policy applicable before 1 January 2018

Financial assets are categorised as follows:

(a) financing and receivables

Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in active market and the Group does not intend to sell immediately or in the near term. The Group’s and the Company’s financing and receivables consist of sale-based contracts (namely Bai’ Bithaman Ajil, Bai Al-Inah, Murabahah, Bai Al-Dayn and At-Tawarruq), lease-based contracts (namely Ijarah Muntahiah Bit-Tamleek and Ijarah Thumma Al-Bai), construction-based contract (Istisna’) and Ar-Rahnu contract.

These financing contracts are recorded in the financial statements as financing and receivables based on concept of ‘substance over form’ and in accordance with MFRS 139.

These contracts are subsequently measured at amortised cost using effective profit rate method. These contracts are stated net of unearned income and any impairment loss.

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

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 actualpatternofshort-termprofit-taking;or

(ii) Designated under fair value option

Financial assets meet at least one of the following criteria upon designation:

• it eliminates or significantly reduces measurement or recognition inconsistencies that wouldotherwise arise from measuring financial assets, or recognising gains or losses on them, using differentbases;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

Financial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group and the Company have the positive intent and ability to hold to maturity. These financial assets are subsequently measured at amortised cost using the effective profit rate method, less any impairment loss.

Any sale or reclassification of more than insignificant amount of financial assets held-to-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.






Financial assets – Policy applicable before 1 January 2018 (continued)

(d) financial assets available-for-sale

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 except for impairment losses and foreign exchange gains and losses arising from monetary items which are recognised in profit or loss. On derecognition or disposal, the cumulative gains or losses previously recognised in other comprehensive income is reclassified from equity into profit or loss.

Profit calculated for a debt instrument using the effective profit method is recognised in the profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment. See Note 2.11 Impairment.

Derivative financial instruments

The Group and the Company hold derivative financial instruments to hedge its foreign currency and profit rate exposures. However, the Group and the Company elect not to apply hedge accounting. Hence, 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 liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

The financial liabilities measured at amortised cost are deposit from customers, investment accounts of customers, deposits and placement with financial institutions, derivative financial liabilities, bills and acceptance payables, Takaful contract liabilities, Takaful payables, Subordinated Sukuk Murabahah and other liabilities.

Fair value through profit or loss category comprises financial liabilities that are derivatives or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have quoted price in an active market for identical instruments whose fair value otherwise cannot be reliably measured are measured at cost.

Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

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Financial liabilities (continued)

(a) investment accounts

Investment accounts are either:

(i) Unrestricted investment accounts

An unrestricted investment account (“URIA”) refers to a type of investment account where the investment account holder (“IAH”) provides the Group with the mandate to make the ultimate decision without specifying any particular restrictions or conditions. The URIA is structured under Mudharabah and Wakalah contracts.

Impairment allowances required on the assets for investment accounts are charged to and borne by the investors.

(ii) Restricted investment accounts

Restricted investment account (“RIA”) refers to a type of investment account where the IAH provides a specific investment mandate to the Group such as purpose, asset class, economic sector and period of investment.

RIA is accounted for as off balance sheet as the Group has no risk and reward in respect of the assets related to the RIA or to the residual cash flows from those assets except for the fee income generated by the Group for managing the RIA. The Group also has no ability to use power over the RIA to affect the amount of the Group return. The RIA is structured under Wakalah contract. Under Wakalah contract, IAH appoints the Group as the agent to invest the funds provided by IAH to finance customers with a view of earning profits and the Group receives fees for the agency service provided.

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.

Fair value arising from financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of 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.





(iii) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. 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 assets transferred or liabilities assumed, is recognised in profit or loss.

(iv) offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

2.6 property and equipment

Recognition and measurement

Items of property and equipment are measured at cost less any 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. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing cost.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

The cost of property 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 knowledgeable willing parties 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 property and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate.

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 and equipment is determined by comparing the proceeds from disposal with the carrying amount of property and equipment and is recognised net within “other income” or “other overhead expenses” respectively in the profit or loss.

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2.6 property and equipment (continued)

Subsequent costs

The cost of replacing a component of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component 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 and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation 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 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 and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

• Buildings 50years• Buildingimprovementsandrenovations 6-10years• Furniture,fixturesandfittings 2-10years• Officeequipment 5-6years• Motorvehicles 5years• Computerequipmentandsoftware 3-7years• Leaseholdbuildings 50years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

2.7 investment property

(i) investment property carried at amortised costs

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 or supply of 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 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 recognised in 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 and 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.




2.7 investment property (continued)

(ii) reclassifications to/from investment property carried at amortised costs

When an item of property and equipment is transferred to investment property following a change in its use, the carrying amount of the item is reclassified to investment property as the Group adopts the cost model for investment property.

2.8 intangible assets

Intangible assets that are acquired by the Group have finite useful lives and are measured at cost less any accumulated amortisation and any accumulated impairment losses.

subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

amortisation

Intangible assets are amortised from the date that they are available for use. Amortisation is based on cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets.

The estimated useful lives for the current periods are as follows:

Bancatakaful service fees 5 years

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

2.9 Leased assets

(i) 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 rate of return 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 and equipment.

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2.9 Leased assets (continued)

(ii) operating lease

Leases, where the Group does not assume substantially all the 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.

2.10 Bills and other receivables

Bills and other receivables are stated at cost less any allowance for impairment.

2.11 impairment

Impairment of financial assets – Policy applicable from 1 January 2018

(a) Impairment of financial assets

The Group’s accounting policy for impairment of financial assets changed significantly under MFRS 9, and the expected credit loss model was applied for the financial year ended 31 December 2018.

The Group recognises allowance for impairment or allowance for ECL on financial assets measured at amortised cost, contract assets and debt securities measured at FVOCI, but not to investments in equity instruments.

At each reporting date, the Group first assesses individually whether objective evidence of impairment exists for significant financial assets and collectively for financial assets that are not individually significant. If it is determined that objective evidence of impairment exists, i.e. credit impaired, for an individually assessed financial assets measured at amortised cost and FVOCI, a lifetime ECL will be recognised for impairment loss which has been incurred.




2.11 impairment (continued)

Impairment of financial assets – Policy applicable from 1 January 2018 (continued)

(a) Impairment of financial assets (continued)

Under collective assessment, the Group applies a three-stage approach to measuring ECL on financial assets measured at amortised cost and FVOCI. Financial assets migrate through the following three stages based on the change in credit quality since initial recognition:

i) Stage 1: 12-months ECLFor exposures where there has not been a significant increase in credit risk since initial recognition and that are not credit impaired upon recognition, the portion of lifetime ECL associated with the probability of default events occurring within the next 12 months is recognised.

ii) Stage 2: Lifetime ECL – not credit impairedFor exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised.

iii) Stage 3: Lifetime ECL – credit impairedFinancial assets are assessed as credit impaired when one or more events that have a negative impact on the estimated future cash flows of that asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience, informed credit assessment and including forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly when it is more than 30 days past due. The Group also uses its internal credit risk grading system and external risk rating to assess deterioration in credit quality of a financial asset.

The Group assesses whether the credit risk on a financial asset has increased significantly on an individual or collective basis. For the purposes of a collective evaluation of impairment, financial assets 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.

(b) Measurement of ECL

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expect to receive).

ECLs are discounted at the effective profit rate of the financial asset.

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(c) Incorporation of forward-looking information

Relevant macroeconomic factors are incorporated in the risk parameters as appropriate. The key macroeconomics variables (“MEVs) that are incorporated in determining ECLs include, but not limited to, Kuala Lumpur Composite Index (“KLCI”), House Price Index (“HPI”), Consumer Price Index (“CPI”), Unemployment Rate and Industrial Production Index (“IPI”).

Forward-looking macroeconomic forecasts are generated by the Group Economist as part of the ECL process. An economic forecast is accompanied with three economic scenarios: a base case, which is the median scenario, assigned a 60% probability of occurring, and two less likely scenarios, one upside and one downside, each assigned 30% and 10% probability of occurring respectively.

Selected MEVs are projected over the forecast period, and they could have a material impact in determining ECLs. Forecasted MEVs are derived by Economist using time series econometrics. The data series are procured from the official source such as Department of Statistics Malaysia (“DOSM”), BNM and other government agencies. Prior to MEV forecast, Economists would gather his or her intelligence from discussion with the policy makers, institutional investors and other news flow (main stream and social media) in order to form an opinion. The opinion may cover the economic policies, business cycle and financial market condition. This will be the main input before embarking MEV forecast exercise.

The methodology and assumptions including any forecasts of future economic conditions are reviewed regularly.

(d) Credit impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a negative impact on the estimated future cash flows of the financial asset have occurred.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

• significantfinancialdifficultyoftheissuerorobligor;• abreachofcontract,suchasdefaultordelinquencyinprofitorprincipalpayments;• therestructuringofaloanoradvancebytheGroupontermsthattheGroupwouldnotconsiderotherwise;• itisprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;or• basedonexternalcreditassessmentinstitutionsratingwhichindicateshighlikelihoodofdefault.

(e) Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in other comprehensive income.






(f) Restructured financing

A financing that is renegotiated is derecognised if the existing agreement is cancelled and a new agreement made on substantially different terms or if the terms of an existing agreement are modified such that the renegotiated financing is a substantially different instrument. Where such financing are derecognised, the renegotiated contract is a new financing and impairment is assessed in accordance with the Group accounting policy.

Where the renegotiation of such financing are not derecognised, impairment continues to be assessed for significant increases in credit risk compared to the initial origination credit risk rating.

(g) Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For commercial and corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

Impairment of financial assets – Policy applicable before 1 January 2018

The Group assesses at each reporting date whether there is any objective evidence that financing and receivables, financial assets held-to-maturity or financial assets available-for-sale are impaired as a result of one or more events having an impact on the estimated future cash flows of the asset. 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 reporting 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. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

i) significantfinancialdifficultyoftheissuerorobligor;

ii) abreachofcontract,suchasdefaultordelinquencyinprofitorprincipalpayments;

iii) itbecomesprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;or

iv) 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 months or more, or where a financing is in arrears for less than three months, the financing exhibits indications of credit weakness, or when the financing is classified as rescheduled and restructured in Central Credit Reference Information System (“CCRIS”).

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Impairment of financial assets – Policy applicable before 1 January 2018 (continued)

For financing and receivables, the Group first assess 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 determine that no objective evidence of impairment exist for an individually assessed financing and receivable, 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. The estimation of the amount and timing of the future cash flows requires management judgement. In estimating these cash flows, judgements are made about the realisable value of the collateral pledged and the borrower financial position. These estimations are based on assumptions and the actual results may differ from these, hence resulting in changes to impairment losses recognised.

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 period on which the historical loss experience is based and remove the effects of conditions in the historical period 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.

If, in a subsequent period, 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.





Impairment of financial assets – Policy applicable before 1 January 2018 (continued)

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 comprehensive income statement.

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.

Where a financing shows evidence of credit weaknesses, the Group may seek to renegotiate the financing rather than taking possession of the collateral. This may involve an extension of the payment arrangements via rescheduling or the renegotiation of new financing terms and conditions via restructuring. Management monitors the renegotiated financing to ensure that all the revised terms are met and the repayments are made promptly for a continuous period. Where an impaired financing is renegotiated, the borrower must adhere to the revised and/or restructured repayment terms for a continuous period of six months before the financing is classified as non-impaired. These financing continue to be subjected to individual or collective impairment assessment.

Impairment of other assets

The carrying amount of other assets (except for current tax assets and deferred tax 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 periods 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.

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.

The provisions are reviewed at each reporting date and if it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

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2.14 General takaful fund

The General Takaful Fund is maintained in accordance with the Islamic Financial Services Act, 2013. Included in General Takaful Fund are funds 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 liabilities

Contribution liabilities represent the future obligations on takaful contracts as represented by contributions received for risks that have not yet expired. The movement in contribution liabilities is released over the term of the takaful contracts and recognised as earned contribution income.

Contributions liabilities are reported at the higher of the aggregate of the unearned contribution reserves (UCR) respectively for all lines of business or the best estimate value of the unexpired risk reserves (URR) and a provision of risk margin for adverse deviation (PRAD) calculated at 75% confidence level at the end of the financial year.

(i) unexpired risk reserves

The URR is prospective estimate of the expected future payments arising from future events insured or covered under contracts in force as at the end of the financial year and also includes allowance for expenses, including overheads and costs of retakaful, expected to be incurred during the unexpired period in administering these policies or contracts and settling the relevant claims, and shall allow for expected future contributions refunds.

URR is estimated via an actuarial valuation performed by qualified actuary, using a mathematical method of estimation similar to incurred but not reported (IBNR) claims.

(ii) unearned contribution reserves

The Unearned Contribution Reserves (“UCR”) represent the portion of the net contributions of takaful certificates written that relate to the unexpired periods of the certificates at the end of the financial year.

In determining the UCR at the end of the reporting period, the method that most accurately reflects the actual unearned contributions is used, as follows:

a) 1/365th method for all General Takaful businessb) 1/8th method for all classes of General Treaty Inward Retakaful business




2.14 General takaful fund (continued)

Provision for outstanding claims

A 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 end of the reporting period. Any difference between the current estimated cost and subsequent settlement is dealt with in the takaful statement of comprehensive income of the Group in the year in which the settlement takes place.

Provision is also made for the cost of claims (together with related expenses) and Incurred But Not Reported Claims (“IBNR”) at the end of the reporting period, using a mathematical method of estimation by a qualified 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, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.

2.15 family takaful fund

Included in Family Takaful Fund are funds arising from:

• FamilyTakaful;• GroupFamilyTakaful;and• Familyretakafulfunds.

The Family Takaful Fund is maintained in accordance with the requirements of the Islamic Financial Services Act, 2013 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.

Investment-linked business

Investments 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 reserves

Actuarial reserves comprise the Prospective Actuarial Valuation, Cash Flow Projection Valuation and Unearned Contribution Valuation as explained below:

(i) prospective 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.

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2.15 family takaful fund (continued)

Actuarial reserves (continued)

(i) prospective actuarial Valuation (continued)

For a credit-related takaful certificate whose sustainability of tabarru’ deductions is dependent 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.

(ii) 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.

(iii) unearned Contribution Valuation

Yearly renewable products or extensions shall be valued according to the following:

(a) 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.

(b) For a certificate covering contingencies other than death or survival the net liability is the maximum of unexpired risk reserve or unearned contribution reserve.

Provision for outstanding claims

Claims 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 receipt 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.




2.16 expense reserves

The expense reserves is reported as a liability in Shareholder’s Fund.

(i) General Takaful Fund

The expense reserve for mudharabah certificates is calculated based on best estimate of the provision for unexpired expense risk (“UER”) and the provision of risk margin for adverse deviation (“PRAD”). The expense reserve for wakalah certificates 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.

(ii) Family Takaful Fund

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 Participant Investment Fund (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 Participant Risk Fund (“PRF”).

2.17 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:

– performanceofaspecifiedpoolofcontractsoraspecifiedtypeofcontract;– realisedand/orunrealisedinvestmentreturnsonaspecifiedpoolofassetsheldbytheissuer;or– the profit or loss of the company, fund or other entity that issues the contract.

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2.18 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.

2.19 Contingencies

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.

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 obligations, 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 operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group’s holding company, 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 equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

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 business

Financing income is recognised in the profit or loss 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 period 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.

Income from a sale-based contract is recognised on effective profit rate basis over the period of the contract based on the principal amounts outstanding whereas income from Ijarah (lease-based contract) is recognised on effective profit rate basis over the lease term.

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 business

Income 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 proportion basis that takes into account the effective yield of the asset.

Contribution income – General Takaful Fund

Contributions are recognised in a financial period in respect of risks assumed during that particular financial period based on the inception date. Inward treaty retakaful contributions are recognised on the basis of periodic advices received from ceding takaful operators.

Contribution income – Family Takaful Fund

Contribution 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. At the end of each financial period, all due contributions are accounted for to the extent that they can be reliably measured.

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2.22 recognition of income (continued)

Wakalah fees

Wakalah 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.

Fee and other income recognition

Financing arrangement, management and participation fees, underwriting commissions, brokerage fees and wakalah performance incentive 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 subsidiaries and associates and other investments are recognised when the Group’s rights to receive payment is established.

2.23 income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability 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, 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 be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively 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 assets and liabilities 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.

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.




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 contribution to the Employees 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 and the Company have no further payment obligations.

State plans

The Group’s and the Company’s contributions to the statutory pension funds are charged to profit or loss in the financial year to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations.

Share-based payment transactions

The grant date fair value of share-based payment granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.

The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the employee share options is measured using Monte Carlo Simulation. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), expected dividends, and the risk-free profit rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

Defined benefit plans

The Group’s net obligation in respect of defined benefit plan is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of the defined obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

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2.25 employee benefits (continued)

Defined benefit plans (continued)

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

2.26 earnings per ordinary share

The Group presents basic earnings per share 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 period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

2.27 fair value measurements

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.




2.27 fair value measurements (continued)

Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are managed by the Group on the basis of the net exposure to either market or credit risk are measured on the basis of a price that would be received to sell a net long position (or paid to transfer a net short position) for a particular risk exposure. Those portfolio-level adjustments are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual instruments in the portfolio.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

3. cash and short-term funds 2018 2017 rm’000 rm’000

GroupCash and balances with banks and other financial institutions 931,783 971,106Money at call and interbank placements with remaining maturity not exceeding one month 1,718,259 3,836,643

2,650,042 4,807,749

CompanyCash and balances with banks and other financial institutions 88,473 241,074

Monies held in trust on behalf of clients by the Group in respect of the stockbroking business are not recognised as part of the Group’s cash and cash equivalents as follows:

Group 2018 2017 rm’000 rm’000

Cash at bank 4,750 4,452

4. dePosits and Placements with financial institutions Group 2018 2017 rm’000 rm’000

Bank Negara Malaysia 2,432,000 –Licensed banks 1,174,855 1,124,343Other financial institutions 30,229 34,742

3,637,084 1,159,085

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ion 5. financial assets held-for-trading

Group 2018 2017 rm’000 rm’000

at fair valueMalaysian Government Investment Issues – 355,681Shares – 134,220Sukuk – 111,273Unit trusts – 6,257

– 607,431

6. financial assets at fair value through Profit or loss (fvtPl) Group 2018 2017 rm’000 rm’000

at fair value Shares 318,013 –Unit trusts 320,305 –Sukuk 374,183 –Malaysian Government Investment Issues 30,328 –Bank Negara Monetary Notes 114,823 –Structured deposits 244,571 –

1,402,223 –

at costShares 380 –

1,402,603 –

Company 2018 2017 rm’000 rm’000

at fair value Unit trusts 6,623 –



7. derivative financial assets/(liabilities)

The following tables summarise the contractual or underlying principal amounts of derivative financial instruments held at fair value through profit or loss and hedging purposes. The principal or contractual amount 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.

notionaL fair VaLue amount assets LiaBiLities Group rm’000 rm’000 rm’00031.12.2018Forward contracts 2,869,455 30,653 (17,752)Profit rate swaps 578,379 3,495 (1,768)

3,447,834 34,148 (19,520)

31.12.2017Forward contracts 3,218,824 63,827 (72,767)Profit rate swaps 607,992 4,492 (1,901)

3,826,816 68,319 (74,668)

8. financial assets available-for-sale Group 2018 2017 rm’000 rm’000at fair value Malaysian Government Investment Issues – 1,525,094Malaysian Government Islamic Papers – 218,952Institutional Trust Account – 251,051Shares – 208,660Sukuk – 10,915,814Unit trusts – 372,566

– 13,492,137

at costShares – 23,849Less: Accumulated impairment loss – (18,549)

– 5,300

– 13,497,437

Company 2018 2017 rm’000 rm’000at fair value Unit trusts# – 174,546

# Included unit trusts managed by a subsidiary of the Group of RM NIL (2017: RM168,209,955)

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ion 9. financial assets at fair value through other comPrehensive income (fvoci)

Group 2018 2017 rm’000 rm’000

Financial assets at fair value through other comprehensive income:a) Debt investment securities 15,651,599 –b) Equity investments 35,518 –

15,687,117 –

a) Debt investment securities at fair value through other comprehensive income

Group 2018 2017 rm’000 rm’000

Malaysian Government Investment Issues 2,129,754 –Institutional Trust Account 318,625 –Malaysian Government Islamic Papers 384,020 –Bank Negara Monetary Notes 389,231 –Islamic commercial papers 306,255 –Sukuk 12,123,714 –

15,651,599 –

Movement of allowance for impairment on financial assets at fair value through other comprehensive income

Group 2018 rm’000

12 months eCLAt 1 January 2018 –– Effects on adoption of MFRS 9 345

At 1 January 2018, as restated 345Reversal of impairment during the year (43)

At 31 December 2018 302



9. financial assets at fair value through other comPrehensive income (fvoci) (continued)

b) Equity investments at fair value through other comprehensive income

Group 2018 2017 rm’000 rm’000

Quoted shares– outside Malaysia 12,446 –

12,446 –

Unquoted shares– in Malaysia 23,056 –– outside Malaysia 16 –

23,072 –

35,518 –

10. financial assets held-to-maturity Group 2018 2017 rm’000 rm’000

at amortised costMalaysian Government Islamic Papers – 59,994

Sukuk – 463,417Less: Accumulated impairment loss – (6,887)

– 456,530

– 516,524

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ion 11. financing, advances and others

(a) By type and shariah contract

BAI’ IJARAH IJARAH BITHAMAN BAI BAI MUNTAHIAH THUMMA GROUP AJIL MURABAHAH AL-DAYN AL-INAH AT-TAwARRUq BIT-TAMLEEk AL-BAI ISTISNA’ AR-RAHNU TOTAL 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At amortised costCash line – – – 1,875 1,521,991 – – – – 1,523,866Term financing

House financing 3,764,219 – – – 14,285,203 – – 51,490 – 18,100,912Syndicated financing – – – 41,327 665,745 – 89,540 – – 796,612Leasing financing – – – – – 106,520 35 – – 106,555Bridging financing – – – – – – – 65,268 – 65,268Personal financing – – – 10,178 13,755,492 – – – – 13,765,670Other term financing 1,099,152 1,239,988 – 6,650 7,992,899 – – 1,194 – 10,339,883

Staff financing 60,777 9,322 – – 155,590 – – 9,846 – 235,535Credit cards – – – – 477,602 – – – – 477,602Trade bills discounted – 820,833 144,827 – – – – – – 965,660Trust receipts – 10,113 – – – – – – – 10,113Pawn broking – – – – – – – – 73,110 73,110Investment Account

Platform* – – – – 9,599 – – – – 9,599

4,924,148 2,080,256 144,827 60,030 38,864,121 106,520 89,575 127,798 73,110 46,470,385

Allowance for impaired financing, advances and others– collective assessment – 12 months expected credit losses (ECL) (416,450)– collective assessment – Lifetime expected credit losses (ECL) (216,564)– individual assessment – Lifetime expected credit losses (ECL) (156,691)

Net financing, advances and others 45,680,680

* This represents a term financing of the Bank Islam’s participation through Investment Account Platform (“IAP”) to finance viable ventures.^ Assets funded under Ijarah financing are owned by Bank Islam throughout the tenure of the Ijarah financing and ownership of the assets will be transferred to customer at the end of financing

tenure for a token consideration or other amount as specified in the Ijarah financing contract.



11. financing, advances and others (continued)

(a) By type and shariah contract (continued)

BAI’ IJARAH IJARAH BITHAMAN BAI BAI MUNTAHIAH THUMMA GROUP AJIL MURABAHAH AL-DAYN AL-INAH AT-TAwARRUq BIT-TAMLEEk AL-BAI ISTISNA’ AR-RAHNU TOTAL 31 DECEMBER 2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At amortised costCash line – – – 29,197 1,207,519 – – – – 1,236,716Term financing

House financing 4,127,474 – – – 11,981,534 – – 55,733 – 16,164,741Syndicated financing – – – 44,968 578,156 – 108,570 – – 731,694Leasing financing – – – – – 87,945 299 – – 88,244Bridging financing – – – – – – – 76,622 – 76,622Personal financing – – – 20,340 12,347,365 – – – – 12,367,705Other term financing 1,532,421 1,130,377 – 3,429 7,558,287 – – 1,257 – 10,225,771

Staff financing 71,358 7,634 – – 134,660 – – 11,676 – 225,328Credit cards – – – – 458,138 – – – – 458,138Trade bills discounted – 819,992 186,433 – – – – – – 1,006,425Trust receipts – 2,922 – – – – – – – 2,922Pawn broking – – – – – – – – 87,222 87,222Investment Account

Platform* – – – – 14,408 – – – – 14,408

5,731,253 1,960,925 186,433 97,934 34,280,067 87,945 108,869 145,288 87,222 42,685,936

Allowance for impaired financing, advances and others– collective assessment allowance (446,069)– individual assessment allowance (126,447)

Net financing, advances and others 42,113,420

* This represents a term financing of the Bank Islam’s participation through Investment Account Platform (“IAP”) to finance viable ventures.^ Assets funded under Ijarah financing are owned by Bank Islam throughout the tenure of the Ijarah financing and ownership of the assets will be transferred to customer at the end

of financing tenure for a token consideration or other amount as specified in the Ijarah financing contract.

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ion 11. financing, advances and others (continued)

(a) By type of and shariah contract (continued)

Included in financing, advances and others are house financing and personal financing that are used for the underlying assets of Unrestricted Investment Accounts (“UA”) and financing sold to Cagamas with recourse to the Group. The details are as follows:

Group 2018 2017 note rm’000 rm’000

House financingUnrestricted Investment Accounts 21 3,816,524 2,982,183Sold to Cagamas with recourse 22 1,501,187 –

5,317,711 2,982,183

Personal financingUnrestricted Investment Accounts 21 1,221,129 987,161

Group 2018 2017 rm’000 rm’000

(b) By type of customer

Domestic non-bank financial institutions 1,637,318 1,353,524Domestic business enterprise 6,924,836 6,426,088Small & medium enterprises 2,092,024 1,869,781Government and statutory bodies 601,285 827,671Individuals 35,069,160 32,014,038Other domestic entities 18,947 7,642Foreign entities 126,815 187,192

46,470,385 42,685,936

(c) By profit rate sensitivity

Fixed rateHouse financing 1,073,575 1,168,200Others 3,102,294 3,560,756

Floating rateHouse financing 17,636,273 15,625,095Others 24,658,243 22,331,885

46,470,385 42,685,936



11. financing, advances and others (continued) Group 2018 2017 rm’000 rm’000

(d) By remaining contractual maturity

Maturity within one year 4,774,098 4,414,217More than one year to three years 1,299,229 1,087,304More than three years to five years 2,921,287 2,598,903More than five years 37,475,771 34,585,512

46,470,385 42,685,936

(e) By geographical distribution

Central Region 22,125,064 20,673,380Eastern Region 7,646,307 6,860,968Northern Region 6,640,816 6,121,471Southern Region 6,723,490 5,908,526East Malaysia Region 3,334,708 3,121,591

46,470,385 42,685,936

(f) By sector

Primary agriculture 754,835 486,679Mining and quarrying 9,060 8,080Manufacturing (including agro-based) 909,850 835,268Electricity, gas and water 371,479 337,388Wholesale & retail trade, and hotels & restaurants 1,098,346 1,228,681Construction 2,417,262 2,176,453Real estate 1,712,250 1,582,531Transport, storage and communications 824,949 655,633Finance, insurance and business activities 2,299,319 2,147,118Education, health and others 1,000,735 1,210,056Household sectors 35,072,300 32,018,049

46,470,385 42,685,936

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(g) movement in impaired financing and advances (“impaired financing”)

Group 2018 2017 rm’000 rm’000

At 1 January 398,277 389,445Classified as impaired during the year 621,974 648,281Reclassified as not impaired during the year (321,635) (331,592)Amount recovered (117,477) (92,432)Amount written off (155,202) (209,231)Exchange differences – (6,194)

At 31 December 425,937 398,277

Gross impaired financing as a percentage of gross financing, advances and others 0.92% 0.93%

The contractual amount outstanding on financing and advances that were written off during the year are still subject to enforcement activity.

Group 2018 2017 rm’000 rm’000

(h) impaired financing by geographical distribution

Central Region 245,531 223,305Eastern Region 101,868 107,422Northern Region 25,349 28,710Southern Region 31,320 22,915East Malaysia Region 21,869 15,925

425,937 398,277

(i) impaired financing by sector

Manufacturing (including agro-based) 21,426 35,448Wholesale & retail trade, and hotels & restaurants 56,665 38,433Construction 123,007 86,357Transport, storage and communications 10,936 12,604Finance, insurance and business activities 3,066 3,799Education, health and others 4,642 5,106Household sectors 206,195 216,530

425,937 398,277



11. financing, advances and others (continued)

(j) movement of allowance for impairment on financing, advances and others

COLLECTIvE LIFETIME ECL NOT LIFETIME ECL TOTAL GROUP 12-MONTH ECL CREDIT-IMPAIRED CREDIT-IMPAIRED COLLECTIvE INDIvIDUAL TOTAL 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2018 446,069 126,447 572,516Effects of adoption on MFRS 9 187,404 1,695 189,099

Restated at 1 January 2018 390,478 139,501 103,494 633,473 128,142 761,615Transfer to 12- month ECL 6,841 (6,525) (316) – – –Transfer to Lifetime ECL not credit

impaired (4,419) 8,639 (4,220) – – –Transfer to Lifetime ECL credit

impaired (523) (8,454) 8,977 – – –Net allowance made during the year (22,326) 1,175 101,690 80,539 58,801 139,340New financial assets originated

or purchased 88,675 7,437 5,090 101,202 – 101,202Financial assets that have been

derecognised (39,166) (12,371) (2,603) (54,140) – (54,140)Write-offs – – (124,950) (124,950) (30,252) (155,202)Exchange differences (3,110) – – (3,110) – (3,110)

At 31 December 2018 416,450 129,402 87,162 633,014 156,691 789,705

Group 2017 rm’000

Collective assessment allowanceAt 1 January 554,971 Net allowance made during the year 34,706 Amount written off (141,940)Exchange differences (1,668)

At 31 December 446,069

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(j) movement of allowance for impairment on financing, advances and others (continued)

Group 2017 rm’000

Individual assessment allowanceAt 1 January 128,198Net allowance made during the year 102,059Amount recovered (30,324)Amount written off (67,291)Exchange differences (6,195)

At 31 December 126,447

(k) effect of modifications on the measurement of allowance for impaired financing, advances and others

The following table discloses information on financing and advances that were modified but not derecognised during the year, for which the allowance for impaired financing, advances and others were measured at a lifetime ECL at the beginning of the year, and at the end of the year had changed to a 12-months ECL:

Group 2018 rm’000

Amortised cost before the modification 15,756Gross carrying amount at end of reporting period 15,921

12. other financial assets at amortised cost Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000

Clients’ and dealers’ debit balances 32,037 47,395 – –Deposits and prepayments 44,143 43,714 454 462Amount due from subsidiaries – – 337 320Investment profit receivable 70,882 97,659 – –Other financing 80,073 78,620 – –Other receivables 122,458 99,604 424 1,169Sukuk^ 6,887 – – –

356,480 366,992 1,215 1,951Less: Accumulated impairment loss:

Individual assessment Sukuk^ (6,887) – – –Other receivables (475) – – –

349,118 366,992 1,215 1,951

^ Previously classified as financial assets held-to-maturity as disclosed in note 10. These assets are classified and measured at amortised cost under MFRS 9.

Amount due from subsidiaries are non-trade in nature, not subject to financing charges and has no fixed term of repayments.



13. takaful assets Group 2018 2017 note rm’000 rm’000Retakaful assets:– Claims liabilities 24(a)(i) 296,534 254,804– Contribution liabilities 24(a)(ii) 76,884 71,308– Actuarial liabilities 24(a)(iii) 163,719 179,484

537,137 505,596

Takaful receivables– Due contributions 105,712 139,677– Due from retakaful/co-takaful 39,490 39,728

145,202 179,405Less: Allowance for impaired receivables 46.3(iv) (6,107) (7,288)

139,095 172,117

676,232 677,713

14. statutory dePosits with bank negara malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act, 2009, the amount of which are determined as set percentages of total eligible liabilities.

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ion 15. deferred tax assets

recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

ASSETS LIABILITIES TOTAL 2018 2017 2018 2017 2018 2017 GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property and equipment – – (6,657) (9,022) (6,657) (9,022) Other investments 3,452 997 – – 3,452 997Unabsorbed capital allowances 1,292 13,197 – – 1,292 13,197Provisions 35,605 33,292 – – 35,605 33,292Expense reserves 34,394 26,592 – – 34,394 26,592Impairment allowances 26,860 – – – 26,860 –Change in fair value reserve – 6,967 (831) – (831) 6,967Set off of tax (7,488) (9,022) 7,488 9,022 – –

Tax assets/(liabilities) 94,115 72,023 – – 94,115 72,023

COMPANYTax assets 10 10 – – 10 10

unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

2018 2017 Group rm’000 rm’000

Unabsorbed capital allowances 128,475 78,475Unutilised tax losses 1,251 6,701Deductible temporary differences 329 329

130,055 85,505

The Group’s unabsorbed capital allowances of RM128,440,000 in respect of its leasing business whereby management considered it uncertain whether Bank Islam is able to utilise the benefits in the future. As such, deferred tax assets have not been recognised.



15. deferred tax assets (continued)

Movement in temporary differences during the year:

RECOGNISED EFFECT OF RECOGNISED EFFECT OF RECOGNISED IN OTHER MOvEMENT ADJUSTMENT RECOGNISED IN OTHER MOvEMENT AS AT IN PROFIT COMPREHENSIvE IN ExCHANGE AS AT ON ADOPTION AS AT IN PROFIT COMPREHENSIvE IN ExCHANGE AS AT 1.1.2017 OR LOSS INCOME RATE 31.12.2017 OF MFRS9 1.1.2018 OR LOSS INCOME RATE 31.12.2018 GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property and equipment (17,050) 8,028 – – (9,022) – (9,022) 2,365 – – (6,657)

Other investments 2,320 141 (1,455) (9) 997 1,390 2,387 2,063 (998) – 3,452Unabsorbed capital

allowances 25,299 (12,102) – – 13,197 – 13,197 (11,905) – – 1,292Provisions 25,018 8,342 105 (173) 33,292 – 33,292 2,438 101 (226) 35,605Impairment

allowances – – – – – – – 26,860 – – 26,860Expense reserves 18,923 7,669 – – 26,592 – 26,592 7,802 – – 34,394Change in fair

value reserve 15,925 – (8,958) – 6,967 (4,165) 2,802 – (3,633) – (831)

Total assets 70,435 12,078 (10,308) (182) 72,023 (2,775) 69,248 29,623 (4,530) (226) 94,115

Note 41 Note 41

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ion 16. investments in subsidiaries

Company 2018 2017 rm’000 rm’000at costQuoted shares in Malaysia 99,053 99,053Unquoted shares in Malaysia 5,210,042 5,067,172

5,309,095 5,166,225

Details of the subsidiaries are as follows:

effeCtiVe oWnersHip interest 2018 2017name of Company prinCipaL aCtiVities % %

Bank Islam Malaysia Berhad Islamic banking business 100 100 (“Bank Islam” or “the Bank”)

Subsidiaries of Bank Islam Malaysia Berhad

BIMB Investment Management Berhad Managing Islamic Unit Trust Funds 100 100

Al-Wakalah Nominees (Tempatan) Provide nominee services 100 100 Sdn. Bhd.

Farihan Corporation Sdn. Bhd. Provide manpower for the provision 100 100 of services in the relevant areas

Bank Islam Trust Company Provide services as Labuan registered 100 100 (Labuan) Ltd. trust company

Subsidiary of Bank Islam Trust Company (Labuan) Ltd.

BIMB Offshore Company Management Resident Corporate Secretary and 100 100 Services Sdn. Bhd. Director for Offshore Companies

Syarikat Takaful Malaysia Keluarga Family and General 59.64 59.72 Berhad (“Takaful Malaysia”) Takaful business

Subsidiaries of Syarikat Takaful Malaysia Keluarga Berhad

Syarikat Takaful Malaysia Am Berhad General Takaful business 100 100

P.T. Syarikat Takaful Indonesia*# Investment holding 56 56

Subsidiaries of P.T. Syarikat Takaful Indonesia

P.T. Asuransi Takaful Keluarga*# Family Takaful business 74.80 74.80

BIMB Securities (Holdings) Sdn. Bhd. Investment holding 100 100

Subsidiary of BIMB Securities (Holdings) Sdn. Bhd.

BIMB Securities Sdn. Bhd. Stockbroking 100 100

Subsidiaries of BIMB Securities Sdn. Bhd.

BIMSEC Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

BIMSEC Nominees (Asing) Sdn. Bhd. Nominee services 100 100

Syarikat Al-Ijarah Sdn. Bhd. Leasing of assets 100 100

* Incorporated in Indonesia. # Audited by other member firm of KPMG International.



16. investments in subsidiaries (continued)

non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:

syariKat taKafuL maLaysia KeLuarGa BerHaD 2018 2017

nCi percentage of ownership interest and voting interest 40.36% 40.28%

Carrying amount of NCI (RM’000) 469,003 384,414

Profit allocated to NCI (RM’000) 118,721 85,004

summarised financial information before intra-group elimination

syariKat taKafuL maLaysia KeLuarGa BerHaD 2018 2017 rm’000 rm’000

as at 31 December Assets 8,931,576 8,194,600Liabilities (7,919,418) (7,361,146)

Net Assets 1,012,158 833,454

year ended 31 December Operating revenue 2,639,065 2,139,160Profit for the year 292,617 205,073Total comprehensive income 295,850 206,456

Cash flows from operating activities 284,009 130,266Cash flows used in investing activities (67,580) (30,974)Cash flows used in financing activities (123,472) (98,514)

Net increase in cash and cash equivalents 92,957 778

Dividends paid to NCI 49,739 39,528

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ion 17. ProPerty and equiPment

FURNITURE, COMPUTER **LAND FIxTURES EqUIPMENT AND AND OFFICE MOTOR AND BUILDINGS FITTINGS EqUIPMENT vEHICLES SOFTwARE TOTAL GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostAt 1 January 2017 280,301 158,373 99,280 2,065 456,188 996,207Additions 5,987 1,830 5,600 1,039 31,312 45,768Reclassifications (2,124) 1,362 686 – 76 –Disposals – (59) (255) (986) (1,439) (2,739)Written off (113) (921) (420) – (2) (1,456)Reclassified from investment properties 3,358 – – – – 3,358Disposal of subsidiary (9) – – – – (9)Exchange difference (1,417) (97) (359) (54) (798) (2,725)

At 31 December 2017/1 January 2018 285,983 160,488 104,532 2,064 485,337 1,038,404Additions 5,923 7,228 4,447 573 62,943 81,114Reclassifications (2,230) 1,694 321 – 215 –Disposals – (406) (543) (4) (6,093) (7,046)Written off (133) (688) (602) – (378) (1,801)Exchange difference (585) (567) (1,949) (111) (4,451) (7,663)

At 31 December 2018 288,958 167,749 106,206 2,522 537,573 1,103,008



17. ProPerty and equiPment (continued) FURNITURE, COMPUTER **LAND FIxTURES EqUIPMENT AND AND OFFICE MOTOR AND BUILDINGS FITTINGS EqUIPMENT vEHICLES SOFTwARE TOTAL GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

DepreciationAt 1 January 2017 52,126 110,768 78,192 1,467 336,640 579,193Depreciation for the year 6,573 9,477 8,465 380 42,000 66,895Reclassifications – (43) 43 – – –Disposals – (56) (248) (510) (1,356) (2,170)Written off (104) (898) (396) – (76) (1,474)Reclassified from investment properties 253 – – – – 253Disposal of subsidiary (2) – – – – (2)Exchange difference (746) (95) (349) (24) (701) (1,915)

At 31 December 2017/1 January 2018 58,100 119,153 85,707 1,313 376,507 640,780Depreciation for the year 6,330 9,554 8,272 373 37,031 61,560Disposals – (393) (403) (4) (6,104) (6,904)Written off (72) (476) (545) – (368) (1,461)Exchange difference (314) (559) (1,919) 12 (3,962) (6,742)

At 31 December 2018 64,044 127,279 91,112 1,694 403,104 687,233

Carrying amountsAt 1 January 2017 228,175 47,605 21,088 598 119,548 417,014

At 31 December 2017 227,883 41,335 18,825 751 108,830 397,624

At 31 December 2018 224,914 40,470 15,094 828 134,469 415,775

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ion 17. ProPerty and equiPment (continued)

BUILDING IMPROvEMENTS FREEHOLD FREEHOLD LEASEHOLD LEASEHOLD AND LAND BUILDING LAND BUILDING RENOvATIONS TOTAL ** LAND AND BUILDINGS – GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostAt 1 January 2017 50,890 139,335 14,784 39,484 35,808 280,301Additions – – – 241 5,746 5,987Reclassifications – – – – (2,124) (2,124)Written off – – – – (113) (113)Reclassified from investment properties – – – 3,358 – 3,358Disposal of subsidiary – – – (9) – (9)Exchange difference – – – (1,415) (2) (1,417)

At 31 December 2017/1 January 2018 50,890 139,335 14,784 41,659 39,315 285,983Additions – – – 72 5,851 5,923Reclassifications – – – – (2,230) (2,230)Written off – – – – (133) (133)Exchange difference – – – (586) 1 (585)

At 31 December 2018 50,890 139,335 14,784 41,145 42,804 288,958

DepreciationAt 1 January 2017 – 16,867 1,652 9,301 24,306 52,126Depreciation for the year – 2,807 174 1,304 2,288 6,573Written off – – – – (104) (104)Reclassified from investment properties – – – 253 – 253Disposal of subsidiary – – – (2) – (2)Exchange difference – – – (744) (2) (746)

At 31 December 2017/1 January 2018 – 19,674 1,826 10,112 26,488 58,100Depreciation for the year – 2,807 174 1,212 2,137 6,330Written off – – – – (72) (72)Exchange difference – – – (314) – (314)

At 31 December 2018 – 22,481 2,000 11,010 28,553 64,044

Carrying amountsAt 1 January 2017 50,890 122,468 13,132 30,183 11,502 228,175

At 31 December 2017 50,890 119,661 12,958 31,547 12,827 227,883

At 31 December 2018 50,890 116,854 12,784 30,135 14,251 224,914



17. ProPerty and equiPment (continued) furniture, offiCe fixtures equipment anD motor anD fittinGs renoVation VeHiCLes Computer totaL Company rm’000 rm’000 rm’000 rm’000 rm’000

CostAt 1 January 2017 1,096 1,467 415 727 3,705Additions 1 51 – 157 209

At 31 December 2017/1 January 2018 1,097 1,518 415 884 3,914Additions 2 – – 70 72Written off – – – (8) (8)

at 31 December 2018 1,099 1,518 415 946 3,978

Accumulated depreciationAt 1 January 2017 1,096 1,051 415 572 3,134Depreciation for the year – 237 – 59 296

At 31 December 2017/1 January 2018 1,096 1,288 415 631 3,430Depreciation for the year – 92 – 74 166

at 31 December 2018 1,096 1,380 415 705 3,596

Carrying amountsAt 1 January 2017 – 416 – 155 571

At 31 December 2017 1 230 – 253 484

at 31 December 2018 3 138 – 241 382

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ion 18. investment ProPerties

LeaseHoLD freeHoLD freeHoLD LanD anD LanD BuiLDinG BuiLDinG totaL Group rm’000 rm’000 rm’000 rm’000

CostAt 1 January 2017 1,897 2,253 10,864 15,014Reclassified to property and equipment – – (3,358) (3,358) Exchange difference – – (51) (51)

At 31 December 2017/1 January 2018 1,897 2,253 7,455 11,605Disposal – – (61) (61) Exchange difference – – (21) (21)

at 31 December 2018 1,897 2,253 7,373 11,523

Depreciation At 1 January 2017 – 270 618 888Depreciation for the year – 45 74 119Reclassified to property and equipment – – (253) (253)Exchange difference – – (17) (17)

At 31 December 2017/1 January 2018 – 315 422 737Depreciation for the year – 45 68 113Disposal – – (18) (18) Exchange difference – – (7) (7)

at 31 December 2018 – 360 465 825

Carrying amountsAt 1 January 2017 1,897 1,983 10,246 14,126

At 31 December 2017 1,897 1,938 7,033 10,868

at 31 December 2018 1,897 1,893 6,908 10,698

Investment properties comprise a number of commercial properties that are leased to third parties. Each of the leases contains an initial non-cancellable period of 3 years. Subsequent renewals are negotiated with the lessee and on average renewal periods of 3 years.



18. investment ProPerties (continued)

Fair value of the Group’s investment properties are categorised as follows:

LeVeL 1 LeVeL 2 LeVeL 3 totaL 2018 rm’000 rm’000 rm’000 rm’000

Freehold land and buildings – – 2,620 2,620Leasehold land and buildings – – 9,956 9,956

– – 12,576 12,576

2017Freehold land and buildings – – 2,560 2,560Leasehold land and buildings – – 10,120 10,120

– – 12,680 12,680

The following are amounts arising from investment properties that have been recognised in profit or loss during the financial year:

Group

2018 2017 rm’000 rm’000

Rental income (net of direct operating expenses) 3,509 4,956

policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

fair value information

Level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical investment properties that the entity can access at the measurement date.

Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the investment property, either directly or indirectly.

Level 2 fair values of land and buildings have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties.

transfer between Level 1 and 2 fair values

There is no transfer between Level 1 and 2 fair values during the financial year.

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ion 18. investment ProPerties (continued)

fair value information (continued)

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the investment property.

The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the significant unobservable inputs used in the valuation models.

inter-reLationsHip BetWeen siGnifiCant siGnifiCant unoBserVaBLe inputs unoBserVaBLe anD fair VaLue VaLuation teCHnique inputs measurement

Comparison method: The valuation method Adjustment rate based The estimated fair value consider the sales and listing of comparable on the comparable would increase/(decrease) if: properties recorded in the area and adjustments sales in the past that – the rate were higher are made between the subject properties and was analysed by the or lower those similar properties. The adjustments are National Property – the historical sales made in relation to location and accessibility, Information Centre transaction were higher size and shape of the lot, physical features, (NAPIC) under Valuation or lower legal and legislation constraints, building design and Property Services and condition, supply and demand, Department, Ministry building code and public restriction. of Finance Malaysia.

Valuation processes applied by the Group and the Company for Level 3 fair value

The Group’s investment properties were valued by independent professional valuer firms, using the comparison, cost and investment methods of valuations, where applicable.

In the comparison method approach, the sales and listings of comparable properties within nearby locations are compiled. From the compiled data, adjustments are made by the valuers between the subject property and those similar properties.

The adjustments made are in relation to location, size and shape of the lot, physical features, legal and legislative constraints, building design and condition, time element, planning provision, improvements and renovation works made, if any, surrounding developments, facilities and amenities available and other factors that may affect the value of the subject property. These adjustments are therefore subject to uncertainties such as property market outlook, potential increases in rental rates and general economic conditions.

In the cost method approach, the indication of values consists of the sum of the present worth of the improvement value.



18. investment ProPerties (continued)

Valuation processes applied by the Group and the Company for Level 3 fair value (continued)

For the valuation of the improvements, the valuers have considered the following:

i) Cost of replacement of the building in accordance with current trend of market prices for materials, labour, contractor’s overhead,profitandfees;

ii) Accrued depreciation as evidenced by the observed condition and present and prospective serviceability in comparison with newunitsoflikekind;and

iii) Extent, character and utility of the property.

The investment method is the capitalisation of net rent from a property. Net rent is the residue of gross annual rent less annual expenses (outgoings) required to sustain the rent with allowance for void and management fees.

The external valuers have considered the results of all these three methods in their valuation and applied professional judgement in the selection of the fair value of these investment properties.

During the year, the external valuers performed an update of the market values of these investment properties in arriving at the fair value, after considering the properties’ existing condition. In the previous financial year, the external valuers have considered the results of all these three methods in their valuation and applied professional judgement in the selection of the fair value of these investment properties.

19. intangible assets BanCataKafuL serViCe fees rm’000takaful

CostAt 1 January 2017 61,321Additions 17,000

At 31 December 2017 / 1 January 2018 78,321Additions 68,000

At 31 December 2018 146,321

amortisationAt 1 January 2017 (17,374) Amortisation during the year (13,115)

At 31 December 2017 / 1 January 2018 (30,489) Amortisation during the year (22,464)

At 31 December 2018 (52,953)

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ion 19. intangible assets (continued)

BanCataKafuL serViCe fees rm’000takaful

Carrying amountsAt 1 January 2017 43,947

At 31 December 2017 / 1 January 2018 47,832

At 31 December 2018 93,368

The intangible assets are in relation to the followings:

(i) Bancatakaful Service Agreement with RHB Islamic Bank (RHB) pursuant to the term of the Bancatakaful Service Agreement (the Agreement) entered on 26 August 2015, whereby the Company can distribute its Family takaful products via RHB Islamic Bank’s distribution channel.

The term of the Agreement is divided over two periods, where the First Period is for the five years of the term commencing on the agreement date and the Second Period is for the subsequent five years. Either Party has the right to terminate the Agreement at the expiry of the First Period. Subject to the commencement of the Second Period, a service fee of RM45,000,000 (inclusive of Goods and Services Tax) will be payable to RHB.

(ii) Bancatakaful Service Agreement with Affin Islamic Bank Berhad which is effective from 15 September 2017 to distribute Family takaful products via their distribution channel.

(iii) Bancatakaful Service Agreement with Bank Kerjasama Rakyat Malaysia Berhad which is effective from 1 July 2018 to distribute Family takaful products via their distribution channel. The consideration in relation to the Bancatakaful Service Agreement was paid in September 2018.

The intangible assets are amortised over its useful life of five years using the straight-line method.



20. dePosits from customers

(a) By type of deposit

Group 2018 2017 rm’000 rm’000

savings depositsWadiah 4,410,537 4,138,519

Demand depositsWadiah 10,644,574 11,297,399

term deposits 34,284,831 30,331,784

Special Investment DepositMudharabah 6,252 6,182

General Investment DepositMudharabah 287,013 322,388

Term Deposit-iTawarruq 30,309,186 26,442,155

Negotiable Islamic Debt Certificates (“NIDC”) 3,682,380 3,561,059

others 93,604 102,894

total deposits 49,433,546 45,870,596

(b) maturity structure of term deposits are as follows:

Group 2018 2017 rm’000 rm’000

Due within six months 15,986,833 18,287,237More than six months to one year 9,685,300 8,734,219More than one year to three years 6,484,593 1,618,691More than three years to five years 2,128,105 1,691,637

34,284,831 30,331,784

(c) By type of customer

Domestic non-bank financial institutions 11,923,695 13,741,161Business enterprises 16,725,704 12,406,686Government and statutory bodies 12,049,184 8,847,454Individuals 5,199,550 4,810,541Domestic banking institutions 1,634,224 3,395,740Others 1,901,189 2,669,014

49,433,546 45,870,596

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ion 21. investment accounts of customers

Group 2018 2017 rm’000 rm’000

(a) By type and shariah contract

unrestricted investment accounts Without maturity

Mudharabah 2,594,846 1,994,491

With maturity Wakalah 2,442,807 1,974,853

5,037,653 3,969,344

restricted investment accounts (“ria”) managed by Bank islam ^With maturity

Wakalah 78,717 124,384

^ Included in RIA managed by Bank Islam is an arrangement between Bank Islam and its ultimate holding entity where Bank Islam acts as the investment agent to manage and administer the RIA with underlying assets amounting to RM78,285,000 (2017: RM123,962,000).

Group 2018 2017 rm’000 rm’000

(b) By type of customer

Government and statutory bodies 767,996 400,709Business enterprises 507,160 474,464Individuals 2,674,428 2,212,239Non-bank financial institutions 1,036,107 786,457Bank and other financial institutions 2,400 –Others 49,562 95,475

5,037,653 3,969,344



21. investment accounts of customers (continued)

(c) movement of investment accounts of customers

restriCteD inVestment aCCounts muDHaraBaH WaKaLaH totaL WaKaLaH Group rm’000 rm’000 rm’000 rm’000

As at 1 January 2017 1,516,844 2,057,027 3,573,871 141,343

Funding inflows/(outflows):Net movement 475,709 – 475,709 –New placement – 3,550,293 3,550,293 19,939Redemption/Principal repayment – (3,727,155) (3,727,155) (46,150)Income from investment 94,386 139,112 233,498 11,847

Bank Islam’s share of profit:Profit distributed to Mudharib (92,448) – (92,448) –Wakalah performance incentive fee – (44,424) (44,424) (2,595)

As at 31 December 2017/1 January 2018 1,994,491 1,974,853 3,969,344 124,384

Funding inflows/(outflows):Net movement 594,825 – 594,825 –New placement – 1,089,909 1,089,909 6,000Redemption/Principal repayment – (696,338) (696,338) (60,080)Income from investment 122,521 112,315 234,836 8,898

Bank Islam’s share of profit:Profit distributed to Mudharib (116,991) – (116,991) –Wakalah performance incentive fee – (37,932) (37,932) (485)

As at 31 December 2018 2,594,846 2,442,807 5,037,653 78,717

Investment portfolio:

2018House financing 2,594,846 1,221,678 3,816,524 –Personal financing – 1,221,129 1,221,129 –Other term financing – – – 78,717

2,594,846 2,442,807 5,037,653 78,717

2017House financing 1,994,491 987,692 2,982,183 –Personal financing – 987,161 987,161 –Other term financing – – – 124,384

1,994,491 1,974,853 3,969,344 124,384

unrestriCteD inVestment aCCounts

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ion 21. investment accounts of customers (continued)

(d) By maturity structures, profit sharing ratio and rate of return

inVestment aCCount HoLDers

BanK isLam’s aVeraGe WaKaLaH profit aVeraGe performanCe totaL sHarinG rate of inCentiVe amount ratio return fee rm’000 (%) (%) (%)

2018Unrestricted investment accounts:Less than 3 months

– Mudharabah 2,594,846 2 0.24 –– Wakalah 973,533 – 3.81 1.45

3,568,379Between 3 to 12 months

– Wakalah 1,469,274 – 3.72 1.72

5,037,653

Restricted investment accounts:Less than 2 years 87 – 6.30 0.30Between 2 to 5 years 78,630 – 1.85 0.46

78,717

2017Unrestricted investment accounts:Less than 3 months

– Mudharabah 1,994,491 2 0.11 –– Wakalah 938,830 – 3.69 1.45

2,933,321Between 3 to 12 months

– Wakalah 1,036,023 – 3.72 1.42

3,969,344

Restricted investment accounts:Less than 2 years 10,000 – 6.30 0.30Between 2 to 5 years 114,384 – 3.52 1.88

124,384



22. recourse obligations on financing sold to cagamas

Recourse obligations on financing sold to Cagamas represents house financing accounts that were sold to Cagamas with recourse. Under the agreement, Bank Islam (“the Bank”) undertakes to administer the financing on behalf of Cagamas and to buy back any financing which are regarded as defective based on pre-determined and agreed-upon prudential criteria with recourse against the Bank. Such financing transactions and the obligation to buy back the financing are reflected as a liability on the statements of financial position. The financing are not de-recognised and are analysed in Note 11.

23. other liabilities Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000

Accruals and other payables 990,770 990,277 3,200 3,244Amount due to subsidiaries – – 22 70Clients’ and dealers’ credit balances 32,089 47,048 – –Dividend payable 262,503 229,284 262,503 229,284

1,285,362 1,266,609 265,725 232,598

The amount due to subsidiaries is non-trade, unsecured, not subject to financing charge and are repayable on demand.

24. takaful liabilities Group 2018 2017 note rm’000 rm’000

Takaful contract liabilities 24(a) 7,072,782 6,658,675Expense reserves 24(b) 251,806 196,655Takaful payables 24(c), 46.5(b) 114,267 106,983

7,438,855 6,962,313

(a) takaful contract liabilities

The takaful contract liabilities comprise the following:

Group 2018 2017 note rm’000 rm’000

Provision for outstanding claims 24(a)(i) 633,725 545,134Provision for unearned contributions 24(a)(ii) 376,971 341,975Participants’ fund 24(a)(iii) 6,062,086 5,771,566

7,072,782 6,658,675

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ion 24. takaful liabilities (continued)

(a) takaful contract liabilities (continued)

(i) provision for outstanding claims

The provision for outstanding claims and its movements are further analysed as follows:

2018 Gross retaKafuL net note rm’000 rm’000 rm’000

family takafulProvision for claims reported by participants 27,361 (4,027) 23,334Provision for IBNR* 138,380 (34,477) 103,903

Provision for outstanding claims 165,741 (38,504) 127,237

General takafulProvision for claims reported by participants 267,294 (165,838) 101,456Provision for IBNR* 200,690 (92,192) 108,498


Note 47(b) Note 47(b)

GroupProvision for claims reported by participants 46.5(b) 294,655 (169,865) 124,790Provision for IBNR* 339,070 (126,669) 212,401


Note 13

2017 Gross retaKafuL net note rm’000 rm’000 rm’000

family takaful Provision for claims reported by participants 28,171 (4,664) 23,507Provision for IBNR* 119,775 (27,311) 92,464


General takafulProvision for claims reported by participants 224,950 (139,243) 85,707Provision for IBNR* 172,238 (83,586) 88,652


GroupProvision for claims reported by participants 46.5(b) 253,121 (143,907) 109,214Provision for IBNR* 292,013 (110,897) 181,116


Note 13

* Incurred-but-not-reported (“IBNR”)



24. takaful liabilities (continued)


(i) provision for outstanding claims (continued)

Movement of provision for outstanding claims:

Group Gross retaKafuL net rm’000 rm’000 rm’000

at 1 January 2017 582,184 (261,426) 320,758Claims incurred during the year 1,011,841 (160,964) 850,877Adjustment to claims incurred in prior accident years (10,176) 2,108 (8,068)Claims paid during the year (1,005,307) 163,996 (841,311)(Decrease)/Increase in IBNR (30,969) 323 (30,646)Disposal of subsidiary (1,729) 861 (868)Effect of movement in exchange rates (710) 298 (412)

at 31 December 2017/1 January 2018 545,134 (254,804) 290,330Claims incurred during the year 1,149,261 (182,935) 966,326Adjustment to claims incurred in prior accident years 4,953 (3,287) 1,666Claims paid during the year (1,112,580) 160,215 (952,365)Increase/(Decrease) in IBNR 47,085 (15,806) 31,279Acquisition of general takaful business 39 – 39Effect of movement in exchange rates (167) 83 (84)

at 31 December 2018 633,725 (296,534) 337,191

(ii) provision for unearned contributions

The provision for unearned contributions and its movements are further analysed as follows:


31.12.2018 376,971 (76,884) 300,087

Note 13

31.12.2017 341,975 (71,308) 270,667

Note 13

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(ii) provision for unearned contributions (continued)

Movement of provision for unearned contributions:


at 1 January 2017 316,569 (62,969) 253,600Contributions written during the year 587,542 (250,490) 337,052Contributions earned during the year (554,442) 241,398 (313,044)Disposal of subsidiary (6,886) 603 (6,283)Effect of movement in exchange rates (808) 150 (658)

at 31 December 2017/1 January 2018 341,975 (71,308) 270,667Contributions written during the year 709,334 (267,964) 441,370Contributions earned during the year (685,807) 262,388 (423,419)Acquisition of general takaful business 11,469 – 11,469Effect of movement in exchange rates – – –

at 31 December 2018 376,971 (76,884) 300,087

(iii) participants’ fund

Participants’ fund balance at end of the reporting period comprises the following:


31.12.2018Actuarial liabilities 5,020,886 (163,719) 4,857,167Unallocated surplus/accumulated surplus 822,801 – 822,801Fair value reserve 29,778 – 29,778Net assets value attributable to unitholders 188,621 – 188,621

6,062,086 (163,719) 5,898,367

Note 13

31.12.2017Actuarial liabilities 4,755,894 (179,484) 4,576,410Unallocated surplus/accumulated surplus 962,329 – 962,329AFS reserve (27,468) – (27,468) Translation reserve (1,565) – (1,565) Net assets value attributable to unitholders 82,376 – 82,376

5,771,566 (179,484) 5,592,082

Note 13



24. takaful liabilities (continued)


(iii) participants’ fund (continued)

GROUP 2018 2017 GROSS RETAkAFUL NET GROSS RETAkAFUL NET GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 5,771,566 (179,484) 5,592,082 5,497,622 (144,096) 5,353,526Adjustment on initial

application of MFRS 9 1,672 – 1,672 – – –

At 1 January 2018, restated/1 January 2019 5,773,238 (179,484) 5,593,754 5,497,622 (144,096) 5,353,526

Net earned contributions 2,031,898 (90,408) 1,941,490 1,577,342 (56,178) 1,521,164Investment income 280,234 – 280,234 271,303 – 271,303Realised gains 1,917 – 1,917 21,412 – 21,412 Fair value loss (73,883) – (73,883) (1,698) – (1,698)Other operating income 5,712 – 5,712 2,510 – 2,510Net benefits and claims (1,073,609) 65,768 (1,007,841) (882,504) 64,009 (818,495) Net fees deducted (771,918) – (771,918) (549,235) – (549,235) Other operating expenses (50) – (50) (13,206) – (13,206) Profit paid to participants (23,698) – (23,698) (29,449) – (29,449) (Decrease)/Increase in

actuarial liabilities (15,688) 14,878 (810) 18,878 (37,319) (18,441) Profit attributable to the

Takaful Operator (79,028) 24,641 (54,387) (74,841) (7,831) (82,672) Excess payment transferred

to participants (7,634) – (7,634) (12,535) – (12,535) Net change in fair value on

debt instruments at FVOCI 43,984 – 43,984 – – – Change in AFS reserve – – – 27,216 – 27,216 Withholding tax (9,602) – (9,602) (25,924) – (25,924) Disposal of subsidiary – – – (6,737) – (6,737) Effect of movement in

exchange rates (19,787) 886 (18,901) (48,588) 1,931 (46,657)

At 31 December 6,062,086 (163,719) 5,898,367 5,771,566 (179,484) 5,592,082

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(b) expense reserves

Group 2018 2017 rm’000 rm’000

At 1 January 196,655 159,310Provision for the year, net 52,260 37,897Acquisition of general takaful business 3,077 –Effect of movement in exchange rates (186) (552)

At 31 December 251,806 196,655

(c) takaful payables

Group 2018 2017 rm’000 rm’000

Due to retakaful companies 91,806 86,409Due to Intermediaries/Participants 22,461 20,574

114,267 106,983

25. sukuk liabilities Group Company 2018 2017 2018 2017 note rm’000 rm’000 rm’000 rm’000

Sukuk liabilities (i) 844,159 1,279,512 844,159 1,279,512Subordinated Sukuk Murabahah (ii) 1,258,513 956,350 – –

2,102,672 2,235,862 844,159 1,279,512

The Sukuk liabilities comprise the following:

(i) The 10-year Islamic securities of RM1.05 billion (2017: RM1.66 billion) in nominal value issued by the Company on 12 December 2013.

On 12 December 2018, the Company has made an early partial redemption of RM609,941,757.88 in nominal value of the Sukuk Murabahah, which is equivalent to a redemption at book value of RM500 million.



25. sukuk liabilities (continued)

(ii) The Subordinated Sukuk Murabahah comprise the following:

nominaL VaLue issue first CaLL maturity profit rate rm’000 Date Date* Date (% p.a.)#

(a) 300,000 22 April 2015 22 April 2020 22 April 2025 5.75

(b) 400,000 15 December 2015 15 December 2020 15 December 2025 5.50

(c) 300,000 13 November 2017 12 December 2022 12 November 2027 5.08

(d) 300,000 7 November 2018 7 December 2023 7 November 2028 5.15

* Optional redemption date or any periodic payment date thereafter. # Accrued and payable semi-annually in arrears.

The Subordinated Sukuk Murabahah qualifies as Tier II capital for the computation of the regulatory capital of the Bank in accordance with the Capital Adequacy Framework (Capital Components) for Islamic Banks issued by BNM.

Reconciliation of movement of Sukuk Liabilities to cash flows arising from financing activities is as follows:

NET CHANGES FROM FINANCING CASH FLOwS AT (REDEMPTION) FINANCE COST FINANCE COST AT 1.1.2018 /ISSUANCE PAYABLE TOTAL FOR THE YEAR 31.12.2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000GroupSukuk Liabilities 1,279,512 (500,000) (24,900) (524,900) 89,547 844,159Subordinated Sukuk Murabahah 956,350 300,000 (51,798) 248,202 53,961 1,258,513

2,235,862 (200,000) (76,698) (276,698) 143,508 2,102,672

26. share caPital numBer Group anD Company of sHares amount note ‘000 rm’000Issued and fully paid:Ordinary shares at 1 January 2017 1,588,680 1,588,680Issue of shares pursuant to Dividend Reinvestment Plan 49,061 183,979Transfer of share premium to share capital pursuant to Section 618(2)

of Companies Act 2016 – 2,102,611

Ordinary shares at 31 December 2017/1 January 2018 1,637,741 3,875,270Issue of shares pursuant to Dividend Reinvestment Plan 26(a) 55,825 207,669

At 31 December 2018 1,693,566 4,082,939

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ion 26. share caPital (continued)

(a) ordinary shares

On 26 January 2018, the Company increased its issued and paid-up share capital from 1,637,741,014 to 1,693,566,014 via the issuance of 55,825,000 new ordinary shares at a consideration of RM3.72 each arising from the Dividend Reinvestment Plan.

(b) Warrants

On 11 December 2013, the Company issued 426,715,958 new ordinary shares of RM1.00 each together with 426,715,958 free detachable warrants at an issue price of RM4.25 per rights share on the basis of two (2) rights share together with two (2) warrants for every five (5) existing shares. The warrants will expire at the end of ten years from the date of issuance.

No warrants were converted during the financial year ended 31 December 2018 (2017: Nil).

As at 31 December 2018, 426,715,078 (2017: 426,715,078) warrants remained unexercised.

27. reserves

27.1 Breakdown of reserves are as follows:

Group 2018 2017 note rm’000 rm’000

Other reserves 27.2 60,985 100,522 Retained earnings 2,081,542 1,757,894

2,142,527 1,858,416Acquisition reserve 27.3 (1,199,747) (1,199,747)

942,780 658,669

Company 2018 2017 rm’000 rm’000

Warrant reserves 129,300 129,300Fair value reserves – 178 Retained earnings 83,873 67,434

213,173 196,912



27. reserves (continued)

27.2 other reserves

CAPITAL STATUTORY wARRANT FvOCI/ TRANSLATION REGULATORY LTIP* RESERvE RESERvE RESERvE FAIR vALUE RESERvE RESERvE RESERvE TOTAL RESERvE GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2017 6,863 1,124,774 129,300 (42,601) (138,991) – 4,611 1,083,956Foreign exchange translation

differences – – – – 42,376 – – 42,376Fair value reserve: Net change in fair value – – – 47,298 – – – 47,298 Net amount reclassified to

profit or loss – – – (6,695) – – – (6,695)Income tax effect relating to

components of other comprehensive income – – – (8,958) – – – (8,958)

Transfer of reserve fund to retained earnings – (1,124,774) – – – – – (1,124,774)

Transfer of retained earnings to regulatory reserve – – – – – 64,645 – 64,645

Share-based payment transactions – – – – – – 4,376 4,376LTIP* exercised – – – – – – (1,702) (1,702)

At 31 December 2017/ 1 January 2018 6,863 – 129,300 (10,956) (96,615) 64,645 7,285 100,522

Adjustment on adoption of MFRS 9 – – – 8,412 – – – 8,412

At 1 January 2018, restated 6,863 – 129,300 (2,544) (96,615) 64,645 7,285 108,934Foreign exchange translation

differences – – – – (9,358) – – (9,358)Fair value reserve: Net change in fair value – – – 44,635 – – – 44,635 Net amount reclassified to

profit or loss – – – (27,612) – – – (27,612) Income tax effect relating to

components of other comprehensive income – – – (3,633) – – – (3,633)

Transfer from regulatory reserve to retained earnings – – – – – (54,645) – (54,645)

Share-based payment transactions – – – – – – 6,231 6,231LTIP* exercised – – – – – – (3,567) (3,567)

At 31 December 2018 6,863 – 129,300 10,846 (105,973) 10,000 9,949 60,985

* Long Term Incentive Plan of Takaful Malaysia as disclosed in Note 28

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ion 27. reserves (continued)

27.2 other reserves (continued)

Capital reserve

The capital reserve arose out of the issuance of bonus issue in a subsidiary of RM6,863,000.

statutory reserve

The statutory reserve was maintained in compliance with Section 57(2)(f) of the Islamic Financial Service Act, 2013 and is not distributable as cash dividends.

However, as a result of the issuance of the revised policy document on Capital Funds for Islamic Banks on 3 May 2017, it is no longer required to maintain the statutory reserves. During the financial year ended 31 December 2017, the Group has transferred RM1,124,774,000 from the statutory reserve to retained earnings.

Warrant reserve

The warrant reserve arose from the Company’s issuance of 426,715,958 free detachable warrants on 11 December 2013.

fVoCi/fair value reserve

The FVOCI/fair value reserve comprises the cumulative net change in the fair value of financial assets at FVOCI/financial asset available-for-sale, excluding impairment losses until the financial assets are derecognised.

translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations and offshore banking operations – Federal Territory of Labuan.

regulatory reserve

The regulatory reserve represents the Bank Islam’s compliance with BNM’s Policy on Classification and Impairment Provisions for Financing to maintain, in aggregate, collective impairment allowances and regulatory reserve of no less than 1% of total credit exposures, net of loss allowance for credit- impaired exposures.

Long term incentive plan (“Ltip”) reserve

The LTIP reserve comprises the cumulative value of employee services received for the issue of Restricted Share Plan and Performance Share Plan in Takaful Malaysia. When the LTIP is exercised, the amount from the LTIP reserve is transferred to share capital. When the LTIP expires, the amount from the LTIP reserve is transferred to retained earnings. LTIP is disclosed in Note 28.

27.3 acquisition reserve

The acquisition reserve is the difference between the consideration paid and the 49% equity interest in Bank Islam Malaysia Berhad acquired in December 2013.



28. emPloyee benefits

share-based payments arrangement of takaful malaysia

At the Extraordinary General Meeting of Takaful Malaysia, held on 24 July 2013, the shareholders approved the establishment of a Long Term Incentive Plan (“LTIP”), which comprises a Restricted Share Plan (“RSP”) and a Performance Share Plan (“PSP”), of not more than 10% of issued and paid-up share capital of Takaful Malaysia (excluding treasury shares) to eligible employees and executive directors of Takaful Malaysia. The LTIP was effected on 25 July 2013 following the submission of the By-Laws for the LTIP to Bursa Malaysia Securities Berhad, the receipt of all required approvals and the compliance with the requirements pertaining to the LTIP.

During the year, the number of the shares in Takaful Malaysia granted are as follows:

numBer of orDinary sHares 2018 2017 performanCe sHares ‘000 ‘000

Outstanding at 1 January 6,387 6,176Granted during the year 3,124 3,208Exercised during the year (1,073) (2,202) Forfeited during the year (770) (795)

Outstanding at 31 December 7,668 6,387

During the financial year, 1,072,500 shares (2017: 2,201,815 shares) in Takaful Malaysia were exercised.

The fair value in Takaful Malaysia services received in return for Restricted Shares and Performance Shares granted are based on the fair value of Restricted Shares and Performance Shares granted respectively, measured using Monte Carlo Simulation, with the following inputs:

performanCe sHaresfair VaLue anD assumption 2018 2017

Fair value at grant date 3.550 4.159

Weighted average share price 3.550 4.159Share price at grant date 3.850 4.020Expected volatility (weighted average volatility) 21.35% 23.67%Option life (expected weighted average life) 3 3Expected dividends 0.0454 0.0295Risk-free profit rate (based on Malaysian government bonds) 3.55% 3.46%

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ion 28. emPloyee benefits (continued)

Value of employee services received for issue of takaful malaysia shares

Group 2018 2017 rm’000 rm’000

performance shares – Shares granted in 2014 – (291)– Shares granted in 2015 1,198 2,445– Shares granted in 2016 3,501 3,045– Shares granted in 2017 3,722 2,128– Shares granted in 2018 2,026 –

10,447 7,327

retirement benefit

The Group also makes contribution to a defined benefit plan that provides pension for eligible permanent employees of its Indonesia subsidiaries. The amounts are determined based on years of service and salaries of the employees at the time of pension. The benefits will be paid upon retirement, permanent disability or termination.

29. sources and uses of charity funds sHariaH non- CHarity CompLianCe funDs inCome totaL Group rm’000 rm’000 rm’000

Undistributed funds as at 1 January 2017 – 5 5Funds collected/received during the year – 8 8Uses of funds during the year – (11) (11)

Contribution to Non-profit Organisation – (4) (4)Contribution for Da’wah activities – (5) (5)Contribution to school – (2) (2)

Undistributed funds as at 31 December 2017/1 January 2018 – 2 2Funds collected/received during the year – 9 9Uses of funds during the year

Contribution to Educational Fund – (4) (4)

undistributed funds as at 31 December 2018 – 7 7



30. income derived from investment of dePositors’ funds Group 2018 2017 rm’000 rm’000

Income derived from investment of:(i) General investment deposits 19,074 22,296(ii) Term deposit-i 1,596,723 1,370,064(iii) Saving and demand deposits 790,472 739,255(iv) Other deposits 195,556 192,572

2,601,825 2,324,187

(i) income derived from investment of general investment deposits

Group 2018 2017 rm’000 rm’000

finance income and hibahFinancing, advances and others 16,802 19,305Financial assets:– Fair value through profit and loss 110 –– Fair value through other comprehensive income 1,473 –– Other financial assets at amortised cost 4 –– Held-for-trading – 142– Available-for-sale – 2,136– Held-to-maturity – 60Money at call and deposit with financial institutions 473 296

18,862 21,939

other dealing incomeNet gain from sale of financial assets FVTPL 30 –Net gain on revaluation of financial assets FVTPL 3 –Net loss from sale of financial assets held-for-trading – (10) Net gain on revaluation of financial assets held-for-trading – 46

33 36

other operating income Net gain from sale of financial assets FVOCI 179 –Net gain from sale of financial assets available-for-sale – 51Net gain from sale of financial assets held-to-maturity – 270

179 321

19,074 22,296

of whichFinancing income earned on impaired financing 240 322

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ion 30. income derived from investment of dePositors’ funds (continued)

(ii) income derived from investment of term deposit-i

Group 2018 2017 rm’000 rm’000

finance income and hibahFinancing, advances and others 1,390,942 1,170,411Financial assets:– Fair value through profit and loss 9,977 –– Fair value through other comprehensive income 136,410 –– Other financial assets at amortised cost 368 –– Held-for-trading – 9,643– Available-for-sale – 144,803– Held-to-maturity – 4,085Money at call and deposits with financial institutions 38,924 16,156

1,576,621 1,345,098

other dealing incomeNet gain from sale of financial assets FVTPL 2,799 –Net gain on revaluation of financial assets FVTPL 94 –Net loss from sale of financial assets held-for-trading – (442) Net gain on revaluation of financial assets held-for-trading – 3,084

2,893 2,642

other operating incomeNet gain from sale of financial assets FVOCI 17,209 –Net gain from sale of financial assets available-for-sale – 3,480Net gain from sale of financial assets held-to-maturity – 18,844

17,209 22,324

1,596,723 1,370,064

of whichFinancing income earned on impaired financing 21,904 18,818



30. income derived from investment of dePositors’ funds (continued)

(iii) income derived from investment of saving and demand deposits

Group 2018 2017 rm’000 rm’000

finance income and hibahFinancing, advances and others 688,992 630,634Financial assets:– Fair value through profit and loss 4,984 –– Fair value through other comprehensive income 67,395 –– Other financial assets at amortised cost 175 –– Held-for-trading – 5,192– Available-for-sale – 78,063– Held-to-maturity – 2,202Money at call and deposits with financial institutions 19,142 10,077

780,688 726,168

other dealing incomeNet gain from sale of financial assets FVTPL 1,394 –Net gain on revaluation of financial assets FVTPL 114 –Net loss from sale of financial assets held-for-trading – (275) Net gain on revaluation of financial assets held-for-trading – 1,649

1,508 1,374

other operating incomeNet gain from sale of financial assets FVOCI 8,276 –Net gain from sale of financial assets available-for-sale – 1,866Net gain from sale of financial assets held-to-maturity – 9,847

8,276 11,713

790,472 739,255


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ion 30. income derived from investment of dePositors’ funds (continued)

(iv) income derived from investment of other deposits

Group 2018 2017 rm’000 rm’000

finance income and hibahFinancing, advances and others 170,760 164,014Financial assets:– Fair value through profit and loss 1,247 –– Fair value through other comprehensive income 16,620 –– Other financial assets at amortised cost 38 –– Held-for-trading – 1,371– Available-for-sale – 20,574– Held-to-maturity – 578Money at call and deposits with financial institutions 4,806 2,560

193,471 189,097

other dealing incomeNet gain from sale of financial assets FVTPL 312 –Net loss on revaluation of financial assets FVTPL (7) –Net loss from sale of financial assets held-for-trading – (38) Net gain on revaluation of financial assets held-for-trading – 435

305 397

other operating incomeNet gain from sale of financial assets FVOCI 1,780 –Net gain from sale of financial assets available-for-sale – 488Net gain from sale of financial assets held-to-maturity – 2,590

1,780 3,078

195,556 192,572




31. income derived from investment account funds Group 2018 2017 rm’000 rm’000

finance incomeUnrestricted investment accounts

– Mudharabah 122,522 94,386– Wakalah 120,301 142,806

242,823 237,192

32. income derived from investment of shareholders’ funds Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000

finance income and hibahFinancing, advances and others 7,345 6,951 – –Financial assets:– Fair value through other comprehensive income 184,280 – – –– Available-for-sale – 147,372 – –Money at call and deposits with financial institutions 16,737 11,391 13,447 8,294

208,362 165,714 13,447 8,294

other dealing incomeNet gain from foreign exchange transactions 54,716 66,396 – –Net gain from sale of financial assets FVTPL 362 – – –Net (loss)/gain on revaluation of financial assets FVTPL (207) – 129 –Net gain from sale of financial assets held-for-trading – 532 – –Net loss on revaluation of financial assets held-for-trading – (66) – –Net derivatives gain/(loss) 52 (779) – –

54,923 66,083 129 –

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ion 32. income derived from investment of shareholders’ funds (continued)


other operating incomeNet gain from sale of financial assets available-for-sale – 272 – –Gross dividend income from securities:– Quoted in Malaysia 17 47 – –– Unit trust in Malaysia 7,232 7,680 5,151 5,080Gross dividend income from subsidiary companies – – 366,783 325,463Fees and commission 205,097 195,857 – –Net gain/(loss) on disposal of property and equipment 372 (71) – –Rental income 1,302 1,445 – –Others 205 402 11 6

214,225 205,632 371,945 330,549

477,510 437,429 385,521 338,843

33. net income from takaful business Group 2018 2017 note rm’000 rm’000

net earned contributionsGross earned contributions 2,287,009 1,814,765Contribution ceded to retakaful (352,796) (297,576) 33(a) 1,934,213 1,517,189

other incomeAdministration income 74,942 80,865Investment income 306,429 291,746Realised gains and losses 2,369 23,135 Fair value gains and losses (80,802) (8,708) Other operating income 8,487 4,047

311,425 391,085



33. net income from takaful business (continued) Group 2018 2017 note rm’000 rm’000net benefits and claimsGross benefits and claims paid (1,112,557) (1,003,654)Claims receded to retakaful 160,215 163,996Gross change to contract liabilities (88,719) 34,611Change to contract liabilities ceded to retakaful 41,813 (5,463)

33(b) (999,248) (810,510)

Expense reserves (52,260) (37,897)

income from takaful business 1,194,130 1,059,867Profits attributable to participants/takaful operator (314,296) (339,672)

net income from takaful business 879,834 720,195

(a) net earned contributions

Group 2018 2017 rm’000 rm’000

Gross contributions 2,310,166 1,835,134Change in actuarial reserves/unearned contributions reserves (23,157) (20,369)

Gross earned contributions 2,287,009 1,814,765

Retakaful (358,372) (308,076)Change in actuarial reserves/unearned contributions reserve 5,576 10,500

Contributions ceded to retakaful (352,796) (297,576)

Net earned contributions 1,934,213 1,517,189

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ion 33. net income from takaful business (continued)

(b) net benefits and claims

Group 2018 2017 rm’000 rm’000

Gross benefits/claims paid (1,112,557) (1,003,654) Retakaful recoveries 160,215 163,996

Net benefits/claims paid (952,342) (839,658)

Gross change in contract liabilities:At 31 December (633,725) (545,134)Less:At 1 January (545,134) (582,184)Acquisition of general takaful business 39 –Effect of movement in exchange rates (167) (2,439)

(88,719) 34,611

Change in contract liabilities ceded to retakaful companies:At 31 December 296,534 254,804Less:At 1 January 254,804 261,426Effect of movement in exchange rates 83 1,159

41,813 (5,463)

(999,248) (810,510)

34. net allowance for imPairment on financing and advances Group 2018 2017 rm’000 rm’000

Net allowance for impaired financing, advances and others– collective assessment allowance, net 127,601 34,706– individual assessment allowance 58,801 71,735Bad debts and financing recovered (104,948) (122,054)

81,454 (15,613)



35. income attributable to dePositors Group 2018 2017 rm’000 rm’000Deposits from customers– Mudharabah Fund 9,730 11,445– Non-Mudharabah Fund 1,226,749 1,079,642Deposits and placements of banks and other financial institutions– Non-Mudharabah Fund 409 3,346Recourse obligations on financing sold to Cagamas 42,750 –

1,279,638 1,094,433

36. income attributable to investment account holders Group 2018 2017 rm’000 rm’000Unrestricted investment accounts– Mudharabah 5,530 1,938– Wakalah 73,937 93,509

79,467 95,447

37. Personnel exPenses Group Company 2018 2017 2018 2017 note rm’000 rm’000 rm’000 rm’000

Salaries and wages 606,157 561,442 5,755 5,706Chief Executive Officer, Directors and

Shariah Supervisory Council members’ remuneration 39 23,507 25,556 2,327 2,299

Employees’ Provident Fund 76,120 72,096 612 653Others 59,958 70,677 677 619

765,742 729,771 9,371 9,277

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ion 38. other overhead exPenses

Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000PromotionAdvertisement and publicity 125,311 85,825 457 646Credit and debit card expenses 30,802 31,114 – –Commission 186,624 135,477 – –

342,737 252,416 457 646

EstablishmentDepreciation of property and equipment 61,560 66,895 166 296Depreciation of investment property 113 119 – –Information technology expenses 50,915 59,614 140 144Office rental 55,832 58,157 1,087 1,031Office maintenance 30,119 24,121 24 25Utilities 21,395 20,435 28 28Security services 10,082 16,395 – –Rental equipment 8,397 6,092 91 97Takaful and insurance 1,324 5,808 112 113Others 1,146 1,121 – –

240,883 258,757 1,648 1,734

General expensesProfessional fees 52,262 44,588 334 1,012Indirect tax expenses 11,848 23,318 – –Outsourcing fees

– Management of self-service terminal 12,608 12,128 – –– Credit recovery 2,417 2,516 – –– Others 2,674 4,169 – –

Travelling & transportation 9,847 12,705 51 38Office supplies 10,212 11,371 51 78Agency related expenses 13,642 10,754 – –Licenses 8,246 9,500 – –Bank and service charges 6,984 7,615 – –Security services for cash in transit 6,523 6,419 – –Postage and delivery charges 6,418 4,979 – –Subscription fees 3,990 4,210 8 5Auditors’ remuneration

– Statutory audit fee 2,047 1,898 113 135– Others 1,582 934 64 56

Mobile banking expenses 1,602 1,359 – –Processing charges 980 655 – –Property and equipment written off 332 56 – –Others 31,552 64,824 1,961 1,616

185,766 223,998 2,582 2,940

769,386 735,171 4,687 5,320



39. chief executive officer, directors and shariah suPervisory council members’ remuneration

Aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as follows:


Chief Executive Officer and Directors of the Company

Group Chief Executive Officer/Executive Directors:Salaries, bonuses and EPF contributions – 5,851 – 214Fees and other emoluments – 1,732 – –Benefits-in-kind – 113 – –

– 7,696 – 214

Chief Executive Officer:Salaries, bonuses and EPF contributions 2,314 674 345 165Fees and other emoluments 781 165 – –Benefits-in-kind 31 16 – –

3,126 855 345 165

Non-Executive Directors:Fees and other emoluments 3,954 3,535 1,982 1,920Benefits-in-kind 158 132 31 43

4,112 3,667 2,013 1,963

Total 7,238 12,218 2,358 2,342

Chief Executive Officer and Directors of the subsidiary companies

Executive Directors:Salaries, bonuses and EPF contributions 1,779 5,503 – –Fees and other emoluments 247 954 – –Benefits-in-kind 7 183 – –

2,033 6,640 – –

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ion 39. chief executive officer, directors and shariah suPervisory council members’

remuneration (continued)

Aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as follows: (continued)


Chief Executive Officer and Directors of the subsidiary companies (continued)

Chief Executive Officers:Salaries, bonuses and EPF contributions 6,105 1,485 – –Fees and other emoluments 4,327 1,653 – –Benefits-in-kind 405 33 – –

10,837 3,171 – –

Non-Executive Directors:Fees and other emoluments 3,009 2,920 – –Benefits-in-kind 243 343 – -

3,252 3,263 – –

Total 16,122 13,074 – –

Shariah Supervisory Council 991 1,084 – –

Grand Total 24,351 26,376 2,358 2,342

Grand Total (excluding benefits-in-kind) (Note 37) 23,507 25,556 2,327 2,299



39. chief executive officer, directors and shariah suPervisory council members’ remuneration (continued)

The total remuneration (including benefits-in-kind) of the Directors of the Company is as follows:

REMUNERATION RECEIvED FROM REMUNERATION RECEIvED FROM THE COMPANY COMPANY SUBSIDIARY COMPANIES GROUP

SALARY AND FEES & OTHER BENEFIT- SALARY AND FEES & OTHER BENEFIT- BONUS EMOLUMENTS IN-kIND TOTAL BONUS EMOLUMENTS IN-kIND TOTAL 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Chief Executive OfficerMohd Muazzam bin Mohamed

(appointed on 5 December 2018) 30 – – 30 61 19 2 112Khairul Kamarudin

(resigned on 20 July 2018) 315 – – 315 1,908 762 29 3,014

345 – – 345 1,969 781 31 3,126

Non-Executive Director:Tan Sri Ambrin bin Buang

(appointed on 2 February 2018) – 370 5 375 – – – 375Tan Sri Ismail bin Adam – 340 5 345 – – – 345Mohd Tarmidzi bin Ahmad Nordin – 326 5 331 – 126 32 489Noraini binti Che Dan – 313 5 318 – 400 50 768Nik Mohd Hasyudeen Yusoff

(appointed on 1 June 2018) – 134 3 137 – 457 25 619Datuk Rozaida binti Omar

(resigned on 6 September 2018) – 116 3 119 – 57 – 176Rifina binti Md Ariff

(resigned on 6 September 2018) – 110 3 113 – – – 113Zahari @ Mohd Zin bin Idris

(retired on 17 May 2017) – 10 – 10 – 548 20 578Tan Sri Samsudin bin Osman

(retired on 31 January 2018) – 151 1 152 – – – 152Datuk Zaiton binti Mohd Hassan

(retired on 1 February 2018) – 112 1 113 – 384 – 497

– 1,982 31 2,013 – 1,972 127 4,112

345 1,982 31 2,358 1,969 2,753 158 7,238

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ion 39. chief executive officer, directors and shariah suPervisory council members’

remuneration (continued)

The total remuneration (including benefits-in-kind) of the Directors of the Company is as follows: (continued)

REMUNERATION RECEIvED FROM REMUNERATION RECEIvED FROM THE COMPANY COMPANY SUBSIDIARY COMPANIES GROUP

SALARY AND FEES & OTHER BENEFIT- SALARY AND FEES & OTHER BENEFIT- BONUS EMOLUMENTS IN-kIND TOTAL BONUS EMOLUMENTS IN-kIND TOTAL 31 DECEMBER 2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group Chief Executive Officer /Executive Directors:

Dato’ Sri Zukri Samat (retired on 9 June 2017) 214 – – 214 5,637 1,732 113 7,696

214 – – 214 5,637 1,732 113 7,696

Chief Executive OfficerKhairul Kamarudin

(appointed on 9 August 2017) 165 – – 165 509 165 16 855

165 – – 165 509 165 16 855

Non-Executive Director:Tan Sri Samsudin bin Osman – 403 6 409 – – – 409Tan Sri Ismail bin Adam – 283 6 289 – – – 289Datuk Zaiton binti Mohd Hassan – 265 6 271 – 455 25 751Datuk Rozaida binti Omar – 138 6 144 – 111 40 295Mohd Tarmidzi bin Ahmad Nordin – 285 6 291 – 120 18 429Noraini binti Che Dan – 255 6 261 – 363 – 624Rifina binti Md Ariff – 138 6 144 – – – 144Zahari @ Mohd Zin bin Idris – 153 1 154 – 566 6 726

– 1,920 43 1,963 – 1,615 89 3,667

379 1,920 43 2,342 6,146 3,512 218 12,218



40. 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 CEO and Directors’ remuneration are as follows:

Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000Other key management personnel:

– Short-term employee benefits 34,862 35,322 2,508 2,486– Benefits-in-kind 449 885 67 65

35,311 36,207 2,575 2,551

41. tax exPense

major components of tax expense

Group Company 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000Malaysian income tax:

Current year 293,594 247,629 3,158 1,935(Over)/Under provision in prior years (14,626) (5,310) (6) 3

278,968 242,319 3,152 1,938

Deferred tax expense:Origination and reversal of temporary differences (29,819) (5,250) – –Under/(Over) provision in prior years 196 (6,828) – –

(29,623) (12,078) – –

249,345 230,241 3,152 1,938

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ion 41. tax exPense (continued)

A reconciliation of effective tax expense for the Group and Company are as follows:


Profit before tax 1,065,455 948,330 281,916 247,397

Income tax calculated using Malaysian tax rate of 24% 255,709 227,599 67,660 59,375Non-deductible expenses 71,703 65,114 3,302 3,446Non-deductible Sukuk’s finance cost 21,491 18,444 21,491 18,444Non-taxable income (94,234) (80,778) (89,295) (79,330)Derecognition of deferred tax assets 10,315 12,000 – –Effect of tax rates in foreign jurisdictions (1,209) – – –

263,775 242,379 3,158 1,935(Over)/Under provision in prior years (14,626) (5,310) (6) 3Under/(Over) provision of deferred tax 196 (6,828) – –

Tax expense 249,345 230,241 3,152 1,938

Recognised in other comprehensive income:Deferred tax expense

Other investment (998) (1,455) – –Provisions 101 7,041 – –

Financial assets available-for-sale – (8,958) – –Financial assets at fair value through other

comprehensive income (FVOCI) (3,633) – – –

(4,530) (3,372) – –

The Inland Revenue Board (“IRB”) had, on 8 September 2017, issued to Takaful Malaysia notices of additional assessment (i.e. Form JA) for the years of assessment (“YA”) 2012, 2013, and 2014. The additional tax payable by Takaful Malaysia under the above-mentioned notices is RM12,561,630.50. As a result of the above, IRB had also treated the tax returns made by Takaful Malaysia for the above years of assessment as incorrect, and imposed a penalty of RM6,200,802.97 to Takaful Malaysia.

Takaful Malaysia has paid the additional tax on 4 October 2017 and submitted an appeal (Form Q) to Special Commissioner of Income Tax against the notice of assessment on 5 October 2017.

Takaful Malaysia is of the view that there are strong justifications for its appeal and have treated the additional tax payment as tax recoverable.

The matter above has been fixed for hearing at the Court on 1st and 2nd September 2021.



42. earnings Per share

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2018 was based on the profit attributable to owners of the Company and the weighted average number of ordinary shares in issue during the year:

Group 2018 2017 rm’000 rm’000

Profit attributable to owners of the Company 682,055 619,838

Group 2018 2017 ’000 ’000

Weighted average number of ordinary shares 1,689,742 1,633,709

Group 2018 2017 sen sen

Basic earnings per ordinary share 40.36 37.94

Diluted earnings per share

There is no dilution due to the Company’s warrants, as the warrants are currently out-of-money in view that the exercise price for each warrant is higher than the closing market price of the Company’s shares as at 31 December 2018.

43. dividends

Dividends recognised by the Company:

sen totaL per sHare amount Date of 2018 rm’000 payment

2018 ordinary 15.50 262,503 29 January 2019

2017

2017 ordinary 14.00 229,284 25 January 2018

The Directors do not recommend any more dividend to be paid for the year under review.

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ion 44. related Party transactions

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the other party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

The Group and the Company has a related party relationship with its subsidiaries (see Note 16) and holding corporation of the Company.

(a) The significant related party transactions of the Group and the Company which are not disclosed elsewhere, other than key management personnel compensation, are as follows:

Group Company transaCtions for transaCtions for 2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000

Holding CompanyWakalah incentive fee 485 2,595 – –Brokerage income 608 1,611 – –Contribution income for General Takaful 6 371 – –Fees and commission 17 156 – –Office rental received 74 78 – –Profit paid on Sukuk Liabilities 95,297 82,599 89,547 76,849Rental of premises paid 24,785 23,947 – –Profit attributable on deposits placed 76,230 21,171 – –Claims paid for General Takaful 234 1,165 – –Other rental paid 450 415 – –Takaful contribution refunded 1 – – –

SubsidiariesIncome receivable on deposits placed – – 13,458 8,301Takaful contribution refunded – – 2 18Office rental paid – – 964 1,001Other expenses – – 141 182Contribution paid for General Takaful – – 68 65

Other related companiesTakaful contribution received 1,165 1,698 – –Income received from financing, advances and others 210 100 – –Fees and commission received 92 178 – –Profit attributable on deposits placed 4,180 5,190 – –Office rental paid 447 446 – –Takaful claims paid 26 27 – –Takaful contribution refund 35 – – –



44. related Party transactions (continued)

(b) The significant outstanding balances of the Group and the Company with related parties, are as follows:

Group Company net BaLanCe net BaLanCe outstanDinG as at outstanDinG as at

2018 2017 2018 2017 rm’000 rm’000 rm’000 rm’000

Holding companyamount due fromOthers 10 17 – –Takaful contribution – 173 – –amount due toDemand and investment deposits 4,020,634 1,505,971 – –Profit payable to investment deposit 18,104 873 – –Sukuk liabilities 945,277 1,380,630 844,159 1,279,512Commitment and contingencies 2,576 2,380 – –Others 17 14 – –

Subsidiariesamount due fromDemand and investment deposits – – 88,469 241,070Profit payable to investment deposit – – 424 1,160Others – – 172 268amount due toOthers – – 22 70

Other related companiesamount due fromFinancing, advances and others 6,895 782 – –amount due toDemand and investment deposits 202,610 230,444 – –Profit payable to investment deposit 72 671 – –Commitment and contingencies 8,533 4,869 – –

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ion 45. caPital adequacy

The Company is not required to maintain any capital adequacy ratios.

45.1 Bank islam

The Total Capital Ratio computation consists of the capital adequacy ratios of Bank Islam and its subsidiaries (“Bank Islam”).

Capital adequacy ratios

Total capital and capital adequacy ratios of Bank Islam have been computed based on BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 2 February 2018 and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) issued on 2 March 2017. The Bank is required to meet minimum Common Equity Tier I (“CET I”), Tier I and Total Capital adequacy ratios of 4.5%, 6.0% and 8.0% respectively in 2018. To ensure that banks build up adequate capital buffer outside period of stress, a Capital Conservation Buffer (“CCB”) of 2.5% above the minimum capital adequacy was introduced by Bank Negara Malaysia. The CCB is maintained in the form of CET I capital at 1.875% on 1 January 2018 and progressively increases by 0.625% to reach 2.5% on 1 January 2019.

As a result, the minimum regulatory capital adequacy ratios requirement for CET I capital ratio, Tier I capital ratio and Total Capital ratio are 6.375%, 7.875% and 9.875% respectively for year 2018 (2017: 5.750%, 7.250% and 9.250%). The Bank has adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk.

The capital adequacy ratios of Bank Islam are set out below:

2018 2017 % %

Common Equity Tier I (“CET I”) Capital Ratio 13.317 12.729Total Capital Ratio 17.767 16.435



45. caPital adequacy (continued)

45.1 Bank islam (continued)

Capital adequacy ratios (continued)

The components of CET I, Tier I and Tier II capital of Bank Islam:

2018 2017 rm’000 rm’000

tier i capitalPaid-up share capital 3,012,368 2,869,498Retained earnings 2,362,476 2,150,402Other reserves (98,437) (60,196)Less:Deferred tax assets (51,385) (37,288)Gain on financial instruments classified as fair value through

other comprehensive income (1,446) –Regulatory reserve (10,000) (64,645)

total Cet i and tier i Capital 5,213,576 4,857,771

Sukuk Murabahah 1,300,000 1,000,000Collective assessment allowance and regulatory reserve^ 441,938 414,193

total tier ii Capital 1,741,938 1,414,193

total Capital 6,955,514 6,271,964

^ Collective assessment allowance on non-impaired financing and regulatory reserve, subject to maximum of 1.25% of total credit risk-weighted assets less credit absorbed by unrestricted investment accounts.

The breakdown of risk-weighted assets by each major risk category is as follows:

2018 2017 rm’000 rm’000

Credit risk 38,963,775 37,442,256Less: Credit risk absorbed by unrestricted investment accounts (3,608,741) (3,034,004)Market risk 422,763 602,089Operational risk 3,370,712 3,152,951

39,148,509 38,163,292

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ion 45. caPital adequacy (continued)

45.2 takaful malaysia

Takaful Malaysia’s capital management policy is to optimise the efficient and effective use of resources to maximise the return on equity and provide an appropriate level of capital to protect participants and meet regulatory requirements.

Takaful Malaysia is required to comply with the regulatory capital requirement prescribed in the Risk Based Capital for Takaful (“RBCT”) Framework issued by BNM where Takaful operators are required to satisfy a minimum capital adequacy ratio of 130%. As at period end, Takaful Malaysia has a capital adequacy ratio in excess of the minimum requirement.

The capital structure of Takaful Malaysia as at 31 December 2018, as prescribed under the RBCT Framework is provided below:

2018 2017 rm’000 rm’000

Tier 1 capital 1,399,233 1,319,241Tier 2 capital 33,297 5,628 Amount deducted from capital (231,762) (126,712)

1,200,768 1,198,157

46. financial risk management Policies

46.1 Categories of financial instruments

The tables below provide an analysis of financial instruments categorised as follows:

• Fairvaluethroughprofitorloss(“FVTPL”)

• Financialassetsavailable-for-sale(“AFS”)

• Financialassetsatfairvaluethroughothercomprehensiveincome(“FVOCI”)

• Financialassetsheld-to-maturity(“HTM”)

• Financing,advancesandreceivables(“F&R”)

• Otherfinancialassetsatamortisedcost(“FA”)

• Financialliabilitiesmeasuredatamortisedcost(“FL”)



46. financial risk management Policies (continued)

46.1 Categories of financial instruments (continued)

Group31 December 2018 CarryinG amortiseD rm’000 amount fVtpL fVoCi Cost

Financial assetsCash, balances and placements

with banks 6,287,126 – – 6,287,126Financial assets at FVTPL 1,402,603 1,402,603 – –Derivative financial assets 34,148 34,148 – –Financial assets at FVOCI 15,687,117 – 15,687,117 –Financing, advances and others 45,680,680 – – 45,680,680Other financial assets at amortised

cost (net of prepayment) 304,975 – – 304,975Takaful assets 676,232 – – 676,232Statutory deposits with

Bank Negara Malaysia 1,602,284 – – 1,602,284

71,675,165 1,436,751 15,687,117 54,551,297

Financial liabilitiesDeposits from customers (49,433,546) – – (49,433,546)Investment accounts of customers (5,037,653) – – (5,037,653)Derivative financial liabilities (19,520) (19,520) – –Bills and acceptances payable (41,114) – – (41,114)Recourse obligations on financing sold

to Cagamas (1,501,187) – – (1,501,187)Other liabilities (1,285,362) – – (1,285,362)Takaful liabilities (114,267) – – (114,267)Sukuk liabilities (2,102,672) – – (2,102,672)Provision for outstanding claims (294,655) – – (294,655)

(59,829,976) (19,520) – (59,810,456)

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ion 46. financial risk management Policies (continued)


GROUP31 DECEMBER 2017RM’000 CARRYING AMOUNT F&R/(FL) FvTPL AFS HTM DERIvATIvES

Financial assetsCash, balances and placements

with banks 5,966,834 5,966,834 – – – –Financial assets held-for-trading 607,431 – 607,431 – – –Derivative financial assets 68,319 – – – – 68,319Financial assets available-for-sale 13,497,437 – – 13,497,437 – –Financial assets held-to-maturity 516,524 – – – 516,524 –Financing, advances and others 42,113,420 42,113,420 – – – –Takaful assets 677,713 677,713 – – – –Statutory deposits with

Bank Negara Malaysia 1,407,284 1,407,284 – – – –Other assets 323,278 323,278 – – – –

65,178,240 50,488,529 607,431 13,497,437 516,524 68,319

Financial liabilitiesDeposits from customers (45,870,596) (45,870,596) – – – –Investment accounts of customers (3,969,344) (3,969,344) – – – –Derivative financial liabilities (74,668) – – – – (74,668)Bills and acceptances payable (420,258) (420,258) – – – –Other liabilities (1,266,609) (1,266,609) – – – –Takaful liabilities (106,983) (106,983) – – – –Sukuk liabilities (2,235,862) (2,235,862) – – – –Provision for outstanding claims (253,121) (253,121) – – – –

(54,197,441) (54,122,773) – – – (74,668)





Company31 December 2018 CarryinG amortiseD rm’000 amount fVtpL fVoCi Cost

Financial assetsCash, balances and placements with banks 88,473 – – 88,473Financial assets at FVTPL 6,623 6,623 – –Other financial assets at amortised cost

(net of prepayment) 761 – – 761

95,857 6,623 – 89,234

Financial liabilitiesOther liabilities (265,725) – – (265,725) Sukuk liabilities (844,159) – – (844,159)

(1,109,884) – – (1,109,884)

31 December 2017 CarryinG rm’000 amount f&r/(fL) fVtpL afs

Financial assetsCash, balances and placements with banks 241,074 241,074 – –Financial assets available-for-sale 174,546 – – 174,546Other assets 1,489 1,489 – –

417,109 242,563 – 174,546

Financial liabilitiesOther liabilities (232,598) (232,598) – –Sukuk liabilities (1,279,512) (1,279,512) – –

(1,512,110) (1,512,110) – –

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46.2 financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Creditrisk

• Marketrisk

• Liquidityrisk

• Operationalrisk

The Group’s exposures to the above risks are mainly attributed to its main operating subsidiaries, Bank Islam and Takaful Malaysia. The Company’s exposure to these risks is not presented separately as it is not material to the Group.

46.3 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 is the risk of a customer or counterparty failing to perform its obligations. It arises from all transactions that could lead to actual, contingent or potential claims against any party, customer or obligor. The types of credit risks that the Bank considers to be material includes: Default Risk, Counterparty Risk, Pre-Settlement Risk, Credit Concentration Risk, Residual/Credit Mitigation Risk and Migration Risk.

Credit risk governance

The management of credit risk is principally carried out by using sets of policies and guidelines approved by Bank Islam’s Management Risk Control Committee (“MRCC”) and/or Board Risk Committee (“BRC”), guided by the Bank Islam’s Board of Directors’ approved Risk Appetite Statement.

The Bank has instituted several levels of Financing Committees, which assess and approves credits at their specified authority levels.

The Bank’s 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 policies 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 levels.

The Bank’s credit risk management governance includes the establishment of detailed 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.




46.3 Credit risk (continued)

(a) Banking (continued)

management of Credit risk

The management of credit risk is being performed by Credit Management Division (“CMD”) and Risk Management Division (“RMD”), and two other units outside of the CMD and RMD domain, namely, Credit Administration Department and Credit Recovery. The combined objectives are, amongst others:

• TobuildahighqualitycreditportfolioinlinewiththeBank’soverallstrategyandriskappetite;

• ToensurethattheBankiscompensatedfortherisktaken,balancing/optimisingtherisk/returnrelationship;

• Todevelopanincreasingabilitytorecognise,measureandavoidormitigatepotentialcreditriskproblemareas;and

• Toconformwithstatutory,regulatoryandinternalcreditrequirements.

The Bank monitors its credit exposures either on a portfolio basis or individual basis through 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 watchlist to enforce close monitoring and prevent financing from turning impaired and to increase chances of full recovery.

A detailed limit structure is in place to ensure that risks taken are within the risk appetite as set by the Bank’s Board and to avoid credit risk concentration 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 include counterparties limits and permissible acquisition of private debt securities, subject to specified minimum rating threshold. Furthermore, the dealing and investing activities are monitored by an independent middle office unit.

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(b) takaful

Credit risk is the potential financial loss resulting from the failure of a customer, an intermediary or counterparty to settle its financial and contractual obligations to the Takaful Malaysia Group as and when they fall due.

The Takaful Malaysia Group’s portfolio of Islamic debt securities, and to a lesser extent short-term and other investments, are subject to credit risk. This risk is defined as the potential loss resulting from adverse changes in a borrower’s ability to repay the debt. The Takaful Malaysia Group’s objective is to earn competitive relative returns by investing in a diversified portfolio of securities.

Management has an investment credit risk policy in place. Limits are established to manage credit quality and concentration risk.

Takaful Malaysia has takaful and other receivable balances that are subject to credit risk. Among the most significant of these are retakaful recoveries. To mitigate the risk of the counterparties not paying the amount due, Takaful Malaysia has established certain business and financial guidelines for retakaful approval, incorporating ratings by major agencies and considering currently available market information.

Takaful Malaysia also periodically review the financial stability of brokers/retakaful companies from public and other sources and the settlement trend of amounts due from retakaful companies.

Cash and deposits are generally placed with banks and financial institutions licensed under the Financial Services Act 2013 and Islamic Financial Services Act 2013 which are regulated by Bank Negara Malaysia and Sharia Insurance Regulation in Indonesia.

Takaful Malaysia manage individual exposures as well as concentration of credit risks. At end of the reporting period, there were no significant concentration of credit risks, other than investments in Islamic debts securities issued by single issuer and investment in Institutional Trust Account.





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.

Group 2018 2017 rm’000 rm’000

Cash and short-term funds 2,650,042 4,807,749Deposits and placements with banks and other financial institutions 3,637,084 1,159,085Financial assets at FVTPL 1,402,603 –Financial assets held-for-trading (excluding shares, unit trusts and

investment funds) – 466,954Derivative financial assets (a) 34,148 68,319Financial assets at FVOCI 15,687,117 –Financial assets available-for-sale (excluding shares, unit trusts and

investment funds) – 12,910,911Financial assets held-to-maturity – 516,524Financing, advances and others (b) 45,680,680 42,113,420Other financial assets at amortised cost (net of prepayments) 304,975 323,278Takaful assets 676,232 677,713Statutory deposits with Bank Negara Malaysia 1,602,284 1,407,284

Sub-total 71,675,165 64,451,237

Credit related obligation:Financial guarantee contracts (c) 1,750,185 1,881,438Financing commitments (d) 8,964,336 8,059,908

Sub-total 10,714,521 9,941,346

Total credit exposures 82,389,686 74,392,583

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Maximum exposure to credit risk (continued)

Banking

(a) Derivative financial assets

In mitigating the counterparty credit risks from foreign exchange and derivatives transactions, the Bank enter into master agreements that provide for closeout netting with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the greater legal certainty that the netting of outstanding obligations can be enforced upon termination of outstanding transactions if an event of default occurs.

(b) financing, advances and others

Business and retail

Financing, advances and others will may have levels of collateralisation depending on the nature of the product. The general creditworthiness of a corporate and commercial customer tends to be the most relevant indicator of credit quality of a financing extended to it.

The Bank manages its exposures to these customers by completing a credit evaluation to assess the customer’s character, industry, business model and capacity to meet their commitments in a timely manner. The Bank may take collateral in the form of a first charge over real estate, floating charges over all corporate assets and other liens and guarantees.

The Bank routinely updates the valuation of collateral held against all financing as it adopts an annual internal valuation policy and a 2 years external valuation policy.

At 31 December 2018, the net carrying amount of credit-impaired financing and advances to corporate and commercial customers amounted to RM219,737,000 (2017: RM181,816,000) and the value of collateral held against those financing and advances amounted to RM132,080,000 (2017: RM176,225,000).

House financing

The following table presents credit exposures from financing and advances by ranges of financing-to-value (“FTV”) ratio. FTV is calculated as the ratio of the gross amount of the financing, or the amount committed for financing commitments – to the value of the collateral.





Maximum exposure to credit risk (continued)

Banking (continued)

(b) financing, advances and others (continued)

House financing (continued)

Group 2018 2017 ftV ratio rm’000 rm’000

Credit-impaired financingLess than 50% 4,562 5,53251-70% 14,033 31,391More than 70% 85,089 81,278

Total 103,684 118,201

(c) financial guarantee contracts (“fGC”)

FGCs comprise mainly of guarantees to customers, and to controlled entities of the Bank under the deed of cross guarantee, standby or documentary letters of credit and performance related contingencies. The Bank will typically have recourse to specific assets pledged as collateral in the event of a default by a party for which the Bank has guaranteed its obligations to a third party.

(d) financing commitments

Financing commitments mainly comprise of irrevocable financing commitments to finance a customer provided there is no breach of any condition established in the contract. If such financing commitments are drawn down by the customer there will typically be specific collateral requirements that will need to be satisfied by the customer in order to access to credit facilities.

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Banking (continued)

(i) Concentration of credit risk for Bank

CASH AND SHORT- TERM FUNDS AND DEPOSITS AND BANk ISLAM PLACEMENTS FINANCIAL DERIvATIvE FINANCIAL FINANCING, ON-BALANCE FINANCIAL AS AT wITH FINANCIAL ASSETS FINANCIAL ASSETS ADvANCES SHEETS GUARANTEE FINANCING 31 DECEMBER 2018 INSTITUTIONS AT FvTPL ASSETS AT FvOCI AND OTHERS TOTAL CONTRACTS COMMITMENTS* RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Primary agriculture – – – 19,736 736,860 756,596 9,028 130,909Mining and quarrying – – – – 8,383 8,383 6,700 12,578Manufacturing (including

agro-based) – – 1 – 880,341 880,342 154,734 436,190Electricity, gas and water – – – 1,804,882 360,208 2,165,090 82,046 33,285Wholesale & retail trade,

and hotels & restaurants – – 3,221 61,391 1,037,141 1,101,753 170,353 391,024Construction – – 3 724,487 2,241,403 2,965,893 334,191 1,160,442Real estate – – – 535,965 1,674,983 2,210,948 4,596 779,439Transport, storage and

communications – – – 1,287,410 799,778 2,087,188 126,107 421,043Finance, insurance and

business activities 3,632,957 364,959 3,215 6,097,992 2,248,011 12,347,134 143,400 1,105,952Education, health and others – – 27,654 45,786 982,759 1,056,199 119,302 1,666,612Household sectors – – – – 34,710,813 34,710,813 – 649,761Other sectors 891,697 – 54 776,650 – 1,668,401 599,728 2,177,101

4,524,654 364,959 34,148 11,354,299 45,680,680 61,958,740 1,750,185 8,964,336

* Financing commitments excluding derivative financial assets





Banking (continued)

(i) Concentration of credit risk for Bank (continued)

CASH AND SHORT- TERM FUNDS AND DEPOSITS AND FINANCIAL FINANCIAL PLACEMENTS ASSETS DERIvATIvE ASSETS FINANCING, ON-BALANCE COMMITMENTS BANk ISLAM wITH FINANCIAL HELD-FOR- FINANCIAL AvAILABLE- ADvANCES SHEETS AND AS AT 31 DECEMBER 2017 INSTITUTIONS TRADING ASSETS FOR-SALE AND OTHERS TOTAL CONTINGENCIES* RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Primary agriculture – – – – 481,879 481,879 111,992Mining and quarrying – – – – 7,906 7,906 383,585Manufacturing (including

agro-based) – – 22 – 800,040 800,062 1,094,810Electricity, gas and water – – – 2,129,021 330,767 2,459,788 442,008Wholesale & retail trade,

and hotels & restaurants – – – 81,146 1,187,262 1,268,408 611,688Construction – 1 65 702,282 2,089,099 2,791,447 1,615,417Real estate – – 1,535 508,410 1,569,501 2,079,446 7,910Transport, storage and

communications – 15,041 1 925,993 637,669 1,578,704 486,025Finance, insurance and

business activities 3,263,920 365,883 66,696 4,905,831 2,112,629 10,714,959 1,680,118Education, health and others – – – – 1,197,840 1,197,840 1,787,146Household sectors – – – – 31,698,828 31,698,828 479,715Other sectors 921,777 – – – – 921,777 1,240,932

4,185,697 380,925 68,319 9,252,683 42,113,420 56,001,044 9,941,346

* Commitments and contingencies excluding derivative financial assets

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(ii) Collateral

The main types of collateral obtained by the Bank to mitigate the credit risk are as follows:

• Forresidentialmortgages–chargesoverresidentialproperties

• Forcommercialpropertyfinancing–chargesoverthepropertiesbeingfinanced

• ForvehiclefinancingunderIjarahThummaAl-Bai–ownershipclaimsoverthevehiclesfinanced

• Forotherfinancingandadvances–chargesoverbusinessassetssuchaspremises,inventories,tradereceivablesand/or cash deposits

As at 31 December 2018 and 31 December 2017, there were no assets repossessed by the Bank as a result of taking possession of collateral held as security, or by calling upon other credit enhancements.

(iii) Credit quality of gross financing and advances

The credit quality of the Bank’s gross financing is summarised as follows:

Lifetime eCL not Lifetime 12-montH CreDit- eCL CreDit- BanK isLam eCL impaireD impaireD totaL31 DeCemBer 2018 rm’000 rm’000 rm’000 rm’000

financing, advances and othersNeither past due nor impaired (“NPDNI”)Excellent 41,801,620 293,750 – 42,095,370Satisfactory 2,734,627 347,516 – 3,082,143Fair 242,626 32,800 – 275,426

44,778,873 674,066 – 45,452,939Past due but not impaired (“PDNI”) – 591,509 – 591,509Impaired – – 425,937 425,937

44,778,873 1,265,575 425,937 46,470,385Allowance for impairment on financing,

advances and others– collective assessment (326,702) (125,183) (83,722) (535,607)– individual assessment – – (156,691) (156,691)

44,452,171 1,140,392 185,524 45,778,087





(iii) Credit quality of gross financing and advances (continued)

The credit quality of the Bank’s gross financing is summarised as follows: (continued)

Lifetime eCL not Lifetime 12-montH CreDit- eCL CreDit- BanK isLam eCL impaireD impaireD totaL31 DeCemBer 2018 rm’000 rm’000 rm’000 rm’000

financing commitments Neither past due nor impaired (“NPDNI”) Excellent 8,234,213 28,251 – 8,262,464Satisfactory 583,981 72,491 – 656,472Fair 14,424 104 – 14,528

8,832,618 100,846 – 8,933,464Past due but not impaired (“PDNI”) – 10,520 – 10,520Impaired – – 20,352 20,352

8,832,618 111,366 20,352 8,964,336Allowance for impairment on financing,

advances and others– collective assessment (54,238) (3,177) (3,440) (60,855)

8,778,380 108,189 16,912 8,903,481

financial guarantee contractsNeither past due nor impaired (“NPDNI”)Excellent 1,692,780 3,138 – 1,695,918Satisfactory 49,235 3,262 – 52,497Fair – – – –

1,742,015 6,400 – 1,748,415Past due but not impaired (“PDNI”) – 942 – 942Impaired – – 828 828

1,742,015 7,342 828 1,750,185Allowance for impairment on financing,

advances and others– collective assessment (35,510) (1,042) – (36,552)

1,706,505 6,300 828 1,713,633

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BanK isLam Consumer Business totaL 31 DeCemBer 2017 rm’000 rm’000 rm’000

Neither past due nor impaired 31,276,065 10,460,497 41,736,562

Excellent to good 26,212,600 8,931,557 35,144,157Satisfactory 4,564,174 1,528,175 6,092,349Fair 499,291 765 500,056

Past due but not impaired 362,240 188,857 551,097 Impaired 216,461 181,816 398,277

31,854,766 10,831,170 42,685,936Allowance for impairment on financing, advances and others– collective assessment allowance (446,069)– individual assessment allowance (126,447)

42,113,420

No significant changes to estimation techniques or assumptions were made during the year.

Gross financing and advances of the main subsidiary, Bank Islam, are classified as follows:

• Neitherpastduenorimpairedfinancing

Financing for which the borrower has not missed a contractual payment (profit or principal) when contractually due and is not impaired and there is no objective evidence of impairment.

• Pastduebutnotimpairedfinancing

Financing for which its contractual profit or principal payments are past due, but the Bank 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 Bank.

• 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, or when the financing is classified as rescheduled and restructured in Central Credit Reference Information System (“CCRIS”).






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:Adequatesafetyofmeetingitscurrentobligationsbutmoretimeisrequiredtomeettheentireobligation in full.

• Fair:Higherrisksonpaymentobligations.Financialperformancemaycontinuetodeteriorate.

Past due but not impaired financing

The ageing analysis of financing and advance past-due but not impaired as at the end of the reporting period was as follows:

BanK isLam 2018 2017 rm’000 rm’000

By ageingMonth-in-arrears 1 357,420 362,240Month-in-arrears 2 234,089 188,857

591,509 551,097

Impaired financing Individually assessed 251,694 217,209

of which:

Month-in-arrears 0 21,789 20,060Month-in-arrears 1 6,433 69,204Month-in-arrears 2 5,247 3,317Month-in-arrears 3 and above 218,225 124,628

Collectively assessed 174,243 181,068

425,937 398,277

Impaired financing of which rescheduled and restructured financingConsumer 16,855 21,264Business 6,859 8,117

23,714 29,381

Rescheduled and restructured financings are financings that have been rescheduled or restructured due to deterioration in the customers’ financial positions and the Bank has made concessions that it would not otherwise consider. Once the financing is rescheduled or restructured, its satisfactory performance is monitored for a period of six months before it can be reclassified to performing.

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Key macroeconomic variables

The following table shows certain key macroeconomic variables used in modelling the allowance for credit losses for Stages 1 and 2. For the base case, upside and downside scenarios, the projections are provided for the next 12 months and for the remaining forecast period, which represents a medium-term view.

BASE SCENARIO UPSIDE SCENARIO DOwNSIDE SCENARIO NExT REMAINING NExT REMAINING NExT REMAINING 12 FORECAST 12 FORECAST 12 FORECAST MONTHS PERIOD MONTHS PERIOD MONTHS PERIOD

Kuala Lumpur Composite Index (“KLCI”) 1,650.0 1,850.0 1,750.0 1,950.0 1,542.5 1,742.5

House Price Index (“HPI”) 2.3% 1.8% 5.8% 5.3% -1.2% -0.2%Consumer Price Index

(“CPI”) 2.4% 2.7% 1.9% 2.2% 3.4% 3.7%Unemployment Rate 3.3% 3.3% 3.0% 3.0% 3.6% 3.7%Industrial Production

Index (“IPI”) 3.3 2.2 6.0 4.9 (2.1) (0.7)

An increase in unemployment rate or CPI will generally correlate with higher allowances for credit losses, whereas an increase in the other macroeconomic factors (KLCI, HPI and IPI) will generally correlate with lower allowances for credit losses.

(iv) Credit quality of takaful receivables

impairment loss of takaful receivables

A reconciliation of the allowance for impairment losses for takaful receivables was as follows:

rm’000

At 1 January 2017 9,375Writeback of impairment debts (1,264)Allowance for impaired debts 1,432Disposal of a subsidiary (2,158)Effect of movement in exchange rates (97)

At 31 December 2017/1 January 2018 7,288Changes on initial application of MFRS 9 1,692

At 1 January 2018, under MFRS 9 8,980Net remeasurement of allowance for impairment (2,837)Bad debts written off against impairment allowance (36)

At 31 December 2018 6,107

Note 13





(v) 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:

Lifetime 12-montH eCL CreDit- Group eCL impaireD totaL as at 31 DeCemBer 2018 rm’000 rm’000 rm’000

financial assets at fVoCiDebt investment securitiesGovernment bonds and treasury bills 3,014,387 – 3,014,387Sukuk

Rated AAA 3,463,868 – 3,463,868Rated A1 to AA3 2,885,436 – 2,885,436Rated A 138,665 – 138,665Lower than A 24,614 20,000 44,614Not rated 912,500 – 912,500

Unrated – Government guaranteed bonds 4,873,504 – 4,873,504Other unrated financial assets 318,625 – 318,625

15,631,599 20,000 15,651,599

financial assets at fVoCiEquity investmentOther unrated financial assets 35,518

financial assets at fVtpLGovernment bonds and treasury bills 145,151Sukuk

Rated AAA 53,763Rated AA 42,945Rated A 86,377Not rated 135,230Unit-linked 55,868

Structured depositsRated AAA 50,537Rated AA 194,034

Other unrated financial assets 638,698

1,402,603

Derivative financial assetsBank and financial institution counterparties 5,250Corporate 28,898

34,148

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(v) Credit quality of investments’ portfolio (continued)

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’000As at 31 December 2017AAA 15,903 – 2,946,627 187,945 3,150,475 AA 3,358 – 2,523,264 5,700 2,532,322A 1,506 – 202,916 11,982 216,404Below A – – 67,013 – 67,013Unrated 41,450 – 555,677 250,903 848,030Sovereign 355,681 – 6,364,363 59,994 6,780,038Unit-linked 49,056 – – – 49,056Financial institution – 66,694 251,051 – 317,745 Corporate – 1,625 – – 1,625

466,954 68,319 12,910,911 516,524 13,962,708

46.4 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. The following are the main market risk factors that the Group is exposed to:

• profit rate risk: also known as the Rate of Return Risk is 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 reasons;

• foreign exchange risk:theimpactofexchangeratemovementsontheGroup’scurrencypositions;

• equity investment risk: the profitability impact on the Group’s equity positions or investments caused by changes inequitypricesorvalues;

• Commodity inventory risk: theriskoflossduetomovementsincommodityprices;

• Liquidity risk: the potential inability of the Group to meet its funding requirements at a reasonable cost (funding liquidity risk) or its inability to liquidate positions quickly at a reasonable price (market liquidity risk).

The key features of the Group’s market risk management practices and policies are represented by the Banking and Takaful segments.




46.4 market risk (continued)

(a) Banking

Bank Islam separates the market risk exposures 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 Bank’s Board approved Trading Book Policy Statements. Non-trading portfolios primarily arise from the Bank’s profit rate management of the Bank’s assets and liabilities and investment portfolio mainly for liquidity management.

market risk governance

The management of market risk is principally carried out by using sets of policies and guidelines approved by the Bank’s Asset and Liability Management Committee (“ALCO”) and/or BRC, guided by the Bank’s Board’s approved Risk Appetite Statement.

The ALCO is responsible under the authority delegated by the Bank’s BRC for managing market risk at strategic level.

management of market risk

The objective is to manage market risk exposures in order to optimise return on risk while maintaining a market risk profile consistent with the Bank’s approved risk appetite.

Bank Islam’s market risk exposures are managed by its Treasury, who have the necessary skills, tools, management and governance to manage such risks. The management of market risk is guided by detailed limits, policies and guidelines which are periodically reviewed.

The Bank’s Market Risk Management Department (“MRMD”) is the independent risk control function, and is responsible for the implementation of market risk management policies. The Bank’s MRMD is also responsible for developing the Bank’s market risk management guidelines, monitoring tools, behavioural assumptions and limit setting methodologies. Escalation procedures are documented and approved by the ALCO and/or BRC. In addition, the market risk exposures and limits are 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 that can be traded. Stress test results are produced regularly to determine the impact of changes in profit rates, foreign exchange rates and other risk factors on the Bank’s profitability, capital adequacy and liquidity. 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 Bank.

(i) profit rate risk

The table below summarises the Bank’s exposure to profit rate risk. The table indicates average profit rates at the reporting date and the period in which the financial instruments reprice or mature, whichever is earlier.

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(i) profit rate risk (continued)

NON TRADING BOOk NON EFFECTIvE BANk ISLAM UP TO 1 >1-3 >3-12 1-5 OvER 5 PROFIT TRADING PROFIT MONTH MONTHS MONTHS YEARS YEARS SENSITIvE BOOk TOTAL RATE AS AT 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term funds

and deposits and placements with financial institutions 3,632,629 – 328 – – 891,697 – 4,524,654 2.15%

Financial assets at FVTPL – – – – – – 364,959 364,959 3.40%Derivative financial assets – – – – – – 34,148 34,148 0.99%Financial assets at FVOCI 500,513 316,389 718,753 5,796,612 4,022,032 – – 11,354,299 4.29%Financing, advances and

others– non-impaired 41,478,399 497,224 66,576 1,308,965 2,693,284 – – 46,044,448 5.81%– impaired net of allowances* – – – – – (363,768) – (363,768)Other financial assets at

amortised cost – – – – – 1,979,993 – 1,979,993

Total assets 45,611,541 813,613 785,657 7,105,577 6,715,316 2,507,922 399,107 63,938,733

Note 52

* This is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired financing.








LiabilitiesDeposits from customers 9,565,065 9,989,364 9,558,386 5,614,820 – 15,167,597 – 49,895,232 2.69Investment accounts of

customers 983,713 689,013 908,904 343 – 2,594,846 – 5,176,819 1.20Derivative financial liabilities – – – – – – 19,520 19,520 0.57Bills and acceptances payable – – – – – 41,114 – 41,114Recourse obligations on

financing sold to Cagamas – – – 1,500,000 – 1,187 – 1,501,187 4.75Subordinated Sukuk

Murabahah – – – 1,300,000 – 8,634 – 1,308,634 5.33Other liabilities – – – – – 719,820 – 719,820

Total liabilities 10,548,778 10,678,377 10,467,290 8,415,163 – 18,533,198 19,520 58,662,326

Note 52EquityEquity attributable to equity

holders of the Bank – – – – – 5,276,407 – 5,276,407

Total equity – – – – – 5,276,407 – 5,276,407

Total liabilities and shareholders’ equity of the Bank 10,548,778 10,678,377 10,467,290 8,415,163 – 23,809,605 19,520 63,938,733

On-balance sheet profit sensitivity gap 35,062,763 (9,864,764) (9,681,633) (1,309,586) 6,715,316 (21,301,683) 379,587 –

Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 300,000 (400,000) – – – – –

Total profit sensitivity gap 35,162,763 (9,564,764) (10,081,633) (1,309,586) 6,715,316 (21,301,683) 379,587 –

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AssetsCash and short-term funds

and deposits and placements with financial institutions 3,263,920 – – – – 921,777 – 4,185,697 1.57

Financial assets held-for- trading – – – – – – 380,925 380,925 4.40

Derivative financial assets – – – – – – 68,319 68,319 1.79Financial assets available-

for-sale 209,960 147,227 732,806 5,140,778 3,021,912 – – 9,252,683 4.08Financing, advances and

others– non-impaired 37,200,376 559,077 73,727 1,474,789 2,979,690 – – 42,287,659 5.56– impaired net of allowances* – – – – – (174,239) – (174,239)Other assets – – – – – 1,741,870 – 1,741,870

Total assets 40,674,256 706,304 806,533 6,615,567 6,001,602 2,489,408 449,244 57,742,914

Note 52

* This is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired financing.








LiabilitiesDeposits from customers 8,164,490 13,367,794 7,370,928 1,714,677 – 15,575,021 – 46,192,910 2.54Investment accounts of

customers 711,299 1,171,831 382,564 – – 1,994,491 – 4,260,185 1.01Derivative financial liabilities – – – – – – 74,668 74,668 1.95Bills and acceptances payable 130,846 35,636 – – – 253,776 – 420,258Subordinated Sukuk Murabahah – – – 1,000,000 – 6,486 – 1,006,486 5.43Other liabilities – – – – – 828,703 – 828,703

Total liabilities 9,006,635 14,575,261 7,753,492 2,714,677 – 18,658,477 74,668 52,783,210

Note 52EquityEquity attributable to equity

holders of the Bank – – – – – 4,959,704 – 4,959,704

Total equity – – – – – 4,959,704 – 4,959,704

Total liabilities and shareholders’ equity of the Bank 9,006,635 14,575,261 7,753,492 2,714,677 – 23,618,181 74,668 57,742,914

On-balance sheet profit sensitivity gap 31,667,621 (13,868,957) (6,946,959) 3,900,890 6,001,602 (21,128,773) 374,576 –

Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 300,000 – (400,000) – – – –

Total profit sensitivity gap 31,767,621 (13,568,957) (6,946,959) 3,500,890 6,001,602 (21,128,773) 374,576 –

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(ii) profit rate risk in the non-trading portfolio

Profit rate risk in the non-trading portfolio is managed and controlled using measurement tool known as earnings-at-risk (“EaR”).

The Bank monitors the sensitivity of EaR under varying profit rate scenarios (i.e. simulation modeling). The model is a combination of standard and non-standard scenarios relevant to the local market. The standard scenarios include the parallel fall or rise in the profit rate curve and historical simulation. These scenarios assume no management action. Hence, it does 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 optimise net revenues. The nature of the hedging and risk mitigation strategies corresponds to the market instruments available. These strategies range from the use of derivative financial instruments, such as profit rate swaps, to more intricate hedging strategies to address inordinate profit rate risk exposures.

The table below shows the Bank’s profit rate sensitivity to a 100 basis points parallel shift as at reporting date.

2018 2017 -100Bps +100Bps -100Bps +100Bps inCrease/(DeCrease) rm’miLLion

Bank islamImpact on EaR (129.46) 129.46 (85.41) 85.41Impact on EVE 133.41 (133.41) 168.00 (168.00)

Other control to manage the profit rate risk in the non-trading portfolio includes present value of a 1 basis point change (“PV01”) which measures the portfolio’s sensitivity to market rates movement.

(iii) market risk in the trading portfolio

Market risk in the trading portfolio is monitored and controlled using Value-at-Risk (“VaR”). It is a technique that estimates the potential losses that could occur on risk positions as a result of movements in market rates over a specified time horizon and to a given level of confidence. The VaR model used by Bank Islam is based on historical simulation. This model derives plausible future scenarios from past series of recorded market rates and prices, taking into account inter-relationship between different markets and rates such as profit rates and foreign exchange rates.






(iii) market risk in the trading portfolio (continued)

The historical simulation model used by the Bank incorporates the following features:

• potentialmarketmovementsarecalculatedwithreferencetodatafromthepasttwoyears;

• historicalmarketratesandpricesarecalculatedwithreferencetoforeignexchangeratesandprofitrates;and

• VaRiscalculatedtoa99percentconfidencelevelandforaone-dayholdingperiod.

A summary of the VaR position of the Bank’s trading portfolios at the reporting date is as follows:

as at 1.1.2018 to 31.12.2018 31.12.2018 aVeraGe maximum minimum BanK isLam rm miLLion rm miLLion rm miLLion rm miLLion

Profit rate risk 0.05 1.96 4.08 0.05Foreign exchange risk 0.26 0.48 1.00 0.15Overall 0.31 2.44 4.62 0.29

as at 1.1.2017 to 31.12.2017 31.12.2017 aVeraGe maximum minimum BanK isLam rm miLLion rm miLLion rm miLLion rm miLLion

Profit rate risk 1.74 1.88 3.29 0.59Foreign exchange risk 0.43 0.29 0.86 0.01Overall 2.17 2.17 3.67 0.62

To ensure holistic monitoring of the trading portfolio, the Bank has also put in place the maximum loss limits, position limits, tenor limits and PV01 limits.

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(iv) foreign exchange risk

The Bank manages and controls the trading portfolio’s foreign exchange risk by limiting the net open exposure to individual currencies and on an aggregate basis. The Bank also has in place the sensitivity limit. For the Bank-wide (trading and non-trading portfolios) foreign exchange risk, the Bank manages and controls by limiting the net open exposure on an aggregate basis.

Sensitivity Analysis

Assuming that other risk variables remain constant, the foreign currency revaluation sensitivity for the Bank as at reporting date is summarised as follows (only net open position for major currencies are shown in its specific currency in the table below. For other currencies, these exposures are grouped as ‘Others’):

2018 2017 -1% +1% -1% +1% DepreCiation appreCiation DepreCiation appreCiation BanK isLam rm’000 rm’000 rm’000 rm’000

US Dollar 11,830 (11,830) 9,331 (9,331)Euro 4,938 (4,938) 5,197 (5,197)Others (112) 112 826 (826)

(b) takaful

The key features of Takaful Malaysia’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 Malaysia Group. Compliance with the policy is monitored and reported monthly to Takaful Malaysia’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 Malaysia’s policies on asset allocation, portfolio limit structure and diversification benchmark have been set in line with Takaful Malaysia’s risk management policy after taking cognisance of the regulatory requirements in respect of maintenance of assets and solvency.





(b) takaful (continued)

Takaful Malaysia 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 Malaysia’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 risk, whereas fixed rate/yield instruments expose Takaful to fair value risk.

Takaful Malaysia’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 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.

The profit yield profile of the Takaful Malaysia Group and its subsidiaries’ significant profit-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:

taKafuL taKafuL famiLy GeneraL maLaysia operator taKafuL taKafuL Group fixeD rate instruments rm’000 rm’000 rm’000 rm’000

2018FVTPL financial assets 63,111 503,886 51,757 618,754FVOCI financial assets 493,490 3,498,323 391,126 4,382,939Amortised cost 598,975 1,263,770 260,499 2,123,244

1,155,576 5,265,979 703,382 7,124,937

2017AFS financial assets 446,354 2,703,050 344,758 3,494,162FVTPL financial assets 4,255 87,035 – 91,290HTM financial assets 10,034 496,490 10,000 516,524Financing and receivables 454,344 1,387,484 195,043 2,036,871

914,987 4,674,059 549,801 6,138,847

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(i) profit yield risk (continued)

Takaful Malaysia 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 increase/(decrease) other comprehensive income/equity, Family and General Takaful participants’ fund by the amounts shown below. This analysis assumes that all other variables remain constant.

IMPACT ON IMPACT ON IMPACT ON CHANGE IN PROFIT IMPACT ON OPERATING PARTICIPANTS’ vARIABLES BEFORE TAx EqUITY* SURPLUS FUND RM’000 RM’000 RM’000 RM’000

takaful malaysia Group2018 FVTPL financial assets +50bps (86) (60) (1,622) (1,622)FVOCI financial assets +50bps (14,841) (11,279) (147,505) (147,505)

(14,927) (11,339) (149,127) (149,127)

FVTPL financial assets -50bps 87 61 1,656 1,656FVOCI financial assets -50bps 15,049 11,437 157,575 157,575

15,136 11,498 159,231 159,231

2017 AFS financial assets +50bps – (10,244) – (133,921)FVTPL financial assets +50bps – 13 (938) (1,206)

– (10,231) (938) (135,127)

AFS financial assets -50bps – 10,738 – 142,376FVTPL financial assets -50bps – (13) 1,025 1,293

– 10,725 1,025 143,669

* Impact on equity reflects adjustments for tax, when applicable.






(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 analysis

The 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 IMPACT ON CHANGE IN PROFIT IMPACT ON OPERATING PARTICIPANTS’ vARIABLES BEFORE TAx EqUITY* SURPLUS FUND RM’000 RM’000 RM’000 RM’0002018 Market price +15% 2,949 2,343 38,969 39,096Market price -15% (2,949) (2,343) (38,969) (39,096)

2017 Market price +15% (41) 8,299 10,153 56,120Market price -15% 41 (8,299) (10,153) (56,120)

* Impact on equity reflects adjustments for tax, when applicable.

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(iii) foreign exchange risk

Takaful Malaysia’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 Malaysia’s business is conducted primarily in Malaysia, the Takaful Malaysia Group and its subsidiaries’ financial assets are also primarily maintained in Malaysia as required under the Islamic Financial Services Act 2013, 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 Malaysia’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 Malaysia has no significant concentration of foreign currency risk.

Takaful Malaysia’s exposure to currency risk is immaterial in the context of the financial statements and hence, sensitivity analysis is not presented.

46.5 Liquidity risk

overview

Liquidity risk is the potential inability of the Group to meet its funding needs and regulatory obligation when they fall due, or will have to do it at excessive cost. This risk can arise from mismatches in the timing of cash flows.

The management reviews both Banking and Takaful business’ liquidity risk separately 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 form a critical part of the Bank’s funding profile, and the Bank places considerable importance on maintaining their stability. For deposits, stability depends upon preserving depositor confidence in the Bank and the Bank’s capital strength and liquidity, and on competitive and transparent pricing.




46.5 Liquidity risk (continued)


The Bank’s liquidity management is primarily carried out in accordance with Bank Negara Malaysia’s requirements and limits approved by the Bank’s ALCO and/or BRC. 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.

The management of liquidity risk is principally carried out by using sets of policies and guidelines approved by the Bank’s ALCO and/or BRC, guided by the Board’s approved Risk Appetite Statement.

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 risk

All liquidity risk exposures are managed by the Bank’s Treasury, who has the necessary skills, tools, management and governance to manage such risks. Limits and triggers are set to meet the following objectives:

• Maintainingsufficientliquiditysurplusandreservestosustainasuddenliquidityshock;

• Ensuringthatcashflowsarerelativelydiversifiedacrossallmaturities;

• Ensuringthatthedepositbaseisnotoverlyconcentratedtoarelativelysmallnumberofdepositors;

• MaintainingsufficientborrowingcapacityintheInterbankmarketandhighlyliquidfinancialassetstobackitup;

• Notover-extendingfinancingactivitiesrelativetothedepositbase;and

• Notoverrelyingonnon-RinggitliabilitiestofundRinggitassets.

The Bank’s MRMD is the independent risk control function and is responsible for ensuring efficient implementation of liquidity risk management. It is also responsible for developing the Bank’s liquidity risk management guidelines, monitoring tools, behavioural assumptions and limit setting methodologies. Escalation procedures are documented and approved by the Bank’s ALCO and/or BRC, with proper authorities to ratify or approve the excess. In addition, the liquidity risk exposures and limits are regularly reported to the Bank’s ALCO and the BRC.

Stress testing and scenario analysis are important tools used by the Bank to manage the liquidity risk. Stress test results are produced regularly to determine the impact of a sudden liquidity shock. The stress-testing provides the Bank’s Management and the 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 risk management is the approved and documented liquidity contingency management 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.

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maturity analysis

The 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 AS AT 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000AssetsCash and short-term funds and deposits and

placements with financial institutions 891,697 3,632,629 – 328 – – 4,524,654Securities portfolio – 835,145 316,389 211,427 507,326 9,848,971 11,719,258Derivatives financial assets – 2,231 13,682 16,448 – 1,787 34,148Financing, advances and others – 1,215,358 2,343,527 525,783 536,695 41,059,317 45,680,680Other assets – – – – – 1,979,993 1,979,993

Total assets 891,697 5,685,363 2,673,598 753,986 1,044,021 52,890,068 63,938,733

Note 52LiabilitiesDeposits from customers 15,167,597 9,565,065 9,989,364 5,539,651 4,018,736 5,614,819 49,895,232Investment accounts of customers 2,594,846 983,713 689,013 743,623 165,281 343 5,176,819Deposits and placements of banks and other

financial institutions – – – – – – –Derivative financial liabilities – 1,123 6,219 9,413 2,316 449 19,520Recourse obligations on financing sold

to Cagamas – – – – 1,187 1,500,000 1,501,187Subordinated Sukuk Murabahah – – – – 8,634 1,300,000 1,308,634Other liabilities – – – – – 760,934 760,934

Total liabilities 17,762,443 10,549,901 10,684,596 6,292,687 4,196,154 9,176,545 58,662,326

Note 52EquityEquity attributable to equity holders

of the Bank – – – – – 5,276,407 5,276,407

Net liquidity gap on statement of financial position (16,870,746) (4,864,538) (8,010,998) (5,538,701) (3,152,133) 38,437,116 –

Commitments and contingencies – 3,012,887 2,161,831 2,083,943 4,012,304 2,891,390 14,162,355

Net liquidity gap (16,870,746) (7,877,425) (10,172,829) (7,622,644) (7,164,437) 35,545,726 (14,162,355)






maturity analysis (continued)

ON UP TO >1 TO 3 >3 TO 6 >6 TO 12 OvER DEMAND 1 MONTH MONTHS MONTHS MONTHS 1 YEAR TOTAL AS AT 31 DECEMBER 2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000AssetsCash and short-term funds and deposits and

placements with financial institutions 921,777 3,263,920 – – – – 4,185,697Securities portfolio – 215,221 147,227 351,798 381,008 8,538,354 9,633,608Derivatives financial assets – 1,658 31,572 15,940 14,657 4,492 68,319Financing, advances and others – 1,275,604 2,132,544 430,257 453,015 37,822,000 42,113,420Other assets – – – – – 1,741,870 1,741,870

Total assets 921,777 4,756,403 2,311,343 797,995 848,680 48,106,716 57,742,914

Note 52LiabilitiesDeposits from customers 15,575,021 8,164,490 13,367,794 5,377,330 1,993,598 1,714,677 46,192,910Investment accounts of customers 1,994,491 711,299 1,171,831 379,555 3,009 – 4,260,185Deposits and placements of banks and other

financial institutions – – – – – – –Derivative financial liabilities – 3,958 29,334 27,218 12,257 1,901 74,668Subordinated Sukuk Murabahah – – – – 6,486 1,000,000 1,006,486Other liabilities – 130,846 35,636 – – 1,082,479 1,248,961

Total liabilities 17,569,512 9,010,593 14,604,595 5,784,103 2,015,350 3,799,057 52,783,210

Note 52EquityEquity attributable to equity holders of the Bank – – – – – 4,959,704 4,959,704

Net liquidity gap on statement of financial position (16,647,735) (4,254,190) (12,293,252) (4,986,108) (1,166,670) 39,347,955 –

Commitments and contingencies – 3,187,616 1,941,359 1,526,040 3,270,632 3,842,515 13,768,162

Net liquidity gap (16,647,735) (7,441,806) (14,234,611) (6,512,148) (4,437,302) 35,505,440 (13,768,162)

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Contractual maturity of financial liabilities on an undiscounted basis

The table below present the cash flows payable by the Bank under financial liabilities by remaining contractual maturities at the end of the reporting period. The amount disclosed in the table are the contractual undiscounted cash flows:

UP TO >1 TO 3 >3 TO 6 >6 TO 12 OvER 1 MONTH MONTHS MONTHS MONTHS 1 YEAR TOTAL AS AT 31 DECEMBER 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Financial LiabilitiesDeposit from customers 24,658,959 10,055,235 5,620,072 4,144,531 6,120,762 50,599,559Investment accounts of customers 3,558,107 699,197 770,056 171,526 369 5,199,255Derivatives financial liabilities 2,817 11,555 23,305 40,713 1,283,082 1,361,472

Forward contract 1,112 6,230 8,094 2,316 – 17,752Islamic Profit Rate Swap 1,705 5,325 15,211 38,397 1,283,082 1,343,720

Bills and acceptances payable 41,114 – – – – 41,114Recourse obligations on financing sold to Cagamas 8,814 17,627 26,441 35,625 1,743,437 1,831,944Subordinated Sukuk Murabahah – – 27,233 27,407 1,366,183 1,420,823Other liabilities 709,253 – – – – 709,253

28,979,064 10,783,614 6,467,107 4,419,802 10,513,833 61,163,420

Commitments and ContingenciesDirect credit substitutes 26,173 166,731 50,317 93,158 151,141 487,520Transaction related contingent items 97,100 40,620 57,367 347,303 472,809 1,015,199Short term self liquidating trade related

contingencies 88,331 106,716 32,448 2,568 17,645 247,708

211,604 314,067 140,132 443,029 641,595 1,750,427







Contractual maturity of financial liabilities on an undiscounted basis (continued)

UP TO >1 TO 3 >3 TO 6 >6 TO 12 OvER 1 MONTH MONTHS MONTHS MONTHS 1 YEAR TOTAL AS AT 31 DECEMBER 2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Financial LiabilitiesDeposit from customers 23,584,211 13,441,816 5,408,437 1,919,920 1,924,218 46,278,602Investment accounts of customers 2,805,598 1,172,136 360,269 24,049 523 4,362,575Derivatives financial liabilities 5,347 29,846 27,218 12,257 – 74,668

Forward contract 3,958 29,334 27,218 12,257 – 72,767Islamic Profit Rate Swap 1,389 512 – – – 1,901

Bills and acceptances payable 420,258 – – – – 420,258Subordinated Sukuk Murabahah – – 10,970 28,353 966,196 1,005,519Other liabilities 817,113 – – – – 817,113

27,632,527 14,643,798 5,806,894 1,984,579 2,890,937 52,958,735

Commitments and ContingenciesDirect credit substitutes 32,823 66,569 27,583 96,056 214,424 437,455Transaction related contingent items 105,664 111,197 102,293 271,506 476,445 1,067,105Short term self liquidating trade related

contingencies 210,585 57,984 21,956 27,528 42,684 360,737

349,072 235,750 151,832 395,090 733,553 1,865,297

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(b) takaful

The following policies and procedures are in place to mitigate exposure to liquidity risk at Takaful Malaysia level:

• Wide liquidity riskpolicy settingout theevaluationanddeterminationof thecomponentsof liquidity risk.Compliance with the policy 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,inordertoensure sufficient funding is available to meet takaful contracts obligations.

• Settingupcontingencyfundingplanswhichspecifyminimumproportionsoffundstomeetemergencycallsaswell as specifying events that would trigger such plans.

• TheTakaful’scatastropheexcess-of-lossretakafulcontractcontainsclausespermittingtheimmediatedrawdownof funds to meet claims payments should claims events exceed certain amount.

maturity analysis

The table below summarises the maturity profile of the financial liabilities of the Takaful Malaysia 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.







MORE CARRYING UP TO >1 TO 3 >3 TO 5 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

2018Provision for outstanding claims 24(a)(i) 294,655 142,233 104,046 41,164 7,212 – 294,655Takaful payables 24(c) 114,267 114,267 – – – – 114,267Other payables 406,673 404,777 1,896 – – – 406,673

815,595 661,277 105,942 41,164 7,212 – 815,595

2017Provision for outstanding claims 24(a)(i) 253,121 115,520 106,973 25,011 5,617 – 253,121Takaful payables 24(c) 106,983 106,983 – – – – 106,983Other payables 328,975 326,639 2,336 – – – 328,975

689,079 549,142 109,309 25,011 5,617 – 689,079

* Expected utilisation or settlement is within 12 months from the reporting date.

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46.6 operational risk

(a) Banking

overview

Operational risk is defined as the risk of loss arising from inadequate or failed internal processes, people and systems and external events, which includes legal risk and Shariah compliance risk but excludes strategic and reputational risk.

management of operational risk

The Bank recognises and emphasises the importance of operational risk management (“ORM”) and manages this risk through a control-based environment where processes are documented, authorisation is independent, transactions are reconciled and monitored and business activities are carried out within the established guidelines, procedures and limits.

The Bank’s overall governance approach in managing operational risk is premised on the Three Lines of Defence Approach:

• 1st line of defence – The risk owner or risk taking unit i.e. Business or Support Unit is accountable for putting in place a robust control environment within their respective units. They are responsible for the day to day management of operational risk. To reinforce accountability and ownership of risk and control, a Risk Controller for each risk taking unit is appointed to assist in driving the risk and control programme for the Bank.

In addition, an Embedded Risk & Compliance Unit (“ERU”) has been established within the significant business and support units (“BU/SU”). The ERU would assist in implementing and monitoring the ORM activities within the BU/SU. The ERU’s relationship and knowledge of the business allow for a more focused implementation and effective oversight of ORM within the BU/SU.

• 2nd line of defence – Operational Risk Management Department (“ORMD”) is responsible for establishing and maintaining the ORM Framework, developing various ORM tools to facilitate the management of operational risk, monitoring the effectiveness of ORM, assessing operational risk issues from the risk owner and escalating the issues to the relevant governance level with recommendations on appropriate risk mitigation strategies. In creating a strong risk culture, ORMD is also responsible to promote risk awareness across the Bank.

Shariah Risk Management Department (“SRM”), Compliance Division and Chief Information Security Officer (“CISO”) Office complement the role of ORMD as the second line of defence. SRM is responsible for managing the Shariah compliance risk (“SCR”) by establishing and maintaining appropriate SRM guidelines, facilitating the process of identifying, assessing, controlling and monitoring SCR and promoting SCR awareness.

Compliance Division is responsible for ensuring effective oversight on compliance-related risks such as regulatory compliance risk, compliance risk as well as money laundering and terrorism financing risks through proper classification of risks and develops, reviewing and enhancing compliance-related training programmes as well as conducting training that promotes awareness creation.

CISO Office is responsible in managing technology risk by establishing, maintaining and enforcing technology risk policies and guidelines, as well as promoting bank wide awareness on technology risk. It also works closely with Information Technology Division (“ITD”) in identifying, assessing, mitigating and monitoring technology risk in the Bank.

• 3rd line of defence – Internal Audit provides independent assurance to the Board and senior management on the effectiveness of the ORM process.



47. takaful risk management

(a) family takaful fund

The Family Takaful contracts consist of:

(i) Family Takaful non-investment-linked contracts

The Family Takaful non-investment-linked contracts are mainly credit related takaful products, group takaful schemes, yearly renewable individual ordinary medical plans, regular contribution individual ordinary plans and annuity plans. The main product types are Mortgage Reducing Term Takaful (MRTT), Group Credit Takaful, Group Term Takaful and Group Medical Takaful.

(ii) Family Takaful investment-linked contracts

The Family Takaful investment-linked contracts are mainly made up of regular contribution investment-linked products. The main products are Takaful myInvest and Takaful myGenLife.

The key coverage for the Family Takaful contracts

The key coverage for the Family Takaful contracts are death, total and permanent disability, hospital and surgical benefits, personal accident benefits, daily hospitalisation cash allowance benefits, dread disease benefits, waiver of contribution benefits and survival benefits (for annuity).

Concentration of Family Takaful risk

The following gives details of Takaful Malaysia Group’s concentration of risks based on outstanding actuarial reserves by main product categories:

Group Gross retaKafuL net note rm’000 rm’000 rm’000

2018

Term 979,168 – 979,168Endowment 1,054,922 (2,646) 1,052,276Mortgage 2,690,381 (161,073) 2,529,308Annuity 296,415 – 296,415

total family actuarial liabilities 24(a)(iii) 5,020,886 (163,719) 4,857,167

2017

Term 877,855 – 877,855Endowment 1,288,089 (1,280) 1,286,809Mortgage 2,280,304 (178,204) 2,102,100Annuity 309,646 – 309,646

total family actuarial liabilities 24(a)(iii) 4,755,894 (179,484) 4,576,410

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ion 47. takaful risk management (continued)

(a) family takaful fund (continued)

Key assumptions

Reserves for all plans were valued on a basis that the Appointed Actuary considers adequate and appropriate, and in-line with the valuation basis set out by BNM in respect of the Guidelines on Valuation Basis for Liabilities of Family Takaful Business (BNM/RH/GL 004-20) and Risk-Based Capital Framework for Takaful Operator.

The key assumptions to which the estimation of actuarial liabilities is particularly sensitive to the followings:

– Mortality and morbidity rates

This is significant for contracts with significant coverage for death, total permanent disability and critical illness and the increase in the mortality or morbidity rates would have direct impact on the liability.

– Discount rate

As the liabilities represents the present value of future cash outflow, a reduction in discount rate would have an increasing impact on the liabilities and vice-versa.

– Surrender rate

This is only applicable to long-term products, where when the rate is reduced (products with PIF) or increased (products without PIF), the impact is an increase of the liability.

Sensitivities

A summary of key assumptions used for sensitivity analysis is as below:

Group mortaLity anD morBiDity DisCount surrenDer rates rate rate

2018Endowment +10%(i) -1% -20%Mortgage +10%(i) -1% -20%Investment-linked +10%(i) -1% -20%

2017Endowment +10%(i) -1% -20%Mortgage +10%(i) -1% -20%Investment-linked +10%(i) -1% -20%



47. takaful risk management (continued)

(a) family takaful fund (continued)

Sensitivities (continued)

(i) 10% Industry mortality and morbidity experience tables M8388 and M9903

The analysis below is performed for reasonable possible movements in each of the key assumptions, with all other assumptions held constant, showing the impact on gross and net liabilities, and unallocated surplus. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities. However, in order to demonstrate the impact arising from changes in assumptions, these assumptions had to be changed on an individual basis. It should also be noted that movement in these assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions.

GROUP IMPACT ON IMPACT ON IMPACT ON CHANGE IN GROSS NET UNALLOCATED ASSUMPTIONS LIABILITIES LIABILITIES SURPLUS RM’000 RM’000 RM’0002018Mortality / morbidity rate +10% 313,451 253,362 (253,362)Discount rate -1% 195,315 186,316 (186,316)Surrender rate -20% 72,957 46,801 (46,801)

2017Mortality / morbidity rate +10% 267,895 208,142 (208,142)Discount rate -1% 175,447 182,436 (182,436)Surrender rate -20% 72,319 47,186 (47,186)

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(b) General takaful fund

The General Takaful contracts consist of fire, motor, personal accident, workmen’s compensation and employers’ liability, liabilities and engineering and others.

Concentration of General Takaful risk

The table below sets out the concentration of General Takaful gross contribution by type of business.

GROUP GROSS RETAkAFUL NET NOTE RM’000 RM’000 RM’000

2018Fire 231,829 (92,118) 139,711Motor 349,507 (118,339) 231,168Marine 19,102 (15,761) 3,341Miscellaneous 108,848 (41,746) 67,102

Gross contribution 24(a)(ii) 709,286 (267,964) 441,322

2017Fire 203,647 (102,129) 101,518Motor 274,689 (97,331) 177,358Marine 17,409 (15,234) 2,175Miscellaneous 91,599 (35,796) 55,803

Gross contribution 24(a)(ii) 587,344 (250,490) 336,854

Key assumptions

The provision for Takaful liabilities is in accordance with the valuation methods set out by BNM in respect of the Guidelines on Valuation Basis for Liabilities of General Takaful Business (BNM/RH/GL 004-21) and Risk-Based Capital Framework for Takaful Operator. The key assumptions underlying the estimation of liabilities is that the Takaful Malaysia Group’s future claims development will follow a similar pattern to past claims development experience, including average claim cost, average claim frequency and business mix for each accident year.

Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrences, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors such as portfolio mix, underwriting policy, policy conditions and claims handling procedures.

Other key circumstances affecting the reliability of assumptions include delays in settlement and changes in foreign currency rates.




(b) General takaful fund (continued)

Sensitivities

The General Takaful claim liabilities are sensitive to the above key assumptions and any changes to these assumptions may impact the liabilities and operating surplus of the General Takaful Fund significantly. It has not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process.

The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities and operating surplus. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities. However, in order to demonstrate the impact arising from changes in assumptions, these assumptions had to be changed on an individual basis. It should also be noted that movement in these assumptions are non-linear.

The key assumptions to which the estimation of actuarial liabilities is particularly sensitive to the followings:

– Fire loss ratio for latest accident year

This is significant as Fire portfolio forms the largest composition under general business. A change in loss ratio estimate will have an impact on the liabilities significantly.

– Motor Act loss ratio for latest accident year

Motor Act business is long term in nature, and would take years before experiencing claim incidents. A significant impact may result if the ultimate experience differs from current estimation.

– Average claim cost

Reserves are based on the assumption that historical average claim cost is reflective of the potential future experience. A change in average cost will have an impact on future liabilities.

– Average claim frequency

Reserves are based on the assumption that historical average claim number in each accident year is reflective of the potential future experience. A change in average number of claims will have an impact on future liabilities.

– Average claim settlement period

Reserves are based on the assumption that claim settlement period is expected to be stable over the years. A change in claim handling practice will have an impact on claim cost and future liabilities.

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Sensitivities (continued)

The summary of changes in key assumptions and the impact to the gross and net claim liabilities, and the operating surplus, are shown below:

GROUP IMPACT ON IMPACT ON IMPACT ON CHANGE IN GROSS NET UNALLOCATED ASSUMPTIONS LIABILITIES LIABILITIES SURPLUS RM’000 RM’000 RM’0002018Fire loss ratio for AY 2018 +10% 24,584 13,974 (13,974)Motor Act loss ratio for AY 2018 +10% 4,313 2,981 (2,981)Average unpaid claims +10% 40,063 18,422 (18,422)Average claim frequency +10% 13,334 8,276 (8,276)Average claim increase by

settlement period 6 months 4,833 25,321 (25,321)

2017Fire loss ratio for AY 2017 +10% 19,630 8,534 (8,534)Motor Act loss ratio for AY 2017 +10% 2,964 2,100 (2,100)Average unpaid claims +10% 41,354 18,011 (18,011)Average claim frequency +10% 13,875 7,656 (7,656)Average claim Increase by

settlement period 6 months 43,225 41,420 (41,420)

Claims development table

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at the end of reporting period, together with cumulative payments to-date.

In setting provisions for claims, Takaful Malaysia Group gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting aside reserves when there is considerable uncertainty.

In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease.





Gross General Takaful contract liabilities for 2018 (Group)

BEFORE 2011 2012 2013 2014 2015 2016 2017 2018 TOTAL ACCIDENT YEAR RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At end of accident year 220,483 215,615 331,800 262,204 221,648 223,780 295,991 375,596One year later 232,454 209,161 306,084 251,372 208,227 203,209 267,272 –Two years later 215,580 177,695 305,183 250,924 188,734 202,810 – –Three years later 192,988 163,244 264,940 243,501 172,121 – – –Four years later 178,913 158,686 263,409 235,522 – – – –Five years later 170,028 155,598 262,593 – – – – –Six years later 169,000 155,764 – – – – – –Seven years later 169,450 – – – – – – –

Current estimate of cumulative claims incurred 169,450 155,764 262,593 235,522 172,121 202,810 267,272 375,596 1,841,128

At end of accident year (48,450) (43,107) (47,866) (58,855) (59,362) (75,630) (99,942) (130,992)One year later (113,694) (99,559) (117,379) (138,390) (124,477) (137,673) (175,925) –Two years later (144,454) (132,631) (158,980) (180,634) (145,455) (172,581) – –Three years later (158,005) (146,199) (240,162) (212,447) (156,623) – – –Four years later (161,070) (152,499) (255,632) (221,968) – – – –Five years later (167,832) (153,664) (259,073) – – – – –Six years later (168,452) (154,205) – – – – – –Seven years later (169,129) – – – – – – –

Cumulative payments to-date (169,129) (154,205) (259,073) (221,968) (156,623) (172,581) (175,925) (130,992) (1,440,496)

Gross General Takaful contract liabilities 321 1,559 3,520 13,554 15,498 30,229 91,347 244,604 400,632

Additional risk margin 67,352

Gross General Takaful contract liabilities per Takaful Malaysia financial position (Note 24(a)(i)) 467,984

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Net General Takaful contract liabilities for 2018 (Group)

BEFORE 2011 2012 2013 2014 2015 2016 2017 2018 TOTAL ACCIDENT YEAR RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At end of accident year 164,771 155,701 145,951 149,409 127,623 130,234 158,981 218,797One year later 166,938 155,158 131,597 128,160 121,144 130,936 150,209 –Two years later 162,745 138,856 121,436 120,438 112,551 127,663 – –Three years later 151,294 127,442 114,847 114,884 105,004 – – –Four years later 140,475 124,850 108,663 111,191 – – – –Five years later 137,539 122,698 110,447 – – – – –Six years later 137,028 122,891 – – – – – –Seven years later 137,368 – – – – – – –

Current estimate of cumulative claims incurred 137,368 122,891 110,447 111,191 105,004 127,663 150,209 218,797 1,083,570

At end of accident year (44,725) (40,054) (41,956) (43,125) (42,496) (54,552) (67,730) (90,056)One year later (104,575) (89,419) (84,498) (88,199) (84,402) (97,117) (117,548) –Two years later (128,583) (109,666) (101,303) (103,471) (96,660) (113,364) – –Three years later (136,415) (117,457) (105,696) (108,312) (100,570) – – –Four years later (134,801) (120,530) (105,070) (109,189) – – – –Five years later (136,230) (121,442) (109,430) – – – – –Six years later (136,850) (121,934) – – – – – –Seven years later (137,262) – – – – – – –

Cumulative payments to-date (137,262) (121,934) (109,430) (109,189) (100,570) (113,364) (117,548) (90,056) (899,353)

Net General Takaful contract liabilities 106 957 1,017 2,002 4,434 14,299 32,661 128,741 184,217

Additional risk margin 25,737

Net General Takaful contract liabilities per Takaful Malaysia financial position (Note 24(a)(i)) 209,954



48. fair value of financial instruments

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. Changes in the assumptions could materially affect these estimates and the corresponding fair values.

Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of MFRS 7, “Financial Instruments: Disclosure and Presentation” which requires the fair value information to be disclosed.

The fair values are based on the following methodologies and assumptions:

Cash and short term funds and deposits and placements with financial institutions

For cash and short term funds and deposits and placements with 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 instruments of similar credit risk and remaining year to maturity.

financial assets measured at fVtpL, fVoCi, held-for-trading, financial assets available-for-sale and held-to-maturity

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.

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ion 48. fair value of financial instruments (continued)

Deposits from customers and investment accounts of customers

The 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 year to maturities.

Bills and acceptances payable

The 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 maturities 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 properties

The 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 hierarchy

MFRS 7 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.Thislevelincludeslistedequitysecurities and debt instruments.

• Level2–InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e. as prices) or indirectly (i.e. derived from prices). This level includes profit rates swap and structured debt. The sources of input parameters include BNM indicative yields.

There has been no transfer between Level 1 and 2 fair values during the financial year.

• Level3–Inputsforassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).Thislevelincludesequity instruments and debt instruments with significant unobservable components.



48. fair value of financial instruments (continued)

fair value information

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position.

2018 FAIR vALUE OF FINANCIAL INSTRUMENTS FAIR vALUE OF FINANCIAL INSTRUMENTS GROUP CARRIED AT FAIR vALUE NOT CARRIED AT FAIR vALUE TOTAL CARRYINGRM’000 LEvEL 1 LEvEL 2 LEvEL 3 TOTAL LEvEL 1 LEvEL 2 LEvEL 3 TOTAL FAIR vALUE AMOUNT

Financial assetsFinancial assets at fair value

through profit or loss 514,360 887,863 380 1,402,603 – – – – 1,402,603 1,402,603Derivative financial assets – 34,148 – 34,148 – – – – 34,148 34,148Financial assets at fair value

through other comprehensive income 12,446 15,332,974 341,697 15,687,117 – – – – 15,687,117 15,687,117

Financing, advances and others – – – – – – 46,594,025 46,594,025 46,594,025 45,680,680

Total assets 526,806 16,254,985 342,077 17,123,868 – – 46,594,025 46,594,025 63,717,893 62,804,548

Financial liabilitiesDerivative financial liabilities – 19,520 – 19,520 – – – – 19,520 19,520Recourse obligations on financing

sold to Cagamas – – – – – – 1,517,235 1,517,235 1,517,235 1,501,187Sukuk liabilities – – – – – – 2,155,573 2,155,573 2,155,573 2,102,672

Total liabilities – 19,520 – 19,520 – – 3,672,808 3,672,808 3,692,328 3,623,379

2018CompanyFinancial assetsFinancial assets at fair value

through profit or loss 6,623 – – 6,623 – – – – 6,623 6,623

Total assets 6,623 – – 6,623 – – – – 6,623 6,623

Financial liabilitiesSukuk liabilities – – – – – – 844,159 844,159 844,159 844,159

Total liabilities – – – – – – 844,159 844,159 844,159 844,159

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fair value information (continued)

2017 FAIR vALUE OF FINANCIAL INSTRUMENTS FAIR vALUE OF FINANCIAL INSTRUMENTS GROUP CARRIED AT FAIR vALUE NOT CARRIED AT FAIR vALUE TOTAL CARRYINGRM’000 LEvEL 1 LEvEL 2 LEvEL 3 TOTAL LEvEL 1 LEvEL 2 LEvEL 3 TOTAL FAIR vALUE AMOUNT

Financial assetsFinancial assets held-for-trading 194,644 412,787 – 607,431 – – – – 607,431 607,431Derivative financial assets – 68,319 – 68,319 – – – – 68,319 68,319Financial assets available-for-sale 531,204 12,709,502 251,051 13,491,757 – – 5,300 5,300 13,497,057 13,497,437Financial assets held-to-maturity – – – – 86,379 437,715 – 524,094 524,094 516,524Financing, advances and others – – – – – – 42,299,796 42,299,796 42,299,796 42,113,420

Total assets 725,848 13,190,608 251,051 14,167,507 86,379 437,715 42,305,096 42,829,190 56,996,697 56,803,131

Financial liabilitiesDerivative financial liabilities – 74,668 – 74,668 – – – – 74,668 74,668Sukuk liabilities – – – – – – 2,280,126 2,280,126 2,280,126 2,235,862

Total liabilities – 74,668 – 74,668 – – 2,280,126 2,280,126 2,354,794 2,310,530

2017CompanyFinancial assetsFinancial assets available-for-sale 174,546 – – 174,546 – – – – 174,546 174,546

Total assets 174,546 – – 174,546 – – – – 174,546 174,546

Financial liabilitiesSukuk liabilities – – – – – – 1,279,512 1,279,512 1,279,512 1,279,512

Total liabilities – – – – – – 1,279,512 1,279,512 1,279,512 1,279,512



48. fair value of financial instruments (continued)

The following table presents the changes in Level 3 instruments for the financial year ended 31 December 2018 for the Group:

Group rm’000

Financial assets at FVOCI/available-for-sale

At 1 January 2017 160,112Purchases 101,539Maturity (21,539)Gains 10,939

At 31 December 2017, as previously stated 251,051Adjustment on adoption of MFRS 9 (net of tax) 22,260

Adjusted balances at 1 January 2018 273,311Purchases 50,000Gains recognised in profit or loss– Investment income – realised 14,032Gains recognised in other comprehensive income– Net change in fair value (unrealised) 4,354

At 31 December 2018 341,697

The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models.

(a) financial instruments carried at fair value

typeVaLuation teCHnique

siGnifiCant unoBserVaBLe inputs

inter-reLationsHip BetWeen siGnifiCant unoBserVaBLe inputs anD fair VaLue measurement

Financial assets measured at FVOCI/ available-for-sale

Valued at cost less impairment

Not applicable Not applicable

Institutional trust account

Discounted cash flows using market profit rate for a similar instrument at the measurement date

4.58% (2017: 4.58%)

The estimated fair value would increase (decrease) if the discount rate were (lower) higher.

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(a) financial instruments carried at fair value (continued)

Valuation processes applied by the Group for Level 3 fair value

The Group has an established control framework in respect of the measurement of fair value of financial instruments. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Investment Officer/Chief Financial Officer/General Manager, Finance. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

sensitivity analysis for Level 3

impaCt on impaCt on impaCt on CHanGe in profit impaCt on operatinG partiCipants’ VariaBLes Before tax equity surpLus funD rm’000 rm’000 rm’000 rm’000

2018Discount rate +1% (1,669) (1,268) (6,212) (6,212)Discount rate -1% 1,741 1,323 6,454 6,454

2017Discount rate +1% – (558) – (3,607)Discount rate -1% – 1,527 – 9,775

(b) financial instruments not carried at fair value

The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:

(i) Other financial assets at amortised cost

The fair values of securities that are actively traded is determined by quoted bid prices. For non-actively traded securities, the fair values are valued at cost less impairment or estimated using discounted cash flows analysis. Where discounted cash flows technique is used, the estimated future cash flows are discounted using applicable prevailing market or indicative rates of similar instruments at the reporting date.

(ii) Financing and advances

The fair values of variable rate financing are estimated to approximate their carrying values. For fixed rate financing, the fair values are estimated based on expected future cash flows of contractual instalment payments, discounted at applicable and prevailing rates at reporting date offered for similar facilities to new borrowers with similar credit profiles. In respect of impaired financing, the fair values are deemed to approximate the carrying values which are net of impairment allowances.

(iii) Subordinated Sukuk Murabahah and Recourse obligations on financing sold to Cagamas

The fair values of subordinated obligations are estimated by discounting the expected future cash flows using the applicable prevailing profit rates of borrowings with similar risk profiles.



49. caPital commitments Group 2018 2017 rm’000 rm’000

Property and equipmentContracted but not provided for in the financial statements 106,867 108,639

50. lease commitments

Leases as lesseeNon-cancellable operating lease rentals are payable as follows:

Group 2018 2017 rm’000 rm’000

Within one year 17,533 17,474Between one and five years 96,567 110,333More than five years 268,624 288,833

382,724 416,640

Leases as lessorThe Group leases out its investment properties (see Note 18). The future minimum lease receivables under non-cancellable leases are as follows:

Group 2018 2017 rm’000 rm’000

Within one year 5,590 6,671Between one and five years 2,599 5,839

8,189 12,510

51. 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 Keluarga Berhad and BIMB Securities Sdn Bhd are subject to regulatory requirements either from Bank Negara Malaysia or Bursa Malaysia Berhad.

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ion 52. 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 Chief Executive Officer of the Group’s holding company. 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, ijarah financing, stockbroking and unit trust.

BanKinG taKafuL otHers eLimination ConsoLiDateD 2018 rm’000 rm’000 rm’000 rm’000 rm’000Business segmentssegment resultRevenue from external customers 3,305,111 879,834 17,532 – 4,202,477 Inter-segment revenue 31,391 22,447 382,181 (436,019) –

total revenue 3,336,502 902,281 399,713 (436,019) 4,202,477

Net income from operations (before allowances for impairment on financing and other assets) 1,952,668 902,281 399,713 (411,290) 2,843,372

Operating overheads (1,004,288) (561,997) (28,470) 41,757 (1,552,998)

Operating results 948,380 340,284 371,243 (369,533) 1,290,374 Allowances for impairment (81,411) – – – (81,411)Finance cost (56,711) – (89,547) 2,750 (143,508)

profit before zakat and taxation 810,258 340,284 281,696 (366,783) 1,065,455

Segment assets 63,938,733 8,855,642 5,607,601 (6,013,435) 72,388,541

Segment liabilities 58,662,326 7,864,622 1,143,844 (776,973) 66,893,819

Note 46.4 (a)(i), 46.5(a)



52. oPerating segment information (continued) BanKinG taKafuL otHers eLimination ConsoLiDateD 2017 rm’000 rm’000 rm’000 rm’000 rm’000Business segmentssegment resultRevenue from external customers 2,982,331 720,195 19,072 – 3,721,598Inter-segment revenue 25,850 16,136 335,921 (377,907) –

total revenue 3,008,181 736,331 354,993 (377,907) 3,721,598

Net income from operations (before allowances for impairment on financing and other assets) 1,799,844 736,331 354,993 (359,450) 2,531,718

Operating overheads (1,006,865) (479,950) (27,785) 31,237 (1,483,363)

Operating results 792,979 256,381 327,208 (328,213) 1,048,355Allowances for impairment 15,370 – – – 15,370Finance cost (41,296) – (76,849) 2,750 (115,395)

profit before zakat and taxation 767,053 256,381 250,359 (325,463) 948,330

Segment assets 57,742,914 8,122,540 5,802,249 (5,883,069) 65,784,634

Segment liabilities 52,783,210 7,310,309 1,562,078 (789,316) 60,866,281

Note 46.4 (a)(i), 46.5(a)

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ion 53. commitments and contingencies

In the normal course of business, the Group’s banking subsidiary 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.

the off-balance sheet and counterparties credit risk for Bank islam is as follows:

POSITIvE FAIR vALUE OF CREDIT RISk 31 DECEMBER 2018 PRINCIPAL DERIvATIvE EqUIvALENT wEIGHTED AMOUNT CONTRACTS AMOUNT ASSET NATURE OF ITEM RM’000 RM’000 RM’000 RM’000

Credit related exposuresDirect credit substitutes 487,980 – 487,980 488,189Transaction related contingent items 1,015,198 – 507,599 471,867Short term self-liquidating trade related contingencies 247,008 – 49,402 43,608Other commitments, such as formal standby facilities

and credit lines, with an original maturity of:– not exceeding one year – – – –– exceeding one year 1,627,618 – 813,809 630,266

Any 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 7,336,717 – – –

10,714,521 – 1,858,790 1,633,930

Derivative Financial InstrumentsForeign exchange related contracts– less than one year 2,869,455 30,653 65,839 50,495Profit rate related contracts– less than one year 400,000 1,708 810 162– one year to less than five years – – – –– five years and above 178,379 1,787 10,264 6,419

3,447,834 34,148 76,913 57,076

Total 14,162,355 34,148 1,935,703 1,691,006



53. commitments and contingencies (continued)

the off-balance sheet and counterparties credit risk for Bank islam is as follows: (continued)

POSITIvE FAIR vALUE OF CREDIT RISk 31 DECEMBER 2017 PRINCIPAL DERIvATIvE EqUIvALENT wEIGHTED AMOUNT CONTRACTS AMOUNT ASSET NATURE OF ITEM RM’000 RM’000 RM’000 RM’000

Credit related exposuresDirect credit substitutes 2,871,511 – 2,871,511 2,167,427Transaction related contingent items 1,066,956 – 533,478 499,771Short term self-liquidating trade related contingencies 373,328 – 74,666 71,836Other commitments, such as formal standby facilities

and credit lines, with an original maturity of:– not exceeding one year 318 – 64 32– exceeding one year 1,226,538 – 613,269 445,326Any 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 4,402,695 – – –

9,941,346 – 4,092,988 3,184,392

Derivative Financial InstrumentsForeign exchange related contracts– less than one year 3,218,824 63,827 112,875 41,796Profit rate related contracts– less than one year – – – –– one year to less than five years 400,000 2,132 4,921 984– five years and above 207,992 2,360 14,351 8,895

3,826,816 68,319 132,147 51,675

Total 13,768,162 68,319 4,225,135 3,236,067

54. subsequent events during the financial year

On 28 November 2018, the Board of Directors of BIMB Holdings Berhad (“BHB”) had declared an interim dividend of 15.50 sen per ordinary share in BHB for the financial year ended 31 December 2018 and paid on 29 January 2019.

From the total dividend amount declared of RM262.5 million, approximately 14.05% or RM37.6 million was distributed as cash dividend whilst the remaining 85.95% amounting to RM224.9 million was reinvested to subscribe for 70,716,700 new ordinary shares at RM3.18 each via the Dividend Reinvestment Plan.

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statement bydirectors Pursuant tosection 251(2) of the companies act, 2016

In the opinion of the Directors, the financial statements set out on pages 171 to 340 are drawn up in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), and the requirements of the Companies Act, 2016 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 2018 and their financial performance and cash flows for the financial year then ended.

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

tan sri Haji ambrin bin Buang

noraini binti Che Dan

Kuala Lumpur,

Date: 27 March 2019


statutory declarationPursuant tosection 251(1)(b) of the companies act, 2016

I, malkiat singh @ malkit singh maan a/l Delbara singh, 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 171 to 340 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 Malkiat Singh @ Malkit Singh Maan a/l Delbara Singh, MIA CA9305, in Kuala Lumpur on 27 March 2019.

malkiat singh @ malkit singh maan a/l Delbara singh

Before me:

BIMB HOLDINGSBERHAD

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indePendent auditors’ rePortto the members of bimb holdings berhad(company no. 423858-X) (incorporated in malaysia)

rePort on the audit of the financial statements

Opinion

We have audited the financial statements of BIMB Holdings Berhad which comprise the statements of financial position as at 31 December 2018 of the Group and Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and Company for the year then ended, and notes to the financial statements, as set out on pages 171 to 340.

In 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 2018 and of their financial performance and their 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, 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

independence and other ethical responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.


the key audit matter identified are: How the matter was addressed in our audit

impairment of financing, advances and others

The carrying value of loans, advances and financing held at amortised costs may be misstated, if impairment provisions are not appropriately identified and estimated.

Determination of expected credit loss provision is a subjective area due to the significant level of judgement and appropriateness of assumptions applied by management.

Refer to the significant accounting policy in Note 2.5 and 2.11, the disclosure of financing and advances in Note 11 and the disclosure of credit risk in Note 46.3.

Our key procedures in addressing this key audit matter included:

• assessed the design and operating effectiveness ofmanagement controls implemented in identifying potentially credit impaired loans, classifying staging (i.e. stage 1, 2 and 3)andreviewingadequacyofexpectedcreditloss;

• evaluated the expected credit loss computation model forconsistency of methodology and compliance with MFRS 9, FinancialInstrumentsandBankNegaraMalaysiaGuidelines;

• testedthecompletenessandaccuracyofdatafromunderlyingsystemsthatisusedinthecomputationmodels;

• assessed the appropriateness of the key assumptions andinputs (eg. economics variables, credit grading, default rates) used by management in the computations and considered whethertheywererepresentativeofcurrentcircumstances;

• assessedtheGroup’screditmonitoringandreviewprocessonthecreditworthinessofselectedcustomers;

• selected samples of financing customers (impaired andperforming), taking into consideration of industry trends/macroeconomic factors, and performed the following:

stage 1 and 2 (non credit impaired):

• assessedthattheselectedborrowersdidnotexhibitanydefinable weaknesses that may jeopardise their repayment abilities.

• ascertain whether the borrowers demonstrated thecriteria’s established by the Group to determine whether these borrowers are appropriately classified under Stage 1 orStage2;

stage 3 (credit impaired):

– considered whether the basis of measuring the individual impairment allowances and key judgements exercised are appropriate given the customer’s circumstances. In addition, we tested the key inputs to the impairment loss computation including the expected future cash flows, discount rates and valuation of collateral held.


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Valuation of financial instruments held at fair value

The valuation of the Group’s financial instruments held at fair value may be materially misstated due to complexity involved in valuing the instruments and the application of valuation techniques which often involve the exercise of judgement and the use of assumptions and estimates.

Refer to the significant accounting policy in Note 2.5, the disclosure of financial assets at fair value through profit or loss (Note 6), and financial assets at fair value through other comprehensive income (Note 9).


• tested the Group’s controls over the valuation andmethodology validation process to determine these are effective and that methodology is applied consistently.

• tested a selection of pricing inputs used, that they wereexternally sourced and were correctly input into the pricing model.

• Independently valued a selection of the Group’s financialinstruments held at fair value and compared these to management’s valuation.

• ascertained the appropriateness of the carrying values ofimpaired or defaulted financial instruments and determined if management’s impairment assessment is appropriate based on MFRS 9 Financial Instruments.

adoption of mfrs 9

Our audit was focused on the adoption of the MFRS 9 – Financial Instruments (MFRS 9), as this is a new and complex accounting standard, which have material impact on the financial statements for the year ended 31 December 2018, and has required considerable management judgement and interpretation in its implementation.

Refer to Note 2.1(b) which discloses the impact of adoption of MFRS 9.


Classification and measurement

We assessed and tested the design and effectiveness of the key controls that management has established in relation to adhering to the classification and measurement requirements under MFRS 9. In addition, we have independently assessed the business model documentation and tested a sample of contracts to assess if those contracts pass the solely through payment of principal and interest criteria.

expected Credit Loss

MFRS 9 introduces new impairment rules which prescribe a new, forward looking, expected credit loss (‘ECL’) impairment provisioning. Our procedures carried out in this regard are discussed in further detail under key audit matter “Impairment of financing, advances and others”.

transition adjustments and disclosure

We assessed and tested the design and operating effectiveness of the management’s process and the controls implemented to determine the completeness and accuracy of the transition adjustments.

Further, we assessed the appropriateness of the transition disclosure in the financial statements.




Valuation of takaful contract liabilities

The takaful contract liabilities comprise of provision for outstanding claims, provision for unearned contributions and participants’ funds for both the family and general businesses, representing a significant portion of the Group’s liabilities at 11% of total liabilities. The main risks associated with the takaful contract liabilities are in respect of valuation of actuarial liabilities for the family takaful business, the provision for outstanding claims and provision for unearned contribution for both family and general takaful businesses.

Actuarial Liabilities – Family takaful contract liabilities

The actuarial liabilities made up 82% and 85% of participants’ funds within the family takaful contract liabilities of the Group respectively. This is an area requiring significant judgment over the estimation of future expected benefits payable to participants of long-term certificates. Economic and operating assumptions such as discount rates, mortality, morbidity and surrender rates are the key inputs used in the estimation of these actuarial liabilities.

We used our own actuarial specialists to assist us in performing our audit procedures in this area, which included amongst others:

• WeassessedtheappropriatenessoftheGroup’smethodologyfor calculating the actuarial liabilities and outstanding claims against the requirements of both the Risk-Based Capital Framework for Takaful Operators (RBC-T Framework) and the Guidelines on Valuation Basis for Liabilities of Family and General Takaful Businesses (Valuation Guidelines) as issued by Bank Negara Malaysia (BNM).

• Weassessedandchallengedtheappropriatenessofdiscountrates, mortality, morbidity and surrender rate assumptions used in the calculation of actuarial liabilities by reference to the Group and industry historical data and the requirements of RBC-T Framework and Valuation Guidelines as issued by BNM.

• Weassessedandchallengedtheappropriatenessofprojectedclaims development assumptions used in the projection of unreported claims at the year-end by reference to the Group and industry historical data.

• Performed tests on the Unexpired Contribution Reserve(“UCR”) calculation produced by management and compared the UCR against the URR to ascertain if adequate reserve has been established.

• Assessed and challenged the appropriateness of loss ratiosassumptions used in the calculation of URR by reference to the Group’s and industry historical data with the support of our own actuarial specialist.


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Provision for outstanding claims and Provision for unearned contribution – Family and general takaful contract liabilities

The provision for outstanding claims for the Group comprises the estimated cost of settling all claims incurred but unpaid at the year end, whether reported or not. The estimation of outstanding claims with respect to unreported claims requires significant judgment, as it involves the projection of the ultimate cost of all claims incurred but not settled at the end of the reporting period, together with the related claims handling costs. Judgment is required to assess the extent to which past claims trends may not represent the current situation and its impact on the assumptions over claims projection.

Estimation of provision for unearned contribution involves judgement in the identification of best estimate value of Unexpired Risk Reserve at the required risk margin for adverse deviation.

In determining the Unexpired Risk Reserve, the calculation used current estimates of future contractual cash flows in consideration of the current loss ratios for policies in-force as at the year-end after taking into account of investment return expected to arise on assets that support these claims liabilities.

Refer to the significant accounting policy in Note 2.16 the disclosure of takaful contract liabilities (Note 24).

• WetestedtheunderlyingdatausedintheGroup’sestimationprocess to source documentation.

information other than the financial statements and auditors’ report thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditor’s report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the annual report and, in doing so, consider whether the annual report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the annual report, we are required to report that fact. We have nothing to report in this regard.



responsibilities of the Directors for the financial statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,whetherdueto fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmade by the Directors.

• ConcludeontheappropriatenessofDirector’suseof thegoingconcernbasisofaccountingand,basedontheauditevidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and Company to cease to continue as a going concern.


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• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,includingthe disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

• Obtain sufficientappropriateauditevidence regarding thefinancial informationof theentitiesorbusinessactivitieswithin theGroup to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide Directors with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

other matter

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 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 pLt adrian Lee Lye WangFirm Number: LLP0010082-LCA & AF0759 Approval Number: 02679/11/2019 JChartered Accountants Chartered Accountant

Date: 27 March 2019

Petaling Jaya


Shareholders Information350 Integrated Annual Report 2018

ProPertiesownedby bhb GroUp

ProPerty listing for bank islam malaysia berhad

NO. LOCATION

DESCRIPTION OF ExISTING

USE TENURE

AGE OF BUILDING (YEARS)

LAND, BUILT-UP AREA (SqUARE FEET)

NET BOOk vALUE AS AT 31.12.2018

(RM)DATE OF

ACqUISITION

1 HS (D) 80625 PT 45 Lot No. 37, Seksyen 87 Jalan Tun Razak 50750 Kuala Lumpur

Building site Leasehold for 99 years expiring on 29.12.2093

NA 6,597 12,171,898.31 30.12.1994

2 No. PT 1708 & 1709 HS (M) 2660 & 2661 Lot No. 1 & 2, Batu 5½ Jalan Cheras 56100 Kuala Lumpur

Vacant land Leasehold for 99 years expiring on 02.04.2085

NA 4,443 60,021.86 03.04.1986

3 Lot No. PT 805-HSD 1323 Mukim Bagan Nakhoda Omar Sabak Bernam, Selangor

Vacant land Leasehold for 99 years expiring on 03.02.2101

NA 405,000 554,780.51 25.03.1999

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ProPerty listing for syarikat takaful malaysia keluarga berhad

NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

FEET)


(RM)DATE OF

ACqUISITION

1 No. 325A & 325B, Blok 41 Kompleks Perniagaan Fajar 91000 Tawau Sabah

Three units of 4 storey Commercial

Complex/Office

999 years town lease expiring on 31.12.2895

27 4,025/ 6,037

2,214,795 12.07.1991

2 No. 64 & 65 Kompleks Jitra Jalan Sungai Korok 06000 Jitra Kedah Darul Aman

Two units of 2 storey

Shophouse/Office

Freehold 32 3,095/ 6,935

653,232 30.09.1991

3 Lot 54 & 55 Bandar Wilayah Jasa Jalan Bunga Raya 91100 Lahad Datu Sabah


Shophouse/Office

99 years town lease expiring on 31.12.2090

23 2,400/ 7,200

1,149,416 27.12.1995

4 No. 15 & 17 Jalan Kelibang Langkawi Mall 07000 Kuah, Langkawi Kedah Darul Aman


Shophouse/Office

Freehold 25 1,440/ 7,720

500,704 17.07.1993

5 No. 433 & 434 Jalan Kulas 93400 Kuching Sarawak


Shophouse/Office

Freehold 23 3,589/ 12,855

3,521,088 02.01.1996

6 Lot 13 & 14 Lazenda Commercial Centre Jalan Okk Abdullah 87007 Wilayah Persekutuan Labuan


Office building

999 years lease expiring on

30.06.2902

24 2,504/ 7,200

1,495,372 14.01.1997

7 No. 1 & 2 Jalan Kelicap Taman Pekan Baru 34200 Parit Buntar Perak Darul Ridzuan


Shophouse/Office


05.09.2078

31 3,956/ 7,044

617,241 18.09.1999

8 No. 46 & 47 Jalan Rahmat 83000 Batu Pahat Johor Darul Takzim


Shophouse/Office

Freehold 29 3,220/ 12,092

1,327,392 18.09.1999



ProPerty listing for syarikat takaful malaysia keluarga berhad (continued)

NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

FEET)


(RM)DATE OF

ACqUISITION

9 No. 180 & 181 Jalan Tuan Hitam 22000 Jerteh Terengganu Darul Iman

Two units of 4 Storey

Shophouse/Office

Freehold 28 3,200/ 12,250

1,392,000 18.09.1999

10 Lot 82, 84 & 86 Jalan Rugbi 13/30 Seksyen 13 40100 Shah Alam Selangor Darul Ehsan

Three units of 2 storey

Shophouse/Office


22.01.2102

19 6,339/ 11,309

2,097,802 07.05.1997

11 No. 229, Jalan Shahab 2 Shahab Perdana Jalan Sultanah Sambungan 05350 Alor Setar Kedah Darul Aman

One unit of 2½ storey

Shophouse/Office

Freehold 22 1,400/ 3,570

365,867 15.07.1999

12 Lot No. 3803 Jalan Dato’ Ulu Muar 72000 Kuala Pilah Negeri Sembilan Darul Khusus

One unit of 3 storey

Shophouse/Office


06.10.2079

19 2,001/ 3,120

353,455 01.07.1997

13 No. 45 Jalan Teluk Sisek 25000 Kuantan Pahang Darul Makmur


Shophouse/Office


18.09.2068

18 3,200/ 8,019

1,722,543 15.09.2000

14 No. 27 Pusat Komersil Temerloh 28000 Temerloh Pahang Darul Makmur


Shophouse/Office


01.04.2095

18 1,398/ 5,017

479,674 02.10.2000

15 No. 2 & 4 Jalan 6C/7 43650 Bandar Baru Bangi Selangor Darul Ehsan


Shophouse/Office


08.07.2086

31 6,383/ 8,032

1,341,060 08.09.1999

16 Lot 14 Seremban City Centre Jalan Tuanku Munawir 70000 Seremban Negeri Sembilan Darul Khusus


Shophouse/Office

Freehold 22 1,500/ 14,589

2,851,428 19.05.2000

17 No. 29, Jalan Delima Pusat Perdagangan Pontian 82000 Pontian Johor Darul Takzim


Shophouse/Office


25.09.2097

17 3,899/ 10,248

1,225,385 23.03.2002

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NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

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(RM)DATE OF

ACqUISITION

18 No. 616 & 617 Jalan Besar 73000 Tampin Negeri Sembilan Darul Khusus


Office building


05.10.2088

26 4,498/ 8,685

852,251 17.09.1999

19 No. 6 Jalan 6C/7 43650 Bandar Baru Bangi Selangor Darul Ehsan


Shophouse/Office


08.07.2086

31 1,905/ 3,508

581,126 09.08.2002

20 Suite 3B/G Blok 3B, Plaza Sentral Jalan Stesen Sentral 5 50470 Kuala Lumpur

One floor of 22 storey

Office building

Freehold 17 6,409* 5,922,000 26.06.2001

21 No. 26 & 27 Jalan Tanjung Pasar Baru 18500 Machang Kelantan Darul Naim


Office building


18.02.2069

37 1,600/ 4,000

482,869 17.09.1999

22 No. 330 & 331 Jalan Sultan Yahya Petra 15720 Kota Bharu Kelantan Darul Naim

Two units of 4½ storey

Office building


09.12.2069

36 3,200/ 15,200

1,469,165 03.07.2002

23 Menara Takaful Malaysia No. 4, Jalan Sultan Sulaiman 50000 Kuala Lumpur

Two units of Office building

Main Block – 26 storey

Annexe Block – 29 storey

Freehold Main Block – 45

Annexe Block – 38

90,427/ 393,508

148,494,847 08.10.2004

24 No. 2408 Taman Samudera 32040 Sri Manjung Perak Darul Ridzuan


Shophouse/Office


19.05.2091

22 2,800/ 5,300

702,324 10.08.2004

25 No. 76A & 76 Pusat Perniagaan Jalan Tupai 34000 Taiping Perak Darul Ridzuan


Office building

Freehold 15 3,134/ 18,304

1,428,807 18.08.2003

* Built-up area




NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

FEET)


(RM)DATE OF

ACqUISITION

26 No. 10 & 11 Jalan Sultan Yahya Petra 15200 Kota Bharu Kelantan Darul Naim


Office building

Freehold 16 3,852/ 9,120

1,693,441 03.07.2002

27 No. 4197 Jalan Teluk Wanjah 05200 Alor Setar Kedah Darul Aman


Office building

Freehold 16 8,716/ 18,440

3,288,960 27.07.2002

28 No. 8 & 10 Jalan Padi Emas 5/2 Bandar Baru UDA 81200 Johor Bahru Johor Darul Takzim


Office building


16.02.2099

13 3,080/ 8,024

1,236,481 30.11.2004

29 No. 4 Kompleks Seri Temin Jalan Ibrahim 08000 Sungai Petani Kedah Darul Aman


Office building


03.10.2080

33 1,400/ 5,510

588,728 11.09.2005

30 Lot 1340 Miri Waterfront Commercial Centre 98000 Miri Sarawak


Office building


30.09.2066

14 1,400/ 5,500

941,916 20.01.2006

31 No. 6 Jalan Padi Emas 5/2 Bandar Baru UDA 81200 Johor Bahru Johor Darul Takzim


Office building


16.02.2099

13 1,540/ 4,012

618,240 14.02.2006

32 No. 148 Kompleks Munshi Abdullah 75200 Melaka


Office building


23.04.2102

25 1,470/ 6,117

684,247 21.03.2006

33 No. 16474 & 16475 Pusat Perniagaan Inderapura Jalan Tras Raub Pahang Darul Makmur


Office building


29.06.2092

19 3,218/ 9,280

1,171,737 27.10.2006

34 No. 435 Jalan Kulas 93400 Kuching Sarawak


Shophouse/Office

Freehold 23 1,214/ 4,262

1,217,160 02.01.1996

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ProPerty listing for syarikat takaful malaysia am berhad

NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

FEET)


(RM)DATE OF

ACqUISITION

1 No. 23 Medan Istana 3 Bandar Ipoh Raya 30450 Ipoh Perak Darul Ridzuan


Shophouse/Office


30.03.2081

23 1,539/ 4,255

425,273 20.09.1995

2 No. 26 & 28 Jalan Perda Barat Bukit Mertajam Seberang Prai 14000 Penang


Shophouse/Office

Freehold 20 3,293/ 8,840

914,667 04.10.1996

3 Lot 1129 & 1130 Bangunan Darul Takaful Jalan Sultan Ismail 20100 Kuala Terengganu Terengganu Darul Iman


Office building

35 years sub lease expiring

on 27.02.2037

16 3,600/ 23,637

5,249,041 29.12.1997

4 No. 20, Fasa 1A Jalan Haji Manan 86000 Kluang Johor Darul Takzim


Shophouse/Office


10.12.2108

22 2,658/ 9,930

1,638,634 27.03.1992


ProPerty listing for syarikat al-iJarah sendirian berhad

NO. LOCATION


USE TENURE


LAND, BUILT-UP

AREA (SqUARE

FEET)


(RM)DATE OF

ACqUISITION

1 No. PT Lot 002600 & 002601 No. HS (D) 815 & 816 No. 71 & 73 Jalan Taman Selat Off Jalan Bagan Luar 12720 Butterworth Pulau Pinang

4 storey Shophouse/Office

for Bank Islam Operation

Freehold 33 Lot 002600 – 171

Lot 002601 – 273

(square meter)

716,739.75 30.09.1985


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share & warrantholdings statisticas at 31 march 2019

analysis of shareholdings as at 31 march 2019

NO. OF HOLDERS NO. OF HOLDINGS %SIzE OF HOLDINGS MALAYSIAN FOREIGN MALAYSIAN FOREIGN MALAYSIAN FOREIGN

1 – 99 638 7 6,449 63 0.00 0.00100 – 1,000 1,518 29 889,417 19,680 0.05 0.001,001 – 10,000 2,577 47 10,129,323 232,398 0.57 0.0110,001 – 100,000 698 76 20,072,401 3,008,618 1.14 0.17100,001 to 88,214,134 (*) 203 40 350,072,702 21,257,118 19.84 1.2088,214,135 and above (**) 4 0 1,358,594,545 0 77.01 0.00Directors Holding 0 0 0 0 0.00 0.00

Total 5,638 199 1,739,764,837 24,517,877 98.61 1.38

NO. OF HOLDERS NO. OF HOLDINGS %

Grand Total 5,837 1,764,282,714 99.99

Note:* Less than 5% of issued holdings** 5% and above of issued holdings

directors’ shareholdings NO. OF SHARESNO. NAME OF DIRECTORS DIRECT INTEREST %

1 Tan Sri Haji Ambrin bin Buang – –2 Tan Sri Ismail bin Adam – –3 Mohd Tarmidzi bin Ahmad Nordin – –4 Noraini binti Che Dan – –5 Nik Mohd Hasyudeen bin Yusoff – –

substantial shareholders

NO. NAME OF SUBSTANTIAL SHAREHOLDERS NO. OF SHARES %

1 Lembaga Tabung Haji 949,609,300 53.822 Employees Provident Fund Board 222,200,101 12.59

Citigroup Nominees (Tempatan) Sdn Bhd3 AmanahRaya Trustees Berhad 110,489,541 6.26

Amanah Saham Bumiputera4 Permodalan Nasional Berhad 97,377,003 5.52


toP 30 holders as at 31 march 2019

no. name HoLDinGs %

1 Lembaga Tabung Haji 949,609,300 53.82

2 Citigroup Nominees (Tempatan) Sdn Bhd 201,618,701 11.43 Employees Provident Fund Board

3 Amanahraya Trustees Berhad 110,489,541 6.26 Amanah Saham Bumiputera

4 Permodalan Nasional Berhad 96,877,003 5.49

5 Kumpulan Wang Persaraan (Diperbadankan) 38,879,480 2.20

6 ValueCap Sdn Bhd 22,691,300 1.29

7 Amanahraya Trustees Berhad 19,290,933 1.09 Amanah Saham Bumiputera 2

8 Amanahraya Trustees Berhad 16,491,000 0.93 Amanah Saham Malaysia

9 Amanahraya Trustees Berhad 15,565,371 0.88 Amanah Saham Malaysia 3

10 Amanahraya Trustees Berhad 15,564,500 0.88 Amanah Saham Malaysia 2 – Wawasan

11 Maybank Nominees (Tempatan) Sdn Bhd 12,997,660 0.74 MTrustee Berhad for CIMB Islamic Dali Equity Growth Fund (UT-CIMB-Dali)(419455)

12 Majlis Ugama Islam Sabah 11,229,099 0.64

13 Amanahraya Trustees Berhad 10,820,568 0.61 Amanah Saham Bumiputera 3 – Didik

14 Citigroup Nominees (Tempatan) Sdn Bhd 10,160,100 0.58 Employees Provident Fund Board (CIMB PRIN)

15 Majlis Ugama Islam Sabah 9,987,500 0.57

16 Amin Baitulmal Johor 8,316,000 0.47


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toP 30 holders as at 31 march 2019 (continued)

no. name HoLDinGs %

17 CIMB Islamic Nominees (Tempatan) Sdn Bhd 5,759,200 0.33 Affin Hwang Asset Management Berhad for Majlis Ugama Islam dan Adat Resam Melayu Pahang

18 Majlis Agama Islam Negeri Pulau Pinang 5,544,000 0.31

19 Majlis Amanah Rakyat 5,544,000 0.31

20 Amanahraya Trustees Berhad 5,230,400 0.30 Public Islamic Dividend Fund

21 Citigroup Nominees (Tempatan) Sdn Bhd 5,000,000 0.28 Employees Provident Fund Board (AMUNDI)

22 HSBC Nominees (Tempatan) Sdn Bhd 4,940,000 0.28 HSBC (M) Trustee Bhd for CIMB Islamic Dali Equity Theme Fund

23 Cartaban Nominees (Tempatan) Sdn Bhd 4,712,930 0.27 PBTB for Takafulink Dana Ekuiti

24 Majlis Agama Islam dan Adat Istiadat Melayu Kelantan 4,532,799 0.26

25 Citigroup Nominees (Tempatan) Sdn Bhd 4,331,020 0.25 Universal Trustee (Malaysia) Berhad for CIMB Islamic Dali Equity Fund

26 Citigroup Nominees (Asing) Sdn Bhd 4,297,599 0.24 CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc

27 Majlis Agama Islam Selangor 4,073,488 0.23

28 Amanah Raya Berhad 3,777,500 0.21 Kumpulan Wang bersama Syariah

29 CIMB Islamic Nominees (Tempatan) Sdn Bhd 3,678,100 0.21 CIMB Islamic Trustee Berhad – Kenanga Syariah Growth Fund

30 Cartaban Nominees (Tempatan) Sdn Bhd 3,518,827 0.20 PAMB for Prulink Dana Unggul

totaL 1,615,527,919 91.56



analysis of warrantholdings as at 31 march 2019

NO. OF HOLDERS NO. OF HOLDINGS %SIzE OF HOLDINGS MALAYSIAN FOREIGN MALAYSIAN FOREIGN MALAYSIAN FOREIGN

1 – 99 48 0 3,031 0 0.00 0.00100 – 1,000 611 5 319,483 1,969 0.07 0.001,001 – 10,000 1,377 8 7,068,195 43,600 1.66 0.0110,001 – 100,000 1,311 16 53,080,012 788,680 12.44 0.18100,001 to 21,335,752 (*) 390 13 155,931,288 15,257,820 36.54 3.5821,335,753 and above (**) 3 0 194,221,000 0 45.52 0.00Directors Holding 0 0 0 0 0.00 0.00

Total 3,740 42 410,623,009 16,092,069 96.23 3.77

NO. OF HOLDERS NO. OF HOLDINGS %

Grand Total 3,782 426,715,078 100.00

Note:* Less than 5% of issued holdings** 5% and above of issued holdings

directors’ warrantholdings NO. OF wARRANTSNO. NAME OF DIRECTORS DIRECT INTEREST %

1 Tan Sri Haji Ambrin bin Buang – –2 Tan Sri Ismail bin Adam – –3 Mohd Tarmidzi bin Ahmad Nordin – –4 Noraini binti Che Dan – –5 Nik Mohd Hasyudeen bin Yusoff – –

substantial warrantholders

NO. NAME OF SUBSTANTIAL wARRANTHOLDERS NO. OF wARRANTS %

1 Lembaga Tabung Haji 117,502,000 27.542 Kong Goon Khing 46,769,000 10.963 AmanahRaya Trustees Berhad 29,950,000 7.02

Amanah Saham Bumiputera

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list of toP 30 warrant holders

no. name HoLDinGs %

1 Lembaga Tabung Haji 117,502,000 27.54

2 Public Nominees (Tempatan) Sdn Bhd 46,769,000 10.96 Pledged Securities Account for Kong Goon Khing (E-SRK)

3 Amanahraya Trustees Berhad 29,950,000 7.02 Amanah Saham Bumiputera

4 HSBC Nominees (Asing) Sdn Bhd 4,341,370 1.02 Exempt An for Credit Suisse Securities (USA) LLC (PB Client)

5 Maybank Securities Nominees (Asing) Sdn Bhd 4,300,000 1.01 Maybank Kim Eng Securities Pte Ltd for Lim Chuan Seng

6 Bailey Plaster Sdn Bhd 4,079,100 0.96

7 Maybank Nominees (Tempatan) Sdn Bhd 3,056,860 0.72 Mtrustee Berhad for CIMB Islamic Dali Equity Growth Fund (UT-CIMB-Dali)(419455)

8 Woon Kia Hong 2,757,000 0.65

9 Alliancegroup Nominees (Tempatan) Sdn Bhd 2,600,000 0.61 Pledged Securities Account for Yong Loy Huat (7000875)

10 Maybank Nominees (Tempatan) Sdn Bhd 2,572,600 0.60 Mohamed Adzman bin Mohamed Sura

11 Public Nominees (Tempatan) Sdn Bhd 2,535,500 0.59 Pledged Securities Account for Kong Goon Siong (E-JCL)

12 RHB Capital Nominees (Tempatan) Sdn Bhd 2,500,000 0.59 Pledged Securities Account for Fong Jong Han

13 Er Soon Puay 2,482,000 0.58

14 Kenanga Nominees (Tempatan) Sdn Bhd 2,430,000 0.57 Pledged Securities Account for Lai Eng Hui (ET)

15 Woon Kia Hong 2,405,900 0.56

16 RHB Capital Nominees (Tempatan) Sdn Bhd 2,400,000 0.56 Pledged Securities Account for Su Ming Yaw

17 HSBC Nominees (Asing) Sdn Bhd 2,107,930 0.49 Morgan Stanley & Co. International PLC (FIRM A/C)

18 Ong Siok Liang 1,800,000 0.42

19 Ong Chin Kang 1,690,000 0.40

20 Lim Gaik Bway @ Lim Chiew Ah 1,678,700 0.39


list of toP 30 warrant holders (continued)

no. name HoLDinGs %

21 CIMSEC Nominees (Tempatan) Sdn Bhd 1,644,300 0.39 Pledged Securities Account for Chay Wai Ling (CURVE-CL)

22 Quek See Kui 1,636,100 0.38

23 Tan Kin Seng 1,593,600 0.37

24 HLIB Nominees (Tempatan) Sdn Bhd 1,492,100 0.35 Pledged Securites Account for Lim Boon Chen (CCTS)

25 Teoh Cheng Chuan 1,416,300 0.33

26 Su Ming Keat 1,393,000 0.33

27 Harakah Islamiah (HIKMAH) 1,222,400 0.29

28 Kenanga Nominees (Tempatan) Sdn Bhd 1,159,000 0.27 Pledged Securities Account for Ling Thin King (ET)

29 Tan Ching Ling 1,110,000 0.26

30 Yap Piew Thong 1,100,000 0.26

totaL 253,724,760 59.47


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31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2781 2999Fax : +603-2781 2998Website : www.bimbholdings.com

BANk ISLAM MALAYSIA BERHADLevel 32, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2088 8000Fax : +603-2088 8028Website : www.bankislam.com.my

BIMB INvESTMENT MANAGEMENT BERHADLevel 19, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2161 2524/2924Toll free : 1 800 88 1196Fax : +603-2161 2464Email : marketing.bimbinvest@bankislam.

com.my

BANk ISLAM TRUST COMPANY (LABUAN) LTDLevel 5 (I), Main Office TowerFinancial Park Complex, Jalan MerdekaWilayah Persekutuan87000 F.T LabuanTel : +6087-451 806/807Fax : +6087-451 808

FARIHAN CORPORATION SDN BHDLevel 19, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2782 1333Fax : +603-2782 1355

AL-wAkALAH NOMINEES (TEMPATAN) SDN BHD21st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2726 7724Fax : +603-2726 7733

SYARIkAT TAkAFUL MALAYSIA kELUARGA BERHAD(Formerly known as Syarikat Takaful Malaysia Berhad) 26th Floor, Annexe BlockMenara Takaful MalaysiaNo. 4, Jalan Sultan Sulaiman50000 Kuala LumpurP.O. Box 1148350746 Kuala LumpurTel : 1-300 88 252 385Fax : +603-2274 0237Website : takaful-malaysia.com.myEmail : [email protected]

PT SYARIkAT TAkAFUL INDONESIAGraha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100, Jakarta12790 IndonesiaTel : +6221-799 1234Fax : +6221-790 1435

PT ASURANSI TAkAFUL kELUARGAGraha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100, Jakarta12790 IndonesiaTel : +6221-799 1234Fax : +6221-790 1435Website : www.takaful.co.id

SYARIkAT TAkAFUL MALAYSIA AM BERHAD26th Floor, Annexe BlockMenara Takaful MalaysiaNo. 4, Jalan Sultan Sulaiman50000 Kuala LumpurTel : +603-2268 1984Fax : +603-2274 2864Website : takaful-malaysia.com.myEmail : [email protected]

BIMB SECURITIES (HOLDINGS) SDN BHD31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2781 2999Fax : +603-2781 2998

BIMB SECURITIES SDN BHDLevel 32, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603-2613 1600Fax : +603-2613 1799Website : www.bimbsec.com.myOnline trading : www.bisonline.com.my

BIMSEC NOMINEES (TEMPATAN) SDN BHDLevel 32, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603-2613 1600Fax : +603-2613 1799

BIMSEC NOMINEES (ASING) SDN BHDLevel 32, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : +603-2613 1600Fax : +603-2613 1799

SYARIkAT AL-IJARAH SDN BHD31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603-2781 2999Fax : +603-2781 2998

regional grouPnetwork

Sustainability Performance Data364 Integrated Annual Report 2018

ftse4good bursa malaysia(“f4gbm”)

F4GBM

PILLARS AND THEMES CODE INDICATORS REFERENCE SECTION

ECONOMIC (6)

Climate Change

ECC-2 Recognition of climate changeHow We Create ValueTakaful Malaysia Annual Report 2018 – Sustainability Report

ECC-15 Three years of total energy consumption dataTakaful Malaysia Annual Report 2018 – Sustainability Report

ECC-37 Results measured against previously disclosed targets to reduce energy consumption

Takaful Malaysia Annual Report 2018 – Sustainability Report

SOCIAL (41)

Labour Standards

SLS-3 Non-discrimination and equal opportunityHow We Create ValueManagement’s Discussion and Analysis

SLS-5Policy or statement supporting the right to freedom of association

How We Create ValueManagement’s Discussion and Analysis

SLS-6Policy or statement supporting the right to collective bargaining


SLS-7 Policy addresses the elimination of excessive working hoursHow We Create ValueManagement’s Discussion and Analysis

SLS-8 Policy supports the right to a minimum or living wageHow We Create ValueManagement’s Discussion and Analysis

SLS-10 Labour standards initiatives, or commitment to frameworksHow We Create ValueManagement’s Discussion and Analysis

SLS-11 Policy supporting the community How We Create ValueManagement’s Discussion and Analysis

SLS-12Policy is communicated globally to employees and translated into relevant languages


SLS-16Improve workforce diversity, equal opportunities, or reduce discrimination


SLS-21 Non-compliance actionsHow We Create ValueManagement’s Discussion and Analysis

SLS-24 Full time staff turnover ratesHow We Create ValueManagement’s Discussion and Analysis

SLS-25Percentage of employees that are contractors or temporary staff


SLS-26Employee development training to enhance knowledge or individual skills


SLS-28Full-time staff voluntary turnover rates relative to sector and country


SLS-29 Employee personal development trainingHow We Create ValueManagement’s Discussion and Analysis

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SOCIAL (41)

Human Rights

SHR-3Statement of principles or process by which community investments are made


SHR-4 Policy addresses children’s rightsHow We Create ValueManagement’s Discussion and Analysis

SHR-5 Commitment to local employment and/or sourcingHow We Create ValueManagement’s Discussion and Analysis

SHR-12Grievance mechanisms in place for individuals impacted by business activities


SHR-15 Output of community investmentsHow We Create ValueManagement’s Discussion and Analysis

SHR-16Mechanisms to facilitate employee engagement and involvement with charitable partners


Customer Responsibility

SCR-1 Responsible advertising or marketingHow We Create ValueManagement’s Discussion and Analysis

SCR-2 Negative product impact on customersHow We Create ValueManagement’s Discussion and Analysis

SCR-4 Involvement in industry initiativesHow We Create ValueManagement’s Discussion and Analysis

SCR-5 Action to address responsible advertising or marketingHow We Create ValueManagement’s Discussion and Analysis

SCR-6 Responsible selling policy with client-facing sales staffHow We Create ValueManagement’s Discussion and Analysis

SCR-8 Negative product impact on vulnerable groupsHow We Create ValueManagement’s Discussion and Analysis

Supply Chain

SSC-34 ESG integration into its investment processHow We Create ValueManagement’s Discussion and Analysis

SSC-35 ESG considerations into investment decision makingHow We Create ValueManagement’s Discussion and Analysis

SSC-36 Collaborative initiatives on Asset Management ESG issuesHow We Create ValueManagement’s Discussion and Analysis

SSC-37 Integration of ESG into portfolio investment decision makingHow We Create ValueManagement’s Discussion and Analysis

SSC-40 Long term investment philosophyHow We Create ValueManagement’s Discussion and Analysis

SSC-42 ESG integration into its insurance activitiesHow We Create ValueManagement’s Discussion and Analysis

SSC-43 Incorporation of ESG considerationsHow We Create ValueManagement’s Discussion and Analysis




f4GBm


SOCIAL (41)

Supply Chain

SSC-44Involvement in collaborative initiatives on insurance ESG issues


SSC-45 Insurance products mitigate insuree environmental riskHow We Create ValueManagement’s Discussion and Analysis

SSC-46 Company encourages clients to consider ESG issuesHow We Create ValueManagement’s Discussion and Analysis

SSC-48 Collaborative initiatives that enhance issuer ESG disclosureHow We Create ValueManagement’s Discussion and Analysis

SSC-49 Provide or support ESG products How We Create ValueManagement’s Discussion and Analysis

SSC-52 Company has ESG lending policies How We Create ValueManagement’s Discussion and Analysis

SSC-54Collaborative initiatives on corporate or project finance ESG issues


GOvERNANCE (48)

Anti-Corruption

GAC-1 Bribery – Policy or commitment statement

How We Create ValueBank Islam Annual Integrated Report 2018Takaful Malaysia Annual Report 2018 – Sustainability Report

GAC-2 Anti-corruption – Policy or commitment statement

How We Create ValueBank Islam Annual Integrated Report 2018Takaful Malaysia Annual Report 2018 – Sustainability Report

GAC-3 Board has oversight of anti-corruption policy Accountability

GAC-4 Due diligence of new business partners addresses corruption Accountability

GAC-5Confidential or anonymous whistle-blowing mechanism for staff

Accountability

GAC-7 Communication of anti-corruption policy to all employees Accountability

GAC-8 Training for staff on the anti-corruption policy How We Create Value

GAC-9 Corruption risk assessment for company operations Bank Islam Annual Integrated Report 2018

GAC-10Procedures are in place to address corruption in operations that are assessed to be ‘high risk’

Bank Islam Annual Integrated Report 2019

GAC-11 Process for intermediaries (including contractors or agents) Bank Islam Annual Integrated Report 2020

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GOvERNANCE (48)

Corporate Governance

GCG-1 Separate Non-Executive Chairman and CEO Accountability

GCG-2 Details about Directors Accountability

GCG-3 Number of Board Directors Accountability

GCG-4 Number of independent Directors on the board Accountability

GCG-5 Number of women on the board Accountability

GCG-6 Commitment to gender diversity on the board Accountability

GCG-7 Board addresses conflicts of interest Accountability

GCG-8 Periodic evaluation of board effectiveness Accountability

GCG-9Board Committee(s) and their Charters, terms of reference or equivalent

Accountability

GCG-10Number of times the board/each committee have/has met per annum

Accountability

GCG-11 Attendance rate Accountability

GCG-12 Board Committee for remuneration Accountability

GCG-13 Charter that discloses the process to determine remuneration Accountability

GCG-14 Fixed and variable remuneration Accountability

GCG-16 Board Audit Committee Accountability

GCG-17 Fees paid to the auditor Accountability

GCG-18 Accounts in relevant languages Accountability

GCG-19Annual General Meeting: Number of days between the date of notice and date of meeting

22nd AGM InformationBHB Corporate Website – www.bimbholdings.com/investor-relations

GCG-21 Shareholders have the right to vote on executive remuneration22nd AGM InformationBHB Corporate Website – www.bimbholdings.com/investor-relations

GCG-22Shareholders have the right to vote on Director appointments and dismissals

22nd AGM InformationBHB Corporate Website – www.bimbholdings.com/investor-relations

GCG-24 Share issues in last three yearsBHB Corporate Website – www.bimbholdings.com/investor-relations

GCG-26 Voting resultsBHB Corporate Website – www.bimbholdings.com/investor-relations

GCG-27 Remuneration for executive members Financial Statements

GCG-28 Variable remuneration is deferred for three years or more Financial Statements




f4GBm


GOvERNANCE (48)

Risk Management

GRM-1 Board has oversight of risk management process Accountability

GRM-2 Senior executive or committee responsible for risk Accountability

GRM-5 Board applies oversight over Code of Conduct Accountability

GRM-7Code of Conduct or equivalent describes the company’s risk management framework

Accountability

GRM-10 Company commits to regular rotation of auditors Accountability

GRM-12 Reviews compliance How We Create Value

GRM-20 Whistle-blowing mechanism How We Create Value

GRM-21 Legal and compliance leads are on the board Accountability

GRM-22 Board oversees risk management Accountability

GRM-23Non-executive board members with experience or knowledge in risk management

Accountability

GRM-26 BIS Tier 1 Capital Ratio Financial Statements

GRM-27 BIS Core Tier 1 Capital Ratio Financial Statements

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global rePorting initiative(“gri”) g4

Gri GeneraL stanDarD

ASPECT GRI CODE INDICATORS REFERENCE SECTION

STRATEGY AND ANALYSIS G4-1Statement from the most senior decision-maker of the organisation addressing sustainability

Letter to Shareholders

ORGANISATIONAL PROFILE

G4-3 Name of the organisation Group Overview

G4-4 Primary brands, products, and services Group Overview

G4-5 Location of the organisation’s headquarters Group Overview

G4-6 Countries where the organisation operates Group Overview

G4-7 Nature of ownership and legal form Group Overview

G4-8 Markets servedFinancial HighlightsPerformance HighlightsStrategy & Value-Creation

G4-9 Scale of the organisationGroup OverviewStrategy & Value-CreationShareholders Information

G4-10 Employment Strategy & Value-Creation

G4-11 Collective bargaining Strategy & Value-Creation

G4-12 Supply chain Accountability

G4-13 Organisational changes Letter to Shareholders

G4-14 Precautionary approach Accountability

G4-15Externally developed economic, environmental and social charters

Letter to Shareholders

G4-16 Memberships of associations Letter to Shareholders

IDENTIFIES MATERIAL ASPECTS AND BOUNDARIES

G4-17 Entities Group Overview

G4-18 Process for defining the report About Our Reports

G4-19 Material aspects identified Strategy & Value-Creation

G4-20 Material aspect within the organisation Strategy & Value-Creation

G4-21 Material aspect outside the organisation Strategy & Value-Creation

STAKEHOLDER ENGAGEMENT

G4-24 Stakeholder groups Strategy & Value-Creation

G4-25 Identification and selection of stakeholders Strategy & Value-Creation

G4-26 Approach to stakeholder engagement Strategy & Value-Creation

G4-27 Key topics and concerns raised Strategy & Value-Creation

REPORT PROFILE

G4-28 Reporting period About Our Reports

G4-30 Reporting cycle About Our Reports

G4-31 Contact point About Our Reports

G4-32 Chosen content About Our Reports

G4-33 External assurance for the report About Our Reports

GOVERNANCE, COMMITMENTS AND ENGAGEMENTS

G4-34 Governance structure Strategy & Value-CreationAccountability

ETHICS AND INTEGRITY G4-56Organisation’s values, principles, standards and norms of behavior

Group OverviewStrategy & Value-CreationManagement Discussion & Analysis


Gri speCifiC stanDarD

MATERIAL ASPECTS GRI CODE INDICATORS REFERENCE SECTION

ECONOMIC

ECONOMIC PERFORMANCE

G4-EC1 Direct economic value generated and distributed Financial Statements

G4-EC2Financial implications and other risks and opportunities for the organisation’s activities due to climate change

Strategy & Value-CreationManagement’s Discussion & Analysis

MARKET PRESENCE

G4-EC5Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation

Strategy & Value-CreationBank Islam Annual Integrated Report 2018

G4-EC6Proportion of senior management hired from the local community at significant locations of operation

Strategy & Value-CreationBank Islam Annual Integrated Report 2019

INDIRECT ECONOMIC IMPACTS

G4-EC7Development and impact of infrastructure investments and services supported


G4-EC8Significant indirect economic impacts, including the extent of impacts


ENvIRONMENT

ENERGY

G4-EN3 Energy consumption within the organization Takaful Malaysia Annual Report 2018 – Sustainability Report

G4-EN6 Reduction of energy consumption Takaful Malaysia Annual Report 2018 – Sustainability Report

PRODUCTS AND SERVICES G4-EN27Extent of impact mitigation of environmental impacts of products and services


SOCIAL

LaBor praCtiCes anD DeCent WorK

TRAINING & EDUCATION

G4-LA9Average hours of training per year per employee by gender, and by employee category


G4-LA10

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings


DIVERSITY & EQUAL OPPORTUNITY

G4-LA12

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity

Bank Islam Annual Integrated Report 2018Takaful Malaysia Annual Report 2018 – Sustainability Report


BIMB HOLDINGSBERHAD

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MATERIAL ASPECTS GRI CODE INDICATORS REFERENCE SECTION

SOCIAL

soCiety

LOCAL COMMUNITIES

FS-13Access points in low-populated or economically disadvantaged areas by type

Strategy & Value-Creatiom

FS-14Initiatives to improve access to financial services for disadvantaged people

Strategy & Value-Creatiom

ANTI-CORRUPTION G4-SO4Communication and training on anti corruption policies and procedures

Strategy & Value-CreationBank Islam Integrated Annual Report 2018

COMPLIANCE G4-FS6Percentage of the portfolio for business lines by specific region, size (eg: micro/SME/Large) and by sector

Financial Statements

PRODUCT PORTFOLIO

G4-FS7Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose

Strategy & Value-Creation

G4-FS8

Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose

Strategy & Value-Creation

G4-FS9Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures

Accountability

22nd AGM Information372 Integrated Annual Report 2018

NOTICE IS HEREBY GIVEN that the 22nd Annual General Meeting of BIMB Holdings Berhad (“BHB” or “the Company”) will be held at Ballroom 3, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday, 15 May 2019 at 10.00 a.m. for the following purposes:

orDinary Business1. To receive the Audited Financial Statements for the financial year ended 31 December 2018 together

with the Reports of the Directors and Auditors thereon.

2. To re-elect Tan Sri Ambrin Buang who is retiring in accordance with Article 61 of the Company’s Constitution and being eligible, has offered himself for re-election.

3. To re-elect Tan Sri Ismail Adam who is retiring by rotation in accordance with Article 61 of the Company’s Constitution and being eligible, has offered himself for re-election.

4. To re-elect Encik Nik Mohd Hasyudeen Yusoff who is retiring by rotation in accordance with Article 66 of the Company’s Constitution and being eligible, has offered himself for re-election.

5. To approve the Directors’ fees and benefits of up to RM2,776,500 payable to the Non-Executive Directors from this 22nd Annual General Meeting until the 23rd Annual General Meeting of the Company.

6. To appoint Messrs. PricewaterhouseCoopers PLT as the External Auditors of the Company in place of the retiring External Auditors, Messrs. KPMG Desa Megat PLT and to authorise the Directors to determine their remuneration.

speCiaL Business7. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading

Nature.

“That subject to the Companies Act 2016, Company’s Constitution and the Main Market 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 19 April 2019 which are necessary for the Group’s day to day operations subject to the following:

a) The transactions carried out are in the ordinary course of business and are on normal commercial termsthatdonotfavourtherelatedpartiesmorethanthegeneralpublic;

b) ArenotdetrimentaltotheminorityshareholdersoftheCompany;and

c) 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 ofthisResolution;

notice of the 22nd

annual general meeting

(please refer to note 1)

(ordinary resolution 1)





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

i) the conclusion of the next AGM of the Company, at which time it will lapse, unless by a resolutionpassedatthemeeting,theauthorityisrenewed;

ii) the expiration of the period within which the next AGM after the date is required to be held pursuant to Section 340(2) of the Companies Act, 2016 (but shall not extend to such extension asmaybeallowedpursuanttoSection340(4)ofCompaniesAct2016);or

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

whichever is the earlier.”

8. Proposed renewal of the authority for Directors to allot and issue new ordinary shares of BHB, for the purpose of the Company’s Dividend Reinvestment Plan (“Drp”) that provides the shareholders of BHB the option to elect to reinvest their cash dividend in new BHB Shares.

“tHat pursuant to the DRP as approved by the Shareholders at the Extraordinary General Meeting held on 27 October 2014 and subject to the approval of the relevant regulatory authority (if any), approval be and is hereby given to the Company to allot and issue such number of new BHB Shares from time to time as may be required to be allotted and issued pursuant to the DRP until the conclusion of the next Annual General Meeting upon such terms and conditions and to such persons as the Directors of the Company at their sole and absolute discretion, deem fit and in the interest of the Company proViDeD tHat the issue price of the said new BHB Shares shall be fixed by the Directors based on the adjusted five (5) market days volume weighted average market price (“VWap”) of BHB Shares immediately prior to the price-fixing date after applying a discount of not more than 10%, of which the VWAP shall be adjusted ex-dividend before applying the aforementioneddiscountinfixingtheissueprice;

anD tHat the Directors and the Secretary of the Company be and are hereby authorised to do all such acts and enter into all such transactions, arrangements, deeds, undertakings and documents as may be necessary or expedient in order to give full effect to the DRP with full power to assent to any conditions, modifications, variations and/or amendments as may be imposed or agreed to by any relevant authorities (if any) or consequent upon the implementation of the said conditions, modifications, variations and/or amendments, by the Directors as they, in their absolute discretion, deem fit and in the best interest of the Company.”

9. Proposed Adoption of the New Constitution of the Company (“proposed adoption of new Constitution”)

“tHat the Company’s existing Memorandum and Articles and Association be deleted in its entirety with immediate effect and in place thereof, adopt the new Constitution of the Company as set out in Part B and Appendix II of the Circular to Shareholders dated 19 April 2019. anD tHat the Directors and Secretary of the Company be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all things and take all such steps as may be considered necessary and/or expedient in order to give full effect to the Proposed Adoption of the New Constitution.”



(special resolution 1)


notes :

1. audited financial statements

The Audited Financial Statements laid at this meeting pursuant to Section 340(1)(a) of the Companies Act 2016 are meant for the shareholders’ information and discussion only. It does not require shareholders’ approval, and therefore Audited Financial Statements are not put forward for voting.

2. ordinary resolution 4

At the 21st Annual General Meeting held on 15 May 2018, BHB obtained Shareholders’ approval on the payment of Non-Executive Directors’ fees and benefits with effect from the 21st Annual General Meeting until the 22nd Annual General Meeting of the Company in 2019. Details of the Non-Executive Directors’ fees and benefits are enumerated on pages 274 to 275 of the Integrated Annual Report.

Pursuant to Section 230(1) Companies Act 2016, Shareholders’ approval is also required for the Non-Executive Directors’ fees and benefits received from its subsidiaries.

The proposed Resolution 4 is for the payment of the Directors’ fees and benefits for the Non-Executive Directors of the Company and its subsidiaries from this 22nd Annual General Meeting until the 23rd Annual General Meeting of the Company.

3. ordinary resolution 5

The propose change is in line with good corporate governance of revisiting the appointment of the Company’s External Auditors from time to time.

The Company’s existing External Auditors, Messrs KPMG Desa Megat PLT, were re-appointed as the External Auditors of the Company at the 21st Annual General Meeting of the Company held on 15 May 2018 to hold office until the conclusion of the 22nd Annual General Meeting of the Company. Messrs KPMG Desa Megat PLT have been the External Auditors of the Company since November 2002.

The proposed appointment of Messrs PricewaterhouseCoopers is subject to the receipt of their consent to act as External Auditors and if approved, they shall hold office until the conclusion of the 23rd Annual General Meeting of the Company.

4. explanatory notes to special Business

a) ordinary resolution 6

Ordinary Resolution 6, if passed, will enable the Company and/or its Subsidiaries to enter into recurrent transaction involving the interest of Related Parties, which are of a revenue or trading nature and necessary for the Group’s day-to-day operations, subject to the transactions being carried out in the ordinary course of business and on terms not to the detriment of the minority shareholders of the Company. The authority, unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting of the Company.

For further details on Ordinary Resolution 6, please refer to Circular to Shareholders dated 19 April 2019.

b) ordinary resolution 7

Ordinary Resolution 7, if passed, will give authority to the Directors to allot and issue share for the Dividend Reinvestment Plan in respect of dividends to be declared until the next Annual General Meeting. A renewal of this authority will be sought at the next Annual General Meeting.

c) special resolution 1

The proposed Special Resolution 1, if passed, will align the Company’s Constitution with the Companies Act 2016 which came into force on 31 January 2017, the updated provision on the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and prevailing statutory and regulatory requirements as well as to enhance administrative efficiency and to provide greater clarity. The Proposed Adoption of the New Constitution is set out in the Circular to Shareholders dated 19 April 2019.

notice of the 22nd


10. To transact any other ordinary business of which due notice shall have been given in accordance with the Companies Act 2016.

By Order of the Board

maria mat saiD (LS 0009400)Company Secretary

Kuala Lumpur 19 April 2019

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5. appointment of proxy

(i) Only members whose names appear in the Record of Depositors on 10 May 2019 shall be eligible to attend, speak and vote at the AGM or appoint proxy(ies) to attend, speak and/ or vote on their behalf.

(ii) A member of the Company entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and to vote instead of him at the same meeting and a proxy need not be a member of the Company.

(iii) Where a member of the Company appoints two (2) proxies, the appointments shall be invalid unless he specifies the holdings to be represented by each proxy.

(iv) Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 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.

(v) The instruments appointing a proxy in the case of an individual shall be signed by the appointer or his attorney and in the case of a corporation, must be under seal or under the hand of an officer or attorney duly authorised.

(vi) The instrument appointing a proxy must be deposited at the Share Registrar, Boardroom Share Registrars Sdn Bhd (formerly known as Symphony Share Registrars Sdn Bhd), Level 6, Symphony House, Pusat Dagangan Dana, 1, Jalan PJU 1A/46, 47301 Petaling Jaya Selangor Darul Ehsan not less than forty-eight (48) hours before the time of the meeting or adjourned meeting at which the person named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.

(vii) Pursuant to Paragraph 8.29A of the Main Market Listing Requirements, all resolutions set out in the Notice will be put to vote by poll.

personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof), and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.


statement accomPanyingnotice of the 22nd annual general meeting

directors who are standing for re-election at the 22nd annual general meeting

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, BIMB Holdings Berhad wishes to highlight the Directors who are standing for re-election at the 22nd Annual General Meeting of the Company are as follows:

1) Article 61 of the Company’s Constitution

• TanSriAmbrinBuang

• TanSriIsmailAdam

2) Article 66 of the Company’s Constitution

• EncikNikMohdHasyudeenYusoff

Profiles of the above Directors are set out on pages 82 to 86 of this Integrated Annual Report.

date, time and Place of the 22nd annual general meeting

The 22nd Annual General Meeting of BIMB Holdings Berhad will be held as follows:

Date : Wednesday, 15 May 2019

Time : 10.00 a.m.

Place : Ballroom 3, Sime Darby Convention Center, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur

Proxyform (Company No. 423858-X)

(Incorporated in Malaysia)

I/We ____________________________________________________________________________________________________________________________(Full Name of Shareholder)

NRIC No./Passport No./Company No. ________________________________________________________________________________________________

of ______________________________________________________________________________________________________________________________(Address)

Telephone No. _____________________________________________ being a member/members of BIMB Holdings Berhad (“BHB” or “the Company”),

herebyappoint;__________________________________________________________________________________________________________________(Full Name & NRIC No.)

of ______________________________________________________________________________________________________________________________(Address)

and/or failing him/her: _____________________________________________________________________________________________________________(Full Name & NRIC No.)

of ______________________________________________________________________________________________________________________________(Address)

or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the tWenty-seConD annuaL GeneraL meetinG (“22nd aGm”) of BimB HoLDinGs BerHaD, to be held at Ballroom 3, Sime Darby Convention Center, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday, 15 May 2019 at 10.00 a.m. and any adjournment thereof.

Please indicate an “X” in the space provided below, how you wish your vote to be cast in respect of the following resolutions. In the absence of specific directions, your proxy may vote or abstain at his/her discretion. If you appoint two proxies, please specify the proportions of holdings to be represented by each proxy.

My/Our proxy is to vote as indicated hereunder:

no. resoLution for aGainst

Ordinary Resolution 1 To re-elect Tan Sri Ambrin Buang as a Director.

Ordinary Resolution 2 To re-elect Tan Sri Ismail Adam as a Director.

Ordinary Resolution 3 To re-elect Encik Nik Mohd Hasyudeen Yusoff as a Director.

Ordinary Resolution 4 To approve the payment of Directors’ fees and benefits amounting to RM2,776,500 payable to the Non-Executive Directors from this 22nd AGM until the 23rd AGM of the Company.

Ordinary Resolution 5 To appoint Messrs. PricewaterhouseCoopers PLT as the External Auditors of the Company in place of the retiring External Auditors, Messrs. KPMG Desa Megat PLT and to authorise the Directors to determine their remuneration.

Ordinary Resolution 6 Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

Ordinary Resolution 7 Proposed renewal of the authority for Directors to allot and issue new ordinary of BHB for the purpose of the Company’s Dividend Reinvestment Plan that provides the Shareholders of BHB the option to elect to reinvest their cash dividend in new BHB Shares.

Special Resolution 1 Proposed Adoption of the New Constitution of the Company.

no. of sHares

Dated this _____________________ day of _____________________ 2019

_______________________________________________________________Signature/Common Seal of Shareholders

For appointment of two proxies, the number of shares and percentage of shareholdings to be represented by the proxies are as follows:

no. of sHares perCentaGeproxy 1proxy 2totaL 100%

notes:

(i) Only members whose names appear in the Record of Depositors on 10 May 2019 shall be eligible to attend, speak and vote at the 22nd Annual General Meeting or appoint proxy(ies) to attend, speak and/ or vote on their behalf.

(ii) A member of the Company entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and to vote instead of him at the same meeting and a proxy need not be a member of the Company.

(iii) Where a member of the Company appoints two (2) proxies, the appointments shall be invalid unless he specifies the holdings to be represented by each proxy.

(iv) Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 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.

(v) The instruments appointing a proxy in the case of an individual shall be signed by the appointer or his attorney and in the case of a corporation, must be under seal or under the hand of an officer or attorney duly authorised.

(vi) The instrument appointing a proxy must be deposited at the Share Registrar, Boardroom Share Registrars Sdn Bhd (formely known as Symphony Share Registrars Sdn Bhd), Level 6, Symphony House, Pusat Dagangan Dana, 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

(vii) Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in the Notice of the 22nd Annual General Meeting will be put to vote by poll.

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BoarDroom sHare reGistrars sDn BHD (378993-D)(Formerly known as Symphony Share Registrars Sdn Bhd)

Level 6, Symphony House Pusat Dagangan Dana 1, Jalan PJU 1A/46 47301 Petaling Jaya Selangor

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