2017 Annual Report Our Vision, Key Behaviours & Brand Attributes

2017 ANNUAL REPORT OUR VISION, KEY BEHAVIOURS & BRAND ATTRIBUTES BUILDING ALLIANCES OUR VISION TO IMPROVE LIVES OUR KEY COMMIT TO EXCELLENCE BEHAVIOURS TAKE OWNERSHIP COLLABORATE INNOVATE & SIMPLIFY UNDERSTAND AND ACT #1 IN INNOVATION OUR BRAND ATTRIBUTES #1 IN BEING FAST, SIMPLE & RESPONSIVE #1 IN BEING ALIGNED TO CUSTOMERS’ NEEDS CORPORATE PROFILE Alliance Financial Group Berhad was incorporated in Malaysia on 7 April 1966 and was listed on the Main Market of Bursa Malaysia Securities Berhad (then known as Kuala Lumpur Stock Exchange) on 6 July 1979. The Group is principally involved in the provision of banking and financial services through Alliance Bank Malaysia Berhad. Alliance Bank Malaysia Berhad, together with its subsidiaries, Alliance Investment Bank Berhad and Alliance Islamic Bank Berhad, provide a wide range of financial products and services in consumer banking, SME banking, corporate and commercial banking, Islamic banking, investment banking, and stockbroking businesses. WHAT’S INSIDE THIS REPORT CONTENTS 01 CORPORATE SECTION 05 FINANCIAL SECTION Vision, Key Behaviours & Brand Attributes Financial Statements Corporate Profile – Statement of Board of Directors’ Responsibilities / p.102 History of Alliance Financial Group / p.02 – Directors’ Report / p.103 Corporate Information / p.04 – Statement by Directors / p.109 Corporate Structure / p.05 – Statutory Declaration / p.109 Products and Services / p.06 – Independent Auditors’ Report / p.110 Financial Highlights / p.10 – Statements of Financial Position / p.115 – Statements of Comprehensive Income / p.116 – Consolidated Statements of Changes in Equity / p.117 – Statement of Changes in Equity / p.119 – Consolidated Statements of Cash Flows / p.120 LEADERSHIP 02 – Statement of Cash Flows / p.122 Directors / p.14 – Notes to the Financial Statements / p.123 Chief Executive Officer / p.27 Basel II Pillar 3 Report Disclosure / p.230 Key Senior Management / p.28 ADDITIONAL INFORMATION PERSPECTIVES 06 03 List of Properties / p.275 Statement by the Chairman of Directory / p.278 Alliance Financial Group Berhad / p.36 Analysis of Shareholdings / p.284 Management Discussion & Analysis / p.40 Substantial Shareholders / p.286 Awards and Recognition / p.56 Directors’ Shareholdings / p.286 Calendar of Significant Events / p.58 Media Highlights / p.66 07 NOTICE AND FORM ACCOUNTABILITY Notice of Annual General Meeting / p.287 04 Form of Proxy Statement of Corporate Governance / p.68 Sustainability Statement / p.78 Audit Committee Report / p.89 Statement on Risk Management and Internal Control / p.92 Risk Management / p.93 Additional Compliance Information / p.100 VIEW OUR REPORT ONLINE Our Annual Report, Accounts and other information about Alliance Financial Group Berhad can be found at www.alliancefg.com 02 ALLIANCE FINANCIAL GROUP BERHAD (6627-X) HISTORY OF ALLIANCE FINANCIAL GROUP 50s - 70s 90s 1958 Banque de L’Indochine commenced operations 1998 By February 1998, the Bank had a network of in Malaya with its first branch in the Selangor 34 branches nationwide, including Sabah and Kwangtung Association Building, Jalan Pudu, Sarawak. Kuala Lumpur. This branch was subsequently relocated to Jalan Raja Chulan, Kuala Lumpur, in 1975. 1999 Multi-Purpose Bank Berhad was selected to be one of the anchor banks in the Malaysian government’s bank consolidation initiative. Multi- 1959 Banque de L’Indochine opened a sub-branch at Purpose Bank Berhad successfully anchored the Jalan Batu, Kuala Lumpur (now known as Jalan merger with International Bank Malaysia Berhad, Tunku Abdul Rahman). Sabah Bank Berhad, Sabah Finance Berhad, Bolton Finance Berhad, Amanah Merchant Bank Berhad, and Bumiputra Merchant Bankers Berhad. 1975 The name of the Bank was changed to Banque de L’Indochine et de Suez (Banque Indosuez). In the same year, Banque Indosuez acquired a building in Jalan Raja Chulan, Kuala Lumpur, to serve as 21st Century its headquarters. 2001 The Alliance Banking Group was established on 19 January with the successful merger of seven financial institutions. The newly-merged 80s - 90s entity’s name and logo were unveiled to the 1982 Malaysian French Bank Berhad was incorporated public for the first time as the Alliance Banking to assume the banking business of the two local Group comprising Alliance Bank Malaysia Berhad branches of Banque Indosuez. The incorporation (Alliance Bank), Alliance Finance Berhad, Alliance was the result of the French government’s Merchant Bank Berhad, and Alliance Unit Trust nationalisation of Banque Indosuez and also Management Berhad. of the subsequent restructuring of the Bank’s businesses in Malaysia to comply with local banking regulations. 2004 On 1 August, Alliance Finance Berhad merged with Alliance Bank. Consequently, Hire Purchase is now offered at all Alliance Bank’s retail 1985 The Bank established its “first” branch in Taman branches nationwide. Maluri, Kuala Lumpur. In the same year, eight more branches were opened throughout the country. 2005 On 1 January, Alliance Merchant Bank Berhad acquired 100% equity interest in Kuala Lumpur City Securities (KLCS). 1986- During this time, 16 branches were established 1995 nationwide. 2006 In August, Alliance Merchant Bank Berhad changed its name to Alliance Investment Bank Berhad (AIBB). In December, KLCS merged with Malaysian French Bank Berhad changed its name 1996 AIBB to offer a full suite of investment banking to Multi-Purpose Bank Berhad. services. 2017 ANNUAL REPORT 03 21st Century Today 2007 In April, Alliance Unit Trust Management Berhad NOW The Alliance Financial Group, comprising merged with Alliance Capital Asset Management Alliance Bank Malaysia Berhad, Alliance Berhad to form Alliance Investment Management Investment Bank Berhad and Alliance Islamic Berhad (AIMB). Under the terms of the agreement, Bank Berhad is a dynamic, integrated financial Alliance Bank owns 70% equity stake in AIMB. services group offering banking and financial In June, Alliance Islamic Bank Berhad (AIS) was services through its consumer banking, SME incorporated as a wholly-owned subsidiary of banking, corporate and commercial banking, Alliance Bank. Islamic banking, investment banking, and stockbroking businesses. In conjunction with the change of name of its holding company from Malaysian Plantations It provides easy access to its broad base of Berhad to Alliance Financial Group Berhad on customers throughout the country via multi 31 August, Alliance Banking Group underwent delivery channels which include retail branches, a major rebranding exercise and was renamed Privilege Banking Centres, Islamic Banking Alliance Financial Group (the Group). Centres, Business Centres, Investment Bank branches, and direct marketing offices located nationwide as well as mobile and Internet banking. 2008 AIS commenced its Islamic banking business on 1 April after assuming the entire Islamic banking With over five decades of proud history in business portfolio of Alliance Bank. contributing to the financial community in Malaysia with its innovative and entrepreneurial business spirit through its principal subsidiaries, the Group is committed to delivering the best In January, Alliance Bank and AIA Berhad entered 2011 customer experience and creating long-term into a joint venture to form AIA AFG Takaful shareholder value. Berhad which offers a range of Takaful savings, protection and investment products. Under the terms of agreement, Alliance Bank owns 30% equity stake in AIA AFG Takaful Berhad. 2013 In March, Alliance Bank completed the sale of its 30% equity stake in AIA AFG Takaful Berhad. In April, Alliance Bank completed the sale of its 70% shareholding in AIMB to KAF-Seagroatt Campbell Berhad. AIMB ceased to be part of the Group following the completion of the sale. In June, Alliance Bank entered into a 10-year bancassurance partnership with Manulife Insurance Berhad. With this partnership, Alliance Bank is now able to provide a comprehensive bancassurance product suite to its customers. 2014 In May, AIBB acquired a 51% equity stake in HwangDBS Vickers Research Sdn Bhd (HDBSV). HDBSV was later renamed AllianceDBS Research Sdn Bhd. 04 ALLIANCE FINANCIAL GROUP BERHAD (6627-X) CORPORATE INFORMATION DIRECTORS DATUK OH CHONG PENG Chairman, Independent Non-Executive Director KUNG BENG HONG Non-Independent Non-Executive Director OU SHIAN WAEI Independent Non-Executive Director LEE AH BOON Non-Independent Non-Executive Director TAN CHIAN KHONG Independent Non-Executive Director (Appointed on 1 August 2016) STEPHEN GEH SIM WHYE Independent Non-Executive Director (Retired on 5 August 2016) CHIEF EXECUTIVE OFFICER REGISTRAR PRINCIPAL BANKER Joel Kornreich Shareworks Sdn Bhd Alliance Bank Malaysia Berhad No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas GROUP COMPANY SECRETARY 50480 Kuala Lumpur, Malaysia BURSA MALAYSIA STOCK NAME/CODE Lee Wei Yen (MAICSA 7001798) Tel : 03-6201 1120 Fax : 03-6201 3121 AFG/2488 REGISTERED OFFICE 3rd Floor, Menara Multi-Purpose AUDITORS INTERNATIONAL SECURITIES Capital Square PricewaterhouseCoopers IDENTIFICATION NUMBER (ISIN) No. 8, Jalan Munshi Abdullah Chartered Accountants MYL2488OO004 50100 Kuala Lumpur, Malaysia Level 10, 1 Sentral, Jalan Rakyat Kuala Lumpur Sentral Tel : 03-2604 3333 50470 Kuala Lumpur, Malaysia Fax : 03-2694 6200 Website : www.alliancefg.com Email : [email protected] 2017 ANNUAL REPORT 05 CORPORATE STRUCTURE as at 25 May 2017 100% 100% 51% Alliance Bank Alliance Investment AllianceDBS Malaysia Berhad Bank Berhad Research Sdn Bhd 100% Alliance Islamic Bank Berhad 100% Alliance Direct

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