AHB AR06-1a_060706.qxd 7/7/06 3:41 AM Page 203 ANNUAL REPORT 2006 AMMB Holdings Berhad (223035-V) (Incorporated in Malaysia) AHB AR06-1a_060706.qxd 7/7/06 1:40 AM Page 204 Corporate Mission “To entrench our position as a premier financial services group providing innovative products and services to our customers.” 2006 Cover Rationale What customers look for is a financial partner of choice who will provide better expertise and a spectrum of innovative financial solutions. It is all about experience, dedication, commitment, professionalism and integrity. The cover for 2006 is splashed with ‘waves’ that symbolise the arches of the AmBank Group logo. The strong colours of red and yellow are the core colours of the AmBank Group. Red symbolises energy, strength, power, courage, prosperity and tenacity, whilst yellow reflects confidence, cheerfulness, enthusiasm, creativity, encouragement and a vibrant presence. White enhances the positive values signifying our unity, consistency and simplicity of unwavering focus towards new levels of excellence. AHB AR06-1a_060706.qxd 7/7/06 1:40 AM Page 1 Customer Contents 2 Notice of Fifteenth Annual General Meeting 4 Letter to Shareholders F 9 Our Philosophy 10 History and Recent Corporate Developments 16 Service Quality Improvement 18 Corporate Structure – Subsidiaries and Associated Companies 19 Organisation Structure 20 Board of Directors/Corporate Information I 22 Profile of Directors 30 The Management 32 Corporate Governance 41 Compliance with Bursa Malaysia Listing Requirements 43 Managing Risks 52 Business Operations Review R 78 Notables and Awards 80 Corporate Social Responsibility 82 Calendar of Events: Business Activities 91 Calendar of Events: Social and Sports Activities 100 Group Financial Review 109 Economic Review S 116 Group Financial Highlights 117 Five-Year Group Financial Review/ Financial Calendar 119 Financial Statements 244 List of Landed Properties 248 Shareholding and Warrant Holding Structures 258 Group Directory 264 Group Branch Network T Proxy Form AHB AR06-1a_060706.qxd 7/7/06 1:40 AM Page 2 2 AMMB Holdings Berhad • Annual Report 2006 Notice of Fifteenth Annual General Meeting NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of AMMB Holdings Berhad (“the Company”) will be held at Dewan AmBank Group, 7th Floor, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur on Wednesday, 9 August 2006 at 2.30 p.m. for the following purposes: Item Agenda Resolution on Proxy Form As Ordinary Business 1. To receive the Audited Accounts for the year ended 31 March 2006 and the Reports of the Directors and Auditors thereon. (Resolution No. 1) 2. To approve a first and final dividend of 5.0% less tax for the year ended 31 March 2006. (Resolution No. 2) 3. To approve payment of Directors’ fees for the year ended 31 March 2006. (Resolution No. 3) 4. To re-elect the following Directors who retire by rotation pursuant to Article 89 of the Company’s Articles of Association: (a) Y Bhg Tan Sri Datuk Dr Aris Othman (Resolution No. 4) (b) Y Bhg Tan Sri Dato’ Mohd Ibrahim Mohd Zain (Resolution No. 5) (c) Y Bhg Dato’ Izham Mahmud (Resolution No. 6) (d) Puan Shalina Azman (Resolution No. 7) 5. To re-appoint Messrs Ernst & Young, the retiring Auditors, and to authorise the Directors to determine their remuneration. (Resolution No. 8) As Special Business To consider and if thought fit, to pass the following resolution as Ordinary Resolution: 6. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965 “THAT subject to the approvals from the relevant authorities, where such approval is necessary, full authority be and is hereby given to the Board of Directors pursuant to Section 132D of the Companies Act, 1965 to issue shares in the capital of the Company at any time upon such terms and conditions and for such purposes as the Directors, may, in their discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum of the issued share capital of the Company for the time being.” (Resolution No. 9) 7. To transact any other business of which due notice shall have been received. AHB AR06-1a_060706.qxd 7/7/06 1:40 AM Page 3 AMMB Holdings Berhad • Annual Report 2006 3 Notes (1) A shareholder of the Company entitled (4) The instrument appointing the proxy to attend and vote is entitled to appoint must be deposited at the Registered a proxy to attend and vote instead of Office of the Company at 22nd Floor, him. A proxy or an attorney need not Bangunan AmBank Group, 55 Jalan be a shareholder of the Company. Raja Chulan, 50200 Kuala Lumpur not Under Section 149(1) of the less than 48 hours before the time Notice of Dividend Companies Act, 1965, if a proxy is not appointed for holding the Meeting. a shareholder, he must be an advocate, (5) Explanatory Note on the Resolution Entitlement and an approved company auditor or a No. 9 Payment person approved by the Registrar of Companies in a particular case. – Authority to Issue Shares Pursuant to Section 132D of the NOTICE IS HEREBY GIVEN that the (2) An Authorised Nominee as defined Companies Act, 1965 first and final dividend of 5.0% less under the Securities Industry (Central tax for the financial year ended Depositories) Act 1991, may appoint Ordinary resolution no. 9, if passed, 31 March 2006, if approved by the one proxy in respect of each securities will give the Directors of the account held with ordinary shares of Company, from the date of the shareholders at the Fifteenth Annual the Company standing to the credit of General Meeting, authority to allot General Meeting, will be paid on the securities account. The proxy so and issue ordinary shares from the 5 September 2006 to shareholders appointed shall be the beneficial unissued share capital of the whose names appear in the Record owner of the shares in the said Company up to an aggregate of Depositors on 18 August 2006. securities account or a person as amount not exceeding 10 percent of A depositor shall qualify for entitlement provided under Section 149(1) of the the issued share capital of the Company for the time being, as and only in respect of: Companies Act, 1965. when the need or business (3) The instrument appointing a proxy a. Shares transferred into the opportunities arise which the in the case of an individual shall depositor’s securities account Directors consider would be in the be signed by the appointor or before 4.00 p.m. on 18 August 2006 interest of the Company. This his attorney and in the case of authority, unless revoked or varied at in respect of ordinary transfers; and a corporation, the instrument a General Meeting, will expire at the appointing a proxy or proxies must be b. Shares bought on Bursa Malaysia next Annual General Meeting. Securities Bhd on a cum entitlement under seal or under the hand of an officer or attorney duly authorised. basis according to the Rules of Bursa Malaysia Securities Bhd. Statement Accompanying By Order of the Board Notice Of Annual General Meeting RAVINDRA KUMAR Directors Who Are Seeking Re-Election At The THAMBIMUTHU 15th Annual General Meeting Of The Company (LS 0000902) Group Company Secretary The Directors retiring by rotation pursuant to Article 89 of the Company’s Articles of Association and seeking re-election are as follows: - • Y Bhg Tan Sri Datuk Dr Aris Othman Kuala Lumpur • Y Bhg Tan Sri Dato’ Mohd Ibrahim Mohd Zain 18 July 2006 • Y Bhg Dato’ Izham Mahmud • Puan Shalina Azman The details of the four Directors seeking re-election are set out in their respective profiles which appear in the Profile of Directors and their securities holdings in the Company and its subsidiaries are set out in the Shareholding and Warrant Holding Structures of this Annual Report. AHB AR06-1a_060706.qxd 8/7/06 12:59 PM Page 4 4 AMMB Holdings Berhad • Annual Report 2006 Letter to Shareholders The financial year that has just ended on 31 March 2006 saw continuity amidst changes. We delivered on our commitment to shareholders by achieving higher profits, declaring higher dividends, and strengthening the capital position of the AmBank Group, whilst maintaining a prudent approach to risk. We started the year with a new • The listing of the investment corporate structure, which reflects banking operations under our multi-niche strategy in the AmInvestment Group Berhad on financial services industry. We 18 May 2005; completed the implementation of the • The business merger of the Group’s corporate reorganisation that we had commercial banking and finance embarked on in FY2005, namely: company operations into a single legal entity, AmBank (M) Berhad on 1 June 2005; AHB AR06-1a_060706.qxd 8/7/06 12:59 PM Page 5 AMMB Holdings Berhad • Annual Report 2006 5 the last three years. Accordingly, the Group’s net earnings per share were higher at 17.2 sen per share vis-à-vis 10.8 sen per share for the previous financial year. The improved performance was mainly attributed to the strong growth in retail lending, decline in non- performing loans, increase in investment and trading income arising from expansion of treasury activities and improvement in general insurance premiums earned. The improvement in profitability was however moderated by the rise in overhead expenses, some of which The Group’s participation in SMIDEX 2006 (in were one-off, relating to the conjuction with the ASEAN + 3 SME Convention 2006): transformation of the finance company AmBank Group employees (in red) with the Prime Our Commitment to Minister, YAB Dato’ Seri Abdullah Ahmad Badawi into a commercial bank, as well as (second from left) and International Trade and Industry Shareholders in Financial marketing expenses incurred in support Minister, YB Dato’ Seri Rafidah Aziz (far left).