BIMB Holdings Berhad (“BHB”) Was Established on 20 March 1997 and Listed on the Main Market of Bursa Malaysia on 16 September 1997

Leading the way in islamic financial excellence

Annual Report 2014 Synergy . Reliability . Strategy . Integrity . Sustainability

Cover Rationale Leading the Way in Islamic Financial Excellence BIMB Holdings Bhd (“BHB”) occupies a central position in the Islamic financial industry in Malaysia through our

Leading the way in islamic subsidiaries which have been involved in Shariah-based financial excellence banking and financial services since 1983. As the Group has expanded over the years, we have opened progressively more doors to our customers and other stakeholders into the rich tapestry of innovative and ethical Islamic products and services that meet the needs of our increasing clientele Annual Report 2014 in meaningful ways. In the process, we have established ourselves as a Trustworthy, Professional and Caring corporation with an extensive Network that maintains the highest level of Integrity.

Leadership 8 Directors’ Profile 14 Group CEO’s Profile Contents 16 CEOs in the Group Corporate Framework 17 Management Committee 2 Corporate Profile 4 Corporate Information Performance Review 6 Group Corporate Structure 18 5 -Year Group Financial Highlights Annual General Meeting of BIMB Holdings Berhad TH Dewan Bankuet 2, Aras B2, Menara Felda, Platinum Park, No. 11, Persiaran KLCC 50088 Kuala Lumpur, Malaysia Thursday, 14 May 2015 at 10.00 a.m. 18 Refer to pages 238 to 241 for Annual General Meeting Information.

Network Trustworthy Integrity Professional Caring

Perspectives Audited Financial Statements 18th AGM INFORMATION 22 Letter to Shareholders 85 Financial Statements 238 Notice of 18th Annual General Meeting 34 Corporate Responsibility 241 Statement Accompanying Notice Additional Information th 40 2014 Event Highlights of 18 Annual General Meeting 220 Properties owned by BHB Group accountability 229 Share and Warrant Holdings Statistics Form of Proxy 52 Statement of Corporate Governance 237 Regional Group Network 77 Statement on Risk Management and Internal Control 82 Additional Compliance Information BIMB HOLDINGS BERHAD 2 Annual Report 2014

Corporate profile

BIMB Holdings Berhad (“BHB”) was established on 20 March 1997 and listed on the Main Market of Bursa Malaysia on 16 September 1997.

BHB acts as an investment holding company for Malaysia’s pioneer Shariah- compliant business entities, involve mainly in Islamic banking, takaful and stockbroking.

Being the premier Shariah-compliant financial services provider with an authorised capital of RM2.0 billion and paid-up capital of RM1,542,209,734.00, BHB is well-positioned to assist the Government’s aspirations in establishing the country as a vibrant International Islamic Financial Center.

BHB has gained in strength and stature over the years as a champion of Islamic banking, takaful and stockbroking industries via its stable of strategic investments in Malaysia’s pioneer Shariah-compliant entities. Championing ETHICAL Islamic Financial Services

Kiptchak Mosque in Turkmenistan BIMB HOLDINGS BERHAD 6 Annual Report 2014

Corporate profile

BIMB Holdings Berhad (“BHB”) was established on 20 March 1997 and listed on the Main Market of Bursa Malaysia on 16 September 1997.

BHB acts as an investment holding company for Malaysia’s pioneer Shariah- compliant business entities, involve mainly in Islamic banking, takaful and stockbroking.

Being the premier Shariah-compliant financial servicesNetw providerork with an authorised capital of RM2.0 billion and paid-up capital of RM1,542,209,734.00, BHB is well-positioned to assist the Government’s aspirations in establishing the country as a vibrant International Islamic Financial Center.

The ONLY public listed Islamic Financial Holding Company in Malaysia

First Islamic BANK in Malaysia

First and only public listed TAKAFUL operator in Malaysia

We are continuously expanding our BRANCH network, consumer business centres, bureaus de change, Ar-Rahnu outlets and takaful First centres to increase our reach across the length and breadth of the full-fledged country. This enables us to get closer to more Malaysians, whose lives shariah-compliant we enrich via an ever-increasing range of products and services. stockbroking company in Malaysia BIMB HOLDINGS BERHAD 4 Annual Report 2014

Corporate Information

BOARD OF DIRECTORS

Tan Sri Samsudin bin Osman Datuk Zaiton binti Mohd Hassan Encik Zahari @ Mohd Zin bin Idris Chairman/Non-Independent Independent Non-Executive Director Non-Independent Non-Executive Director Non-Executive Director Dato’ Johan bin Abdullah Encik Salih Amaran bin Jamiaan Tan Sri Ismail bin Adam Non-Independent Non-Executive Director Non-Independent Non-Executive Director Senior Independent Non-Executive Director Datuk Rozaida binti Omar Puan Rifina bintiM d Ariff Tan Sri Ismee bin Ismail Non-Independent Non-Executive Director Non-Independent Non-Executive Director Non-Independent Non-Executive Director

group ceo COMPANY SECRETARY AUDIT & EXAMINATION COMMITTEE

Dato’ Sri Zukri bin Samat Puan Maria binti Mat Said (LS 0009400) Datuk Zaiton binti Mohd Hassan (Appointed w.e.f. 18 February 2015) Chairman

Tan Sri Ismail bin Adam

Encik Zahari @ Mohd Zin bin Idris

NOMINATION & ASSESSMENT REMUNERATION COMMITTEE SHARIAH SUPERVISORY COMMITTEE COUNCIL, BANK ISLAM MALAYSIA BERHAD

Tan Sri Ismail bin Adam Tan Sri Ismail bin Adam Dr. Ahmad Shahbari @ Chairman Chairman Sobri bin Salamon Chairman Tan Sri Ismee bin Ismail Tan Sri Ismee bin Ismail Dato’ Mohd Bakir bin Haji Mansor Datuk Zaiton binti Mohd Hassan Datuk Zaiton binti Mohd Hassan (Resigned w.e.f. 31 March 2015)

Assistant Professor Dr. Uzaimah binti Ibrahim

Professor Dr. Ahmad Hidayat bin Buang

Dr. Muhammad Syafii bin Antonio 5 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Corporate Fra mewo r k Information L e a de r ship

SHARIAH ADVISORY BODY, SHARIAH ADVISORY SYARIKAT TAKAFUL MALAYSIA BERHAD COMMITTEE, BIMB SECURITIES SDN BHD

Dr. Ahmad Shahbari @ Professor Dr. Muhamad Rahimi Dato’ Mohd Bakir bin Haji Mansor bin Osman

Sobri bin Salamon Chairman Review Chairman P e r fo m a n c Dato’ Wan Mohamad bin Dato’ Sheikh Prof. Emeritus Dato’ Paduka Dr. Dato’ Mohd Bakir bin Haji Mansor Abdul Aziz Mahmood Zuhdi bin Haji Abdul Majid

Dr. Aida binti Othman Ir. Dr. Muhamad Fuad bin Abdullah

CEOs IN THE GROUP AUDITORS P e r spe c tives

Dato’ Sri Zukri bin Samat Dato’ Sri Mohamed Hassan bin Md. Kamil KPMG Desa Megat & Co. (AF0759) Group Chief Executive Officer Group Managing Director Level 10, KPMG Tower BIMB Holdings Berhad; and Syarikat Takaful Malaysia Berhad 8, First Avenue, Bandar Utama Managing Director 47800 Petaling Jaya ab ility Bank Islam Malaysia Berhad Encik Rashid bin Ismail Selangor Darul Ehsan Chief Executive Officer acc ount BIMB Securities Sdn Bhd

REGISTERED OFFICE SHARE REGISTRAR STOCK EXCHANGE LISTING tements a Audited

BIMB Holdings Berhad (423858-X) Symphony Share Registrars Sdn Bhd Main Market of F in a n c i l S t 31st Floor, Menara Bank Islam Level 6, Symphony House Bursa Malaysia Securities Berhad No. 22, Jalan Perak Pusat Dagangan Dana 1 16 September 1997 50450 Kuala Lumpur Jalan PJU, 1A/46 Tel : +603-2781 2999 47301 Petaling Jaya Stock Short Name : BIMB/BIMB-WA

Fax : +603-2781 2998 Selangor Darul Ehsan Stock No. : 5258 tion Tel : +603-7841 8000 Warrant No. : 5258WA Fax : +603-7841 8152 l Addition a l I nfo r m a tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 6 Annual Report 2014

Group Corporate structure

100%

Subsidiaries of Core Business Units 100% BIMB Investment Management Bhd 55.18% 100% BIMB Foreign Currency Clearing Agency Sdn Bhd (under members’ voluntary liquidation) 100% Al-Wakalah Nominees (Tempatan) Sdn Bhd 100% Farihan Corporation Sdn Bhd 100% Bank Islam Trust Co (Labuan) Ltd

100% BIMB Offshore Company Management 5.23% Services Sdn Bhd 60.31%

5.15% Subsidiaries of Core Business Units 63.09% Asean Retakaful International (L) Ltd (under members’ voluntary liquidation) 56.00% PT Syarikat Takaful Indonesia 42.73% 57.24% PT Asuransi Takaful Keluarga 52.67% PT Asuransi Takaful Umum 9.93% 100%

5.92% 51% 49% Others Subsidiaries of Core Business Units 18.59% 100% BIMSEC Nominees (Asing) Sdn Bhd 100% BIMSEC Nominees (Tempatan) Sdn Bhd 7 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Group corporate Fra mewo r k structure L e a de r ship Review P e r fo m a n c

100% Notes: Shareholding structure as at 31 March 2015 Syarikat Al-Ijarah Sdn Bhd Core Business Units P e r spe c tives

Other Business Units ab ility

Associate / Investment acc ount 48%

Islamic Banking tements a Audited

& Finance F in a n c i l S t Institute Malaysia Sdn Bhd (under members’ tion voluntary liquidation) l Addition a l I nfo r m a tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 8 Annual Report 2014 directors’ profile

Tan Sri Samsudin bin Osman Chairman/Non-Independent Non-Executive Director 68 years old - Malaysian

Date of Appointment: 1 February 2007 Directorship of Public Companies: Sime Darby Berhad Qualifications: Master of Public Administration, Pennsylvania State University (USA) Membership of Board Committees in BIMB Holdings Berhad: Bachelor of Arts (Hons), University of Malaya None Diploma in Public Administration, University of Malaya Meeting Attendance: Working Experiences & Occupations: 8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 Present: • Chairman, Employees Provident Fund (EPF) Board Declaration of Interest: and EPF Investment Panel He does not have any family relationship with any director and/or major • Chairman, Universiti Utara Malaysia shareholder of BHB nor does he have any conflict of interest with BHB • Chairman, BIMB Holdings Berhad except by virtue of being a nominee Director of Lembaga Tabung Haji. He • Chairman, Sime Darby Industrial Holdings Sdn Bhd has not been convicted of any offence within the past 10 years.

Previous: • President, Perbadanan Putrajaya • Chief Secretary to the Malaysian Government • Secretary General for the Ministry, Home Affairs • Secretary General for the Ministry, Domestic Trade and Consumer Affairs 9 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra directors’ Fra mewo r k profile L e a de r ship Review P e r fo m a n c

TAN SRI ISMAIL bin ADAM Tan Sri Ismee bin Ismail Senior Independent Non-Executive Director Non-Independent Non-Executive Director 64 years old - Malaysian 50 years old - Malaysian P e r spe c tives

Date of Appointment: 3 January 2011 Date of Appointment: 9 October 2006 (appointed as Senior-Independent Non-Executive Director w.e.f. 25 May 2011)

Qualifications: ab ility Qualifications: Fellowship of Chartered Institute of Management Accountants (CIMA) (United Kingdom) Master of Arts (Economics), Vanderbilt University (USA) Member of Malaysian Institute of Accountants (MIA) Bachelor of Arts (Hons), University of Malaya Diploma in Public Administration (Post-Baccalaureate Diploma), University Working Experiences & Occupations: acc ount of Malaya Present: Advanced Management Program, Harvard Business School • Group Managing Director and Chief Executive Officer, Lembaga Tabung Haji Working Experiences & Occupations: • Chairman, Syarikat Takaful Malaysia Berhad Present: Previous: • Chairman, Prasarana Malaysia Berhad • Chief Executive Officer, ECM Libra Securities Sdn Bhd/ECM Libra

• Advisor, Hay Group Sdn Bhd Capital Sdn Bhd tements a Audited

• Senior General Manager, Lembaga Tabung Haji F in a n c i l Previous: • Senior Vice President, Business and Corporate Development of Medical S t • Director General, Public Service Department, Malaysia Online (M) Sdn Bhd • Secretary General, Ministry of Health • Chief Accountant/Treasurer, Pengurusan Danaharta Nasional Berhad • Director General, National Productivity Corporation • General Manager, Business Development of Arab Malaysian • Senior Project Officer, National Institute of Public Administration (INTAN) Development Berhad • Accountant, Shell Companies in Malaysia • Assistant Director, Trade for Ministry of Trade and Industry • Management Accountant, Arab Malaysian Development Berhad tion Directorship of Public Companies: Directorship of Public Companies: • Prasarana Malaysia Berhad • Bank Islam Malaysia Berhad • Westports Holdings Berhad • TH Plantations Berhad l Addition a l • Syarikat Takaful Malaysia Berhad I nfo r m a Membership of Board Committees in BIMB Holdings Berhad: • 1Malaysia Development Berhad • Chairman of Nomination & Assessment Committee • Edra Global Energy Berhad (formerly known as 1MDB Energy Group Berhad) • Chairman of Remuneration Committee Membership of Board Committees in BIMB Holdings Berhad: • Member of Audit & Examination Committee • Member of Nomination & Assessment Committee • Member of Remuneration Committee Meeting Attendance: tion

8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 Meeting Attendance: AG M

6 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 th Declaration of Interest: 18 He does not have any family relationship with any director and/or major Declaration of Interest: info r m a He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB. He has shareholder of BHB nor does he have any conflict of interest with BHB except not been convicted of any offence within the past 10 years. by virtue of being a nominee Director of Lembaga Tabung Haji. He has not been convicted of any offence within the past 10 years. BIMB HOLDINGS BERHAD 10 Annual Report 2014 directors’ profile

Datuk Zaiton binti Mohd Hassan dato’ johan bin abdullah Independent Non-Executive Director Non-Independent Non-Executive Director 58 years old - Malaysian 58 years old - Malaysian

Date of Appointment: 2 February 2006 Date of Appointment: 17 February 2015 (Resigned as Non-Independent Executive Director w.e.f. 15 January 2015) Qualifications: Fellowship of Association of Chartered Certified Accountants (ACCA), Qualifications: United Kingdom MBA (Finance), Morehead State University (USA) Member of the Malaysian Institute of Accountants (MIA) Member of the Malaysian Institute of Certified Public Accountants (MICPA) BBA (Finance), Eastern Michigan University (USA) Diploma in Banking, University Technology MARA (Malaysia) Working Experiences & Occupations: Present: Working Experiences & Occupations: • Managing Director, Capital Intelligence Advisors Sdn Bhd Present: • Chairman, Private Pension Administrator Malaysia • Deputy Group Managing Director and Chief Executive Officer, Lembaga Tabung Haji Previous: • President/Executive Director, Malaysian Rating Corporation Berhad (MARC) Previous: • Served 12 years with Maybank in various senior positions including • Group Managing Director/Chief Executive Officer, that of General Manager, Group Strategic Planning BIMB Holdings Berhad • Fund Manager in Bapema Corporation Sdn Bhd • Deputy Chief Regulatory Officer, Group Regulation, • Project Officer in Bank Pembangunan (M) Bhd Bursa Malaysia Berhad • Audit trainee in PricewaterhouseCoopers • Head, Issues and Listing Division, Bursa Malaysia Berhad • Senior Vice President, Securities Issues, Bursa Malaysia Berhad Directorship of Public Companies: • Vice President, Listing Bursa Malaysia Berhad • Bank Islam Malaysia Berhad • Sime Darby Berhad • General Manager, Corporate Planning, Damansara Realty Berhad • Dolphin International Berhad Directorship of Public Companies: Membership of Board Committees in BIMB Holdings Berhad: • Syarikat Takaful Malaysia Berhad • Chairman of the Audit and Examination Committee • Bank Islam Malaysia Berhad • Member of Nomination and Assessment Committee • Edra Global Energy Berhad (formerly known as 1MDB Energy Group Berhad) • Member of Remuneration Committee Membership of Board Committees in BIMB Holdings Berhad: Meeting Attendance: 8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 None

Declaration of Interest: Meeting Attendance: She does not have any family relationship with any director and/or major 8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 shareholder of BHB nor does she have any conflict of interest with BHB. She has not been convicted of any offence within the past 10 years. Declaration of Interest: He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB except by virtue of being a nominee Director of Lembaga Tabung Haji. He has not been convicted of any offence within the past 10 years. 11 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra directors’ Fra mewo r k profile L e a de r ship Review P e r fo m a n c

Datuk Rozaida binti Omar Encik Zahari @ Mohd Zin bin Idris Non-Independent Non-Executive Director Non-Independent Non-Executive Director 52 years old - Malaysian 71 years old - Malaysian P e r spe c tives

Date of Appointment: 1 December 2009 Date of Appointment: 20 September 2002 (Redesignated from Independent Non-Executive Director to

Qualifications: Non-Independent Non-Executive Director w.e.f. 3 December 2014) ab ility Member of Association of Chartered Certified Accountants (ACCA) UK A-Level, Birkenhead College, United Kingdom Qualifications: Senior Cambridge Certificate

Working Experiences & Occupations: acc ount Present: Working Experiences & Occupations: • Group Chief Financial Officer, Lembaga Tabung Haji Present: • None Previous: • Finance Director, Glaxo Smith Kline Consumer Healthcare Sdn Bhd Previous: • Finance Manager, Guthrie Trading Sdn Bhd • Executive Director/Chief Executive Officer, Inter-City MPC (M) Sdn Bhd • General Manager Commercial Banking, Malayan Banking Berhad

• Credit Manager, Citibank Berhad tements a • Financial Accountant, Felda • Assistant General Manager, Malayan Banking Berhad Audited l F in a n c i l • Deputy Zone Head, Head Officer, Malayan Banking Berhad S t Directorship of Public Companies: • Area Manager, Malayan Banking Berhad • Syarikat Takaful Malaysia Berhad • Branch Manager, Malayan Banking Berhad • Pelikan International Corporation Berhad • Assistant Branch Manager, Malayan Banking Berhad • Trainee Officer, Malayan Banking Berhad Membership of Board Committees in BIMB Holdings Berhad:

None Directorship of Public Companies: tion • Bank Islam Malaysia Berhad Meeting Attendance: 7 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 Membership of Board Committees in BIMB Holdings Berhad: l Addition a l

• Member of Audit and Examination Committee I nfo r m a Declaration of Interest: She does not have any family relationship with any director and/or major Meeting Attendance: shareholder of BHB nor does she have any conflict of interest with BHB except 7 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 by virtue of being a nominee Director of Lembaga Tabung Haji. She has not been convicted of any offence within the past 10 years. Declaration of Interest:

He does not have any family relationship with any director and/or major tion

shareholder of BHB nor does he have any conflict of interest with BHB. He has AG M

not been convicted of any offence within the past 10 years. th 18 info r m a BIMB HOLDINGS BERHAD 12 Annual Report 2014 directors’ profile

Encik Salih Amaran bin Jamiaan Puan Rifina binti Md Ariff Non-Independent Non-Executive Director Non-Independent Non-Executive Director 75 years old - Malaysian 48 years old - Malaysian

Date of Appointment: 18 February 2005 Date of Appointment: 1 April 2014

Qualifications: Qualifications: Master in Business Administration, Wharton School, University of Bachelor of Arts (Hons) Accounting & Financial Analysis, Pennsylvania (USA) University of Newcastle Upon-Tyne, UK Bachelor of Science (Economics), London School of Economics and Political Science, University of London (UK) Working Experiences & Occupations: Post Graduate Diploma in Public Administration, Victoria University, Present: Wellington (New Zealand) • Senior General Manager, Corporate Finance & Services, Lembaga Tabung Haji Working Experiences & Occupations: Present: • None Previous: • Assistant Vice President, Affin Merchant Bank Berhad Previous: • Senior Manager, Amanah Saham Mara Berhad • Regional Representative in Kuala Lumpur, Islamic Development Bank, • Senior Officer, Permata Merchant Bank Berhad Jeddah • Deputy Director, Trade Finance and Promotion, Islamic Development Directorship of Public Companies: Bank, Jeddah None • Deputy Director, Business Development, Islamic Development Bank, Jeddah Membership of Board Committees in BIMB Holdings Berhad: • Special Advisor (Economics), Commonwealth Secretariat, London None • General Manager, International Banking Division, Malayan Banking Berhad Meeting Attendance: • Deputy Secretary, Finance Division, Ministry of Finance, Malaysia 5 of 6 Board Meetings held in the Financial Year Ended 31 December 2014 • Principal Assistant Secretary, Tax Division, Ministry of Finance, Malaysia Declaration of Interest: Directorship of Public Companies: She does not have any family relationship with any director and/or major None shareholder of BHB nor does she have any conflict of interest with BHB except Membership of Board Committees in BIMB Holdings Berhad: by virtue of being a nominee Director of Lembaga Tabung Haji. She has not None been convicted of any offence within the past 10 years.

Meeting Attendance: 8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014

Declaration of Interest: He does not have any family relationship with any director and/or major shareholder of BHB nor does he have any conflict of interest with BHB except by virtue of being a nominee Director of Permodalan Nasional Berhad. He has not been convicted of any offence within the past 10 years. 13 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra directors’ Fra mewo r k profile L e a de r ship Review P e r fo m a n c

Puan Maria binti Mat Said Company Secretary 48 years old - Malaysian P e r spe c tives

Date of Appointment: 31 December 2009

Qualifications: ab ility Bachelor of Law from University of Malaya

Working Experiences & Occupations:

Present: acc ount • Senior General Manager, Legal & Secretarial Division of Bank Islam Malaysia Berhad • Company Secretary of Bank Islam Malaysia Berhad • Company Secretary of BIMB Holdings Berhad

Previous: • Senior Vice President, Compliance & Service Standards Division of tements a

Tahan Insurance Malaysia Berhad Audited l F in a n c i l

• Secretary to the Board of Directors of LOFSA S t • Manager, Development & Promotions of LOFSA • Manager, Legal of Danamodal Nasional Berhad • Company Secretary, Danamodal Nasional Berhad • Senior Legal Officer, Legal Department of Bank Negara Malaysia

Directorship of Public Companies: tion • Al Wakalah Nomines (Tempatan) Sdn Bhd • Bank Islam Trust Company (Labuan) Ltd • Farihan Corporation Sdn Bhd

• BIMB Foreign Currency Clearing Agency Sdn Bhd Addition a l I nfo r m a (under members’ voluntary liquidation)

Secretary of Board Committees in BIMB Holdings Berhad: • Secretary of Audit and Examination Committee • Secretary of Nomination and Assessment Committee • Secretary of Remuneration Committee • Secretary of Board of Directors tion AG M

Meeting Attendance: th 18 8 of 8 Board Meetings held in the Financial Year Ended 31 December 2014 info r m a

Declaration of Interest: None BIMB HOLDINGS BERHAD 14 Annual Report 2014

Group CEO’s profile

dato’ sri zukri bin samat Group Chief Executive Officer 57 years old - Malaysian

Date of Appointment: 18 February 2015 Directorship of Public Companies: • Bank Islam Malaysia Berhad Qualifications: • BIMB Investment Management Berhad Honorary Doctorate (PhD) in Finance and Islamic Banking, • Asian Institute of Finance Berhad Kolej Universiti INSANIAH MBA (Finance), University of Hull (United Kingdom) Membership of Board Committees in BIMB Holdings Berhad: Diploma in Accountancy, University Technology MARA (Malaysia) None

Working Experiences & Occupations: Meeting Attendance: Present: None • Group Chief Executive Officer, BIMB Holdings Berhad • Managing Director, Bank Islam Malaysia Berhad Declaration of Interest: Previous: He does not have any family relationship with any director and/or major • Executive Director, Khazanah Nasional Berhad shareholder of BHB nor does he have any conflict of interest with BHB. He has • Managing Director, Pengurusan Danaharta Nasional Berhad not been convicted of any offence within the past 10 years. • General Manager, Credit Agricole Indosuez • Deputy General Manager, Commerce International Merchant Bank Berhad • Senior Account Officer, Pacific Bank Berhad • Senior Account Officer, Public Bank Berhad • Credit Officer, Bank Bumiputra Malaysia Berhad A global Leader in islamic banking

Al-Salam Mosque in Odessa, Ukraine BIMB HOLDINGS BERHAD 18 Annual Report 2014

Group CEO’s profile

dato’ sri zukri bin samat Group Chief Executive Officer 57 years old - Malaysian

Date of Appointment: 18 February 2015 Directorship of Public Companies: • Bank Islam Malaysia Berhad Qualifications: • BIMB Investment Management Berhad Honorary Doctorate (PhD) in Finance and Islamic Banking, • Asian Institute of Finance Berhad Kolej Universiti INSANIAH MBA (Finance), University of Hull (United Kingdom) MembershipTrus of Board Committeestw in BIMBor Holdings Berhad:thy Diploma in Accountancy, University Technology MARA (Malaysia) None

We continue to make steady progress by focusing on the H2E 6 pillars i. Robust Organic Growth ii. Service Excellence iii. Shariah-led Innovation iv. Resource Optimisation v. Being an Employer of Choice vi. Regionalisation Awarded in FOUR categories: Best CEO, Best Customer Service Provider Asia, Best Islamic Bank Malaysia and Most Outstanding Retail Bank 141 branches and more than 1,200 self-service terminals across the country

A hallmark of our banking operations is the level of trust we have nurtured among our partners and customers. As a result of building strong relationships, we truly understand the needs of our consumer, corporate and commercial segments and are able to meet these with innovative service offerings. BIMB HOLDINGS BERHAD 16 Annual Report 2014

CEOs in the group

Encik Rashid bin Ismail Dato’ Sri Zukri bin Samat Dato’ Sri Mohamed Hassan bin Md. Kamil Chief Executive Officer, Group Chief Executive Officer, BIMB Holdings Berhad; Group Managing Director, BIMB Securities Sdn Bhd and Managing Director, Bank Islam Malaysia Berhad Syarikat Takaful Malaysia Berhad 17 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Management Fra mewo r k committee L e a de r ship Review P e r fo m a n c

2 3

1. Dato’ Sri Zukri bin Samat Group Chief Executive Officer P e r spe c tives

2. Encik Mohamad Azlan bin Mohamad Alam Chief Financial Officer

3. Encik Aidil Haznul Zulkifli ab ility Head, Legal, Secretarial & Compliance

4. Encik Dzul Effendy bin Ahmad Hayan acc ount 1 4 Head, Corporate Strategy & Transformation Management

5. Cik Nor Aina binti Kamaruddin Head, Corporate Services

6. Encik Omar bin Atin tements a Audited

Head, Corporate Communications F in a n c i l S t tion 5 6 l Addition a l I nfo r m a tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 18 Annual Report 2014

5-year group financial highlights

2010 2011 2012 2013 2014 RM’000 RM’000 RM’000 RM’000 RM’000 Restated Restated Restated Share Capital 1,066,790 1,066,790 1,066,790 1,493,506 1,493,506

Shareholders’ Equity 1,667,102 1,869,847 2,080,775 2,810,337 2,949,037

Deposits from Customers 26,798,107 28,208,203 32,379,000 36,924,367 40,678,379

Takaful liabilities 4,786,882 5,124,602 5,580,755 6,082,001 6,323,577

Financing, advances and others 11,858,599 14,161,837 19,507,799 23,740,948 29,524,571

Marketable securities 18,755,334 16,311,797 19,162,529 18,409,143 15,528,737

Total Assets 35,939,624 38,246,388 43,939,909 49,674,545 53,030,205

Revenue 2,596,313 2,078,979 2,473,953 2,809,395 2,967,473

Profit before zakat and taxation (PBZT) 588,155 588,924 717,439 819,427 815,384

Net Profit 238,470 236,642 276,220 279,327 532,329

Dividend Less Taxation 24,802 114,679 128,015 164,286 219,545

Net financing and advances over customer deposits = Net financing and advances/ Customer deposits (%) 44.25 50.20 60.25 64.30 72.58

Gross NPF ratio = Gross NPF/Gross financing and advances (%) 4.50 2.61 1.55 1.18 1.14

Net NPF ratio = (Gross NPF – Specific allowance)/(Gross financing and advances Specific allowance) (%) 1.06 -0.17 -0.67 -0.91 -0.82

Earnings per Share (Sen) 22.35 22.18 25.89 25.84 35.64

Net Tangible Assets per Share (RM) 1.56 1.75 1.95 1.88 1.97

Gross Dividend per Share (%) 3.10 10.75 12.00 12.00 14.70

Net Dividend per Share (%) 2.33 10.75 12.00 12.00 14.70 19 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 5-year group Fra mewo r k financial highlights L e a de r ship

Shareholders’ takaful equity liabilities (RM’000) (Rm’000) Review P e r fo m a n c

2010 2014 2010 2014 P e r spe c tives 2011 2013 2011 2013

2012 2012 ab ility 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 1,667,102 1,869,847 2,080,775 2,810,337 2,949,037 4,786,882 5,124,602 5,580,755 6,082,001 6,323,577 acc ount

financing, Total assets advances (RM‘000) and others (RM’000) tements a Audited l F in a n c i l S t

2010 2014 2010 2014 tion l Addition a l I nfo r m a

2011 2013 2011 2013

2012 2012 tion AG M

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 th 11,858,599 14,161,837 19,507,799 23,740,948 29,524,571 35,939,624 38,246,388 43,939,909 49,674,545 53,030,205 18 info r m a BIMB HOLDINGS BERHAD 20 Annual Report 2014

5-year group financial highlights

Deposits Earnings from per Share Customers (SEN) (RM‘000)

2010 2014 2010 2014

2011 2013 2011 2013

2012 2012

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 26,798,107 28,208,203 32,379,000 36,924,367 40,678,379 22.35 22.18 25.89 25.84 35.64

Net Tangible Profit before Assets per Zakat Share and Taxation (RM) (RM‘000)

2010 2014 2010 2014

2011 2013 2011 2013

2012 2012

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 1.56 1.75 1.95 1.88 1.97 588,155 588,924 717,439 819,427 815,384 21 BIMB HOLDINGS BERHAD Annual Report 2014

The Preferred choice for insurance

Medina of Fez in Morocco BIMB HOLDINGS BERHAD 24 Annual Report 2014

5-year group financial highlights

Deposits Earnings from per Share Customers (SEN) (RM‘000)

2010 2014 2010 2014

2011 2013 2011 2013

2012 2012

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 26,798,107 28,208,203 32,379,000 36,924,367 40,678,379 22.35 22.18 25.89 25.84 35.64

Net Tangible Profit before Assets per Zakat Share and Taxation (RM) (RM‘000) Integrity

2010 2014 2010 2014

2011 2013 2011 2013

2012 2012

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 1.56 1.75 1.95 1.88 1.97 588,155 588,924 717,439 819,427 815,384 Takaful Malaysia the first and ONLY listed Takaful Operator in Malaysia

Takaful Malaysia opened 3 new Takaful myCare centres now 27 service centres nationwide.

Named the Best Takaful Company in Malaysia for three consecutive years at the International Takaful Awards 2013-2015

Awarded the Best Performing Stock – Highest As the premier takaful provider in the country, we uphold the highest Returns to level of integrity in protecting our customers and their loved ones from life’s unexpected adversities. Our extensive range of Islamic Shareholders over Three Years under the Finance family and general insurance ensure peace of mind to thousands of Sector at the Edge Billion Ringgit Malaysians of all races and backgrounds across the country. Club Corporate Awards 2013 BIMB HOLDINGS BERHAD 22 Annual Report 2014

Letter to shareholders

Tan Sri Samsudin bin Osman Chairman 23 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Letter to Fra mewo r k shareholders L e a de r ship

Dear Shareholders, Review P e r fo m a n c The financial year ended December 2014 presented fresh challenges to financial institutions globally and here in Malaysia, in both the conventional as well as Islamic sectors. Despite these challenges, BIMB Holdings Berhad (“BHB” or “the Group”) continued to grow from strength to strength, backed by steady performances of each of our core subsidiaries. Guided by strong and professional management teams and supported by solid foundations, we have produced another set of very encouraging P e r spe c tives results to deliver a consolidated operating profit of RM883.6 million, marking an increase of 7.3% from the previous year.

Our performance in 2014 befits our leadership as the first and only listed Islamic ab ility financial services holding company in the region. It gives me great pleasure to share

the highlights of our financial and operational journey over the 12-month period acc ount with you.

OPERATING ENVIRONMENT tements a Audited l F in a n c i l The global economy picked up to a certain extent in 2014, led by strong performance in the US. This had a positive S t impact on developing nations, such as Malaysia, which benefited from higher export earnings. Towards the end of the year, greater global volatilities brought about by geopolitical undercurrents in Eastern Europe and the Middle East, a strengthening US economy as well as falling oil prices, led to an outflow of foreign funds. Although the resulting depreciation of the Ringgit impacted businesses with US denominated costs, it was beneficial to exporters. Coupled with resilient consumer spending and private investment, the country achieved gross domestic product tion (“GDP”) growth of 6.0%, exceeding the 4.3% recorded in 2013. l Addition a l I nfo r m a The outflow of foreign funds led to poor performance by the KLCI, uncertainties in the domestic equities market, and contributed to institutional funds being placed in banks. However, stiff competition for these funds contributed to a higher cost of such deposits. Coupled with lower rates on financing, banking profit margins came under pressure. tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 24 Annual Report 2014

Letter to shareholders

Notwithstanding this scenario, Islamic banking continued to Based on the framework, in 2014 the Government announced a be resilient, outperforming the general industry in terms of Shariah-based Investment Account Platform (“IAP”), expected to growth in assets and financing. Over the last four (4) years, the be implemented in September 2015. The IAP provides participating Malaysian Islamic banking industry’s assets have almost doubled, banks with the framework to offer investors a wider range of from RM351.2 billion at end 2010 to RM625.2 billion at end 2014, Shariah-compliant investment options with differing risk-return accounting for 25.6% of the domestic banking system’s assets. profiles. Capital from these accounts will be directed to diverse Although total financing growth slipped from 17.7% in 2013 to forms of funding inclusive of equities-based funding as well as 15.4%, and is expected to continue to moderate in 2015 due to efforts funding of viable ventures. In this manner, IAP will be beneficial to contain household debt within a more challenging economic both to organisations – generally SMEs – requiring additional funds environment, it is expected to continue to remain fairly robust in to support their growth, as well as to investors willing to take the the near future. risk related to investing in business ventures to reap the possibility of higher returns from a Shariah-compliant mandate. As part of its vision to turn Malaysia into a global Islamic financial services hub, the Government had set a target for Islamic banking Given BHB’s commitment to ensuring the success of all Government assets to make up 40% of the banking system’s total by 2020. This initiatives aimed at enhancing Islamic finance, we are proud of the is to be achieved by greater diversification of Islamic financing fact that Bank Islam is one of four (4) founding financial institutions products in order to enhance the sector’s capability to support real to spearhead the IAP. As the Bank’s holding company, BHB will economic activity. provide all the support needed to nurture the programme, the latest brainchild by Bank Negara Malaysia (“BNM”). These products, however, have to adhere to stipulations of the Islamic Financial Services Act (“IFSA”), introduced on 30 June The IAP adds to previous initiatives introduced to spur Islamic 2013, which clearly distinguishes between deposits and investment finance, such as the Exchange Traded Bond and Sukuk (ETBS); accounts. While Islamic deposits can be withdrawn on demand the introduction by the Securities Commission of a framework for and are guaranteed by Perbadanan Insurans Deposit Malaysia socially responsible sukuk instruments; and the requirement that (“PIDM”), the accounts do not promise any distribution of profits Shariah-compliant counters on Bursa Malaysia Securities Berhad to the account holders. The clients of investment accounts, on the (“Bursa Securities”) have not more than 33% of their cash and other hand, are able to retain funds for a longer period of time debts in conventional accounts. and enjoy the opportunity to earn higher returns subject to more restrictive withdrawal conditions. Investment accounts, without At a more fundamental level, the Government is strengthening the any capital guarantee by PIDM, can be structured with different risk industry via the creation of a more robust regulatory and supervisory and return profiles based on the characteristics of the underlying environment. Adding to measures previously announced under assets and the risk appetites of the investors. the Financial Services Act (FSA)/IFSA which applied to banks and financial institutions, in 2014 BNM widened the scope of the Two (2) main types of investment accounts offered by Islamic Acts to include financial holding companies (“FHCs”), which have banks in Malaysia are Restricted Investment Accounts (“RIA”) or been defined as “apex entities of financial groups which are not Unrestricted Investment Accounts (“URIA”). RIA is an investment persons… and approved by BNM”. account where a specific mandate is given to the bank with regard to the purpose, asset class, economic sector and period of investment Targeting these FHCs, which include BHB, BNM is developing whereas URIA allows the bank to make the ultimate investment prudential standards to ensure they are able to meet capital decision without specifying any particular restriction or condition. requirements that support risks originating from all entities within the group including those that are unregulated; and to reduce For us, the Investment Account Framework is timely as it reflects leverage associated with multiple gearing of capital which can the concept of Islamic finance which emphasises on risk-sharing, overstate a group’s capital strengths and increase contagion risk. strengthening further the link of finance to the real economy. 25 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Letter to Fra mewo r k shareholders L e a de r ship

At the same time, BNM is strengthening the governance framework The respectable performance of our banking and takaful businesses of FHCs by imposing more stringent requirements on independent combined to produce a consolidated operating profit of RM883.6 directors and increasing their representation on the boards of both million which, as mentioned earlier, was a 7.3% or RM60.5 million financial institutions as well as financial groups. increase from the RM823.1 million recorded in 2013.

Within the takaful sector, IFSA has called on operators to streamline Our consolidated profit before zakat and taxation (“PBZT”), Review their family and general businesses by June 2018. Other than however, was marginally lower at RM815.4 million, compared with P e r fo m a n c IFSA, the takaful sector has been further strengthened by the RM819.4 million in 2013. This was due to the higher cost of financing Risk Based Capital for Takaful (RBCT) Framework, enforced as of for our sukuk of RM68.2 million as opposed to RM3.3 million in 1 January 2014, demanding greater capital adequacy. In essence, 2013. The sukuk was raised to fund the acquisition of Bank Islam both regulations are shaping a more robust takaful industry, which shares in 2013. The acquisition meant greater recognition of Bank would place takaful providers in a better position to compete with Islam’s profits in our statement of accounts, leading to a significant conventional players. 90.6% increase (of RM253.0 million) in our net profit attributable to shareholders for the year under review. Consequently, our earnings As it stands, the takaful sector in Malaysia is growing at double- per share (EPS) also rose by 37.9% to 35.64 sen per share, from 25.84 P e r spe c tives digit rates, far outpacing the conventional sector as more consumers sen per share in the previous year. are seeing the value of innovative, value-add Shariah-based takaful products. With stronger governance, takaful operators can expect BHB’s asset quality improved further, with our gross impaired to create greater churn from the conventional sector to takaful to financing ratio decreasing by four (4) basis points to 1.14% from further accelerate their growth path. end December 2013 to end December 2014. This was due to Bank ab ility Islam’s prudent credit underwriting standards and aggressive While the IFSA and other regulatory frameworks, including Basel collection efforts. III and the US Government’s recently imposed Foreign Account acc ount Tax Compliance Act (FATCA), impose different sets of challenges to At the same time, the Group’s capital position remained healthy, local financial institutions, the end result will be a much enhanced above BNM’s minimum requirements, with Common Equity Tier 1, financial ecosystem that is transparent, responsible and efficient. Tier 1 and Total CAR at 12.2%, 12.2% and 13.4% as at 31 December Accordingly, BHB and our subsidiaries embrace the opportunity to 2014 respectively.

streamline our operations in line with the emerging frameworks, tements a Audited l F in a n c i l

and look forward to reaping the fruit of our current labour in the Given our performance, on 25 November 2014, the Group declared S t near future. an interim single-tier dividend of 14.7 sen per share, amounting to RM219.5 million, or 172.8% of our net profit for the financial year. FINANCIAL PERFORMANCE Upon its payout on 13 January 2015, 82.3% or RM180.6 million was reinvested by shareholders in 48,703,800 new ordinary shares

Despite operating in a more stringent and competitive environment, of RM1.00 each at RM3.71 per share via our inaugural Dividend tion BHB’s financial performance in 2014 was encouraging. Our total Reinvestment Plan (DRP). net income grew by 1.3% to RM2.1 billion on the back of strong l Addition a l net financing growth by Bank Islam which cushioned the impact of I nfo r m a lower sales generated by our Family Takaful business.

Concerted efforts to increase our cost efficiencies led to BHB’s operating overheads decreasing by 2.9% to RM1.2 billion. This is a tion

notable achievement given that we continued to invest in our talent AG M and capital expenditure to support business franchise growth. I am th 18 further pleased to share that our prudent and diligent management info r m a of operating overheads saw our cost to net income ratio improve from 59.3% to 56.8%. BIMB HOLDINGS BERHAD 26 Annual Report 2014

Letter to shareholders

BANK ISLAM Redefining Products, Building Capital

Bank Islam is the country’s first Shariah-based bank and the first Bank Islam was the first bank in Malaysia to introduce chip-based Islamic bank to be established in the region. It continues to be ATM cards; the first to launch mobile banking service without the symbol of Islamic banking in the country, leading the way in Internet access; and the first to launch floating rates for personal introducing innovative products and solutions as it pursues its financing, among others. Continuing with this string of pioneering vision to become a “global leader in Islamic banking”. In 2013, BHB activity, in 2014 it introduced yet another first for the country – the acquired 49% equity of Bank Islam that had previously been owned very first Restricted Investment Account under IFSA 2013 called Al- by Lembaga Tabung Haji and Dubai Financial Group, following Ansar. which the Bank has become a 100% owned BHB subsidiary. It contributes to about 80% of the Group’s profits. Following the Budget 2015 announcement that Lembaga Tabung Haji would allocate RM200 million towards financing Bumiputra Financial Performance entrepreneurs and SMEs, the Bank made the necessary investments in its IT infrastructure to support the new product, and set up a As a result of concerted efforts to grow the business, Bank Islam dedicated team to market it. The result is the Shariah-compliant recorded a PBZT of RM702.1 million, which was 3.8% higher Al-Ansar, which was approved by BNM in early March 2015, and than was achieved for the financial year 2013. Its net financing was launched on 2 April 2015 by the Prime Minister of Malaysia, assets grew by 24.4% to RM29.5 billion as at end December 2014, YAB Dato’ Sri Mohd. Najib Tun Abdul Razak. Alhamdulillah, we accompanied by a 17.3% increase in fund-based income from are very proud of Al-Ansar as it is the brandchild of Bank Islam and financing of RM234.7 million. At the same time, foreign exchange the first of its kind in Malaysia. transactions and net gain from the sale of financial assets available- for sale contributed to a 2.9%, or RM8.4 million, increase in non- In offering financing to recipients, the Bank will be guided by a fund based income. specific mandate with regard to the purpose, asset class, economic sector and period of investment as specified by Lembaga Tabung Bank Islam ended the year with a RM3.8 billion increase in Haji. Al-Ansar will be made available until 31 December 2020. customer deposits, marking a 10.1% growth to total RM41.0 billion. Its current and savings accounts (“CASA”), meanwhile, grew by The Bank also received approval from BNM to issue a Subordinated 7.3%, or by RM1.1 billion, leading to a CASA ratio at end December Sukuk Murabahah Programme (sukuk) valued up to RM1 billion 2014 of 38.1%, surpassing that of the Islamic banking industry in with a tenure of 30 years from the date of first issuance. Proceeds general in the country, which stood at 24.8%. from the sukuk will be used to enhance the Bank’s capital adequacy ratio to support more robust organic growth. The first tranche of the Continued focus on asset quality saw the Bank’s gross impaired programme, amounting to RM300 million, was launched in April financing ratio at year end further improve to 1.14% from 1.18% a 2015 and was subscribed RM100 million each by Tabung Haji, EPF year ago, while its net impaired financing ratio stood at -0.82%. Both and KWAP. metrics surpass those of the banking system, which experienced a 1.66% gross impaired ratio and -0.11% net impaired ratio as at year The Bank continued to make steady progress on each of the end. six pillars of its Hijrah to Excellence (“H2E”) transformation programme, namely: Robust Organic Growth, Service Excellence, In fact, I am proud to note, some of the Bank’s key performance Shariah-led Innovation, Resource Optimisation, Employee of indicators for the year 2014 measure favourably against those of Choice and Regionalisation. the banking system. Its pre-tax return on equity was 19.9% against the banking system’s 15.2%; and pre-tax return on assets was 1.6% Its Organic Growth is reflected in the Bank’s sound financial against 1.5%. performance. This, in turn has been supported by the other pillars of the H2E programme. 27 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Letter to Fra mewo r k shareholders L e a de r ship

Towards Service Excellence, the Bank has been leveraging on Finally, within a fast growing and competitive niche sector such as greater use of technology to increase its efficiencies and service Islamic banking, it is only to be expected that there will be a war for delivery. Further enhancing its service culture, various initiatives talent. Bank Islam’s strategic response to this is to establish itself have been implemented to instil a customer-centric mindset among as an Employer of Choice, offering employees a stimulating work employees, and especially frontliners who deal directly with the environment that inspires and rewards excellence while caring for Bank’s retail and corporate clients. All frontline staff are required to employees’ well-being. In addition to identifying and developing Review attend Service Excellence Training which reinforces the importance leaders, the Bank encourages greater engagement across all levels P e r fo m a n c of delivering superior service. via a culture of sharing and respect.

These efforts have not been in vain. During the year, the Bank was Syukur Alhamdulillah, Bank Islam was voted the 16 most popular named the Most Outstanding Retail Bank at the Kuala Lumpur employer in the 100 Leading Graduate Employers Poll conducted Islamic Finance Forum (KLIFF) 2014. It also won the International by GTI Media and powered by the trendence Graduate Barometer, Banker’s Best Customer Services Provider 2014 for Malaysia award up from 51 in 2013. Even better, the Bank was rated among the top in United Kingdom. three (3) employers in the Banking and Financial Services sector by the same survey. One of the Bank’s talents, Ustaz Mohd Nazri P e r spe c tives In terms of Shariah-led innovation, Bank Islam continued to develop Chik meanwhile did us proud by being named the most Promising more products and solutions not only for customers but also for the Young Banker by The Asian Banker Awards 2014; while the Bank’s industry. To remain competitive in the market, it launched the Term MD Dato’ Sri Zukri bin Samat – who is now also our Group CEO – Deposit-i (Tawarruq) [TDT-i], a PIDM guaranteed deposit account, added to his list of accolades by being awarded the Banking CEO offering the flexibility of managing funds according to short or of the Year – Asia by International Banker Awards 2014 held in ab ility long-term needs. London, United Kingdom.

It also launched a number of debit cards – the MyAngkasa TAKAFUL MALAYSIA acc ount Membership Card for members of the National Cooperative Body of Malaysia (ANGKASA); the co-branded Bank Islam Team Takaful Malaysia was the first Islamic insurance provider to be Harimau Visa Debit Card-i for Harimau Malaysia football fans; and set up in the country and is today the market leader in the Family another University Debit Card-i (UniDebit), this time for students Takaful segment, with particular strengths in Employee Benefit and

at Universiti Malaysia Pahang (UMP). Bancatakaful protection solutions. Takaful Malaysia stands out in tements a Audited l F in a n c i l

the marketplace for its 15% Cash Back to General Takaful customers S t Meanwhile, its wholly-owned subsidiary BIMB Investment for no claims made during their year of coverage. Management Berhad launched the BIMB i Flexi Fund, a Shariah- compliant mixed asset fund structured to offer investors long-term Financial Performance capital appreciation.

Amid a challenging environment that included curbs on personal tion By virtue of Resource Optimisation, the Bank intends to cross sell loans, Takaful Malaysia continued to focus on prudent underwriting, and upsell its products; further improve its systems and processes; tighter management expenses control and proactive investment l Addition a l as well as create greater cost efficiencies and productivity. Among management to deliver another set of respectable financial figures. I nfo r m a the key achievements within this pillar was reducing the waiting time of walk-in customers at Bank Islam branches. During the year, Although the year saw its operating revenue decline by 3.5% to 94% of the branches have achieved their minimum waiting time of RM1.65 billion, Takaful Malaysia’s PBZT increased by 4% from five (5) minutes or less. RM179.3 million in 2013 to RM186.7 million. Its profit after tax and tion

zakat (PATZ) grew by 3%, to RM138.7 million from RM134.4 million. AG M

This was largely attributable to lower management expenses. th 18 info r m a BIMB HOLDINGS BERHAD 28 Annual Report 2014

Letter to shareholders

The total asset size increased by 4% to RM7.2 billion, supported A key differentiator of Takaful Malaysia is its Cash Back offerings. by enhanced underwriting for mortgages and General Takaful In its campaigns, therefore, Takaful Malaysia places much emphasis products. These cushioned the RM244 million drop in take-up of on driving greater awareness of the unrivalled value it offers group credit products following the implementation of BNM’s customers. more stringent personal financing rules, which led to a decrease in total gross contribution by 5% to RM1.41 billion. Takaful Malaysia’s “No Claims? Get 15% Cash Back For Motor Insurance” outdoor advertising campaign was a case in point. This Segment-wise, General Takaful’s gross contribution grew 5% from was complemented by advertising via other channels and through 2013 to close at RM451.3 million, while gross contribution from strategic partnerships to strengthen the Takaful Malaysia image, Family Takaful decreased by 9% to RM958.1 million as a result of a and educate the non-Muslim market segment of the relevance significant drop in group credit products. of its products in meeting their needs. In its point-of-purchase advertising for Motor Takaful, Takaful Malaysia made the most I am pleased to share that Takaful Malaysia was able to complement of the opportunity to introduce consumers to its extensive range its sound underwriting performance with equally impressive of products, and to engage specifically with potential non-Muslim investment results despite the challenging 2014 investment customers. environment. There were significant shifts in the global financial market landscape where the economic growth of many countries Takaful Malaysia also took its advertising collaboration with Tesco in Asia grew at a more subdued pace. Locally, the financial market Stores Malaysia one step further. From conventional advertising also registered a lower growth than anticipated. Nonetheless, posters, it launched into full-wall wraps covering every inch maintaining a cautious approach, particularly for equities and of the side walls of the travellator walkaway at 15 Tesco outlets sukuk, and greater focus on portfolio diversification, the Company throughout Malaysia. This advertising blitz will run for one year delivered a sustainable five-year average investment yield of more from June 2014. than 6% per annum. Targeting corporate customers, and especially those who have Innovating on Products, Building the Brand subscribed to its Employee Benefits protection plans, Takaful Malaysia launched the Takaful myCorporate portal as an online During the year, Takaful Malaysia maintained its edge by meeting one-stop centre. With just a few clicks of the button, corporate customers’ needs with innovative products, and focusing on customers can update information on their employees and these excellent service delivery. In addition, it enhanced its infrastructure will be incorporated instantly for immediate coverage. The portal and operations, grew its network, empowered its agency force also enables clients to access all information relating to their and established strategic partnerships with corporate clients and companies’ takaful insurance packages and certificates. bank partners. These, coupled with more aggressive marketing and branding campaigns, helped Takaful Malaysia to further expand its Further improving customer access to its services, Takaful Malaysia market share. opened its third Takaful Retail Centre at the Lembaga Tabung Haji Islamic Financial Service Centre (“IFiC”) at Jalan Tun Razak, Kuala The most significant product launch was that of the Takaful Lumpur. Takaful Malaysia was inspired by the one-stop centre myHealth Protector, an innovative approach to healthcare offering concept of IFiC to convert its existing Takaful myDesk at Lembaga an attractive range of in- and out-patient benefits and a choice Tabung Haji’s headquarters into a Takaful Retail Centre. The of eight (8) medical plans at affordable premiums. The product Takaful Retail Centre will not only function as a collection centre for also increases the maximum entry age to 70 years, enabling those both General and Family products but will also act as a servicing who are healthy and without medical coverage to be insured. As centre to assist customers in their certificate servicing and claim an added value proposition, Takaful myHealth Protector extends submissions. Takaful Malaysia’s 15% Cash Back promise to its health care plan participants. 29 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Letter to Fra mewo r k shareholders L e a de r ship

Internally, Takaful Malaysia continued to stay lean and agile in its Nevertheless, market volatility increased the value of dealing and operations to deliver lasting reserves and sustainable organisational brokerage income at BIMB Securities Sdn Bhd (“BIMB Securities”) efficiencies. Leveraging on enhanced systems and processes, it in 2014. The company achieved an increase of 18% in value of managed to reduce costs and its inventory as it further grew its dealing compared with 2013. This also led to a 16% increase in business. gross brokerage income to RM14.904 million compared with RM12.794 million in 2013, and a 13% growth in the total net dealing Review Takaful Malaysia has consistently been recognised for its high income from the previous year. The stockbroking group (including P e r fo m a n c level of operational effectiveness and the trust it engenders from Nominees companies) recorded a total income of RM14.5 million, customers. For three (3) consecutive years at the International an increase of 10% compared with the previous year, but with a Takaful Awards, Takaful Malaysia won the title of the Best Takaful lower PBZT of RM0.6 million. Other investments yielded lower Company in Malaysia in recognition of the superior quality of its returns compared with the previous year, thus contribution to the wide range of solutions to meet customer’s needs. profit was much lower.

Takaful Malaysia was also a top-three winner in three (3) categories The Company also rolled out several technological initiatives in of The Edge Billion Ringgit Club Corporate Awards 2014. The 2014, such as the Intranet and Document Management System, P e r spe c tives company clinched second place for the Best Performing Stock - for greater work efficiency and to reduce paper use. In addition, Highest Returns to Shareholders Over three (3) Years; third place eBroking initiatives were deployed whereby share margin clients for the Most Profitable Company - Highest Return on Equity Over are now able to trade via the online trading system. ePayment via three (3) Years; and third place for the Highest Profit Growth www.bankislam.com.my and www.Maybank2u.com.my were also Company - Highest Compound Growth in Profit Before Tax Over introduced, allowing clients to pay BIMB Securities via the banking ab ility three (3) Years. internet portal. Further initiatives with Bursa Securities were also made during the year, such as the trade confirmation messages BIMB SECURITIES sent via Dropcopy FIX connection files and the introduction of acc ount BursaMktPlc (http://www.bursamarketplace.com), a platform It was a challenging year for investors, especially the fourth created by Bursa Securities for the public to interact with Opinion quarter. Foreign funds selling coupled with battering of the oil and Leaders at the different stockbroking companies. gas sector were main reasons for the roller coaster ride. For the year,

the FBMKLCI lost 5.66% as opposed to the Emas Shariah Index SYARIKAT AL-IJARAH tements a Audited l F in a n c i l

which declined by 4.17%. The below expectation performance was S t attributed to a massive outflow of foreign funds totalling RM6.9 Syarikat Al-Ijarah Sdn Bhd is the Group‘s leasing arm. For the billion for the year from a net inflow of RM3.1 billion in 2013. financial year ending December 2014, it posted a PBZT of RM0.35 million, which was 16.7% lower than the PBZT of RM0.42 million in 2013. tion l Addition a l I nfo r m a tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 30 Annual Report 2014

Letter to shareholders

CORPORATE GOVERNANCE These Committees will meet regularly to discuss strategic issues within the Group, thus ensuring BHB not only meets the regulatory The Board of Directors of BHB has always maintained the requirements but also maintains the highest standards in our highest level of corporate governance to ensure the integrity internal control, effective capital and risk management, create and transparency of our operations. Our corporate governance business synergies within and drive the business objectives of the framework is guided by the Malaysian Code on Corporate Group. Governance (MCCG) 2012 and is constantly updated to reflect changes in the regulatory environment. Our new governance structure underlines the Group’s commitment to strengthening the Islamic financial services industry in the country, aiding in the establishment of Malaysia as a regional In line with the IFSA and its requirement for Islamic financial Islamic financial hub. In the process, we will also elevate BHB as the holding companies to have greater oversight and control over the premier Shariah-compliant financial services group in the country. activities of the companies within its fold, BHB has enhanced our governance structure by establishing at the Board level, a new Group Board Risk Committee, whilst at the management level, a new Group Management Committee and Group Enterprise Risk Management Committee which will be implemented in FY2015.

Board of Directors Board Nomination Audit and Group Board Remuneration Committees and Assessment Examination Risk Control Committee Committee Committee Committee

Group Chief Executive Officer

Group Group Enterprise Risk Committees M anagement Management Committee Management Committee (GMC) (GER) 31 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra Letter to Fra mewo r k shareholders L e a de r ship

CORPORATE RESPONSIBILITY As the US economy continues to surge forward, much of Europe and other economic powerhouses such as Japan and, to some extent As a responsible Islamic organisation, BHB makes regular zakat China, are still grappling to fend off deflationary pressures. This (business tithes) payments to the Islamic authorities in the different has led to a slew of monetary easing measures, with a number states. In 2014, in addition to paying zakat, Bank Islam developed of central banks launching into quantitative easing (“QE”) programmes to resuscitate demand. In Malaysia, to consolidate new zakat computation guidelines for the industry, making it easier Review for us and all Islamic corporations to perform their duty. its fiscal health, the Government has revised allocations for P e r fo m a n c various sectors under Budget 2015 in anticipation of a challenging Over and above zakat contributions, we play an active role in the environment exacerbated by low oil prices. Consequently, fiscal communities where we have a presence by contributing to the deficit is projected to reach 3.2% of GDP from the initial estimate of social and economic well-being of those who are underprivileged 3.0%. In the same vein, GDP growth forecast in 2015 was lowered to or marginalised. 4.5% and 5.5% from 5.0% and 6.0% previously.

Through our subsidiaries, we have “adopted” a couple of At BHB, we expect the challenging financial landscape to further orphanages and contribute to their administration. In addition, narrow the net income margin. Exacerbating the situation, the P e r spe c tives our employees dedicate their own personal time to spend with the Goods and Services Tax (“GST”) implemented on 1 April 2015, children, especially during festive occasions such as Aidilfitri. Our is likely to increase banking and takaful costs to a certain extent. contributions to society are not confined to Malaysian shores, but Although the GST is widely thought to increase inflation, at least in have been extended to those in need overseas. Over the past few the initial stages, the continued decline in commodity and oil prices ab ility years, we have been supporting the Palestinian cause via a variety will keep the consumer price index in check. of channels. Demand for financing has been decreasing gradually, and could acc ount Although our industry does not contribute significantly to climate continue into 2015. With innovative and attractive financing change, we take our responsibility to protecting the natural products, however, Bank Islam is confident of being able to shore environment seriously. Towards this end, we have been educating up its financing portfolio. This will be complemented by targeted children about the importance of environmental conservation while efforts to increase the Bank’s deposits as well as investment actively participating in various activities – such as rehabilitating accounts. As the Bank continues with its H2E programme, it will

mangrove forests – that directly enhance our ecosystem and further strengthen its fundamentals and be better positioned to tements a Audited l F in a n c i l

safeguard the environment for future generations. create greater demand for Islamic banking, as well as to capitalise S t on opportunities that will arise from a supportive and vibrant OUTLOOK ecosystem.

A much repeated sentiment within the corporate realm today Takaful Malaysia will maintain an active management strategy is that only one thing is certain, namely uncertainty. This seems coupled with prudent underwriting and investment activities. tion to accurately describe the global environment, which has been In anticipation of more corporations and multinationals entering extremely volatile over the last few years, and shows no sign of the takaful market, it will enhance its focus on innovative and l Addition a l settling into any predictable pattern. customer-centric products, and its culture of customer service I nfo r m a excellence. It will also reinforce its brand name and reputation via strategic marketing campaigns that drive home its unique 15% Cash Back proposition. tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 32 Annual Report 2014

Letter to shareholders

Building on its multi-channel distribution network, it aims to I would also like to express my deepest appreciation to members of outpace the market and firmly establish itself as the preferred choice the Board of Directors of BHB as well as of our subsidiary companies not just among takaful companies but all conventional insurance for their wise counsel which has helped the Group maintain our providers. An area of focus will be Islamic financing products. As steady momentum of growth. Shariah-compliant financing gains traction in the market, there will be a greater need for takaful as a valid risk transfer mechanism, and On behalf of the Board of Directors, meanwhile, I would like to Takaful Malaysia intends to fully explore the potential of this niche. take this opportunity to extend our gratitude to the Management of BHB for its leadership. In particular, we would like to thank our We expect the local equity market to continue to be challenging as former Group Managing Director/Chief Executive Officer, Dato’ a result of dampened sentiments from the outflow of foreign funds Johan bin Abdullah, who has steered BHB Group so ably for the and massive sell-down in the oil and gas sector. At the same time, last seven (7) years. Dato’ Johan has recently been appointed as given the market’s current valuation, and Japan’s commitment to Deputy Group Managing Director and Chief Executive Officer of heightened QE, the local bourse will be well supported by domestic Lembaga Tabung Haji and we wish him all the best in his future liquidity. The global financial system, too, will be flushed with undertakings. Meanwhile, we welcome on board our new Group liquidity from the cautionary monetary policies of most central Chief Executive Officer, Dato’ Sri Zukri bin Samat who is also the banks that have been pushing down interest rates as a means of Managing Director of Bank Islam. With his extensive experience encouraging growth. Overall, the outlook for stockbroking in in the Islamic banking and financial industry, we have every 2015 will be reflective of the year 2014. Barring any unforeseen confidence of Dato’ Sri Zukri guiding BHB Group to the next phase circumstances, there may be a slight rebound in the market which of its ongoing exciting journey. may improve the situation towards the second half of 2015. As for our employees, I speak for the Board when I say that we ACKNOWLEDGEMENTS truly appreciate your commitment to the Group, and your passion to see us achieve our shared vision and goals. Keep up the excellent BHB is at a very exciting phase of our journey, in which we are work, and BHB will certainly continue to Lead the Way in Islamic both shaping as well as being shaped by various forces that are Financial Excellence. promoting a more transparent, efficient and sustainable Islamic financial system. Our successes to date are the culmination of the contributions of various stakeholders, from our parent organisation to our subsidiaries, our business partners and customers, all of whom I would like to acknowledge. Thank you.

Of special note, I would like to thank the regulators – namely BNM, Bursa Securities and the Minority Shareholder Watchdog Group (MSWG), among others – as well as analysts, fund managers and Tan Sri Samsudin bin Osman members of the media, for their support. To our highly valued Chairman shareholders, thank you for your belief in our ability to deliver and for your active participation at our Annual General Meeting. 33 BIMB HOLDINGS BERHAD Annual Report 2014

Committed towards responsible corporate practices

Sheikh Zayed Mosque in Abu Dhabi, United Arab Emirates BIMB HOLDINGS BERHAD 36 Annual Report 2014

Letter to shareholders

Building on its multi-channel distribution network, it aims to I would also like to express my deepest appreciation to members of outpace the market and firmly establish itself as the preferred choice the Board of Directors of BHB as well as of our subsidiary companies not just among takaful companies but all conventional insurance for their wise counsel which has helped the Group maintain our providers. An area of focus will be Islamic financing products. As steady momentum of growth. Shariah-compliant financing gains traction in the market, there will be a greater need for takaful as a valid risk transfer mechanism, and On behalf of the Board of Directors, meanwhile, I would like to Takaful Malaysia intends to fully explore the potential of this niche. take this opportunity to extend our gratitude to the Management of BHB for its leadership. In particular, we would like to thank We expect the local equity market to continue to be challenging as our former Group Managing Director and Chief Executive Officer, a result of dampened sentiments from the outflow of foreign funds Dato’ Johan bin Abdullah, who has steered BHB Group so ably for and massive sell-down in the oil and gas sector. At the same time, the last seven years. Dato’ Johan has recently been appointed as given the market’s current valuation, and Japan’s commitment to Deputy Group Managing Director and Chief Executive Officer of heightened QE, the local bourse will be well supported by domestic Lembaga Tabung Haji and we wish him all the best in his future liquidity. The global financial system, too, will be flushed with undertakings. Meanwhile, we welcome on board our new Group liquidity from the cautionary monetary policies of most central Chief Executive Officer, Dato’ Sri Zukri bin Samat who is also the banks that have been pushing down interest rates as a means of Managing Director of Bank Islam. With his extensive experience encouraging growth. Overall, the outlook for stockbroking in in the Islamic banking and financial industry, we have every 2015 will be reflective of the year 2014. Barring any unforeseen confidence of Dato’ Sri Zukri guiding BHB Group to the next phase circumstances, there may be a slight rebound in the market which of its ongoing exciting journey. may improve the situation towards the second half of 2015. As for our employees, I speak for the Board when I say that we ACKNOWLEDGEMENTS truly appreciate your commitment to the Group, and your passion to see us achieve our shared vision and goals. Keep up the excellent BHB is at a very exciting phase of our journey, in which we are work, and BHB will certainly continue to Lead the Way in Islamic both shaping as well as being shaped by various forces that are Financial Excellence. promoting a more transparent, efficient and sustainable Islamic financial system. Our successes to date are the culmination of the Caring contributions of various stakeholders, from our parent organisation to our subsidiaries, our business partners and customers, all of whom I would like to acknowledge. Thank you.

Launched Programme SL1M Latihan 1Malaysia Bank Islam paid out RM12,028,983 zakat to all 14 states

takaful malaysia channelled RM1,081,382 to all 14 state zakat collection centres

We care about our customers and Malaysian society as a whole. As we grow, we want Malaysians to grow with us. We therefore give generously of our time and funds to help the underprivileged break out of the poverty cycle and march with the rest of the country into a brighter future. BIMB HOLDINGS BERHAD 34 Annual Report 2014 corporate responsibility

COMMUNITY

MARKETPLACE

WORKPLACE As the holdings company of premier Islamic banking, insurance and securities operations, the principles of ethics and integrity are ingrained into BIMB Holdings Berhad (“BHB”)’s blueprint. We are guided in all our operations and business decisions not only by financial considerations but also by the impact of our actions on ENVIRONMENT our stakeholders – be they our customers, our partners, our employees or the community at large. Our Corporate Responsibility (“CR”) actions have We have been giving back to the communities that support strengthened our market reputation and added to the value of BHB, which will go a long way towards us over the years via outreach programmes, lending ensuring our sustainability. We take great pride in a hand with various projects and providing financial all our CR undertakings and present an outline of support where required. In the process we have integrated our activities in the following pages, under the four ourselves fully with communities at the grassroots (4) broad areas of the Community, Marketplace, Workplace and the Environment. level thus bridging existing gaps in the socio economic divide. As a responsible corporate organisation, we also contribute to the elevation of professional standards in the financial landscape while playing our part in mitigating environmental issues such as climate change and diminishing biodiversity. 35 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra corporate Fra mewo r k responsibility L e a de r ship

COMMUNITY Review Within the community, BHB along with P e r fo m a n c our subsidiaries Bank Islam and Takaful Malaysia have a tradition of supporting worthy causes; providing financial and other forms of aid to the underprivileged; supporting the attainment of sound education among marginalised children; and promoting an ethical, caring society through a better understanding and P e r spe c tives practice of the tenets of Islam.

Caring for the Underprivileged the donation of RM23,000 to help improve During the year, we continued to support their livelihood. Under the Program Rumah a number of social enterprises and Bantuan Bank Islam, meanwhile, it spent ab ility organisations that provide aid to the under- RM627,000 on building homes for the poor. served.

Other donations from the Bank included acc ount Together with the International Union of an amount of RM244,700 towards Menuju Braille Quran Services, we contributed Destini Anak Bangsa, a fund for poor RM15,000 to the Persatuan Braille Malaysia students; the Development of Wakaf to standardise symbols in braille Qurans land in the Federal Territory; charitable worldwide. We also presented two (2) organisations; selected asnaf (recipients) in defibrillator machines worth RM25,000 Perlis and a van for the Majlis Agama Islam tements a each to Lembaga Tabung Haji. dan Adat Istiadat Melayu Perlis. Audited l F in a n c i l S t

Other beneficiaries of our donations These donations were over and above its included the Persatuan Kebajikan Anak- contributions to the state zakat (business Anak Yatim Islam Wilayah Persekutuan tithes) centres, which amounted to Kuala Lumpur (PERKAYATIM) which RM12,028,983. RM20,000 to the Tabung Sumbangan TH- works with orphans; and the Majlis Orang- Palestin under a programme managed by tion Orang Besar DiRaja Kelantan which For its part, Takaful Malaysia contributed the Prime Minister’s Department. We also undertakes various charitable activities. RM1,814,539 to 90 charitable organisations contributed RM24,000 to the Persatuan l Addition a l

and needy individuals, in addition to VIVA Palestina Malaysia to sponsor the I nfo r m a One of the highlights of Bank Islam’s channelling a total of RM1,081,382 to the 14 attendance of 30 blind Palestinian children community programmes during the year state zakat collection centres. at a Quran memorisation camp in Gaza. was a gotong-royong (clean-up) at Rumah Ehsan Kuala Kubu Bharu old folks’ home Palestinian Aid Relief Educational Support

where volunteers from the Bank helped to tion brighten up the house and its surroundings We do not confine our outreach Firm in the conviction that education is AG M while also spending time with the residents. programmes to local shores, but extend a powerful socio-economic enabler, we th 18 The Bank also donated hospital beds and aid to deserving communities wherever give generously to various programmes info r m a hydraulic shower trolleys worth RM30,000 in the world they may be. For the second and initiatives to ensure every child in the to the home. In addition, it brought new year running we provided support to country has the resources to enjoy a sound meaning to the lives of fishermen with Palestinians in the Gaza Strip by donating education. BIMB HOLDINGS BERHAD 36 Annual Report 2014 corporate responsibility

The year 2014 saw us donate RM5,000 to the In addition, BHB donated RM4,800 to Kumpulan Wang Amanah Pelajar Miskin An-Najjah Malaysia, an NGO that focuses in support of the Ministry of Education’s on the underprivileged and new Muslim efforts to reduce the school drop-out rate to converts; and purchased 39 copies of a zero. At year end, we also held an inaugural coffee table book entitled Expressions of Back To School ceremony which our Group Merdeka – A Pictorial Journey in support Managing Director/CEO Dato’ Johan bin of Yayasan Pendidikan Islam. For its part, Abdullah presented complete sets of school Bank Islam contributed a total of RM64,350 uniforms and school bags to the children of towards the renovation of surau (prayer deserving BHB staff. halls) in schools, as well as to support the community activities organised by various Bank Islam presented a total of RM21,205 mosques. including school items to children of Muallaf via the Pertubuhan Kebajikan Both our subsidiaries contributed Muallaf Daerah Kluang and donated towards the Haj pilgrimage, with Bank used computers to SK (L) Jalan Batu in Islam donating RM210,000 to the Majlis Kuala Lumpur; SMK Bandar Tenggara Penghargaan Sahabat Korporat TH 1435H; Bank Islam contributed a total of in Kulaijaya, Johor and SMK Paloh in and Takaful Malaysia sponsoring RM84,000 RM578,750 to various activities targeted Kluang, Johor. At the tertiary level, the in the form of books entitled Panduan for the underprivileged as well as to show Bank presented RM45,000 to Universiti Ibadah Haji Wanita, a handbook for women its appreciation of personnel who perform Teknologi MARA (UiTM) Shah Alam for performing Haj. significant public duty such as the police, its annual Invention, Innovation & Design immigration and customs officers, doctors Exposition 2014 (IIDEX). Ramadan Activities and nurses and members of the media.

UiTM was also the beneficiary of The spirit of volunteerism and caring truly Continuing with tradition, Takaful Malaysia sponsorship by Takaful Malaysia, which shines at BHB and our subsidiaries during donated RM100,000 to Pertubuhan Al- continued to provide financial support the month of Ramadan, when we go the Khaadem Home of Hope in addition to to its Actuarial Science students. For the extra mile to bring smiles to those who are hosting a Majlis Berbuka Puasa at the home second consecutive year, Takaful Malaysia less privileged. in Shah Alam which houses 50 children. contributed RM50,000 to diploma and Takaful Malaysia also took 64 children undergraduate students in this field, which During the year under review, BHB from Pertubuhan Kebajikan Anak-anak supplies the highly skilled statisticians donated RM7,200 towards the preparation Yatim Al-Nasuha (Rumah Al-Nasuha) on a needed by the insurance industry. of 15 pots of bubur lambuk (savoury shopping spree at the One Utama Shopping porridge) at Masjid Jamek Kampung Baru, Mall. This was the fourth consecutive year Moral and Ethical Development Kuala Lumpur which were distributed by that Takaful Malaysia had organised this volunteers led by our Group Managing event. In addition, its senior management Both BHB and Bank Islam contributed Director/CEO, Dato’ Johan bin Abdullah. presented duit raya (money) and goodies to towards greater understanding of Islam the children. via sponsorships of seminars and other knowledge-sharing events. BHB supported Persatuan Amanah Hawi Al-Khairat’s one (1)-day seminar on Modern Society and the Tolerance of Muhammad; while our subsidiary channelled funds towards the IImFest Malaysia Conference 2014 and Seminar Pengurusan Kualiti Islam (I-QAM 2014). 37 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra corporate Fra mewo r k responsibility L e a de r ship

The group also made significant A key stakeholder group are our customers, contributions to various industry award whose interests drive our commitment to ceremonies that serve to enhance standards deliver innovative products and exceptional and inspire a shift in mindset towards service. Bank Islam has continuously sustainability. Together, we contributed created waves with its pioneering offerings, a total of RM154,085 to: the Malaysian- such as TAP Mobile Banking-i service,

MARKETPLACE ASEAN Corporate Governance Index one of the first mobile banking services Review BHB and our subsidiaries have been 2014 and Award Ceremony; the Islamic to be launched in the country; the first P e r fo m a n c strengthening our position in the Finance News Awards Ceremony 2014; floating rates for personal financing; and marketplace by intensifying our stakeholder the Press Awards Ceremony organised by the first multi-purpose university debit engagement while also contributing the Malaysian Press Institute; the CEO of card, designed especially for the students towards the enhancement of the financial the Year Asia 2014 and the Global Islamic and staff of Universiti Malaysia Kelantan sector in Malaysia. Finance Awards 2014. (UMK). In 2014, a similar multi-functional debit card was introduced for students of A key development during the year was Towards the promotion of higher levels Universiti Malaysia Pahang (UMP). Over the launch of the SL1M Graduate Trainee

of professionalism, we supported a and above the functionalities of a standard P e r spe c tives Programme that saw 100 graduates undergo number of conferences and seminars, debit card, this University Debit Card-i soft skills training and six-month on-the- including the Islamic Finance Awareness (UniDebit) provides university and library job training in BHB and our subsidiaries. Programme 2014: Contemporary Issues access as well as university identification We hope this initiative will help reduce the on Islamic Banking Products & Services, functionalities. number of unemployed graduates as well organised by IBFIM; the 16th Malaysian as supply some much needed talent in the Finance Association Conference; National With customers’ convenience in mind, the ab ility Islamic financial services industry. Tax Conference 2014; and KLIFF Islamic Bank is transitioning swiftly into more Finance Presentation. online services and transactions. Having

upgraded its Internet banking platform its acc ount system is able to manage 500 concurrent Internet banking users, up from 100 previously. Using this portal, customers can open accounts online and make mobile electronic payments. Guided by a Service

Transformation Roadmap, the Bank has tements a Audited

also set up a Customer First Committee F in a n c i l S t to enhance the management of complaints and feedback. In addition, it has opened a mock training branch for new front liners to equip them with customer-centric skills. Ultimately, Bank Islam aims to offer a seamless customer service experience tion across all its customer touch points. l Addition a l I nfo r m a tion AG M th 18 info r m a BIMB HOLDINGS BERHAD 38 Annual Report 2014 corporate responsibility

evolving regulatory requirements as well as the demands of a changing customer demographic. While enhancing leadership, technical and functional skills across the board, there is also increased focus on nurturing specialised knowledge in areas WORKPLACE that are key to sustainable growth in today’s financial services landscape, such In an industry that is as competitive and as Risk Management, Shariah, Credit and dynamic as financial services, it is critical to Compliance. have a competent and motivated workforce to maintain an edge. Recognising this, At Takaful Malaysia, concerted efforts are Takaful Malaysia’s customer promise of a BHB and our subsidiaries are committed made to increase its agency force and to 15% cash back to those who make no claims to attracting and retaining the best talent. provide them with continuous training to underlines a very strong customer-centric Not only do we offer very attractive strengthen their respective retail agency ethos which places the operator in a league remuneration packages, we also enhance distribution channels. This is supported of its own in the insurance industry. The our employees’ professional development by enhanced efficiencies at the head office, rebate is extended to all General takaful via continuous training opportunities and where continuous investments are made in products and selected Family product seek to create an environment in which new technologies to increase productivity which was made applicable to Takaful their personal, spiritual and health needs and enable better customer service. In order Malaysia’s latest offering, Takaful myHealth are also taken care of. Protector. The plan not only provides very to attract more talent into the industry, Takaful Malaysia strives to create greater comprehensive health coverage but also As part of its transformation programme, awareness of the promising career path that increases the maximum age for protection Bank Islam is placing increased emphasis awaits individuals who seek to build their up to 70 years, thus catering to more senior on creating a high-performance culture. wealth by contributing in a meaningful citizens for whom such service makes a The idea is to build the capabilities way to the well-being of others. significant difference. and capacity of all employees to meet

Striving continuously to serve its customers better, Takaful Malaysia launched a new myTakaful Corporate portal that affords its corporate clients the convenience of managing their Group Medical and Group Term Takaful plans online. It also made its counter services more accessible by opening its third Takaful Retail Centre, at Lembaga Tabung Haji’s Islamic Financial Service Centre (IFiC) on Jalan Tun Razak, Kuala Lumpur. Customers will not only be able to sign up for General and Family products but will also be able to service their certificates and submit claims here. 39 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra corporate Fra mewo r k responsibility L e a de r ship Review P e r fo m a n c P e r spe c tives ab ility acc ount During the year, Bank Islam invested a total of RM50,000 towards setting up recycling activities in five (5) of its PINTAR adopted schools. The objective was not just to recycle material but also to create greater tements a ENVIRONMENT environmental awareness among the Audited l F in a n c i l Although the financial services industry students, and to instil a sense of individual S t does not have a significant environmental responsibility towards sustainable living. impact, BHB believes all corporations have a responsibility towards minimising as far A major environmental project during the as possible our use of natural resources to year was planting 2,200 mangrove trees at tion avoid waste. Towards this end, we engage the Sulaman Lake Forest in Tuaran, Sabah. in activities such as the 3Rs to reduce, reuse The initiative, undertaken by Bank Islam

and recycle materials. We also encourage under its One Earth, One Quest campaign, Addition a l I nfo r m a energy efficient behaviours such as saw 50 volunteers – comprising the Bank’s switching off lights and air conditioners officers and local students – rehabilitate when not in use. Our subsidiaries play a tract of the mangrove forest that had their part to protect the environment by degraded over the years. In addition

engaging with local communities in green to the tree planting activity, the Bank tion projects. Children are often targeted in donated RM35,000 to the Sabah Wetlands AG M th

these activities as they determine the Conservation Society to boost its mangrove 18 nation’s future. conservation efforts. info r m a BIMB HOLDINGS BERHAD 40 Annual Report 2014

2014 event highlights

4 January Bank Islam presented USD17,670 collected by Surau Wakaf Ahmad Dawjee Dadabhoy (SWADD), Menara Bank Islam to the Shuaa al-Amal Institute, an orphanage in Palestine. 9 JANUARY Takaful Malaysia donated RM10,000 from its charity fund to Yayasan Akademi Siswazah. 4 January 21 FEBRUARY 20 JANUARY Takaful Malaysia introduced a range of healthcare benefits to cushion the financial burden of expensive medical treatment. 21 JANUARY Takaful Malaysia contributed a total of RM92,700 to various charities and individuals as part of its community outreach programme. 25 JANUARY Bank Islam and Hijabista jointly organised a “Bank Islam-Hijabista Shop Till You Drop” programme as an appreciation to its customers. 27 January 27 JANUARY BIMB Holdings, in collaboration with International Union of Braille Quran 6 FEBRUARY 21 FEBRUARY Services, presented RM15,000 to Persatuan Takaful Malaysia contributed a total of Bank Islam launched its inaugural Service Braille Malaysia to standardise tajwid RM157,000 to nine (9) deserving charities Excellence Campaign 2014, a motivational symbols in the Braille Quran for worldwide nationwide. agenda that will shift the paradigm of its usage. customer service that has been practiced 14 FEBRUARY year in year out. 6 FEBRUARY Takaful Malaysia announced a record cash Bank Islam celebrated the Al-Awfar “Dream back payout of RM30 million to its general 25 FEBRUARY of a Lifetime” Campaign RM1.2 million takaful customers who had made no claims Takaful Malaysia contributed RM50,000 to winners in a ceremony tele-cast live on MHI, during their coverage period. the Malaysian Association for the Blind. TV3. 41 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 2014 event Fra mewo r k highlights L e a de r ship 25 FEBRUARY 31 MARCH APRIL 2014 Takaful Malaysia clinched the Best Takaful BIMB Holdings conducted an analysts’ Takaful Malaysia unveiled its out of home Company in Malaysia award at the 8th briefing at Menara Bank Islam. advertising campaign to communicate its International Takaful Summit held in Abu unique proposition of rewarding motor Dhabi, United Arab Emirates. APRIL 2014 insurance customers with a 15% Cash Review Takaful Malaysia unveiled an advertising Back should there be no claims during their 26 FEBRUARY campaign to communicate its 15% Cash Back coverage period. P e r fo m a n c Bank Islam launched its second UniDebit for Motor Insurance to customers who make Card-i with Universiti Malaysia Pahang. no claims during their coverage period. 2 APRIL The UniDebit card offers several additional Bank Islam presented a cheque for RM300,000 functionalities for the University besides the as part of its zakat (tithes) contribution to the standard debit card. state of Sarawak. 4 MARCH P e r spe c tives Takaful Malaysia donated a total of RM195,000 to four (4) deserving charities in Kuala Lumpur and Selangor. ab ility 11 MARCH Takaful Malaysia contributed RM10,000 to acc ount the Association of ex-Policemen in Malaysia. 25 MARCH BIMB Investment Management Bhd launched the BIMB i Flexi Fund, which offers tements a long-term capital growth by investing in a 18 APRiL Audited l F in a n c i l diversified portfolio of Shariah-compliant S t securities. 18 APRIL 29 MARCH Bank Islam donated two (2) units of hearse to Majlis Agama Islam dan Adat Istiadat Melayu Perlis received by DYTM Raja Muda Perlis, Tuanku Syed Faizzuddin Ibni Tuanku Syed Bank Islam contributed RM219,700 to assist tion underprivileged students during the Malam Sirajuddin Jamalullail. Simfoni Kasih 2014 – Menuju Destini Anak l Addition a l Bangsa organised by Universiti Teknologi 18 APRIL I nfo r m a MARA (“UiTM”). Bank Islam contributed RM100,000 in zakat to selected asnaf (deserving recipients) at the Program Kayuhan Basikal bersama DYTM Raja Muda Perlis dan Sumbangan Zakat kepada Golongan Asnaf. tion

18 APRIL AG M th

Bank Islam presented a cheque for RM100,000 to Duli Yang Teramat Mulia Tuanku Syed 18

Faizuddin Putra Ibni Yang Maha Mulia Tuanku Syed Sirajuddin Jamalullail towards its zakat info r m a payment for the state of Perlis. BIMB HOLDINGS BERHAD 42 Annual Report 2014

2014 event highlights

22 APRIL 2014 15 MAY 17-18 MAY Takaful Malaysia announced a record return About 800 guests attended BIMB Holdings’ Bank Islam sponsored RM10,000 towards on equity of 25.9% along with a record- 17th Annual General Meeting at the Sime the IImFest Malaysia Conference 2014 which breaking profit after tax and zakat (PATZ) of Darby Convention Centre, Kuala Lumpur. seeks to increase participants’ understanding RM134.4 million for the financial year 2013. of Islam. 17 MAY 27-30 APRIL Bank Islam collaborated with BERNAMA 18 MAY Bank Islam contributed RM45,000 to UiTM in organising a Media Treasure Hunt 2014 Bank Islam donated computers to SMK Shah Alam for its three-day Invention, from Kuala Lumpur to Johor. Some of the Paloh in Kluang, Johor as part of ongoing Innovation & Design 2014 exposition as a activities involved the Persatuan Nelayan efforts to promote computer literacy among support towards innovative future leaders. Kawasan (PNK) Pontian, Johor and the rural students. nearby community where activities carried 7 MAY out were to encourage media to perform 27 MAY Pertubuhan Kebajikan Al-Amin and Badan CR activities and strengthen relationships Bank Islam held a prize-giving ceremony Kebajikan Siti Khadijah each received amongst one another. to hand over a million Ringgit each to three RM10,000 from Takaful Malaysia. winners of the Al-Awfar “Fast Lane to become A Millionaire” campaign. 8 MAY Bank Islam donated RM10,000 to Majlis Agama Islam Wilayah Persekutuan for the development of wakaf land in the Federal Territory. 8 MAY Bank Islam presented a cheque for RM600,000 representing its zakat contributions to His Royal Highness the Sultan of Kelantan, 17 may 18 may Sultan Muhammad V at the Mandarin Oriental Kuala Lumpur. 12 MAY Takaful Malaysia contributed a total of RM1,081,381.50 in zakat to religious departments across all 14 states in the country. 15 MAY Takaful Malaysia donated RM150,000 for the construction of a surau in SMK Tinggi Perempuan Melaka.

27 may 43 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 2014 event Fra mewo r k highlights L e a de r ship 4 JUNE 11 JUNE 16 JUNE Bank Islam donated RM10,000 towards Bank Islam Chairman Datuk Zamani BIMB Holdings contributed RM24,000 the 16th Malaysian Finance Association Abdul Ghani presented a zakat cheque of to Persatuan VIVA Palestina Malaysia to Conference. RM100,000 to Tuan Yang Terutama, Yang sponsor 30 Palestinian blind children to DiPertua Negeri Melaka, Tun Datuk Seri attend a Quran memorisation camp in Gaza,

Palestine. Review 4 JUNE Utama Haji Mohd Khalil bin Yaakob. Takaful Malaysia donated a total of P e r fo m a n c RM55,000 to five (5) religious associations. 12 JUNE 18 JUNE Takaful Malaysia launched its new corporate D.Y.M.M Paduka Seri Sultan Perak Darul portal, myTakaful Corporate, designed Ridzuan, Sultan Nazrin Muizzuddin Shah 5 JUNE with extensive self-service capabilities and Takaful Malaysia opened its third Takaful Ibni Almarhum Al Maghfurlah Sultan Azlan content platform for its corporate clients. Retail Centre at the Lembaga Tabung Haji Muhibbuddin Shah received a zakat cheque Islamic Financial Service Centre (IFiC) at for RM350,000 from the Chairman of Bank 19 JUNE P e r spe c tives Jalan Tun Razak, Kuala Lumpur. Islam, Datuk Zamani bin Abdul Ghani. Bank Islam organised its annual luncheon talk by Dr. Fons Trompenaars with valued corporate clients at The Majestic Hotel, Kuala Lumpur. ab ility 25 JUNE Bank Islam organised a Bank Security Managers Meeting, officiated by Deputy acc ount IGP Tan Sri Mohd Bakri bin Mohd Zinin and attended by 100 banking security managers at Menara Bank Islam.

27 JUNE tements a Audited l F in a n c i l

BIMB Holdings donated two (2) defibrillator S t 11 june machines worth RM25,000 each to Lembaga Tabung Haji in support of the Sahabat Korporat Tabung Haji programme.

27 JUNE tion Bank Islam contributed RM210,000 worth of donations, products and services to the l Addition a l Sahabat Korporat Tabung Haji 1435H in aid I nfo r m a of pilgrims performing the Haj. 27 JUNE

Takaful Malaysia contributed RM84,000 tion

to the Sahabat Korporat Tabung Haji AG M th

Programme in the form of a book entitled 18

Panduan Ibadah Haji Wanita. info r m a 12 june BIMB HOLDINGS BERHAD 44 Annual Report 2014

2014 event highlights

27 june 12 july

27 JUNE 2-22 JULY 10 JULY Bank Islam hosted iftar sessions with media Bank Islam held the prize-giving ceremony Takaful Malaysia contributed a total of organisations Utusan, KOSMO, Sinar for winners of the Personal Financing-i 2014 RM14,000 to Tabung Kebajikan Al-Nidaa’ Harian, RTM and Bernama at their premises BMW Campaign at BMW’s head office in and Surau Asy-Syuro. and distributed packed food to media Kuala Lumpur. 30 JUNE friends at TV3 and TV Al Hijrah. Takaful Malaysia launched a year-long 11 JULY advertising initiative with TESCO Stores 4-5 JULY Bank Islam handed over a RM1,000,000 Malaysia involving 15 TESCO outlets Bank Islam collaborated with Berita zakat cheque to His Royal Highness Sultan throughout Malaysia. Harian in organising the Program Semarak Saharfuddin Idris Shah at Masjid Al-Azhar, Ramadan, involving various charitable KUIS, for the state of Selangor. 30 JUNE – 24 JULY activities during the fasting month. Bank Islam collaborated with Surau Ahmad 11 JULY Dawjee Dadabhoy to provide free meals for 7-8 JULY Takaful Malaysia donated RM10,000 of its iftar for staff and others in the vicinity of Bank Islam organised a breaking of fast at charity funds to Surau Mutmainnah, Sungai Menara Bank Islam. the Checkpoint, Immigration & Quarantine Buloh, Selangor. and Police headquarters in Padang Besar, 1 JULY Perlis with members of the local community, 12 JULY bank customers, police, immigration and Bank Islam organised a breaking of fast BIMB Holdings donated RM7,200 for the customs officers and police pensioners. and contributed RM40,150 to Rumah Tunas preparation and distribution of 15 pots of Harapan Darul Hilmi in Kuala Terengganu, bubur lambuk (savoury porridge) at Masjid Terengganu. Jamek Kampung Baru, Kuala Lumpur 9 JULY during Ramadan. Bank Islam organised a breaking of fast session with 150 underprivileged guests 12 JULY 2 JULY from Kg. Orang Asli Sabak Bernam and Takaful Malaysia contributed RM100,000 to Rumah Anak Yatim Hulu Langat. fulfil the education needs of children from Bank Islam presented a RM300,000 cheque the Al-Khaadem Home of Hope in Petaling towards its zakat contribution to the office of Jaya, Selangor. the Majlis Agama Islam Pulau Pinang. 45 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 2014 event Fra mewo r k highlights L e a de r ship 14 JULY Masjid At-Taqwa, Kampung Rancangan Klias, Beaufort, Sabah received a contribution of RM33,300 from Bank Islam.

14 JULY Review Petubuhan Kebajikan Al-Nidaa’ Malaysia P e r fo m a n c received a donation of RM50,000 and Yayasan Anak-Anak Yatim TTDI received RM75,000 as part of Takaful Malaysia’s corporate social responsibility (CSR) initiatives.

17 july 22 july P e r spe c tives 15 JULY Bank Islam handed over RM300,000 in zakat contributions to Baitulmal Sabah.

17 JULY ab ility Bank Islam invited media representatives on duty from Sinar Harian and Karangkraf acc ount together with underprivileged children to a breaking of fast. 18 JULY Takaful Malaysia took 64 orphans from the tements a

Pertubuhan Kebajikan Anak-anak Yatim Al- Audited l F in a n c i l Nasuha (Rumah Al-Nasuha) on an aidilfitri S t shopping treat, and also donated RM26,000 22 july to the home.

21 JULY 22 JULY 11 AUGUST tion Bank Islam donated RM30,000 to Anak-anak Bank Islam presented RM7,088,983 in zakat Takaful Malaysia donated RM20,000 each Yatim Islam Wilayah Persekutuan, Kuala contributions to Minister in the Prime to five (5) religious organisations, and l Addition a l Lumpur as part of its Aidilfitri goodwill. Minister’s Department, YB Mej. Jen. Dato’ contributed RM5,000 each to Pertubuhan I nfo r m a Seri Haji Jamil Khir bin Haji Baharom (R). Ikatan Seruan Ummah Kuala Lumpur, Dana 22 JULY Kebajikan Warisan and Surau Al-Muttaqin. Bank Islam organised a breaking of fast for 22 JULY the underprivileged, doctors and nurses at BIMB Holdings donated RM5,000 to 11 AUGUST tion Masjid Al-Falah, Melaka. AG M Persatuan Kebajikan Anak-Anak Yatim Bank Islam presented RM400,000 in zakat to th Islam Wilayah Persekutuan Kuala Lumpur KDYTM Tengku Mahkota Pahang, Tengku 18 info r m a (PERKAYATIM) in support of its work with Abdullah Ibni Sultan Ahmad Shah for the orphans. state of Pahang. BIMB HOLDINGS BERHAD 46 Annual Report 2014

2014 event highlights

25 august

11-21 AUGUST 22 AUGUST 25 AUGUST Bank Islam donated RM10,000 each to five Bank Islam sponsored RM10,000 to Majlis Bank Islam and Kolej Universiti Insaniah (5) schools to support their participation in Perundingan Pertubuhan Islam Malaysia (KUIN) signed a Memorandum of a ChemEng OutReach@Biodiesel Workshop (MAPIM) for the installation of Zikr sign Understanding for the Insaniah Waqaf Fund organised by UTM, which focused on boards at the mosque and on the road. where Bank Islam is the strategic partner in recycling activities. managing and administrating the waqf fund 25 AUGUST for the construction of Masjid Insaniah. 12-13 AUGUST Bank Islam handed over 22 homes in Johor Bank Islam donated RM50,000 to the under the Rumah Bantuan Bank Islam, a 26 AUGUST National Tax Conference 2014. charity programme through which it helps Tahfiz Madinatul Huffaz Kuala Lumpur to build and renovate houses for the poor received RM30,000 from Takaful Malaysia’s 19 AUGUST since year 2008. charity fund. BIMB Holdings donated RM20,000 to Tabung Sumbangan TH-Palestin in aid of 25 AUGUST 29 AUGUST Palestinians in the occupied territory. The Jawatankuasa Agama Negeri Johor BIMB Holdings contributed RM5,000 to received a zakat cheque for RM400,000 from the Persatuan Amanah Hawi Al-Khairat in Bank Islam. support of a one (1)-day seminar on Modern Society and the Tolerance of Muhammad held at University Technology Malaysia (UTM). 47 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 2014 event Fra mewo r k highlights L e a de r ship 4 SEPTEMBER Bank Islam celebrated the launch of its 137th branch in Menara Utusan Malaysia, Kuala Lumpur. 5 SEPTEMBER Review Bank Islam and MyANGKASA signed a Memorandum of Understanding on the MyANGKASA membership card, a P e r fo m a n c multipurpose smart card, exclusive for members of ANGKASA as well as its affiliate cooperative bodies. 5 SEPTEMBER Takaful Malaysia contributed RM19,200 to Badan Kebajikan Telekom Malaysia Berhad, Putrajaya. 5 september P e r spe c tives 11 SEPTEMBER Bank Islam presented a zakat contribution of RM500,000 to YAB Dato’ Ahmad Razif bin Abdul Rahman, Chief Minister of Terengganu. ab ility 22 SEPTEMBER Takaful Malaysia contributed RM20,000 to Surau An-Nadwah acc ount Puncak Utama, Selangor. 27 SEPTEMBER Bank Islam launched One Earth One Quest in the forest reserve of Tasik Sulaman, Tuaran, Sabah by planting 2,200 mangrove seedlings tements a

to help restore critical coastal ecosystems. Audited l F in a n c i l 11 september S t 1 OCTOBER BIMB Holdings and its Group of Companies launched the SL1M Graduate Trainee Programme with the aim of enhancing the skills

and employability of 100 graduates. tion 1 OCTOBER l Addition a l BIMB Holdings donated RM4,800 to An-Najjah Malaysia, an I nfo r m a NGO that cares for the well-being of orphans, single mothers, the handicapped, hardcore poor, old folks and new Muslim converts.

1 OCTOBER tion BIMB Holdings purchased 39 copies of a coffeetable book entitled AG M th

Expressions of Merdeka – A Pictorial Journey at RM100 each in 18 1 october support of Yayasan Pendidikan Islam. info r m a BIMB HOLDINGS BERHAD 48 Annual Report 2014

2014 event highlights

1 october

1 OCTOBER 21 OCTOBER Takaful Malaysia continues to support actuarial science program Bank Islam handed over RM140,000 in zakat contributions to Pusat students at UiTM by contributing RM50,000 to the fund for aspiring Urus Zakat Negeri Sembilan. diploma and undergraduate holders of Actuarial Science to pursue and fulfill their dreams of becoming qualified actuaries. 23 OCTOBER BIMB Holdings donated RM5,000 to the Majlis Orang-Orang Besar 5-7 OCTOBER DiRaja Kelantan in support of its charitable activities which include Bank Islam held the Program Ibadah Korban 2014 in five (5) regions the donation of hemodialysis machines, funding for the construction with the objective of enhancing the spirit of togetherness and of mosques and aid to flood victims. camaraderie among the communities it serves. 27 OCTOBER 13 OCTOBER BIMB Holdings held an Extraordinary General Meeting to get Bank Islam handed over RM450,000 in zakat contributions to the shareholders’ approval on its proposed Dividend Reinvestment Plan. Chief Minister of Kedah, YAB Dato’ Seri Haji Mukhriz bin Tun Mahathir. 21 OCTOBER Bank Islam participated in the inaugural The Bursa Bull Run 2014 organised by Yayasan Bursa Malaysia. 49 BIMB HOLDINGS BERHAD Annual Report 2014 te Co r po ra 2014 event Fra mewo r k highlights L e a de r ship 5 NOVEMBER BIMB Holdings donated RM5,000 to the Ministry of Education Malaysia in support of its efforts to achieve a zero school drop- out rate. Review

17 NOVEMBER P e r fo m a n c Bank Islam presented a mock cheque of RM2.3 million to the Football Association of Malaysia (FAM) under the Bank Islam Team Harimau Visa Debit Card-i contribution programme in support of the development of the country’s favourite sport. 17 november P e r spe c tives 19 NOVEMBER Bank Islam signed the financing agreements for its Subordinated Sukuk Murabahah

Programme of up to RM1 billion. ab ility 24 NOVEMBER acc ount BIMB Holdings donated RM5,000 as a form of corporate contribution to the Tabung Haji Family Day 2014 held at I-City, Shah Alam, Selangor. tements a 24 NOVEMBER Audited l F in a n c i l BIMB Holdings contributed RM10,000 as a 19 november S t corporate sponsor of the Malaysian-ASEAN Corporate Governance Index 2014 and Award Ceremony. tion 27 NOVEMBER Prospectus of Kronologi Asia Berhad was l Addition a l launched in conjunction with its Listing on I nfo r m a the ACE Market of Bursa Malaysia Securities Berhad, where Bank Islam was the principal adviser, sole underwriter, sponsor and placement agent for its listing. tion AG M th 18 info r m a

27 november BIMB HOLDINGS BERHAD 50 Annual Report 2014

2014 event highlights

29 november 17 december

29 NOVEMBER 17 DECEMBER Bank Islam allocated RM40,500 towards an BIMB Holdings organised an Appreciation outreach programme at Rumah Warga Emas Dinner for members of the Board and Group Ehsan in Kuala Kubu Baru, Selangor which Senior Management at Cascades Restaurant, included the provision of various facilities, Mandarin Oriental Kuala Lumpur. enhancing the surroundings of the old folks’ home and bringing cheer to the residents. 17 DECEMBER Bank Islam organised a Facebook Get- 12 DECEMBER Together at Universiti Malaya with its BIMB Holdings handed over complete sets Facebook fans to strengthen bonds with its of school uniforms and bags to deserving clients. staff at its inaugural Back to School CR 12 december Initiative Handover Ceremony. 26 DECEMBER Bank Islam contributed RM21,205 worth of 14 DECEMBER back-to-school items to children of Muslim Bank Islam gave away two (2) BMWs to its converts. Personal Financing-i Campaign winners in Kelantan which were presented by YB Dato’ Sri Mustapa bin Mohamed, Minister of International Trade and Industry Malaysia.

14 december The First in full- fledged shariah- compliant stockbroking Hassan II Mosque in Casablanca, Morocco BIMB HOLDINGS BERHAD 5232 Annual Report 2014

2014 event highlights

29 november 17 december

29 NOVEMBER 17 DECEMBER Bank Islam allocated RM40,500 towards an BIMB Holdings organised an Appreciation outreach programme at Rumah Warga Emas Dinner for members of the Board and Group Ehsan in Kuala Kubu Baru, Selangor which Senior Management at Cascades Restaurant, included the provision of various facilities, Mandarin Oriental Kuala Lumpur. enhancing the surroundings of the old folks’ home and bringing cheer to the residents. 17 DECEMBER Bank Islam organised a Facebook Get- 12 DECEMBER Together at Universiti Malaya with its BIMB Holdings handed over complete sets ProFacebookfe fansssiona to strengthen bonds withl its of school uniforms and bags to deserving clients. staff at its inaugural Back to School CR 12 december Initiative Handover Ceremony. 26 DECEMBER Bank Islam contributed RM21,205 worth of 14 DECEMBER back-to-school items to children of Muslim Bank Islam gave away 2 BMWs to its converts. Personal Financing-i Campaign winners in Kelantan which were presented by YB Dato’ Sri Mustapa bin Mohamed, Minister of International Trade and Industry Malaysia.

14 december 53 BIMB HOLDINGS BERHAD Annual Report 2014 BIMB SECURITIES the first and ONLY Shariah Compliant Stockbroking Company in Malaysia 16% increase in Gross Brokerage Income BEST Shariah Trading Value 2013 for Non-Investment Bank category and 2nd Runner Up for Best Institutional Equities Participating Organisation for Non-Investment Bank category

Launched the Mobile trading WE ARE THE FIRST AND ONLY SHARIAH COMPLIANT STOCKBROKING COMPANY IN MALAYSIA PRINCIPALLY INVOLVED IN DEALING IN SECURITIES ON BURSA MALAYSIA application AND OTHER PERMITTED BUSINESS ACTIVITIES SERVING BOTH THE MUSLIMS AND for its Internet Trading platform, NON-MUSLIMS ALIKE. WITH OUR EXPERIENCE AND CAPABILITIES IN SHARIAH EQUITY BISonline, on Android and Apple IOS TRADING, COUPLED WITH A DEDICATED INTERNAL AND EXTERNAL SHARIAH TEAM AND SCHOLARS ON BOARD, WE CERTAINLY BELIEVE WE WILL BE ABLE TO PROVIDE QUALITY SERVICES EXCEEDING SATISFACTION. BIMB HOLDINGS BERHAD 52 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

The Board of Directors (“the Board”) of BIMB Holdings Berhad (“BHB” or “the Company”) is committed to upholding the highest standards of corporate governance and practices to enhance stakeholder value and build consumer trust in line with BHB Group’s positioning as a premier Islamic financial services provider. This includes the practice of Islamic principles for the benefit of society. The Board is also committed to ensure that the right executive leadership, strategies and internal controls for risk management are well in place in order to achieve the highest standards of business integrity, ethics and professionalism across the BHB Group.

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

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

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

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

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

(v) Corporate Governance Guide (“CG Guide”): Towards Boardroom Excellence 2nd Edition (CG Guide) by Bursa Securities; and

(vi) Corporate Governance Blueprint 2011 issued by Securities Commission.

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

1. BOARD OF DIRECTORS

1.1 BOARD CHARTER (Principle 1, Recommendation 1.1 and 1.7 of the MCCG 2012)

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

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

The TORs for the Board and its committees and the various relevant internal policies comprises, amongst others:

1. Director’s duties and obligations; 2. Appointment and resignation of Directors; 3. Governance structure; 4. Board and Board Committees proceedings; 5. Remuneration and benefits for Directors; 6. Supply of information to the Board; 7. Training and induction programmes; and 8. Annual Board assessment.

53 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

1.2 ROLES AND RESPONSIBILITY OF THE BOARD (Recommendation 1.2 of the MCCG 2012)

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

• Reviewing and approving all strategic and policy matters including the business plan and pertinent operating policies, and

monitoring the management’s performance based on Key Performance Indicators; R eview e v ie w

• Monitoring and reviewing the overall performance of the Company and BHB Group against set targets and objectives; Per f orm a nce P er ormance • Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed; • Reviewing risk management practices within BHB Group and the Company: (i) to ensure there are adequate internal controls and infrastructure; (ii) to identify and manage principal risks; (iii) to ensure the implementation of appropriate systems to manage these risks; • Reviewing and approving succession plans, including appointing, training, fixing the compensation of and where appropriate replacement of senior management;

• Approving policies pertaining to staff salary and benefits; P erspec t i v es • Approving the appointment of Directors and Directors’ emoluments and benefits; • Approving the Company’s investor relations programme or shareholder communication policy; • Reviewing the adequacy and integrity of the Company’s internal control systems and infrastructure and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; • Approving transactions in accordance with the authority limit, and ensuring that the Company’s business operations are conducted in accordance with Shariah principles; and abili ty • Reviewing relevant reports or proposals to ensure the Company’s operations are in compliance with the Islamic Financial Services Act 2013, the Companies Act 1965, Bursa Securities Listing Requirements, the Articles of Association of the Company and any

regulations and guidelines under the relevant laws. acco u n t

The Management of the Company is headed by the Group Chief Executive Officer (“GCEO”), who is accountable to the Board for ensuring the Company operates effectively.

1.3 BOARD COMPOSITION AND BALANCE tement s t emen s a a Audited Au di t ed

The Board of BHB currently consists of nine (9) members, with nine (9) Non-Executive Directors. Out of the nine (9) Non-Executive Fin a nci l Financial St St Directors, two (2) are Independent Non-Executive Directors. The seven (7) Non-Independent Non-Executive Directors consist of five (5) nominees of Lembaga Tabung Haji (“TH”) (including the Chairman), one (1) nominee of Permodalan Nasional Berhad (“PNB”) and one (1) Director not representing any interested corporate shareholder.

The current composition of the Board does not comply with Paragraph 15.02(1) of Bursa Securities Listing Requirements and BNM/ GP1-i as the numbers fall below the requirement since 3 December 2014 pursuant to the redesignation of one of its Independent tion t ion Non-Executive Director to Non-Independent Non-Executive Director. In this regard, BHB has commenced for the appointment of an additional Independent Non-Executive Director and has also obtained the approval from Bursa Securities on 26 February 2015 for an l Addition a l A ddi t ional extension of time up to 2 June 2015 to comply with the requirement. I n f orm a orma

Recommendation 3.5 of the MCCG 2012 states that, where the Chairman of the Board is not an Independent Director, the majority of the Directors must be independent. However, the Board strongly believes that the present Chairman has the ability and capability to ensure proper checks and balances to facilitate the Board’s proceedings and decision-making. It is also pertinent to note that there is

a separation of authority between the Chairman and the GCEO. Their duties and responsibilities are distinct and separate to facilitate t ion checks and balances in the operations of the Company. AGM t h 18

Within the Board there is diversity and a wealth of knowledge, experience and skills in the fields of accountancy, banking, regulation, in f orma international business operations and development, finance and risk management. A brief profile of each member of the Board is presented on pages 8 to 13 of this Annual Report. BIMB HOLDINGS BERHAD 54 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

The selection of the Chairman, Directors and GCEO is made by the Nomination and Assessment Committee (“NAC”) based on merit, guided by the Fit and Proper Criteria for Key Responsible Persons Policy (“KRP Policy”).

The Board has taken note of Recommendation 2.2 of MCCG 2012 on its approach to gender diversity and the number of female directors, in line with the announcement by the Government. For the year under review, BHB has three (3) female directors on its Board, representing 33% of its Board composition.

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

1.4 INDEPENDENT NON-EXECUTIVE DIRECTORS (“INEDs”)

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

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

Pursuant to Recommendation 3.1 of the MCCG 2012, the Board has approved and adopted a set of criteria for the purpose of conducting an assessment of independence of its Independent Directors. In its assessment, the Board focuses amongst others on the skills, experience, contributions, economic and family relationships beyond the Independent Director’s background and considers whether an Independent Director can continue to bring independence and objective judgment to Board deliberations. The assessment also focus on the tenure of directorship and the INEDs self-declaration on their compliance with the independence criteria under the BNM/GP1-i and Bursa Securities Listing Requirements.

In view of the above, all INEDs are to declare their independence as INEDs of BHB on a monthly basis, following which these declarations were tabled to the Board on a quarterly basis.

Recommendation 3.2 of the MCCG 2012 states that the tenure of Independent Directors should not exceed a cumulative term of nine (9) years. One of BHB’s Independent Director (Datuk Zaiton binti Mohd Hassan) has reached a cumulative term of nine (9) years. The Board is of the view that the said Independent Director’s presence and contributions are pertinent considering her wealth of experience. The Independent Director actively participates and provides invaluable independent views to the Board and Board Committees, particularly on the quarterly financial reports, audited financial statements and other operational aspects of the Group. Her vast experience in banking and in other various senior positions in the financial industry would enable BHB to tap on her expertise for the development of BHB and its subsidiaries. In addition, she had complied with the attendance requirements for Board and Board Committee meetings under Bursa Securities Listing Requirements as well as BNM/GP1-i. This testifies to her commitment and dedication in discharging her responsibilities as an Independent Director.

As provided in the Notice of the upcoming 18th Annual General Meeting (“AGM”) dated 21 April 2015, the Board is proposing to seek shareholders’ approval to retain the said Independent Director of the Company.

In line with paragraph 2.27 of BNM/GP1-i, none of BHB’s INEDs has more than 5% equity interest in the licensed institution or in its related companies, or is connected to a substantial shareholder of the licensed institution. 55 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

The Board also ensures that all INEDs have the following attributes:

• The ability to challenge the assumptions, beliefs or viewpoints of others with objective questioning, and constructive and rigorous challenging in the interest of the Company; • Willingness to stand up and defend his/her own views, beliefs and opinions for the ultimate good of the Company; and • A good understanding of the Company’s business activities in order to appropriately provide responses on the various strategic

and technical issues put forth and deliberated by the Board. R eview Per f orm a nce The Board is of the view that both the INEDs of the Company comply with the above requirements.

1.5 SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

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

Tan Sri Ismail can be reached at [email protected]. P erspec t i v es

1.6 BOARD APPOINTMENT PROCESS (Principle 2, Recommendation 2.2 of the MCCG 2012)

The appointment of a new Director is set out in a formal and transparent process, for which the primary responsibility is delegated to the NAC. The procedure is in line with the Company’s KRP Policy (which has been implemented since August 2011), BNM Guideline on Fit and Proper Criteria and BNM/GP1-i. Under the said procedure, the NAC recommends to the Board suitable candidates for abili ty directorship or for key positions in the Company. NAC is also responsible for ensuring these candidates satisfy the requisite skills and core competencies to be deemed as fit and proper, in accordance with the KRP Policy of the Company, Bursa Securities Listing

Requirements and the Corporate Governance Blueprint 2011 issued by Securities Commission. acco u n t

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

The Board, with the assistance of the NAC, also considers the following criteria in the selection process: tement s a Audited l Fin a nci l St (a) Probity, personal integrity and reputation – the person must have key qualities such as integrity, diligence, independence of mind and fairness; (b) Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role; and (c) Financial integrity – the person must manage his/her debts or financial affairs prudently.

Additionally, in line with the Recommendation 3.2 and Recommendation 3.3 of the MCCG 2012, the tenure of service for Independent tion Directors has been capped at the maximum of nine (9) years and upon completion of the nine (9) years tenure, the Independent Director may continue to serve on the Board. In these circumstances, the shareholders may decide that an Independent Director can l Addition a l remain beyond the cumulative terms of nine (9) years, subject to the NAC’s assessment, Board’s recommendation as well as strong I n f orm a justification to be provided to the shareholders at a general meeting. t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 56 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

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

Evaluation of suitability on Identification Deliberation by Recommendation Fit and Proper Requirement of candidates NAC to the Board of candidates

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

1.7 BOARD AND INDIVIDUAL DIRECTOR’S EFFECTIVENESS

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

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

Upon completion of the assessments, the results are tabulated and reviewed by the NAC for endorsement prior to deliberation by the Board. If required, the Chairman will engage and discuss the peer assessment results with individual members.

1.8 ROLES AND RESPONSIBILITIES OF THE CHAIRMAN AND THE GCEO (Principal 1, Recommendation 1.1 and Principal 3, Recommendation 3.4 of the MCCG 2012)

The roles and responsibilities of the Chairman and the GCEO are distinct and separate, in accordance with relevant best practice. This is to ensure appropriate supervision of the Management, with a clear hierarchical structure. This distinction allows for a better understanding and distribution of jurisdictional responsibilities and accountabilities. This clear structure and focused approach facilitates efficiency and expedites informed decision-making. The distinction on the roles and responsibilities of the Chairman and the GCEO is also reflected in the Company’s TOR.

1.8.1 Chairman

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

Pertinent information and analysis are disseminated to members of the Board prior to Board meetings where the Chairman shall encourage a healthy level of deliberation. This is also to ensure that the Board discharges its responsibilities and that all Directors participate in the discussions.

The Chairman also ensures that consensus is reached at Board meetings. Where deemed necessary, the Chairman shall call for a vote such that a decision will be reached by a simple majority. In the event a consensus cannot be obtained, the Chairman may elect to defer the agenda, with further analysis conducted on the subject matter, to the next meeting. 57 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

1.8.2 GCEO

Dato’ Sri Zukri bin Samat was appointed as the GCEO of BHB effective from 18 February 2015 in place of Dato’ Johan bin Abdullah who has relinquished his position as Group Managing Director/Chief Executive Officer of BHB with effect from 15 January 2015.

The GCEO is responsible for the day-to-day operations of BHB and is accountable to the Board. He leads BHB’s Management

team and is also responsible for regulatory compliance. In managing the Group’s business affairs, the GCEO is assisted by a R eview

Management Committee which meets on a monthly basis. The GCEO is also responsible for the implementation of the Board’s Per f orm a nce policies and decisions.

1.9 COMPANY SECRETARY

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

dealing in securities and restrictions on disclosure of price-sensitive information. P erspec t i v es

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

1.10 DIRECTORS’ RETIREMENT, RE-ELECTION and RE-APPOINTMENT

In accordance with the Company’s Articles of Association, all directors of BHB are subject to re-election by the shareholders in AGM abili ty at the first opportunity after their appointment, and in subsequent year one-third (1/3) of the directors for the time being, or if their number is not three or a multiple of three, then the nearest one-third (1/3) are subject to retirement by rotation at least once every three

(3) years in accordance with the Bursa Securities Listing Requirements and Articles 61 and 66 of the Company’s Article of Association. acco u n t

Tan Sri Samsudin bin Osman and Datuk Rozaida binti Omar who are due for retirement and seeking for re-election at the forthcoming AGM pursuant to Article 61 of the Company’s Articles of Association.

Dato’ Johan bin Abdullah was appointed as the Non-Independent Non-Executive Director effective 17 February 2015 and should retire

at the AGM pursuant to Article 66 of the Company’s Article of Association. Dato’ Johan bin Abdullah is seeking re-election at the AGM. tement s a Audited l Fin a nci l St Encik Salih Amaran bin Jamiaan and Encik Zahari @ Mohd Zin bin Idris who are due for retirement pursuant to Section 129(2) of the Companies Act, 1965. In this regard, Encik Zahari @ Mohd Zin bin Idris has indicated his intention to seek for re-election at the forthcoming AGM however Encik Salih Amaran bin Jamiaan has expressed his intention not to seek for re-election at the forthcoming AGM.

Details of Directors who are due for retirement, re-election and re-appointment at the forthcoming AGM are disclosed on pages 238 tion to 241 of the Annual Report. l Addition a l In relation to the application for the re-appointment of Directors to BNM, the NAC will first assess the Directors who are due for I n f orm a re-appointment and will then submit its recommendation to the Board for deliberation and approval. Upon obtaining the Board’s endorsement, the relevant submission including the justifications for such re-appointment is thereafter made to BNM for approval prior to the expiry of the relevant Director’s BNM’s term of appointment.

1.11 BOARD MEETINGS t ion AGM t h

Board meetings are scheduled in advance at the beginning of a new calendar year to enable Directors to plan ahead and fit the year’s 18

meetings into their own schedules. The Board meets on a scheduled basis every quarter. When the need arises, Special Board meetings in f orma are also convened. The Board continues to proactively engage with senior management or external advisors for information and/or clarification on relevant matters to ensure that the various concerns and issues relevant to the Company’s operations are duly addressed. BIMB HOLDINGS BERHAD 58 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

All Directors have complied with the requirement that they must attend at least 75% of Board meetings held in the financial year in accordance with BNM/GP1-i, and attended at least 50% of Board meetings held in the financial year ended 31 December 2014 pursuant to the Bursa Securities Listing Requirements.

During the financial year ended 31 December 2014, the Company held eight (8) Board meetings and the Directors’ attendance are as follows:

No. of Meetings Director Held* Attended % Tan Sri Samsudin bin Osman 8 8 100 Chairman/Non-Independent Non-Executive Director Tan Sri Ismail bin Adam 8 8 100 Senior Independent Non-Executive Director Tan Sri Ismee bin Ismail 8 6 75 Non-Independent Non-Executive Director Datuk Zaiton binti Mohd Hassan 8 8 100 Independent Non-Executive Director Dato’ Johan bin Abdullah*** 8 8 100 Non-Independent Non-Executive Officer Datuk Rozaida binti Omar 8 7 86 Non-Independent Non-Executive Director Encik Zahari @ Mohd Zin bin Idris 8 7 86 Non-Independent Non-Executive Director Encik Salih Amaran bin Jamiaan 8 8 100 Non-Independent Non-Executive Director Puan Rifina binti Md Ariff** 6 5 83 Non-Independent Non-Executive Director

Notes: * Reflects the number of meetings held during the time the Director held office. ** Appointed as Director of BHB w.e.f. 1 April 2014. *** Resigned as Group Managing Director/Chief Executive Officer w.e.f. 15 January 2015 and reappointed as Non-Independent Non-Executive Director on 17 February 2015.

1.12 ACCESS TO INFORMATION (Recommendation 1.5 of the MCCG 2012)

The Board of Directors have full and unrestricted access to all information pertaining to BHB’s affairs including inter alia, financial results, annual budgets, reviews against business plans and progress reports on BHB’s corporate developments to enable them to discharge their duties effectively.

The schedule of Board Meetings are circulated in advance to the Board members. The Agenda and Board meeting papers are disseminated to the Directors at least five (5) days prior to the Board meeting to allow sufficient time for the Directors to study and review the issues and, where necessary, to obtain further information and explanations to facilitate informed decision-making. During the Board meeting, the Directors will deliberate on the different items as per the agenda at length prior to making their conclusions and decision.

Senior Management and external advisers may be invited to attend the Board meetings when necessary, to furnish the Board with explanations on agenda items tabled at the Board meetings or to provide clarification on issue(s) that may be raised by any Director(s). 59 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

The deliberations and resolutions passed by the Board are recorded properly, and minutes of the meeting will be confirmed at the next Board Meeting.

The Board is also regularly updated by the Company Secretary and/or Management on any changes to regulations and guidelines as issued by BNM, Bursa Securities, the Securities Commission, Companies Commission of Malaysia or other regulatory authorities.

All Directors have direct and unlimited access to the advice and services of Senior Management and may seek independent professional R eview

advice at the Company’s expense, if required, in furtherance of their duties. Per f orm a nce

1.13 NUMBER OF DIRECTORSHIPS

In accordance with BNM/GP1-i, Directors are not allowed to hold more than 10 directorships in listed companies and not more than 15 directorships in non-listed companies. Bursa Securities Listing Requirements, meanwhile, require Directors of a listed issuer to hold not more than five (5) directorships in listed issuers.

At present, all Directors of BHB have complied with best practices as recommended by the Green Book which states that Directors P erspec t i v es should not sit on the board of more than five (5) listed companies. This is to ensure that their commitment, resources and time are focused to enable them to discharge their duties effectively.

1.14 CONFLICT OF INTEREST

In accordance with statutory requirements, members of the Board are required to declare their interest, including whether such interest abili ty arises through close family members to relevant regulators, and these disclosures are subsequently noted at Board meetings.

In the event where there may be a conflict of interest, the Director(s) will abstain from voting and will not participate in any deliberations acco u n t or decisions of the Board. In this regard, the Director(s) will excuse themselves from the meeting.

1.15 DIRECTORS’ TRAINING (Recommendation 4.2 of the MCCG 2012)

The Board recognises the value of enhancing the skills and knowledge of its members on relevant new laws and regulations, the

changing business environment and risk profile, as well as the latest developments and key challenges in the financial sector. tement s a Audited l Fin a nci l St The Board is mindful of the need for continuous training to keep abreast of new developments and is encouraged to attend forums and seminars facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. The Board will continue to evaluate and determine the training needs of its Directors to enhance their skills and knowledge.

The Company provides a dedicated training budget for the Director’s continuing education. Relevant training programmes are arranged by the Company for the Directors and members of the Board Committees. The Directors may also request to attend additional training tion courses according to their specific requirements as a Director or member of the Board Committees. l Addition a l I n f orm a t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 60 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

As at to date all Board members have attended Financial Institutions Directors’ Education (FIDE) programme. In addition other training programmes attended by the Directors in the financial year ended 31 December 2014 are as follows:

(i) Board Leadership and Management Effectiveness:

- Corporate Directors Advanced Programme (CDAP) 2014: Human Capital - Luncheon Talk by Ripa Rashid Director of Research and Curriculum ICLIF - Seminar Wakil-wakil Pengarah Korporat TH - Nominating Committee Programme - Managing Stakeholders’ Expectations in the Fast Changing Business Trends Towards Value Creation - Corporate Directors Training Programme - Audit Committee Conference - A Comprehensive Talent-based Approach to Board Recruitment - “Business, Value Creation & Society” by Dr. Micheal Yaziji, INSEAD, Geneva - Bengkel Pengurusan Risiko & Latihan Sistem ERMS by Lembaga Tabung Haji - Bengkel Pelan Pengurusan Risiko Rasuah (CRM) by Lembaga Tabung Haji - Linkage 20 Conversations @ Harvard Leadership Programme - FIDE: Aligning Business and Human Capital Strategies - Nominating Committee Programme 2 by ICLIF - Directors Breakfast Series with Beverly Behan: “Great Companies Deserve Great Boards” - MINDA: Corporate Directors Advanced Programme

(ii) Corporate Governance and Risk Management:

- Seminar on Governance for Chairman of Board Members of University Management Board - Shariah Compliance Risk Masterclass for Bank Islam Board Members - FIDE Forum Event: “Risk: From Whereof?” by Tan Sri Andrew Sheng

(iii) Accounting, Finance and Capital Markets:

- GST Awareness Workshop by EY Tax Consultants Sdn Bhd - Corporate Finance Case Studies: IPO Workshop - Roundtable on Malaysia Code for Institutional Investors - Global Islamic Finance Forum 2014

As at the end of financial year ended 31 December 2014, all Directors are in adherence to the Mandatory Accreditation Programme, as required by Bursa Securities.

1.16 DIRECTORS TRADING DURING CLOSED PERIOD

Directors and principal officers of BHB are prohibited from trading in any affected securities based on price sensitive information and/ or knowledge which has not been publicly announced, in accordance with Bursa Securities’ Listing Requirements and the relevant provisions of the Capital Markets & Services Act 2007. Notices on the closed period for trading in BHB and/or any affected securities are circulated to Directors and principal officers deemed privy to any price sensitive information in advance of the closed period, wherever applicable. 61 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

2. DIRECTORS’ REMUNERATION (Recommendation 2.3 of the MCCG 2012)

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

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

2.1 REMUNERATION PACKAGE POLICY

The policy on remuneration packages for Directors is as follows:

Executive Director P erspec t i v es (a) Basic Salary The basic salary of the Executive Director is recommended by the RC to the Board, taking into account the responsibility, contribution and performance of the Executive Director, as well as the market rate for similar positions in comparable companies.

(b) Bonus Scheme The Group has adopted a bonus schemes for all employees, including the Executive Director. The criteria for the scheme would abili ty include the Group’s overall level of financial achievements by the Group against set targets, together with other qualitative assessments of an individual’s performance during the period. The bonus payable to the Executive Director is reviewed and

recommended by the RC and thereafter approved by the Board. No bonus scheme is provided for Non-Executive Directors. acco u n t

Non-Executive Directors

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

Non-Executive Directors are subject to shareholders’ approval at the Annual General Meeting. tement s a Audited l Fin a nci l St (d) Benefits-In-Kind Other benefits (such as Directors’ Health and Medical Benefit together with Directors’ and Officers’ liability insurance and travelling allowance) are made available as appropriate.

Remuneration of the Directors in office during the financial year is disclosed in Note 33(a) of BHB’s Financial Statements. tion l Addition a l I n f orm a t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 62 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

A summary of the aggregate remuneration of the Directors, distinguishing between Executive and Non-Executive Directors for the financial year ended 31 December 2014, is as follows:

Group Company 1.1.2014 to 1.1.2013 to 1.1.2014 to 1.1.2013 to 31.12.2014 31.12.2013 31.12.2014 31.12.2013 RM’000 RM’000 RM’000 RM’000 Executive Director: Fees and allowances 355 284 - - Salaries, bonuses and EPF contributions 2,202 1,907 2,202 1,907 Benefits-In-Kind 191 77 90 54 2,748 2,268 2,292 1,961 Non-Executive Directors: Fees and allowances 2,206 2,065 992 957 Benefits-In-Kind 532 346 251 154 Total 5,486 4,679 3,535 3,072 Total (excluding Benefits-In-Kind) 4,763 4,256 3,194 2,864 Shariah Supervisory Council 731 603 - -

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

Group 1.1.2014 to 1.1.2013 to 31.12.2014 31.12.2013 Executive Director: RM2,000,001 and RM2,500,000 - - RM2,500,001 and RM3,000,000 1 1

Non-Executive Directors: Below RM50,000 - - RM50,001 and RM100,000 - - RM100,001 and RM150,000 1 - RM150,001 and RM200,000 1 3 RM200,001 and RM250,000 1 - RM250,001 and RM300,000 2 - RM300,001 and RM350,000 - 1 RM350,001 and RM400,000 - - RM400,001 and RM450,000 - - RM450,001 and RM500,000 - 1 RM500,001 and RM550,000 1 1 RM550,001 and RM600,000 - 1 RM600,001 and RM650,000 2 - Total 9 8 63 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

3. BOARD COMMITTEES

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

Board of Directors P erspec t i v es Audit and Nomination Remuneration Examination and Assessment Committee Committee Committee

3.1 NOMINATION AND ASSESSMENT COMMITTEE (“NAC” or “Committee”) (Recommendations 2.1 and 2.2 of the MCCG 2012) abili ty

The Committee comprises Non-Executive Directors, a majority of whom are independent and presently chaired by the Senior Independent Non-Executive Director. Meetings are held every quarter and as and when necessary for the Committee to deliberate on acco u n t relevant matters. The NAC held four (4) meetings during the financial year ended 31 December 2014. Details of committee members’ attendance are as follows:

Committee Members Attendance % Tan Sri Ismail bin Adam (Chairman)* - - tement s

Senior Independent Non-Executive Director a Audited l Fin a nci l Tan Sri Ismee bin Ismail St 4/4 100 Non-Independent Non-Executive Director Datuk Zaiton binti Mohd Hassan* 4/4 100 Independent Non-Executive Director

Encik Zahari @ Mohd Zin bin Idris** tion 3/4 75 Non-Independent Non-Executive Director

Notes: Addition a l I n f orm a * Tan Sri Ismail bin Adam appointed as Chairman of NAC to replace Datuk Zaiton binti Mohd Hassan w.e.f. 10 December 2014. ** Encik Zahari @ Mohd Zin bin Idris relinquished as Member of NAC w.e.f. 10 December 2014. t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 64 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

The Committee is responsible for assessing and recommending to the Board candidates for directorships and/or Executive Directors to be appointed in the Company and its key subsidiaries.

With respect to nomination and election process of new Directors, the responsibilities of the Committee shall include as follows:

• Gathering the nomination and selection of Directors for members of the Board. • Reviewing the competencies, commitment, contribution and performance of the candidates/Board members and the required mix of skills, experiences and gender and other qualities of the Directors. • Making recommendations to the Board on candidates for appointment.

The other responsibilities of the Committee are as follow:

• Assessing the overall competency requirements for the Board and the performance of the GMD/GCEO; • Overseeing the overall composition of the Board to ensure, amongst others, it has the appropriate size, mix of skills and gender diversity; • Recommending and assessing the overall suitability of Directors as well as nominees for the GMD/GCEO’s position to the Board prior to submission of such application to BNM for approval; • Establishing a formal mechanism to assess the effectiveness of the Board as a whole, the contributions of each Director to the effectiveness of the Board/Board’s committees as well as the independence of Independent Non-Executive Directors; • Ensuring all Directors receive appropriate continuous training; • Overseeing the appointment, management succession planning and performance evaluation of Directors and Key Senior Management; and • Ensuring that the Board has the right balance between Executive Directors, Non-Independent Non-Executive Directors and Independent Non-Executive Directors and the core competencies required throughout the annual review.

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

In addition, the Board has concurred that the existing gender diversity on the Board composition is acceptable; with three (3) members or 33% of the Board being ladies.

3.2 REMUNERATION COMMITTEE (“RC” or “Committee”) (Recommendation 2.3 of the MCCG)

The Committee comprises Non-Executive Directors, a majority of whom are independent and presently chaired by the Senior Independent Non-Executive Director. Meetings are scheduled in advance at the beginning of a new calendar year to enable the Directors to plan ahead and fit the year’s meetings into their own schedules. The Committee held two (2) meetings during the financial year ended 31 December 2014. When the need arises, special meetings are convened. Details of the attendance are as follows:

Committee Members Attendance % Tan Sri Ismail bin Adam (Chairman)* - - Senior Independent Non-Executive Director Tan Sri Ismee bin Ismail 2/2 100 Non-Independent Non-Executive Director Datuk Zaiton binti Mohd Hassan* 2/2 100 Independent Non-Executive Director Encik Zahari @ Mohd Zin bin Idris** 1/2 50 Non Independent Non-Executive Director

Notes: * Tan Sri Ismail bin Adam appointed as Chairman of NAC to replace Datuk Zaiton binti Mohd Hassan w.e.f. 10 December 2014. ** Encik Zahari @ Mohd Zin bin Idris relinquished as Member of NAC w.e.f. 10 December 2014. 65 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

The Committee’s role is to assist and support the Board by recommending to the Board the remuneration of Directors and Executive Directors, as well as of Senior Management of the Company. The responsibilities of the RC would include:

• Recommending a framework of remuneration for Directors, GMD/GCEO and Key Senior Management; • Recommending specific remuneration packages for Directors, GMD/GCEO and Key Senior Management; • Reviewing and recommending to the Board policies pertaining to staff’s salary, remuneration scheme and benefits; and

• Reviewing and recommending to the Board the quantum of bonus payments to Company’s staff. R eview

3.3 AUDIT AND EXAMINATION COMMITTEE (“AEC” or “Committee”) Per f orm a nce

The AEC is authorised by the Board to conduct activities within its Terms of Reference and has unrestricted access to both the internal and external auditors and members of the Senior Management. The activities carried out by the Committee, which met six (6) times during the year under review, are summarised in the AEC’s Report while its Terms of Reference are set out on pages 70 to 75 of this Annual Report. The AEC’s composition is disclosed on page 70 of this Annual Report.

3.4 GROUP SHARIAH COMMITTEE

There are three (3) separate Shariah Committees that provide Shariah guidance and consultation to BHB’s key subsidiaries (Islamic P erspec t i v es Banking, Takaful and Stockbroking).

In compliance with BNM’s Guidelines on the Governance Framework and the Company’s Memorandum and Articles of Association, the Shariah Committees’ responsibility is to ensure that the key subsidiaries operate in accordance with Shariah principles. abili ty (a) Members of the Shariah Supervisory Council of Bank Islam:

Members Nationality acco u n t Ustaz Dr. Ahmad Shahbari @ Sobri bin Salamon (Chairman) Malaysian Dato’ Mohd Bakir bin Haji Mansor (Resigned w.e.f. 31 March 2015) Malaysian Associate Professor Dr. Uzaimah binti Ibrahim Malaysian Professor Dr. Ahmad Hidayat bin Buang Malaysian

Ustaz Dr. Muhammad Syafii bin Antonio Malaysian tement s a Audited l Fin a nci l (b) Members of the Shariah Advisory Body of Syarikat Takaful Malaysia Berhad: St

Members Nationality Ustaz Dr. Ahmad Shahbari @ Sobri bin Salamon (Chairman) Malaysian

Dato’ Mohd Bakir bin Haji Mansor Malaysian tion Dr. Aida binti Othman Malaysian

Professor Dr. Muhammad Rahimi bin Osman Malaysian Addition a l I n f orm a Dato’ Wan Mohamad bin Dato’ Sheikh Abdul Aziz Malaysian

Members Nationality t ion

Dato’ Mohd Bakir bin Haji Mansor (Chairman) Malaysian AGM t h

Prof. Emeritus Dato’ Paduka Dr. Mahmood Zuhdi bin Haji Abdul Majid Malaysian 18 in f orma Ir. Dr. Muhammad Fuad bin Abdullah Malaysian BIMB HOLDINGS BERHAD 66 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

4. SHAREHOLDERS

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

4.1 INVESTOR RELATIONS (Recommendation 7.1 of the MCCG 2012)

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

IR provides an important opportunity to promote effective communication and proactive engagement with stakeholders. It is also an effective tool to reach out and to update stakeholders on the Group and the Company’s corporate activities, such as dialogues and discussions with fund managers, financial analysts and the media. These initiatives provide vital channels of communication for better understanding of the business and operations within the Group. Where relevant, members of the media are also invited to attend major events in the Company.

4.2 CONFERENCES AND ROADSHOWS

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

4.3 fINANCIAL RESULTS

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

4.4 ANNUAL REPORT

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

In addition, the Annual Report contains the Chairman’s Statement which provides an overview of the Company and BHB Group’s performance, operations and other matters affecting shareholders’ interest. The Company also discloses its corporate governance and internal control statements in the Annual Report. The information stated in the Annual Report would allow shareholders and investors to make informed investment decisions regarding BHB Group. 67 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

4.5 GENERAL MEETINGS

The Annual General Meeting is regarded as the main forum for dialogue and communication during which shareholders and investors are informed of the financial performance and current developments of the Group. Shareholders are encouraged to attend the Annual General Meeting and participate in the proceedings. Shareholders’ approval is required on all material issues including, but not limited to, the election and appointment of Directors, corporate exercises, as well as the appointment of auditors and dividend payments (if

any). R eview Per f orm a nce At the General Meetings, shareholders are invited to ask questions or seek clarifications before any resolutions are put forth for approval. The GMD/GCEO will also brief shareholders on the Group’s financial performance. All Board members, Senior Management, BHB Group’s Management team and the Company’s external auditor are available to respond to shareholders’ queries during the Annual General Meeting.

A press conference is held after each Annual General Meetings, at which the Company’s GCEO together with the GMD/CEOs of the major operating subsidiaries, brief the media on the Group’s financial performance and corporate developments. This session also

enables the Board and Management to clarify issues and to answer questions raised by members of the media. P erspec t i v es

4.6 MEDIA COVERAGE

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

4.7 WEBSITE

BHB’s corporate website, www.bimbholdings.com, represents another channel of communication with stakeholders and act as an acco u n t effective dissemination of information to public at large. It contains information on the Company and BHB Group such as its corporate profile, Senior Management, investor information, financial results and corporate news which can be assessed easily and promptly.

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

Tan Sri Ismail bin Adam tement s a Audited l Fin a nci l

Senior Independent Director St Email: [email protected]

Encik Omar bin Atin Head, Corporate Communications

Email: [email protected] tion

5. ACCOUNTABILITY AND AUDIT l Addition a l I n f orm a 5.1 fINANCIAL REPORTING AND DISCLOSURE

The Board has a fiduciary responsibility to present a clear, balanced and comprehensive assessment of the Company and the Group’s performance and prospects. This is presented at the end of each financial year primarily through annual financial statements, quarterly

and half-yearly announcement of results to shareholders as well as the Letter to Shareholders in the Annual Report. In order to meet t ion

the fiduciary responsibility expected of the Board, the Board is assisted by the AEC to ensure that the financial statement present a true AGM and fair view of BHB Group’s financial performance and state of affairs. t h 18 in f orma The Board also ensures that the Company and BHB Group’s financial reporting are made in accordance with the Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and Companies Act, 1965 (“Act”). BIMB HOLDINGS BERHAD 68 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

5.2 DIRECTORS’ RESPONSIBILITY STATEMENT

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

The Statement by Directors pursuant to Section 169(15) of the Act is set out on page 76 of this Annual Report.

5.3 INTERNAL CONTROL

The Board recognises the importance of maintaining a sound internal control system that covers financial, operational and compliance controls to safeguard shareholders’ investments and the Company’s assets. The Statement on Risk Management and Internal Control, which provides an overview of the state of internal control, is set out on pages 77 to 81 of this Annual Report.

5.4 POLICIES

(i) Corporate Disclosure Policy

A Corporate Disclosure Policy (“CDP”) has been formulated to enhance the standard of BHB’s corporate governance, particularly in the area of transparent disclosures to the public. The purpose of the CDP is to enable shareholders and stakeholders to gain access to business information beyond the Company’s financial disclosure. In addition, it maintains an effective communication tool which enables both the Board and Management to communicate effectively with stakeholders on a timely basis.

(ii) Corporate Social Responsibility (“CSR”) and the Environment

The Company has adopted an objective and positive stand by promoting a wide range of CSR activities through various community programmes and use of natural resources.

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

(iii) Code of Ethics (“COE”)

BHB’s COE was implemented on 4 June 2014 for all BHB’s employees to make decisions that meet with the required standards of integrity, professionalism and ethical behavior. BHB’s reputation as a responsible financial holding company and a good corporate citizen must be maintained and safeguarded to ensure the organisation to grow and prosper in conducting business. The COE also demonstrates how BHB’s employees should act with the stakeholders being namely; customers, service providers, communities, media (electronic print), investor and regulators.

The COE also provides the basis for all employees to adhere to a working environment that is productive, positive, enjoyable, safe and free from harassment and discrimination.

Each section of the COE covers an area in which employees have responsibilities to BHB as follows:

(i) Personal conduct and protection of BHB’s assets; (ii) Obligations in conducting BHB’s business with other people and organisation; and (iii) Conflicts of interest and other considerations affecting BHB.

However, no COE can anticipate every appropriate behavior. BHB therefore, expects each employee to make competent judgment in a particular situation. 69 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

(iv) whistle-Blowing Policy

BHB is committed to the values of transparency, integrity, impartiality and accountability in the conduct of its business and affairs. Wrongdoing such as fraud, corruption, financial impropriety and gross mismanagement should be reported and dealt with in accordance with the Company’s established due process. A whistle-blowing policy reflects BHB’s commitment to be vigilant at all times. It is also to assist BHB to manage its risks and contingencies as well as to avoid recurring acts of wrongdoing. R eview BHB promotes an open communication and transparent work culture by setting up internal procedures to address concerns regarding any likely wrongdoing. The policy complements the normal channels of communication and reporting lines within Per f orm a nce BHB. It also provides an alternative route for employees to raise concerns if the usual lines of communication are not available when the complaint relates to his or her immediate supervisor or head of department.

BHB encourages its employees to aspire to achieve the highest possible standards of compliance and ethics. Whistle-blowing policies have therefore been integrated into BHB’s practices and culture to help to deter fraud, corruption and mismanagement. Through the effective implementation of this policy, BHB is able to preserve its integrity and transparency, thus enhance and build credibility with its stakeholders. P erspec t i v es (v) Directors’ Code of Conduct and Ethics

BHB adopts and practices the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia. The Code of Ethics provides guidance for proper standards of conduct with sound and prudent business practices as well as standards of ethical behaviour for directors, based on the principles of integrity, responsibility, sincerity and corporate social responsibility. abili ty

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

1. Corporate Governance; acco u n t 2. Relationship with shareholders, employees, creditors and customers; and 3. Social responsibilities and the environment.

Based on the aforesaid, BHB’s Directors are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders. This is in line with the Company’s core values which place emphasis on ethical behavior in all dealings

with third parties and employees. tement s a Audited l Fin a nci l St (vi) Sustainability Policy

As a pioneer Shariah-compliant financial services provider, BHB and its subsidiaries strive to be responsible corporate citizens. BHB is committed to upholding Shariah principles in relation to its business and social responsibilities:

• Marketplace tion BHB Group is committed to strengthening its Shariah governance, adopting a customer-centric philosophy for service excellence and promoting literacy in the areas of Shariah-compliant banking, takaful and stockbroking products. l Addition a l I n f orm a • Workplace BHB Group aspires to be an employer of choice by providing a conducive working environment, continuous education and development of talent, encouraging volunteerism and managing responsibly its most valuable asset, which is the staff.

• Community t ion

BHB Group is focused on efforts to enrich deserving communities via education, social development and economic AGM

inclusion, poverty alleviation and humanitarian relief. t h 18

• Environment in f orma BHB Group champions environmental conservation and the protection of natural resources via educational efforts targeted at its business constituents on the importance of environmental preservation. BIMB HOLDINGS BERHAD 70 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

5.5 RELATIONSHIP WITH AUDITORS

(a) Internal Auditors

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

(b) External Auditors

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

A report of the AEC outlining its role in relation to the internal and external auditors is set out on pages 70 to 75 of this Annual Report.

This statement is made in accordance with a resolution of the Board dated 23 March 2015.

6. AUDIT AND EXAMINATION COMMITTEE REPORT (“AEC” or “Committee”)

6.1 COMMITTEE

Datuk Zaiton binti Mohd Hassan Chairman/Independent Non-Executive Director (Fellow of the ACCA, Member of MIA and MICPA)

Tan Sri Ismail bin Adam Senior Independent Non-Executive Director (Master of Arts (Economics), Vanderbilt University USA)

Encik Zahari @ Mohd Zin bin Idris Non-Independent Non-Executive Director (Senior Cambridge Certificate)

The Committee is authorised by the Board to conduct its activities within its Terms of Reference and has full access to the internal and external auditors and members of the Management of the Company. 71 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

The terms of reference of the Committee are as follows:

6.2 COMPOSITION

(a) The Committee shall comprise only Non-Executive Directors, with at least three (3) members, of whom the majority must be Independent Directors. The Chairman shall be an Independent Non-Executive Director and at least one (1) member of the committee must be: R eview Per f orm a nce • A member of the Malaysian Institute of Accountants (“MIA”); or • He/She must have at least three (3) years’ working experience with the following conditions: - He/She must have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967; or - He/She must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967.

(b) The Committee shall not consist of any alternate director of the Company and shall be formally appointed and/or terminated by the Board. P erspec t i v es

(d) All members shall hold office only for so long as they serve as Directors of the Company and members of the Committee may

relinquish their membership in the Committee with prior written notice to the Secretary and may continue to serve as Directors abili ty of the Company.

6.3 CHAIRMAN OF THE AEC acco u n t

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

• To steer the Committee to achieve its objectives; • To provide leadership to the Committee and ensure proper flow of information to the Committee, review adequacy and timing of documentation; tement s a Audited

• To provide a reasonable time for discussion at the Committee meetings; organise and lead the agenda for Committee meetings Fin a nci l St based on input from the members and ensure that all relevant issues are on the agenda; • To ensure that consensus is reached on every Committee resolution and where considered necessary, call for a vote for a decision to be made by simple majority; OR in the event a consensus cannot be obtained, the Chairman may elect to defer the agenda to the next meeting with further analysis conducted on the subject matter; • To manage the processes and workings of the Committee and ensure it discharges its responsibilities; and • To ensure all members participate in discussions to enable and encourage effective decision-making. tion

6.4 COMMITTEE MEMBERS l Addition a l I n f orm a

Each AEC member is expected:

• To contribute independent opinions to the fact-finding, analysis and decision-making process of the Committee, based on his/ her experience and knowledge; • To consider the viewpoints of the other Committee members, and make decisions and recommendations in the best interest of t ion AGM

the Company collectively; t h

• To keep abreast of the latest corporate governance guidelines in relation to the Committee as a whole; and 18 • To continuously seek out best practices in terms of the processes utilised by the Committee, following which these should be in f orma discussed with the rest of the Committee for possible adoption. BIMB HOLDINGS BERHAD 72 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

6.5 SECRETARY

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

6.6 DISCLOSURE

The Committee shall assist the Board in making certain disclosures concerning its activities, pursuant to Bursa Securities’ Listing Requirements.

6.7 MEETINGS AND PROCEEDINGS

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

(b) The Chairman of the Committee, or the Secretary on the requisition of the members, shall at any time summon a meeting of the members by giving due notice. It is not necessary to give notice of a Committee meeting to any member for the time being absent from Malaysia.

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

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

(e) The Chairman of the Committee shall chair the Committee meetings and in his absence, the members present shall elect one (1) member among themselves to chair the meeting, subject to that person being an Independent Non-Executive Director.

(f) All decisions and/or approvals are to be made on an unanimous basis, whilst adhering to the quorum of the meeting.

(g) The Secretary shall draft out the agenda for each meeting, in consultation with the Chairman of the Committee. The agenda shall be sent to all members of the Committee and any other persons required to attend the meeting.

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

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

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

6.8 QUORUM

The quorum shall be three (3) with a majority must be Independent Directors. 73 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

6.9 ATTENDANCE AND INVITEES

The GCEO is invited to attend all meetings. Subject to the Chairman’s consent, and with the advice of the GCEO, the Senior Management or any other persons may be invited to attend the meeting as and when required. Other Board members shall also have the right to attend.

At least twice a year, the Committee shall meet with the external auditors without executive Board members/Senior Management R eview

presence. Per f orm a nce

A total of six (6) meetings were held during the financial year ended 31 December 2014. The details of attendance of each member at the AEC meetings are as follows:

Committee Members Attendance % Datuk Zaiton binti Mohd Hassan (Chairman)* 6/6 100 Independent Non-Executive Director P erspec t i v es Tan Sri Ismail bin Adam** - - Senior Independent Non-Executive Director Encik Zahari @ Mohd Zin bin Idris* 6/6 100 Non-Independent Non-Executive Director

Encik Salih Amaran bin Jamiaan*** abili ty 6/6 100 Non-Independent Non-Executive Director

Notes: acco u n t * Datuk Zaiton binti Mohd Hassan was appointed as Chairman of AEC in place of Encik Zahari @ Mohd Zin bin Idris w.e.f. 10 December 2014. ** Tan Sri Ismail bin Adam was appointed as Member of AEC w.e.f. 10 December 2014. *** Encik Salih Amaran bin Jamiaan relinquished as member of AEC w.e.f. 10 December 2014.

6.10 AUTHORITY OF THE AEC tement s a Audited l Fin a nci l The AEC is empowered by the Board to carry out the following: St

(a) Investigate any activity or matter within its terms of reference; (b) Promptly report to Bursa Securities matters which have not been resolved satisfactorily thus resulting in a breach of the Listing Requirements; (c) Obtain external independent professional advice, legal or otherwise, when deemed necessary; tion (d) Maintain direct communication channels with the external auditors, person(s) carrying out the internal audit function and Senior Management of the Company and its subsidiaries; and l Addition a l (e) Convene meetings with the internal and external auditors, without the attendance of the Management, whenever deemed I n f orm a necessary.

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

(a) Seek any information it requires from any employee of the Company in order to perform its duties; t ion (b) Obtain, at the Company’s expenses, any professional advice including the advice of independent consultants; and secure the AGM t h

attendance of the external advisers at its meeting if considered necessary to help it fulfill its obligations; 18

(c) Have full and unrestricted access to the Company’s records, properties and personnel; and in f orma (d) Have full and unrestricted access to advice and services of the Company Secretary. BIMB HOLDINGS BERHAD 74 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

6.11 DUTIES AND RESPONSIBILITIES

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

(A) Internal Audit

• Review the adequacy of the internal audit programme, internal audit findings and recommend actions to be taken by Management on deficiencies in controls and procedures that are identified; • Recommend to the Board the appointment or termination of the Chief Internal Auditor; • Assess the performance of the internal auditors and determine and recommend the remuneration and annual increment of the internal auditors; and • Take cognisance of the resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resigning.

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

(B) Internal Controls

• Review the effectiveness of internal controls and risk management processes (For further details on Statement on Risk Management and Internal Control, kindly refer to pages 77 to 81 of the Annual Report.); and • Review the Company’s statement on internal control prior to endorsement by the Board.

• Review the external auditors’ audit scope and plan; • Review the appointment of external auditors and the audit fee and deal with any issue pertaining to resignations or dismissals and make recommendations to the Board; • Review and monitor the effectiveness of the external auditors’ performance and their independence and objectivity by way of an assessment to be conducted annually; • Review the external auditors’ letter to Management and Management’s responses, including the previous audit recommendations, and make recommendations to the Board; and • Approve the provision of non-audit services by the external auditor.

(D) financial Reporting

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

• Any changes in accounting policies and practice; • Significant adjustments resulting from the audit; • The going concern assumption; and • Compliance with applicable Financial Reporting Standard and other legal and regulatory requirements.

(E) Related Party Transactions

Review and report to the Board any related party transactions that may arise within the Company or Group. 75 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement of Frame w or k corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad) L eadership

(F) Annual Report

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

(G) General R eview • The Committee may consider other matters as referred to the AEC by the Board; • The Committee is not delegated with decision-making power but is required to submit its recommendation to the Board Per f orm a nce for decisions; • The Committee will, in carrying out its activities as well as in making its recommendations to the Board of Directors, take into consideration the latest guidelines prescribed by Bursa Securities, Bank Negara Malaysia and other relevant regulatory bodies; and • The Committee will perform any other functions as agreed by the Board.

6.12 fuNCTIONS AND ACTIVITIES P erspec t i v es

(A) Internal Audit Function

The internal audit function for BHB and its wholly-owned subsidiaries has been outsourced to the Internal Audit Department of

Bank Islam Malaysia Berhad (“Bank Islam”) since December 2008. abili ty

The internal audit function for Bank Islam and Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) is carried out by their

respective internal audit divisions. acco u n t

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

The Management of Bank Islam and Takaful Malaysia are responsible for ensuring that corrective actions on reported weaknesses Audited l Fin a nci l are undertaken within a reasonable time frame. St

For the financial year ended 31 December 2014, the total cost incurred for the internal audit function of the Company was RM20,000 (2013: RM17,000).

(B) Activities During the Year tion

The following is a summary of activities that were carried out by the AEC during the year under review: l Addition a l I n f orm a

(i) Review BHB Group’s quarterly financial statements prior to submission to the Board for consideration and approval; (ii) Review and approve the external auditors’ scope of work and audit plan for the year; (iii) Review the audit report of BHB Group prepared by the external auditors and internal audit department, their findings and

Management’s responses thereto; t ion

(iv) Monitor the progress of the Internal Audit function in completing its audit plan and assess the performance of the Internal AGM t h

Audit function; and 18

(v) Review the recurrent related party transactions. in f orma

This statement is made in accordance with a resolution of the Board dated 23 March 2015. BIMB HOLDINGS BERHAD 76 Annual Report 2014 statement of corporate governance (Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)

STATEMENT ON DIRECTORS’ RESPONSIBILITY

This statement is prepared as required by the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhad. The Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their cash flows for that year then ended.

In preparing the financial statements for the year ended 31 December 2014, the Directors have:

• adopted suitable accounting policies and applied them consistently; • made judgments and estimates that are reasonable and prudent; • ensured applicable Financial Reporting Standards have been followed; and • prepared the financial statements on a going concern basis.

The Board has the overall responsibility to take all steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect frauds and other irregularities.

This statement is made in accordance with a resolution of the Board dated 31 March 2015. 77 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement on Frame w or k risk management and internal control L eadership Pursuant to Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors (the “Board”) is pleased to provide the following Statement on Risk Management and Internal Control (the “Statement”) which outlines the nature and scope of risk management and internal controls of the Group during the financial year ended 31 December

2014. R eview Per f orm a nce For the purpose of disclosure, this Statement is guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers. The Board is committed and acknowledges its responsibility to oversee the system of risk management and internal control within the Company including reviewing its adequacy, integrity and effectiveness to safeguard shareholders’ investments and the Group’s assets.

RESPONSIBILITY

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

The Board has established appropriate controls and processes for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of BHB Group’s objectives. The control structure and processes which have been instituted throughout the BHB Group is reviewed abili ty from time to time to cater for the changes in the business environment. The respective Board Risk Committee/Audit and Examination Committee at the main operating subsidiaries regularly reviews and monitors the Management’s approach and action in addressing key risks of the subsidiaries.

This process has been in place and continued to be BHB Group’s practice for the financial year under review and up to the date of approval of this acco u n t Statement for inclusion in the Annual Report of the Company.

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

• Identify the risks relevant to the business, implementation of strategies and the achievement of its objectives;

• Implement regular risk management reporting, monitoring and review as part of its risk management framework; and tement s a Audited l Fin a nci l

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

The BHB’s Audit and Examination Committee assists the Board to review the adequacy and effectiveness of the systems of internal control and ensures that appropriate methods and procedures are in place to obtain the level of assurance required by the Board. The Corporate Governance and Internal Control Statements of the Group’s Islamic Banking and Takaful subsidiaries were approved by their respective Board Risk Committee, Audit and Examination Committee, and Board, as the case may be. Any material internal control deficiencies within BHB Group will be presented tion to the Audit and Examination Committee and Board through a Risk Management Dashboard reporting. l Addition a l I n f orm a t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 78 Annual Report 2014 statement on risk management and internal control

KEY INTERNAL CONTROL STRUCTURE

The key processes that the Board has established in reviewing the adequacy and effectiveness of the systems of internal control include the following:

• Risk Management Framework

The Board has established an organisation structure and charter with clear defined lines of responsibility, authority limits and accountability in association with BHB Group’s business and operational requirements in order to maintain a sound control environment.

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

Bank Islam and Takaful Malaysia, each has established a Board Risk Committee. Both Bank Islam and Takaful Malaysia have each respectively appointed Deputy Chief Risk Officers and Chief Risk Officer who responsible to monitor, assess and ensure the effective conduct of risk management based on a Risk Management Framework approved by the Board.

The Board’s oversight function on risk management function in BIMB Securities is performed by its Audit and Examination Committee.

In this regard, risk management practices are inculcated and embedded in the activities of the Group’s major operating subsidiaries, which amongst others, include the establishment of risk tolerance thresholds and Risk Appetite Statement that identifies, assesses and monitors the risks associated to the business of the subsidiaries.

The Board Risk Committee or the Audit and Examination Committee (as the case may be) will escalate and update the Board on any new regulatory or statutory requirement that would impact the Risk Management principles, policies, procedures and practices of the subsidiaries.

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

• Audit and Examination Committee (“AEC”)

The AEC of BHB and its major operating subsidiaries review the adequacy of internal controls within the Company based on the assessment performed by the Internal Auditors. In addition, relevant matters pertaining to Internal Accounting Controls are also reported to the respective AECs on a quarterly basis. The AECs also review and assess the adequacy of scope and effectiveness of the internal as well as external audit functions. For the external auditors, the AEC also assess their independence and the quality of their resources. The risk responses and internal controls that the Management has initiated are documented and recorded in the minutes of the Board Risk Committee/AEC meetings.

Pursuant to Paragraph 15.17(f) of the Listing Requirements of Bursa Malaysia Securities Berhad, the BHB’s AEC had two (2) separate meetings with the external auditors, without the presence of any executive members of the Company, to discuss on any issues relating to BHB Group during the financial year ended 31 December 2014. 79 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement on Frame w or k risk management and internal control L eadership

• Internal Audit

The internal audit function for BHB and its subsidiaries (save for Takaful subsidiaries) is carried out by the Internal Audit Division of Bank Islam (“Internal Audit”). Through the internal audit function, assessment on compliance with policies and procedures and the effectiveness of the Group’s internal control systems is made. The Internal Audit undertakes regular reviews of BHB and its subsidiaries’ operations and business processes; examining and evaluating the adequacy and efficiency of financial and operating controls, and highlighting significant R eview risks and non-compliance. Where applicable, Internal Audit will provide recommendations to improve on the management of risks, control Per f orm a nce and governance processes. The AEC regularly reviews the status of rectification actions on the findings or recommendations by the internal auditors. Further details of the activities of the internal audit function are provided in the BHB’s AEC report.

Internal audit is performed for all key Divisions in BHB Group, thus providing the respective AECs an independent assurance on the operational, financial, compliance and risk related activities within the Group. The risk-based internal audit plan is reviewed and approved by the respective AECs of the key subsidiaries. The respective AECs review the internal audit observations highlighted in the internal audit reports. P erspec t i v es

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

Other Key Elements of Internal Control abili ty

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

• Management Committee acco u n t

The day-to-day operation of BHB is managed by the Chief Executive Officer (“CEO”) and assisted by the Management Committee (“MANCO”). The CEO is responsible in ensuring the operations of BHB are conducted in accordance with the corporate objectives of the Company, approved annual budget as well as approved policies and procedures. tement s a Audited

The MANCO comprises the Heads of each Department who are principally responsible for the performance of their functions in their Fin a nci l St respective areas.

• Standard Operating Procedures

Documented Standard Operating Procedures (“SOPs”) for all departments of BHB were approved by the MANCO and endorsed by tion BHB’s AEC. The SOP serves as a day-to-day operational guide to ensure compliance with financial and operational controls as well as the applicable laws and regulations. All SOPs are reviewed and updated regularly to reflect current risks, new regulatory requirements and the l Addition a l current operations. I n f orm a t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 80 Annual Report 2014 statement on risk management and internal control

• Human Resources Policies and Procedures

The Human Resources SOP of BHB encompass areas of human resources management such as the recruitment of new employees based on “fit and proper” criteria, performance appraisals, training and development.

• Annual Business Plan and Budgeting Process

The Group’s annual budget is prepared based on the annual business plans of BHB’s operating subsidiaries. The budget and business plan is approved by the subsidiaries’ respective Boards and subsequently endorsed by BHB’s Board. Actual performances of the subsidiaries are reviewed against the targeted results on a quarterly basis allowing timely response and corrective actions to be taken to ensure the business targets are met.

The subsidiaries’ performances are assessed against the budget and business plan and key financial indicators.

• Information Technology (“IT”) System

IT is key in supporting the service efficiency and the delivery systems of the Group. The IT Risk Framework was developed to ensure that risks are correctly identified and mitigated accordingly. BHB’s Islamic Banking and Takaful subsidiaries continue to upgrade their IT systems in order to enhance efficiency of their business operations and to facilitate the implementation of their risk-based capital frameworks. During the year under review, the subsidiaries have also undertaken a number of IT systems upgrade in view of new regulatory requirements, including the Personal Data Protection Act 2010, the Islamic Financial Services Act 2013 and the Goods and Services Tax Act 2014.

• Performance Review

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

The actual performance of BHB and its operating subsidiaries are assessed against approved budgets and business plan, key financial indicators as well as comparison with the industry averages to identify significant deviations and gaps, for the respective Management to take remedial measures, where necessary.

Assurance from Management

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

Taking into consideration the assurance from Management and the input from the relevant assurance providers, the Board is of the view that the systems of risk management and internal control are performing satisfactory and are adequate to safeguard the shareholders’ investments, customers’ interest and the Group’s assets. The Group will continue to implement new measures to strengthen the internal control and risk management environment. 81 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora statement on Frame w or k risk management and internal control L eadership

Review of the Statement by External Auditors

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Recommended Practice Guide (“RPG”) 5 (Revised), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the financial year ended 31 December 2014. Based on the review conducted, the external auditors have reported to the Board that nothing has come to R eview their attention that cause them to believe that the statement included in the annual report of the Group, in all material respects: Per f orm a nce

(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or (b) is factually inaccurate.

RPG 5 (Revised) does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether P erspec t i v es the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems. abili ty acco u n t tement s a Audited l Fin a nci l St tion l Addition a l I n f orm a t ion AGM t h 18 in f orma BIMB HOLDINGS BERHAD 82 Annual Report 2014 additional compliance information

1. SHARE BUYBACKS BHB did not purchase any of its own shares during the financial year ended 31 December 2014.

2. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES BHB had on 11 December 2013 issues 426,715,958 Free Detachable Warrants pursuant to the Renounceable Rights Issue of 426,715,958 new ordinary shares of RM1.00 each in BHB in respect of the financial year ended 31 December 2013. Details of the warrant holdings is set out on page 233 of the Annual Report.

BHB had not issued any Options or any other convertible securities in respect of the financial year ended 31 December 2014.

3. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) BHB did not sponsor any ADR or GDR programme in the financial year ended 31 December 2014.

4. NON-AUDIT FEES The amount of non-audit fees paid/payable to the external auditors and their affiliated companies by BHB for the financial year ended 31 December 2014 is set out in Note 34 on page 162 of the Annual Report.

5. PROFIT GUARANTEE No profit guarantees were given by BHB during the financial year under review.

6. LIST OF PROPERTIES The list of properties is set out on pages 220 to 228 of the Annual Report.

7. MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS Save as disclosed below and the related party transactions disclosed in Note 39 of the Financial Statements, there were no other material contracts entered into by BHB and its subsidiary companies involving Directors and/or Major Shareholders’ interest either still subsisting at the end of the financial year or entered into since the end of the previous financial year.

(a) BHB, Dubai Financial Group LLC. (“DFG”) and Lembaga Tabung Haji (“TH”) had on 31 July 2013 entered into a sale and purchase agreement (as varied by the supplemental agreement dated 30 September 2013) for the acquisition of 690,196,000 ordinary shares of RM1.00 each in Bank Islam Malaysia Berhad (“Bank Islam”) held by DFG, representing approximately 30.47% of the issued and paid-up share capital of Bank Islam; and the acquisition of 419,894,000 ordinary shares of RM1.00 each in Bank Islam held by TH, representing approximately 18.53% of the total issued and paid-up capital of Bank Islam for a cash consideration of USD550 million and the RM equivalent of USD334,603,069 respectively.

(b) BHB had on 11 September 2013 entered into a Foreign Exchange Forward Contract with Standard Chartered Saadiq Berhad and TH for the purchase of up to USD550 million by BHB.

(c) A Deed Poll dated 25 October 2013 was executed by BHB constituting the issuance of 426,715,958 free detachable warrants pursuant to the renounceable rights issue of 426,715,958 new ordinary shares of RM1.00 each in BHB (“Right Share”) together with 426,715,958 free detachable warrants.

(d) TH had on 31 July 2013 provided the undertaking in respect of the renounceable rights issue of 426,715,958 Rights Shares together with 426,715,958 Warrants at an issue price of RM4.25 per Rights Share on the basis of two (2) rights shares together with two (2) Warrants for every five (5) existing BHB shares held.

(e) TH had on 31 July 2013 provided an irrevocable written undertaking to subscribe for such portion of the sukuk issue not subscribed by the other investors (up to RM1.66 billion in nominal value) which had been accepted by BHB (as varied by an agreement letter dated 24 September 2013 between BHB and TH). 83 BIMB HOLDINGS BERHAD Annual Report 2014 t e C orpora additional Frame w or k compliance information L eadership

8. IMPOSITION OF SANCTIONS AND/OR PENALTIES There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management arising from any significant breach of rules/guidelines/legislation by the relevant regulatory bodies during the financial year under review.

9. vARIATION IN RESULTS There was no variation in results (differing by 10% or more) from any estimated profit forecast/projection in the unaudited results announced. R eview

10. GENERAL MANDATE Per f orm a nce BHB Group had at the last Annual General Meeting (“AGM”) obtained a general mandate from its shareholders to allow BHB and/or its subsidiaries in their normal course of business, to enter into recurrent transactions of a revenue or trading nature with related parties (“RRPTs”) which are necessary for its day-to-day operations, on terms not more favourable to the related party than those available in the general public and not to the detriment of minority shareholders. The RRPTs Mandate is valid until the conclusion of the forthcoming AGM of the Company. The Board proposes to seek the renewal of the existing RRPTs Mandate at the forthcoming 18th AGM of the Company which will be held on 14 May 2015 at 10.00 a.m. This Mandate, if approved by shareholders, would be valid until the conclusion of the next AGM of the Company in the year 2016. P erspec t i v es Actual Value Transacted Related Party/ from 15 May 2014 Nature of Principal Interested Director and/or Major Shareholders1 (being the date Transactions Activities of the last AGM) abili ty to 31 March 20152 RM’000 • 3Rental of Lembaga Tabung Interested Major Shareholder office premises Haji (“TH”) acco u n t payable by TH is principally TH is a major shareholder of BHB with 55.18% shareholding. 20,577 Bank Islam involved in Malaysia providing Interested Directors Berhad (“Bank pilgrimage Islam”) to TH. management (1) Tan Sri Ismee bin Ismail, being the Group Managing Director and Chief

services, saving Executive Officer of TH is also a Director of BHB and Bank Islam. Tan Sri tement s a Audited l Fin a nci l

and depository Ismee has no direct/indirect shareholding in TH, BHB or Bank Islam. St services, investment (2) Dato’ Johan bin Abdullah, the Deputy Group Managing Director and Chief holding and rental Executive Officer of TH is also a Director of BHB and Bank Islam. Dato’ Johan of buildings. has no direct/indirect shareholding in TH, BHB or Bank Islam. tion (3) Tan Sri Samsudin bin Osman, Datuk Rozaida binti Omar and Puan Rifina binti Md Ariff are nominee Directors of TH and BHB. They have no direct/ indirect shareholding in TH or BHB. l Addition a l I n f orm a

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

(5) Dato’ Sri Zukri bin Samat, the Group Chief Executive Officer of BHB is also t ion AGM

the Managing Director of Bank Islam. Dato’ Sri Zukri has no direct/indirect t h

shareholding in BHB or Bank Islam. 18 in f orma BIMB HOLDINGS BERHAD 84 Annual Report 2014 additional compliance information

Actual Value Transacted Related Party/ from 15 May 2014 Nature of Principal Interested Director and/or Major Shareholders1 (being the date Transactions Activities of the last AGM) to 31 March 20152 RM’000 • 3Rental of Syarikat Takaful Interested Directors office premises Malaysia Berhad payable by (“Takaful (1) Tan Sri Ismee bin Ismail is Chairman/Director of Takaful Malaysia. He is 2,402 Bank Islam Malaysia”) also a Director of Bank Islam and BHB. Tan Sri Ismee has no direct/indirect to Takaful Takaful Malaysia shareholding in Takaful Malaysia, Bank Islam or BHB. Malaysia. is principally involved in family (2) Dato’ Johan bin Abdullah, the Deputy Group Managing Director and Chief and general Executive Officer of TH is also a Director of Takaful Malaysia, BHB and Bank takaful business. Islam. Dato’ Johan has no direct/indirect shareholding in TH, BHB or Bank Islam.

(3) Datuk Rozaida binti Omar is a Director of Takaful Malaysia and also a Director of BHB. She has no direct/indirect shareholding in Takaful Malaysia or BHB.

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

(5) Dato’ Sri Zukri bin Samat, the Group Chief Executive Officer of BHB is also the Managing Director of Bank Islam. Dato’ Sri Zukri has no direct/indirect shareholding in BHB or Bank Islam. • 3Rental of Bank Islam Interested Directors office premise Bank Islam payable by BHB is principally (1) Tan Sri Ismee bin Ismail, Dato’ Johan bin Abdullah, Datuk Zaiton binti Mohd 803 to Bank Islam. involved in the Hassan and Encik Zahari @ Mohd Zin bin Idris are Directors of BHB and also provision of Directors of Bank Islam. They have no direct/indirect shareholding in Bank Islamic banking Islam or BHB. • 3Rental of and related office premise activities based on (2) Encik Salih Amaran bin Jamiaan is a Director of BHB. He is also Chairman/ 155 payable by the principles of Director of SAISB. Encik Salih has no direct/indirect shareholding in SAISB. Bank Islam to Shariah. As at 31 March 2015, he holds indirect interest of 20,000 shares in BHB. Syarikat Al- Ijarah Sdn Bhd (3) Dato’ Sri Zukri bin Samat, the Group Chief Executive Officer of BHB is also (“SAISB”). the Managing Director of Bank Islam. Dato’ Sri Zukri has no direct/indirect shareholding in BHB or Bank Islam.

There is no amount due and owing to BHB by its related parties pursuant to the RRPTs.

Notes: 1 The direct and indirect shareholdings of the related parties in BHB above are set out in Section 6 of the Circular to Shareholders dated 21 April 2015. 2 The last practicable date before printing of the Circular is 31 March 2015. 3 The rental sum of the properties was arrived at or estimated based on the on-going or expected market rate at the time the tenancy agreement was or was to be executed. Details of the rental of office premises are set out in the Circular to Shareholders dated 21 April 2015. e Corpor at Fr am e w or k Le a ders hi p financial statements R e vi w P er f or manc e 86 - 89 Directors’ Report

90 - 91 Statements of Financial Position

92 - 93 Statements of Profit or Loss and Other Comprehensive Income P erspe ctiv es 94 - 96 Statements of Changes in Equity

97 - 98 Statements of Cash Flows

99 - 215 Notes to the Financial Statements acc o untability 216 Statement by Directors

217 Statutory Declaration A u d it ed

218 - 219 Independent Auditors’ Report F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 86 Annual Report 2014 directors’ report for the financial year ended 31 December 2014

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 2014.

Principal activities

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

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

Results Group Company RM’000 RM’000 Profit for the year attributable to: Owners of the Company 532,329 127,088 Non-controlling interests 54,575 - 586,904 127,088

Reserves and provisions

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

Issue of shares and debentures

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

There were no debentures issued during the financial year.

Options granted over unissued shares

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

Dividends

The amount of dividends paid by the Company since 31 December 2013 are as follows: RM’000 In respect of the financial year ended 31 December 2013: final single tier dividend of 8.50% per ordinary share, paid on 29 May 2014 126,948

In respect of the financial year ended 31 December 2014: interim single tier dividend of 14.70% per ordinary share, declared on 25 November, ex-date on 12 December 2014, and paid on 13 January 2015 219,545 346,493

The directors do not recommend any final dividend to be paid for the year under review. 87 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at directors’ Fr am e w or k report for the financial year ended 31 December 2014 Le a ders hi p

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. R e vi w At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad financing, P er f or manc e or the amount of impairment provisions for impaired financing in the financial statements of the Group and of theC ompany, 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. P erspe ctiv es

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

Valuation methods

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

Contingent and other liabilities

At the date of this report, there does not exist: A u d it ed

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year and which secures F inancial e m nt s Stat the liabilities of any other person, or

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

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

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. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 88 Annual Report 2014 directors’ report for the financial year ended 31 December 2014

Items of an unusual nature

The results of the operations of the Group and of the Company for the financial year were not, in the opinion of theD irectors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature, likely to affect substantially the results of the operations of the Group and of the Company for the current financial year in which this report is made.

Significant events during the year

The significant events during the financial year are as disclosed in Note 49 to the financial statements.

Directors

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

tan Sri Samsudin bin Osman tan Sri Ismail bin Adam tan Sri Ismee bin Ismail datuk Zaiton binti Mohd Hassan datuk Rozaida binti Omar rifina bintiM d Ariff Zahari @ Mohd Zin bin Idris salih Amaran bin Jamiaan dato’ Johan bin Abdullah (resigned as Non-Independent Executive Director w.e.f 15.01.2015 and appointed as Non-Independent N non-Executive Director w.e.f 17.02.2015)

Directors’ interests in shares

The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ shareholdings are as follows:

Number of ordinary shares of RM1 each At At 1 January 2014 Bought Sold 31 December 2014 Interest in the Company: salih Amaran bin Jamiaan - Others 14,000 3,000 - 17,000 14,000 3,000 - 17,000

None of the other Directors holding office at 31 December 2014 had any interest in the shares and options over shares of the Company and of its related corporations during the financial year. 89 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at directors’ Fr am e w or k report for the financial year ended 31 December 2014 Le a ders hi p

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in the financial statements or the fixed salary of a full time employee of the Company 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 firm in which the

Director has a substantial financial interest. R e vi w P er f or manc e There was no arrangement during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Auditors

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

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: P erspe ctiv es

……………………………………. Tan Sri Samsudin bin Osman acc o untability

……………………………………. A u d it ed

Dato’ Johan bin Abdullah F inancial e m nt s Stat

Kuala Lumpur,

Date: 31 March 2015 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 90 Annual Report 2014

Statements of

Financial Position as at 31 December 2014

Group Company As at As at 31.12.2014 31.12.2013 31.12.2014 31.12.2013 Note RM’000 RM’000 RM’000 RM’000 Assets Cash and short-term funds 3 3,898,172 3,953,896 123,566 149,559 Deposits and placements with financial institutions 4 721,324 701,302 - - Financial assets held-for-trading 5 1,165,590 1,405,198 - - Derivative financial assets 6 62,541 29,118 - - Financial assets available-for-sale 7 13,815,889 16,536,010 18,559 17,860 Financial assets held-to-maturity 8 547,258 467,935 - - Financing, advances and others 9 29,524,571 23,740,948 - - Other assets 10 580,985 250,801 1,189 2,451 Takaful assets 11 811,051 753,089 - - Statutory deposits with Bank Negara Malaysia 12 1,335,000 1,297,100 - - Current tax assets 41,872 9,448 510 45 Deferred tax assets 13 65,816 69,191 10 10 Investments in subsidiaries 14 - - 4,707,615 4,647,369 Investments in associates 15 1 1 1 1 Property, plant and equipment 16 446,933 436,578 1,431 2,058 Investment properties 17 11,506 16,721 - - Assets classified as held for sale 18 1,696 7,209 - - Total assets 53,030,205 49,674,545 4,852,881 4,819,353 91 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statements of Fr am e w or k Financial Position as at 31 December 2014 Le a ders hi p

Group Company As at As at 31.12.2014 31.12.2013 31.12.2014 31.12.2013 Note RM’000 RM’000 RM’000 RM’000 Liabilities and equity

Deposits from customers 19 40,678,379 36,924,367 - - R e vi w

Deposits and placements of banks and P er f or manc e other financial institutions 20 300,000 1,529,975 - - Derivative financial liabilities 6 32,407 13,565 - - Bills and acceptances payable 127,524 170,598 - - Other liabilities 21 1,195,304 774,566 221,541 12,025 Takaful liabilities 22 6,323,577 6,082,001 - - Sukuk liabilities 23 1,133,256 1,089,935 1,133,256 1,089,935 Zakat and taxation 50,498 39,598 - - P erspe ctiv es Total liabilities 49,840,945 46,624,605 1,354,797 1,101,960

Equity Share capital 24 1,493,506 1,493,506 1,493,506 1,493,506 Reserves 25 1,455,531 1,316,831 2,004,578 2,223,887

Equity attributable to owners of the Company 2,949,037 2,810,337 3,498,084 3,717,393

Non-controlling interests 240,223 239,603 - - acc o untability Total equity 3,189,260 3,049,940 3,498,084 3,717,393 Total liabilities and equity 53,030,205 49,674,545 4,852,881 4,819,353 Commitments and contingencies 48 12,135,967 11,211,680 - - A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati

The accompanying notes form an intergal part of these financial statements. BIMB HOLDINGS BERHAD 92 Annual Report 2014

Statements of Profit or Loss and Other Comprehensive Income for the financial year ended 31 December 2014

Group Company 2014 2013 2014 2013 Note RM’000 RM’000 RM’000 RM’000 Income derived from investment of depositors’ funds 27 2,032,085 1,851,278 - - Income derived from investment of shareholders’ funds 28 392,585 405,059 207,727 283,574 Net income from Takaful business 29 542,803 553,058 - - Reversal of/(Allowance for) impairment on financing and advances 30 (59,993) 15,009 - - (Allowance for)/Reversal of impairment on investments 31 2,978 (9,211) - - Reversal of impairment on other assets 710 5,570 - - Direct expenses (17,966) (25,773) - - Total distributable income 2,893,202 2,794,990 207,727 283,574 Income attributable to depositors 32 (845,001) (772,801) - - Total net income 2,048,201 2,022,189 207,727 283,574 Personnel expenses 33 (599,052) (593,921) (7,745) (7,219) Other overhead expenses 34 (565,543) (605,143) (4,350) (24,414) 883,606 823,125 195,632 251,941 Finance cost (68,222) (3,349) (68,222) (3,349) Share of results of associate company, net of tax - (349) - - Profit before zakat and tax 815,384 819,427 127,410 248,592 Zakat (13,202) (14,108) - - Tax expense 36 (215,278) (242,165) (322) (56,461) Profit for the year 586,904 563,154 127,088 192,131

Attributable to: Owners of the Company 532,329 279,327 127,088 192,131 Non-controlling interests 54,575 283,827 - - Profit for the year 586,904 563,154 127,088 192,131 Earnings per share (sen) 37 35.64 25.84 Dividend per ordinary share-net (sen) 38 23.20 8.50 93 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statements of Profit or Loss Fr am e w or k Statements of Profit or Loss and Other Comprehensive Income and Other Comprehensive Income for the financial year ended 31 December 2014 for the financial year ended 31 December 2014 Le a ders hi p

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Profit for the year 586,904 563,154 127,088 192,131

Other comprehensive income, net of tax R e vi w

Items that may be reclassified subsequently to profit or loss: P er f or manc e Currency translation differences in respect of foreign operations (18,041) (27,843) - - Fair value reserve: net change in fair value (7,198) (113,172) 699 571 net amount transferred to profit or loss (24,553) (14,547) (603) (749)

Other comprehensive income for the year, net of tax (49,792) (155,562) 96 (178) P erspe ctiv es Total comprehensive income for the year 537,112 407,592 127,184 191,953

Total comprehensive income attributable to: owners of the Company 481,507 202,346 127,184 191,953 non-controlling interests 55,605 205,246 - - Total comprehensive income for the year 537,112 407,592 127,184 191,953 acc o untability A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati

The accompanying notes form an intergal part of these financial statements. BIMB HOLDINGS BERHAD 94 Annual Report 2014

Statements of changes in equity for the financial year ended 31 December 2014

Attributable to owners of the Company Non-distributable Distributable Retained Earnings/ Non- Share Share Other (Accumulated controlling Total capital premium reserves Losses) Total interests equity Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2013 1,066,790 603,630 428,433 (18,078) 2,080,775 1,747,615 3,828,390 Profit for the year - - - 279,327 279,327 283,827 563,154 Other comprehensive income currency translation differences in respect of foreign operations - - (12,052) - (12,052) (15,791) (27,843) fair value reserve: net change in fair value - - (56,440) - (56,440) (56,732) (113,172) net amount reclassified to profit or loss - - (8,489) - (8,489) (6,058) (14,547) Total comprehensive income for the year - - (76,981) 279,327 202,346 205,246 407,592 Transfer to statutory reserve - - 125,370 (125,370) - - - Issue of shares and warrants 426,716 1,257,527 129,300 - 1,813,543 - 1,813,543 Share issue expense - (1,529) - - (1,529) - (1,529) Dividends paid to shareholders 38 - - - (90,677) (90,677) - (90,677) Dividends paid to non-controlling interests - - - - - (58,315) (58,315) Disposal of interest in subsidiary - - - 4,406 4,406 3,551 7,957 Acquisition of interest in subsidiary - - (1,199,747) - (1,199,747) (1,659,290) (2,859,037) Share-based payment transactions - - 1,220 - 1,220 796 2,016 At 31 December 2013 1,493,506 1,859,628 (592,405) 49,608 2,810,337 239,603 3,049,940 Note 24 Note 25.2

The accompanying notes form an intergal part of these financial statements. 95 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statements of Fr am e w or k changes in equity for the financial year ended 31 December 2014 Le a ders hi p

fair value reserve: P erspe ctiv es net change in fair value - - (5,609) - (5,609) (1,589) (7,198) net amount reclassified to profit or loss - - (23,307) - (23,307) (1,246) (24,553) Total comprehensive income for the year - - (50,822) 532,329 481,507 55,605 537,112

Transfer to statutory acc o untability reserve - - 254,517 (254,517) - - - Dividends paid to shareholders 38 - - - (346,493) (346,493) - (346,493) Dividends paid to non-controlling interests - - - - - (51,603) (51,603) A u d it ed inancial F inancial

Disposal of interest in e m nt s Stat subsidiary - - - 1,807 1,807 694 2,501 Share-based payment transactions - - 2,903 - 2,903 1,911 4,814 Long Term Incentive Plan exercised - - (1,024) - (1,024) 1,024 - Distributions to non- controlling interests - - - - - (7,011) (7,011) nal Add iti o nal

At 31 December 2014 1,493,506 1,859,628 (386,831) (17,266) 2,949,037 240,223 3,189,260 o n I nf or mati Note 24 Note 25.2 A G M th 18 o n inf or mati

The accompanying notes form an intergal part of these financial statements. BIMB HOLDINGS BERHAD 96 Annual Report 2014

Statements of changes in equity for the financial year ended 31 December 2014

Attributable to owners of the Company Non-distributable Distributable Share Share Warrant Fair value Retained Total capital premium reserves reserves earnings equity Company Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2013 1,066,790 603,630 - 133 133,550 1,804,103 Profit for the year - - - - 192,131 192,131 Other comprehensive income fair value reserve: net change in fair value - - - 571 - 571 net amount reclassified to profit or loss - - - (749) - (749) Total comprehensive income for the year - - - (178) 192,131 191,953 Issue of shares and warrants 426,716 1,257,527 129,300 - - 1,813,543 Share issue expenses - (1,529) - - - (1,529) Dividends paid to shareholders 38 - - - - (90,677) (90,677) At 31 December 2013/1 January 2014 1,493,506 1,859,628 129,300 (45) 235,004 3,717,393 Profit for the year - - - - 127,088 127,088 Other comprehensive income fair value reserve: net change in fair value - - - 699 - 699 net amount reclassified to profit or loss - - - (603) - (603) Total comprehensive income for the year - - - 96 127,088 127,184 Dividends paid to shareholders 38 - - - - (346,493) (346,493) At 31 December 2014 1,493,506 1,859,628 129,300 51 15,599 3,498,084 Note 24

The accompanying notes form an intergal part of these financial statements. 97 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statements of Fr am e w or k

cash flows for the financial year ended 31 December 2014 Le a ders hi p

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Cash flows from operating activities profit before zakat and tax 815,384 819,427 127,410 248,592 adjustments for: R e vi w

Depreciation 61,235 60,623 681 675 P er f or manc e (Reversal)/impairment losses on financial assets available-for-sale (106) 9,537 - - reversal of impairment losses on financial assets held-to-maturity (2,872) (326) - - reversal of impairment on other assets (710) (5,570) - - collective assessment allowance 162,878 141,621 - - individual assessment allowance 34,055 79,103 - - P erspe ctiv es dividends from securities (44,771) (51,705) (603) (749) dividends from subsidiaries - - (201,610) (270,285) loss/(Gain) on disposal of property, plant and equipment 1,394 1,514 - (2) Gain on disposal of investment properties (2,639) - - - Gain on disposal of assets held for sale (169) 680 - - net loss/(gain) on sale of financial assets held-for-trading 3,262 9,449 - - acc o untability net gain on sale of financial assets available-for-sale (66,628) (159,298) - - fair value gain on financial assets held-for-trading (12,840) (12,725) - - share of losses of associate companies - 349 - - net derivative losses/(gains) 2,370 (9,163) - - property, plant and equipment write off 52 4,659 - - Gain on disposal of interest in subsidiary - - (2,305) (6,900) A u d it ed inancial F inancial

loss on redemption on financial assets held-to-maturity - 459 - - e m nt s Stat finance cost 68,222 3,349 68,222 3,349 Operating profit/(loss) before working capital changes 1,018,117 891,983 (8,205) (25,320) Changes in working capital: deposits and placements of banks and other financial institutions (1,229,975) 669,697 - - financing of customers (5,980,556) (4,453,873) - - statutory deposits with Bank Negara Malaysia (37,900) (237,200) - - nal Add iti o nal other assets (422,556) (3,328) 1,262 7,996 o n I nf or mati deposits from customers 3,754,012 4,545,367 - - other liabilities 464,055 416,803 (10,030) 10,567 bills payable (43,074) (214,540) - - Cash generated (used in)/from operations (2,477,877) 1,614,909 (16,973) (6,757) Zakat paid (13,745) (10,277) - - A G M th

Tax paid (231,920) (215,716) (787) - 18

Tax refund 341 2,804 - 2,714 o n inf or mati Net cash generated (used in)/from operating activities (2,723,201) 1,391,720 (17,760) (4,043) BIMB HOLDINGS BERHAD 98 Annual Report 2014

Statements of cash flows for the financial year ended 31 December 2014

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Cash flows from investing activities net proceeds from disposal of securities 2,927,839 801,134 - - purchase of property, plant and equipment (74,891) (47,066) (54) (144) proceeds from disposal of property, plant and equipment 694 820 - 2 proceeds from disposal of investment properties 7,710 - - - proceeds from disposal of assets held for sale 7,378 3,110 - - dividends from securities 44,771 51,705 - - dividends from subsidiaries - - 201,610 213,528 disposal of investment in subsidiary 2,501 7,957 2,501 7,957 acquisition of non-controlling interests - (2,859,037) - (2,859,037) subscription of ordinary shares pursuant to dividend Reinvestment Plan - - (60,442) (84,956) Net cash generated from/(used in) investing activities 2,916,002 (2,041,377) 143,615 (2,722,650)

Cash flows from financing activities dividends paid by holding company (126,948) (90,677) (126,948) (90,677) dividends paid to non-controlling interests (51,603) (58,315) - - distributions non-controlling interests (7,011) - - - payment of coupon on Sukuk (24,900) - (24,900) - proceeds from share issues - 1,813,543 - 1,813,543 share issue expenses - (1,529) - (1,529) proceeds from issuance of Islamic Securities by Company - 1,086,586 - 1,086,586 Net cash (used in)/generated from financing activities (210,462) 2,749,608 (151,848) 2,807,923

Net (decrease)/increase in cash and cash equivalents (17,661) 2,099,951 (25,993) 81,230 Cash and cash equivalents at 1 January 4,655,198 2,583,090 149,559 68,329 Foreign exchange differences (18,041) (27,843) - - Cash and cash equivalents at 31 December 4,619,496 4,655,198 123,566 149,559

Cash and cash equivalents comprise: cash and short-term funds 3,898,172 3,953,896 123,566 149,559 deposits and placements with financial institutions 721,324 701,302 - - 4,619,496 4,655,198 123,566 149,559

The accompanying notes form an intergal part of these financial statements. 99 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k

financial statements for the financial year ended 31 December 2014 Le a ders hi p

1. Principal activities and general information

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

Registered office and principal place of business R e vi w 31st Floor, Menara Bank Islam P er f or manc e no. 22, Jalan Perak 50450 Kuala Lumpur

the consolidated financial statements for the financial year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in an associate.

the Company is principally engaged in investment holding activities while the other Group entities are primarily involved in Islamic banking business, managing family and general takaful, and stock-broking businesses. P erspe ctiv es the ultimate holding corporation of the Company during the financial year is Lembaga Tabung Haji (“LTH”), a statutory body established under the Tabung Haji Act 1995 (Act 535).

these financial statements were authorised for issue by the Board of Directors on 31 March 2015.

2. Summary of significant accounting policies

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

2.1 basis of preparation

(a) Statement of compliance A u d it ed

the financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial F inancial e m nt s Stat Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), the requirements of the Companies Act, 1965 in Malaysia.

the following are accounting standards, amendments and interpretations 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 July 2014 • Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements nal Add iti o nal

2011-2013 Cycle) o n I nf or mati • Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 119, Employee Benefits - Defined Benefits Plans: Employee Contributions A G M

• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle) th 18 • Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle) o n inf or mati • Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle) BIMB HOLDINGS BERHAD 100 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

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 2016 • Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements 2012- 2014 Cycle) • Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 10, 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 • Amendments to MFRS 10, Consolidated Financial Statements and MFRS 12, Disclosure of Interests in Other Entities and MFRS 128, Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception • Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations • MFRS 14, Regulatory Deferral Accounts • Amendments to MFRS 101, Presentation of Financial Statements - Disclosure Initiative • Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation • Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture – Agriculture: Bearer Plants • Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle) • Amendments to MFRS 127, Separate Financial Statements - Equity Method in Separate Financial Statements • Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)

MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2017 • MFRS 15, Revenue from Contracts with Customers

MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2018 • MFRS 9, Financial Instruments (2014)

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

• from the annual period beginning on 1 January 2015 for those accounting standards, amendments or interpretation that are effective for annual periods beginning on or after 1 July 2014, except for Amendments to MFRS 1 and Amendments to MFRS 138 which are not applicable to the Group and the Company. • from the annual period beginning on 1 January 2016 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2016, except for Amendments to MFRS 11 and MFRS 14 which are not applicable to the Group and the Company. • from the annual period beginning on 1 January 2017 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2017. • from the annual period beginning on 1 January 2018 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2018. 101 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.1 basis of preparation (continued)

(a) Statement of compliance (continued)

the initial application of the accounting standards, amendments or interpretations are not expected to have any material R e vi w

financial impacts to the current period and prior period financial statements of the Group and of theC ompany except as P er f or manc e mentioned below:

MFRS 15, Revenue from Contracts with Customers mfrs 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services.

the Group is currently assessing the financial impact that may arise from the adoption of MFRS 15. P erspe ctiv es

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

the Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.

(b) basis of measurement acc o untability

the financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

these financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and the Company’s functional

currency. All financial information presented in RM has been rounded to the nearest thousand (RM’000), unless otherwise A u d it ed inancial F inancial stated. e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 102 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.1 basis of preparation (continued)

(d) use of estimates and judgements

the preparation of the financial statements in conformity with MFRSs 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 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 note:

• Note 2.5 – Financial instruments: Determination of fair value • Note 2.10 – Impairment • Note 2.13 – General Takaful Fund – Provision for outstanding claims – Expense reserves • Note 2.14 – Family Takaful Fund – Actuarial reserves – Provision for outstanding claims – Expenses reserves • Note 2.21 – Deferred tax assets

2.2 basis of consolidation

(a) Subsidiaries

subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of 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 investments includes transaction costs. 103 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.2 basis of consolidation (continued)

(b) business combinations

business combinations are accounted for using the acquisition method from the acquisition date, which is the date on R e vi w

which control is transferred to the Group. P er f or manc e

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

• The fair value of the consideration transferred; plus • The recognised amount of any non-controlling interest in the acquiree; plus • If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less • The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed P erspe ctiv es 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.

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

(d) acquisition from entities under common control A u d it ed inancial F inancial e m nt s Stat 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 comparative period presented or, if later, at the date that common control was established; for this purpose comparatives 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. nal Add iti o nal

(e) loss of control o n I nf or mati

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

or as a financial asset available-for-sale depending on the level of influence retained. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 104 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.2 basis of consolidation (continued)

(f) Associates

associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

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

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

when the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

when the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss.A ny gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss, if that gain or loss would be required to be reclassified to profit or loss, on the disposal of the related assets or liabilities.

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

(g) 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.

(h) 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.

unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 105 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

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 R e vi w

at the dates of the transactions. P er f or manc e

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. P erspe ctiv es foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

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. acc o untability

(b) Operations denominated in functional currencies other than Ringgit Malaysia

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. A u d it ed inancial F inancial foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. e m nt s Stat 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 or joint control is lost, the cumulative amount in theFCTR related to that foreign operation is reclassified to profit or loss as part of the profit 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 nal Add iti o nal

its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint o n I nf or mati control, the relevant proportion of the cumulative amount is reclassified to profit or loss. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 106 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

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

(a) 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.

(b) financial instrument categories and subsequent measurement

the Group and the Company categorise financial instruments as follows:

financial assets

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

fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

other financial assets 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. 107 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.5 financial instruments (continued)

(b) financial instrument categories and subsequent measurement (continued)

Financial assets (continued) R e vi w P er f or manc e (ii) held-to-maturity investments

held-to-maturity investments category comprises Islamic debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity.

financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective profit method. P erspe ctiv es any sale or reclassification of more than an insignificant amount of financial assets held-to-maturity not close to their maturity would result in the reclassification of all financial assets held-to-maturity to financial assets available-for-sale and the Group would be prevented from classifying any financial assets as financial assets held-to-maturity for the current and following two financial years.

(iii) Financing and receivables

financing and receivables category comprises Islamic debt instruments that are not quoted in an active market. acc o untability

financial assets categorised as financing and receivables are subsequently measured at amortised cost using the effective profit method.

(iv) Available-for-sale financial assets

available-for-sale category comprises investment in equity and Islamic debt securities instruments that are not held A u d it ed inancial F inancial for trading. e m nt s Stat

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 measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Profit nal Add iti o nal

income calculated for an Islamic debt instrument using the effective profit method is recognised in profit or loss. o n I nf or mati

(v) takaful receivables

takaful receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, takaful receivables are measured at amortised cost, using the

effective profit method. A G M th 18

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment o n inf or mati (see Note 2.10). BIMB HOLDINGS BERHAD 108 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.5 financial instruments (continued)

(b) financial instrument categories and subsequent measurement (continued)

Financial liabilities

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

fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) 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.

other 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.

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 is 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 provision.

(d) Regular way purchase or sale of financial assets

a regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

a regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(i) the recognition of an asset to be received and the liability to pay for it on the trade date, and (ii) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date. 109 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.5 financial instruments (continued)

(e) Derecognition

a financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the R e vi w financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks P er f or manc e 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 the 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, P erspe ctiv es is recognised in profit or loss.

2.6 Property, plant and equipment

Recognition and measurement

items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. acc o untability

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. A u d it ed inancial F inancial e m nt s Stat the cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between 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, plant 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, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. nal Add iti o nal o n I nf or mati the gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other overhead expenses” respectively in the profit or loss.

Subsequent costs A G M

the cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item th 18 if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and o n inf or mati its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. BIMB HOLDINGS BERHAD 110 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.6 Property, plant and equipment (continued)

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, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group and the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative years are as follows: • Buildings 50 years • Building improvements and renovations 6 - 10 years • Furniture, fixtures and fittings 2 - 10 years • Office equipment 2 - 6 years • Motor vehicles 4 - 5 years • Computer equipment and software 2 - 7 years • Leasehold buildings 50 - 100 years

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, plant and equipment as stated in accounting policy Note 2.6.

cost includes expenditure that is directly attributable to the acquisition of the investment property.

depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 50 years for buildings. Freehold land is not depreciated.

an investment property is derecognised on its disposal, or when it is permanently withdrawn from use 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.

(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. 111 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.8 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 R e vi w

leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the P er f or manc e present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.The finance expense is allocated to each period during the lease term so as to produce a constant periodic profit rate on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. P erspe ctiv es leasehold land which in substance is a finance lease is classified as property, plant and equipment or as investment property if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. acc o untability

property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.

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. A u d it ed inancial F inancial e m nt s Stat leasehold land which in substance is an operating lease is classified as prepaid lease payments.

2.9 bills and other receivables

Bills and other receivables are stated at cost less any allowance for impairment. nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 112 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.10 Impairment

Financial assets

the Group and the Company assess at each reporting date whether there is objective evidence that financing and receivables, financial assets held-to-maturity or financial assets available-for-sale are impaired 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 statement of financial position date (“a loss event”) and that loss event or events has an impact on the estimated future cash flow of the financial asset or the group of financial assets as that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial assets is estimated.

(a) financing, advances and others

for financing, advances and others, the criteria that is used to determine that there is objective evidence of an impairment loss include:

(i) significant financial difficulty of the issuer or obligor; or (ii) a breach of contract, such as default or delinquency in profit or principal payments; or (iii) it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; 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 (3) months or more or where a financing is in arrears for less than three (3) months, the financing exhibits indications of credit weakness.

for financing and receivables, the Group first assesses whether objective evidence of impairment exists individually for financing and receivables that are individually significant, and collectively for financing and receivables that are not individually significant.I f the Group determines that no objective evidence of impairment exist for an individually assessed financing and receivables, whether significant or not, it includes the assets in a group of financing and receivables with similar credit risk characteristics and collectively assesses them for impairment. Financing and receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in the collective assessment for impairment.

the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective profit rate. The amount of the loss is recognised using an allowance account and recognised in the profit or loss. T he 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. 113 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.10 Impairment (continued)

Financial assets (continued)

(a) financing, advances and others (continued) R e vi w P er f or manc e future cash flows for a group of financing and receivables that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted based on current observable data to reflect the effects of current conditions that did not affect the year on which the historical loss experience is based and remove the effects of conditions in the historical year that do not currently exist.

when a financing is uncollectable, it is written off against the related allowance for impairment. Such financing are written

off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequently P erspe ctiv es recoveries of amounts previously written off are credited to the profit or loss.

if, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance for impairment account. The amount of reversal is recognised in the profit or loss.

(b) available-for-sale financial assets

in the case of available-for-sale equity securities, a significant or prolonged decline in their fair value of the security below acc o untability its cost is also considered in determining whether impairment exists. Where such evidence exists, the cumulative net loss that has been previously recognised directly in equity is removed from equity and recognised in the profit or loss. In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as all other financial assets. Reversals of impairment of debt instruments are recognised in the other comprehensive income. Reversals of impairment of equity shares are not recognised in the profit or loss, increases in the fair value of equity shares after

impairment are recognised directly in equity. A u d it ed inancial F inancial e m nt s Stat (c) unquoted equity instruments

an impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

(d) takaful receivables nal Add iti o nal o n I nf or mati if there is objective evidence that the takaful receivable is impaired, the Group reduces the carrying amount of the takaful receivable accordingly and recognises that impairment loss in profit or loss. The Group gather the objective evidence that a takaful receivable is impaired using the same process adopted for financial assets carried at amortised cost.The impairment loss is calculated under the same method used for those financing, advances and others. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 114 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.10 impairment (continued)

Other assets

the carrying amounts of other assets (except for deferred tax asset and investment property measured at fair value and non- current assets classified as held for sale) 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 estimated recoverable amount. Impairment losses are recognised in profit or loss.

impairment losses recognised in prior periods are assessed at the end of each reporting period 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 since the last impairment loss was recognised. 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 profit or loss in the financial year in which the reversals are recognised.

2.11 Bills and acceptances payable

bills and acceptances payable represents the Group’s own bills and acceptances rediscounted and outstanding in the market.

2.12 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. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

2.13 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:

• General Takaful; and • General retakaful funds

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 income

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. 115 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.13 General Takaful Fund (continued)

Unearned contribution reserves

the Unearned Contribution Reserves (“UCR”) represent the portion of the net contributions of takaful certificates written that R e vi w relate to the unexpired periods of the certificates at the end of the financial year. P er f or manc e

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 business (b) 1/8th method for all classes of General Treaty Inward Retakaful business

Provision for outstanding claims P erspe ctiv es 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 and of the Company 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 external actuary where historical claims experience are used to project future claims. The provision includes a risk margin for adverse deviation. As with all acc o untability projections, there are elements of uncertainty and the projected claims may be different from actual. These uncertainties arise from changes in underlying risk, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.

Expense reserves A u d it ed

the expense reserve for mudharabah certificates is calculated based on best estimate of the provision for unexpired expense F inancial e m nt s Stat 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.

2.14 Family Takaful Fund

included in Family Takaful Fund are funds arising from: nal Add iti o nal

• Family Takaful; o n I nf or mati • Group Family Takaful; and • Family retakaful funds.

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 A G M

the Group. th 18 o n inf or mati 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. BIMB HOLDINGS BERHAD 116 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.14 Family Takaful Fund (continued)

contribution income

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.

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:

(a) 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.

for a credit-related takaful certificate whose sustainability of tabarru’ deductions is dependant on the performance of Participants Investment Fund (“PIF”), the calculation is subject to adjusting the future gross tabarru’ cash flow such that it is limited to the period where the PIF can sustain the tabarru’ and assuming that the takaful coverage is in force for the full duration of the takaful contract.

(b) cash Flow Projection Valuation

for products with PIF other than credit-related products, the liabilities shall be valued by projecting future cash flows to ensure that all future obligations can be met without recourse to additional finance or capital support at any future time during the duration of the certificate. The cash flow projection shall use a basis that is consistent with the requirements of the valuation guidelines.

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

(i) for a certificate covering death or survival, the liabilities shall be valued on an unexpired risk basis using a prospective estimate of expected future payments arising from future events covered as at the valuation date. These future payments shall include allowance for direct claims related expenses, direct investment-related expenses, cost of retakaful and expected future contribution refunds expected during the unexpired period.

(ii) for a certificate covering contingencies other than death or survival, the net liability is the maximum of unexpired risk reserve or unearned contribution reserve. 117 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.14 Family Takaful Fund (continued)

Provision for outstanding claims

claims and provisions for claims arising on family and group family takaful certificates, including settlement costs, are R e vi w

accounted for using the case basis method and for this purpose the benefits payable under a family takaful certificate are P er f or manc e 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 P erspe ctiv es 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.

Expense reserves

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

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 A u d it ed inancial F inancial corresponding family takaful certificate (for example, for a long-term ordinary takaful certificate, the valuation method for e m nt s Stat expense liabilities should also be long-term in nature).

(b) Deficiency Reserve for Skim Anuiti Takaful KWSP

in addition to the expense liabilities above, an additional requirement is also complied as stipulated below:

if PIF is expected to be insufficient to meet future annuity certain benefit and/or future life annuity tabarru’, another nal Add iti o nal

provision shall be set aside that is in line with requirement of the valuation guideline. Upon PIF insufficiency, the o n I nf or mati Shareholders’ Fund shall honour the annuity certain benefit payment to participants as well as the tabarru’ to Participant Risk Fund (“PRF”). A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 118 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.15 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.A s 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:

• likely to be a significant portion of the total contractual benefits; • whose amount or timing is contractually at the discretion of the issuer; and • that are contractually based on the: - performance of a specified pool of contracts or a specified type of contract; - realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or - the profit or loss of the company, fund or other entity that issues the contract.

2.16 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. 119 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.16 Retakaful (continued)

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.R etakaful liabilities represent balances due to retakaful operators. Amounts payable are estimated in a manner consistent with the related retakaful contract. R e vi w P er f or manc e 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.

2.17 Contingencies P erspe ctiv es

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. acc o untability 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. A u d it ed

F inancial 2.18 Operating segments e m nt s Stat

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. All operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Group Managing Director cum Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

2.19 Share capital nal Add iti o nal o n I nf or mati Ordinary shares

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. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 120 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.20 Recognition of income

Financing income – Banking business

financing income is recognised in the profit or loss on an accrual basis using the effective profit rate method. The effective profit rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instruments or, when appropriate, a shorter 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.

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 and brokerage fees are recognised as income based on contractual arrangements. Fees from advisory and corporate finance activities are recognised net of service taxes and discounts on completion of each stage of the assignment.

dividend income from subsidiary and associated companies and other investments are recognised when the Group’s rights to receive payment is established.

2.21 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 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 by the end of the reporting period. 121 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.21 income tax (continued)

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. R e vi w P er f or manc e 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.

2.22 Zakat

this represents business zakat. It is an obligatory amount payable by the Group and the Company to comply with the principles

of Shariah. P erspe ctiv es

2.23 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 acc o untability 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.

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 A u d it ed inancial F inancial to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations. e m nt s Stat

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 nal Add iti o nal

vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of o n I nf or mati 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 A G M price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility th 18

adjusted for changes expected due to publicly available information), expected dividends, and the risk-free profit rate (based o n inf or mati on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. BIMB HOLDINGS BERHAD 122 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

2. Summary of significant accounting policies (continued)

2.24 non-current assets held for sale

non-current assets, or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.

immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell.

any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

intangible assets and property and equipment once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale.

2.25 Earnings per ordinary shares

the Group presents basic data for its ordinary shares (“EPS”).

basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the 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 convertible notes and share options granted to employees.

2.26 borrowing costs

borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective profit method.

borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

the capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. 123 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

2. Summary of significant accounting policies (continued)

2.27 fair value measurements

fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as 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. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in R e vi w

the principal market or in the absence of a principal market, in the most advantageous market. P er f or manc e

for non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

when measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows: P erspe ctiv es level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. level 3 : unobservable inputs for the asset or liability.

the Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers. acc o untability

3. cash and short-term funds

2014 2013 Group RM’000 RM’000 A u d it ed inancial F inancial

Cash and balances with banks and other financial institutions 796,588 600,969 e m nt s Stat Money at call and interbank placements with remaining maturity not exceeding one month 3,101,584 3,352,927 3,898,172 3,953,896

Company Cash and balances with banks and other financial institutions 123,566 149,559 123,566 149,559 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 124 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

4. Deposits and placements with financial institutions

Group 2014 2013 RM’000 RM’000 Licensed banks 715,238 688,324 Other financial institutions 6,086 12,978 721,324 701,302

5. financial assets held-for-trading

Group 2014 2013 RM’000 RM’000 At fair value: Quoted securities in Malaysia - Shares 66,725 51,239 Quoted securities outside Malaysia - Shares 43,594 29,583 - unit trusts 22,943 18,451 133,262 99,273

Unquoted securities in Malaysia - malaysian Government Investment Issues 50,767 726,353 - bank Negara Negotiable Notes 394,808 178,058 - islamic Debt Securities 205,492 328,751 - negotiable Islamic Debt Certificates 279,628 - Unquoted securities outside Malaysia - islamic Debt Securities 101,633 72,763 1,032,328 1,305,925 1,165,590 1,405,198

125 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

6. Derivative financial assets/liabilities

the following tables summarise the contractual or underlying principal amounts of derivatives financial instruments held at fair value through profit or loss and hedging purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at financial position date, and do not represent amounts at risk.

trading derivative financial instruments are revalued on a gross position and the unrealised gains or losses are reflected as derivative R e vi w

financial assets and liabilities respectively. P er f or manc e

Notional Fair value Amount Assets Liabilities Group RM’000 RM’000 RM’000 31.12.2014 Forward contracts 1,840,778 45,508 (28,798)

Profit rate swaps 1,187,694 17,018 (3,594) P erspe ctiv es Structured deposits 106,680 15 (15) 3,135,152 62,541 (32,407)

31.12.2013 Forward contracts 1,381,894 8,681 (6,594) Profit rate swaps 1,311,481 19,855 (6,389) Structured deposits 110,495 582 (582) acc o untability 2,803,870 29,118 (13,565)

7. financial assets available-for-sale

2014 2013 A u d it ed

Group RM’000 RM’000 F inancial e m nt s Stat At fair value Quoted securities in Malaysia - unit trusts 208,161 148,399 - Shares 428,420 930,897 Quoted securities outside Malaysia - unit trusts 82,902 73,827 - Shares 14,747 542 nal Add iti o nal - islamic Debt Securities 1,173 5,134 o n I nf or mati 735,403 1,158,799 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 126 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

7. financial assets available-for-sale (CONTINUED)

2014 2013 Group RM’000 RM’000 At fair value Unquoted securities in Malaysia - malaysian Government Islamic Papers 241,466 455,731 - malaysian Government Investment Issues 1,202,058 1,269,943 - negotiable Islamic Debt Certificates - 447,825 - islamic Debt Securities 11,452,570 12,868,937 - Shares 380 380 - unit trusts 149,313 298,897 Unquoted securities outside Malaysia - Shares 38 36 - islamic Debt Securities 1,405 1,345 - islamic Development Bank Unit Trusts 1,647 1,647 13,048,877 15,344,741

At cost Unquoted securities in Malaysia - unquoted shares in Malaysia 24,450 23,456 less: Accumulated impairment loss* (15,734) (14,740) 8,716 8,716 Unquoted securities outside Malaysia - unquoted shares outside Malaysia 22,893 23,754 13,815,889 16,536,010

* movement in accumulated impairment loss due to translation differences.

2014 2013 Company RM’000 RM’000 At fair value Quoted securities in Malaysia - unit trusts 18,559 17,860

8. financial assets held-to-maturity

2014 2013 Group RM’000 RM’000 Unquoted securities in Malaysia - malaysian Government Islamic Papers 145,276 145,391 - islamic Debt Securities 387,306 319,089 less: Accumulated impairment loss (7,019) (7,125) Unquoted securities outside Malaysia - islamic Debt Securities 21,695 10,580 547,258 467,935 127 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p otal T 69,171 72,533 33,398 90,288 844,720 174,348 435,638 R M ’000 (444,388) (142,753) 9,141,640 1,347,577 9,606,221 1,013,823 7,282,355 30,111,712 29,524,571 ------R e vi w 90,288 90,288 P er f or manc e R M ’000 A r-Rahnu ------1,822 66,730 72,533 18,466 159,551 I stisna’ R M ’000 ------P erspe ctiv es 5,030 I jarah ai A l- B ai 148,543 153,573 R M ’000 humma T humma ------B it- I jarah 64,141 64,141 amleek R M ’000 T M untahiah - - - - - A t- acc o untability 44,610 711,351 998,462 346,003 R M ’000 awarruq 3,869,009 9,234,012 3,717,813 T 18,921,260 ------69 B ai 89,635 21,576 133,369 180,731 372,209 797,589 R M ’000 nah A l- I nah A u d it ed inancial F inancial e m nt s Stat ------33,398 403,814 R M ’000 1,013,823 1,451,035 M urabahah ------jil A jil ai’ B ai’ 19,841 111,203 R M ’000 nal Add iti o nal 5,205,901 8,474,275 3,137,330 o n I nf or mati ithaman B ithaman

A G M financing financing financing financing financing ouse financing ouse th

collective assessment allowance discounted

individual assessment allowance 18 erm financing rust receipts rust rade bills rade bills yndicated yndicated S Group 31 December 2014 A t amortised cost C ash line T h easing easing L ridging ridging B ersonal ersonal P P awn broking financing, advances and others A llowance for impaired - o ther term T - redit cards C redit T taff financing S taff N et financing, advances and others o n inf or mati (a) b y type and Shariah contract 9. es an d o th ers f inancin g , a d vanc BIMB HOLDINGS BERHAD 128 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014 otal T 40,052 35,957 95,621 749,246 732,677 217,681 819,488 172,708 445,242 R M ’000 (365,375) (136,197) 8,332,211 6,701,052 5,900,585 24,242,520 23,740,948 ------95,621 95,621 R M ’000 A r-Rahnu ------1,884 67,995 40,052 21,944 131,875 I stisna’ R M ’000 ------I jarah 33,216 ai A l- B ai 159,750 192,966 R M ’000 humma T humma ------B it- I jarah 57,931 57,931 amleek R M ’000 T M untahiah - - - - - A t- 25,736 573,323 475,200 288,153 R M ’000 awarruq 1,190,950 7,597,961 2,326,624 T 12,477,947 - - - - - B ai 708 7,034 14,107 175,923 193,387 734,250 157,089 R M ’000 nah A l- I nah 1,282,498 ------35,957 841,338 805,381 R M ’000 M urabahah ------jil A jil ai’ B ai’ 30,874 124,320 R M ’000 5,442,107 9,162,344 3,565,043 ithaman B ithaman

financing financing financing financing financing

individual assessment allowance discounted collective assessment allowance erm financing rust receipts rust rade bills rade bills Group 31 December 2013 A t amortised cost C ash line T h ouse financing yndicated yndicated S easing easing L ridging ridging B ersonal ersonal P T P awn broking - N et financing, advances and others o ther term financing, advances and others A llowance for impaired - redit cards C redit T taff financing S taff (a) b y type and Shariah contract (continued) 9. es an d o th ers (c ntinu ed ) f inancin g , a d vanc 129 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

9. financing, advances and others (continued)

Group 2014 2013 RM’000 RM’000

(b) by type of customer R e vi w

domestic non-bank financial institutions 471,181 352,438 P er f or manc e domestic business enterprise 5,884,575 4,630,194 small medium industries 658,763 631,069 Government and statutory bodies 292,201 200,885 Individuals 22,336,404 18,216,908 other domestic entities 8,230 5,483 Foreign entities 460,358 205,543 30,111,712 24,242,520 P erspe ctiv es

(c) by profit rate sensitivity Fixed rate House financing 1,563,643 1,512,408 Others 7,553,928 7,954,409 Floating rate Others 20,994,141 14,775,703

30,111,712 24,242,520 acc o untability

(d) by remaining contractual maturity maturity within one year 3,147,023 2,927,612 more than one year to three years 992,088 816,371 more than three years to five years 1,468,082 1,373,079 A u d it ed more than five years 24,504,519 19,125,458 F inancial e m nt s Stat 30,111,712 24,242,520

(e) by geographical distribution Central Region 13,567,565 10,699,889 Eastern Region 5,037,536 4,455,488 Northern Region 4,722,950 3,928,233 Southern Region 4,411,954 3,191,397 nal Add iti o nal east Malaysia Region 2,371,707 1,967,513 o n I nf or mati 30,111,712 24,242,520 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 130 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

9. financing, advances and others (continued)

Group 2014 2013 RM’000 RM’000 (f) by sector primary agriculture 331,524 243,148 mining and quarrying 20,481 8,135 manufacturing (including agro-based) 1,011,749 829,577 electricity, gas and water 549,284 365,014 wholesale & retail trade, and hotels & restaurants 879,627 750,364 Construction 2,316,754 1,872,011 real estate 693,563 517,731 transport, storage and communications 563,955 236,616 finance, insurance and business activities 924,120 850,283 education, health and others 483,863 342,942 household sectors 22,336,792 18,216,799 other sectors - 9,900 30,111,712 24,242,520

(g) movement in impaired financing and advances (“impaired financing”) are as follows: at 1 January 285,302 308,709 classified as impaired during the year 438,837 440,665 reclassified as not impaired during the year (194,739) (236,056) amount recovered (72,983) (71,626) amount written off (115,145) (160,388) exchange differences 3,267 3,998 at 31 December 344,539 285,302

Gross impaired financing as a percentage of gross financing, advances and others 1.14% 1.18%

(h) impaired financing by geographical distribution central Region 148,240 129,930 eastern Region 44,509 28,106 northern Region 30,618 52,873 southern Region 13,307 13,702 east Malaysia Region 107,865 60,691 344,539 285,302 131 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

9. financing, advances and others (continued)

Group 2014 2013 RM’000 RM’000

(i) impaired financing by sector R e vi w

primary agriculture 1,854 - P er f or manc e manufacturing (including agro-based) 7,669 32,302 electricity, gas and water 54 108 wholesale & retail trade, and hotels & restaurants 14,732 15,525 Construction 72,192 21,601 transport, storage and communications 42,689 33,117 finance, insurance and business activities 60,258 61,393 education, health and others 590 - P erspe ctiv es household sectors 144,501 121,226 other sectors - 30 344,539 285,302

(j) movement of allowance for impaired financing Collective assessment allowance at 1 January 365,375 313,334

allowance made during the year 162,878 141,621 acc o untability amount written off (84,416) (90,373) exchange differences 551 793 at 31 December 444,388 365,375

Individual assessment allowance

at 1 January 136,197 126,988 A u d it ed inancial F inancial allowance made during the year 34,055 79,103 e m nt s Stat amount written off (30,802) (69,901) exchange differences 3,303 7 at 31 December 142,753 136,197 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 132 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

10. Other assets

2014 2013 Group RM’000 RM’000 Clients' and dealers' debit balances 179,229 47,879 Deposits and prepayments 42,781 43,173 Other financing 78,290 87,832 Other receivables 280,685 71,917 580,985 250,801

Company Amount due from subsidiaries 281 40 Deposits and prepayments 436 2,411 Income receivable 472 - 1,189 2,451

other financing of the Group are stated net of impairment allowances ofRM 1,713,000 (2013: RM1,927,000).

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

11. takaful assets

Group 2014 2013 Note RM’000 RM’000 Retakaful assets: - claims liabilities 22(a)(i) 405,867 407,393 - contribution liabilities 22(a)(ii) 69,949 80,200 - actuarial liabilities 22(a)(iii) 206,644 148,340 682,460 635,933

Takaful receivables - due contributions 95,074 88,353 - due from retakaful/co-takaful 38,004 37,325 133,078 125,678 Less: Allowance for impaired receivables (4,487) (8,522) 128,591 117,156 811,051 753,089

Offsetting of financial assets and financial liabilities

there is no financial assets and liabilities that have been set off for presentation purposes. 133 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

12. 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.

13. Deferred tax assets R e vi w P er f or manc e Recognised deferred tax assets and liabilities

deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Total 2014 2013 2014 2013 2014 2013 Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 P erspe ctiv es Property, plant and equipment - 91 (23,342) (28,843) (23,342) (28,752) Investment properties 654 640 - - 654 640 Unabsorbed capital allowances 27,863 28,579 - - 27,863 28,579 Provisions 60,641 68,724 - - 60,641 68,724 Tax assets/(liabilities) 89,158 98,034 (23,342) (28,843) 65,816 69,191 acc o untability Company Tax assets 10 10 - - 10 10

unrecognised deferred tax assets

deferred tax assets have not been recognised in respect of the following items: A u d it ed inancial F inancial e m nt s Stat

2014 2013 Group RM’000 RM’000 Unabsorbed capital allowances 28,047 27,518 Unutilised tax losses 7,158 7,158 Deductible temporary differences 653 (154) 35,858 34,522 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 134 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

13. Deferred tax assets (continued)

Movement in temporary differences during the year:

Recognised Effect of Recognised Effect of Recognised in other movement As at Recognised in other movement As at in profit comprehensive in exchange 31.12.2013 / in profit comprehensive in exchange As at 1.1.2013 or loss income rate 1.1.2014 or loss income rate 31.12.2014 Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Property, plant and equipment (33,422) 4,527 146 (3) (28,752) 5,409 - 1 (23,342) Investment properties 783 (143) - - 640 14 - - 654 Unabsorbed capital allowances 30,246 (1,667) - - 28,579 (716) - - 27,863 Provisions 58,223 11,934 (839) (594) 68,724 (10,603) 2,351 169 60,641 Total assets 55,830 14,651 (693) 597 69,191 (5,896) 2,351 170 65,816 Note 36 Note 36

14. investments in subsidiaries

Company 2014 2013 RM’000 RM’000 At cost Quoted shares in Malaysia 99,053 99,249 Unquoted shares in Malaysia 4,608,562 4,548,120 4,707,615 4,647,369 135 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

14. investments in subsidiaries (continued)

details of the subsidiaries are as follows: Effective Ownership Interest 2014 2013 Name of Company Principal activities % %

Bank Islam Malaysia Berhad Islamic banking business 100 100 R e vi w P er f or manc e Subsidiaries of Bank Islam Malaysia Berhad bimb Investment Management Berhad Managing Islamic Unit Trust Funds 100 100

bimb Foreign Currency Clearing Agency Dormant (in the process of members voluntary 100 100 sdn Bhd liquidation)

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

farihan Corporation Sdn Bhd Provide manpower for the provision of Islamic 100 100 P erspe ctiv es pawn broking services

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

Subsidiary of Bank Islam Trust Company (Labuan) Ltd bimb Offshore Company Management Resident Corporate Secretary and Director for 100 100 services Sdn Bhd offshore Companies acc o untability Syarikat Takaful Malaysia Berhad Family and General Takaful business 60.31 60.50

Subsidiaries of Syarikat Takaful Malaysia Berhad asean Retakaful International (L) Ltd ** Family and General retakaful business 63.09 63.09

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

Subsidiaries of P.T. Syarikat Takaful Indonesia A u d it ed inancial F inancial p.T. Asuransi Takaful Umum *# General Takaful business 64.70 64.70 e m nt s Stat

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 nal Add iti o nal Subsidiaries of BIMB Securities Sdn Bhd o n I nf or mati bimsec Asset Management Sdn Bhd *** Dormant - 100

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 A G M th 18 * incorporated in Indonesia. o n inf or mati # audited by a firm of auditors other than KPMG Desa Megat & Co. ** members’ Voluntary Winding-up commenced on 21 May 2012. The subsidiary has been consolidated based on management accounts. *** the Company had been dissolved under the Companies Commission of Malaysia on 16 July 2014. BIMB HOLDINGS BERHAD 136 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

14. investments in subsidiaries (continued)

non-controlling interest in Subsidiaries

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

2014 Syarikat Bank Islam Takaful Malaysia Berhad Malaysia Berhad Total NCI percentage of ownership interest and voting interest - 39.69% Carrying amount of NCI (RM’000) - 240,223 240,223 Profit allocated to NCI (RM’000) - 55,605 55,605

Summarised financial information before intra-group elimination

Syarikat Bank Islam Takaful Malaysia Berhad Malaysia Berhad RM’000 RM’000 As at 31 December 2014 Assets - 7,164,788 Liabilities - (6,568,342) Net Assets - 596,446

Year ended 31 December 2014 Revenue - 545,937 Profit for the year - 138,735 Total comprehensive income - 139,073

Cash flows from operating activities - 170,111 Cash flows from investing activities - 387,206 Cash flows from financing activities - (137,340) Net increase in cash and cash equivalents - 419,977

Distribution to NCI - 7,011

Dividends paid to NCI - 51,603 137 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

14. investments in subsidiaries (continued)

Non-controlling interest in Subsidiaries (continued)

2013 Syarikat Bank Islam Takaful R e vi w Malaysia Berhad Malaysia Berhad Total P er f or manc e NCI percentage of ownership interest and voting interest - 39.50% Carrying amount of NCI (RM’000) - 239,603 239,603 Profit allocated to NCI (RM’000) 163,814 41,432 205,246

In December 2013, Bank Islam Malaysia Berhad became a wholly-owned subsidiary of the Company, upon the completion of the acquisition of 49.0% equity interest in Bank Islam Malaysia Berhad from Dubai Financial Group LLC and Lembaga Tabung Haji. P erspe ctiv es

Summarised financial information before intra-group elimination Syarikat Bank Islam Takaful Malaysia Berhad Malaysia Berhad RM’000 RM’000 As at 31 December 2013

Assets - 6,924,543 acc o untability Liabilities - (6,334,644) Net Assets - 589,899

Year ended 31 December 2013 Revenue

2,245,105 561,988 A u d it ed inancial F inancial Profit for the year 485,726 134,380 e m nt s Stat Total comprehensive income 334,313 130,905

Cash flows from operating activities 1,293,078 328,219 Cash flows from investing activities 874,375 (250,203) Cash flows from financing activities (110,443) (84,665)

Net increase/(decrease) in cash and cash equivalents 2,057,010 (6,649) Add iti o nal o n I nf or mati

Dividends paid to NCI 24,997 33,338 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 138 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

15. investments in associates

Group and Company 2014 2013 RM’000 RM’000 At cost Unquoted shares 5,019 5,019 Less: - accumulated impairment loss (5,018) (5,018) 1 1

the principal activities of the associates and the interest of the Group are as follows:

Effective Interest Place of 2014 2013 Name of Company Principal activities Incorporation % % Islamic Banking and Provides training and Malaysia Finance Institute Malaysia Sdn Bhd consultancy services 48 48

16. Property, plant and equipment

Furniture Computer **Land and fixtures and Office Motor equipment buildings fittings equipment vehicles and software Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2013 274,840 220,182 79,434 3,957 381,272 959,685 Additions 7,786 12,247 5,847 465 20,721 47,066 Reclassifications (109) 73 (41) - 77 - Disposals (2,579) (5,191) (2,276) (429) (3,044) (13,519) Write off (1,837) (11,573) (12,667) (57) (2,503) (28,637) Transfer from investment properties 5,267 - - - - 5,267 Transfer to asset held for sale (1,060) - - - - (1,060) Exchange difference (2,045) (1,449) 50 (160) 141 (3,463) At 31 December 2013/1 January 2014 280,263 214,289 70,347 3,776 396,664 965,339 Additions 5,386 27,574 7,560 1,285 33,086 74,891 Reclassifications (2,035) 1,526 509 - - - Disposals (3,709) (4,071) (2,560) (359) (23,180) (33,879) Write off - (482) - - - (482) Transfer to asset held for sale (1,750) - - - - (1,750) CMDF Incentive - - - - (31) (31) Exchange difference 495 422 21 54 15 1,007 At 31 December 2014 278,650 239,258 75,877 4,756 406,554 1,005,095 139 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

16. Property, plant and equipment (continued)

Furniture Computer **Land and fixtures and Office Motor equipment buildings fittings equipment vehicles and software Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Depreciation R e vi w

At 1 January 2013 32,753 146,524 46,976 1,870 277,149 505,272 P er f or manc e Depreciation for the year 6,191 17,294 8,926 704 27,232 60,347 Disposals (1,768) (4,193) (1,837) (356) (3,031) (11,185) Write off (1,107) (8,477) (11,847) (57) (2,490) (23,978) Transfer to asset held for sale (33) - - - - (33) Exchange difference (504) (1,271) 49 (73) 137 (1,662) At 31 December 2013/1 January 2014 35,532 149,877 42,267 2,088 298,997 528,761 Depreciation for the year 6,128 14,910 8,420 743 30,876 61,077 P erspe ctiv es Disposals (2,754) (3,133) (2,428) (323) (23,153) (31,791) Write off - (430) - - - (430) Transfer to asset held for sale (54) - - - - (54) Exchange difference 167 375 20 25 12 599 At 31 December 2014 39,019 161,599 48,279 2,533 306,732 558,162

Carrying amounts

At 1 January 2013 242,087 73,658 32,458 2,087 104,123 454,413 acc o untability At 31 December 2013 244,731 64,412 28,080 1,688 97,667 436,578 At 31 December 2014 239,631 77,659 27,598 2,223 99,822 446,933

Building improvement Freehold Freehold Leasehold Leasehold and

land building land building renovations Total A u d it ed inancial F inancial ** Land and buildings - Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 e m nt s Stat Cost At 1 January 2013 55,724 120,419 12,375 50,055 36,267 274,840 Additions - 2,748 - (49) 5,087 7,786 Reclassifications - - - - (109) (109) Disposals - - - (621) (1,958) (2,579) Write off - - - - (1,837) (1,837) nal Add iti o nal

Transfer from investment properties - 5,267 - - - 5,267 o n I nf or mati Transfer to asset held for sale - - - (1,060) - (1,060) Exchange difference (20) (22) - (2,010) 7 (2,045) At 31 December 2013/1 January 2014 55,704 128,412 12,375 46,315 37,457 280,263 Additions - 1,160 - - 4,226 5,386 Reclassifications - 3,326 - (3,326) (2,035) (2,035) A G M

Disposals (220) (409) - - (3,080) (3,709) th Transfer from investment properties ------18 Transfer to asset held for sale - - - (1,750) - (1,750) o n inf or mati Exchange difference - - - 494 1 495 At 31 December 2014 55,484 132,489 12,375 41,733 36,569 278,650 BIMB HOLDINGS BERHAD 140 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

16. Property, plant and equipment (continued)

Building improvement 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 Depreciation At 1 January 2013 - 6,006 986 4,294 21,467 32,753 Depreciation for the year - 2,710 174 1,297 2,010 6,191 Disposals - - - (164) (1,604) (1,768) Write off - - - - (1,107) (1,107) Transfer to asset held for sale - - - (33) - (33) Exchange difference - (4) - (507) 7 (504) At 31 December 2013/1 January 2014 - 8,712 1,160 4,887 20,773 35,532 Depreciation for the year - 2,612 174 1,143 2,199 6,128 Reclassifications - 142 - (142) - - Disposals - (46) - - (2,708) (2,754) Transfer to asset held for sale - - - (54) - (54) Exchange difference - - - 166 1 167 At 31 December 2014 - 11,420 1,334 6,000 20,265 39,019

Carrying amounts At 1 January 2013 55,724 114,413 11,389 45,761 14,800 242,087 At 31 December 2013 55,704 119,700 11,215 41,428 16,684 244,731 At 31 December 2014 55,484 121,069 11,041 35,733 16,304 239,631

Office Furniture, equipment fixtures and Motor and fittings Renovation vehicles computer Total Company RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2013 1,110 1,346 415 452 3,323 Additions - - - 144 144 Reclassifications (14) - - 14 - Disposals - - - (48) (48) At 31 December 2013/1 January 2014 1,096 1,346 415 562 3,419 Additions - - - 54 54 At 31 December 2014 1,096 1,346 415 616 3,473 141 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

16. Property, plant and equipment (continued)

Office Furniture, equipment fixtures and Motor and fittings Renovation vehicles computer Total Company RM’000 RM’000 RM’000 RM’000 RM’000 R e vi w P er f or manc e Depreciation At 1 January 2013 254 149 69 262 734 Depreciation for the year 265 225 104 81 675 Reclassifications (6) - - 6 - Disposals - - - (48) (48) At 31 December 2013/1 January 2014 513 374 173 301 1,361 Depreciation for the year 260 224 104 93 681 At 31 December 2014 773 598 277 394 2,042 P erspe ctiv es

Carrying amounts At 1 January 2013 856 1,197 346 190 2,589 At 31 December 2013 583 972 242 261 2,058 At 31 December 2014 323 748 138 222 1,431 acc o untability 17. investment properties

Freehold Freehold Leasehold Leasehold land building land building Total Group RM’000 RM’000 RM’000 RM’000 RM’000

Cost A u d it ed inancial F inancial At 1 January 2013 6,491 12,088 585 12,076 31,240 e m nt s Stat Reclassified to asset held for sale - - - (6,938) (6,938) Reclassified to property, plant, and equipment - (5,535) - - (5,535) Exchange difference - - (88) (70) (158) At 31 December 2013/1 January 2014 6,491 6,553 497 5,068 18,609 Disposals - (4,720) - (488) (5,208) Exchange difference - - - 18 18 nal Add iti o nal At 31 December 2014 6,491 1,833 497 4,598 13,419 o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 142 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

17. investment properties (Continued)

Freehold Freehold Leasehold Leasehold land building land building Total Group RM’000 RM’000 RM’000 RM’000 RM’000 Depreciation At 1 January 2013 - 1,178 - 926 2,104 Depreciation for the year - 137 - 139 276 Reclassified to asset held for sale - - - (205) (205) Reclassified to property, plant, and equipment - (268) - - (268) Exchange difference - - (10) (9) (19) At 31 December 2013/1 January 2014 - 1,047 (10) 851 1,888 Depreciation for the year - 70 - 88 158 Disposals - (62) - (75) (137) Exchange difference - - - 4 4 At 31 December 2014 - 1,055 (10) 868 1,913

Carrying amounts At 1 January 2013 6,491 10,910 585 11,150 29,136 At 31 December 2013 6,491 5,506 507 4,217 16,721 At 31 December 2014 6,491 778 507 3,730 11,506

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.

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

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 2014 Freehold land and buildings - - 5,320 5,320 Leasehold land and buildings with unexpired lease period of more than 50 years - - 3,820 3,820 Leasehold land and buildings with unexpired lease period of less than 50 years - - 2,782 2,782 - - 11,922 11,922

2013 Freehold land and buildings - - 6,344 6,344 Leasehold land and buildings with unexpired lease period of more than 50 years - - 8,655 8,655 Leasehold land and buildings with unexpired lease period of less than 50 years - - 4,715 4,715 - - 19,714 19,714 143 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

17. investment properties (Continued)

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

Group 2014 2013 RM’000 RM’000 R e vi w Rental income (net of direct operating expenses) 3,887 3,087 P er f or manc e

18. aSSEts classified as held for sale

Group 2014 2013

RM’000 RM’000 P erspe ctiv es At 1 January 7,209 3,374 Settlement for asset held for sale (7,209) (3,925) Transferred from property, plant and equipment 1,696 1,027 Transferred from investment properties - 6,733 At 31 December 1,696 7,209

the carrying value of investment properties is the same as its carrying value before being reclassified to current assets. acc o untability

19. Deposits from customers

Group 2014 2013 RM’000 RM’000 A u d it ed inancial F inancial (a) By type of deposit e m nt s Stat Savings deposits 5,091,650 4,674,482 Wadiah 3,052,428 2,379,204 Mudharabah 2,039,222 2,295,278 Demand deposits Wadiah 10,470,568 9,790,057 Term Deposit 25,029,432 22,371,806

Special Investment Accounts Add iti o nal o n I nf or mati Mudharabah 4,755,488 18,436,466 General Investment Accounts Mudharabah 919,816 2,012,162 Term & Special term deposit-i Tawarruq 17,895,591 -

Negotiable Islamic Debt Certificates (NIDC) 1,229,025 1,466,205 A G M th

Waheed-i 134,453 358,516 18

Ziyad 95,059 98,457 o n inf or mati Others 86,729 88,022 Total Deposits 40,678,379 36,924,367 BIMB HOLDINGS BERHAD 144 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

19. Deposits from customers (CONTINUED)

Group 2014 2013 RM’000 RM’000 (b) maturity structure of term deposits are as follows: due within six months 21,933,815 20,152,221 more than six months to one year 2,834,535 2,036,519 more than one year to three years 224,132 136,897 more than three years to five years 36,950 46,169 25,029,432 22,371,806

(c) by type of customer Government and statutory bodies 7,022,205 8,069,129 Business enterprises 9,638,052 9,688,640 Individuals 5,565,494 5,124,757 Others 18,452,628 14,041,841 40,678,379 36,924,367

20. Deposits and placements of banks and other financial institutions

Group 2014 2013 RM’000 RM’000 Non-Mudharabah fund Licensed banks - 1,538 Other financial institutions - 44,564 - 46,102

Mudharabah fund Licensed banks 280,000 1,298,873 Other financial institutions 20,000 185,000 300,000 1,483,873 300,000 1,529,975 145 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

21. Other liabilities

2014 2013 Group RM’000 RM’000 Accruals and other payables 805,461 724,208

Clients’ and dealers’ credit balances 170,298 50,358 R e vi w Dividend payable 219,545 - P er f or manc e 1,195,304 774,566

Company Accruals and other payables 1,944 11,361 Amount due to subsidiaries 52 664 Dividend payable 219,545 - 221,541 12,025 P erspe ctiv es

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

22. takaful liabilities

Group 2014 2013 Note RM’000 RM’000 acc o untability Takaful contract liabilities 22(a) 6,120,133 5,875,051 Expense reserves 22(b) 142,127 131,522 Takaful payable 22(c), 41.5(b) 61,317 75,428 6,323,577 6,082,001 A u d it ed inancial F inancial

(a) takaful contract liabilities e m nt s Stat

The takaful contract liabilities comprise the following:

Group 2014 2013 Note RM’000 RM’000

Provision for outstanding claims 22(a)(i) 808,491 861,274 Add iti o nal o n I nf or mati Provision for unearned contributions 22(a)(ii) 290,899 296,425 Participants’ fund 22(a)(iii) 5,020,743 4,717,352 6,120,133 5,875,051 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 146 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

22. 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:

2014 Gross Retakaful Net Note RM’000 RM’000 RM’000 Family Takaful Provision for claims reported by participants 33,310 (3,352) 29,958 Provision for IBNR * 169,748 (49,805) 119,943 Provision for outstanding claims 203,058 (53,157) 149,901

General Takaful Provision for claims reported by participants 375,636 (259,623) 116,013 Provision for IBNR * 229,797 (93,087) 136,710 Provision for outstanding claims 605,433 (352,710) 252,723 Note 42(b) Group Provision for claims reported by participants 41.5(b) 408,946 (262,975) 145,971 Provision for IBNR * (399,545) (142,892) 256,653 Provision for outstanding claims (808,491) (405,867) 402,624 Note 11

2013 Gross Retakaful Net Note RM’000 RM’000 RM’000 Family Takaful Provision for claims reported by participants 40,150 (2,278) 37,872 Provision for IBNR * 155,657 (32,845) 122,812 Provision for outstanding claims 195,807 (35,123) 160,684

General Takaful Provision for claims reported by participants 433,215 (291,300) 141,915 Provision for IBNR * 232,252 (80,970) 151,282 Provision for outstanding claims 665,467 (372,270) 293,197

Group Provision for claims reported by participants 41.5(b) 473,365 (293,578) 179,787 Provision for IBNR * 387,909 (113,815) 274,094 Provision for outstanding claims 861,274 (407,393) 453,881 Note 11 * incurred-but-not-reported (“IBNR”) 147 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

22. takaful liabilities (CONTINUED)

(a) takaful contract liabilities (continued)

(i) Provision for outstanding claims (continued)

Movement of provision for outstanding claims: R e vi w P er f or manc e Group Gross Retakaful Net RM’000 RM’000 RM’000 At 1 January 2013 733,074 (301,150) 431,924 Claims incurred during the year 918,583 (225,695) 692,888 Adjustment to claims incurred in prior accident years (91,255) 74,157 (17,098) Claims paid during the year (769,419) 79,843 (689,576) P erspe ctiv es Increase in IBNR 72,779 (37,408) 35,371 Effect of movement in exchange rates (2,488) 2,860 372 At 31 December 2013/1 January 2014 861,274 (407,393) 453,881 Claims incurred during the year 796,871 (135,998) 660,873 Adjustment to claims incurred in prior accident years (66,989) 45,418 (21,571) Claims paid during the year (796,785) 121,754 (675,031) Increase in IBNR 11,636 (29,077) (17,441)

Effect of movement in exchange rates 2,484 (571) 1,913 acc o untability At 31 December 2014 808,491 (405,867) 402,624

(ii) Provision for unearned contributions

The provision for unearned contributions and its movements are further analysed as follows: A u d it ed inancial F inancial

Group e m nt s Stat Gross Retakaful Net RM’000 RM’000 RM’000 31.12.2014 290,899 (69,949) 220,950 Note 11 31.12.2013 296,425 (80,200) 216,225 Note 11 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 148 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

22. takaful liabilities (Continued)

(a) takaful contract liabilities (continued)

(ii) Provision for unearned contributions (continued)

Movement of provision for unearned contributions:

Group Gross Retakaful Net RM’000 RM’000 RM’000 At 1 January 2013 295,439 (72,297) 223,142 Contributions written during the year 428,406 (141,347) 287,059 Contributions earned during the year (424,992) 132,969 (292,023) Effect of movement in exchange rates (2,428) 475 (1,953) At 31 December 2013/1 January 2014 296,425 (80,200) 216,225 Contributions written during the year 451,319 (170,096) 281,223 Contributions earned during the year (457,441) 180,457 (276,984) Effect of movement in exchange rates 596 (110) 486 At 31 December 2014 290,899 (69,949) 220,950

(iii) Participants’ fund

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

Group Gross Retakaful Net RM’000 RM’000 RM’000 31.12.2014 Actuarial liabilities 4,022,862 (206,644) 3,816,218 Unallocated surplus/accumulated surplus 923,020 - 923,020 AFS reserve (68,235) - (68,235) Translation reserve 999 - 999 Net assets value attributable to unitholders 142,097 - 142,097 5,020,743 (206,644) 4,814,099 Note 11 31.12.2013 Actuarial liabilities 3,708,819 (148,340) 3,560,479 Unallocated surplus/accumulated surplus 897,061 - 897,061 AFS reserve 1,379 - 1,379 Translation reserve 1,129 - 1,129 Net assets value attributable to unitholders 108,964 - 108,964 4,717,352 (148,340) 4,569,012 Note 11 149 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

22. takaful liabilities (Continued)

(a) takaful contract liabilities (continued)

(iii) Participants’ fund (continued)

2014 2013 R e vi w

Gross Retakaful Net Gross Retakaful Net P er f or manc e Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 4,717,352 (148,340) 4,569,012 4,419,630 (63,856) 4,355,774 Net earned contributions 1,235,114 (65,737) 1,169,377 1,391,017 (51,952) 1,339,065 Investment income 221,114 - 221,114 211,900 - 211,900 Realised gains 42,009 - 42,009 132,936 - 132,936 Fair value gains 12,871 - 12,871 9,621 - 9,621 Other operating income 6,540 - 6,540 2,931 - 2,931 P erspe ctiv es Net benefits and claims (696,349) 69,152 (627,197) (782,178) 63,696 (718,482) Fees deducted (net) (321,367) - (321,367) (362,158) - (362,158) Other operating expenses (24,625) - (24,625) (11,641) - (11,641) Profit paid to participants (30,429) - (30,429) (31,639) - (31,639) Increase in actuarial liabilities 58,295 (58,016) 279 38,482 (85,501) (47,019) Profit attributable to the takaful Operator (130,812) (3,414) (134,226) (145,792) (11,745) (157,537) Excess payment transferred to participants (1,239) - (1,239) 3,236 - 3,236 acc o untability Change in AFS reserve (69,613) - (69,613) (106,411) - (106,411) Withholding tax (11,281) - (11,281) (4,030) - (4,030) Effect of movement in exchange rates 13,163 (289) 12,874 (48,552) 1,018 (47,534) At 31 December 5,020,743 (206,644) 4,814,099 4,717,352 (148,340) 4,569,012 A u d it ed inancial F inancial (b) Expense reserves e m nt s Stat

Group 2014 2013 RM’000 RM’000 At 1 January 131,522 89,486 Provision for the year, net 10,415 42,770 Effect of movement in exchange rates 190 (734) nal Add iti o nal o n I nf or mati At 31 December 142,127 131,522

Group

2014 2013 A G M RM’000 RM’000 th 18

Due to retakaful companies 46,409 61,359 o n inf or mati Due to Intermediaries/Participants 14,908 14,069 61,317 75,428 BIMB HOLDINGS BERHAD 150 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

23. Sukuk liabilities

Group and Company 2014 2013 RM’000 RM’000 Sukuk liabilities 1,133,256 1,089,935 the amount refers to the 10-year Islamic securities (“Sukuk”) of RM1.66 billion in nominal value issued by the Company on 12 December 2013.

24. Share capital

Group and Company 2014 2013 RM’000 RM’000 Authorised: Ordinary shares of RM1 each 2,000,000 2,000,000

Issued and fully paid: Ordinary shares of RM1 each as at 1 January 1,493,506 1,066,790 Issuance of shares via the renounceable rights - 426,716 Issuance of shares under conversion of warrants * - Ordinary shares of RM1 each as at 31 December 1,493,506 1,493,506

* RM80 (a) Ordinary shares in December 2013, the Company increased its issued and paid-up share capital from RM1,066,789,896 to RM1,493,505,854 via the renounceable rights issue of 426,715,958 new ordinary shares of RM1.00 each. there is no change in the authorised and issued and fully paid shares of the Company during the financial year. (b) Warrants on 11 December 2013, the Company issues 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. warrants converted during the financial year resulted in 80 (2013: Nil) new ordinary shares of RM1.00 each being issued. as at 31 December 2014, 426,715,878 (2013: 426,715,958) warrants remained unexercised.

25. Reserves 25.1 Share premium and reserves breakdown of share premium and reserves are as follows:

2014 2013 Group Note RM’000 RM’000 Share premium 1,859,628 1,859,628 Other reserves 25.2 (386,831) (592,405) (Accumulated losses)/Retained Earnings (17,266) 49,608 1,455,531 1,316,831 151 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

25. Reserves (CONTINUED)

25.1 Share premium and reserves (continued)

2014 2013 Company RM’000 RM’000 R e vi w Share premium 1,859,628 1,859,628 Fair value reserves 51 (45) P er f or manc e Warrant reserves 129,300 129,300 Retained earnings 15,599 235,004 2,004,578 2,223,887

25.2 Other reserves

Fair P erspe ctiv es Capital Staturtory Warrant Acquisition value Translation LTIP* reserve reserve reserve reserve reserve reserve reserve Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2013 6,863 358,719 - - 69,176 (6,325) - 428,433 Foreign exchange translation differences - - - - - (12,052) - (12,052) Fair value reserve: net change in fair value - - - - (56,440) (56,440) net amount reclassified acc o untability to profit or loss - - - - (8,489) - - (8,489) Transfer from current year profit - 125,370 - - - - - 125,370 Issuance of rights issue shares with warrants - - 129,300 - - - - 129,300 Acquisition of additional A u d it ed

interest in subsidiary F inancial e m nt s Stat from non-controlling interests - - - (1,199,747) - - - (1,199,747) Share-based payment transactions ------1,220 1,220 At 31 December 2013/ 1 January 2014 6,863 484,089 129,300 (1,199,747) 4,247 (18,377) 1,220 (592,405) Foreign exchange translation differences - - - - - (21,906) - (21,906) nal Add iti o nal

Fair value reserve: o n I nf or mati net change in fair value - - - - (5,609) - - (5,609) net amount reclassified to profit or loss - - - - (23,307) - - (23,307) Transfer from current year profit - 254,517 - - - - - 254,517

Share-based payment A G M

transactions ------2,903 2,903 th 18 LTIP * exercised ------(1,024) (1,024) o n inf or mati At 31 December 2014 6,863 738,606 129,300 (1,199,747) (24,669) (40,283) 3,099 (386,831)

* long Term Incentive Plan BIMB HOLDINGS BERHAD 152 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

25. Reserves (continued)

25.2 Other reserves (continued)

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.

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

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

Share premium share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.

translation reserve the translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

fair value reserve the fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets recognised in other comprehensive income until the investments are derecognised or impaired.

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

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 Berhad. When the LTIP is exercised, the amount from the LTIP reserve is transferred to share premium. When the LTIP expires, the amount from the LTIP reserve is transferred to retained earnings. LTIP is disclosed in Note 26.

26. Employee benefits

Share-based payments arrangement

at the Extraordinary General Meeting of Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) a subsidiary of the Company, 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 20 August 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. 153 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

26. Employee benefits (continued)

Share-based payments arrangement (continued)

the salient features of the LTIP are, inter alia, as follows:

(i) the RSP is a restricted share plan for selected key employees and the executive directors of Takaful Malaysia and its R e vi w

subsidiaries (collectively known as “Takaful Malaysia Group”).The RSP Grant is intended as a one-off grant, subject to the P er f or manc e discretion of the Long-term Incentive Plan Committee (“LTIP Committee”) for future grants, to retain key employees for the development, growth and success of Takaful Malaysia Group.The RSP will be vested to the RSP Grantees at no consideration over a period of up to three (3) years pro-rata which may include additional holding periods for each vesting as determined by the LTIP Committee, whereby selected employees will be assessed based on, amongst others, the individual performance and achievement, which may include but are not limited to, profit after zakat and taxation and/or other financial measures as may be relevant, in accordance with terms and conditions stipulated and determined by the LTIP Committee in its discretion.The LTIP Committee is a committee established by the Board to implement and administer the LTIP in accordance with the LTIP

By-Laws. P erspe ctiv es

(ii) the PSP is a performance share plan for selected key employees and the executive directors of Takaful Malaysia Group. The PSP Grant is an annual grant to incentivise key employees for the long-term success and growth of Takaful Malaysia Group as well as shareholders’ value enhancement.The PSP will be vested to the RSP Grantees at no consideration over a period of up to three (3) years cliff vesting schedule whereby selected employees will be assessed based on, amongst others, the total shareholders’ return, which is the improvement in stock price including dividends paid, and the long-term financial performance of Takaful Malaysia over a period of three (3) financial years, or such other period of time should the LTIP Committee choose to do so, in accordance with terms and conditions stipulated and determined by the LTIP Committee in its discretion. acc o untability

(iii) eligible employees are those executives (including executive directors) of Takaful Malaysia Group (other than subsidiaries which are dormant) who have attained the age of 18 years; entered into a full-time or fixed-term contract of employment with and is on the payroll of a company within the Takaful Malaysia Group; have not served notice of resignation or received notice of termination on the date of the offer; whose service/employment have been confirmed in writing; and have fulfilled other eligibility criteria which has been determined by the LTIP Committee at its sole and absolute discretion from time to time. A u d it ed inancial F inancial (iv) the total number of Takaful Malaysia Shares to be offered to any one of the employees and/or to be vested in any one of the e m nt s Stat grantees shall not be more than 10% of the Takaful Malaysia Shares made available under the LTIP and shall not either singly or collectively through persons connected with the said employee, holds 20% or more of the Takaful Malaysia’s issued and paid up share capital.

(v) the maximum number of Takaful Malaysia Shares to be allotted and issued under LTIP shall not be more than in aggregate 10% of the issued and paid-up ordinary share capital of Takaful Malaysia at any point in time during the duration of the LTIP. nal Add iti o nal

(vi) the LTIP shall be in force for a period of ten (10) years from the effective date of implementation of the LTIP. o n I nf or mati

(vii) The new Takaful Malaysia Shares to be allotted and issued pursuant to the LTIP shall, upon allotment and issuance, rank pari passu in all respects with the then existing issued Takaful Malaysia Shares and shall be entitled to any rights, dividends, allotments and/or distributions attached thereto and/or which may be declared, made or paid to Takaful Malaysia’s shareholders, provided that the relevant allotment date of such new shares is before the record date (as defined in the LTIP

By-Laws) for any right, allotment or distribution. A G M th 18

(viii) if the LTIP Committee so decides (but not otherwise), in the event of any alteration in the capital structure of Takaful Malaysia’s o n inf or mati during the duration of the LTIP, such corresponding alterations (if any) may be made in the number of unvested Takaful Malaysia Shares and/or the method and/or manner in the vesting of the Takaful Malaysia Shares comprised in a grant. BIMB HOLDINGS BERHAD 154 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

26. Employee benefits (continued)

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

Performance Restricted Shares Shares Number of shares Number of shares Total (’000) (’000) (’000) At 1 January 2013 - - - Granted during the year 607 724 1,331 Outstanding at 31 December 2013/1 January 2014 607 724 1,331 Granted during the year - 460 460 Exercised during the year (189) - (189) Forfeited during the year (39) (111) (150) Outstanding at 31 December 2014 379 1,073 1,452

During the financial year, 189,500 in Takaful Malaysia shares were vested. The weighted average share price at the date of exercise for the year was RM8.96 (2013: Nil).

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:

Restricted Shares Performance Shares 2014 2013 2014 2013 Fair value and assumption Fair value at grant date (RM) 7.194 7.194 10.533 6.996

Weighted average share price (RM) 7.194 7.194 10.533 6.996 Share price at grant date (RM) 7.755 7.755 12.580 7.755 Expected volatility (weighted average volatility) 34.30% 34.30% 31.19% to 34.30% 34.30% Option life (expected weighted average life) 3 3 3 3 Expected dividends (RM) 0.0384 0.0384 0.0384 to 0.0431 0.0384 Risk-free profit rate (based on Malaysian government bonds) 3.30% to 3.52% 3.30% to 3.52% 3.43% to 3.52% 3.43% 155 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

26. Employee benefits (continued)

value of employee services received for issue of Takaful Malaysia shares

Group 2014 2013 R e vi w RM’000 RM’000 P er f or manc e Expense recognised as share-based payments shares granted in 2013 - restricted shares 2,327 1,148 - Performance shares 2,017 868 4,344 2,016 shares granted in 2014 - performance shares 470 - P erspe ctiv es 4,814 2,016

27 income derived from investment of depositors’ funds

Group 2014 2013 RM’000 RM’000 acc o untability Income derived from investment of: (i) General investment deposits 114,634 118,442 (ii) other deposits 1,917,451 1,732,836 2,032,085 1,851,278

(i) income derived from investment of general investment deposits A u d it ed inancial F inancial e m nt s Stat

Group 2014 2013 RM’000 RM’000 Financing income and hibah Financing, advances and others 89,451 86,619 Financial assets: nal Add iti o nal - Held-for-trading 2,399 1,903 o n I nf or mati - Available-for-sale 19,152 24,173 - Held-to-maturity 286 652 Money at call and deposit with financial institutions 2,138 4,211 113,426 117,558 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 156 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

27 income derived from investment of depositors’ funds (continued) (i) income derived from investment of general investment deposits (continued)

Group 2014 2013 RM’000 RM’000 Other dealing income Net loss from sale of financial assets held-for-trading (192) (594) Net gain on revaluation of financial assets held-for-trading 173 596 (19) 2

Other operating income Net gain from sale of financial assets available-for-sale 1,227 911 Loss on redemption of financial assets held-to-maturity - (29) 1,227 882 114,634 118,442

Of which Financing income earned on impaired financing 1,409 1,696

(ii) income derived from investment of other deposits

Group 2014 2013 RM’000 RM’000 Financing income and hibah Financing, advances and others 1,498,013 1,267,866 Financial assets: - Held-for-trading 39,970 27,903 - Available-for-sale 318,176 353,419 - Held-to-maturity 4,961 9,495 Money at call and deposits with financial institutions 36,171 61,476 1,897,291 1,720,159

Other dealing income Net loss from sale of financial assets held-for-trading (3,172) (8,948) Net gain on revaluation of financial assets held-for-trading 2,558 8,554 (614) (394)

Other operating income Net gain from sale of financial assets available-for-sale 20,774 13,501 Loss on redemption of financial assets held-to-maturity - (430) 20,774 13,071 1,917,451 1,732,836

Of which Financing income earned on impaired financing 23,612 24,744 157 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

28. income derived from investment of shareholders’ funds

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Financing income and hibah R e vi w

Financing, advances and others 6,133 4,429 - - P er f or manc e Financial assets available-for-sale 119,197 103,988 - - Money at call and deposits with financial institutions 7,342 15,919 3,178 5,634 132,672 124,336 3,178 5,634

Other dealing income Net gain from foreign exchange transactions 95,443 83,797 - -

Net gain from sale of financial assets held-for-trading 102 93 - - P erspe ctiv es Net gain on revaluation of financial assets held-for-trading 295 - - - Net derivatives (loss)/gain (2,370) 9,163 - - 93,470 93,053 - -

Other operating income Net loss from sale of financial assets available-for-sale (316) - - - Reversal of allowance for doubtful debts - 201 - -

Gross dividend income from securities: acc o untability - quoted in Malaysia 309 6 - - - unit trust in Malaysia 616 768 603 749 - unit trust outside Malaysia 16 - - - - unquoted in Malaysia 2,619 6,458 - - Gross dividend income from subsidiary companies - - 201,610 270,285

Fees and commission 161,454 178,632 - - A u d it ed inancial F inancial Net (loss)/gain on disposal of property, plant and equipment (1,394) (1,514) - 2 e m nt s Stat Net gain on disposal of shares in subsidiary - - 2,305 6,900 Rental income 2,923 2,770 - - Others 216 349 31 4 166,443 187,670 204,549 277,940 392,585 405,059 207,727 283,574 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 158 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

29. nEt income from Takaful business

Group 2014 2013 Note RM’000 RM’000 Net earned contributions Gross earned contributions 1,415,806 1,523,388 Contribution ceded to retakaful (246,194) (184,921) 29(a) 1,169,612 1,338,467

Other income Administration income 40,524 30,954 Investment income 240,317 230,061 Realised gains and losses 47,544 144,072 Fair value gains and losses 11,701 3,575 Other operating income 9,581 6,593 349,667 415,255

Net benefits and claims Gross benefits and claims paid (796,785) (769,419) Claims receded to retakaful 121,754 79,843 Gross change to contract liabilities 55,267 (130,688) Change to contract liabilities ceded to takaful (2,097) 109,103 29(b) (621,861) (711,161)

Expense reserves (10,415) (42,770)

Income from takaful business 887,003 999,791 Profits attributable to participants/takaful operator (344,200) (446,733) Net income from takaful business 542,803 553,058

(a) net earned contributions

Group 2014 2013 RM’000 RM’000 Gross contributions 1,409,614 1,480,301 Change in actuarial reserves/unearned contributions reserves 6,192 43,087 Gross earned contributions 1,415,806 1,523,388

Retakaful (235,833) (193,299) Change in actuarial reserves/unearned contributions reserve (10,361) 8,378 Net earned contributions 1,169,612 1,338,467 159 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

29. nEt income from Takaful business (continued)

(b) net benefits and claims

Group 2014 2013 R e vi w RM’000 RM’000 P er f or manc e Gross benefits/claims paid (796,785) (769,419) Retakaful recoveries 121,754 79,843 Net benefits/claims paid (675,031) (689,576)

Gross change in contract liabilities: at 31 December (808,491) (861,274) Less: P erspe ctiv es at 1 January (861,274) (733,074) effect of movement in exchange rates 2,484 (2,488) 55,267 (130,688)

Change in contract liabilities ceded to retakaful companies: at 31 December 405,867 407,393 Less:

at 1 January 407,393 301,150 acc o untability effect of movement in exchange rates (571) 2,860 (2,097) 109,103 (621,861) (711,161)

30. allowance for/(Reversal of) impairment on financing and advances A u d it ed inancial F inancial e m nt s Stat

Group 2014 2013 RM’000 RM’000 Allowance for impaired financing, advances and others - collective assessment allowance 162,878 141,621 - individual assessment allowance 34,055 79,103 nal Add iti o nal

Bad debts and financing recovered (136,940) (235,733) o n I nf or mati 59,993 (15,009) A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 160 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

31. (Reversal of)/Allowance for impairment on investments

Group 2014 2013 RM’000 RM’000 Financial assets: - available-for-sale (2,872) 9,537 - held-to-maturity (106) (326) (2,978) 9,211

32. income attributable to depositors

Group 2014 2013 RM’000 RM’000 Deposits from customers - Mudharabah Fund 594,380 593,296 - non-Mudharabah Fund 227,159 155,773 Deposits and placements of banks and other financial institutions - Mudharabah Fund 23,155 19,237 - non-Mudharabah Fund 307 4,495 845,001 772,801

33. Personnel expenses

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Salaries and wages 460,097 452,974 3,302 3,260 Employees’ Provident Fund 56,417 56,129 456 432 Directors’ remuneration 22,427 20,370 3,535 3,072 Others 60,111 64,448 452 455 599,052 593,921 7,745 7,219 161 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

33. Personnel expenses (Continued)

(a) aggregate remuneration of Directors of the Group and the Company categorised into appropriate components are as follows:

Group Company R e vi w 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 P er f or manc e Directors of the Company Executive Director: Fees and allowances 355 284 - - Salaries, bonuses and EPF contributions 2,202 1,907 2,202 1,907 Benefits-in-kind 191 77 90 54 2,748 2,268 2,292 1,961 Non-Executive Directors: P erspe ctiv es Fees and allowances 2,206 2,065 992 957 Benefits-in-kind 532 346 251 154 Total 5,486 4,679 3,535 3,072

Directors of the subsidiary companies Executive Directors: Salaries, bonuses and EPF contributions 13,913 13,195 - - acc o untability Benefits-in-kind 474 477 - - 14,387 13,672 - - Non-Executive Directors: Fees and allowances 2,181 1,773 - - Benefits-in-kind 373 246 - -

Total 16,941 15,691 - - A u d it ed inancial F inancial e m nt s Stat

Grand Total 22,427 20,370 3,535 3,072 Total (excluding benefits-in-kind) 20,857 19,224 3,194 2,864 (b) Shariah Supervisory Council 731 603 - - nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 162 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

34. Other overhead expenses

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Promotion 177,287 200,393 333 275 Establishment 220,135 207,546 1,994 1,869 General expenses 168,121 197,204 2,023 22,270 565,543 605,143 4,350 24,414

Included in other overhead expenses are: Auditors’ remuneration - statutory audit - KPMG 1,239 1,361 115 97 - Other auditors 100 121 - - - Other services - KPMG 694 360 17 360 Depreciation of property, plant and equipment 61,077 60,347 681 675 Depreciation of investment properties 158 276 - - Rental of properties 53,734 51,907 882 852 Property, plant and equipment write off 52 4,659 - - Rental of equipment 5,890 5,384 100 99

35. kEy management personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain senior management members of the Group.

the compensation for key management personnel other than Directors’ remuneration are as follows:

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Other key management personnel: - short-term employee benefits 45,837 43,381 1,218 1,210 - Benefits-in-kind 656 681 52 54 46,493 44,062 1,270 1,264 163 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

36. tax expense

major components of tax expense

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 R e vi w P er f or manc e Malaysia Income Tax: Current Year 228,447 254,306 705 56,711 (Over)/under provision in prior years (19,065) 2,510 (383) (250) 209,382 256,816 322 56,461

Deferred tax expense: Origination and reversal of temporary differences (2,008) (8,802) - - Under/(Over) provision in prior years 7,904 (5,849) - - P erspe ctiv es 5,896 (14,651) - - 215,278 242,165 322 56,461

A reconciliation of effective tax expense for the Group and Company are as follows:

Group Company

2014 2013 2014 2013 acc o untability RM’000 RM’000 RM’000 RM’000

Profit before tax 815,384 819,427 127,410 248,592

Income tax calculated using Malaysia tax rate of 25% (2013: 25%) 203,846 204,857 31,853 62,148 A u d it ed inancial F inancial

Non-deductible expenses 30,584 44,142 19,982 7,252 e m nt s Stat Non-taxable income (7,767) (3,495) (51,130) (12,689) Deferred tax assets not recognised (224) - - - 226,439 245,504 705 56,711 (Over)/Under provision in prior years (19,065) 2,510 (383) (250) Under/(Over) provision of deferred tax 7,904 (5,849) - - Tax expense 215,278 242,165 322 56,461 nal Add iti o nal Recongnised in other comprehensive income: o n I nf or mati Deferred tax expense Provisions 2,351 839 - - property, plant and equipment - (146) - - 2,351 693 - - A G M

Based on the recent amendments of Section 60AA of the Income Tax Act 1967 (ITA), the wakalah fee received by Shareholders’ fund th from Family Business is not subjected to income tax. Accordingly, commission and management expenses incurred by Shareholders’ 18 fund in relation to Family Business are disallowed as deductible expenses. The amended Section 60AA of ITA will be effective for o n inf or mati year of assessment 2015 onwards. BIMB HOLDINGS BERHAD 164 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

37. Earnings per share

basic earnings per ordinary share

the calculation of basic earnings per ordinary share at 31 December 2014 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 2014 2013 RM’000 RM’000 Profit attributable to owners of theC ompany 532,329 279,327

Group 2014 2013 ’000 ’000 Weighted average number of ordinary shares 1,493,506 1,080,819

Group 2014 2013 Sen Sen Basic earnings per ordinary share 35.64 25.84

Diluted earnings per share

the Group have no dilution in their earnings per ordinary share 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 2014.

38. Dividends

Dividends recognised by the Company:

Total Sen amount Date of per share RM’000 payment 2014 Final 2013 ordinary 8.50 126,948 29 May 2014 Interim 2014 ordinary 14.70 219,545 13 January 2015 Total amount 23.20 346,493

2013 Final 2012 ordinary 5.00 53,339 17 June 2013 First interim 2013 ordinary 3.50 37,338 21 October 2013 Total amount 8.50 90,677

the Directors do not recommend any final dividend to be paid for the year under review. 165 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

39. Related party transactions

parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions, or where the parties are subject to common control or common significant influence. Related parties may be individuals or other entities.

the Group or the Company has a related party relationship with its subsidiaries (see Note 14), associates (see Note 15) and holding R e vi w

corporation of the Company. P er f or manc e

(a) the significant related party transactions of the Group and theC ompany, other than key management personnel compensation, are as follows:

Group Company transactions for transactions for 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 P erspe ctiv es Holding Company Gain/(Loss) on forex transaction 95 (11,263) - - Profit attributable on deposits placed 84,996 108,750 - - Rental of premises paid 21,608 20,128 - - Brokerage income 3,292 3,678 - - Contribution income for Family Takaful 5,823 - - -

Contribution income for General Takaful 2,675 2,677 - - acc o untability Claims paid for Family Takaful 985 - - - Claims paid for General Takaful 718 1,726 - - Other rental 292 227 - - Office rental received 17 - - - Fees and commission received 1 6 - - Commission paid for Takaful 56 - - - A u d it ed inancial F inancial e m nt s Stat

Subsidiaries Income receivable on deposits placed - - 3,220 3,056 Office rental paid - - 929 845 Others - - 20 17 Contribution paid for General Takaful - - 17 15 Contribution paid for Family Takaful - - 81 -

Claims receivable for General Takaful - - 187 - Add iti o nal o n I nf or mati

Other related companies Income received from financing, advances and others 12 1,279 - - Net gain on forex transaction 1,086 563 - - Profit attributable on deposits placed 5,986 4,818 - - Fees and commission received 27 60 - - A G M th

Office rental paid 421 - - - 18 o n inf or mati BIMB HOLDINGS BERHAD 166 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

39. Related party transactions (Continued)

(b) the significant outstanding balances of the Group and the Company with related party, are as follows:

Group Company Net balance Net balance outstanding as at outstanding as at 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 Holding company Amount due from Others - 30 - - Amount due to Demand and investment deposits 2,639,396 4,308,191 - - Profit payable to investment deposit 3,347 1,851 - - Commitment and contingencies 187 127 - - Sukuk liabilities 1,133,256 1,089,935 1,133,256 1,089,935

Subsidiaries Amount due from Current account and investment deposits - - 123,834 147,106 Profit payable to investment deposit - - 472 86 Others - - 271 - Amount due to Others - - 52 664

Other related companies Amount due from Financing, advances and others 205 77,448 - - Amount due to Demand and investment deposits 618,454 200,846 - - Commitment and contingencies 3,478 5,726 - - Profit payable to investment deposit 247 204 - - 167 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

40. capital adequacy

The Total Capital Ratio computation consists of the capital adequacy ratios of Bank Islam Malaysia Berhad and its subsidiaries (“Bank Islam” or “the Bank”).

the Company is not required to maintain any capital adequacy ratios. R e vi w

capital Adequacy Ratios P er f or manc e

total capital and capital adequacy ratios of the Bank have been computed based on BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components and Risk-Weighted Assets) issued on 28 November 2012. The minimum regulatory capital adequacy ratios requirement for Common Equity Tier I (“CET I”) capital ratio, Tier I capital ratio and total capital ratio are 4.0%, 5.5% and 8.0% respectively for year 2014. 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: P erspe ctiv es

2014 2013 % % Common Equity Tier I (CET I) Capital Ratio 12.240 12.964 Total Tier I Capital Ratio 12.240 12.964 Total Capital Ratio 13.355 14.056

The components of CET I, Tier I and Tier II capital of Bank Islam: acc o untability

2014 2013 RM’000 RM’000 Tier I capital Paid-up share capital 2,319,907 2,298,165 A u d it ed inancial F inancial

Share premium 90,981 52,281 e m nt s Stat Retained earnings 388,923 253,822 Other reserves 929,779 722,567 Less: Deferred tax assets (31,220) (24,613) Total CET I and Tier I Capital 3,698,370 3,302,222 Collective assessment allowance ^ 336,850 278,155 Total Tier II Capital 336,850 278,155

Total Capital 4,035,220 3,580,377 Add iti o nal o n I nf or mati

^ collective assessment allowance on non-impaired financing subject to maximum of 1.25% of total credit risk-weighted assets. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 168 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

40. capital adequacy (continued)

The breakdown of risk-weighted assets by each major risk category is as follows:

2014 2013 RM’000 RM’000 Credit risk 26,947,994 22,252,433 Market risk 542,910 761,777 Operational risk 2,724,074 2,457,803 30,214,978 25,472,013

The off-balance sheet and counterparties credit risk for Bank Islam is as follows:

Positive Fair Value of Credit Risk Principal Derivative Equivalent Weighted Amount Contracts Amount Asset RM’000 RM’000 RM’000 RM’000 31 December 2014 Nature of item Credit related exposures Direct credit substitutes 360,433 - 360,433 355,715 Assets sold with recourse 2 - 2 2 Transaction related contingent items 1,026,265 - 513,132 451,601 Short term self-liquidating trade related contingencies 236,874 - 47,375 45,832 Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 6,165 - 1,233 1,215 - exceeding one year 942,851 - 471,425 378,793 Unutilised credit card lines 1,023,337 - 204,668 153,502 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 5,404,888 - - - 9,000,815 - 1,598,268 1,386,660 169 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

40. capital adequacy (continued)

The off-balance sheet and counterparties credit risk for Bank Islam is as follows (continued):

Positive Fair Value of Credit Risk Principal Derivative Equivalent Weighted R e vi w

Amount Contracts Amount Asset P er f or manc e RM’000 RM’000 RM’000 RM’000 31 December 2014 Nature of item Derivative Financial Instruments Foreign exchange related contracts - less than one year 1,840,778 45,508 65,406 36,492 Profit rate related contracts - less than one year 300,000 348 308 62 P erspe ctiv es - one year to less than five years 600,000 12,278 20,153 4,031 - five years and above 287,694 4,392 12,996 12,996 Equity related contracts - one year to less than five years 106,680 15 6,401 3,200 3,135,152 62,541 105,264 56,781 Total 12,135,967 62,541 1,703,532 1,443,441

31 December 2013 acc o untability Nature of item Credit related exposures Direct credit substitutes 319,032 - 319,032 312,160 Assets sold with recourse 2 - 2 2 Transaction related contingent items 877,246 - 438,623 386,730 Short term self-liquidating trade A u d it ed

related contingencies 278,297 - 55,659 54,695 F inancial e m nt s Stat Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 1,714 - 343 327 - exceeding one year 823,818 - 411,909 338,294 Unutilised credit card lines 991,097 - 198,219 148,665 Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that nal Add iti o nal effectively provide for automatic cancellation due to o n I nf or mati deterioration in a borrower’s creditworthiness 5,116,604 - - - 8,407,810 - 1,423,787 1,240,873 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 170 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

40. capital adequacy (continued)

The off-balance sheet and counterparties credit risk for Bank Islam is as follows (continued):

Positive Fair Value of Credit Risk Principal Derivative Equivalent Weighted Amount Contracts Amount Asset RM’000 RM’000 RM’000 RM’000 31 December 2013 Nature of item Derivative Financial Instruments Foreign exchange related contracts - less than one year 1,381,894 8,681 18,546 10,290 Profit rate related contracts - less than one year 100,000 695 250 50 - one year to less than five years 500,000 2,705 9,000 1,800 - five years and above 711,481 16,455 35,660 19,660 Equity related contracts - one year to less than five years 110,495 582 8,840 4,420 2,803,870 29,118 72,296 36,220 Total 11,211,680 29,118 1,496,083 1,277,093

41. financial Risk Management policies

41.1 Categories of financial instruments

The tables below provide an analysis of financial instruments categorised as follows:

(a) financing, advances and receivables (“F&R”) (b) fair value through profit or loss (“FVTPL”) (c) financial assets available-for-sale (“AFS”) (d) financial assets held-to-maturity (“HTM”) (e) financial liabilities measured at amortised cost (“FL”)

Carrying amount F&R/(FL) FVTPL AFS HTM Derivatives Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 31 December 2014 Financial assets Cash, balances and placements with banks 4,619,496 4,619,496 - - - - Financial assets held-for-trading 1,165,590 - 1,165,590 - - - Derivative financial assets 62,541 - - - - 62,541 Financial assets available-for-sale 13,815,889 - - 13,815,889 - - Financial assets held-to-maturity 547,258 - - - 547,258 - Financing, advances and others 29,524,571 29,524,571 - - - - Takaful assets 811,051 811,051 - - - - Statutory deposits with bank Negara Malaysia 1,335,000 1,335,000 - - - - Other assets 538,204 538,204 - - - - 52,419,600 36,828,322 1,165,590 13,815,889 547,258 62,541 171 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial Risk Management policies (continued)

41.1 Categories of financial instruments (continued)

Carrying amount F&R/(FL) FVTPL AFS HTM Derivatives Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 R e vi w P er f or manc e 31 December 2014 Financial liabilities Deposits from customers (40,678,379) (40,678,379) - - - - Deposits and placements of banks and other financial institutions (300,000) (300,000) - - - - Derivative financial liabilities (32,407) - - - - (32,407) Bills and acceptance payable (127,524) (127,524) - - - -

Other liabilities (1,195,304) (1,195,304) - - - - P erspe ctiv es Takaful liabilities (61,317) (61,317) - - - - Sukuk liabilities (1,133,256) (1,133,256) - - - - (43,528,187) (43,495,780) - - - (32,407)

31 December 2013 Financial assets Cash, balances and placements with banks 4,655,198 4,655,198 - - - -

Financial assets held-for-trading 1,405,198 - 1,405,198 - - - acc o untability Derivative financial assets 29,118 - - - - 29,118 Financial assets available-for-sale 16,536,010 - - 16,536,010 - - Financial assets held-to-maturity 467,935 - - - 467,935 - Financing, advances and others 23,740,948 23,740,948 - - - - Takaful assets 753,089 753,089 - - - - Statutory deposits with A u d it ed inancial F inancial

bank Negara Malaysia 1,297,100 1,297,100 - - - - e m nt s Stat Other assets 207,628 207,628 - - - - 49,092,224 30,653,963 1,405,198 16,536,010 467,935 29,118

Financial liabilities Deposits from customers (36,924,367) (36,924,367) - - - - Deposits and placements of banks and other financial institutions (1,529,975) (1,529,975) - - - - nal Add iti o nal

Derivative financial liabilities (13,565) - - - - (13,565) o n I nf or mati Bills and acceptance payable (170,598) (170,598) - - - - Other liabilities (774,566) (774,566) - - - - Takaful liabilities (75,428) (75,428) - - - - Sukuk liabilities (1,089,935) (1,089,935) - - - - (40,578,434) (40,564,869) - - - (13,565) A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 172 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial Risk Management policies (continued)

41.1 Categories of financial instruments (continued)

Carrying amount F&R/(FL) FVTPL AFS HTM Derivatives Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 31 December 2014 Financial assets Cash, balances and placements with banks 123,566 123,566 - - - - Financial assets available-for-sale 18,559 - - 18,559 - - Other assets 753 753 - - - - 142,878 124,319 - 18,559 - -

Financial liabilities Other liabilities 221,541 221,541 - - - - Sukuk liabilities 1,133,256 1,133,256 - - - - 1,354,797 1,354,797 - - - -

31 December 2013 Financial assets Cash, balances and placements with banks 149,559 149,559 - - - - Financial assets available-for-sale 17,860 - - 17,860 - - Other assets 40 40 - - - - 167,459 149,599 - 17,860 - -

Financial liabilities Other liabilities 12,025 12,025 - - - - Sukuk liabilities 1,089,935 1,089,935 - - - - 1,101,960 1,101,960 - - - -

41.2 financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk • Market risk • Liquidity risk • Operational risk

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. 173 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial Risk Management policies (continued)

41.3 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. R e vi w P er f or manc e (a) Banking

bank Islam’s credit risk arises from all transactions that could lead to actual, contingent or potential claims against any party, borrower or obligor. The types of credit risks that the Bank considers to be material includes: Default Risk, Pre- Settlement Risk, Counterparty 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 P erspe ctiv es Board Risk Committee (“BRC”), guided by the Risk Appetite Statement approved by Bank Islam’s Board of Directors.

the Bank’s Management Risk Control Committee (“MRCC”) is responsible under the authority delegated by the Bank’s BRC for managing credit risk at strategic level. The Bank’s MRCC reviews the Bank’s credit risk frameworks and guidelines, aligns credit risk management with business strategies and planning, reviews credit profile of the credit portfolios and recommends necessary actions to ensure that the credit risk remains within established risk tolerance level.

the Bank’s credit risk management governance includes the establishment of comprehensive credit risk policies, guidelines and procedures which documents the Bank’s financing standards, discretionary powers for financing approval, credit risk acc o untability ratings methodologies and models, acceptable collaterals and valuation, and the review, rehabilitation and restructuring of problematic and delinquent financing.

management of Credit Risk the management of credit risk is being performed by two distinct departments within the Bank’s Risk Management

Department (“RMD”), Credit Analysis and Credit Risk Management and two departments outside of the RMD domain, A u d it ed inancial F inancial namely, Credit Administration and Credit Recovery. The combined objectives are, amongst others: e m nt s Stat

• To build a high quality credit portfolio in line with the Bank’s overall strategy and risk appetite; • To ensure that the Bank is compensated for the risk taken, balancing/optimising the risk/return relationship; • To develop an increasing ability to recognise, measure and avoid or mitigate potential credit risk problem areas; and • To conform with statutory, regulatory and internal credit requirements.

the Bank monitors its credit exposures either on a portfolio basis or individual basis through annual reviews. Credit risk nal Add iti o nal

is proactively monitored through a set of early warning signals that could trigger immediate reviews of (certain part of) o n I nf or mati the portfolio. The affected portfolio or financing is placed on a watch list to enforce close monitoring and prevent financing from turning impaired and to increase chances of full recovery.

a comprehensive 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 contagion to a single customer, sector, product, Shariah contract, etc. A G M

credit risk arising from dealing and investing activities are managed by the establishment of limits which includes counter th 18

parties limits and permissible acquisition of private entities’ instruments, subject to specified minimum rating threshold. o n inf or mati Furthermore, the dealing and investing activities are monitored by an independent middle office unit. BIMB HOLDINGS BERHAD 174 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial Risk Management policies (continued)

41.3 credit risk (continued)

(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 receivables and investment securities balances that are subject to credit risk. To mitigate the risk of the counterparties not paying the amount due, Takaful Malaysia has established certain business and financial guidelines for brokers/retakaful approval, incorporating ratings by major agencies where applicable and considering currently available market information.

takaful Malaysia also periodically review the financial stability of brokers/retakaful companies from public and other sources and the settlement trend of amounts due from these parties.

cash and deposits are generally placed with banks and financial institutions licensed under theF inancial Services Act 2013 and Islamic Financial Services Act 2013 which are regulated by Bank Negara Malaysia.

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. 175 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial Risk Management policies (continued)

41.3 credit risk (continued)

Maximum exposure to credit risk (continued)

Group R e vi w

2014 2013 P er f or manc e RM’000 RM’000 Cash and short-term funds 3,898,172 3,953,896 Deposits and placements with banks and other financial institutions 721,324 701,302 Financial assets held-for-trading (excluding shares, unit trusts and investment funds) 1,032,328 1,305,925 Derivative financial assets 62,541 29,118 Financial assets available-for-sale (excluding shares, unit trusts and investment funds) 12,898,672 15,048,915 Financial assets held-to-maturity 547,258 467,935 P erspe ctiv es Financing, advances and others 29,524,571 23,740,948 Other assets (net of prepayments) 538,204 207,628 Takaful assets 811,051 753,089 Statutory deposits with Bank Negara Malaysia 1,335,000 1,297,100 Sub-total 51,369,121 47,505,856

Credit related obligation: acc o untability credit commitments 9,000,815 8,407,810 Sub-total 9,000,815 8,407,810 Total credit exposures 60,369,936 55,913,666

(i) credit quality of gross financing and advances A u d it ed

Gross financing and advances of the main subsidiary, Bank Islam, are classified as follows: F inancial e m nt s Stat

• Neither past due nor impaired financing financing for which the borrower has not missed a contractual payment (profit or principal) when contractually due and is not impaired as there is no objective evidence of impairment.

• Past due but not impaired financing financing for which its contractual profit or principal payments are past due, but the Group believes that impairment is not appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the nal Add iti o nal Group. o n I nf or mati

• Impaired financing 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. A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 176 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial Risk Management policies (continued)

41.3 credit risk (continued)

(i) credit quality of gross financing and advances (continued)

The table below summarises the credit quality of the Group’s gross financing according to the above classifications.

Group 2014 2013 RM’000 RM’000 Financing, advances and others Neither past due nor impaired - excellent to good 23,196,518 18,909,824 - Satisfactory 5,741,808 4,249,300 - Fair 407,727 368,334 29,346,053 23,527,458 Past due but not impaired 421,120 429,760 Impaired 344,539 285,302 30,111,712 24,242,520 Allowance for impaired financing, advances and others - collective assessment allowance (444,388) (365,375) - individual assessment allowance (142,753) (136,197) 29,524,571 23,740,948

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:

• Excellent to Good: Sound financial position with no difficulty in meeting its obligations. • Satisfactory: Adequate safety of meeting its obligations but more time is required to meet its obligation in full. • Fair: High risks on payment obligations. Financial performance may continue to deteriorate.

the age analysis of financing and advance past-due but not impaired as at the end of the reporting period was as follows:

Group 2014 2013 RM’000 RM’000 By aging Month-in-arrears 1 274,624 294,267 Month-in-arrears 2 146,496 135,493 421,120 429,760 177 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.3 credit risk (continued)

(ii) credit quality of takaful receivables

The table below summarises the credit quality of the Group’s Takaful receivable: R e vi w P er f or manc e Group 2014 2013 RM’000 RM’000 Takaful receivables Neither past due nor impaired 116,097 101,441 Past due but not impaired 12,494 15,715

Impaired 4,487 8,522 P erspe ctiv es 133,078 125,678 Allowance for impairment (4,487) (8,522) 128,591 117,156

The age analysis of takaful receivables past-due but not impaired as at the end of the reporting period based on days past- due was as follows:

Group acc o untability 2014 2013 RM’000 RM’000 Days past-due 1-30 days 1,620 2,306 31-60 days 662 785 A u d it ed inancial F inancial

61-90 days 1,556 480 e m nt s Stat 91-180 days 2,653 3,035 > 180 days 6,003 9,109 12,494 15,715

Impairment loss of takaful receivables

A reconciliation of the allowance for impairment losses for takaful receivables was as follows: nal Add iti o nal o n I nf or mati RM’000 At 1 January 2013 10,883 Writeback of impairment loss (2,361) At 31 December 2013/1 January 2014 8,522 Writeback of impairment loss (4,245) A G M th

Allowance for impaired debts 220 18

Effect of movement in exchange rates (10) o n inf or mati At 31 December 2014 4,487 BIMB HOLDINGS BERHAD 178 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.3 Credit risk (continued)

(iii) credit quality of investments’ portfolio

investments’ portfolio (excluding equity securities, unit trusts and investment units in closed end funds) of the Group by external party rating are as follows:

Financial Financial Financial assets assets assets held-for- Derivative available- held-to- trading assets for-sale maturity Total Group RM’000 RM’000 RM’000 RM’000 RM’000 As at 31 December 2014 AAA 68,648 - 3,928,609 157,513 4,154,770 AA 280,913 - 2,631,022 3,849 2,915,784 A 68,517 - 142,605 5,588 216,710 Below A - - 20,347 - 20,347 Unrated 36,204 - 229,875 235,032 501,111 Sovereign 541,028 - 5,946,214 145,276 6,632,518 Unit-linked 37,018 - - - 37,018 Financial institution - 57,078 - - 57,078 Corporate - 5,463 - - 5,463 1,032,328 62,541 12,898,672 547,258 14,540,799

As at 31 December 2013 AAA 175,428 - 4,527,435 99,419 4,802,282 AA 103,489 - 3,414,274 33,955 3,551,718 A 11,745 - 59,984 7,157 78,886 Below A - - 6,807 351 7,158 Unrated 20,781 - 236,455 181,662 438,898 Sovereign 958,694 - 6,803,960 145,391 7,908,045 Unit-linked 35,788 - - - 35,788 Financial institution - 21,350 - - 21,350 Corporate - 7,768 - - 7,768 1,305,925 29,118 15,048,915 467,935 16,851,893 179 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 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 R e vi w Group. Furthermore, significant or sudden movements in rates could affect the Group’s liquidity/funding position. The Group P er f or manc e is exposed to the following main market risk factors:

• Rate of Return or Profit Rate/Yield Risk: the potential impact on the Group’s profitability caused by changes in the market rate of return, either due to general market movements or due to issuer/borrower specific causes; • Foreign Exchange Risk: the impact of exchange rate movements on the Group’s currency positions; • Equity Investment Risk: the profitability impact on the Group’s equity positions or investments caused by changes in equity prices or values; • Commodity Inventory Risk: the risk of loss due to movements in commodity prices. P erspe ctiv es the objective of the Group’s market risk management is to manage and control market risk exposures in order to optimise return on risk while maintaining a market risk profile consistent with the Group’s approved risk appetite.

the key features of the Group’s market risk management practices and policies are represented by the Banking and Takaful segments.

(a) Banking

bank Islam separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those acc o untability positions arising from market making, proprietary position taking and other marked-to-market positions so designated as per the approved Trading Book Policy Statements. Non-trading portfolios primarily arise from the re-pricing mismatches of the Bank’s customer driven assets and liabilities and from the Bank’s investment of its surplus funds.

market risk governance A u d it ed

the management of market risk is principally carried out by using risk limits approved by the Bank’s BRC, guided by the F inancial e m nt s Stat Risk Appetite Statement approved by the Board of Directors of the Bank.

the Asset and Liability Management Committee (“ALCO”) is responsible under the authority delegated by the Bank’s BRC for managing market risk at strategic level.

Management of market risk

bank Islam’s market risk exposures are managed by its Treasury. The aim is to ensure that all market risks are consolidated nal Add iti o nal

at Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits o n I nf or mati are set for portfolios, products and risk types, with market liquidity and credit quality being the principal factors in determining the level of limits set.

the Bank’s Market Risk Management Department (“MRMD”) is an independent risk control function, responsible for ensuring efficient implementation of market risk management policies.T he Bank’s MRMD is also responsible for

developing market risk management guidelines, measurement techniques, behavioural assumptions and limit setting A G M

methodologies. Any excesses against the prescribed limits are reported immediately to the Senior Management. Strict th 18 escalation procedures are documented and approved by the Bank’s BRC. In addition, the market risk exposures and limits o n inf or mati are regularly reported to the Bank’s ALCO and BRC. BIMB HOLDINGS BERHAD 180 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

Management of market risk (continued)

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 monthly to determine the impact of changes in profit rates, foreign exchange rates and other risk factors on the profitability, capital adequacy and liquidity of the respective operating subsidiaries. The stress test provides the Bank’s Management and the BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the respective businesses.

(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.

Non trading book Non Effective Up to 1 >1-3 >3-12 1-5 Over 5 profit Trading profit month months months years years sensitive book Total rate Bank Islam RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % As at 31 December 2014 Assets Cash, balances and placements with banks 2,391,792 104,108 - - - 773,453 - 3,269,353 2.40 Financial assets held-for-trading ------921,629 921,629 3.80 Derivative financial assets ------62,541 62,541 1.99 Financial assets available-for-sale 56,394 124,169 1,799,758 5,396,262 2,860,080 - - 10,236,663 4.14 Financial assets held-to-maturity - - - - 60,752 - - 60,752 8.44 Financing, advances and others - non-impaired 1,048,140 1,210,137 777,261 2,318,746 24,412,889 - - 29,767,173 6.01 - impaired net of allowances * - - - - - (242,602) - (242,602) Other assets - - - - - 1,745,173 - 1,745,173 Total assets 3,496,326 1,438,414 2,577,019 7,715,008 27,333,721 2,276,024 984,170 45,820,682 Note 47 * this is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired financing. 181 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(i) Profit rate risk (continued) R e vi w

Non trading book P er f or manc e Non Effective Up to 1 >1-3 >3-12 1-5 Over 5 profit Trading profit month months months years years sensitive book Total rate Bank Islam RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % As at 31 December 2014 Liabilities Deposits from P erspe ctiv es customers 18,070,797 4,317,866 2,852,504 55,698 - 15,713,467 - 41,010,332 2.19 Deposits and placements of banks and other financial institutions 200,000 100,000 - - - - - 300,000 2.99 Derivative financial

liabilities ------32,407 32,407 1.03 acc o untability Bills and acceptance payable - - - - - 127,524 - 127,524 Other liabilities - - - - - 620,829 - 620,829 Total liabilities 18,270,797 4,417,866 2,852,504 55,698 - 16,461,820 32,407 42,091,092 Note 47 Equity A u d it ed

Equity attributable F inancial e m nt s Stat to equity holders of the Bank - - - - - 3,729,590 - 3,729,590 Total equity - - - - - 3,729,590 - 3,729,590

Total liabilities and shareholders’ equity of the Bank 18,270,797 4,417,866 2,852,504 55,698 - 20,191,410 32,407 45,820,682 nal Add iti o nal On-balance sheet o n I nf or mati profit sensitivity gap (14,774,471) (2,979,452) (275,485) 7,659,310 27,333,721 (17,915,386) 951,763 - Off-balance sheet profit sensitivity gap (profit rate A G M

swaps) 300,000 300,000 - (600,000) - - - - th

Total profit 18

sensitivity gap (14,474,471) (2,679,452) (275,485) 7,059,310 27,333,721 (17,915,386) 951,763 - o n inf or mati BIMB HOLDINGS BERHAD 182 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(i) Profit rate risk (continued)

Non trading book Non Effective Up to 1 >1-3 >3-12 1-5 Over 5 profit Trading profit month months months years years sensitive book Total rate Bank Islam RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % As at 31 December 2013 Assets Cash, balances and placements with banks 2,984,281 130,491 18 - - 616,133 - 3,730,923 2.26 Financial assets held-for-trading ------1,216,895 1,216,895 2.51 Derivative financial assets ------29,118 29,118 1.04 Financial assets available-for-sale 291,837 978,243 1,979,158 5,727,754 3,439,929 - - 12,416,921 3.96 Financial assets held-to-maturity - - - - 63,327 - - 63,327 9.06 Financing, advances and others - non-impaired 1,014,025 1,125,266 580,605 2,130,053 19,107,269 - - 23,957,218 6.25 - impaired net of allowances * - - - - - (216,270) - (216,270) Other assets - - - - - 1,613,239 - 1,613,239 Total assets 4,290,143 2,234,000 2,559,781 7,857,807 22,610,525 2,013,102 1,246,013 42,811,371 Note 47

* this is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired financing. 183 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued) 41.4 Market risk (continued) (a) banking (continued) (i) Profit rate risk (continued) R e vi w Non trading book Non Effective P er f or manc e Up to 1 >1-3 >3-12 1-5 Over 5 profit Trading profit month months months years years sensitive book Total rate Bank Islam RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % As at 31 December 2013 Liabilities

Deposits from P erspe ctiv es customers 17,553,433 2,771,729 2,093,107 175,956 154 14,650,623 - 37,245,002 2.16 Deposits and placements of banks and other financial institutions 1,314,564 151,538 63,873 - - - - 1,529,975 2.20 Derivative financial

liabilities ------13,565 13,565 0.48 acc o untability Bills and acceptance payable 20,421 4,855 - - - 145,322 - 170,598 3.45 Other liabilities - - - - - 525,396 - 525,396 Total liabilities 18,888,418 2,928,122 2,156,980 175,956 154 15,321,341 13,565 39,484,536 Note 47

Equity A u d it ed inancial F inancial e m nt s Stat Equity attributable to equity holders of the Bank - - - - - 3,326,835 - 3,326,835 Total equity - - - - - 3,326,835 - 3,326,835

Total liabilities and shareholders’ nal Add iti o nal

equity of the Bank 18,888,418 2,928,122 2,156,980 175,956 154 18,648,176 13,565 42,811,371 o n I nf or mati On-balance sheet profit sensitivity gap (14,598,275) (694,122) 402,801 7,681,851 22,610,371 (16,635,074) 1,232,448 - Off-balance sheet profit sensitivity

gap (profit rate A G M swaps) 400,000 600,000 (100,000) (500,000) (400,000) - - - th 18

Total profit o n inf or mati sensitivity gap (14,198,275) (94,122) 302,801 7,181,851 22,210,371 (16,635,074) 1,232,448 - BIMB HOLDINGS BERHAD 184 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(ii) Profit rate risk in the non-trading portfolio

Profit rate risk in the non-trading portfolio is managed and controlled using measurement known as economic value of equity (“EVE”) and earnings-at-risk (“EaR”). EVE and EaR limits are approved by the Bank’s BRC and independently monitored monthly by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

the Bank manages market risk in non-trading portfolios by monitoring the sensitivity of projected EaR and EVE under varying profit rate scenarios (simulation modelling).F or simulation modelling, a combination of standard scenarios and non-standard scenarios relevant to the local market are used. The standard scenarios monitored monthly include a 100 and 200 basis points parallel fall or rise in profit rates and historical simulation of past events. The scenarios assume no management action. Hence, they do not incorporate actions that would be taken by the Bank’s Treasury to mitigate the impact of the profit rate risk. In reality, depending on the view on future market movements, the Bank’s Treasury would proactively seek to change the profit rate exposure profile to minimise losses and to optimize net revenues. The nature of the hedging and risk mitigation strategies corresponds to the market instruments available. These strategies range from the use of 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 projected sensitivity at the Bank’s level to a 100 basis points parallel shift to profit rates across all maturities applied on the Bank’s profit rate sensitivity gap as at reporting date.

2014 2013 -100bps +100bps -100bps +100bps Bank Islam Increase/(Decrease) RM’million Impact on EaR (22.45) 22.45 (51.45) 51.45 Impact on EVE (397.43) 397.43 (521.44) 521.44

note: EVE and EaR as at 31 December 2013 were reinstated in line with the change in methodology from behavioural method to BNM contractual method as approved by the Special BRC 01/2014 on 30 June 2014. 185 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(ii) Profit rate risk in the non-trading portfolio (continued) R e vi w P er f or manc e other controls to contain profit rate risk in the non-trading portfolio include stress testing and applying sensitivity limits to the available-for-sale financial assets. Sensitivity is measured by the present value of a 1 basis point change (“PV01”) and is independently monitored by the Bank’s MRMD on a daily basis against limits approved by the BRC. PV01 exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

(iii) market risk in the trading portfolio

market risk in the trading portfolio is monitored and controlled using Value-at-Risk (“VaR”). VaR limit is approved P erspe ctiv es by the Bank’s BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

a summary of the VaR position of the Bank’s trading portfolios at the reporting date is as follows:

As at 1.1.2014 to 31.12.2014 31.12.2014 Average Maximum Minimum

Bank Islam RM’million RM’million RM’million RM’million acc o untability Profit rate risk 0.67 1.62 2.83 0.63 Foreign exchange risk 0.11 0.22 2.08 0.01

Overall 0.78 1.84 4.71 0.68 A u d it ed inancial F inancial e m nt s Stat As at 1.1.2013 to 31.12.2013 31.12.2013 Average Maximum Minimum Bank Islam RM’million RM’million RM’million RM’million Profit rate risk 1.48 1.64 3.33 0.43 Foreign exchange risk 0.78 0.26 1.06 0.01 nal Add iti o nal Overall 2.26 1.90 3.64 0.55 o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 186 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(iii) Market risk in the trading portfolio (continued)

Value-at-Risk vaR is a technique that estimates the potential losses that could occur on risk positions as a result of movements in market rates and prices over a specified time horizon and to a given level of confidence. The VaR models used by Bank Islam are based on historical simulation. These models derive plausible future scenarios from past series of recorded market rates and prices, taking into account inter-relationships between different markets and rates such as profit rates and foreign exchange rates.

The historical simulation models used by the Bank incorporate the following features:

• potential market movements are calculated with reference to data from the past four years; • historical market rates and prices are calculated with reference to foreign exchange rates and profit rates; • VaR is calculated to a 99 per cent confidence level and for a one-day holding period. The nature of the VaR models means that an increase in observed market volatility will lead to an increase in VaR without any changes in the underlying positions; and • The dataset is updated on weekly basis.

statistically, the Bank would expect to see losses in excess of VaR only 1 per cent of the time over a one-year period. The actual number of excesses over this period can therefore be used to gauge how well the models are performing.

Although a valuable guide to risk, VaR should always be viewed in the context of its limitations. For example:

• The use of historical data as a proxy for estimating future events may not encompass all potential events, particularly those which are extreme in nature; • The use of a 1-day holding period assumes that all positions can be liquidated or hedged in one day. This may not fully reflect the market risk arising at times of severe illiquidity, when a 1-day holding period may be insufficient to liquidate or hedge all positions fully; • The use of a 99 per cent confidence level, by definition, does not take into account losses that might occur beyond this level of confidence; • VaR is calculated on the basis of exposures outstanding at the close of business and therefore does not necessarily reflect intra-day exposures; and • VaR is unlikely to reflect the loss potential on exposures that might arise under significant market movements.

the Bank recognises these limitations by augmenting the VaR limits with other limits such as maximum loss limits, position limits and PV01 limits structures. These limits are approved by the Bank’s BRC and independently monitored daily by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

other controls to contain market risk at an acceptable level are through stress testing, rigorous new product approval processes and a list of permissible instruments to be traded. Stress tests are produced monthly to determine the impact of changes in profit rates, foreign exchange rates and other main economic indicators on the Bank’s profitability, capital adequacy and liquidity. The stress-testing provides the Bank’s Management and BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the Bank. 187 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 Market risk (continued)

(a) banking (continued)

(iv) Foreign exchange risk R e vi w P er f or manc e Trading positions in addition to VaR and stress testing, the Bank controls the foreign exchange risk within the trading portfolio by limiting the open exposure to individual currencies, and on an aggregate basis.

Overall (trading and non-trading positions) the Bank controls the overall foreign exchange risk by limiting the open exposure to non-Ringgit positions on an aggregate basis. P erspe ctiv es foreign exchange limits are approved by the Bank’s BRC and independently monitored daily by the Bank’s MRMD. Exposures and limits are regularly discussed and reported to the Bank’s ALCO and BRC.

Sensitivity Analysis considering that other risk variables remain constant, the foreign currency revaluation sensitivity for the Group as at reporting date is summarised as follows:

2014 2013 acc o untability -1% +1% -1% +1% Depreciation Appreciation Depreciation Appreciation Bank Islam RM’000 RM’000 RM’000 RM’000 US Dollar (4,855) 4,855 8,604 (8,604) Euro 5,268 (5,268) 6,306 (6,306)

Others 861 (861) (148) 148 A u d it ed inancial F inancial e m nt s Stat (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. nal Add iti o nal o n I nf or mati - 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. A G M th

takaful Malaysia also issue unit-linked investment policies. In the unit-linked business, the certificate holders bear 18

investment risk on the assets held in the unit-linked funds as the certificate benefits are directly linked to value of the assets o n inf or mati 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. BIMB HOLDINGS BERHAD 188 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(b) Takaful (continued)

(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 2014 AFS financial assets 258,447 2,090,635 349,413 2,698,495 FVTPL financial assets 3,236 112,553 - 115,789 HTM financial assets 2,248 442,979 41,279 486,506 Financing and receivables 246,802 1,081,406 177,653 1,505,861 510,733 3,727,573 568,345 4,806,651

2013 AFS financial assets 250,115 2,043,811 375,414 2,669,340 FVTPL financial assets 4,041 84,989 - 89,030 HTM financial assets 1,965 366,741 35,902 404,608 Financing and receivables 194,337 694,446 104,501 993,284 450,458 3,189,987 515,817 4,156,262 189 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 Market risk (continued)

(b) Takaful (continued)

(i) Profit yield risk (continued) R e vi w P er f or manc e 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 have increased/(decreased) other comprehensive income/equity, Family and General Takaful participants’ fund by the amounts shown below. The analysis assumes that all other variables remain constant.

Impact on Impact on Impact on

profit Impact on operating Participants’ P erspe ctiv es Change in before tax equity* surplus fund variables RM’000 RM’000 RM’000 RM’000 2014 AFS financial assets +50bps - (8,020) - (168,963) FVTPL financial assets +50bps 10 10 (8) (8) 10 (8,010) (8) (168,971) acc o untability AFS financial assets -50bps - 8,790 - 147,429 FVTPL financial assets -50bps (10) (10) 4 4 (10) 8,780 4 147,433

2013 AFS financial assets +50bps - (8,351) - (135,002) A u d it ed inancial F inancial FVTPL financial assets +50bps 11 11 (325) (325) e m nt s Stat 11 (8,340) (325) (135,327)

AFS financial assets -50bps - 10,603 - 179,063 FVTPL financial assets -50bps (11) (11) 368 368 (11) 10,592 368 179,431

* impact on equity reflects adjustments for tax, when applicable. Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 190 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.4 Market risk (continued)

(b) Takaful (continued)

(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 profit Impact on operating Participants’ Change in before tax equity* surplus fund variables RM’000 RM’000 RM’000 RM’000 2014 Market price +15bps 8 7,820 8,136 88,747 Market price -15bps (8) (7,820) (8,136) (88,747)

2013 Market price +15bps (39) 13,045 5,736 147,610 Market price -15bps 39 (13,045) (5,736) (147,610)

* impact on equity reflects adjustments for tax, when applicable. 191 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.4 Market risk (continued)

(b) Takaful (continued)

(iii) foreign exchange risk R e vi w P er f or manc e 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. P erspe ctiv es

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.

41.5 Liquidity risk acc o untability

Overview

liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations when they fall due, or might have to fund these obligations at excessive cost. This risk can arise from mismatches in the timing of cash flows. Funding risk arises when the necessary liquidity to fund illiquid asset positions cannot be obtained at the expected terms when required. A u d it ed inancial F inancial

the management reviews both Banking and Takaful business’ liquidity risk separately due to the different nature of both businesses. e m nt s Stat

(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. nal Add iti o nal o n I nf or mati current accounts and savings deposits payable on demand or at short notice form a significant part of the Bank’s funding, and the Bank places considerable importance on maintaining their stability. For deposits, stability depends upon preserving depositors’ confidence in the Bank and the Bank’s capital strength and liquidity, and on competitive and transparent pricing.

the management of liquidity and funding is primarily carried out in accordance with the BNM Liquidity Framework, practices and limits, and triggers approved by the Bank’s BRC and ALCO. These limits and triggers vary to take account of the depth and A G M th

liquidity of the local market in which the Bank operates. The Bank maintains a strong liquidity position and manages the liquidity 18

profile of its assets, liabilities and commitments to ensure that cash flows are appropriately balanced and all obligations are met o n inf or mati when due. BIMB HOLDINGS BERHAD 192 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.5 Liquidity risk (continued)

(a) banking (continued)

The Bank’s liquidity and funding management process includes:

• Daily projection of cash flows and ensuring that the Bank has sufficient liquidity surplus and reserves to sustain a sudden liquidity shock; • Projecting cash flows and considering the level of liquid assets necessary in relation thereto; • Maintain liabilities of appropriate term relative to the asset base; • Maintain a diverse range of funding sources with adequate back-up facilities; • Monitor depositors’ concentration in order to avoid undue reliance on large individual depositors and ensure a satisfactory overall funding mix; and • Manage the maturities and diversify funding liabilities across products and counterparties.

Liquidity and funding risk governance the management of liquidity and funding risk is principally undertaken using risk limit mandates approved by the Bank’s BRC and management action triggers assigned by the Bank’s ALCO.

the Bank’s ALCO is responsible under the authority delegated by the Bank’s BRC for managing liquidity and funding risk at strategic level.

Management of liquidity and funding risk all liquidity risk exposures are managed by the Bank’s Treasury. The aim is to ensure that liquidity and funding risk are consolidated at the Bank’s Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits and triggers are set to meet the following objectives:

• Sufficient liquidity surplus and reserves to sustain a sudden liquidity shock; • Cash flows are relatively diversified across all maturities; • Deposit base is not overly concentrated to a relatively small number of depositors; • Sufficient borrowing capacity in the Interbank market and highly liquid financial assets to back it up; and • Not over-extending financing activities relative to the deposit base.

the Bank’s MRMD is the independent risk control function and is responsible for ensuring efficient implementation of liquidity and funding risk management policies. It is also responsible for developing the Bank’s liquidity and funding risk management guidelines, measurement techniques, behavioural assumptions and limit setting methodologies. Any excess against the prescribed limits and triggers are reported immediately to the Bank’s Senior Management. Strict escalation procedures are documented and approved by the Bank’s BRC, with proper authorities to ratify or approve the excess in place. In addition, the market risk exposures and limits are regularly reported to the Bank’s ALCO and BRC.

another control to ensure that liquidity and funding risk exposures remain within tolerable levels includes stress testing. Stress testing and scenario analysis are important tools in the Bank’s liquidity management framework. This will also include an assessment of asset liquidity under various stress scenarios. Stress test results are produced monthly to determine the impact of a sudden liquidity shock. The stress-testing provides the Bank’s Management and BRC with an assessment of the financial impact of identified extreme events on the liquidity and funding risk exposures of the Bank.

a final key control feature of the Bank’s liquidity and funding risk management are the approved and documented liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in the event of difficulties arising from systemic or other crisis while minimising adverse long-term implications to the Bank. 193 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.5 Liquidity risk (continued)

(a) banking (continued)

Maturity analysis R e vi w P er f or manc e 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 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 As at 31 December 2014

Assets P erspe ctiv es Cash, balances and placements with banks 773,453 2,391,792 104,108 - - - 3,269,353 Securities portfolio - 490,709 259,457 730,579 1,229,869 8,508,430 11,219,044 Derivatives financial assets - 4,323 8,250 26,970 6,328 16,670 62,541 Financing and advances - 1,048,140 1,210,137 509,343 267,918 26,489,033 29,524,571 Other assets - - - - - 1,745,173 1,745,173 Total assets 773,453 3,934,964 1,581,952 1,266,892 1,504,115 36,759,306 45,820,682

Note 47 acc o untability Liabilities Deposits from customers 15,713,467 18,070,797 4,317,866 1,860,673 991,831 55,698 41,010,332 Deposits and placements of banks and other financial institutions - 200,000 100,000 - - - 300,000 Derivative financial liabilities - 2,108 17,720 4,310 4,985 3,284 32,407 A u d it ed inancial F inancial Other liabilities - - - - - 748,353 748,353 e m nt s Stat Total liabilities 15,713,467 18,272,905 4,435,586 1,864,983 996,816 807,335 42,091,092 Note 47 Equity Equity attributable to equity holders of the Bank - - - - - 3,729,590 3,729,590 On Balance Sheet Net

liquidity gap (14,940,014) (14,337,941) (2,853,634) (598,091) 507,299 32,222,381 - Add iti o nal o n I nf or mati Commitments and contingencies 2,410,036 1,676,783 1,434,560 1,434,375 2,372,617 2,807,596 12,135,967 Net liquidity gap (17,350,050) (16,014,724) (4,288,194) (2,032,466) (1,865,318) 29,414,785 (12,135,967) A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 194 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.5 Liquidity risk (continued)

(a) banking (continued)

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 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 As at 31 December 2013 Assets Cash, balances and placements with banks 616,133 2,984,281 130,491 13 5 - 3,730,923 Securities portfolio - 291,837 1,338,465 967,987 1,342,489 9,756,365 13,697,143 Derivatives financial assets - 8,374 3,828 (200) (259) 17,375 29,118 Financing and advances - 1,014,025 1,125,266 224,711 355,894 21,021,052 23,740,948 Other assets - - - - - 1,613,239 1,613,239 Total assets 616,133 4,298,517 2,598,050 1,192,511 1,698,129 32,408,031 42,811,371 Note 47 Liabilities Deposits from customers 14,650,623 17,553,433 2,771,729 1,531,244 561,863 176,110 37,245,002 Deposits and placements of banks and other financial institutions - 1,314,564 151,538 32,755 31,118 - 1,529,975 Derivative financial liabilities - 6,915 4,368 91 24 2,167 13,565 Other liabilities - - - - - 695,994 695,994 Total liabilities 14,650,623 18,874,912 2,927,635 1,564,090 593,005 874,271 39,484,536 Note 47 Equity Equity attributable to equity holders of the Bank - - - - - 3,326,835 3,326,835 On Balance Sheet Net liquidity gap (14,034,490) (14,576,395) (329,585) (371,579) 1,105,124 28,206,925 - Commitments and contingencies 2,186,831 2,011,842 1,358,059 873,122 1,898,539 2,883,287 11,211,680 Net liquidity gap (16,221,321) (16,588,237) (1,687,644) (1,244,701) (793,415) 25,323,638 (11,211,680) 195 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

41. financial risk management policies (continued)

41.5 Liquidity risk (continued)

(a) banking (continued)

Maturity analysis (continued) R e vi w

contractual maturity of financial liabilities on an undiscounted basis P er f or manc e 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 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 As at 31 December 2014 Financial Liabilities P erspe ctiv es Deposit from customers 33,747,231 4,287,385 1,939,086 1,020,742 59,025 41,053,469 Deposit from placements of banks and other financial institutions 200,425 100,409 - - - 300,834 Derivatives financial liabilities 4,925 18,202 4,310 4,985 15 32,437 forward contract 2,123 17,410 4,310 4,985 - 28,828 islamic Profit Rate Swap 2,802 792 - - - 3,594 structured deposits - - - - 15 15 Bills and acceptance payable 127,524 - - - - 127,524

Other liabilities 579,259 - - - - 579,259 acc o untability 34,659,364 4,405,996 1,943,396 1,025,727 59,040 42,093,523

Commitments and Contingencies Direct credit substitutes 37,603 81,510 56,237 123,881 61,202 360,433 Transaction related contingent items 114,274 74,499 89,310 248,546 499,636 1,026,265 Short term self liquidating trade related contingencies 158,699 32,308 - 3,117 42,750 236,874 A u d it ed inancial F inancial 310,576 188,317 145,547 375,544 603,588 1,623,572 e m nt s Stat

As at 31 December 2013 Financial Liabilities Deposit from customers 32,200,635 2,789,081 1,568,999 590,880 164,023 37,313,618 Deposit from placements of banks and other financial institutions 1,315,794 152,164 32,875 31,254 - 1,532,087 Derivatives financial liabilities 6,919 4,332 93 (43) 2,756 14,057 forward contract 3,208 3,347 39 - - 6,594 nal Add iti o nal islamic Profit Rate Swap 3,711 985 54 (43) 2,174 6,881 o n I nf or mati structured deposits - - - - 582 582 Bills and acceptance payable 166,018 4,927 - - - 170,945 Other liabilities 14,115 - - - - 14,115 33,703,481 2,950,504 1,601,967 622,091 166,779 39,044,822

Commitments and Contingencies A G M th

Direct credit substitutes 32,471 55,936 58,809 131,843 39,973 319,032 18

Transaction related contingent items 91,115 52,355 125,681 148,373 459,722 877,246 o n inf or mati Short term self liquidating trade related contingencies 124,675 23,240 25,662 51,935 44,396 269,908 248,261 131,531 210,152 332,151 544,091 1,466,186 BIMB HOLDINGS BERHAD 196 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

41. financial risk management policies (continued)

41.5 Liquidity risk (continued)

(b) Takaful

The following policies and procedures are in place to mitigate exposure to liquidity risk at Takaful Malaysia level:

• Wide liquidity risk policy setting out the evaluation and determination of the components of 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. • Setting up guidelines on asset allocations, portfolio limit structures and maturity profiles of assets, in order to ensure sufficient funding is available to meet takaful contracts obligations. • Setting up contingency funding plans which specify minimum proportions of funds to meet emergency calls as well as specifying events that would trigger such plans. • The Takaful’s catastrophe excess-of-loss retakaful contract contains clauses permitting the immediate drawdown of 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.

Carrying Up to >1 to 3 >3 to 5 More than No value a year* years years 5 years maturity Total Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2014 Provision for outstanding claims 22(a)(i) 408,946 169,739 130,679 106,229 2,299 - 408,946 Takaful payables 22 61,317 61,153 164 - - - 61,317 Other payables 216,471 200,440 13,067 137 2,827 - 216,471 686,734 431,332 143,910 106,366 5,126 - 686,734

2013 Provision for outstanding claims 22(a)(i) 473,365 202,498 151,911 101,253 17,703 - 473,365 Takaful payables 22 75,428 74,692 736 - - - 75,428 Other payables 227,876 223,486 2,012 251 2,127 - 227,876 776,669 500,676 154,659 101,504 19,830 - 776,669

* expected utilisation or settlement is within 12 months from the reporting date. 197 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

42. takaful risk management

(a) family Takaful Fund

The Family Takaful contracts consist of:

(i) family Takaful non-investment-linked contracts R e vi w P er f or manc e 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. P erspe ctiv es 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 acc o untability

the following gives details of Takaful Malaysia Group’s concentration of risks based on outstanding actuarial reserves by main product categories:

Group A u d it ed

Gross Retakaful Net F inancial e m nt s Stat Note RM’000 RM’000 RM’000 2014 Term 874,389 (101,692) 772,697 Endowment 1,358,507 (18) 1,358,489 Mortgage 1,466,686 (104,934) 1,361,752 Annuity 323,280 - 323,280 Total Family actuarial liabilities 22(a)(iii) 4,022,862 (206,644) 3,816,218 nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 198 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

42. takaful risk management (continued)

(a) family Takaful Fund (continued)

Group Gross Retakaful Net Note RM’000 RM’000 RM’000 2013 Term 824,558 (77,821) 746,737 Endowment 1,367,608 - 1,367,608 Mortgage 1,187,668 (70,519) 1,117,149 Annuity 328,985 - 328,985 Total Family actuarial liabilities 22(a)(iii) 3,708,819 (148,340) 3,560,479

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 following:

- 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. 199 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

42. takaful risk management (continued)

(a) family Takaful Fund (continued)

Sensitivities

A summary of key assumptions used for sensitivity analysis is as below: R e vi w P er f or manc e Group Mortality and Morbidity Discount Surrernder rates rate rate 2014 Endowment +10%(i) -1% -20% (i) Mortgage +10% -1% -20% P erspe ctiv es Investment-linked +10%(i) -1% -20%

2013 Endowment +10%(i) -1% -20% Mortgage +10%(i) -1% -20% Investment-linked +10%(i) -1% -20%

(i) 10% Industry mortality and morbidity experience tables M8388 and M9903 acc o untability

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 assumptions of correlation 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 A u d it ed inancial F inancial

economic assumptions. e m nt s Stat

Group Impact on Impact on Impact on gross net unallocated Change in liabilities liabilities surplus assumptions RM’000 RM’000 RM’000 2014 nal Add iti o nal Mortality/morbidity rate +10% 196,164 136,580 (136,580) o n I nf or mati Discount rate -1% 183,304 161,481 (161,481) Surrender rate -20% 58,568 44,264 (44,264)

2013

Mortality/morbidity rate +10% 180,259 135,607 (135,607) A G M th

Discount rate -1% 146,481 130,140 (130,140) 18

Surrender rate -20% 49,629 42,032 (42,032) o n inf or mati BIMB HOLDINGS BERHAD 200 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

42. takaful risk management (continued)

(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 2014 Fire 163,537 (82,606) 80,931 Motor 208,649 (64,912) 143,737 Marine 5,733 (3,320) 2,413 Miscellaneous 73,400 (19,258) 54,142 Gross contribution 22(a)(ii) 451,319 (170,096) 281,223

2013 Fire 154,544 (80,917) 73,627 Motor 187,435 (30,647) 156,788 Marine 5,134 (2,796) 2,338 Miscellaneous 81,293 (26,987) 54,306 Gross contribution 22(a)(ii) 428,406 (141,347) 287,059

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. 201 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

42. takaful risk management (continued)

(b) General Takaful Fund (continued)

Key assumptions (continued)

other key circumstances affecting the reliability of assumptions include delays in settlement and changes in foreign currency R e vi w

rates. P er f or manc e

Sensitivities

the General Takaful claim liabilities are sensitive to the above key assumptions and any changes to these assumptions may have impact on the liabilities and operating surplus of the General Takaful Fund significantly. It is not possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process.

the analysis below is performed for reasonable possible movements in each of the key assumptions, with all other assumptions P erspe ctiv es held constant, showing the impact on gross and net liabilities and operating surplus. The assumptions of correlation 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 acc o untability

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 A u d it ed inancial F inancial may result if the ultimate experience differs from current estimation. e m nt s Stat

- 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 nal Add iti o nal o n I nf or mati 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 A G M handling practice will have an impact on claim cost and future liabilities. th 18 o n inf or mati BIMB HOLDINGS BERHAD 202 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

42. takaful risk management (continued)

(b) General Takaful Fund (continued)

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 gross net unallocated Change in liabilities liabilities surplus assumptions RM’000 RM’000 RM’000 2014 Fire loss ratio for AY 2014 +10% 15,709 6,386 (6,386) Motor Act loss ratio for AY 2014 +10% 3,247 2,919 (2,919) Average claim cost +10% 60,263 28,415 (28,415) Average claim frequency +10% 33,179 20,960 (20,960) Average claim settlement period Increase by 6 months 12,523 8,181 (8,181)

2013 Fire loss ratio for AY 2013 +10% 14,351 5,884 (5,884) Motor Act loss ratio for AY 2013 +10% 2,783 2,478 (2,478) Average claim cost +10% 58,903 28,075 (28,075) Average claim frequency +10% 31,943 20,651 (20,651) Average claim settlement period Increase by 6 months 11,675 7,541 (7,541)

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 determining the provisions for claims, Takaful Malaysia Group takes into consideration the probability and magnitude of future experience being more adverse than expected, 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 required in order to assure confidence in the adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the level of margin to be maintained should be relatively lower. 203 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

42. takaful risk management (continued)

(b) General Takaful Fund (continued)

Gross General Takaful contract liabilities for 2014 (Group):

Before R e vi w

2007 2008 2009 2010 2011 2012 2013 2014 Total P er f or manc e RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Accident year At end of accident year 363,421 211,719 151,643 256,026 252,127 235,113 348,058 272,807 One year later 308,462 163,964 159,147 325,009 256,803 226,965 322,024 - Two years later 269,303 170,990 202,227 314,734 237,588 195,807 - - Three years later 261,723 194,484 186,882 289,971 216,253 - - -

Four years later 258,296 182,666 172,266 261,764 - - - - P erspe ctiv es Five years later 257,029 165,483 159,098 - - - - - Six years later 250,354 161,903 ------Seven years later 245,275 ------Current estimate of cumulative claims incurred 245,275 161,903 159,098 261,764 216,253 195,807 322,024 272,807 1,834,931

At end of accident year (63,455) (50,291) (71,393) (101,724) (58,326) (51,497) (56,640) (64,682) acc o untability One year later (179,619) (109,315) (132,370) (174,690) (132,258) (113,394) (130,366) - Two years later (204,297) (142,410) (146,646) (205,770) (164,490) (147,379) - - Three years later (219,658) (152,230) (153,005) (221,959) (179,202) - - - Four years later (227,646) (156,264) (155,143) (230,198) - - - - Five years later (233,071) (157,581) (155,984) - - - - - Six years later (234,596) (158,663) ------A u d it ed inancial F inancial

Seven years later (238,380) ------e m nt s Stat Cumulative payments to-date (238,380) (158,663) (155,984) (230,198) (179,202) (147,379) (130,366) (64,682) (1,304,854) Gross General Takaful contract liabilities 6,895 3,240 3,114 31,566 37,051 48,428 191,658 208,125 530,077 Additional risk margin 79,439 Effect of movement in exchange rates (4,083)

Gross General Takaful contract liabilities per Takaful Malaysia financial position (Note 22(a)(i)) 605,433 Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 204 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

42. takaful risk management (continued)

(b) General Takaful Fund (continued)

Net General Takaful contract liabilities for 2014 (Group):

Before 2007 2008 2009 2010 2011 2012 2013 2014 Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Accident year At end of accident year 106,409 102,188 107,014 211,276 179,670 169,228 156,615 156,941 One year later 118,800 86,706 109,700 214,389 183,927 169,004 143,677 - Two years later 117,551 92,132 115,733 203,874 179,313 152,765 - - Three years later 119,607 98,093 107,449 197,585 168,629 - - - Four years later 115,828 96,590 104,480 185,014 - - - - Five years later 121,362 93,306 100,610 - - - - - Six years later 120,143 90,836 ------Seven years later 123,160 ------Current estimate of cumulative claims incurred 123,160 90,836 100,610 185,014 168,629 152,765 143,677 156,941 1,121,632

At end of accident year (47,717) (33,040) (44,099) (84,167) (53,570) (47,769) (48,340) (47,835) One year later (85,148) (60,702) (79,458) (143,180) (119,794) (101,619) (94,643) - Two years later (94,843) (74,740) (92,171) (158,560) (144,833) (122,291) - - Three years later (102,483) (84,233) (97,214) (171,555) (152,714) - - - Four years later (107,236) (87,523) (98,469) (175,176) - - - - Five years later (114,486) (88,292) (98,930) - - - - - Six years later (114,787) (88,685) ------Seven years later (118,094) ------Cumulative payments to-date (118,094) (88,685) (98,930) (175,176) (152,714) (122,291) (94,643) (47,835) (898,368) Net General Takaful contract liabilities 5,066 2,151 1,680 9,838 15,915 30,474 49,034 109,106 223,264 Additional risk margin 30,046 Effect of movement in exchange rates (587) Net General Takaful contract liabilities per Takaful Malaysia financial position (Note 22(a)(i)) 252,723 205 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

43. 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 R e vi w

such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and P er f or manc e 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: P erspe ctiv es cash and short term funds and deposits and placements with banks and other financial institutions

for cash and short term funds and deposits and placements with financial instruments 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 held-for-trading and financial assets available-for-sale acc o untability

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. A u d it ed inancial F inancial e m nt s Stat financing, advances and others

their fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of financings with similar credit risks and maturities. The fair values are represented by their carrying value, net of specific allowance and income-in- suspense, being the recoverable amount.

Deposits from customers nal Add iti o nal o n I nf or mati 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 A G M months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are th 18

estimated based on discounted cash flows using prevailing money market profit rates for deposits and placements with similar o n inf or mati remaining year to maturities. BIMB HOLDINGS BERHAD 206 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

43. fair value of financial INSTRUMENTS (COntinued)

bills and acceptance payable

the estimated fair values of bills and acceptance payables with maturity of less than six months approximate their carrying values. For bills and acceptance 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:

• Level 1 – Quoted price (unadjusted) in active markets for the identical assets or liabilities. This level includes listed equity securities and debt instruments.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (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 Bank Negara Malaysia (“BNM”) indicative yields or counterparty credit risk.

there has been no transfer between Level 1 and 2 Fair values during the financial year.

• Level 3 – Inputs for asset or liability that are not based on observable market data (unobservable inputs). This level includes equity instruments and debt instruments with significant unobservable components. 207 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

43. 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. R e vi w

Fair value of financial instruments Fair value of financial instruments P er f or manc e carried at fair value not carried at fair value Total Carrying Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total fair value Amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2014 Group P erspe ctiv es Financial assets Financial assets held-for-trading 229,805 921,629 - 1,151,434 - - - - 1,151,434 1,165,590 Derivative financial assets - 62,541 - 62,541 - - - - 62,541 62,541 Financial assets available-for-sale 650,677 12,992,952 153,933 13,797,562 - - 32,066 32,066 13,829,628 13,815,889

Financial assets acc o untability held-to-maturity - - - - 21,089 466,896 60,752 548,737 548,737 547,258 Financing, advances and others ------29,527,807 29,527,807 29,527,807 29,524,571 Total assets 880,482 13,977,122 153,933 15,011,537 21,089 466,896 29,620,625 30,108,610 45,120,147 45,115,849 A u d it ed inancial F inancial Financial liabilities e m nt s Stat Derivative financial liabilities - 32,407 - 32,407 - - - - 32,407 32,407 Sukuk liabilities ------1,133,256 1,133,256 1,133,256 1,133,256 Total liabilities - 32,407 - 32,407 - - 1,133,256 1,133,256 1,165,663 1,165,663

2014

Company Add iti o nal o n I nf or mati

Financial assets Financial assets available-for-sale 18,559 - - 18,559 - - - - 18,559 18,559 Total assets 18,559 - - 18,559 - - - - 18,559 18,559 A G M th

Financial liabilities 18 Sukuk liabilities ------1,133,256 1,133,256 1,133,256 1,133,256 o n inf or mati Total liabilities ------1,133,256 1,133,256 1,133,256 1,133,256 BIMB HOLDINGS BERHAD 208 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

43. fair value of financial INSTRUMENTS (COntinued)

fair value information (continued)

Fair value of financial instruments Fair value of financial instruments carried at fair value not carried at fair value Total Carrying Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total fair value Amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2013 Group

Financial assets Financial assets held-for-trading 172,036 1,233,162 - 1,405,198 - - - - 1,405,198 1,405,198 Derivative financial assets - 29,118 - 29,118 - - - - 29,118 29,118 Financial assets available-for-sale 1,083,423 15,116,184 303,517 16,503,124 - - 34,481 34,481 16,537,605 16,536,010 Financial assets held-to-maturity - - - - 10,451 392,470 85,318 488,239 488,239 467,935 Financing, advances and others ------24,040,733 24,040,733 24,040,733 23,740,948 Total assets 1,255,459 16,378,464 303,517 17,937,440 10,451 392,470 24,160,532 24,563,453 42,500,893 42,179,209

Financial liabilities Derivative financial liabilities - 13,565 - 13,565 - - - - 13,565 13,565 Sukuk liabilities ------1,089,935 1,089,935 1,089,935 1,089,935 Total liabilities - 13,565 - 13,565 - - 1,089,935 1,089,935 1,103,500 1,103,500

2013 Company

Financial assets Financial assets available-for-sale 17,860 - - 17,860 - - - - 17,860 17,860 Total assets 17,860 - - 17,860 - - - - 17,860 17,860

Financial liabilities Sukuk liabilities ------1,089,935 1,089,935 1,089,935 1,089,935 Total liabilities ------1,089,935 1,089,935 1,089,935 1,089,935 209 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

43. fair value of financial INSTRUMENTS (continued)

the following table presents the changes in Level 3 instruments for the financial year ended 31D ecember 2014 for the Group:

2014 2013 RM’000 RM’000 R e vi w Financial assets held-for-trading P er f or manc e At 1 January - 59,662 Redemption - (588) Settlement - (60,288) Fair value gains/(losses) - 1,214 At 31 December - -

Financial assets available-for-sale P erspe ctiv es At 1 January 303,517 305,204 Maturity (159,474) - Gains 9,890 13,493 Settlement - (5,643) Impairment - (9,537) At 31 December 153,933 303,517

the following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key acc o untability unobservable inputs used in the valuation models.

(a) financial instruments carried at fair value

Inter-relationship between significant unobservable inputs A u d it ed

Type Valuation technique Significant unobservable inputs and fair value measurement F inancial e m nt s Stat Financial assets Valued at cost less impairment Not applicable Not applicable available-for-sale

Discounted cash flows using market The estimated fair value would Institutional profit rate for a similar instrument at 4.58% increase (decrease) if the discount trust account the measurement date rate were (lower) higher. nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 210 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

43. fair value of financial INSTRUMENTS (continued)

(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 to 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 Financial Officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

Sensitivity analysis for Level 3

Impact on Impact on Impact on profit Impact on operating Participants’ Change in before tax equity surplus fund variables RM’000 RM’000 RM’000 RM’000 2014 Market price +1% - (611) - (1,142) Market price -1% - 633 - 1,175

2013 Market price +1% - (707) - (2,496) Market price -1% - 733 - 2,565

(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) financial investments held-to-maturity (“HTM”)

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.

44. capital commitments

Group 2014 2013 RM’000 RM’000 Property, plant and equipment Contracted but not provided for in the financial statements 62,834 49,521 approved but not contracted for and not provided 20,427 31,179 83,261 80,700 211 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

45. lEase commitments

Leases as lessee Non-cancellable operating lease rentals are payable as follows:

Group 2014 2013 R e vi w

RM’000 RM’000 P er f or manc e Within one year 46,857 47,262 Between one and five years 131,153 132,770 More than five years 304,209 323,942 482,219 503,974

Leases as lessor

The Group leases out its investment properties (see Note 17). The future minimum lease receivables under non-cancellable leases P erspe ctiv es are as follows:

Group 2014 2013 RM’000 RM’000 Within one year 7,003 6,520 Between one and five years 8,519 4,818 acc o untability 15,522 11,338

46. 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.T he A u d it ed inancial F inancial

Directors monitor the adequacy of capital on an ongoing basis. e m nt s Stat

there were no changes in the Group’s approach to capital management during the financial year.

under the Listing Requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

the capital requirements in respect of Bank Islam Malaysia Berhad, Syarikat Takaful Malaysia Berhad and BIMB Securities Sdn Bhd nal Add iti o nal are subject to regulatory requirements from Bank Negara Malaysia and Bursa Malaysia Berhad. o n I nf or mati

47. Operating segment information

performance is measured based on segment profit/(loss) before zakat and taxation, as included in the internal management reports that are reviewed by the Group Managing Director/Chief Executive Officer. Segment profit/(loss) before zakat and taxation is A G M th

used to measure performance as management believes that such information is the most relevant in evaluating segmental results 18

relative to other entities that operate within these industries. In the preceding year, performance was measured based on segmental o n inf or mati results from operating activities and included items directly attributable to a segment as well as those that could be allocated on a reasonable basis. BIMB HOLDINGS BERHAD 212 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

47. Operating segment information (CONTINUED)

The Group operates predominantly in Malaysia and accordingly, information by geographical location on the Group’s operation is not presented.

segment information is presented in respect of the Group’s main business segment.

Business segments the Group comprises of the following main business segments:

banking islamic banking and provision of related services. takaful underwriting of family and general Islamic insurance (“Takaful”). others investment holding, currency trading, ijarah financing, stockbroking and unit trust.

Banking Takaful Others Elimination Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 2014 Business segments Segment result Revenue from external customers 2,413,748 542,803 10,922 - 2,967,473 Inter-segment revenue 23,078 2,708 212,564 (238,350) - Total revenue 2,436,826 545,511 223,486 (238,350) 2,967,473

Net income from operations (before allowance for impairment on financing and other assets) 1,585,700 545,511 223,486 (232,225) 2,122,472 Operating overheads (826,644) (357,487) (26,230) 27,800 (1,182,561) Operating results 759,056 188,024 197,256 (204,425) 939,911 Allowance for impairment on financing and advance (59,993) - - - (59,993) Reversal of impairment on other assets 3,688 - - - 3,688 Finance cost - - (68,222) - (68,222) Profit before zakat and taxation 702,751 188,024 129,034 (204,425) 815,384 Segment assets 45,820,682 7,127,028 5,190,914 (5,108,419) 53,030,205 Segment liabilities 42,091,092 6,545,264 1,527,373 (322,784) 49,840,945 Note 41.4(a)(i), 41.5(a) 213 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

47. Operating segment information (continued)

Banking Takaful Others Elimination Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 2013

Business segments R e vi w

Segment result P er f or manc e Revenue from external customers 2,244,205 553,058 12,132 - 2,809,395 Inter-segment revenue 900 2,644 285,642 (289,186) - Total revenue 2,245,105 555,702 297,774 (289,186) 2,809,395

Net income from operations (before allowance for impairment on financing and other assets) 1,465,640 555,702 297,774 (282,522) 2,036,594 P erspe ctiv es Operating overheads (799,376) (382,017) (42,916) (528) (1,224,837) Operating results 666,264 173,685 254,858 (283,050) 811,757 Reversal of impairment on financing 15,009 - - - 15,009 Allowance for impairment on investment (9,211) - - - (9,211) Reversal of impairment on other assets 5,570 - - - 5,570 Finance cost - - (3,349) - (3,349) acc o untability Share in the results of associate company (349) - - - (349) Profit before zakat and taxation 677,283 173,685 251,509 (283,050) 819,427 Segment assets 42,811,371 6,893,085 5,093,767 (5,123,678) 49,674,545 Segment liabilities 39,484,536 6,316,044 1,209,750 (385,725) 46,624,605 Note 41.4(a)(i), 41.5(a) A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 214 Annual Report 2014

Notes to the financial statements for the financial year ended 31 December 2014

48. cOmmitments and contingencies

in the normal course of business, the Group makes various commitments and incur certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. These exclude all contracts cleared in the normal course of the takaful business.

Group 2014 2013 RM’000 RM’000 Credit-related Exposures Direct credit substitutes 360,433 319,032 Assets sold with recourse 2 2 Transaction related contingent items 1,026,265 877,246 Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 6,165 1,714 - exceeding one year 942,851 823,818 Short term self liquidating trade related contingencies 236,874 278,297 Unutilised credit card lines 1,023,337 991,097 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 5,404,888 5,116,604 9,000,815 8,407,810

Derivative Financial Instruments Foreign exchange related contracts less than one year 1,840,778 1,381,894 Profit rate related contracts Less than one year 300,000 100,000 One year to less than five years 600,000 500,000 5 years and above 287,694 711,481 Equity related contracts one year to less than five years 106,680 110,495 3,135,152 2,803,870 12,135,967 11,211,680

49. Significant events during the financial year

on 25 November 2014, the Board of Directors of BIMB Holdings Berhad (“BHB”) (“Board”) had declared an interim single tier dividend of 14.7% per ordinary share of RM1.00 each in BHB (“BHB Share”) for the financial year ending 31D ecember 2014 (“Interim Dividend”) to be paid on 13 January 2015.

from the total dividend amount paid of RM219.5 million on 13 January 2015, approximately 17.7% or RM38.9 million was distributed as cash dividend whilst the remaining 82.3% amounting to RM180.6 million was reinvested to subscribe for 48,703,800 new ordinary shares of RM1.00 at RM3.71 each via the Dividend Reinvestment Plan. 215 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Notes to the Fr am e w or k financial statements for the financial year ended 31 December 2014 Le a ders hi p

50. Supplementary information on the breakdown of realised and unrealised profits or losses

the breakdown of the accumulated losses of the Group and of the Company as at 31 December, into realised and unrealised profits or losses, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group Company R e vi w 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000 P er f or manc e Total retained earnings of the Company and its subsidiaries - realised 761,071 850,447 15,589 234,994 - unrealised 53,510 38,833 10 10 814,581 889,280 15,599 235,004 Less: Consolidation adjustments (831,847) (839,672) - - Total (accumulated losses)/retained earnings (17,266) 49,608 15,599 235,004 P erspe ctiv es

the determination of realised and unrealised profits is based on the Guidance ofS pecial Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010. acc o untability A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 216 Annual Report 2014

Statement by directors pursuant to Section 169(15) of the Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 90 to 214 are drawn up in accordance withM alaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”), and the requirements of the Companies Act, 1965 in Malaysia, and Shariah requirements so as to give a true and fair view of the financial position of the Group and of theC ompany as of 31 December 2014 and their financial performance and cash flows for the financial years then ended.

In the opinion of the Directors, the information set out in Note 50 on page 215 to the financial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

…………………………………… Tan Sri Samsudin bin Osman

…………………………………… Dato’ Johan bin Abdullah

Kuala Lumpur,

Date: 31 March 2015 217 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statutory Fr am e w or k declaration pursuant to Section 169(16) of the Companies Act, 1965 Le a ders hi p

I, Mohamad Azlan bin Mohamad Alam, the officer primarily responsible for the financial management of BIMB Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 90 to 215 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Kuala Lumpur on 31 March 2015. R e vi w P er f or manc e

…………………………………….... Mohamad Azlan bin Mohamad Alam P erspe ctiv es

Before me: acc o untability A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati 18th o n inf or mati BIMB HOLDINGS BERHAD 218 Annual Report 2014 independent auditors’ report to the members of bimb holdings berhad (company no. 423858-x) (incorporated in malaysia)

Report on the Financial Statements

We have audited the financial statements of BIMB Holdings Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 90 to 214.

Directors’ Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion 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 2014 and of their financial performance and cash flows for the year then ended in accordance withM alaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) we have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 14 to the financial statements.

(c) we are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) the audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. 219 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at independent auditors’ report Fr am e w or k to the members of bimb holdings berhad (company no. 423858-x) (incorporated in malaysia) Le a ders hi p

Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 50 on page 215 to the financial statements has been compiled by theC ompany as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised R e vi w

and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, P er f or manc e issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. P erspe ctiv es

KPMG Desa Megat & Co. Ow Peng Li Firm Number: AF 0759 Approval Number: 2666/09/15(J) Chartered Accountants Chartered Accountant

Petaling Jaya, acc o untability

Date: 31 March 2015 A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 220 Annual Report 2014

Properties owned by bhb group

Property Listing for syarikat takaful malaysia berhad

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement (square (RM) feet) 1 No. 325A & 325B Three units of 4 999 years town 23 4,025/ 3,000,000 31.12.2014 12.07.1991 Blok 41, Kompleks storey Commercial lease expiring on 6,037 Perniagaan Fajar Complex/Office 31.12.2895 91000 Tawau Sabah

2 No. 64 & 65 Two units of 2 Freehold 28 3,095/ 1,130,000 31.12.2014 30.09.1991 Kompleks Jitra storey Shophouse/ 6,935 Jalan Sungai Korok Office 06000 Jitra Kedah Darul Aman

3 No. 23, Medan One unit of 3 99 years lease 19 1,539/ 570,000 31.12.2014 20.09.1995 Istana 3 storey Shophouse/ expiring on 4,255 Bandar Ipoh Raya Office 30.03.2081 30450 Ipoh Perak Darul Ridzuan

4 No. 84, Batu 3 ¼ One unit of 5 Freehold 28 1,883/ 1,800,000 31.12.2014 22.12.1995 Jalan Gombak storey Shophouse/ 8,700 53000 Kuala Office Lumpur

5 Lot 54 & 55 Two units of 3 99 years town 19 2,400/ 1,680,000 31.12.2014 27.12.1995 Bandar Wilayah storey Shophouse/ lease expiring on 7,200 Jasa Office 31.12.2090 Jalan Bunga Raya 91100 Lahad Datu Sabah 221 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Properties owned Fr am e w or k by bhb group Le a ders hi p

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement

(square (RM) R e vi w feet) P er f or manc e 6 No. 15 & 17 Two units of 2 Freehold 21 1,440/ 660,000 31.12.2014 17.07.1993 Jalan Kelibang storey Shophouse/ 7,720 Langkawi Mall Office 07000 Kuah Langkawi Kedah Darul Aman P erspe ctiv es 7 No. 26 & 28 Two units of 3 Freehold 16 3,293/ 1,240,000 31.12.2014 04.10.1996 Jalan Perda Barat storey Shophouse/ 8,840 Bukit Mertajam Office Seberang Prai 14000 Penang

8 No. 433 & 434 Two units of 4 Freehold 19 3,589/ 3,880,000 31.12.2014 02.01.1996

Jalan Kulas storey Shophouse/ 12,855 acc o untability 93400 Kuching Office Sarawak

9 No. 20, Fasa 1A One unit of 4 99 years lease 18 2,658/ N/A N/A 27.03.1992 Jalan Haji Manan storey Shophouse/ expiring on 9,930 86000 Kluang Office 10.12.2108

Johor Darul A u d it ed inancial F inancial Takzim e m nt s Stat

10 Lot 13 & 14 Two units of 3 999 years lease 20 2,504/ 2,200,000 31.12.2014 14.01.1997 Lazenda storey Office expiring on 7,200 Commercial Centre building 30.06.2902 Jalan Okk Abdullah 87007 Wilayah Persekutuan nal Add iti o nal

Labuan o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 222 Annual Report 2014

Properties owned by bhb group

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement (square (RM) feet) 11 No. 1 & 2 Two units of 2 99 years lease 27 3,956/ 880,000 31.12.2014 18.09.1999 Jalan Kelicap storey Shophouse/ expiring on 7,044 Taman Pekan Baru Office 05.09.2078 34200 Parit Buntar Perak Darul Ridzuan

12 No. 46 & 47 Two units of 4 Freehold 25 3,220/ 1,745,000 31.12.2014 18.09.1999 Jalan Rahmat storey Shophouse/ 12,092 83000 Batu Pahat Office Johor Darul Takzim

13 No. 180 & 181 Two units of 4 Freehold 24 3,200/ 1,740,000 31.12.2014 18.09.1999 Jalan Tuan Hitam storey Shophouse/ 12,250 22000 Jerteh Office Terengganu Darul Iman

14 Lot 82, 84 & 86 Three units of 2 99 years lease 15 6,339/ 3,120,000 31.12.2014 07.05.1997 Jalan Rugbi storey Shophouse/ expiring on 11,309 Seksyen 13 Office 22.01.2102 40100 Shah Alam Selangor Darul Ehsan

15 No. 229, Jalan One unit of 2 ½ Freehold 18 1,400/ 530,000 31.12.2014 15.07.1999 Shahab 2 storey Shophouse/ 3,570 Shahab Perdana Office Jalan Sultanah Sambungan 05350 Alor Star Kedah Darul Aman 223 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Properties owned Fr am e w or k by bhb group Le a ders hi p

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement

(square (RM) R e vi w feet) P er f or manc e 16 Lot No. 3803 One unit of 3 99 years lease 15 2,001/ 550,000 31.12.2014 01.07.1997 Jalan Dato’ Ulu storey Shophouse/ expiring on 3,120 Muar Office 06.10.2079 72000 Kuala Pilah Negeri Sembilan Darul Khusus

17 No. 45 One unit of 4 99 years lease 14 3,200/ 2,500,000 31.12.2014 15.09.2000 P erspe ctiv es Jalan Teluk Sisek storey Shophouse/ expiring on 8,019 25000 Kuantan Office 18.09.2068 Pahang Darul Makmur

18 No. 27 One unit of 2 ½ 99 years lease 14 1,398/ 720,000 31.12.2014 02.10.2000 Pusat Komersil storey Shophouse/ expiring on 5,017 Temerloh Offie 01.04.2095 28000 Temerloh acc o untability Pahang Darul Makmur

19 No. 2 & 4 Two units of 2 99 years lease 27 6,383/ 1,965,000 31.12.2014 08.09.1999 Jalan 6C/7 storey Shophouse/ expiring on 8,032 43650 Bandar Baru Office 08.07.2086 A u d it ed inancial F inancial

Bangi e m nt s Stat Selangor Darul Ehsan

20 Lot 14 One unit of 6 Freehold 18 1,500/ 3,680,000 31.12.2014 19.05.2000 Seremban City storey Shophouse/ 14,589 Centre Office Jalan Tuanku

Munawir Add iti o nal o n I nf or mati 70000 Seremban Negeri Sembilan Darul Khusus A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 224 Annual Report 2014

Properties owned by bhb group

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement (square (RM) feet) 21 No. 29, Jalan One unit of 3 99 years lease 13 3,899/ 1,660,000 31.12.2014 23.03.2002 Delima storey Shophouse/ expiring on 10,248 Pusat Perdagangan Office 25.09.2097 Pontian 82000 Pontian Johor Darul Takzim

22 Lot 1129 & 1130 One unit of 12 35 years sub lease 12 3,600/ 6,400,000 31.12.2014 29.12.1997 Bangunan Darul storey Office expiring on 23,637 Takaful building 27.02.2037 Jalan Sultan Ismail 20100 Kuala Terengganu Terengganu Darul Iman

23 No. 616 & 617 Two units of 2 99 years lease 22 4,498/ 1,700,000 31.12.2014 17.09.1999 Jalan Besar storey Office expiring on 8,685 73000 Tampin building 05.10.2088 Negeri Sembilan Darul Khusus

24 No. 6 One unit of 2 99 years lease 27 1,905/ 770,000 31.12.2014 09.08.2002 Jalan 6C/7 storey Shophouse/ expiring on 3,508 43650 Bandar Baru Office 08.07.2086 Bangi Selangor Darul Ehsan

25 Suite 3B/G One floor of 22 Freehold 13 6,409 * 8,500,000 31.12.2014 26.06.2001 Blok 3B, Plaza storey Office Sentral building Jalan Stesen Sentral 5 50470 Kuala Lumpur 225 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Properties owned Fr am e w or k by bhb group Le a ders hi p

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement

(square (RM) R e vi w feet) P er f or manc e 26 No. 26 & 27 Two units of 2 66 years lease 33 1,600/ 700,000 31.12.2014 17.09.1999 Jalan Tanjung storey Office expiring on 4,000 Pasar Baru building 18.02.2069 18500 Machang Kelantan Darul Naim

27 No. 330 & 331 Two units of 4 ½ 99 years lease 32 3,200/ 2,180,000 31.12.2014 03.07.2002 P erspe ctiv es Jalan Sultan storey Office expiring on 15,200 Yahya Petra building 09.12.2069 15720 Kota Bharu Kelantan Darul Naim

28 Menara Takaful Two units of Freehold Annexe 90,427/ 170,000,000 31.12.2014 08.10.2004 Malaysia Office building Block-34 393,508 No. 4, Jalan Sultan Main Block - 26 acc o untability Sulaiman storey Main 50000 Annexe Block - 29 Block-41 Kuala Lumpur storey

29 No. 2408 One unit of 2 99 years lease 18 2,800/ 800,000 31.12.2014 10.08.2004

Taman Samudera storey Shophouse/ expiring on 5,300 A u d it ed inancial F inancial 32040 Sri Manjung Office 19.05.2091 e m nt s Stat Perak Darul Ridzuan

30 No. 76A & 76 Two units of 3 Freehold 11 3,134/ 1,530,000 31.12.2014 18.08.2003 Pusat Perniagaan storey Office 18,304 Jalan Tupai building 34000 Taiping nal Add iti o nal

Perak Darul o n I nf or mati Ridzuan A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 226 Annual Report 2014

Properties owned by bhb group

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement (square (RM) feet) 31 No. 10 & 11 Two units of 3 33 years lease 12 3,852/ 2,360,000 31.12.2014 03.07.2002 Jalan Sultan Yahya storey Office expiring on 9,120 Petra building 08.09.2037 15200 Kota Bharu Kelantan Darul Naim

32 No. 4197 One unit of 4 Freehold 12 8,716/ 1,800,000 31.12.2014 27.07.2002 Jalan Teluk Wanjah storey Office 18,440 05200 Alor Star building Kedah Darul Aman

33 No. 10 & 8 Two units of 3 99 years lease 9 3,080/ 2,140,000 31.12.2014 30.11.2004 Jalan Padi storey Office expiring on 8,024 Emas building 16.02.2099 Bandar Baru UDA 81200 Johor Bahru Johor Darul Takzim

34 No. 4 One unit of 4 99 years lease 29 1,400/ 670,000 31.12.2014 11.09.2005 Kompleks Seri storey Office expiring on 5,510 Temin building 03.10.2080 Jalan Ibrahim 08000 Sungai Petani Kedah Darul Aman

35 Lot 1340 One unit of 4 60 years lease 10 1,400/ 1,400,000 31.12.2014 20.01.2006 Miri Waterfront storey Office expiring on 5,500 Commercial building 30.09.2066 Centre 98000 Miri Sarawak 227 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Properties owned Fr am e w or k by bhb group Le a ders hi p

Property Listing for syarikat takaful malaysia berhad (continued)

No. Location Description of Tenure Age of Land, Net Book Date of Date of Sale Existing Use Building Built- Value as at Revaluation and Purchase (years) up Area 31.12.2014 Agreement

(square (RM) R e vi w feet) P er f or manc e 36 No. 6 One unit of 3 99 years lease 9 1,540/ 1,070,000 31.12.2014 14.02.2006 Jalan Padi Emas storey Office expiring on 4,012 Bandar Baru UDA building 16.02.2099 81200 Johor Bahru Johor Darul Takzim

37 No. 148, Kompleks One unit of 4 ½ 99 years lease 21 1,470/ 1,050,000 31.12.2014 21.03.2006 P erspe ctiv es Munshi Abdullah storey Office expiring on 6,117 75200 Melaka building 23.04.2102

38 No. 16474 & 16475 Two units of 3 99 years lease 15 3,218/ 1,610,000 31.12.2014 27.10.2006 Pusat Perniagaan storey Office expiring on 9,280 Inderapura building 29.06.2092 Jalan Tras, Raub Pahang Darul acc o untability Makmur

39 No. 435 One unit of 4 Freehold 19 1,214/ 1,480,000 31.12.2014 02.01.1996 Jalan Kulas storey Shophouse/ 4,262 93400 Kuching Office Sarawak A u d it ed inancial F inancial e m nt s Stat * build-up Area nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 228 Annual Report 2014

Properties owned by bhb group

Property Listing for BANK ISLAM MALAYSIA BERHAD

No. Location Description of Tenure Age of Land, Built-up Net Book Date of Date of Sale Existing Use Building Area (square Value as at Acquisition and Purchase (years) feet) 31.12.2014 Agreement (RM) 1 HS (D) 80625 Building site 99 years lease N/A 6,597 12,834,314.55 30.12.1994 N/A PT 45 Seksyen 87 expiring on Jalan Tun Razak 29.12.2093 Bandar Kuala Lumpur

2 No. PT 1708 & 1709 Vacant land 99 years lease N/A 4,443 63,687.30 03.04.1986 N/A H S (M) 2660 & expiring on 2661, Batu 5 ½ 02.04.2085 Jalan Cheras Kuala Lumpur

3 Lot No. PT Vacant land 99 years lease N/A 405,000 583,414.35 25.03.1999 N/A 805-HSD 1323 expiring on Mukim Bagan 03.02.2101 Nakhoda Omar Sabak Bernam Selangor

Property Listing for SYARIKAT AL-IJARAH SENDIRIAN BERHAD

No. Location Description of Tenure Age of Land, Built-up Net Book Date of Date of Sale Existing Use Building Area (square Value as at Acquisition and Purchase (years) feet) 31.12.2014 Agreement (RM) 1 No. P.T. Lot 002600 4-storey Freehold 29 171 & 273 855,755.91 30.09.1985 N/A & H.S.(D) 815 & Shophouse/ 816, Lot 002601. Office for Bank No. 71 & 73 Islam Operation Jalan Taman Selat Off Jalan Bagan Luar Butterworth Pulau Pinang 229 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at share and warrant Fr am e w or k holdings statistics Le a ders hi p

Analysis of Shareholdings as at 31 March 2015

Authorised Share Capital : rm2,000,000,000 Paid-up Capital : rm1,542,209,734 Class of Shares : ordinary Shares of RM1.00 each Voting Rights : one (1) vote per ordinary share R e vi w

No. of Shareholders No. of Shares Percentage (%) P er f or manc e

Size of Shareholdings Malaysia Foreign Malaysia Foreign Malaysia Foreign

Less than 100 605 7 7,603 121 0.00 0.00

100-1,000 1,326 21 833,737 12,985 0.05 0.00

1,001 - 10,000 2,870 48 11,258,615 257,900 0.73 0.02

10,001 - 100,000 734 42 19,178,337 1,521,402 1.24 0.10 P erspe ctiv es

100,001 - 77,110,485 (*) 160 41 223,652,775 29,906,935 14.51 1.94

77,110,486 and above (**) 5 - 1,255,579,324 - 81.41 0.00

Total 5,700 159 1,510,510,391 31,699,343 97.94 2.06

* less than 5% of Issued Shares ** 5% and above of Issued Shares acc o untability

Directors’ Shareholdings as at 31 March 2015

Direct Shareholdings Indirect Shareholdings

No. Name of Directors No. % No. % A u d it ed inancial F inancial e m nt s Stat 1 Tan Sri Samsudin bin Osman - 0.00 - 0.00

2 Tan Sri Ismail bin Adam - 0.00 - 0.00

3 Tan Sri Ismee bin Ismail - 0.00 - 0.00

4 Datuk Zaiton binti Mohd Hassan - 0.00 - 0.00

5 Dato' Johan bin Abdullah - 0.00 - 0.00 nal Add iti o nal o n I nf or mati 6 Datuk Rozaida binti Omar - 0.00 - 0.00

7 Encik Zahari @ Mohd Zin bin Idris - 0.00 - 0.00

8 Encik Salih Amaran bin Jamiaan - 0.00 22,000 (a) 0.00

9 Puan Rifina binti Md Ariff - 0.00 - 0.00 A G M th

Note: 18

(a) indirect shareholding held by spouse. o n inf or mati BIMB HOLDINGS BERHAD 230 Annual Report 2014 share and warrant holdings statistics

Distribution Table According to Category of SHAREHolders as at 31 March 2015

No. of Shareholders No. of Shares %

Malaysia Foreign Malaysia Foreign Malaysia Foreign

Category of Non Non Non Shareholders Bumiputra Bumiputra Bumiputra Bumiputra Bumiputra Bumiputra 1 Individual 1,161 3,513 55 6,103,756 21,935,694 730,701 0.40 1.42 0.05 2 body corporate (a) Banks/ Finance Companies 50 2 - 1,122,698,463 1,248,600 - 72.80 0.08 0.00 (b) Investment Trusts/ Foundation/ Charities 1 - - 2,412,540 - - 0.16 0.00 0.00 (c) other Types of Companies 44 31 3 17,530,436 5,129,199 3,757,600 1.14 0.33 0.24 3 Government Agencies/ Institutions 18 - - 76,411,163 - - 4.95 0.00 0.00 4 Nominees 444 436 101 67,619,082 189,421,458 27,211,042 4.38 12.28 1.76 5 Others ------0.00 0.00 0.00 Total 1,718 3,982 159 1,292,775,440 217,734,951 31,699,343 83.83 14.11 2.06

No. of No. of Shareholders Shares %

Grand Total 5,859 1,542,209,734 100.00

SHAREHolders with Holdings of 5% and above as at 31 March 2015

Direct Shareholdings

No. Name of Substantial Shareholders No. %

1 Lembaga Tabung Haji 851,039,400 55.18

2 Employees Provident Fund Board 153,076,601 9.93

3 Kumpulan Wang Persaraan (Diperbadankan) 91,286,080 5.92

4 Amanahraya Trustee Berhad 80,722,540 5.23 Skim Amanah Saham Bumiputera

5 Permodalan Nasional Berhad 79,454,703 5.15 231 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at share and warrant Fr am e w or k holdings statistics Le a ders hi p

List of Top 30 SHAREHolders as at 31 March 2015

No. Name Shareholdings %

1 Lembaga Tabung Haji 851,039,400 55.18

2 Citigroup Nominees (Tempatan) Sdn Bhd 151,376,601 9.82 R e vi w Employees Provident Fund Board P er f or manc e 3 Kumpulan Wang Persaraan (Diperbadankan) 86,590,880 5.61

4 Amanahraya Trustees Berhad 80,722,540 5.23 Skim Amanah Saham Bumiputera

5 Permodalan Nasional Berhad 79,454,703 5.15

6 Amsec Nominees (Tempatan) Sdn Bhd 27,740,460 1.80

Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI) P erspe ctiv es

7 Lembaga Kemajuan Tanah Persekutuan (FELDA) 18,447,998 1.20

8 Majlis Ugama Islam Sabah 10,318,999 0.67

9 Majlis Ugama Islam Sabah 9,178,000 0.60

10 CIMB Group Nominees (Tempatan) Sdn Bhd 8,563,380 0.56 Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund

11 Amin Baitulmal Johor 8,316,000 0.54 acc o untability

12 Cartaban Nominees (Tempatan) Sdn Bhd 6,512,440 0.42 Exempt an for Eastspring Investments Berhad

13 Maybank Nominees (Tempatan) Sdn Bhd 6,238,900 0.40 Etiqa Takaful Berhad (Family PRF EQ) A u d it ed inancial F inancial

14 Affin Hwang Nominees (Tempatan) Sdn Bhd 5,544,000 0.36 e m nt s Stat Affin Hwang Asset Management Berhad for Majlis Ugama Islam dan Adat Resam Melayu Pahang

15 Majlis Agama Islam Negeri Pulau Pinang 5,544,000 0.36

16 Majlis Amanah Rakyat 5,544,000 0.36

17 Amanahraya Trustees Berhad 5,318,600 0.34 Amanah Saham Didik nal Add iti o nal

18 Majlis Agama Islam Selangor 5,124,988 0.33 o n I nf or mati

19 Amanahraya Raya Berhad 5,000,000 0.32 Kumpulan Wang Bersama Syariah

20 Majlis Agama Islam dan Adat Istiadat Melayu Kelantan 4,532,799 0.29 A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 232 Annual Report 2014 share and warrant holdings statistics

List of Top 30 SHAREHolders as at 31 March 2015 (CONTINUED)

No. Name Shareholdings %

21 Citigroup Nominees (Tempatan) Sdn Bhd 3,976,400 0,26 Kumpulan Wang Persaraan (Diperbadankan) (I-VCAP)

22 Amanahraya Trustees Berhad 3,785,800 0.25 Public Islamic Dividend Fund

23 HSBC Nominees (Asing) Sdn Bhd 3,779,940 0.25 Exempt an for JPMORGAN Chase Bank, National Association (U.S.A.)

24 DB (Malaysia) Nominess (Asing) Sdn Bhd 3,541,028 0.23 SSBT Fund WTAU for Wisdomtree Emerging Markets SmallCap Dividend Fund

25 Koperasi Permodalan Felda Malaysia Berhad 3,209,900 0.21

26 Tokio Marine Life Insurance Malaysia Bhd 3,165,200 0.21 As Beneficial Owner (PF)

27 Harakah Islamiah (Hikmah) 3,131,000 0.20

28 Citigroup Nominees (Asing) Sdn Bhd 3,107,897 0.20 CBNY for Dimensional Emerging Markets Value Fund

29 Citigroup Nominees (Asing) Sdn Bhd 3,105,620 0.20 Exempt an for Citibank New York (Norges Bank 12) 30 Koperasi Permodalan Felda Malaysia Berhad 3,000,000 0.19 Total 1,414,911,473 91.75 233 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at share and warrant Fr am e w or k holdings statistics Le a ders hi p

Analysis of Warrant Holdings as at 31 March 2015

No. of Warrant Holders No. of Warrants Percentage (%)

Size of Warrant Holdings Malaysia Foreign Malaysia Foreign Malaysia Foreign

Less than 100 86 - 5,062 - 0.00 0.00 R e vi w

100-1,000 757 7 400,852 4,069 0.09 0.00 P er f or manc e

1,001 - 10,000 1,792 15 9,169,581 72,700 2.15 0.02

10,001 - 100,000 1,305 18 47,520,182 837,580 11.14 0.20

100,001 - 21,335,792 (*) 277 8 134,945,976 11,918,876 31.62 2.79

21,335,793 and above (**) 3 - 221,841,000 - 51.99 0.00

Total 4,220 48 413,882,653 12,833,225 96.99 3.01 P erspe ctiv es

* less than 5% of Issued Warrant ** 5% and above of Issued Warrant

Directors’ WARRANT holdings as at 31 March 2015

None of BHB's Board of Directors have any direct/indirect warrant holdings as at 31 March 2015. acc o untability A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati BIMB HOLDINGS BERHAD 234 Annual Report 2014 share and warrant holdings statistics

Distribution Table According to Category of Warrant holders as at 31 March 2015

No. of Warrant Holders No. of Warrants %

Malaysia Foreign Malaysia Foreign Malaysia Foreign

Category of Non Non Non Warrant Holders Bumiputra Bumiputra Bumiputra Bumiputra Bumiputra Bumiputra 1 Individual 390 2,796 18 6,088,538 95,517,632 350,600 1.43 22.85 0.08 2 body corporate (a) Banks/ Finance Companies 10 2 - 196,943,738 375,500 - 46.15 0.09 0.00 (b) Investment Trusts/ Foundation/ Charities ------0.00 0.00 0.00 (c) Other Types of Companies 6 25 - 1,672,100 2,337,049 - 0.39 0.55 0.00 3 Government Agencies/ Institutions 2 - - 95,360 - - 0.02 0.00 0.00 4 Nominees 554 435 30 47,011,256 61,841,480 12,482,480 11.02 14.49 2.93 5 Others ------0.00 0.00 0.00 Total 962 3,258 48 251,810,992 162,071,661 12,833,225 59.01 37.98 3.01

No. of Warrant No. of Holders Warrants %

Grand Total 4,268 426,715,878 100.00

WARRANT Holders with Holdings of 5% and above as at 31 March 2015

Direct Warrant Holdings

No. Name of Substantial Warrant Holders Warrant %

1 Lembaga Tabung Haji 153,155,000 35.89

2 Public Nominees (Tempatan) Sdn Bhd 38,686,000 9.07 Pledged Securities Account for Kong Goon Khing (E-BTR)

3 Amanahraya Trustee Berhad 30,000,000 7.03 Skim Amanah Saham Bumiputera 235 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at share and warrant Fr am e w or k holdings statistics Le a ders hi p

List of Top 30 WARRANT Holders as at 31 March 2015

Warrant No. Name Holdings %

1 Lembaga Tabung Haji 153,155,000 35.89 R e vi w 2 Public Nominees (Tempatan) Sdn Bhd 38,686,000 9.07 P er f or manc e Pledged Securities Account for Kong Goon Khing (E-BTR)

3 Amanahraya Trustees Berhad 30,000,000 7.03 Skim Amanah Saham Bumiputera Permodalan Nasional Berhad

4 Permodalan Nasional Berhad 13,383,898 3.14

5 Chin Hooi Nan 13,348,000 3.13

6 Amsec Nominees (Tempatan) Sdn Bhd 10,299,560 2.41 P erspe ctiv es Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI)

7 Chin Hooi Nan 6,091,000 1.43

8 HSBC Nominees (Asing) Sdn Bhd 4,640,370 1.09 Exempt an for Credit Suisse Securities (USA) LLC (PB Client)

9 Malacca Equity Nominees (Tempatan) Sdn Bhd 3,110,300 0.73 Exempt an for Philip Capital Management Sdn Bhd acc o untability 10 Maybank Securities Nominees (Asing) Sdn Bhd 2,600,000 0.61 Maybank Kim Eng Securities Pte Ltd for Lim Chuan Seng

11 Su Ning Yaw 2,400,000 0.56

12 CIMB Group Nominees (Tempatan) Sdn Bhd 2,347,080 0.55 Amtrustee Berhad For CIMB Islamic Dali Equity Theme Fund A u d it ed inancial F inancial 13 HSBC Nominees (Asing) Sdn Bhd 2,107,930 0.49 e m nt s Stat Morgan Standley & CO. International PLC (Firm A/C)

14 Lim Gaik Bway @ Lim Chiew Ah 1,978,700 0.46

15 Public Nominees (Tempatan) Sdn Bhd 1,669,000 0.39 Pledged Securities Account for Kong Goon Khing (E-BTR)

16 Citigroup Nominees (Tempatan) Sdn Bhd 1,262,400 0.30 nal Add iti o nal

Universal Trustee (Malaysia) Berhad for CIMB-Principal Equity Fund o n I nf or mati

17 Citigroup Nominees (Tempatan) Sdn Bhd 1,253,800 0.29 Universal Trustee (Malaysia) Berhad for CIMB Islamic Small Cap Fund

18 Citigroup Nominees (Tempatan) Sdn Bhd 1,249,500 0.29 Bank Negara Malaysia Medical Fund Account (CIMB Principal) A G M

19 Harakah Islamiah (Hikmah) 1,222,400 0.29 th 18

20 Chong Shoong Tean 1,128,700 0.26 o n inf or mati BIMB HOLDINGS BERHAD 236 Annual Report 2014 share and warrant holdings statistics

List of Top 30 WARRANT Holders as at 31 March 2015 (CONTINUED)

Warrant No. Name Holdings %

21 Ng Kok Sing 1,080,000 0.25

22 Kenanga Nominees (Tempatan) Sdn Bhd 965,000 0.23 Pledged Securities Account for Ling Thin King (ET)

23 CIMB Group Nominees (Tempatan) Sdn Bhd 945,500 0.22 CIMB - Principal Asset Management Berhad for Manulife Insurance (Malaysia) Berhad - (Managed Fund)

24 Kenanga Nominees (Tempatan) Sdn Bhd 934,000 0.22 Pledged Securities Account for Lai Kim Fong (ET)

25 Sua Hing Kam 885,000 0.21

26 CIMB Group Nominees (Tempatan) Sdn Bhd 874,000 0.20 CIMB -Principal Asset Management Berhad for Federal Land Development Authority 27 Maybank Nominees (Tempatan) Sdn Bhd 870,000 0.20 Pledged Securities Account for Tee See Kim

28 CIMSEC Nominees (Asing) Sdn Bhd 835,000 0.20 Pledged Securities Account for Noble Plan Sdn Bhd

29 HSBC Nominees (Asing) Sdn Bhd 813,216 0.19 Exempt an for JPMORGAN Chase Bank, National Association (U.S.A.)

30 Kenanga Nominees (Tempatan) Sdn Bhd 791,000 0.19 Pledged Securities Account for Lai Eng Hui(ET) Total 300,926,354 70.52 237 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at regional Fr am e w or k group network Le a ders hi p

BIMB HOLDINGS BERHAD SYARIKAT TAKAFUL BIMB SECURITIES SDN BHD 31st Floor, Menara Bank Islam MALAYSIA BERHAD Level 32, Menara Multi-Purpose No. 22, Jalan Perak 26th Floor, Annexe Block Capital Square 50450 Kuala Lumpur Menara Takaful Malaysia No. 8, Jalan Munshi Abdullah Tel : +603-2781 2999 No. 4, Jalan Sultan Sulaiman 50100 Kuala Lumpur Fax : +603-2781 2998 50000 Kuala Lumpur Tel : +603-2691 8887

Website : www.bimbholdings.com P.O. Box 11483 Fax : +603-2691 8854 R e vi w

50746 Kuala Lumpur Website : www.bimbsec.com.my P er f or manc e BANK ISLAM MALAYSIA BERHAD Tel : 1-300 88 252 385 Online Trading : www.bisonline.com.my 32nd, Menara Bank Islam Fax : +603-2274 0237 No. 22, Jalan Perak Website : takaful-malaysia.com.my BIMBSEC NOMINEES 50450 Kuala Lumpur Email : [email protected] (TEMPATAN) SDN BHD Tel : +603-2088 8000 Level 32, Menara Multi-Purpose Fax : +603-2088 8033 PT SYARIKAT TAKAFUL INDONESIA Capital Square Website : www.bankislam.com.my Graha B, Graha Takaful Indonesia No. 8, Jalan Munshi Abdullah

Jalan Mampang Prapatan Raya 50100 Kuala Lumpur P erspe ctiv es BIMB INVESTMENT No. 100, Jakarta Tel : +603-2691 8887 MANAGEMENT BERHAD 12790 Indonesia Fax : +603-2691 8854 19th Floor, Menara Bank Islam Tel : +6221-799 1234 No. 22, Jalan Perak Fax : +6221-790 1435 BIMB NOMINEES 50450 Kuala Lumpur Website : www.takaful.com (ASING) SDN BHD Tel : +603-2161 2524/2924 Level 32, Menara Multi-Purpose Toll free : 1-800 88 1196 PT ASURANSI TAKAFUL KELUARGA Capital Square Fax : +603-2161 2464 Graha B, Graha Takaful Indonesia No. 8, Jalan Munshi Abdullah

Jalan Mampang Prapatan Raya 50100 Kuala Lumpur acc o untability BANK ISLAM TRUST COMPANY No. 100, Jakarta Tel : +603-2691 8887 (LABUAN) LTD 12790 Indonesia Fax : +603-2691 8854 Level 5 (1), Main Office Tower Tel : +6221-799 1234 Jalan Merdeka, Financial Park Complex Fax : +6221-790 1435 SYARIKAT AL-IJARAH SDN BHD Wilayah Persekutuan Website : www.takaful.com 31st Floor, Menara Bank Islam 87000 F.T Labuan No. 22, Jalan Perak A u d it ed

Tel : +0687-451 806 PT ASURANSI TAKAFUL UMUM 50450 Kuala Lumpur F inancial e m nt s Stat Fax : +0687-451 808 Graha A, Graha Takaful Indonesia Tel : +603-2781 2999 Jalan Mampang Prapatan Raya Fax : +603-2781 2998 FARIHAN CORPORATION SDN BHD No. 100, Jakarta 19th Floor, Menara Bank Islam 12790 Indonesia No. 22, Jalan Perak Tel : +6221-799 2345 50450 Kuala Lumpur Fax : +6221-790 1944 Tel : +603-2782 1333 Website : www.takaful.com Fax : +603-2782 1355 nal Add iti o nal BIMB SECURITIES o n I nf or mati AL- WAKALAH NOMINEES (HOLDINGS) BERHAD (TEMPATAN) SDN BHD 31st Floor, Menara Bank Islam 21st Floor, Menara Bank Islam No. 22, Jalan Perak No. 22, Jalan Perak 50450 Kuala Lumpur 50450 Kuala Lumpur Tel : +603-2781 2999 Tel : +603-2726 7724 Fax : +603-2781 2998 A G M th

Fax : +603-2726 7733 18 o n inf or mati BIMB HOLDINGS BERHAD 238 Annual Report 2014

Notice of 18th Annual General Meeting

NOTICE IS HEREBY GIVEN that the 18th Annual General Meeting (“AGM”) of BIMB Holdings Berhad (“BHB” or “the Company”) will be held at Dewan Bankuet 2, Aras B2, Menara Felda, Platinum Park, No. 11, Persiaran KLCC, 50088 Kuala Lumpur, Malaysia on Thursday, 14 May 2015 at 10.00 a.m. for the following purposes:

ORDINARY BUSINESS

1. to receive the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Auditors thereon. (Ordinary Resolution 1)

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

(a) tan Sri Samsudin bin Osman (Ordinary Resolution 2) (b) datuk Rozaida binti Omar (Ordinary Resolution 3)

3. to re-elect Dato’ Johan bin Abdullah, a Director who is retiring in accordance with Article 66 of the Company’s Articles of Association and being eligible, has offered himself for re-election. (Ordinary Resolution 4)

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

“That Encik Zahari @ Mohd Zin bin Idris, who is retiring in accordance with Section 129 of the Companies Act, 1965, be and is hereby re-appointed as a Director of the Company to hold office until the conclusion of the next AGM of the Company.” (Ordinary Resolution 5)

5. to approve the payment of Directors’ fees of RM1,243,000 for the financial year ended 31D ecember 2014 (RM1,111,000 for the financial year ended 31 December 2013). (Ordinary Resolution 6)

6. to re-appoint Messrs. KPMG Desa Megat & Co. as the External Auditors of the Company until the conclusion of the next AGM and to authorise the Directors to fix their remuneration. (Ordinary Resolution 7)

SPECIAL BUSINESS

7. retention of Independent Director

to retain Datuk Zaiton binti Mohd Hassan as an Independent Non-Executive Director of the Company in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012. (Ordinary Resolution 8) 239 BIMB HOLDINGS BERHAD Annual Report 2014

th e Corpor at Notice of 18 Fr am e w or k annual general meeting Le a ders hi p

8. proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

“That subject to the Companies Act 1965, Memorandum and Articles of Association of the Company and the Listing Requirements of Bursa Malaysia Securities Berhad approval be and is hereby given to BIMB Holdings Berhad and its subsidiaries to enter into the category of recurrent related party transactions of a revenue or trading nature with those related parties as specified in Section 2.1.3 R e vi w of the Circular to Shareholders dated 21 April 2015 which are necessary for the Group’s day to day operations subject to the following: P er f or manc e

(a) the transactions carried out are in the ordinary course of business and are on normal commercial terms that do not favour the related parties more than the general public; (b) Are not detrimental to the minority shareholders of the Company; and (c) will be disclosed in the annual report with the breakdown of the aggregate value of transactions conducted during the financial year pursuant to the shareholders’ mandate during the financial year ("Mandate").

and that the Mandate conferred by this resolution shall commence immediately upon the passing of P erspe ctiv es this Resolution;

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 resolution passed at the meeting, the authority is renewed; (ii) the expiration of the period within which the next AGM after the date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as

may be allowed pursuant to Section 143(2) of Companies Act 1965); or acc o untability (iii) it is revoked or varied by a resolution passed by the shareholders in a general meeting.

whichever is the earlier.” (Ordinary Resolution 9)

9. proposed renewal of the authority for Directors to allot and issue new ordinary shares of RM1.00 each in BHB (“BHB Shares”), for the purpose of the Company’s Dividend Reinvestment Plan (“DRP”) that

provides the Shareholders of BHB (“Shareholders”) the option to elect to reinvest their cash dividend A u d it ed inancial F inancial in new BHB Shares. e m nt s Stat

“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 AGM 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 theD irectors based nal Add iti o nal

on the adjusted five (5) market days volume weighted average market price (“VWAP”) of BHB Shares o n I nf or mati 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 aforementioned discount in fixing the issue price and the issue price may not be less than the par value of BHB Shares;

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 A G M

as may be necessary or expedient in order to give full effect to the DRP with full power to assent th

to any conditions, modifications, variations and/or amendments as may be imposed or agreed to 18

by any relevant authorities (if any) or consequent upon the implementation of the said conditions, o n inf or mati modifications, variations and/or amendments, by the Directors as they, in their absolute discretion, deem fit and in the best interest of the Company.” (Ordinary Resolution 10) BIMB HOLDINGS BERHAD 240 Annual Report 2014

Notice of 18th annual general meeting

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

By Order of the Board

MARIA BINTI MAT SAID (LS 0009400) Company Secretary Kuala Lumpur 21 April 2015

Notes : 1. only members registered in the Record of Depositors as at 7 May 2015 shall be eligible to attend and vote at the Annual General Meeting or appoint proxy to attend and vote on his/her behalf. 2. a member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same general meeting. Where a member appoints two (2) proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 3. where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under theS ecurities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 4. the instrument appointing a proxy shall: (i) in the case of an individual, be signed by the appointer or by his attorney; and (ii) in the case of a corporation, be either executed under its common seal or signed by its attorney or by an officer on behalf of the corporation. 5. all proxy forms should be deposited at the Company’s Registered Office, 31st Floor, Menara Bank Islam, No. 22, Jalan Perak, 50450 Kuala Lumpur not less than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof. 6. explanatory Notes:

6.1 Retention of Independent Director in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance

Datuk Zaiton binti Mohd Hassan datuk Zaiton was appointed as an Independent Non-Executive Director of BHB on 2 February 2006. As at the date of the 18th AGM of BHB, she has served as an Independent Non-Executive Director of the Company slightly over nine (9) years. As such, Datuk Zaiton has exceeded the nine (9) years’ tenure as recommended by the Malaysian Code of Corporate Governance 2012. Based on the Directors’ Assessment for 2014, the Board has formed a collective view and agreed that it would be crucial to retain Datuk Zaiton as an Independent Non-Executive Director in the Company.

during the nine (9) years’ period in the Company, Datuk Zaiton has demonstrated her commitment to the Company and has a good attendance record, in line with the attendance requirements for Board meetings pursuant to the Listing Requirements and BNM/GP1-i. This testifies her dedication in discharging the responsibilities expected of an Independent Director.

apart from being well prepared for the Board and Board Committees’ meetings, Datuk Zaiton participates actively in the deliberations of the matters at the Board and Board Committees meetings. She was acknowledged to be meticulous and analytical in her views. Coupled with her vast experience in banking, risk management and other experiences gained through the various senior positions that she held in the financial industry, Datuk Zaiton’s independent views, input and contributions are highly valued and respected. The skills, experience and knowledge possessed by Datuk Zaiton are useful for the future development of BHB and its subsidiaries.

apart from the above, Datuk Zaiton has complied with the criteria/requirement of ‘Independent Director’ and other requirements set out in Paragraph 1.01 of Bursa Malaysia Securities Berhad Listing Requirements. Based on the aforesaid, the Board strongly recommend the shareholders of BHB to retain Datuk Zaiton as an Independent Non-Executive Director at the 18th AGM of the Company.

6.2 Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

for further details on Ordinary Resolution 9, please refer to Circular to Shareholders dated 21 April 2015.

6.3 Dividend Reinvestment Plan

this Proposed Ordinary Resolution 10 will give authority to the Directors to allot and issue share for the Dividend Reinvestment Plan in respect of any dividend to be declared until the next AGM. A renewal of this authority will be sought at the next AGM. 241 BIMB HOLDINGS BERHAD Annual Report 2014 e Corpor at Statement Accompanying Fr am e w or k Notice of 18th Annual General Meeting Le a ders hi p

Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Malaysia Securities Berhad, BHB wishes to highlight the Directors who are standing for re-election at the 18th AGM of the Company are as follows:

(1) article 61 of the Company’s Articles of Association • Tan Sri Samsudin bin Osman • Datuk Rozaida binti Omar R e vi w P er f or manc e (2) article 66 of the Company’s Articles of Association • Dato’ Johan bin Abdullah

(3) recommendation 3.3 of the Malaysian Code of Corporate Governance 2012 • Datuk Zaiton binti Mohd Hassan

(4) section 129 of the Companies Act, 1965 • Encik Zahari @ Mohd Zin bin Idris P erspe ctiv es

Profiles of the above Directors are set out on pages 8 to 12 of this Annual Report. acc o untability A u d it ed inancial F inancial e m nt s Stat nal Add iti o nal o n I nf or mati A G M th 18 o n inf or mati This page has been intentionally left blank. form of proxy (Company No. 423858-X) (Incorporated in Malaysia under the Companies Act, 1965)

I/We ...... NRIC No./Passport No./Company No...... of ...... (ADDRESS) telephone no...... being a member/members of BIMB Holdings Berhad (“the Company”), hereby appoint

...... in respect of ...... shares of ...... (ADDRESS) and/or ...... in respect of ...... shares of ...... (ADDRESS) or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the 18th Annual General Meeting of the Company to be held at Dewan Bankuet 2, Aras B2, Menara Felda, Platinum Park, No. 11, Persiaran KLCC, 50088 Kuala Lumpur, Malaysia on Thursday, 14 May 2015 at 10.00 a.m. and at any adjournment thereof. I/We indicate with an “x” in the appropriate spaces below as to how I/we wish my/our vote to be cast: For Against Ordinary Resolution 1 To receive the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Auditors thereon. Ordinary Resolution 2 To re-elect Tan Sri Samsudin bin Osman, a Director who are retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible, have offered himself for re-election. Ordinary Resolution 3 To re-elect Datuk Rozaida binti Omar, a Director who is retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible has offered herself for re-election. Ordinary Resolution 4 To re-elect Dato’ Johan bin Abdullah, a Director who is retiring in accordance with Article 66 of the Company’s Articles of Association and being eligible, has offered himself for re-election. Ordinary Resolution 5 To re-appoint Encik Zahari @ Mohd Zin bin Idris, a Director who is retiring pursuant to Section 129 of the Companies Act, 1965 and has offered himself for re-appointment. Ordinary Resolution 6 To approve the payment of Directors’ fees of RM1,243,000 for the financial year ended 31 December 2014 (RM1,111,000 for the financial year ended 31 December 2013). Ordinary Resolution 7 To re-appoint Messrs. KPMG Desa Megat & Co. as the External Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. Ordinary Resolution 8 To retain Datuk Zaiton binti Mohd Hassan as an Independent Non-Executive Director of the Company in accordance with Recommendation 3.3 of the Malaysian Code of Corporate Governance 2012. Ordinary Resolution 9 To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature. Ordinary Resolution 10 To approve Proposed renewal of the authority for Directors to allot and issue new ordinary shares of RM1.00 each in BHB (“BHB Shares”), for the purpose of the Company’s Dividend Reinvestment Plan (“DRP”) that provides the Shareholders of BHB (“Shareholders”) the option to elect to reinvest their cash dividend in new BHB Shares. Subject to the abovestated voting instructions, my/our proxy may vote or abstain from voting on any resolution as *he/*she/*they may think fit.

If appointment of proxy is under hand ...... No. of Shares Held: ...... Signed by *individual member/*officer or attorney of member/*authorised Securities Account No.: ...... nominee of ...... (beneficial owner) Date: ......

If appointment of proxy is under seal Seal The Common Seal of ...... was No. of Shares Held: ...... hereto affixed in accordance with itsA rticles of Association in the presence of: Securities Account No.: ...... Date: ......

...... Director Director/Secretary

In its capacity as *member/*attorney of member/*authorised nominee of ...... (beneficial owner) Important Notes: 1. only members registered in the Record of Depositors as at 7 May 2015 shall be eligible to attend and vote at the Annual General Meeting or appoint proxy to attend and vote on his/her behalf. 2. a member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same general meeting. Where a member appoints two (2) proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 3. where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 4. the instrument appointing a proxy shall: (i) in case of an individual, be signed by the appointor or by his attorney; and (ii) in case of a corporation, be either under its common seal or signed by its attorney or by an officer on behalf of the corporation. 5. the instrument appointing a proxy must be deposited at the Registered Office of the Company at 31st Floor, Menara Bank Islam, No. 22, Jalan Perak, 50450 Kuala Lumpur, Malaysia not less than 48 hours before the time fixed for holding of the meeting or any adjournment thereof. 6. a proxy may vote on a show of hands and on a poll. If the form of proxy is returned without an indication as to how the proxy shall vote on any particular matter, the proxy may exercise his discretion as to whether to vote on such matter. 7. the lodging of a form of proxy does not preclude a member from attending and voting in person at the meeting should the member subsequently decide to do so.

*Delete if inappropriate

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BIMB HOLDINGS BERHAD (423858-X) 31st Floor Menara Bank Islam No. 22, Jalan Perak 50450 Kuala Lumpur

Fold Here www.bimbholdings.com

BIMB HOLDINGS BERHAD (423858-X) 31st Floor Menara Bank Islam No. 22, Jalan Perak 50450 Kuala Lumpur

Tel : +603 2781 2999 Fax : +603 2781 2998