CORPORATE PROFILE Alliance Financial Group Berhad was incorporated in Malaysia on 7 April 1966 and was listed on the Main Market of Bursa Malaysia Securities Berhad on 6 July 1979. The Group is principally involved in the provision of banking and financial services through Alliance Bank Malaysia Berhad. Alliance Bank Malaysia Berhad, together with its subsidiaries, Alliance Investment Bank Berhad and Alliance Islamic Bank Berhad, provide a wide range of financial products and services in commercial banking, financing, investment banking, investment advisory, stockbroking, Islamic banking and other related financial services. CONTENTS CORPORATE SECTION FINANCIAL SECTION Corporate Profile 91 Financial Statements 2 History of Alliance Financial Group •฀฀ Statement฀of฀Board฀of฀Directors’ 4 Corporate Information Responsibilities 5 Corporate Structure •฀฀ Directors’฀Report 6 Products and Services •฀฀ Statement฀by฀Directors 10 Financial Highlights •฀฀ Statutory฀Declaration •฀฀ Independent฀Auditors’฀Report LEADERSHIP •฀฀ Statements฀of฀Financial฀Position •฀฀ Statements฀of฀Comprehensive฀ 12 Directors Income 25 Chief Executive Officer •฀฀ Consolidated฀Statements฀of 26 Key Senior Management Changes in Equity PERSPECTIVES •฀฀ Statement฀of฀Changes฀in฀Equity •฀฀ Consolidated฀Statements฀of฀ 34 Statement by Chairman of Cash Flows Alliance Financial Group Berhad •฀฀ Statement฀of฀Cash฀Flows 36 Statement by Chairman of •฀฀ Notes฀to฀the฀Financial฀Statements Alliance Bank Malaysia Berhad 215 Basel II Pillar 3 Report Disclosure 40 Business and Operations Review by Chief Executive Officer of Alliance Financial Group Berhad 50 Awards and Recognition ADDITIONAL INFORMATION 52 Calendar of Significant Events 262 List of Properties 60 Media Highlights 265 Directory 271 Analysis of Shareholdings ACCOUNTABILITY 273 Substantial Shareholders 64 Statement on Corporate Governance 273฀฀ Directors’฀Shareholdings 72 Corporate Responsibility 77 Audit Committee Report NOTICE AND FORM 81 Statement on Risk Management and 274 Notice of Annual General Meeting Internal Control Form of Proxy 82 Risk Management 90 Additional Compliance Information View our report online Our Annual Report, Accounts and other information about Alliance Financial Group Berhad can be found at www.alliancefg.com 2016 Annual Report | Alliance Financial Group Berhad (6627-X) HISTORY OF ALLIANCE FINANCIAL GROUP 1958 1959 1975 1982 Banque฀de฀L’Indochine฀ Banque฀de฀L’Indochine฀opened฀ The name of the Bank was Malaysian French Bank Berhad commenced operations in a sub-branch at Jalan Batu, changed to Banque de was incorporated to assume Malaya with its first branch Kuala Lumpur (now known as L’Indochine฀et฀de฀Suez the banking business of the in the Selangor Kwangtung Jalan Tunku Abdul Rahman). (Banque฀Indosuez).฀In฀the฀same฀ two local branches of Banque Association Building, Jalan year,฀Banque฀Indosuez฀acquired฀ Indosuez.฀The฀incorporation฀ Pudu, Kuala Lumpur. This a building in Jalan Raja Chulan, was the result of the French branch was subsequently Kuala Lumpur, to serve as its government’s฀nationalisation฀ relocated to Jalan Raja Chulan, headquarters. of฀Banque฀Indosuez฀and฀also฀of฀ Kuala Lumpur, in 1975. the subsequent restructuring of฀the฀Bank’s฀businesses฀in฀ Malaysia to comply with local banking regulations. 1999 2001 2004 2005 Multi-Purpose Bank Berhad The Alliance Banking Group was On 1 August, Alliance Finance On 1 January, Alliance Merchant was selected to be one of the established on 19 January with Berhad merged with Alliance Bank Berhad acquired 100% anchor banks in the Malaysian the successful merger of seven Bank. Consequently, Hire equity interest in Kuala Lumpur government’s฀bank฀consolidation฀ financial institutions. The newly- Purchase is now offered at all City Securities (KLCS). initiative. Multi-Purpose Bank merged฀entity’s฀name฀and฀logo฀ Alliance฀Bank’s฀retail฀branches฀ Berhad successfully anchored were unveiled to the public for nationwide. the merger with International the first time as the Alliance Bank Malaysia Berhad, Sabah Banking Group comprising Bank Berhad, Sabah Finance Alliance Bank Malaysia Berhad Berhad, Bolton Finance Berhad, (Alliance Bank), Alliance Finance Amanah Merchant Bank Berhad, Berhad, Alliance Merchant Bank and Bumiputra Merchant Berhad and Alliance Unit Trust Bankers Berhad. Management Berhad. 2011 2013 2014 In January, Alliance Bank and In March, Alliance Bank In June, Alliance Bank entered In May, AIBB acquired a AIA Berhad entered into a joint completed the sale of its into a 10-year bancassurance 51% equity stake in HwangDBS venture to form AIA AFG Takaful 30% equity stake in AIA AFG partnership with Manulife Vickers Research Sdn Bhd Berhad which offers a range of Takaful Berhad. Insurance Berhad. With this (HDBSV). HDBSV was later Takaful savings, protection and partnership, Alliance Bank re-named AllianceDBS Research In April, Alliance Bank investment products. is now able to provide a Sdn Bhd. completed the sale of its comprehensive bancassurance Under the terms of agreement, 70% shareholding in AIMB to product suite to its customers. Alliance Bank owns 30% equity KAF-Seagroatt Campbell stake in AIA AFG Takaful Berhad. Berhad. AIMB ceased to be part of the Group following the completion of the sale. 2 2016 Annual Report | Alliance Financial Group Berhad (6627-X) 1985 1986-95 1996 1998 The Bank established its During this time, 16 branches Malaysian French Bank Berhad By February 1998, the Bank “first” branch in Taman Maluri, were established nationwide. changed its name to had a network of 34 branches Kuala Lumpur. In the same Multi-Purpose Bank Berhad. nationwide, including Sabah year, eight more branches were and Sarawak. opened throughout the country. 2006 2007 2008 In August, Alliance Merchant In April, Alliance Unit Trust In conjunction with the change AIS commenced its Islamic Bank Berhad changed its name Management Berhad merged of name of its holding company banking business on 1 April to Alliance Investment Bank with Alliance Capital Asset from Malaysian Plantations after assuming the entire Berhad (AIBB). In December, Management Berhad to Berhad to Alliance Financial Islamic banking business KLCS merged with AIBB to form Alliance Investment Group Berhad on 31 August, portfolio of Alliance Bank. offer a full suite of investment Management Berhad (AIMB). Alliance Banking Group banking services. Under the terms of the underwent a major rebranding agreement, Alliance Bank owns exercise and was renamed 70% equity stake in AIMB. In Alliance Financial Group June, Alliance Islamic Bank (the Group). Berhad (AIS) was incorporated as a wholly-owned subsidiary of Alliance Bank. The Alliance Financial Group, comprising Alliance Bank Malaysia Berhad, Alliance Investment Bank Berhad and Alliance Islamic Bank Berhad is a dynamic, integrated financial services group offering banking and financial services through its consumer banking, business banking, Islamic banking, investment banking and stockbroking businesses. It provides easy access to its broad base of customers throughout the country via multi delivery channels which include retail branches, Privilege Banking Centres, Islamic Banking Centres, Business Centres, Investment Bank branches and direct marketing offices located nationwide as well as mobile and Internet banking. With over five decades of proud history in contributing to the financial community in Malaysia Today with its innovative and entrepreneurial business spirit through its principal subsidiaries, the Group is committed to delivering the best customer experience and creating long-term shareholder value. 3 2016 Annual Report | Alliance Financial Group Berhad (6627-X) CORPORATE INFORMATION DIRECTORS REGISTRAR Datuk Oh Chong Peng Shareworks Sdn Bhd Chairman, Independent Non-Executive Director No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas Stephen Geh Sim Whye 50480 Kuala Lumpur, Malaysia Independent Non-Executive Director Tel : 03-6201 1120 Fax : 03-6201 3121 Kung Beng Hong Non-Independent Non-Executive Director Ou Shian Waei Independent Non-Executive Director AUDITORS Lee Ah Boon PricewaterhouseCoopers Non-Independent Non-Executive Director Chartered Accountants Level 10, 1 Sentral Jalan Rakyat Kuala Lumpur Sentral 50470 Kuala Lumpur CHIEF EXECUTIVE OFFICER Malaysia Joel Kornreich PRINCIPAL BANKER GROUP COMPANY SECRETARY Alliance Bank Malaysia Berhad Lee Wei Yen (MAICSA 7001798) BURSA MALAYSIA STOCK NAME/CODE REGISTERED OFFICE AFG/2488 3rd Floor, Menara Multi-Purpose Capital Square No. 8, Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia INTERNATIONAL SECURITIES Tel : 03-2604 3333 IDENTIFICATION NUMBER (ISIN) Fax : 03-2694 6200 Website : www.alliancefg.com Email : [email protected] MYL2488OO004 4 2016 Annual Report | Alliance Financial Group Berhad (6627-X) CORPORATE STRUCTURE as at 31 May 2016 100% Alliance Bank Malaysia Berhad 100% Alliance Investment Bank Berhad 51% AllianceDBS Research Sdn Bhd 100% Alliance Islamic Bank Berhad 100% Alliance Direct Marketing Sdn Bhd 100% AllianceGroup Nominees (Tempatan) Sdn Bhd 100% AllianceGroup Nominees (Asing) Sdn Bhd This chart features the main operating companies and does not include inactive companies฀and฀companies฀that฀are฀under฀members’฀voluntary฀liquidation. 5 2016 Annual Report | Alliance Financial Group Berhad (6627-X) PRODUCTS AND SERVICES ALLIANCE BANK MALAYSIA BERHAD PERSONAL BANKING Wealth Management Bancassurance •฀ Alliance฀Travel฀Protector Deposits •฀ Alliance฀Premier฀Protector •฀ Savings฀Account/ •฀ Alliance฀Senior฀Protector Basic Savings Account •฀ Safe฀Assure •฀ AllianceSave฀Pendidikan