Contents 2013 Annual Report Monumental Achievements Through Progressive Developments 03 Corporate Profile 28 Statement of Corporate Governance 04 Corporate Information 37 Statement of Internal Control 06 Corporate Structure 39 Risk Management 08 Chairman’s Statement 49 Shariah Compliance 11 President/Group Managing Director’s Statement 14 Financial Performance 51 2013 Corporate Highlights 16 Financial Highlights 62 Financial Statement 17 5-Year Group Financial Summary 18 5-Year Group Growth 19 Simplified Group Balance Sheet 20 Profile of Directors 25 Profile of Shariah Committee 27 Group Management Committee 3 CORPORATE PROFILE BOARD OF DIRECTORS COMPANY SECRETARIES Tan Sri Dato’ Sri Dr. Wan Abdul Aziz Wan Abdullah Razali Hassan Chairman (LS 05531) Dato’ Mohd Zafer Mohd Hashim Hazlinda Ahmad Rosdi President/Group Managing Director (MAICSA 7053034) Tuan Haji Zainul Rahim Mohd Zain SHARIAH COMMITTEE Tan Sri Faizah Mohd Tahir Tan Sri Dato’ Seri (Dr) Haji Harussani Haji Zakaria Datuk Dr. Syed Jaafar Syed Aznan Prof. Dr. Abdul Jalil Borham Datuk Idris Abdullah Dr. Ridzwan Ahmad Tuan Haji Rosli Abdullah Assistant Prof. Dr. Miszairi Sitiris Tuan Haji Abdul Aziz Ishak Associate Prof. Dr. Noraini Mohd Ariffin Tuan Haji Ariffin Hew Datuk Nozirah Bahari AUDITORS Dato’ Abd Rahman Md Khalid Ernst & Young (AF:0039) REGISTERED OFFICE Aras 16, Menara Bank Pembangunan Bandar Wawasan No. 1016, Jalan Sultan Ismail 50250 Kuala Lumpur Malaysia WEBSITE www.bpmb.com.my CORPORATE INFORMATION Bank Pembangunan Malaysia Berhad (BPMB) is wholly owned by the Malaysia Government through the Minister of Finance Inc. BPMB is mandated as a development financial institution providing medium to long term financing to the following sectors: INFRASTRUCTURE ROAD/HIGHWAY • Toll Road • City Road • Federal Road • Bridge • Trunk Road COMMUNITY, SOCIAL & PUBLIC SERVICES • Education • Health (excluding Health Tourism) • Flood Mitigation UTILITIES • Power • Sewerage • Water TOURISM • Theme Tourism • Hotel/Resort/ • Convention and Serviced Apartment/Villa Business Centre • Marina TRANSPORTATION • Inland • Air AREA DEVELOPMENT • Public/Commercial/Residential • Industrial PORT • Inland • Warehouse/ • Sea Logistic Hub MARITIME VESSELS • Liquid Cargo Vessel • Dry Cargo Vessel • Specialised Vessel SHIPYARD • Ship Building • Ship Repair • Engineering Work • Yard Facilities & Infrastructure MARINE-RELATED • Fabrication • Vessel Service 5 TECHNOLOGY ADVANCED MANUFACTURING • Chemical • Textile • Plastic • Iron & Steel • Pulp & Paper • Aerospace • Pharmaceutical • Advanced Material • Electrical & Electronic • Engineering & Support Services • Instrumentation & Equipment • Security Printing • Food Processing ENVIRONMENTAL CONSERVATION • Energy Efficiency • Biofuel • Clean Development Mechanism (CDM) • Renewable Energy • Waste to Wealth • Pollution Control OIL & GAS BIOTECHNOLOGY OFFSHORE • • Biotechnology Oil & Gas Field Operators • Offshore Structure Owners/ INFORMATION AND Operators • Platform Contractors COMMUNICATION TECHNOLOGY (ICT) ONSHORE • Telecommunication • Fabricators • Communication • Tank Farm Owners/ • System Integration Operators • Terminal Owners/ Operators OFFSHORE SUPPORT VESSELS • Anchor Handling Tug • Crew Boat • Supply/Utility Vessel • Pipe Lay Barge/Vessel • Accommodation Work Barge • Other vessel involved in Oil & Gas activities (as at February 2014) 7 CHAIRMAN’S STATEMENT IN THE NAME OF ALLAH, THE MOST BENEFICENT, THE Seremban-Gemas-Johor electrified double tracking project, MOST MERCIFUL. extension of Kelana Jaya and Ampang light rail transit (LRT) lines as well as Express Rail Link (ERL) from KLIA to KLIA2. The sub-sector also driven by the Economic Transformation INTRODUCTION Programme (ETP) projects namely, Tanjung Bin and Manjung On behalf of the Board of Directors of Bank coal-power plants, as well as Kimanis and Lahat Datu power Pembangunan Malaysia Berhad, it is my great plant. pleasure to present the 40th Annual Report Public investment expanded further supported by higher and Audited Financial Statement of Bank capital spending by the Non-Financial Public Enterprises Pembangunan and Group for the financial year (NFPEs) and sustained development expenditure. The bulk ended December 31, 2013. of the Federal Government expenditure was channelled towards the economic and social sectors, particularly to improve urban public transport and to provide public MALAYSIAN ECONOMIC REVIEW FOR 2013 amenities. PETRONAS continued to invest in the oil and gas Malaysia continued to focus on supporting growth and exploration activities. Among the major projects are Refinery accelerating the national transformation process while and Petrochemical Integrated Development (RAPID) in ensuring sustainability of public finances. Despite the Pengerang and Sabah Ammonia Urea (SAMUR) in Sipitang. challenging external environment, the economy grew 4.7% in 2013 driven by the robust domestic demand and supported The services sector remained the largest growth contributor, by strong fundamentals of the economy as well as an as sub-sectors catering to the domestic market, namely retail accommodative monetary policy. and telecommunications, benefited from strong consumer spending. The finance and insurance sub-sector recorded All sectors registered positive growth during 2013. Growth higher growth, reflecting continued financing, particularly continued to be driven by the services sector in line with the to businesses, coupled with higher fee-based income and strong activity in domestic-oriented services. Construction stronger growth of earnings from insurance premiums. Trade- sector sustained a strong growth driven mainly by ongoing related services, particularly the wholesale and transportation civil engineering and residential activities. Of the construction sub-sectors, moderated in tandem with slower external trade total value, civil engineering has the highest share followed activities. by non-residential and residential sub-sectors. Domestic financial stability remained intact throughout 2013, The civil engineering sub-sector was bolstered by the providing a supportive environment for continued growth ongoing implementation of infrastructure project and corridor of the Malaysian economy. Financial institutions remained development. These include Besraya Eastern Extension, resilient throughout the year, sustaining their financial performance while continuing to strengthen operational and risk management. The level and quality of banks’ capital remained solid, enabling the smooth implementation of the Basel III Capital Adequacy Framework which was phased in from January 2013. The banking system (including Islamic banks) as a whole maintained a strong Total Capital Ratio (TCR) of 14.4% as at end-2013. FINANCIAL PERFORMANCE IN 2013 BPMB Group posted a better financial performance in 2013 as compared to 2012. Profit before tax increased to RM494.7 million from RM286.1 million in the year before mainly due to non-interest income derived from charter hire and freight income of GMVB’s newly acquired subsidiaries namely Syarikat Borcos Shipping Sdn Bhd (Borcos) and Orkim Sdn Bhd (Orkim). Following to this, profit after tax of BPMB Group also soared to RM306.3 million as compared to RM187.8 million in the previous year. 9 For the financial year ended 2013, BPMB recorded profit before tax of RM569.3 million, a growth of 32% as compared to the previous year. The increase was mainly due to higher net income from Islamic banking business, higher non-interest income and lower impairment on loans and financing. BPMB Group’s total assets increased to RM29.2 billion as at Financial Institution Rating of AAA on Bank Pembangunan, end of 2013 from RM27.5 billion in the previous year mainly premised on our established track record in infrastructure due to the increase in GMVB’s vessels coupled with the financing, strong capitalisation and strong regulatory and increase in the net loan and advances during the year under government support. review. GLOBAL MARITIME VENTURE BERHAD (GMVB) Total liabilities of BPMB Group also rose to RM21.7 billion from RM20.2 billion in the previous year largely attributed to For the financial year ended 31 December 2013, GMVB the higher deposit placement in BPMB following the launch Group recorded revenue of RM313.3 million as compared to of Tawarruq, a new Islamic deposit product. The acquisition RM66.9 million in the previous year, an increase of 4.7 times. of Borcos and Orkim also contributed to the increase in the The higher operating revenue was due to increase in the long term borrowings. charter hire and freight income following the acquisition of controlling stake in Borcos and Orkim. Consequently, GMVB Group registered lower loss before tax of RM141.1 million, BANK PEMBANGUNAN MALAYSIA BERHAD (BPMB) as compared to RM177.5 million losses incurred in the year For the financial year ended 2013, BPMB recorded profit before. before tax of RM569.3 million, a growth of 32% as compared to the previous year. The increase was mainly due to higher Total assets for the year ended 2013 also jumped by 49.4% to net income from Islamic banking business, higher non- stand at RM1,714.5 million due to higher value of vessels and interest income and lower impairment on loans and financing. equipment following the acquisition of Borcos and Orkim. The acquisition also resulted in higher amount of short and long term borrowings thus increased the overall total liabilities of BPMB’s total assets increased from RM27.0 billion to RM28.1 GMVB Group to RM891.3 million from RM212.5