...2012/04/16 · BIMB HOLDINGS BERHAD BIMB HOLDINGS BERHAD (423858-X) 31st Floor, Menara Bank...

BIM

B H

OLD

ING

S BER

HA

D

BIMB HOLDINGS BERHAD (423858-X)

31st Floor, Menara Bank Islam 22, Jalan Perak, 50450 Kuala Lumpur

Tel: 603 2781 2999Fax: 603 2781 2998

www.bimbholdings.com

An

nu

al

Re

po

rt 2

01

1

GROWTH... A MEAsuRE Of succEss

The success of an organisation can be measured in various ways, one of which is its growth. Just like a sapling that grows into a tall and strong tree, the BHB Group has likewise successfully grown into an organisation of strength and position.

As pioneers in various Islamic financial services including banking, takaful and stockbroking amongst others, we have ensured a competitive advantage for our organisation through our resources, expertise and experience. And, as a statement of our success, we have seen a significant increase in our business and presence from year to year. Not one to rest on our laurels however, we have put in place a framework that reflects our corporate ambitions for continued growth. All this we do to pursue sustainable financial results as well as ensure a continued measure of success through the years for our shareholders, customers and society alike.

This year’s cover design depicts rows of matured trees, a symbol of successful growth that is an apt measure of the BHB Group.

BIM

B H

OLD

ING

S BER

HA

D

BIMB HOLDINGS BERHAD(423858-X)

31 Floor, Menara Bank Islam 22, Jalan Perak, 50450 Kuala Lumpur

Tel: 603 2781 2943Fax: 603 2781 2998

www.bimbholdings.com An

nu

al

Re

po

rt 2

01

1

contents

2 Notice of 15th Annual General Meeting 6 Statement Accompanying Notice of 15th Annual General Meeting

CORPORATE FRAMEWORK7 Corporate Profile8 Corporate Information 10 Group Corporate Structure

LEADERSHIP14 Board of Directors16 Directors’ Profile22 CEOs’ in the Group 23 Management Committee

PERFORMANCE REVIEW24 5-Years Group Financial Highlights

PERSPECTIVES29 Letter to Shareholders40 Corporate Responsibility 48 2011 Event Highlights

ACCOuNTAbILITy60 Statement of Corporate Governance71 Statement on Internal Control74 Additional Compliance Information

AuDITED FINANCIAL STATEMENTS78 Financial Statements

ADDITIONAL INFORMATION197 Properties owned by BHB Group205 Shareholdings Statistics208 Regional Group Network

Form of Proxy for the 15th AGM of the Company

Notice is hereby given that the 15th Annual

General Meeting of BIMB Holdings Berhad

(“BHB” or “the company”) will be held at

Tun Rahah Grand Hall, Level 1, Menara

Yayasan Tun Razak, 200 Jalan Bukit Bintang,

55100 Kuala Lumpur on Tuesday, 8 May 2012

at 10.00 a.m.

Notice of 15th Annual General Meeting

AS ORDINARy buSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2011 together with the Reports of the Directors and Auditors thereon.

(Ordinary Resolution 1)

2. To approve the payment of final single tier dividend of 7.25% in respect of the financial year ended 31 December 2011.


3. 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 Osman


b) Tuan Syed Elias Abd. Rahman Alhabshi


c) Puan Rozaida Omar


4. To consider and if thought fit, to pass the following resolution in accordance with Section 129(6) of the Companies Act, 1965:-“That Encik Salih Amaran Jamiaan, 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 Annual General Meeting of the Company.”


5. To approve the payment of Directors’ fees of RM495,000 for the financial year ended 31 December 2011 (RM715,430 for eighteen months financial period ended 31 December 2010).


6. To re-appoint Messrs. KPMG Desa Megat & Co. as External Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.


NOTICE IS HEREby GIVEN that the FIFTEENTH (15th) ANNuAL GENERAL MEETING of bIMb Holdings berhad (“bHb” or “the Company”) will be held at Tun Rahah Grand Hall, Level 1, Menara Yayasan Tun Razak, 200 Jalan Bukit Bintang, 55100 Kuala Lumpur on Tuesday, 8 May 2012 at 10.00 a.m. for the following purposes:


BIMB HolDINGS BERHAD (423858-X)Annual Report 2011

2

AS SPECIAL buSINESS

Ordinary Resolution

7. Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Proposed New Shareholders’ Mandate for Additional 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 of the Circular to Shareholders dated 16 April 2012 which are necessary for the Group’s day to day operations subject to the following:-i) 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;

ii) Are not detrimental to the minority shareholders of the Company; and

iii) Will be disclosed in the annual report with the breakdown of the aggregate value of transaction 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 this Resolution;

And that such Mandate shall continue to be in force until:-

a) the conclusion of the next Annual General Meeting of the Company, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

b) the expiration of the period within which the next Annual General Meeting 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

c) it is revoked or varied by a resolution passed by the shareholders in a general meeting.

whichever is the earlier.”




3

Special Resolution

8. To approve the following Proposed Amendments to the Company’s Articles of Association:-

“That the Company’s Articles of Association be and is hereby amended by inserting new Article 51(e) and 51(f) immediately after the existing Article 51(d), to read as follows:-

Article 51 (e)

Appointment of Multiple Proxies

i) 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.

ii) 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.”

Article 51 (f)

Appointment of Multiple Proxies by Individual Members

i) A member shall not be entitled to appoint more than two proxies to attend and vote at the same general meeting.

ii) Where a member appoints two proxies the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.”

(Special Resolution 1)

9. To transact any other business of which due notice shall have been given in accordance with the Companies Act 1965.

Notice of 15th Annual General Meeting



4

FuRTHER NOTICE IS HEREby GIVEN THAT for the purpose of determining a member who shall be entitled to attend this 15th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 41(a)(iii) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 30 April 2012. Only a depositor whose name appears on the Record of Depositors as at 30 April 2012 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

NOTICE OF DIVIDEND ENTITLEMENT AND PAyMENTNOTICE IS ALSO HEREby GIVEN that subject to the shareholders’ approval at the 15th Annual General Meeting of the Company to be held on Tuesday, 8 May 2012, a final single tier dividend of 7.25% in respect of the financial year ended 31 December 2011 will be paid on 13 June 2012 to depositors whose names appear in the Record of Depositors as at 23 May 2012.

Shareholders of the Company will only be entitled to the dividend in respect of:

a) Shares transferred to the depositor’s securities account before 4.00 p.m. on 23 May 2012 in respect of ordinary transfer.

b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of Bursa Malaysia Securities Berhad.

By Order of the Board

Maria Mat Said (LS 0009400)Company Secretary

Kuala Lumpur16 April 2012

Notes:1. A member of the Company entitled to attend and vote at

the meeting may appoint a proxy or proxies to attend and vote instead of himself/herself.

2. The instrument appointing a proxy shall:-i) in case of individual, be signed by the appointer or by

his attorney; andii) 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.

3. Where a member appoints more than one (1) proxy the appointment shall specify the proportions of his holdings to be represented by each proxy.

4. 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 forty-eight hours before the time fixed for holding of the meeting or any adjournment thereof.

5. Explanatory Note to the Special Businessi) For further details on Ordinary Resolution 9 and Special

Resolution 1, please refer to Circular to Shareholders dated 16 April 2012.



5

Statement Accompanying Notice of 15th Annual General Meeting

1. The Directors who are standing for re-election and re-appointment at the 15th AGM of the Company are as follows:-

Article 61 of the Company’s Articles of Association

• Tan Sri Samsudin Osman• Tuan Syed Elias Abd. Rahman Alhabshi• Puan Rozaida Omar

Section 129 of the Companies Act, 1965

• Encik Salih Amaran Jamiaan

2. The profiles of the above Directors are set out in the Profile which appear on pages 16 to 20 of this Annual Report.

Statement Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Malaysia Securities Berhad



6

Corporate Profile

BIMB Holdings Berhad (“BHB”) was established on March 20, 1997 and listed on the Main Market of Bursa Malaysia on September 16, 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 billion and paid-up capital of RM1,066,789,896, BHB is well-positioned to assist the Government’s aspirations in establishing the country as a vibrant International Islamic Financial Centre. BHB has gained in strength and stature over the years and celebrates its 15th anniversary in 2012 as a champion of Islamic banking, takaful and stockbroking industries via its stable of strategic investments in Malaysia’s pioneer Shariah-compliant entities.



7

Corporate Information

bOARD OF DIRECTORS

Tan Sri Samsudin OsmanChairman/Non-Independent Non-Executive Director

Encik Johan AbdullahGroup Managing Director/Chief Executive OfficerNon-Independent Executive Director

Tan Sri Ismail AdamSenior Independent Non-Executive Director*

Dato’ Paduka Ismee IsmailNon-Independent Non-Executive Director

Encik Salih Amaran JamiaanNon-Independent Non-Executive Director

Encik Zahari @ Mohd Zin IdrisIndependent Non-Executive Director

Puan Zaiton Mohd HassanIndependent Non-Executive Director

Tuan Syed Elias Abd. Rahman AlhabshiNon-Independent Non-Executive Director

Puan Rozaida OmarNon-Independent Non-Executive Director

* Redesignated as Senior Independent Non-Executive Director on 25 May 2011



8

AuDIT AND EXAMINATION cOMMITTEE

Encik Zahari @ Mohd Zin Idris (Chairman)Puan Zaiton Mohd HassanEncik Salih Amaran Jamiaan

NOMINATION AND AssEssMENT cOMMITTEE

Puan Zaiton Mohd Hassan (Chairman)Dato’ Paduka Ismee IsmailEncik Zahari @ Mohd Zin Idris

REMuNERATION cOMMITTEE

Puan Zaiton Mohd Hassan (Chairman)Dato’ Paduka Ismee IsmailEncik Zahari @ Mohd Zin Idris

sHARIAH suPERVIsORY cOuNcIL BANK IsLAM MALAYsIA BERHAD

Dr Ahmad Shahbari @ Sobri Salamon (Chairman)Haji Mohd bakir Haji Mansor Sheikh Dr. Ahmed Mohieldin AhmedAssociate Professor Dr. uzaimah Ibrahim Professor Dr. Ahmad Hidayat buangDr. Muhammad Syafii Antonio

sHARIAH ADVIsORY BODY sYARIKAT TAKAfuL MALAYsIA BERHAD

Dr. Ahmad Shahbari @ Sobri Salamon (Chairman)Haji Mohd bakir Haji MansorDr. Aida OthmanAssociate Professor Dr. Muhamad Rahimi OsmanDato’ Wan Mohamad Dato’ Sheikh Abdul Aziz

sHARIAH cOMMITTEE BIMB sEcuRITIEs sDN BHD

Haji Mohd bakir Haji Mansor (Chairman)Prof. Emeritus Dato’ Paduka Dr. Mahmood Zuhdi Haji A. MajidIr. Dr. Muhammad Fuad Abdullah

cEOs IN THE GROuP

Encik Johan AbdullahGroup Managing Director/ Chief Executive OfficerBIMB Holdings Berhad

Dato’ Sri Zukri SamatManaging DirectorBank Islam Malaysia Berhad

Dato’ Mohamed Hassan Md. KamilGroup Managing DirectorSyarikat Takaful Malaysia Berhad

Encik Rashid IsmailChief Executive OfficerBIMB Securities Sdn Bhd

cOMPANY sEcRETARY

Puan Maria Mat Said (LS 0009400)

AuDITORs

KPMG Desa Megat & Co (AF 0759)Level 10, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling Jaya, Selangor

REGIsTERED OffIcE

31st Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : +603 2781 2999Fax : +603 2781 2998Website: www.bimbholdings.com

sHARE REGIsTRAR

Symphony Share Registrars Sdn bhdLevel 6 Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/46, 47301 Petaling Jaya Tel : +603 7841 8000Fax : +603 7841 8152

sTOcK EXcHANGE LIsTING

Main Board of Bursa Malaysia Securities Berhad16 September 1997



9

Group Corporate Structure

* Associate Company** Under Members Voluntary Liquidation

Bank Islam Malaysia Berhad

BANKING

51%

TAKAFUL STOCK & SHARE BROKING

100%BIMB Investment Management Berhad

100%BIMB Foreign Currency Clearing Agency Sdn. Bhd.

100%Al-Wakalah Nominees (Tempatan) Sdn. Bhd.

100%Farihan Corporation Sdn. Bhd

100%Bank Islam Trust Company (Labuan) Ltd

20%Amana Bank Limited(Sri Lanka)

100%BIMB Offshore Company Management Services Sdn. Bhd.

Syarikat Takaful Malaysia Berhad

65.22%

63.09%ASEAN Retakaful International (L) Ltd

56%P.T. Syarikat Takaful Indonesia

74.78%P. T. Asuransi Takaful Keluarga

64.70%P. T. Asuransi Takaful Umum

BIMB Securities (Holdings) Sdn. Bhd.

100%Syarikat Al-Ijarah Sdn. Bhd.

100%

51% 49%BIMB SecuritiesSdn. Bhd.

100%BIMSEC Nominees(Asing) Sdn. Bhd.

100%BIMSEC Nominees (Tempatan) Sdn. Bhd.

100%BIMSEC AssetManagementSdn. Bhd.

LEASING OF ASSETS

BIMB Musyarakah Satu Sdn. Bhd.**

100%

INVESTMENT HOLDING -VENTURE CAPITAL

Islamic Banking & Finance Institute Malaysia Sdn. Bhd. *

48%

OTHERS



10

* Associate Company** Under Members Voluntary Liquidation

Bank Islam Malaysia Berhad

BANKING

51%

TAKAFUL STOCK & SHARE BROKING

100%BIMB Investment Management Berhad

100%BIMB Foreign Currency Clearing Agency Sdn. Bhd.

100%Al-Wakalah Nominees (Tempatan) Sdn. Bhd.

100%Farihan Corporation Sdn. Bhd

100%Bank Islam Trust Company (Labuan) Ltd

20%Amana Bank Limited(Sri Lanka)

100%BIMB Offshore Company Management Services Sdn. Bhd.

Syarikat Takaful Malaysia Berhad

65.22%

63.09%ASEAN Retakaful International (L) Ltd

56%P.T. Syarikat Takaful Indonesia

74.78%P. T. Asuransi Takaful Keluarga

64.70%P. T. Asuransi Takaful Umum

BIMB Securities (Holdings) Sdn. Bhd.

100%Syarikat Al-Ijarah Sdn. Bhd.

100%

51% 49%BIMB SecuritiesSdn. Bhd.

100%BIMSEC Nominees(Asing) Sdn. Bhd.

100%BIMSEC Nominees (Tempatan) Sdn. Bhd.

100%BIMSEC AssetManagementSdn. Bhd.

LEASING OF ASSETS

BIMB Musyarakah Satu Sdn. Bhd.**

100%

INVESTMENT HOLDING -VENTURE CAPITAL

Islamic Banking & Finance Institute Malaysia Sdn. Bhd. *

48%

OTHERS



11

Fostering a winning relationship with

our customers

Our culture is one of excellence and our vision is to be the premier Islamic financial

service provider in the country. We aim to exceed our customers’ expectations and cater to

their needs and demands, ultimately making a significant difference to the industry.

Board ofDirectors



14

1. Puan Rozaida Omar Non-Independent Non-Executive

Director

2. Encik Salih Amaran Jamiaan Non-Independent Non-Executive

Director

3. Encik Zahari @ Mohd Zin Idris Independent Non-Executive Director

Standing from left to right:

4. Tan Sri Ismail Adam Senior Independent Non-Executive

Director

5. Tan Sri Samsudin Osman Chairman

Non-Independent Non-Executive Director

6. Encik Johan Abdullah Group Managing Director/Chief

Executive Officer Non-Independent Executive Director

7. Dato’ Paduka Ismee Ismail Non-Independent Non-Executive

Director

8. Puan Zaiton Mohd Hassan Independent Non-Executive Director

9. Tuan Syed Elias Abd. Rahman Alhabshi

Non-Independent Non-Executive Director

10. Puan Maria Mat Said Company Secretary



15

Directors’ Profile

1. Tan Sri Samsudin OsmanChairman/Non-Independent Non-Executive DirectorMaster of Public Administration, Pennsylvania State University (USA)Bachelor of Arts (Hons), University of MalayaDiploma in Public Administration, University of Malaya

Tan Sri Samsudin, 65, a Malaysian, was appointed to the Board on 1 February 2007. He is currently the President of Perbadanan Putrajaya and Chairman of the Employees Provident Fund (EPF) Board, the EPF Investment Panel and University Utara Malaysia. Tan Sri Samsudin also sits on the Board of Sime Darby Berhad as a Director. From 2001 to 2006, he was the Chief Secretary to the Government of Malaysia. 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.

Tan Sri Samsudin attended all six Board Meetings held in the financial year.



16

2. Encik Johan AbdullahGroup Managing Director/Chief Executive OfficerNon-Independent Executive DirectorMBA (Finance), Morehead State University (USA)BBA (Finance), Eastern Michigan University (USA)Diploma in Banking, University Technology MARA

Encik Johan, 55, a Malaysian, was appointed as Group Managing Director/Chief Executive Officer of BHB on 15 May 2008. He is also a Director of Bank Islam Malaysia Berhad, Syarikat Takaful Malaysia Berhad and other subsidiaries within the BHB Group. He started his professional career in 1987 with the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad) as a Listing Officer. In 1989, he joined the Corporate Finance Division of Bumiputra Merchant Bankers Berhad and left the bank in early 1995 as a Senior Manager. He later served at Damansara Realty Berhad as General Manager, Corporate Planning until he re-joined Bursa Malaysia Securities Berhad in 1999, where he took up various senior positions including that of Deputy Chief Regulatory Officer, Group Regulation. Encik Johan has no family relationship with any Director and/or major shareholder of BHB nor does he have any conflict of interest with BHB. He has not been convicted of any offence within the past 10 years.

Encik Johan attended all six Board Meetings held in the financial year.

3. Tan Sri Ismail AdamSenior Independent Non-Executive DirectorMaster of Arts (Economics), Vanderbilt University (USA)Bachelor of Arts (Hons), University of MalayaDiploma in Public Administration (Post-Baccalaureate Diploma), University of MalayaAdvanced Management Program, Harvard Business School

Tan Sri Ismail, 61, a Malaysian, was appointed to the Board on 3 January 2011. He is currently an Advisor to Malaysian Anti-Corruption Commission, Advisor to the Hay Group Sdn Bhd, Chairman of Syarikat Prasarana Berhad and an Adjunct Professor at the Razak School of Government, Universiti Tun Abdul Razak. He has 38 years of experience in policy management and administration, starting his career in the civil service where he held various senior positions including that of Chief Administration Officer of the Department of Statistics, Director General of the National Productivity Corporation, and Secretary General of the Ministry of Health. He was the Director General of Public Service Malaysia prior to his retirement in 2010. Tan Sri Ismail 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 not been convicted of any offence within the past 10 years.

Tan Sri Ismail attended all six Board Meetings held in the financial year.



17

4. Dato’ Paduka Ismee IsmailNon-Independent Non-Executive DirectorAssociate Member of Chartered Institute of Management AccountantsMember of Malaysian Institute of Accountants

Dato’ Paduka Ismee, 47, a Malaysian, was appointed to the Board on 9 October 2006. He is a member of the Nomination and Assessment Committee and Remuneration Committee of BHB. He is currently the Group Managing Director and Chief Executive Officer of Lembaga Tabung Haji. He is also Chairman of Syarikat Takaful Malaysia Berhad and Director of Bank Islam Malaysia Berhad, TH Plantations Berhad, KFC Holdings Malaysia Berhad, 1Malaysia Development Berhad and Johor Corporation. Prior to joining Lembaga Tabung Haji, he was the Chief Executive Officer of ECM Libra Securities and a Director of ECM Libra Capital Sdn Bhd. He has also served as Chief Accountant at Pengurusan Danaharta Nasional Berhad, General Manager of Business Development at Arab Malaysian Development Berhad and has held several finance-related positions at Shell Malaysia. 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.

Dato’ Paduka Ismee attended five out of six Board Meetings held in the financial year.

5. Encik Zahari @ Mohd Zin IdrisIndependent Non-Executive DirectorSenior Cambridge Certificate

Encik Zahari, 68, a Malaysian, was appointed to the Board on 20 September 2002. He is Chairman of the Audit and Examination Committee, and a member of the Nomination and Assessment Committee and the Remuneration Committee of BHB. He is also a Director of Bank Islam Malaysia Berhad. He began his career at Malayan Banking Berhad where, between 1962 and 1996, he gained positions of increasing responsibility, culminating as General Manager, Commercial Banking Division. From 2000 to 2005, Encik Zahari was the Managing Director of Inter-City MPC (M) Sdn Bhd. 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 not been convicted of any offence within the past 10 years.

Encik Zahari attended all six Board Meetings held in the financial year.




18

7. Encik Salih Amaran JamiaanNon-Independent Non-Executive DirectorMaster in Business Administration, Wharton School, University of Pennsylvania (USA)Diploma in Public Administration, Victoria University, Wellington (New Zealand) Bachelor of Science (Economics), London School of Economics and Political Science, University of London (UK)

Encik Salih, 72, a Malaysian, was appointed to the Board on 18 February 2005. He is a member of the Audit and Examination Committee of BHB. Prior to this, he had served as Deputy Secretary, Finance Division of the Ministry of Finance; General Manager, International Banking Division of Malayan Banking Berhad; Special Advisor (Economics) of the Commonwealth Secretariat, London; and Deputy Director, Trade Finance and Promotion Department of the Islamic Development Bank (IDB) in Jeddah. He was also the Regional Representative of IDB for Brunei, Indonesia and Malaysia based in Kuala Lumpur. 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.

Encik Salih attended five out of six Board Meetings held in the financial year.

6. Puan Zaiton Mohd Hassan Independent Non-Executive DirectorFellow of the Association of Chartered Certified AccountantsMember of the Malaysian Institute of Certified Public Accountants

Puan Zaiton, 55, a Malaysian, was appointed to the Board on 2 February 2006. She is Chairman of the Nomination and Assessment Committee and the Remuneration Committee, and a member of the Audit and Examination Committee of BHB. She is currently the Managing Director of Capital Intelligence Advisors Sdn Bhd. She is also a Director of Bank Islam Malaysia Berhad, Sime Darby Berhad, Malaysian Industrial Development Finance Berhad and Credit Guarantee Corporation Malaysia Berhad. She was formerly the President/Executive Director of Malaysian Rating Corporation Berhad (MARC). Prior to joining MARC, Puan Zaiton served 12 years with Maybank in various senior positions including that of General Manager, Group Strategic Planning, a post she held until her resignation in 1996. She does not have any family relationship with any Director and/or major 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.

Puan Zaiton attended all six Board Meetings held in the financial year.



19

8. Tuan Syed Elias Abd. Rahman AlhabshiNon-Independent Non-Executive DirectorMaster of Management, Asian Institute of Management (Philippines)

Tuan Syed Elias, 68, a Malaysian, was appointed to the Board on 1 December 2009. He has over 45 years of experience in the domestic and international banking and financial sector. He started his career with Malayan Banking Berhad and later joined Bank Bumiputra Malaysia Berhad, where he held various senior positions between 1966 and 1982, culminating as General Manager, International Banking. He was also the Executive Director of Merrill Lynch, Asia Pacific District from 1987 to 1998, Chief Operating Officer of Hong Leong Group Capital from 1990 to 2001, Managing Director of Babcock & Brown, Asia Pacific from 2002 to 2008, and Group Executive Director of Realmild Sdn Bhd from 2008 to 2009. Since September 2011, he has been appointed as Senior Adviser for Asia Pacific of Threadneedle Investments (Pte) Ltd, Singapore. 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.

Tuan Syed Elias attended all six Board Meetings held in the financial year.

9. Puan Rozaida OmarNon-Executive Non-Independent DirectorMember of the Association of Chartered Certified Accountants (ACCA) UK

Puan Rozaida, 49, a Malaysian, was appointed to the Board on 1 December 2009. She is currently the Group Chief Financial Officer of Lembaga Tabung Haji. She is also a Director of Syarikat Takaful Malaysia Berhad and Pelikan International Corporation Berhad. She started her career as a Financial Accountant in FELDA in 1986. For a year from 1990, she was a Credit Manager at Citibank Berhad. Puan Rozaida then joined Guthrie Trading Sdn Bhd as a Finance Manager from 1992-1993, following which she became a Finance Director of Glaxo SmithKline Consumer Healthcare Sdn Bhd from 1994 until 2003. She does not have any family relationship with any Director and/or major shareholder of BHB nor does she have any conflict of interest with BHB except by virtue of being a nominee Director of Lembaga Tabung Haji. She has not been convicted of any offence within the past 10 years.

Puan Rozaida attended all six Board Meetings held in the financial year.




20

10. Puan Maria Mat SaidCompany Secretary

Puan Maria is the General Manager, Legal & Secretarial Division of Bank Islam Malaysia Berhad. She is responsible for providing legal advisory and corporate secretarial services to the bank while ensuring proper corporate governance procedures. She joined Bank Islam in August 2005 and was appointed Company Secretary of the bank on 29 January 2009. In the same year, Puan Maria was appointed as the Company Secretary of the Company on 31 December. Puan Maria has over 18 years of experience in the financial sector, and holds a Bachelor of Laws from the University of Malaya.



21

CEOs’ in the Group



Encik Rashid IsmailChief Executive OfficerbIMb Securities Sdn. bhd.

Dato’ Mohamed Hassan Md. Kamil

Group Managing Director Syarikat Takaful Malaysia berhad

Dato’ Sri Zukri Samat Managing Directorbank Islam Malaysia berhad

Encik Johan Abdullah Group Managing Director/Chief Executive OfficerbIMb Holdings berhad

22

Management Committee

sitting front:Encik Johan Abdullah, Group Managing Director/Chief Executive Officer

standing from left:

Encik Aidil Haznul Zulkifli, Senior Manager, Legal

Encik Junady Nawawi, Head, Corporate Strategy & Transformation Management

Encik Mohamad Azlan Mohamad Alam, Chief Financial Officer

Cik Nor Aina Hj Kamaruddin, Head, Corporate Services

Annual Report 2011


23BIMB HolDINGS BERHAD (423858-X)

5-years Group Financial Highlights

2007 2008 2009 2010 2011 RM’000 RM’000 RM’000 RM’000 RM’000 Restated Restated Restated (Note 1)

Share Capital 891,390 891,390 1,066,790 1,066,790 1,066,790

Shareholders’ Funds 921,188 1,005,284 1,272,533 1,654,735 1,824,090

Deposits from Customers 17,388,633 20,535,907 24,871,451 26,798,107 28,208,203

Takaful Funds 2,635,212 3,197,799 3,177,493 3,708,015 4,099,041

Financing of Customers 8,403,285 9,055,028 9,661,864 11,860,631 14,140,970

Investments 4,002,831 3,734,094 9,092,943 15,432,490 12,842,149

Total Assets 22,551,201 27,582,097 32,147,478 35,854,746 38,250,792

Revenue 1,858,669 1,426,814 1,490,180 2,596,313 2,036,050

Profit before Zakat and Taxation 909,105 379,615 299,132 588,155 567,600

Net Profit 787,762 236,198 113,659 230,837 203,252

Dividend Less Taxation 13,193 9,693 9,601 24,802 114,679

(Note 2)

Financing to Deposit Ratio (%) 48.33 44.09 38.85 44.26 50.13

Gross Impaired/Non-Performing Financing (%) 22.40 18.65 12.70 4.50 2.61

Net Impaired/Non-Performing Financing (%) 11.44 7.82 4.90 1.08 -0.31

Earnings per Share (Sen) 97.86 26.50 12.69 21.64 19.05

Net Tangible Assets per Share (RM) 1.03 1.13 1.19 1.55 1.71

Gross Dividend per Share (%) 2.00 1.45 1.20 3.10 10.75

(Note 2)

Net Dividend per Share (%) 1.48 1.09 0.90 2.33 10.75

(Note 2) Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.Note 2: Including a proposed final single tier ordinary dividend of 7.25% for shareholders’ approval at the forthcoming Annual

General Meeting.



24

2007* 2008 2009* 2010*Note 1

20112007* 2008 2009* 2010*Note 1

2011

1,65

4,73

5

1,27

2,53

3

1,00

5,28

4

921,

188

1,82

4,09

0

3,70

8,01

5

3,17

7,49

3

3,19

7,79

9

2,63

5,21

2

4,09

9,04

1

2007* 2008 2009* 2010*Note 1

2011

2007* 2008 2009* 2010*Note 1

2011

2007* 2008 2009* 2010*Note 1

2011

2007* 2008 2009* 2010*Note 1

2011

2007* 2008 2009* 2010*Note 1

2011

2007* 2008 2009* 2010*Note 1

2011

11,8

60,6

31

9,66

1,86

4

9,05

5,02

8

8,40

3,28

5

14,1

40,9

70

21.6

4

12.6

9

26.5

0

97.8

6

19.0

5

35,8

54,7

46

32,1

47,4

78

27,5

82,0

97

22,5

51,2

01

38,2

50,7

92

1.55

1.19

1.13

1.03

1.71

26,7

98,1

07

24,8

71,4

51

20,5

35,9

07

17,3

88,6

33

28,2

08,2

03

588,

155

299,

132

379,

615

909,

105

567,

600

Takaful Funds(RM‘000)

Shareholders’ Funds(RM‘000)

Financing of Customers(RM‘000)

Earnings per Share(Sen)

Total Assets(RM‘000)

Net Tangible Assets per Share (RM)

Deposits from Customers(RM‘000)

Profit before Zakat and Taxation(RM‘000)

Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.

* Restated



25

Striking a balance in our business

When it comes to our corporate governance, BHB places the highest standards on

integrity and professionalism. We ensure that our vision of being the best is being realised

without having to sacrifice the values that define who we are as an organisation.

Continued And Sustainable

Growth

A Business Review

Letter to Shareholders

Dear shareholders,

I am pleased to report that, despite a challenging economic environment in 2011, BIMB Holdings Berhad (“BHB“) and its Group of Companies (“BHB Group” or “the Group”) has yet again managed to maintain continued and sustainable growth. This, we have done by pooling our resources and building on our collective experience and expertise to make the most of existing opportunities, as well as explore new growth areas. Our two main businesses, Islamic banking and Takaful charted good progress in the year while maintaining effective cost management measures, resulting in a significantly enhanced financial performance for the Group.

On behalf of the Board of Directors, it gives me great pleasure to present to you our financial results for the financial year ended 31 December 2011 (“FY2011”).



29

OPERATING ENVIRONMENT

FY2011 was marked by continuing financial crises in the US and the European Union, exacerbated by political upheavals in the Middle East and natural disasters throughout the world including the devastating tsunami in Japan. These caused a general slowdown in the global economy, and Malaysia was not entirely spared. The FBM Kuala Lumpur Composite Index (KLCI) and FBM Shariah Emas Index both dropped in the third quarter along with global and Asian equity markets. However, they recovered fairly quickly to post modest gains of 0.78% and 2.41% respectively for the year, strongly outperforming most of their regional peers.

Though the challenging global environment also affected the country’s exports, Malaysia’s economy in general proved to be resilient and, buoyed by household and business spending as well as higher public sector expenditure, recorded an annual GDP growth of 5.1%.

In line with continued liberalisation of the Islamic financial industry, competition is becoming more intense. However, as a pioneer in Islamic banking and Takaful operations in the country, we have managed to strengthen our presence in the local market and were able to hold our position during the year.


2007* 2008 2009 2010*Note 1

2011

21.64

12.69

26.50

97.86

19.05

Earnings per Share(Sen)

2007* 2008 2009* 2010*Note 1

2011Note 2

2.33

0.90

1.09

1.48

10.7

5

Net Dividend per Share(%)

2007* 2008 2009* 2010*Note 1

2011

2.596

1.490

1.427

1.859

2.036

Revenue(RM Billion)

Note 1: Change in accounting year from 30 June to 31 December, with transitional financial period of 18 months for 2010.

Note 2: Including a proposed final single tier ordinary dividend of 7.25% for shareholders’ approval at the forthcoming Annual General Meeting.

* Restated


BIMB HolDINGS BERHAD (423858-X)

30Annual Report 2011

FINANCIAL PERFORMANCE

Against a challenging and uncertain external environment, BHB Group was able to seize several growth opportunities to achieve a record year of earnings of more than half a billion in Profit Before Zakat and Tax (“PBZT”). The Group recorded a PBZT of RM567.6 million, an increase of 44.8% over the annualised PBZT of RM392.1 million in 2010. This translated into a Return on Equity (“ROE”) of 17.3% compared to 14.3% in 2010. Our net profit attributable to shareholders also improved, increasing by 32.1% to RM203.3 million.

The strong performance was mainly driven by higher profits generated by BHB Group’s two major subsidiaries, namely Bank Islam Malaysia Berhad (“Bank Islam” or “the Bank”) and Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”).

Our revenue grew 17.6% to RM2,036.1 million over an annualised revenue of RM1,730.9 million in 2010. This was achieved on the back of higher financing income and non-fund based income, and improved asset quality by Bank Islam. Takaful Malaysia, meanwhile, contributed with better underwriting results from strong business growth and higher realised gains on the disposal of investments. In addition, there is also a one-off exceptional item in the form of the release of contingent special reserves of RM24.6 million from its Family and General Takaful funds.

At the company level, BHB registered a PBZT of RM252.9 million, an increase of more than 100% over an annualised PBZT of RM24.8 million in 2010. The commendable result was achieved on the back of higher dividend income from Bank Islam and Takaful Malaysia, coupled with diligent cost management which saw our cost to net income ratio improve to 6.9% from 20.9% in 2010.

In addition, a one-off write-back in impairment provision of RM156.0 million on BHB’s investment in Bank Islam also contributed to this strong performance at the company level.

ISLAMIC bANKING

Financial Performance

Bank Islam continued to grow from strength to strength for the FY2011 recording a 36.5% growth for its PBZT to post an impressive result of RM470.1 million.

The Bank also posted very credible ROE and Return on Asset (“ROA”) with 17.7% (2010: 16.5%) and 1.5% (2010: 1.2%) respectively. The increase in ROA reflects the Bank’s continued effort in reshaping its balance sheets for optimal returns, achieving a well-balanced product composition and a better funding cost structure. These have boosted the Bank’s total assets, which now stand at RM32.2 billion.

Capital adequacy ratio remained strong with Risk Weighted Capital Ratio (“RWCR”) at 16.1% after accounting for dividends proposed for FY2011. While it surpassed the Islamic banking industry average of 14.3%, its Tier-1 core capital ratio also remained healthy at 15% (2010: 15.2%).

The Bank continues to maintain its capital position well above the minimum regulatory prudential thresholds by proactively managing its capital structure to maximise efficiency and drive ROE while ensuring a delicate balance between the needs of capital to support strong organic growth strategies and meet shareholder expectations. Asset quality has also improved with a net impaired financing ratio of -0.3% as compared to 1.1% in the previous year.

The year 2011 saw a RM79.9 million or 5.9% increase in fund based income. Net financing grew by RM2.3 billion or 19.2% as compared to the previous financial year. The Bank’s financing portfolio continued to be focused on consumer lending which accounted for 75.5% of the total. Bank Islam’s strategy of reshaping its balance sheet saw greater focus on sourcing for lower-cost funds. Customer deposits totaled RM28.3 billion as at end 2011, with current and savings accounts (“CASA”) making up 43.4% of the total. Faster growth in net financing (19.2%) compared to customer deposits (5.3%) led to an improved financing-to-deposits ratio of 51.5% as at end 2011 from 45.7% a year ago.



31

Bank Islam’s impressive result was also boosted by a 52.3% surge in non-fund based income on the back of higher investment income, gains from foreign exchange and an increase in fee-based income. Admirably, its non-fund based income growth of RM78.7 million almost matched its fund-based income, thanks to heightened corporate finance and advisory activities, treasury and other investment banking services, wealth management/unit trust products, mobile banking services and foreign exchange related business. Consequently, the ratio of non-fund based income to total income edged up to 13.8% as at end 2011 from 10.8% a year previously.

Key Developments

The financial year was marked by several firsts for Bank Islam. Among these, one which makes the Group particularly proud was becoming the first Islamic bank and commercial bank to be engaged as the Principal Adviser, Managing Underwriter, Underwriter and Placement Agent for APFT Berhad’s IPO and listing exercise in March 2011. APFT Berhad is Malaysia’s leading flight education and training service provider. This was followed by the successful listing of Focus Lumber Berhad in April 2011 whereby the Bank was appointed as the Principal Adviser, Managing Underwriter, Underwriter and Placement Agent.

In January 2011, the Bank created another milestone by becoming a 20% shareholder in Amana Bank Limited (“Amana Bank”) in Sri Lanka. Amana Bank has set its sight on becoming Sri Lanka’s first Islamic commercial bank, and Bank Islam, as its strategic partner, will lend its expertise in this transformation via Technical Advisory Services Agreement. The exercise is a significant milestone for the Bank, for it could herald the beginning of many more strategic partnerships with international financial institutions in non-traditional Shariah markets around the world that are keen to capitalise on the growing Islamic banking sector. This supports the Bank’s focus on Inorganic Growth and Corporate Expansion, under its Sustainable Growth Plan.

At the same time, the Bank did not let up on the momentum achieved in further strengthening its position as a leading Islamic bank in the country. Bank Islam was appointed Joint Principal Adviser, Joint Lead Arranger, Joint Lead Manager and Joint Shariah Adviser for the RM5 billion Islamic Securities Programme of TNB Janamanjung Sdn Bhd, for which the Bank was awarded Project Finance International’s Asia Pacific

Bond Deal of the Year 2011 and Islamic Finance News’ Ijarah Deal of the Year 2011. The Bank, similarly, secured other Sukuk and corporate finance advisory mandates that significantly enhanced its non-fund based income.

Keeping its consumers in mind, Bank Islam lived up to its tagline of ‘Pioneering Change’ by launching a series of innovative products to meet the differentiated and increasingly sophisticated needs of the different market segments. The Bank has received the “Anugerah Inovasi Islam Peringkat Kebangsaan 2011 bagi Inovasi Kewangan Islam” award by Ministry of Science, Technology & Innovation (“MOSTI”) for its role in introducing TAP Mobile Banking-i service, an innovative product that allows Bank Islam’s customers to perform banking transactions through their mobile phones without the need for Internet connection.

Among the measures taken in improving its services is the enhancement of Bank Islam’s Treasury department’s processes which resulted in improved pricing of foreign exchange (“FX”) products to customers. Its “Money2Overseas” product, an enhanced FX Telegraphic transfer service, is currently the cheapest remittance service in Malaysia and offers customers the FX remittance facility to more than 100 countries in more than 100 currencies in a cheap, fast and safe manner.

Catering to growing demand for multi-functional debit cards, Bank Islam in March 2011 launched the highly popular Bank Islam Visa Debit Card-i. To inspire young Malaysians below the age of 18 to save, the Bank offers Al-Awfar Junior, based on a profit-sharing Mudharabah contract. Meanwhile, the Cash Line-i was launched to provide short-term financing to meet customers’ working capital needs and ease their cash flow. Disbursed through the customer’s current account with Bank Islam, it is offered for a period of up to 5 years with the option to renew at the end of the financing tenure. In addition, Bank Islam has also done its part in giving a helping hand to the society by adopting the government-proposed ‘Skim Rumah Pertamaku’. This government initiative is intended to assist young adults who have just joined the workforce in purchasing their first house.

Just as it grew its business, the Bank also expanded geographically with the opening of nine new branches in 2011, bringing its total to 122. The Bank is leveraging on its expanding branch network, which includes eight consumer




32

business centres, three Ar-Rahnu branches and five Currency Exchange Centres (“Bureau de Change”) together with 1,124 electronic delivery channels, to cater to its more than 3.5 million customers.

Its impressive performance in recent years has not gone unnoticed. Other than the award for the Janamanjung deal, in 2011 Bank Islam clinched two awards from VISA International, notably for the highest usage of electronic payment via debit cards. The Bank was named “Most Trusted Brand” and “Best Brand for Financial Services” under the Islamic banking category by Readers’ Digest and BrandLaureate respectively. Most recently, it was given the title “Best Islamic Bank in Malaysia” by Islamic Finance News. We are honoured by all these awards as they bear testimony to the Bank’s unwavering commitment to pleasing its customers while meeting the varied needs of all other stakeholders.

TAKAFuL MALAySIA

Financial Performance

Competition within the Takaful market intensified in 2011 along with continued liberalisation of the sector that saw four new Family Takaful licenses being granted. The industry was further impacted by the softening in equity market in the second half of 2011. Despite these challenges, Takaful Malaysia achieved another year of strong growth in 2011, with profits exceeding the RM100 million mark for the first time since its establishment in 1984.

For FY2011, Takaful Malaysia’s Group operating revenue increased by 17% to RM1.35 billion, while PBZT was RM101.4 million compared to RM65.3 million for the annualised 12 months period ended December 2010, a growth of 55%. PAZT increased by 98.4% to RM76.4 million from period ended December 2010. The large improvement in profit is largely attributable to the improved investment and underwriting results along with strong business growth.

Total asset size increased by approximately 11% to RM5.9 billion in 2011 as compared to RM5.3 billion a year ago. Total profit from investment activities which comprised realised gains, fair value changes and net of impairment losses increased by 21% to RM320.1 million from RM265.2 million in 2010.

Strong Product Innovation

As part of its strategy to position itself as a modern, young and energetic Shariah-compliant company, Takaful Malaysia strives to maintain an edge in the market by offering innovative products. Despite being barely a year-old, Takaful myGenLife has emerged as a leading choice in both, the Insurance and Takaful market. The investment-linked product comes with 10 optional supplementary riders which offer attractive coverage benefits. It also provides options for customers to invest in our five Shariah compliant investment funds, which is the widest available range of Shariah-compliant funds offered by any Takaful operator.



33


By ‘marrying’ both protection and investment based elements that cater to the participants’ needs and affordability, Takaful myGenLife offered flexibility and affordability, which made it popular among retail customers.

Recognising the potential presented by a growing yet largely under-served SME market, Takaful Malaysia on 5 April 2011, launched Takaful mySME solutions, aimed primarily at the top five SME sectors, namely light manufacturing, food & beverages, retail, offices and services. The solutions are designed to provide SME entrepreneurs with comprehensive protection to suit their unique needs while enhancing productivity and cash flow liquidity. With the objectives to educate and create awareness among all SME entrepreneurs across the country, Takaful Malaysia organised nationwide roadshows on the importance of solid risk management.

In 2010, Takaful Malaysia had embarked on a three-year plan to improve its operational efficiency by upgrading its technical solutions, communications infrastructure, service delivery and technical competencies. In 2011, it made headway in terms of its communication platform by unveiling a revamped website which not only provides added customer convenience via functions such as financial tools but also presents its contents in Bahasa Malaysia, English and Mandarin, the first Takaful company to do so.

It also improved its service delivery by fully refurbishing 14 Takaful myCare Centres located in Dataran Kewangan Darul Takaful, Petaling Jaya, Shah Alam, Kuantan, Bandar Perda, Seremban, Kota Bharu, Ipoh, Johor Bahru, Kuala Terengganu, Gelugor, Alor Setar, Kota Kinabalu and Kuching. These centres are now more comfortable for users which include customers as well as corporate and retail agents.

In June 2011, Takaful Malaysia embarked on the implementation of electronic Document Management Solution (“DMS”) and the Workflow Management System (“eWMS”) to facilitate a paperless working environment and to improve operational efficiency and productivity throughout the organisation. The system has significantly improved the process of underwriting new business, making it faster and simpler. The company also launched its Retail and Corporate Agency as well as Bancatakaful web portals that will empower its sales force to better serve customers. This massive initiative underscores Takaful Malaysia’s commitment to better serve its customers, partners and agents in its pursuit to be the Preferred Choice for Insurance.

Takaful Malaysia’s exceptional performance was recognised by The Edge, which ranked the company third in terms of compound growth in profit before tax over a period of three years. The company added yet another feather to its cap when it clinched the coveted BrandLaureate Award 2010-2011 in the Corporate Branding Category for Best Brands in Financial Services - Insurance Takaful for the second year running.



34

STOCKbROKING

In 2010, BIMB Securities Sdn Bhd (“BIMB Securities”) had obtained the Securities Commission’s approval to embark on a three-year development plan effective 1 January 2011, which entitles the company to undertake activities accorded to ‘1+1’ stockbroking companies. At the same time, BIMB Securities created greater awareness of the Shariah capital market and its own products via investor seminars. Coupled with a strengthened team of research analysts and dealers, BIMB Securities performed well in 2011.

As a result of heightened marketing efforts in 2011, BIMB Securities increased its revenue by 40% from the annualised revenue in 2010 to RM5.2 million, while growing its total income by 36% to RM9.1 million. Along with improved operational efficiencies, its PBZT recorded a significant increase of RM2.3 million or 267% compared to the annualised Loss Before Zakat and Tax in Year 2010.

During the year, BIMB Securities’ total value of trading volume on Bursa Malaysia Securities Berhad (“Bursa Securities”) stood at RM4.61 billion, representing 1.1% of the total trade volume by value on the Bursa Securities.

LEASING

Syarikat Al Ijarah Sdn Bhd is the Group’s leasing arm. For the 12-month period ending December 2011, it posted a PBZT of RM0.51 million which was 6.3% higher than the annualised PBZT of RM0.48 million recorded for the previous corresponding period. Its PAZT, meanwhile, stood at RM0.30 million.

CORPORATE GOVERNANCE

BHB Group is committed to upholding the highest standards of corporate governance and practices to enhance our stakeholder value, inspire greater trust in our customers and sustain our growth within an increasingly competitive Islamic financial services sector. In addition to practising Islamic principles for the benefit of society and the Group, we abide by the Malaysian Code on Corporate Governance, Bank Negara Malaysia’s Guidelines on Corporate Governance for Licensed Islamic Banks (BNM GP1-i), Bursa’s Main Market Listing Requirements, the Green Book on Enhancing Board Effectiveness by the Putrajaya Committee on Government-linked Companies (“GLC”) High Performance, and Bursa’s Corporate Governance Guide.

Our Board of Directors leads us in constantly improving our Corporate Governance practices in line with local and global best practice to ensure we conduct our business with integrity, ethics and professionalism at all times.

CORPORATE RESPONSIbILITy

As a holding company based on Shariah principles, BHB is fully committed to serving the communities in which we have a presence. We are also conscious of the need to ensure our profits are made ethically and that they are shared responsibly. Under Shariah, we are duty-bound to share a certain amount of our wealth in the form of zakat among the less fortunate. BHB Group relishes the opportunity to do this, and regularly makes zakat contributions to help the underprivileged via the provision of educational support, medical support, aid to upgrade their homes and monetary aid to help with their daily finances. Our Corporate Responsibility initiatives apply equally to our customers, employees, business partners and shareholders. We uphold the highest principles of integrity in our dealings with all our stakeholders to build long-term and mutually beneficial relationships with them.

OuTLOOK

Economic Outlook

There are reasons to be cautiously optimistic about the global economy, in light of recent developments that include efforts to resolve the Euro zone debt crisis coupled with signs of tentative recovery in the US and increased manufacturing activity regionally. Reflecting these positive sentiments, Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 3.00% since May 2011.

At the same time, the International Monetary Fund (IMF) has forecast a moderation in world trade growth to 3.8% in 2012 from 6.9% in 2011, and in Malaysia total trade is expected to grow at between 5%-6% as opposed to 8.7% in 2011. GDP growth in the country, meanwhile, has been forecasted to be to between 4%-5% for 2012 as opposed to 5%-6% as stated in Bank Negara Malaysia’s (“BNM”) in its Annual Report 2011. This moderation in growth can, in turn, be expected to lead to a decrease in the overall consumer price index (CPI) from 3.2% in 2011 to about 2.6% for the year 2012.



35


National Transformation Initiatives

Although there remains much uncertainty regarding the global economy, Malaysia is likely to escape the worst of continuing fluctuations and downgrades. Projects under the 10th Malaysia Plan (10MP) and the Economic Transformation Programme (ETP) are expected to boost domestic economic activity in 2012 and beyond. As in 2011, the investment environment is envisioned to be volatile and challenging, yet again we believe that there will be attractive business opportunities, especially with the strong support from the Government and various regulatory bodies.

The Financial Sector Blueprint, released by BNM on 21 December 2011, aims to transform the financial sector into a key driver and catalyst of economic growth. Among the key focus areas of this Blueprint are the international expansion of Islamic finance and growth of micro-Takaful to cater to the distinct financial needs of all segments of society. These thrust areas will benefit the Islamic financial sector in general, and BHB Group will make the most of all the opportunities that are created along the way.

We anticipate that Bank Islam’s net financing will continue to grow in 2012 with the objective of building a high quality credit portfolio. Takaful Malaysia, meanwhile, can be expected to further increase its market share in the Takaful industry by introducing new products, growing its agency workforce, and having strategic tie-ups with Islamic banks to market Bancatakaful products.

Its ultimate goal is to become firmly established as the preferred choice not just among Takaful companies, but among all insurance providers, and it is making concerted efforts to achieve this vision.

Although the investment climate will pose many challenges to BIMB Securities, we are confident that with its new fortified team, it will be able to continue to grow its revenue and profit margins in 2012 and beyond.

Group Headline Key Performance Indicators (“KPI”) Targets

As part of the Group’s commitment to transparent performance management practices, the Board and Management of BHB have agreed upon and set in place the following headline KPIs targets for FY2012:

· Return on Equity (ROE) of 16.0%· Return on Assets (ROA) of 1.5%

These headline KPIs are targets or aspirations that reflect BHB Group’s main corporate ambitions in pursuing sustainable financial results. They form part of the broader KPIs framework that the BHB Group is implementing. As we set our sights on achieving our KPIs targets, the BHB Group and its subsidiaries will work hard to face the challenges of the marketplace head on while capitalising on the many opportunities before us. We will do all this while undertaking the necessary measures to protect stakeholders’ interests and create good value for them.

Islamic banking

The Malaysian economy grew at a slower pace of 5.1% in 2011 as compared to 7.2% in 2010, as exports were affected by the global downturn. This slowdown will continue to have an adverse impact on Bank Islam, in particular through the trade finance business. In the short term, therefore, Bank Islam will focus on strengthening its domestic presence, where demand is maintaining a high level of economic activity. At the same time, the Bank will continue to look to inorganic growth as part of its long-term strategy.

On the consumer banking front, personal and house financing will continue to be key drivers in 2012, with a strategic thrust in selected household segments. In commercial banking, the Bank will target priority sectors that are resilient to the global environment and that display high growth potential. These include the 12 National Key Economic Areas identified under the ETP, such as Oil, Gas & Energy, Palm Oil & Rubber, Healthcare and Education.

Corporate banking will continue to further pursue syndicated financing opportunities to drive asset growth while the investment banking division will seek to be involved in more Sukuk and corporate finance advisory mandates to enhance non-fund based income distribution. The Bank’s Treasury, meanwhile, will continue to spearhead its forex business and explore opportunities to establish an international currency business unit.

As the Bank is confident of growth in 2012, it will continue to place strong emphasis on attracting, developing and retaining exceptional talents to further build its capacity and capability. This includes the capacity to expand regionally, and to explore in particular opportunities in Indonesia, which is an economic giant in the making. Bank Islam sees huge growth potential for its Islamic financial services in the said country as it is the world’s most populous Muslim nation and already has an entrenched Islamic finance infrastructure.



36

Takaful

The Takaful market in Malaysia is growing at 20%-25% annually, yet the penetration rate is still low at around 10%, compared to conventional insurance which is reported to be close to 43%. Hence Takaful Malaysia sees huge potential for substantial growth in the country. This potential is further boosted by Government initiatives under the ETP and the newly released Financial Sector Blueprint (2011-2020).

Under the ETP, the Government has expressed its intention of increasing the GDP for life insurance from 2.8% currently to 4.0%. Various Entry Point Projects have been identified to increase national coverage to 75% of the population by 2020. The sector will also be boosted by tax incentives as announced for Private Pension Plans. These efforts will be complemented by growing affluence among Malaysians as well as heightened awareness of financial planning and Shariah compliant products.

Meanwhile, implementation of the Risk Based Capital Framework may witness a round of consolidation between smaller Takaful players. If this development takes place in 2012, there will be bigger but fewer players to contend with, which augurs well for Takaful Malaysia moving forward.

On the whole, the BHB Group expects the insurance and Takaful industries to exhibit strong growth both on the international and domestic fronts. In particular, protection products such as family protection and medical Takaful are likely to see strong sales as customers seek security amid volatile market conditions. Takaful will make the most of these factors to continue to innovate on its products and create a broader appeal to capture a larger number of customers. As the market is relatively young, it is still largely untapped and underserved.

A main challenge for Takaful Malaysia in 2012 will be to recruit sufficient agents and talents. Towards this end, it has taken various steps to establish itself firmly as the preferred choice not just among Takaful companies but among all insurance providers. Its objective is to gain recognition as a dynamic, customer-oriented company that offers the best service and competitive products with a strong brand and image.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors of BHB, I would like to acknowledge all our stakeholders for their continued support and trust in the Group which have contributed immensely to our commendable performance in 2011. We are indebted to our shareholders, whose funds provide us with the required capital to translate our growth strategies into reality. We fully appreciate our business associates who have worked steadfastly with us in a spirit of true collaboration and partnership. We would also like to thank our customers for having faith in our products and in our ability to serve them well.

As always, I would also like to extend our sincere appreciation to the Government and regulators, in particular BNM, the Securities Commission and Bursa Securities, for providing the necessary regulatory support and mechanisms to the financial industry, and to the Islamic financial industry in particular.

Finally I would like to offer the Board’s deep-felt gratitude to our entire Management and staff force for their unwavering dedication and commitment to BHB and for proving that, together, we can achieve anything.

Thank you and

Tan Sri Samsudin OsmanChairman



37

Nurturing harmony within our people

At BHB, we might come from varied backgrounds, but our diversity is what unites us.

As a Group, we embrace different ideas amongst our employees, appreciate their varied

skills and support their excellence.

CorporateResponsibility

As an investment holding company of Shariah-compliant banking, takaful and stockbroking businesses, BIMB Holdings Berhad and its subsidiaries (“the Group”) are built on a foundation of ethics and social equity. A Shariah-compliant company by definition abides by Islamic law which ensures integrity, justice and fair play. It goes without saying, therefore, that a high level of corporate responsibility (“CR”) is inbuilt into the very blueprint of the Group.



40

Every corporate strategy and decision made takes into account its impact on our stakeholders. Business ethics is not an added afterthought to our planning, but forms the core of our existence and the premise upon which all our operations are based.

We realise that in order to maintain our culture of responsibility and integrity, all our employees need to share the same vision and objectives of the Group. Hence, we make concerted efforts to involve our staff in our CR initiatives. At the same time, the Group also ensures we apply the same high standards of ethics and responsibility in our interactions with our own people, whose well-being is of paramount importance to us.

Over and above building relationships based on respect and integrity with all our stakeholders, we are also guided by the principles of corporate responsibility in actions and activities that impact the environment. We acknowledge that the environment is a precious national and global asset that needs to be protected, hence we strive to minimise waste in any form while contributing in a more positive way to conserve our natural ecosystems.

In this CR report, we wish to share the CR efforts of the Group as a whole, including initiatives undertaken by our subsidiaries, namely Bank Islam and Takaful Malaysia.

COMMuNITy

BHB Group is conscious of its duty to give back to the communities in which it operates, and especially to those communities that are marginalised, underserved or underprivileged. We play an active role in local communities and take special interest in organisations, groups or individuals that require aid in any kind. Our contributions take the form of monetary aid, other types of resources and the physical time and energy put in by employees and volunteers to help improve lives.

bHbBHB has adopted two orphanages - Pertubuhan Kebajikan dan Pendidikan Permata Hatiku, Gombak, Selangor and Pusat Jagaan Rumah Anak-Anak Yatim/Miskin Taman Baiduri, Dengkil, Selangor. At these homes, we provide relevant educational aid for the children, offer financial aid to help them in their daily operations, and also share the joy of the festive seasons with them.

In addition, BHB collaborates with our subsidiaries, Bank Islam and Takaful Malaysia to give back to society. In 2011, together we made contributions to Lembaga Tabung Haji under the Sahabat Korporat Tabung Haji Programme, to support Lembaga Tabung Haji in its effort to provide essential items to pilgrims during the 2011 Hajj season.

bank Islam

With an allocation of about RM1.2 million for its CR activities, Bank Islam has always taken seriously its role in giving back to the society. The Bank has a tradition of providing support to the needy and underprivileged. In 2011, among its charitable donations were RM360,000 to re-build 12 houses for the elderly in Sungai Tengas, Kulim, Kedah as well as contributions via its ‘Spirit of Togetherness’ programme to all 11 shelters (Rumah Seri Kenangan) for the senior citizens and the underprivileged under the supervision of Majlis Kebajikan Masyarakat in Peninsular Malaysia. Bank Islam has also contributed food, toiletries, medicine and essential items to kick-off its collaboration with Reach-Out Malaysia in providing

Corporate Responsibility



42

humanitarian aid to the homeless around Kuala Lumpur. The Bank has pledged to provide those aids for a full one year with volunteers from Bank Islam, which has instilled a caring mindset amongst them.

The Bank also provides financial aid to various educational and religious institutions to educate members of the community. Bank Islam donated RM16,000 towards the refurbishment of Madrasah Darul Hidayah in Kg Sri Bombalai, Tawau; contributed RM39,900 as zakat to 133 students under the Program PINTAR Bank Islam; donated 10 computers and 2 printers to Sekolah Rendah Agama in Padang Jawa in Klang, Selangor; presented RM39,767.20 to Sekolah Menengah Gombak Setia in Selangor for its Zero to Hero Programme; and RM200,000 to UiTM for its Tabung Mengubah Destini Anak Bangsa. In addition, the Bank also donated RM100,000 to Persidangan Dan Ekspo Ciptaan Institut Pengajian Tinggi Antarabangsa (“PECIPTA 2011”) in support of research & development, innovation and creativity at the tertiary education level.

Meanwhile, volunteers from the Bank rallied together to upgrade Madrasah Darul Hidayah in Tawau, Sabah by having a ‘gotong-royong’. They also turned out in force to join 400 villagers from Kg Merbau Sempak in Sungai Buloh, Selangor, in a Spirit of Togetherness programme held at the Masjid Nurul Amin in conjunction with the sponsorship of Season Two of the Imam Muda reality television programme. In addition, 250 Bank staff spent the weekend with 10 Season Two Imam Muda contestants helping the orphans and cleaning their orphanage at Pertubuhan Kebajikan Ukhuwah Anak Yatim Miskin Sungai Besar, Sabak Bernam, Selangor. Bank Islam contributed RM3,000 to the orphanage. The staff also worked hand in hand with 10 finalists of another reality show, Ustazah Pilihan, in organising ‘sukaneka’ and interaction session as well as helping to improve the living conditions of Orang Asli in Kg Sungai Mas, Sungai Lembing, Pahang.



43


Further supporting religious organisations, the Bank presented zakat amounting to RM11,588,188 to 14 representatives of Majlis Agama Islam and Pusat Zakat Negeri; and contributed RM98,000 to Masjid Tunku Abdul Malik in Kedah to assist in a community programme. Bank Islam has also organised Waqaf Al-Quran programme, in conjunction with Ramadhan month, where a total of 2,286 copies of Al-Quran have been donated to various mosques and religious schools nationwide. The year 2011 also saw about RM218,000 being contributed to the needy across Malaysia as part of Bank Islam’s ’Amal Jariah’ initiative.

During the month of Ramadhan, the Bank organised a series of breaking fast sessions throughout the country involving more than 1,000 orphans, senior citizens, single mothers, underprivileged citizens and ‘mualaf’. It also shared the breaking of fast with a various members of the media while distributing packed food and bubur lambuk to editorial staff at a number of media organisations.

Takaful Malaysia

Takaful Malaysia’s CR activities fall under the Takaful myJalinan umbrella, which comprises two categories:

• Takaful myJalinan Kasih, which provides monetary assistance to the needy

• Takaful myJalinan Ilmu, which helps students in their studies with special emphasis on improving their proficiency in English

In 2011, Takaful Malaysia hosted a Majlis Berbuka Puasa for 66 children at the Al-Khaadem Home of Hope in Shah Alam during which it contributed RM70,000 in zakat and presented the children with duit raya. Takaful Malaysia also treated the 125 residents of Rumah Titian Kasih – children and single mothers, including 30 disabled persons – to a raya shopping spree and buka puasa feast, apart from distributing duit raya to all the residents, Takaful Malaysia donated RM38,000 to the home. Both programmes fall under Takaful myJalinan Kasih.

In addition, Takaful Malaysia also contributed RM112,000 in zakat to various societies and care centres in conjunction with Aidil Fitri. Rumah Amal Nur El Amin, Rumah Amal Semarak Kasih Al Hashimi and Wisma Amal Budi Bestari each received RM20,000; Pusat Jagaan Lambaian Kasih received RM15,000; Persatuan Kebajikan Rumah Perlindungan Teratak Nur Insan was given RM10,000; and eight other recipients received contributions ranging from RM2,000 to RM5,000 each.

Touched by the plight of eight-year-old Nurul Dahyatul Fazlinda, from Kuala Terengganu, who was disfigured by acid during a family squabble, Takaful Malaysia donated RM5,000 from its zakat to help pay for reconstructive surgery on her face and chest. The contribution has helped Nurul’s mother as well, as she was also injured in the acid attack and has subsequently been unable to work.

Under a joint Takaful myJalinan Kasih and Ilmu programme, Takaful Malaysia co-launched the Zamalah Kebajikan Staf UM fund with University of Malaya (“UM”) to help UM’s financially less fortunate employees to pay for their children’s education, marriage expenses, skills training and well-being while also covering unfortunate events.



44

As a responsible and caring corporate citizen, Takaful Malaysia takes pains to accelerate payments to beneficiaries, especially in cases involving death or disability caused by unfortunate events. When two 15-year-old students insured under the Takaful Pelajar Sekolah Malaysia (“TPSM”) scheme died in a road accident on 11 November on the North-South Highway at Slim River, Takaful Malaysia hastened the death claim payments amounting to RM5,000 to each beneficiaries. Similarly, it ensured prompt payment of a total of RM70,000 to the beneficiaries of 14 victims of a landslide in Hulu Langat on 16 June. Takaful Malaysia also contributed a total of RM20,000 to rebuild the Al-Taqwa orphanage, which was badly damaged by the landslide.

By acting promptly, Takaful Malaysia manages to alleviate some of the suffering of the bereaved families.

ENVIRONMENT

In light of current climate change trends, BHB Group is committed to playing our part in minimising our carbon footprint and in helping to educate our staff and members of the public on the importance of safeguarding the environment for a sustainable future. While the Group and our subsidiaries have adopted environment-friendly practices at the workplace, we also endeavour to make a positive difference in the environment surrounding us. In 2011, Bank Islam contributed RM16,660 to a mangrove tree planting initiative held at the forest reserve in Che Mat Zin Island in Klang, Selangor, at which 60 Api-Api trees were planted. The objective was not only to enhance the natural ecosystem but also to expose the Bank’s staff to the mangrove ecosystem and explain how it acts as a protective shield to inland communities while supporting rich marine biodiversity.

Bank Islam also contributed RM20,000 towards a clean-up of the Taman Gelora beachfront in Kuantan, Pahang. The objective was to inculcate civic-mindedness among Bank Islam’s employees and to foster better ties between the Bank’s staff and the local community. The clean-up also aimed to promote a healthy lifestyle. By beautifying the beach, it is hoped that more locals and visitors will be attracted to engage in recreational activities there. About 1 tonned of garbage was collected.



45

In terms of innovation, Takaful Malaysia launched its first online plan – the FirstLife Plan – as well as a series of Takaful mySME solutions that have been designed specifically for light manufacturing, food & beverages, retail, offices and services SME sectors. Takaful Malaysia further organised a nationwide roadshow to stress the importance of risk management in SMEs to ensure their safety and sustainability while enhancing business productivity and cash flow liquidity. Takaful Malaysia also introduced Takaful myGenLife, the investment-linked product that comes with 10 optional supplementary riders which offer attractive coverage benefits. It also provides options for customers to invest in five Shariah compliant investment funds, which is the widest available range of Shariah-compliant funds offered by any Takaful operator.

As a result of our constantly high level of service, product innovation, performance and community involvement, the Group and its subsidiaries are regularly recognised as leaders in the marketplace. In 2011, both Bank Islam and Takaful Malaysia clinched the BrandLaureate Award 2010-2011 for Corporate Branding – Best Brands in Financial Services, for Islamic Banking and Insurance respectively.

MARKETPLACEWe realise that in order to create an open and transparent culture, we need to engage more actively with our various stakeholders. In 2011, we made significant steps in this direction. BHB organised an Analysts Briefing in June 2011 with the aim of fostering closer ties with the investment community and increasing the Group’s visibility. BHB and our subsidiaries also took part in the Government-linked Companies (“GLC”) Open Day, themed Nation Building, Touching Lives, organised by the Transformation Management Office of the Putrajaya Committee on GLC High Performance.

One of the most important stakeholders is our customers and we have always been committed to a high level of product and service delivery. Bank Islam ensures a high level of customer satisfaction by continuously bringing to market products that are innovative and provide convenience to the customer. During the year, the Bank introduced the Transaction-at-Palm (TAP) Mobile Banking-i service, allowing customers to perform banking transactions via their mobile phones minus internet connection. It also encouraged the healthy habit of saving among youth via Al-Awfar Junior, and helped customers ease their cash flow situation with the Cash Line-i. These, along with other efforts to serve customers with quality products delivered efficiently, won the Bank the “Best Islamic Bank in Malaysia” award by Islamic Finance News.

Towards enhanced customer service, Takaful Malaysia in 2011 became the first Takaful operator to offer a trilingual website (Bahasa Malaysia, English and Mandarin) where all Malaysians can visit and view the products offered, provide their feedback and even make use of value-add features that include financial tools. During the year under review, the company also refurbished 14 Takaful myCare Centres to offer its valued customers and agents greater convenience and comfort while transacting with Takaful Malaysia.




46

WORKPLACEWe believe in creating a stimulating workplace where our people feel a sense of belonging and are empowered to carry out their functions to the best of their ability. Continuous training is provided to ensure our employees could realise their true potential, while outstanding performance is rewarded by attractive remuneration and incentives. Our staff are our most valued asset, and we are committed to ensuring they are kept challenged by the working environment at BHB while feeling appreciated for their contributions and motivated to continue to grow in their personal and professional capacity.

In order to engage our employees, we celebrate various events, including important days on the Muslim calendar, and organise activities that bring together staff from different levels of management.

In 2011, BHB organised a bowling competition which led to great team spirit and unity. BHB also hosted an Aidil Fitri Open House for our Board of Directors, staff and their families. As a Group, our employees are united in a shared passion for community service. They regularly volunteer their time and effort in various CR programmes run by their respective organisations.

In order to create a vibrant workplace, Bank Islam focuses on: Training & Development, Employee Health, Safety & Well-being, Business Ethics & Code of Conduct, Labour Practices & Conducive Working Environment, Fair Rewards & Recognition, Succession Planning, and Religious & General Lectures and Forums.

The Bank believes in engaging with its employees to create a healthy organisational climate, in line with its aspiration to be “the employer of choice”. Towards this end, the Bank is committed to provide career and talent enhancement initiatives aimed at inspiring its workforce. Training and professional development programmes are designed to inculcate valuable knowledge among staff. For example, in 2011, regional and operations

workshops were conducted to raise the competency levels of the participants. Meanwhile, newly recruited staff are trained at a ‘mock branch’ in Bangunan Setia 1, located next to Wisma Bank Islam at Jalan Dungun, Kuala Lumpur. Here, they gain invaluable experience and knowledge before being assigned to real counters at Bank Islam branches.

The Bank maintains good relations with various employee unions and is committed to the safety and welfare of its employees by ensuring a safe working environment. In 2011, the Bank reviewed its Occupational Safety and Health related operations to be in line with the requirements of the National Institute of Safety and Health.

To promote workplace harmony, Bank Islam has established a Disciplinary Committee to act as an independent body in handling disciplinary cases, and in 2011 reviewed its Guidelines on Disciplinary Process. Apart from this, an Industrial Relations awareness programme creates a platform to forge better interaction and understanding between Human Resources and staff from other Divisions.

In 2011, Takaful Malaysia reinforced its professional support to agents by setting up the Takaful myStar Academy. The academy offers a variety of specialised training programmes, specially selected to help its agents enhance their product knowledge, sales and recruitment skills while unleashing their potential to excel in their agency business.

All BHB Group’s CR initiatives serve to strengthen the organisation. By empowering our workforce, giving back to the community, contributing to the betterment of the workplace, and protecting the environment, we reinforce our reputation not only as an employer of choice but also as a preferred business partner and financial services provider. CR is a value-added proposition for BHB Group and we intend to keep growing our efforts and progress in tandem with our expansion strategy.



47

2011 Event Highlights

≥ 13/01/2011Doa Selamat and ground breaking ceremony for a project to rebuild 12 old folks’ homes throughout the country, for which Bank Islam pledged a contribution of RM360,000.

≥ 11/02/2011Takaful Malaysia presented RM5,000 from its zakat fund to Nurul Dahyatul Fazlinda, from Kuala Terengganu, who was disfigured by acid in a family squabble. Nurul, a Standard Three pupil of Sekolah Kebangsaan Padang Setar, Kuala Berang will be going for a series of corrective surgeries on her face and chest. Her mother, Che Ku Zaimah, and brother, Muhammad Irfan, suffered burns on their hands and body in the same acid attack. This monetary assistance will help ease the family’s burden as Che Ku Zaimah is presently unemployed due to her injuries.

≥ 18/02/2011Presentation of Bank Islam’s zakat amounting to RM200,000 for UiTM’s Tabung Mengubah Destini Anak Bangsa.

Jan

Feb



48

≥ 23/03/2011Both Bank Islam and Takaful Malaysia clinched the BrandLaureate Award 2010-2011 for Corporate Branding – Best Brands in Financial Services, for Islamic Banking and Insurance Takaful respectively.

≥ 18/04/2011Bank Islam spent RM16,000 on repair works of Madrasah Darul Hidayah in Kg. Sri Bombalai, Tawau, Sabah. 100 Bank Islam staff participated in the renovation. In conjunction with this CSR initiative, the bank also donated 100 copies of the Al-Quran to each of the madrasah and three other recipients under the Wakaf Al-Quran project.

≥ 07/04/2011Bank Islam donated 10 computers and two printers to Sekolah Rendah Agama in Padang Jawa, Klang, Selangor.

Mar

Apr



49


≥ 08/05/201150 Bank Islam staff and 400 villagers from Kg. Merbau Sempak in Sungai Buloh took part in a Spirit of Togetherness programme held at the Masjid Nurul Amin in conjunction with the sponsorship of season two of the Imam Muda television programme.

≥ 24/05/2011Takaful Malaysia co-launched the ‘Zamalah Kebajikan Staf UM’ fund with University of Malaya (UM) to support UM’s financially less fortunate employees. This fund will help the employees pay for their children’s education, marriage expenses, skills training, well-being as well as for unfortunate events. Takaful Malaysia contributes RM20,000 towards this fund under its Takaful myJalinan Kasih and Ilmu CSR programmes.

≥ 31/05/2011Bank Islam Managing Director Dato’ Sri Zukri Samat presented zakat amounting to RM11,588,188 to 14 representatives of Majlis Agama Islam dan Pusat Zakat Negeri, witnessed by Minister in the Prime Minister’s Department, Dato’ Seri Haji Jamil Khir Baharom.

≥ 12/05/2011BHB held its 13th and 14th Annual General Meeting for the 18-month financial period ended 31 December 2010 at the Tun Rahah Grand Hall, Menara Yayasan Tun Razak, Kuala Lumpur. The AGM was attended by all nine Board of Directors, representatives of the Minority Shareholders Watchdog Group and approximately 250 shareholders. The AGM was followed by a Press Conference attended by Group Managing Director/Chief Executive Officer of BHB, Managing Director of Bank Islam and Chief Financial Officer of Takaful Malaysia.

Maywww.bimbholdings.com


50

≥ 18/06/2011Bank Islam organised a Bank Islam & Media Amazing Hunt 2011, in which staff got to compete with members of the media in a treasure-hunt in addition to carrying out charity work at PAYASUM, an orpanage located in Melaka. In conjunction with the event, Bank Islam also donated some trees to the Sg. Udang Recreational Park.

≥ 16/06/2011Takaful Malaysia handed over cheques for death claim payments amounting to RM70,000 to the beneficiaries of 14 victims of a devastating landslide in Hulu Langat. The deceased were insured under Takaful Malaysia’s ‘Takaful Pelajar Sekolah Malaysia’ scheme. Representatives from the schools received RM5,000 each on behalf of the beneficiaries. Takaful Malaysia also contributed RM20,000 to rebuild the Al-Taqwa orphanage, which was badly damaged by the landslide.

≥ 24-26/06/2011BHB spearheaded the participation of BHB Group of Companies namely Bank Islam, Takaful Malaysia and BIMB Securities during the GLC Open Day 2011 organised by Khazanah Malaysia at Kuala Lumpur Convention Centre. The Prime Minister visited the Group booth and was greeted by Board Member Dato’ Ismee Ismail, Group Managing Director/Chief Executive Officer Encik Johan Abdullah and Managing Director Dato’ Sri Zukri Samat.

Junwww.bimbholdings.com


51

≥ 02/08/2011Bank Islam held a breaking of fast with 200 orphans in Perak at the Official Residence of the Chief Minister of Perak.

≥ 03/08/2011Bank Islam distributed packed food and bubur lambuk to reporters at Utusan Malaysia and Kosmo newspapers.

≥ 05/08/2011Bank Islam held a breaking of fast with 130 orphans and the underpriviledged from Negeri Sembilan at the Royale Bintang and Spa Resort in Seremban.

≥ 10/08/2011Bank Islam held a breaking of fast with 450 editorial staff of the NSTP Group (Berita Harian, Harian Metro & New Straits Times) at Balai Berita in Bangsar.

≥ 10/08/2011Bank Islam organised a breaking of fast with 200 orphans and senior citizens at the Eastwood Valley Golf and Country Club in Miri, Sarawak. The bank also distributed packed food and bubur lambuk to editorial staff of Karangkraf in Selangor.

Aug


≥ 05/07/2011Bank Islam contributed RM360,000 to Rumah Cahaya Sg. Tengas, an old folks’ home in Kulim, Kedah.

≥ 19-20/07/2011Bank Islam showcased its products at the National Tax Conference 2011 held at the Plenary Hall, Kuala Lumpur Convention Centre, with a sponsorship of RM70,000.

≥ 12/07/2011Bank Islam contributed RM39,767.20 in zakat to Sekolah Menengah Gombak Setia in Selangor for its Zero to Hero Programme.

Julwww.bimbholdings.com


52

≥ 12/08/2011Bank Islam organised a breaking of fast with the editorial staff of Bernama and Bernama TV at Wisma Bernama in Kuala Lumpur. The event was attended by 200 guests.

≥ 15/08/2011Bank Islam organised a breaking of fast with 130 orphans from Darul Falah & PERKAYA at the Primula Hotel in Kuala Terengganu, Terengganu.

≥ 16/08/2011Bank Islam, in collaboration with Sekretariat Pemerkasaan dan Pembelaan Wanita Islam (SENADA), held a breaking of fast with 200 oprhans from 13 districts in Pahang at the Official Residence of the Chief Minister of Pahang.

≥ 13/08/2011Takaful Malaysia hosted a breaking of fast for 66 children of Al-Khaadem Home of Hope, at the home in Shah Alam. The company also contributed RM70,000 in zakat to the home while giving out duit raya to all the children.

Augwww.bimbholdings.com


53

≥ 18/08/2011Bank Islam distributed packed food and bubur lambuk to RTM at Wisma Angkasapuri in Kuala Lumpur.

≥ 21/08/2011Takaful Malaysia treated the 125 residents of Rumah Titian Kasih – children, single mothers and the disabled – to a raya shopping spree, during which they bought shoes and baju raya, followed by a buka puasa feast. Takaful Malaysia also distributed duit raya to all the children and single mothers and contributed RM38,000 to the home.

≥ 19/08/2011Bank Islam organised a breaking of fast with 167 orphans, senior citizens, single mothers and the underprivileged at Universiti Kebangsaan Malaysia in Bangi, Selangor.

Aug




54

≥ 08/09/2011BHB Group of Companies contributed a total of RM140,000 to Tabung Haji under the Sahabat Korporat Tabung Haji Programme, to support Tabung Haji in its effort to provide essential items to pilgrims during the 2011 Hajj season.

≥ 13/09/2011Bank Islam contributed RM100,000 to Persidangan Dan Ekspo Ciptaan Institut Pengajian Tinggi Antarabangsa (PECIPTA 2011) held at the KL Convention Centre in support of research & development, innovation and creativity at the tertiary education level.

≥ 21/09/2011Takaful Malaysia extended RM112,000 in zakat to the less fortunate during the company’s Hari Raya celebration at its head office in Dataran Kewangan Darul Takaful. Rumah Amal Nur El Amin, Rumah Amal Semarak Kasih Al Hashimi and Wisma Amal Budi Bestari each received RM20,000, Pusat Jagaan Lambaian Kasih received RM15,000, Persatuan Kebajikan Rumah Perlindungan Teratak Nur Insan was given RM10,000 and 8 other recipients received between RM2,000-RM5,000 each.

≥ 10/09/2011BHB organised an Aidil Fitri open house for staff, Board members and their families at Hotel Maya in Kuala Lumpur. 45 orphans from Pertubuhan Kebajikan dan Pendidikan Permata Hatiku in Gombak and Pusat Jagaan Rumah Anak-Anak Yatim Taman Baiduri in Dengkil were the guests of honour. Each orphanage received RM3,000 while the chidrden were given duit raya.

Sepwww.bimbholdings.com


55

≥ 01/10/2011Bank Islam contributed RM200,000 in business tithes to Tabung Mengubah Destini Anak Bangsa, Universiti Teknologi MARA at Malam Simfoni Kasih held at the Dewan Agong Tuanku Canselor in Shah Alam, Selangor.

≥ 17/11/2011Takaful Malaysia handed over cheques for death claim payments amounting to RM10,000 to the beneficiaries of two 15-year-old boys who died in a road accident in Slim River. The boys, Allahyarham Maysarra Zaidi and Allahyarham Khairul Anwar Azhan, were insured under the ‘Takaful Pelajar Sekolah Malaysia’ scheme. Each boy’s family received RM5,000.

Oct

Nov




56

≥ 7-10/12/2011Bank Islam collaborated with Reach-Out Malaysia on a humanitarian programme to distribute food, clothing toiletries and other essential items to the homeless, contributing about RM15,000 to the cause.

≥ 28/12/2011Bank Islam contributed RM98,000 in business tithes to Masjid Tunku Abdul Malik in Kedah to assist in a community programme organised in collaboration with the mosque.

Dec



57

Creating a sustainable stability

BHB is committed to achieving the highest standards of corporate governance.

Our dedication, business integrity, ethics and professionalism has helped us surpass boundaries

and exceed expectations whilst generating sustainable profit for our stakeholders.

Statement of Corporate Governance

In line with this, BHB Group’s corporate governance model adopts the following requirements and guidelines on corporate governance best practices:

(i) The Malaysian Code on Corporate Governance (“the Code”);

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

(iii) Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Ma in Market L is t ing Requ i rements ( “L is t ing Requirements”);

(iv) Green Book on Enhancing Board Effectiveness (“Green Book”) by the Putrajaya Committee on GLC High Performance; and

(v) Corporate Governance Guide (“CG Guide”) by Bursa Securities.

The Board is pleased to present the following report on the application of principles and best practices as set out above.

I. BoardofdIrectors

(1) theBoard andBoardBalance

The Board of BHB currently consist of nine members, with one Executive Director and eight Non-Executive Directors. Out of the eight Non-Executive Directors, three are Independent Directors. Four of the Non-Executive Directors are nominees of Lembaga Tabung Haji (“TH”) and one Non-Executive Director is a nominee of Permodalan Nasional Berhad (“PNB”).

The current composition of the Board is in compliance with Chapter 15.02(1) of the Listing Requirements and BNM GP1-i as 1/3 of its members are Independent Directors.

The Independent Directors play a pivotal role in ensuring the required check and balance in faciliting the Board to discharge its duties and responsibilities. The Independent Directors also act as a safeguard in ensuring that the interests of the minority shareholders as well as stakeholders are protected.

The Directors bring to the Board a wealth of knowledge, experience and skills in the field of accountancy, banking, regulation, international business operations and development, finance and risk management, amongst others. Brief backgrounds of each Director are presented on pages 16 to 20 of the Annual Report.

The duties and responsibilities of the Chairman and the Group Managing Director/Chief Executive Officer (“GMD/CEO”) are distinct and separate. The Chairman leads and oversees the Board and presides all Board meetings and shareholders’ meetings.

The GMD/CEO is responsible for the day-to-day operations of BHB’s business and is accountable to the Board and shareholders. He also leads BHB’s Management on BHB’s business, strategic planning, budgeting, financial reporting, risk management and also responsible for assuring compliance with the regulation and requirements as underlined by the relevant regulatory bodies. The GMD/CEO leads BHB’s management and is responsible for the overall administration and operation of the Company. In managing the business affairs, the GMD/CEO is assisted by a Management Committee, which meets on a monthly basis. The GMD/CEO is also responsible for the implementation of the Board’s policies and decisions.

The Board of Directors of BIMB Holdings Berhad (“BHB” or “the Company”) remains resolute in upholding the highest standards of corporate governance and practices to enhance stakeholders’ value; reaching consumer trust and building a competitive Islamic organisation in pursuing BHB Group’s goal to be the premier Islamic financial service provider. This includes the practices of Islamic Principles for the benefit of the society and the performance of the Company. The Board is also committed in achieving the highest standards of business integrity, ethics and professionalism across the BHB Group.

(Pursuant to Paragraph 15.25 of the Listing Requirements of Bursa Malaysia Securities Berhad)



60

(2) BoardMeetings

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 meeting into their own schedules. The Board meets on a scheduled basis at every quarter of the year. When the need arises, Special Board meetings are also convened. The Board continues to proactively engage with senior management staff or external advisors to advise the Board and to furnish the Directors with information and clarification needed on relevant matters to ensure that the various concerns and issues relevant to the operations of the Company are duly addressed.

All Board members have complied with the attendance requirements for Board meetings held in the financial year.

During the year ended 31 December 2011, there were six (6) Board meetings and Director’s attendance at the meetings held are as follows:-

No. ofMeetings

directors Held* attended

Tan Sri Samsudin OsmanChairman/Non-Independent Non-Executive Director

6 6

Johan AbdullahGroup Managing Director/Chief Executive OfficerNon-Independent Executive Director

6 6

Dato’ Paduka Ismee IsmailNon-Independent Non-Executive Director

6 5

Zahari @ Mohd Zin IdrisIndependent Non-Executive Director

6 6

Zaiton Mohd HassanIndependent Non-Executive Director

6 6

Salih Amaran JamiaanNon-Independent Non-Executive Director

6 5

Syed Elias Abd. Rahman AlhabshiNon-Independent Non-Executive Director

6 6

Rozaida OmarNon-Independent Non-Executive Director

6 6

Tan Sri Ismail AdamSenior Independent Non-Executive Director

6 6

Dato’ Hairuddin MohamedIndependent Non-Executive Director

1** 1

* reflects the number of meetings held during the time the Director held office

** Dato’ Hairuddin Mohamed resigned on 1 March 2011



61


(3) supply of Information

The Board of Directors has full and unrestricted access to all information pertaining to BHB’s affairs and businesses to enable them to discharge their duties effectively. All the Directors have direct access to the advice and services of the management of the BHB Group and they may also seek independent professional advice where necessary.

The Board meeting’s schedules would be circulated in advance to the Board members. The Board meeting papers are disseminated to the Directors at least 5 days prior to the Board meeting. The meeting paper shall contain sufficient details and updated information to enable them to be adequately appraised before the meeting and in facilitating decision making. During the Board meeting, the Directors shall deliberate the business as per the agenda at length prior to making their decision and conclusion. The deliberation and resolution passed by the Board shall be properly recorded and subsequently the minutes of the meeting shall be confirmed at the next Board Meeting.

The Board is also regularly updated from time to time by the Company Secretary and/or management on new statutory and regulatory requirements or any changes or amendments to the regulatory requirements concerning their duties and responsibilities.

(4) appointment to theBoard

There is a formal and transparent procedure for the appointment and re-appointment of Directors in BHB which is under the primary responsibility delegated to the Nomination and Assessment Committee (“NAC”). The NAC is entrusted with the specific tasks of identifying and recommending on the appointments of new Directors to the Board of the Company and CEO of its subsidiaries after taking into account the required mix of skills, experience and other qualities of the appointee.

The NAC is guided by its Terms of Reference and BNM/GP1-i.

(5) re-election

In accordance with the Company’s Articles of Association, 1/3 of the Directors shall retire from office at each Annual General Meeting (“AGM”) and are eligible for re-election. Directors who are appointed by the Board in each financial year are subject to re-election by the shareholders at the next AGM following their appointments.

Details of Directors due for re-election at the forthcoming AGM are disclosed on page 6 of the Annual Report.

(6) Number ofdirectorships

In accordance with the BNM GP1-i and Listing Requirements of Bursa Securities, Directors must not hold more than 10 directorship in listed companies and not more than 15 directorships in non-listed companies.

At present, all Directors of BHB adopt and comply with the best practice recommendation of the Green Book which states that Directors should not sit on the board of more than five listed companies. This is to ensure that their commitment, resources and time are more focused to enable them to discharge their duties effectively.

In this regard, all Directors of BHB have duly complied with the relevant guidelines.

(7) directors’ training

The Board recognises the value in enhancing the skills and knowledge of its members on relevant new laws and regulations and changing business environment and risk profile, as well as aspects on the latest development and key challenges in the financial sector.

The Company provides a dedicated training budget for Director’s continuing education. Relevant training programmes are arranged by the Company for the Directors and members of the Board Committees.



62

The Directors may also request to attend additional training courses according to their specific needs as a Director or member of the Board Committees.

In 2011, Directors of BHB have attended development and training programmes which were organised by various institutions, the details of which are set out below:-

courses

2011 Corporate Directors Conference of the Malaysian Alliance of Corporate Directors

3rd Annual Corporate Governance Summit 2011

4th Annual Corporate Governance Summit 2012

“Seminar Pengarah Wakil-Wakil TH 2011”

Financial Institutions Directors Education (“FIDE”)

FIDE: Banking Insights

FIDE: IT Governance & Risk Management

Workshop on “What Directors Should Know About The Investor’s Mindset”

Internal Capital Adequacy Assessment Process (“ICAAP”)

Khazanah Megatrends Forum

Regional CFO Summit 2010: CFOs In The Modern Age, Do You Measure Up?

Stock Market Review & Economics Outlook 2010

The Non-Executive Director Development Series (“NEDD”) Course

Bursa Malaysia Governance Series For Directors; “The Board’s Responsibility for Corporate Culture”

Sime Darby Berhad Talk- “Avoiding Minefields Amidst A Changing Anti-Corruption Landscape”

“A Code of Conduct : Practical Experience of a Multinational Corporation”

ARAM Global Director’s Duties Conference 2011

MCCG “Scrutinising Financial Statement Fraud & Detection of Red Flag for Directors and Officers, PLC’s and Government Regulatory Agencies Workshop”

Half Day Governance Programme Assessing “The Risk and Control Environment”

All Directors have attended the Mandatory Accreditation Programme as required by Bursa Securities Listing Requirements.



63

(8) directors’remuneration

Non-Executive Directors remuneration is determined at the levels which would continue to attract and retain Directors of high calibre to provide the necessary skill and experience as required and commensurate with the responsibilities for effective operations of the BHB Group. The compensation packages of the GMD/CEO is structured to relate to short and long term goals of the Company, benchmarked against the industry. The rewards are based on his performance during the year against the Key Performance Indicators as approved by the Board. Remuneration of the Directors in office during the financial year is also disclosed in the BHB’s Financial Statements section of the Annual Report.

(a)(i) The aggregate remuneration of the Directors for the year under review are as follows:-

Group company 1.1.2011 to 1.7.2009 to 1.1.2011 to 1.7.2009 to 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000 executivedirector:Fees and allowances 209 297 – –Salaries, bonuses and EPF contributions 1,001 1,775 1,001 1,775Benefits-in-kind 102 151 73 151 1,312 2,223 1,074 1,926Non-executivedirectors:Fees and allowances 1,498 1,936 455 698Benefit-in-kind 125 70 40 17 Total 2,935 4,229 1,569 2,641 Total (excluding benefits-in-kind) 2,708 4,008 1,456 2,473 (ii) Shariah Supervisory Council 305 491 – –

Salaries, bonuses and EPF contributions of Executive Director for the corresponding 18 months amongst others include bonus payout for the financial year ended 30 June 2009, as well as bonus payout for the 12 months financial period ended 30 June 2010.




64

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

company 1.1.2011 to 1.7.2009 to 31.12.2011 31.12.2010 Number of executivedirectorRM1,3000,001 and RM1,350,000 1 –RM2,200,001 and RM2,250,000 – 1

Number ofNon-executivedirectorsBelow RM50,000 3 2RM50,001 and RM100,000 1 2RM100,001 and RM150,000 2 –RM150,001 and RM200,000 – 1RM200,001 and RM250,000 – 2RM300,001 and RM350,001 1 -RM350,001 and RM400,000 1 2RM400,001 and RM450,000 – 1RM500,001 and RM550,000 1 – Total 10 11

II. BoardcoMMIttees

To assist the Board in discharging its duties, the Board delegates certain of its 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.

Board of Directors

Audit and Examination Committee

Nomination and Assessment Committee

Remuneration Committee



65

a. Nomination and assessment committee (“Nac” or“committee”)

The Committee is responsible to assess, consider and recommend to the Board, candidates for directorships and/or senior management to be appointed in the Company and its key subsidiaries. The other responsibilities of the Committee are as follow:-

• to recommend to the Board on matters of renewal or extension of Directors’ and senior management appointments.

• to recommend to the Board, Directors to be appointed on the Board Committees based on the required skill and experience.

• to annually review and assess performance of the Board as a whole and its various standing committees as well as the contribution of each individual Director.

The Company has conducted the annual assessment of the performance of the Board as a whole. The Company will continue to assess the effectiveness of the board and its performance annually. The NAC held five meetings during the financial year.

The Committee comprises non-executive Directors, majority of whom are independent. Meetings are held as and when necessary for the Committee to deliberate on related matters.

b. remunerationcommittee (“rc” or “committee”)

The Committee’s role is to assist and support the Board’s responsibility by recommending to the Board, remuneration of Directors and senior management of the Company in all forms including any review of scheme of service. The Committee is also responsible to assess and recommend to the Board:-

• the remuneration of executive Directors in all forms.

• the remuneration of non-executive Directors.

• the remuneration of senior management and matters under the scheme of service for employees.

The RC held 5 meetings during the financial year.

The Committee comprises non-executive Directors, majority of whom are independent. Meetings are held as and when necessary for the Committee to deliberate on related matters.

c. auditandexaminationcommittee (“aec”or“committee”)

The Committee is authorised by the Board to conduct its activities within its Terms of Reference and has unrestricted access to internal and external auditors and members of the management of the Company.

The terms of reference of the Committee are as follows:

• compositionThe Committee shall comprise at least three non-executive Directors, a majority of whom shall be independent non-executive Directors. The Chairman of the Committee shall be an independent non-executive Director.

At least one member shall be a member of the Malaysian Institute of Accountants or possess similar qualifications as prescribed in Part I or Part II of the First Schedule of the Accountants Act, 1967, with at least three years of relevant experience.

The Committee shall not consist of any alternate Director of the Company.

• frequencyofMeetingsMeetings shall be held not less than four times a year. The external auditors may request a meeting if necessary.

• QuorumThe quorum shall be three with majority must be Independent Directors.

The Company Secretary of BHB shall act as Secretary to the Committee.

• attendanceatMeetingsThe GMD/CEO is invited to attend the meetings. Other Board members shall have the right to attend.

At least twice a year, the Committee shall meet with the external auditors without the presence of executive board member/senior management.




66

• authorityThe Committee is empowered by the Board to carry out the followings:-

1. Investigate any activity or matter within its terms of reference.

2. Promptly report to Bursa Malaysia matters which have not been resolved satisfactorily thus resulting in a breach of the Listing Requirements.

3. Obtain external independent professional advice, legal or otherwise deemed necessary.

4. Maintain direct communication channels with external auditors, person(s) carrying out the internal audit function and senior management of the Company and its subsidiaries.

5. Convene meetings with internal and external auditors, without the attendance of the management, whenever deemed necessary.

In discharging the above functions, the Committee is also empowered to have:-

1. Necessary resources which are required to discharge its duties.

2. Full and unrestricted access to information and documents relevant to its activities.

• duties andresponsibilitiesThe primary duties and responsibilities of the Committee are as follows:-

1. Internalaudit

• 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.

• To recommend to the Board on the appointment or termination of the Chief Internal Audit.

• Assess the performance of the internal auditors and determine and recommend the remuneration and annual increment of the internal auditors.

2. Internal controls

• Review the effectiveness of internal controls and risk management processes.

• Review the Company’s statement on internal control systems prior to endorsement by the Board.

3. externalaudit

• Review the external auditors’ audit scope and plan.

• Review the appointment of external auditors and the audit fee and any question of resignation or dismissal and to make recommendations to the Board.

• Monitor the effectiveness of the external auditors’ performance and their independence and objectivity.

• Review the external auditors’ letter to Management and Management’s responses, including the previous audit recommendations and make recommendations to the Board.

• Approve the provision of non-audit service by external auditor.

4. financialreportingReview 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.

• Compliance with applicable Financial Reporting Standard and other legal and regulatory requirements.



67

5. relatedParty transactionsReview and report to the Board any related party transactions that may arise within the Company or Group.

6. annualreportReport the AEC’s activities, the number of audit meeting held in a year, details of attendance of each Director in respect of meetings and the details of relevant training attended by Director.

7. GeneralTo perform any other functions as may be agreed by the Board.

• Internalaudit 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”, subsidiary of BHB), the said function has been outsourced since December 2008.

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

The respective Internal Auditor’s core function is to perform a regular audit and provide an 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.

The management of Bank Islam and Takaful Malaysia are responsible to ensure that corrective actions on reported weaknesses are undertaken within an appropriate time frame.

• activitiesduring theYear

The following is a summary of activities that were carried out by the Committee during the year under review:-

(a) Review of BHB Group’s quarterly financial statements prior to the submission to the Board for consideration and approval.

(b) Review and approval of the external auditors’ scope of work and audit plan for the year.

(c) Review of the audit report of BHB Group prepared by the external auditors and Internal Audit Department, their findings and management responses thereto.

(d) Monitoring of the progress of the Internal Audit functions in completing its audit plan and assessing the performance of Chief Internal Auditor.

(e) Review of the recurrent related party transactions.

d. composition andattendance ofBoardcommittees

The composition of the NAC, RC and AEC and details of attendance of each member at the committee meetings during the period under review are as follows:-

attendanceat theMeeting

directors/Members Nac rc aec

Zaiton Mohd Hassan 5/5* 5/5* 5/5

Zahari @ Mohd Zin Idris 5/5 5/5 5/5*

Dato’ Paduka Ismee Ismail 5/5 5/5 #

Salih Amaran Jamiaan # # 5/5

Dato’ Hairuddin Mohamed # # 1/1**

# Not a member of the Committee* Chairman of the Committee** Dato’ Hairuddin Mohamed resigned on 1 March 2011




68

e. Groupshariahcommittees

There are three Shariah Committees to cater for BHB’s key subsidiaries (Islamic banking, takaful and stockbroking) businesses.

In compliance with BNM’s Guidelines on Shariah Governance Framework and the Company’s Memorandum and Articles of Association, the Shariah Committees ensures that the operations of the key subsidiaries are in accordance with Shariah principles.

(a) Shariah Supervisory Council of Bank Islam

Members Nationality

Dr. Ahmad Shahbari @ Sobri Salamon (Chairman)

Malaysian

Haji Mohd Bakir Haji Mansor Malaysian

Sheikh Dr. Ahmed Mohieldin Ahmed Sudanese

Associate Professor Dr. Uzaimah Ibrahim Malaysian

Professor Dr. Ahmad Hidayat Buang Malaysian

Dr. Muhammad Syafii Antonio Malaysian

(b) Shariah Advisory Body of Takaful Malaysia

Members Nationality

Dr. Ahmad Shahbari @ Sobri Salamon (Chairman)

Malaysian

Haji Mohd Bakir Haji Mansor Malaysian

Dr. Aida Othman Malaysian

Associate Professor Dr. Muhammad Rahimi Osman

Malaysian

Dato’ Wan Mohamad Dato’ Sheikh Abdul Aziz

Malaysian

(c) Shariah Committee of BIMB Securities Sdn. Bhd.

Members Nationality

Haji Mohd Bakir Haji Mansor (Chairman) Malaysian

Prof. Emeritus Dato’ Paduka Dr. Mahmood Zuhdi Haji A. Majid

Malaysian

Ir. Dr. Muhammad Fuad Abdullah Malaysian

III accoUNtaBILItYaNdaUdIt

financialreportingThe Board has a fiduciary responsibility for presenting a clear, balanced and comprehensive assessment of the Company’s and the Group’s operations 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 the fiduciary responsibility expected of the Board, the Board is assisted by the AEC to ensure that the financial statement present a true and fair view of BHB’s Group financial performance and state of affairs.

The Statement by Directors pursuant to Section 169(15) of the Companies Act 1965 is set out on page 194 of this Annual Report.

Internal controlThe Board recognises the importance for maintaining a sound internal control system that cover financial controls, operational and compliance controls to safeguard shareholders’ investments and the Company’s assets. The Statement on Internal Control which provides an overview of the state of the Internal Control is set out in page 71 of this Annual Report.



69

relationshipwithexternalauditors

The Board has established transparent and appropriate relationship with its external auditors through the AEC. The AEC and the Board maintain a great emphasis on the objectivity and independence of the external auditors, in providing the relevant and transparent reports to shareholders. In ensuring full disclosure, the external auditor is regularly invited to attend AEC Meetings as well as 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.

The role of the AEC in relation to the external auditors is described under the audit rommittee report on page 67 of this Annual Report.

IV sHareHoLders

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

One of most important channels of communication to shareholders is through the Annual Report which contains comprehensive and sufficient details about the financial results and performance of the Company and the Group.

The AGM is regarded as the principal forum during which shareholders and investors are informed of the current developments of the Company and the Group. Shareholders are invited to ask questions during the question and answer session prior to the motion for approval of a particular resolution.

In addition, the Company shall from time to time, make various announcements and disclosures on material corporate proposals to Bursa Securities (including mandatory disclosures under the Listing Requirements). This is to make available reasonable access to material information regarding the Group to the investing public. The Company’s major subsidiaries namely Bank Islam and Takaful Malaysia also make disclosures to the media from time to time on various matters pertaining to their activities that are of interest to the investing public.

Further, in line with best practices on corporate governance, Tan Sri Ismail Adam was appointed as the Senior Independent Director (“SID”) of the Board to whom concerns of shareholders and stakeholders may be conveyed. He is responsible for addressing queries that may be raised by the shareholders. He can be contacted at his email address - [email protected].




70

On the basis of the aforesaid, the Board is pleased to provide the Statement on Internal Control (“Statement”) that was prepared in accordance with the “Guidance for Directors of Public Listed Companies” issued by Bursa Securities. The Board acknowledges that they are responsible for BHB’s system of internal control and for reviewing its adequacy and integrity.

The Board recognises that a sound system of internal control and risk management practices is essential in ensuring good corporate governance. The purpose is to have an acceptable risk profile rather than eliminate the risk of failure to achieve the business objectives of the BHB Group. However, as with any other internal control system, the system of internal control can only provide reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud.

The process of identifying, evaluating and managing the significant risks faced by the BHB Group is an on-going process which includes reviewing and updating the internal controls system when there are changes to business environment, operations or regulatory guidelines. This process is regularly reviewed by the Board and has been in place for the year under review.

The islamic banking and takaful subsidiaries’ statement on internal control were approved by their respective Audit Committees and Boards.

KeY INterNaLcoNtroLProcesses

• riskManagementThe Board has established an organisation structure with clearly defined lines of responsibility, authority limits and accountability aligned to business and operational requirements. 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 this regard, the Board has implemented a Risk Management Dashboard (“RMD”) which is reported to the Board on a quarterly basis by the major operating subsidiaries.

The major operating subsidiaries, namely Bank Islam Malaysia Berhad (“Bank Islam”), Syarikat Takaful Malaysia Berhad (“Takaful Malaysia”) and BIMB Securities Sdn. Bhd. (“BIMB Securities”) have adopted their own RMD. Both Bank Islam and Takaful Malaysia also established their respective Board Risk Committee with the primary responsibility of ensuring effective control measures are adopted and adhered to. For BIMB Securities, this function is currently undertaken by its Audit Committee.

Statement on Internal Control

INtrodUctIoN

Pursuant to paragraph 15.26(b) of the Bursa Malaysia Securities Berhad’s Listing Requirements, the Board of

Directors (“Board”) is to include in its Annual Report a statement regarding its internal control. In addition,

the Malaysian Code on Corporate Governance (Revised 2007) requires all listed companies to maintain a sound

system of internal control to safeguard shareholders’ investment and the Company’s asset.



71

Statement on Internal Control

• audit committeeThe Audit and Examination Committee (“AEC”) of BHB and its major subsidiaries shall review internal control issues identified by the respective internal auditors, external auditors, regulatory authorities and management. The respective AEC would then evaluate the adequacy and effectiveness of the risk management and internal control systems. In addition, Internal Accounting Controls are also reported to the AEC on quarterly basis. The AEC also reviews the internal as well as external audit functions with particular emphasis on the scope and quality of findings. The minutes of the AEC meetings are tabled to the BHB Board on a quarterly basis. Where there are specific issues, management of the subsidiaries or the Chief Internal Auditor/external auditors shall be invited to BHB AEC meeting for discussion and deliberation. For the purpose of compliance with Paragraph 15.17(f) of the Bursa Securities Listing Requirements, the AEC also have two (2) annual independent sessions with external auditors without the presence of the management to discuss on any issues relating to BHB.

• Internalaudit

The internal audit function for BHB and its subsidiaries (save for Bank Islam and Takaful Malaysia) is carried out by the Internal Audit Division of Bank Islam. Its function is to ensure compliance with policies and procedures and the effectiveness of the internal control systems and highlight significant findings in respect of non-compliance issues. Audit work is carried out on all divisions of BHB to provide an independent and objective report on operational and management activities. The audit plan is reviewed and approved by the AEC and the findings are submitted to the relevant subsidiaries’ Board prior to escalation to the BHB AEC.

For Bank Islam and Takaful Malaysia, the internal audit function is carried out by its own independent department. The Internal Auditors reports directly to the respective Audit Committees.

otHerKeYeLeMeNtsof INterNaLcoNtroL

• Managementcommittee

The day-to-day operation of BHB is managed by the GMD/CEO, who in turn is assisted by the Management Committee (“MANCO”) which ensures the operations of BHB are conducted in accordance with corporate objectives, approved annual budget as well as policies and procedures.

The MANCO comprises the Heads of each Department and they are principally responsible for the performance of their respective department.

• standardoperatingProcedures

Documented Standard Operating Procedures (“SOP”) of all departments of BHB have been approved by MANCO and endorsed by the AEC. The SOP serves as a day-to-day operational guide to ensure compliance with internal controls and the applicable laws and regulations.

• Humanresources

The Human Resources Policies and Procedures are in place encompassing the full spectrum of human resources management such as the recruitment, performance management and training and development.

• BudgetingProcess

The Group’s annual budget is prepared based on the annual business plans from BHB’s operating subsidiaries and subsequently tabled to the Board for approval.

The major subsidiaries’ business plans and budgets are approved at their respective Boards. The subsidiaries’ performance are assessed against the budgets, and explanations are provided for significant variances on a regular basis to the respective Boards and BHB’s Board.



72

• Informationtechnology (“It”)system

The subsidiaries within the Group recognise that IT is key to supporting service efficiency and delivery systems. In this regard, BHB’s Islamic banking and takaful subsidiaries continues 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. IT Risk Framework was developed amongst others to ensure that risks are correctly identified and mitigated accordingly.

• Performancereview

The Board receives and reviews reports from the Management on the financial performance as well as legal and regulatory matters on a regular basis. In addition, a quarterly Financial Dashboard is presented by the respective Chief Executive Officers 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 industry averages to indentify and diagnose significant run-offs and gaps for corrective measures to be taken by management.

conclusion

The Board is of the view that the system of internal control instituted by BHB and its operating subsidiaries are sound and adequate to safeguard shareholders investments, customers’ interest and Group assets.



73

Additional Compliance Information

1. shareBuybacks

BHB did not purchase any of its own shares during the financial year ended 31 December 2011.

4. Non-auditfees

The amount of non-audit fees paid/payable to external auditors and their affiliated companies by BHB for the financial year ended 31 December 2011 is set out in Note 29 on page 145 of this Annual Report.

2. options,Warrantsoranyconvertiblesecurities

BHB has not issued any Options, Warrants or any convertible securities in respect of the financial year ended 31 December 2011.

5. ProfitGuarantee

There was no profit guarantees given by BHB during the financial year under review.

3. americandepositoryreceipt(adr)orGlobaldepositoryreceipt(Gdr)

BHB has not sponsored any ADR or GDR programme in the financial year ended 31 December 2011.

6. ListofProperties

The list of properties is set out on pages 197 to 204 of the Annual Report.

7. MaterialcontractsInvolvingdirectorsandMajorshareholdersThere were no material contracts entered into by BHB and its subsidiary companies involving Directors and Major Shareholders’ interest either still subsisting at the end of the financial year or entered into since the end of the previous financial year except for related party transactions disclosed in Note 34 to the Financial Statements.

8. Impositionofsanctionsand/orPenaltiesThere 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/legislations by the relevant regulatory bodies during the financial year under review.

9. VariationinresultsThere was no variation in results (differing by 10% or more) from any profit estimation forecast/projection unaudited results announced.



74

10. GeneralMandateBHB Group had, at the last 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 to the general public and not to the detriment of the 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 and new additional RRPTs Mandate at the forthcoming 15th AGM of the Company which will be held on 8 May 2012 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 year 2013.

Nature oftransactions

relatedParty/Principalactivities

Interesteddirector and/ormajor shareholders1

actual Valuetransacted from 12May 2011 (beingthedate of the lastaGM) to 30March20122

rM’000

• 4Rental of office premises payable by Bank Islam to LTH.

LembagatabungHaji(“tH”) TH is principally involved in providing pilgrimage management services, saving and depository services, investment holding and rental of buildings.

Interested major shareholder

TH is a major shareholder of BHB with 51.95% shareholding.

Interested Directors

(1) Dato’ Paduka Ismee Ismail, being the Group Managing Director and Chief Executive Officer of TH is also a Director of BHB and Bank Islam. Dato’ Paduka Ismee has no direct/indirect shareholding in TH, BHB and Bank Islam.

(2) Tan Sri Samsudin Osman, Tuan Syed Elias Abd. Rahman Alhabshi and Puan Rozaida Omar are nominee Directors of TH in BHB. They have no direct/indirect shareholding in TH and BHB.

(3) Encik Johan Abdullah, being the Group Managing Director/Chief Executive Officer of BHB is also a Director of Bank Islam. Encik Johan has no direct/indirect shareholding in BHB and Bank Islam.

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

1,122



75

Additional Compliance Information





rM’000

• 4Rental of office premises payable by Bank Islam to Takaful Malaysia.

• 3Leasing of office equipment payable by Takaful Malaysia to Syarikat Al-Ijarah Sdn. Bhd. (“SAISB”).

takafulMalaysiaTakaful Malaysia is principally involved in family and general takaful business.


(1) Dato’ Paduka Ismee Ismail is Chairman/Director of Takaful Malaysia. Dato’ Paduka Ismee is also a Director of Bank Islam and BHB. Dato’ Paduka Ismee has no direct/indirect shareholding in Takaful Malaysia, Bank Islam and BHB.

(2) Encik Johan Abdullah is a Director of Takaful Malaysia. Encik Johan is also Director of Bank Islam, SAISB and Group Managing Director/Chief Executive Officer of BHB. Encik Johan has no direct/indirect shareholding in Takaful Malaysia, Bank Islam, SAISB and BHB.

(3) Puan Rozaida Omar is a Director of Takaful Malaysia and she is also a Director of BHB. Puan Rozaida has no direct/indirect shareholding in Takaful Malaysia and BHB.

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

(5) Encik Salih Amaran Jamiaan is a Director of BHB. He is also the Chairman/Director of SAISB. Encik Salih has no direct/indirect shareholding in BHB and SAISB.

2,403

361



76





rM’000

• 4Rental of office premises payable by Bank Islam to SAISB.

Bank IslamBank Islam is principally involved in the provision of Islamic banking and related activities based on the principles of Shariah.


(1) Dato’ Paduka Ismee Ismail, Puan Zaiton Mohd Hassan and Encik Zahari @ Mohd Zin Idris are Directors of BHB and they are also Directors of Bank Islam. They have no direct/indirect shareholding in Bank Islam and BHB.

(2) Encik Johan Abdullah, being the Group Managing Director/Chief Executive Officer of BHB is also a Director of Bank Islam and SAISB. Encik Johan has no direct/indirect shareholding in BHB, Bank Islam and SAISB.

(3) Encik Salih Amaran Jamiaan is a Director of BHB. He is also Chairman/Director of SAISB. Encik Salih has no direct/indirect shareholding in SAISB and BHB.

147

1 Details of the direct and indirect shareholdings of the related parties in BHB above are set out in Section 6 of the Circular to Shareholders dated 16 April 2012.

2 The last practicable date before printing of Circular to shareholders is 30 March 2012.3 The leasing of office equipment payable to SAISB has expired on 31 March 2012.4 The rental sum of the properties was arrived at or estimated based on the on-going or expected market rate at the time

tenancy agreement was or to be executed.4 Details of the rental of office premises are set out in pages 9 to 11 of the Circular to Shareholders dated 16 April 2012.



77

FinancialStatements

2011

Directors’ Report 80 - 83Statements of Financial Position 84 - 85Income Statements 86Statements of Comprehensive Income 87Statement of Changes in Equity 88 - 90Statements of Cash Flows 91 - 93Notes to the Financial Statements 94 - 193Statement by Directors 194Statutory Declaration 194Independent Auditors’ Report 195 - 196



Annual Report 2011

Directors’Reportfor the financial year ended 31 December 2011

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 2011.

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 13 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 203,252 227,831Non-controlling interests 201,824 –

405,076 227,831

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

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

dividends

The amount of dividends paid by the Company since 31 December 2010 are as follows: rM’000In respect of the 18 months financial period ended 31 December 2010:

Final dividend of 1.6% per ordinary share less tax at 25%, paid on 15 June 2011 12,802In respect of the financial year ended 31 December 2011:

Interim dividend of 3.5% per ordinary share of which 2.88% is taxexempt and 0.62% is single tier dividend, paid on 6 October 2011 37,337

50,139




dividends (continued)

The Directors recommend a final single tier ordinary dividend of 7.25% per ordinary share totalling RM77,342,267 for the financial year ended 31 December 2011.

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.

At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad financing, or amount of impairment provisions for impaired financing in the financial statements of the Group and of the Company, 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.

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 render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company to be misleading or inappropriate.

continGent and other liabilities

The contingent liabilities of the Group and the Company are disclosed in Note 41 to the financial statements. At the date of this report, there does not exist:

(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 the liabilities of any other person, or

(b) any contingent liabilities 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 banking 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.



Annual Report 2011

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.

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 the Directors, 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 44 to the financial statements.

subsequent events after the financial year

There were no significant events subsequent to the financial year ended 31 December 2011.

directors

Directors who served since the date of the last report are:Tan Sri Samsudin bin OsmanTan Sri Ismail bin AdamDato’ Paduka Ismee bin IsmailJohan bin AbdullahZahari @ Mohd Zin bin IdrisZaiton binti Mohd HassanSalih Amaran bin JamiaanSyed Elias bin Abd Rahman AlhabshiRozaida binti Omar

None of the Directors holding office at 31 December 2011 had any interest in the ordinary shares of the Company and of its related corporations during the financial year.

Directors’Report (continued)for the financial year ended 31 December 2011




directors’ benefits

Since the end of the previous financial period, 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) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

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.

issue of shares and debentures

There were no changes in the issued and paid-up capital of the Company 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.

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:

tan sri samsudin bin osman

Johan bin abdullah

Kuala Lumpur,Date: 30 March 2012



Annual Report 2011

Group restated restated company note 31.12.2011 31.12.2010 30.6.2009 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000 rM’000

assetsCash and short–term funds 3 3,460,092 2,762,195 8,482,444 89,898 63,815Deposits and placements with financial institutions 4 1,075,330 412,798 90,682 – –Financial assets held–for–trading 5 1,228,952 2,279,891 294,868 – –Derivative financial assets 6 15,877 80,108 26,441 – –Financial assets available–for–sale 7 11,281,711 12,936,655 8,635,312 12,296 12,229Financial assets held–to–maturity 8 331,486 215,944 162,763 – –Financing, advances and others 9 14,140,970 11,860,631 9,661,864 – –Other assets 10 181,624 200,727 190,681 432 252Statutory deposits with Bank Negara Malaysia 11 912,000 10,000 139,729 – –Current tax assets 7,718 30,316 13,694 1,826 1,682Assets classified as held for sale – – 1,471 – –Deferred tax assets 12 39,429 59,023 71,646 10 1,659Investments in subsidiaries 13 – – – 1,711,113 1,557,642Investment in associates 14 21,181 1 149 1 1Property, plant and equipment 15 244,390 219,575 185,514 944 433General Takaful and Family Takaful assets 16 5,310,032 4,786,882 4,190,220 – –

total assets 38,250,792 35,854,746 32,147,478 1,816,520 1,637,713

The notes on pages 94 to 192 are an integral part of these financial statements.

Statements of Financial Positionas at 31 December 2011




Group restated restated company note 31.12.2011 31.12.2010 30.6.2009 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000 rM’000

liabilities and equityDeposits from customers 17 28,208,203 26,798,107 24,871,451 – –Deposits and placements of banks and other financial institutions 18 384,628 378,129 8,078 – –Derivative financial liabilities 6 23,299 66,708 28,476 – –Bills and acceptances payable 259,153 163,191 283,212 – –Other liabilities 19 598,117 503,062 365,959 1,731 684Zakat and taxation 28,890 37,975 33,188 – –General Takaful and Family Takaful liabilities 16 1,210,991 1,078,867 1,012,727 – –General Takaful and Family Takaful participants’ funds 16 4,099,041 3,708,015 3,177,493 – –

total liabilities 34,812,322 32,734,054 29,780,584 1,731 684

equityShare capital 21 1,066,790 1,066,790 1,066,790 1,066,790 1,066,790Reserves 22 757,300 587,945 205,743 747,999 570,239

Equity attributable to owners of the Company 1,824,090 1,654,735 1,272,533 1,814,789 1,637,029Non–controlling interests 1,614,380 1,465,957 1,094,361 – –

total equity 3,438,470 3,120,692 2,366,894 1,814,789 1,637,029

total liabilities and equity 38,250,792 35,854,746 32,147,478 1,816,520 1,637,713




Annual Report 2011

Group company 12 months 18 months 12 months 18 months ended ended ended ended note 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000

Income derived from investment of depositors’ funds 23 1,393,918 1,835,741 – –Income derived from investment of shareholders’ funds 24 642,132 760,572 104,142 47,215Allowance for impairment on financing and advances 25 (44,023) (207,702) – –(Allowance)/Reversal for impairment on investments 26 (15,406) (19,875) 156,027 (148)Provision for contingent liability (15,231) – – –Profit equalisation reserve 20 – 46,369 – –Direct expenses (28,425) (26,885) – –

Total distributable income 1,932,695 2,388,220 260,169 47,067Income attributable to depositors 27 (473,133) (617,175) – –

Total net income 1,459,832 1,771,045 260,169 47,067Personnel expenses 28 (455,568) (572,396) (5,073) (7,498)Other overhead expenses 29 (435,281) (610,494) (2,172) (2,350)

568,983 588,155 252,924 37,219Share of results of associate company (1,383) – – –

Profit before zakat and tax 567,600 588,155 252,924 37,219Zakat (9,196) (15,066) – –Tax expense 31 (153,328) (122,624) (25,093) (7,031)

Profit for the year/period 405,076 450,465 227,831 30,188

attributable to:Owners of the Company 203,252 230,837 227,831 30,188Non–controlling interests 201,824 219,628 – –


Earnings per share (sen) 32 19.05 21.64

Dividend per ordinary share – net (sen) 33 4.70 2.02


Income Statements for the financial year ended 31 December 2011




Statements of Comprehensive Income for the financial year ended 31 December 2011

Group company 12 months 18 months 12 months 18 months ended ended ended ended note 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000


Other comprehensive incomeCurrency translation differences in respect

of foreign operations (8,491) 36,257 – –Net gain on revaluation of financial assets

available–for–sale 39,905 93,011 68 42

Other comprehensive income for the year/period, net of tax 31,414 129,268 68 42

total comprehensive income for the year/period 436,490 579,733 227,899 30,230

attributable to:Owners of the Company 219,861 297,481 227,899 30,230Non–controlling interests 216,629 282,252 – –

total comprehensive income for the year/period 436,490 579,733 227,899 30,230




Annual Report 2011

Statement of Changes in Equity for the financial year ended 31 December 2011

<---------------Attributable to owners of the Company---------------> <------------Non-distributable------------> non- share share other accumulated controlling total capital premium reserves losses total interests equityGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 1 July 2009

– as previously stated 1,066,790 602,978 1,057,886 (1,455,121) 1,272,533 1,094,361 2,366,894 – effected of adopting FRS139 – – (510) (26,624) (27,134) (27,826) (54,960)

at 1 July 2009, restated 1,066,790 602,978 1,057,376 (1,481,745) 1,245,399 1,066,535 2,311,934

Profit for the period – – – 230,837 230,837 219,628 450,465Other comprehensive income

Currency translation differences in respect of foreign operations – – 19,187 – 19,187 17,070 36,257Net gain on revaluation of financial assets available- for-sale – – 47,457 – 47,457 45,554 93,011

Total comprehensive income for the period – – 66,644 230,837 297,481 282,252 579,733Transfer to statutory reserve – – 105,003 28,454 133,457 (133,457) –Convertible Redeemable Non–Cumulative Preference Shares (CRNCPS) issued and converted to ordinary shares – – – – – 264,600 264,600Dividends paid to shareholders – – – (21,602) (21,602) – (21,602)Dividends paid to non–controlling interests – – – – – (14,152) (14,152)Divestment of shares held by non–controlling interests – – – – – (347) (347)Minority interests’ subscription of shares of a subsidiary – – – – – 526 526

at 31 december 2010 1,066,790 602,978 1,229,023 (1,244,056) 1,654,735 1,465,957 3,120,692

Note 21 Note 22




<---------------Attributable to owners of the Company---------------> <------------Non-distributable------------> non- share share other accumulated controlling total capital premium reserves losses total interests equityGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 1 January 2011 1,066,790 602,978 1,229,023 (1,244,056) 1,654,735 1,465,957 3,120,692Profit for the year – – – 203,252 203,252 201,824 405,076Other comprehensive income Currency translation differences in respect of foreign operations – – (4,562) – (4,562) (3,929) (8,491) Net gain on revaluation of financial assets available-for-sale – – 21,171 – 21,171 18,734 39,905Total comprehensive income for the year – – 16,609 203,252 219,861 216,629 436,490Transfer to statutory reserve – – 91,586 (91,586) – – –Dividends paid to shareholders – – – (50,139) (50,139) – (50,139)Dividends paid to non–controlling interests – – – – – (67,673) (67,673)Acquisition of non–controlling interests – – – (367) (367) (533) (900)

at 31 december 2011 1,066,790 602,978 1,337,218 (1,182,896) 1,824,090 1,614,380 3,438,470

Note 21 Note 22




Annual Report 2011

<-------------------Non-distributable----------------> (accumulated share share fair value losses)/ total capital premium reserves retained profit equitycompany rM’000 rM’000 rM’000 rM’000 rM’000

at 1 July 2009 1,066,790 603,630 157 (42,176) 1,628,401Profit for the period – – – 30,188 30,188Net gain on revaluation of financial assets available-for-sale – – 42 – 42

Total comprehensive income for the period – – 42 30,188 30,230Dividends to shareholders – – – (21,602) (21,602)

at 31 december 2010/1 January 2011 1,066,790 603,630 199 (33,590) 1,637,029Profit for the year – – – 227,831 227,831Net gain on revaluation of financial assets available-for-sale – – 68 – 68

Total comprehensive income for the year – – 68 227,831 227,899Dividends to shareholders – – – (50,139) (50,139)

at 31 december 2011 1,066,790 603,630 267 144,102 1,814,789

Note 21


Statement of Changes in Equity (continued)for the financial year ended 31 December 2011




Statements of Cash Flows for the financial year ended 31 December 2011

Group company 12 months 18 months 12 months 18 months ended ended ended ended 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000

cash flows from operating activitiesProfit before zakat and tax 567,600 588,155 252,924 37,219Adjustments for:

Depreciation of property, plant and equipment 55,531 72,997 196 369Impairment losses on financial assets available–for–sale 18,158 19,727 – –Reversal of impairment losses on financial assets held–to–maturity (2,752) – – –Impairment on other assets – 148 – 148Reversal of impairment on investment in subsidiaries – – (156,027) –Reversal of allowance for doubtful debts (240) (2,624) – –Allowance for impairment on financing and others 44,023 207,702 – –Provision for contingent liability 15,231 – – –Dividend from securities (13,797) (10,885) (100,869) (42,884)(Gain)/loss on disposal of property, plant and equipment (2,429) 1,423 – –Net (gain)/loss on sale of financial assets held–for–trading (6,774) 1,132 – –Net gain on sale of financial assets available–for–sale (54,811) (22,124) – –Unrealised gain on financial assets held–for–trading (20,873) (35,236) – –Share of losses in associated companies 1,383 – – –Net derivative losses 8,618 7,162 – –Property, plant and equipment written off 709 4,116 – –Gain on disposal of leased assets – (12) – –Gain on redemption on financial assets–held to maturity (1,452) – – –

Operating profit/(loss) before working capital changes 608,125 831,681 (3,776) (5,148)



Annual Report 2011

Statements of Cash Flows (continued)for the financial year ended 31 December 2011


Operating profit/(loss) before working capital changes 608,125 831,681 (3,776) (5,148)Changes in working capital:

Deposits and placements of banks and other financial institutions 6,499 370,051 – –

Financing of customers (2,339,593) (2,198,767) (112) –Statutory deposits with Bank Negara Malaysia (902,000) 129,729 – –Other receivables 17,820 (913,448) (65) 280Deposits from customers 1,410,096 1,926,656 – –Other payables 39,587 657,014 (23,832) (7,935)Bills payable 95,962 (120,021) – –

Cash (used in)/generated from operations (1,063,504) 682,895 (27,785) (12,803)Zakat paid (13,153) (12,649) – –Tax paid (120,080) (95,620) (51) (143)Tax refund 3,816 4,620 996 23

net cash (used in)/generated from operating activities (1,192,921) 579,246 (26,840) (12,923)

cash flows from investing activitiesNet sales/(purchases) from disposal of securities 2,698,749 (6,159,622) – –Purchase of property, plant and equipment (79,724) (110,702) (707) (34)Proceeds from disposal of property, plant and equipment 2,621 2,805 – –Dividend from securities 13,797 10,885 100,869 42,884Redemption of investment in subsidiary – – 2,900 12,989Increase investment in subsidiary – – – (275,400)Redemption of subordinated Mudharabah financing – – – 100,000Acquisition of investment in associate company (22,563) – – –

net cash generated from/(used in) investing activities 2,612,880 (6,256,634) 103,062 (119,561)





cash flows from financing activitiesDividends paid (50,139) (21,602) (50,139) (21,602)Issuance of shares of a subsidiary to Non–controlling shareholders – 264,600 – –Advances to subsidiaries – – – (6,800)Acquisition of non–controlling interests (900) – – –

net cash (used in)/generated from financing activities (51,039) 242,998 (50,139) (28,402)

net increase/(decrease) in cash and cash equivalents 1,368,920 (5,434,390) 26,083 (160,886)

cash and cash equivalents at the beginning of year/period 3,174,993 8,573,126 63,815 224,701

foreign exchange differences (8,491) 36,257 – –

cash and cash equivalents at the end of year/period 4,535,422 3,174,993 89,898 63,815

cash and cash equivalents comprise:Cash and short term funds 3,460,092 2,762,195 89,898 63,815Deposits and placements with financial institutions 1,075,330 412,798 – –

4,535,422 3,174,993 89,898 63,815




Annual Report 2011

Notes to the Financial Statements

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 are as follows:

registered office and principal place of business31st Floor, Menara Bank Islam22 Jalan Perak50450 Kuala Lumpur

The consolidated financial statements for the financial year ended 31 December 2011 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.

The ultimate holding corporation of the Company is Lembaga Tabung Haji, 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 30 March 2012.

1. basis of PreParation

(a) statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standards (FRS), generally accepted accounting principles and the Companies Act, 1965 in Malaysia, the provisions of the Companies Act, 1965 and Shariah requirements.

During the current reporting period, the Group and the Company adopted the following significant standards and amendments to standards:

(i) Amendments to FRS 7, Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments

This amendment enhances disclosures on fair value and liquidity risk. Financial instruments measured at fair value are disclosed on a three-level fair value hierarchy. Classification by the level is based on the observability and significance of the inputs used in measuring fair value. Additional disclosure includes a reconciliation of the change in the fair value of level three instruments. These are disclosed in Note 37 of the financial statements.




1. basis of PreParation (continued)

(a) statement of compliance (continued)

(ii) FRS 3, Business Combinations (revised) and its subsequent amendments

The standard now requires all acquisition related transaction costs to be expensed as incurred. In addition, contingent considerations are now measured at fair value, with subsequent changes recognised in income statement.

(iii) FRS 127, Consolidated and Separate Financial Statements (revised)

The standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no loss of control. Such transactions will have no impact on goodwill, nor will it give rise to a gain or loss. Where there is loss of control, any remaining interest in the entity is re-measured at fair value, and a gain or loss is recognised in income statement.

(iv) Amendment to FRS 117, Leases

The adoption of Amendment to FRS 117 has resulted in a change in the accounting policy relating to the classification of leases of land.

Prior to the adoption of Amendment to FRS 117, the Group had previously classified a leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term as an operating lease. The payment made on entering into or acquiring a leasehold land was accounted for as prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided.

On adoption of Amendment to FRS 117, leases of leasehold land which in substance is a finance lease has been reclassified to property, plant and equipment. The effects of adopting Amendment to FRS 117 have been accounted for retrospectively in accordance with transitional provisions of the standard, and comparatives have been restated as disclosed in Note 45.

(v) FRS 4, Insurance Contracts

Under FRS 4, the Group is required to identify takaful contracts and investment contracts. Takaful contracts are those contracts when the Group has accepted significant takaful risk (by pooling of risk in a Risk Fund) from another party (participants) and agreeing to compensate the participants if a specified uncertain event (the insured event) adversely affects the participants.

Any takaful contracts which do not contain significant insurance risk will be treated as investment contracts. In addition, takaful contract liabilities are required to be presented at gross of retakaful assets.



Annual Report 2011


(a) statement of compliance (continued)(v) FRS 4, Insurance Contracts (continued)

Certain comparative figures have been restated as a result of this change and changes are as disclosed in Note 45.

The Group and the Company has not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Company:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011• IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments• Amendments to IC Interpretation 14, Prepayment of a Minimum Funding Requirement

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012• FRS 124, Related Party Disclosures (revised)• Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Severe Hyperinflation and Removal of

Fixed Dates for First-time Adopters• Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets• Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012• Amendments to FRS 101, Presentation of Financial Statements – Presentation of Items of Other Comprehensive

Income

frss, interpretations and amendments effective for annual periods beginning on or after 1 January 2013• FRS 10, Consolidated Financial Statements• FRS 11, Joint Arrangements• FRS 12, Disclosure of Interests in Other Entities• FRS 13, Fair Value Measurement• FRS 119, Employee Benefits (2011)• FRS 127, Separate Financial Statements (2011)• FRS 128, Investment in Associates and Joint Ventures (2011)• IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine• Amendments to FRS 7, Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities• Amendments to FRS 7, Financial Instruments: Disclosures – Mandatory Date of FRS 9 and Transition Disclosures

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014• Amendments to FRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

Notes to the Financial Statements (continued)





(a) statement of compliance (continued)FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015• FRS 9, Financial Instruments (2009)

FRS 9, Financial Instruments (2010)

The Group and the Company’s financial statements for annual period beginning on 1 January 2012 will be prepared in accordance with the Malaysian Financial Reporting Standards (MFRS) issued by the MASB and International Financial Reporting Standards (IFRS). As a result, the Group and the Company will not be adopting the above FRSs, interpretations and amendments.

(b) basis of measurementThe financial statements have been prepared on the historical cost basis except for the following assets as explained in their respective accounting policy notes:

• Financial assets held-for-trading• Financial assets available-for-sale• Derivative financial instruments

(c) functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All financial information presented in RM has been rounded to the nearest thousand (RM’000), unless otherwise stated.

(d) use of estimates and judgements

The preparation of financial statements 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 year in which the estimate is revised and in any future years affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following note:

• Note 2(c) – Financial instruments: Determination of fair value• Note 2(e) – Impairment• Note 2(l) – Deferred tax assets



Annual Report 2011

2. siGnificant accountinG Policies

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

(a) basis of consolidation(i) subsidiaries

Subsidiary companies are entities that the Group has power to govern the financial and operating policies of, in order to obtain benefits from their activities. Potential voting rights are considered when assessing control. The financial results of subsidiary companies are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases.

Prior to the amendments to FRS 3, the purchase method of accounting is used to account for the acquisition of subsidiary companies. The cost of acquisition is measured as the fair value of the assets given, liabilities incurred or assumed, and the equity instruments issued at the date of exchange plus costs directly attributable to the business combination. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. Any difference between the cost of the business combination and the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill.

With the adoption of the amendments to FRS 3 (Note 1(a) (ii)) and revised FRS 127 (Note 1(a) (iii)) which applies prospectively, the consideration transferred for an acquisition is measured as the acquisition date fair value of the assets transferred, the liabilities incurred and the equity interest issued. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.

Investments in subsidiary companies are stated in the Company’s statement of financial position at cost less impairment loss, if any. Where there is indication of impairment, the carrying amount of the investment is assessed. A write down is made if the carrying amount exceeds its recoverable amount.

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

Associates are accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include the Group’s share of the profit or loss of the equity accounted 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.





2. siGnificant accountinG Policies (continued)

(a) basis of consolidation (continued)(ii) associates (continued)

When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest (including any long-term investments) is reduced to nil 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 investee.

Investments in associates are stated in the Company’s statement of financial position at cost less any impairment losses.

(iii) changes in Group compositionThe Group treats all changes in group composition as equity transactions between the Group and its non-controlling shareholders. 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.

(iv) non-controlling interestsNon-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 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.

Since the beginning of the reporting period, the Group has applied FRS 127, Consolidated and Separate Financial Statements (revised) where 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. This change in accounting policy is applied prospectively in accordance with the transitional provisions of the standard and does not have impact on earnings per share.

In the previous years, where losses applicable to the non-controlling interests exceed the their interests in the equity of a subsidiary, the excess, and any further losses applicable to the non-controlling interests, were charged against the Group’s interest except to the extent that the non-controlling interests had a binding obligation to, and was able to, make additional investment to cover the losses. If the subsidiary subsequently reported profits, the Group’s interest was allocated with all such profits until the non-controlling interests’ share of losses previously absorbed by the Group had been recovered.



Annual Report 2011


(a) basis of consolidation (continued)(v) transactions eliminated on consolidation

Intra-group balances, 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 equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) foreign currency(i) foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting year 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.

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 which are recognised in other comprehensive income.

(ii) operations denominated in functional currencies other than ringgit MalaysiaThe assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting year. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss as part of the profit or loss on disposal.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely 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 FCTR within equity.






(c) financial instrumentsFinancial instruments are classified and measured using accounting policies as mentioned below.

(i) recognition and derecognitionPurchases and sales of financial instruments are recognised on the date that the Group commits to purchase or sell the instruments. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. A financial liability is derecognised from the balance sheet when the obligation specified in the contract is expired.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) initial measurementA financial instrument is initially recognised at 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 acquisition or issue of the financial assets.

(iii) subsequent measurementThe Group and the Company categorise financial instruments as follows:

(i) financing and receivablesFinancing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in active market.

These financial assets are subsequently measured at amortised cost using effective profit rate method, less any impairment loss.



Annual Report 2011


(c) financial instruments (continued)(iii) subsequent measurement (continued)

(ii) financial assets at fair value through profit or lossFinancial assets at fair value through profit and loss are either:

held-for-tradingFinancial assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term or it is part of a portfolio that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

designated under fair value optionFinancial assets meet at least one of the following criteria upon designation:• it eliminates or significantly reduces measurement or recognition inconsistencies that would otherwise

arise from measuring financial assets, or recognising gains or losses on them, using different bases; or• the financial asset contains an embedded derivative that would otherwise need to be separately

recordedThese financial assets are subsequently measured at their fair values and any gain or loss arising from a change in the fair value will be recognised in the income statement.

(iii) financial assets held-to-maturityFinancial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. These financial assets are subsequently measured at amortised cost using effective profit rate method, less any impairment loss.

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.






(c) financial instruments (continued)(iii) subsequent measurement (continued)

(iv) financial assets available-for-saleFinancial assets available-for-sale are financial assets that are either designated in this category or not classified in any other category and are measured at fair value.

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 stated at cost less any impairment loss.

Any gain or loss arising from a change in the fair value is recognised in other comprehensive income until the securities are sold, disposed off or impaired, at which time the cumulative gains or losses previously recognised in equity will be transferred to the statement of comprehensive income. Profit or loss from sale of the available-for-sale securities is recognised in the statement of comprehensive income.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment. See Note 2(e) Impairment.

(v) derivative financial instrumentsThe Group holds derivative financial instruments to hedge its foreign currency and profit rate exposures. Foreign exchange trading positions, including spot and forward contracts, are revalued at prevailing market rates at balance sheet date and the resultant gains and losses for the financial year are recognised in the income statement.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(vi) financial liabilityFinancial liabilities are initially recognised at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost using the effective profit rate method, except for derivatives that are liabilities, which shall be measured at fair value.

A financial liability is removed or derecognised from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.



Annual Report 2011


(c) financial instruments (continued)(iv) financial guarantee contracts

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 instruments.

Financial guarantee is initially recognised in the financial statements at fair value on the date the guarantee was given. Subsequent to initial recognition, each guarantee is measured at the higher of the initial amount less amortisation calculated to recognise the initial measurement in the income statement over the year of the financial guarantee and the best estimate of the amount required to settle 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 a provision.

(v) determination of fair valueThe fair values of financial instruments traded in active markets (such as over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. For unquoted financial instruments, fair value is determined using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models.

(vi) reclassification of financial assetsA non-derivative financial asset held-for-trading may be reclassified if the financial asset is no longer held for the purpose of selling in the near term. In addition, a financial asset that meets the definition of financing and receivables may be reclassified out of held-for-trading or available-for-sale categories if the Group has the intention and ability to hold the financial asset for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. The fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective profit rates for financial assets reclassified to financing and receivables and held-to maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective profit rate prospectively.






(d) Property, plant and equipment(i) recognition and measurement

All items of property and equipment are stated at cost less accumulated depreciation and impairment losses, if any.

Property and equipment retired from active use and held for disposal are stated at the carrying amount at the date when the asset is retired from active use, less impairment losses, if any.

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. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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 a willing buyer and a willing seller 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 plant and equipment is based on the quoted market prices for similar items.

When significant parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other operating expenses” respectively in the profit or loss.

(ii) subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of those parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.



Annual Report 2011


(d) Property, plant and equipment (continued)(iii) depreciation

Depreciation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. 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 99 years• Building improvement and renovations 6 years• Furniture, fixtures and fittings 2 – 6 years• Office equipment 2 – 6 years• Motor vehicles 4 years• Computer equipment and software 2 – 6 years

Depreciation methods, useful lives and residual values are reassessed at the balance sheet date.

(e) impairmentfinancial assetsThe Group assesses at each balance sheet date whether there is objective evidence that financing and receivables, financial assets held-to-maturity or financial assets available-for-sale are impaired. 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 balance sheet 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. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

i) significant financial difficulty of the issuer or obligor;ii) a breach of contract, such as default or delinquency in profit or principal payments;iii) it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; oriv) consecutive downgrade of two notches for external ratings

In respect of financing, the Group 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.






(e) impairment (continued)financial assets (continued)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. If 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 income statement.

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.

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 recoveries of amounts previously written off are credited to the income statement.

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 income statement.

In the case of available-for-sale equity securities, a significant or prolonged decline in their fair value of the security below 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 income statement. 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 income statement. Reversals of impairment of equity shares are not recognised in income statement, increases in the fair value of equity shares after impairment are recognised directly in equity.



Annual Report 2011


(e) impairment (continued)other assetsThe carrying amounts of other assets are reviewed at the end of each reporting year 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 recoverable amount. Impairment losses are recognised in the income statement.

Impairment losses recognised in prior years are assessed at each reporting date 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. 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 the income statement in the year in which the reversals are recognised.

(f) cash and cash equivalentsCash and cash equivalents include cash and short-term funds, and deposits and placements with banks and other financial institutions.

(g) family takaful fundIncluded in family takaful fund is fund arising from:

i) Family takaful;ii) Group family takaful; andiii) Family retakaful funds.

The family takaful fund is maintained in accordance with the requirements of the Takaful (Amendment) Act, 1984 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 the Group.

The surplus transfer from the family takaful fund to the income statements is based on the predetermined profit sharing ratio of the underwriting surplus and return on investments.






(g) family takaful fund (continued)Contribution incomeContribution 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. For Individual family takaful contribution, recognition is up to the extent of one due amount.

At the end of each financial year, all due contributions are accounted for to the extent that they can be reliably measured.

Actuarial reservesActuarial reserves included in participants’ funds comprise the unearned contribution reserves and the reserve computed under the net contribution valuation as explained below:

(i) Unearned contribution reserveThe Unearned Contribution Reserve (“UCR”) of group family fund (except for Mortgage Reducing Term Takaful (“MRTT”) as detailed below) and family retakaful fund represents the portion of the net contributions of takaful certificates written that relate to the unexpired years of the certificates at the end of the financial year.

In determining the UCR at balance sheet date, the method that most accurately reflects the actual unearned contributions is used, as follows:

(i) 1/365th method for all group family takaful business within Malaysia.(ii) A pro-rata basis based on a time apportionment method for family retakaful business.

(ii) Net contribution valuationThe actuarial liabilities for MRTT products managed under group family fund and Ordinary Participants’ Special Account (“PSA”) are calculated using the net contribution method of valuation (“NCV”). The liability is ascertained by deducting the present value of future net contribution from the present value of the future amount-at-risk. As with all projections, there are elements of uncertainty and the projected liability may be different from actual.

These uncertainties arise from changes in underlying risks, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.



Annual Report 2011


(g) family takaful fund (continued)Provision for outstanding claimsClaims and provisions for claims arising on family and group family takaful certificates, including settlement costs, are accounted for using the case basis method and for this purpose, the benefits payable under a family takaful certificate are recognised as follows:

(i) maturity or other policy benefit payments due on specified dates are accounted for as claims payable on the due dates.

(ii) death, surrender and other benefits without due dates are treated as claims payable on the date of receipts of intimation of death of the participant or occurrence of contingency covered.

(iii) for group health business, provision is made for the cost of claims, together with related expenses, incurred but not reported (“IBNR”) at balance sheet date, using a mathematical method of estimation by a qualified internal actuary where historical claims experience are used to project future claims. 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.

(h) General takaful fundThe general takaful fund is maintained in accordance with the Takaful Act, 1984 (amendment). Included in general takaful fund is fund arising from:

i) General takaful; andii) 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 management expenses.

Contribution incomeContributions are recognised in a financial year in respect of risks assumed during that particular financial year based on the inception date. Inward treaty retakaful contributions are recognised on the basis of yearly advices received from ceding takaful operators.






(h) General takaful fund (continued)Unearned contributions reserveThe Unearned Contribution Reserves (“UCR”) represent the portion of the net contributions of takaful certificates written that relate to the unexpired years of the certificates at the end of the financial year.

In determining the UCR at balance sheet date, the method that most accurately reflects the actual unearned contributions is used, as follows:

(i) 1/365th method for all General Takaful business within Malaysia.(ii) 1/8th method for all classes of General Treaty Inward Retakaful business.

Provision for outstanding claimsA 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 balance sheet date. Any difference between the current estimated cost and subsequent settlement is dealt with in the takaful revenue accounts for the Group and Company in the year in which the settlement takes place.

Provision is also made for the cost of claims, together with related expenses, incurred but not reported (“IBNR”) at balance sheet date, using a mathematical method of estimation by a qualified external actuary where historical claims experience are used to project future claims. 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, claims settlement pattern as well as uncertainties in the projection model and underlying assumptions.

(i) Profit equalisation reserve (“Per”)PER refers to the amount appropriated out of or written back to the total gross income to reduce the fluctuations in the profit rates payable to the depositors. It is in conformity with ‘The Framework of the Rate of Return’ or BNM/GP2-i issued by Bank Negara Malaysia. PER is reflected under other liabilities of the Group.

(j) share capitalOrdinary shares are classified as equity in the balance sheet. Cost directly attributable to the issuance of new equity shares are taken to equity as a deduction from the proceeds.



Annual Report 2011


(k) income recognitionfinancing incomeFinancing income is recognised in the income statement 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 year 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.

Once a financial assets 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.

fee and other income recognitionFinancing 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 Company’s rights to receive payment is established.

(l) income taxIncome tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet 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, and 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 apply to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.

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 date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.






(m) ZakatThis represents business zakat. It is an obligatory amount payable by the Group to comply with the principles of Shariah.

(n) employee benefitsshort term employee benefitsShort-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 provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group 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.

The Group’s contributions to statutory pension funds are charged to the income statements in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(o) non-current assets held for saleNon-current assets (or disposal groups 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 first is 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 re-measurement are recognised in the income statements. Gains are not recognised in excess of any cumulative impairment loss.

(p) earnings per ordinary shareThe 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 year, adjusted for own shares held.

(q) operating segmentsAn operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.



Annual Report 2011

3. cash and short terM funds

Group company 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000

Cash and balances with banks and other financial institutions 872,244 855,230 89,898 63,815Money at call and interbank placements with remaining maturity not exceeding one month 2,587,848 1,906,965 – –

3,460,092 2,762,195 89,898 63,815

4. dePosits and PlaceMents with financial institutions

Group 31.12.2011 31.12.2010 rM’000 rM’000

Licensed banks 1,075,330 410,000Other financial institutions – 2,798

1,075,330 412,798





5. financial assets held-for-tradinG

Group 31.12.2011 31.12.2010 rM’000 rM’000

at fair value:quoted securities in Malaysia Shares – 444

unquoted securities in Malaysia Malaysian Government Investment Issues 71,804 50,573 Islamic Commercial Papers 9,852 – Bank Negara Negotiable Notes 1,116,264 2,202,117 Islamic Debt Securities 31,032 26,757

1,228,952 2,279,447

1,228,952 2,279,891

6. derivative financial assets/liabilities

The following tables summarise the contractual or underlying principal amounts of derivatives financial instruments held at fair value through income statements 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 financial assets and liabilities respectively.

Principal fair valueGroup amount assets liabilities31.12.2011 rM’000 rM’000 rM’000

Forward contracts 1,684,899 5,589 (4,854)Cross currency profit rate swaps 171,740 7,549 (7,509)Profit rate swaps 500,000 – (8,197)Structured deposits 137,005 2,739 (2,739)

2,493,644 15,877 (23,299)



Annual Report 2011

6. derivative financial assets/liabilities (continued)

Principal fair valueGroup amount assets liabilities31.12.2010 rM’000 rM’000 rM’000

Forward contracts 5,208,060 42,284 (26,788)Cross currency profit rate swaps 171,740 10,055 (9,964)Profit rate swaps 500,000 – (2,187)Structured deposits 462,995 27,769 (27,769)

6,342,795 80,108 (66,708)

7. financial assets available-for-sale


at fair value:quoted securities in Malaysia Unit trust 15,525 15,458 12,296 12,229 Shares 36,572 39,017 – –

52,097 54,475 12,296 12,229

at fair value:unquoted securities in Malaysia

Malaysian Government Investment Issues 2,583,230 4,444,171 – –Negotiable Islamic Debt Certificates 1,170,238 2,277,443 – –Islamic Commercial Papers 208,566 872,867 – –Islamic Debt Securities 7,007,171 4,737,271 – –Accepted Bills 243,500 384,155 – –Promissory notes 5,108 5,108 – –Bank Negara Negotiable Notes – 149,364 – –

11,217,813 12,870,379 – –





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


at fair value:unquoted securities outside Malaysia

Islamic Development Bank Unit Trust 1,923 1,923 – –

at cost:unquoted securities in Malaysia

Unquoted shares 22,448 22,061 – -Less: Impairment losses (14,258) (13,871) – -

8,190 8,190 – -

at cost:unquoted securities outside Malaysia

Unquoted shares 1,688 1,688 – -

11,281,711 12,936,655 12,296 12,229

8. financial assets held-to-Maturity

Group 31.12.2011 31.12.2010 rM’000 rM’000

unquoted securities in MalaysiaIslamic Debt Securities 288,432 177,361Less: Impairment losses (20,315) (23,067)

268,117 154,294quoted securities outside Malaysia

Bond 63,369 61,650

331,486 215,944



Annual Report 2011

8. financial assets held-to-Maturity (continued)

During the year, there was reclassification of financial assets available-for-sale to financial assets held-to-maturity as follows:

Group rM’000

Islamic Debt Securities* 111,088

* The reclassification of the financial assets was done at fair value.

9. financinG, advances and others

Group 31.12.2011 31.12.2010 rM’000 rM’000

i) by type

at amortised costCash line 406,590 254,278Term financing

House financing 4,393,020 3,911,363Syndicated financing 164,649 82,237Leasing receivables 280,403 303,884Bridging financing 160,779 238,595Personal financing 3,786,432 3,001,049Other term financing 3,358,527 2,760,392

Staff financing 157,510 148,425Credit cards 451,538 450,542Trade bills discounted 1,309,598 1,060,217Trust receipts 48,897 59,854Pawn broking 47,352 13,897

Gross financing, advances and others 14,565,295 12,284,733





9. financinG, advances and others (continued)

Group 31.12.2011 31.12.2010 rM’000 rM’000

i) by type (continued)

Gross financing, advances and others 14,565,295 12,284,733Allowance for impaired financing, advances and others– Collective assessment allowance (348,555) (345,041)– Individual assessment allowance (75,770) (79,061)

net financing, advances and others 14,140,970 11,860,631

ii) by contract

Bai’ Bithaman Ajil (deferred payment sale) 7,291,742 6,209,417Ijarah (operating lease) 295,881 334,106Ijarah Muntahia Bittamlik/AITAB (finance lease) 22,648 11,657Mudharabah (profit sharing) 6,000 6,000Murabahah (cost-plus) 1,316,853 1,120,380Al-Inah Cash Note 3,903,981 1,662,823Istisna’ 1,435,588 353,125At-Tawarruq 245,250 2,573,328Ar-Rahn 47,352 13,897

14,565,295 12,284,733

iii) by type of customer

Domestic non-bank financial institutions 25,755 1,218Domestic business enterprise 2,683,710 1,934,656Small medium industries 391,947 401,119Government & statutory 129,766 151,526Individuals 10,989,077 9,324,459Other domestic entities 73,239 57,741Foreign entities 271,801 414,014

14,565,295 12,284,733



Annual Report 2011


Group 31.12.2011 31.12.2010 rM’000 rM’000

iv) by profit rate sensitivity

Fixed rateHouse financing 2,087,060 2,198,946Others 8,680,517 8,005,296

Floating rateOthers 3,797,718 2,080,491

14,565,295 12,284,733

v) by sector

Primary agriculture 149,182 182,111Mining and quarrying 48,249 897Manufacturing (including agro-based) 904,779 791,995Electricity, gas and water 7,221 150,860Construction 756,014 508,293Real estate 385,261 187,445Household sectors 11,016,473 9,321,823Wholesale, retail trade, restaurants and hotels 558,811 479,868Transport, storage and communication 233,766 408,349Finance, insurance and business services 180,770 154,408Educational, health and others 122,204 85,375Others 202,565 13,309

14,565,295 12,284,733

vi) by remaining contractual maturity

Maturity within one year 2,672,329 2,071,456More than one year to three years 863,680 705,542More than three years to five years 818,561 1,385,004More than five years 10,210,725 8,122,731

14,565,295 12,284,733






Group 31.12.2011 31.12.2010 rM’000 rM’000

vii) Movement in impaired financing and advances (“impaired financing”)

At 1 July– as previously stated – 1,360,449– effect of adopting FRS 139 552,221 675,069

At 1 July 2009, as restated 552,221 2,035,518

Classified as impaired during the year/period 549,075 315,241Reclassified as not impaired during the year/period (297,191) (362,279)Amount recovered (238,876) (311,447)Amount written off (187,141) (1,079,122)Exchange differences 1,702 (45,690)

At 31 December 2011 379,790 552,221

Gross impaired financing as a percentage of gross financing, advances and others 2.61% 4.50%

viii) impaired financing by sector

Primary agriculture 3,511 10,947Mining and quarrying – 851Manufacturing (including agro-based) 42,184 83,810Wholesale & retail trade, and hotels & restaurants 23,606 42,729Construction 71,680 130,925Real estate 1,203 1,263Transport, storage and communications 1,062 1,538Finance, insurance and business activities 16,255 –Education, health and others 71 6,112Household sectors 217,371 270,847Other sectors 2,847 3,199

379,790 552,221



Annual Report 2011


Group 31.12.2011 31.12.2010 rM’000 rM’000

ix) Movement of allowance forimpaired/non-performing financing

Collective assessment allowanceAt 1 January 2011/1 July 2009 345,041 504,927Allowance made during the year/period 204,593 538,979Amount recovered (97,426) (111,808)Amount written off (100,816) (555,129)Exchange differences (2,837) (31,928)

At 31 December 2011/2010 348,555 345,041

Individual assessment allowanceAt 1 January 2011/1 July 2009 79,061 859,374Allowance made during the year/period 119,056 124,827Amount recovered (31,955) (163,025)Amount written off (90,392) (740,797)Exchange differences – (1,318)

At 31 December 2011/2010 75,770 79,061





10. other assets


Bill receivables – 306 – –Clients’ and dealers’ debit balances 79,693 94,560 – –Due from Takaful funds* 20,878 39,889 – –Amount due from subsidiaries – – 112 –Deposits and prepayments 35,526 25,332 320 252Other receivables** 45,527 40,640 – –

181,624 200,727 432 252

* Included in amount due from Takaful funds is Qardh Hasan receivables amounting to RM277,000 (2010: RM1,567,000). Qardh Hasan is required to make good deficit arising in the Takaful funds.

** Other receivables of the Group is stated net of impairment allowances of RM96,402,000 (2010: RM97,571,000).

11. statutory dePosits with bank neGara Malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994), the amount of which are determined as set percentages of total eligible liabilities.



Annual Report 2011

12. deferred tax assets

recognised deferred tax assets and liabilitiesDeferred tax assets and liabilities are attributable to the following:

assets liabilities net 31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

GroupAllowances for impairment on financing and advances – 41,160 – – – 41,160Property, plant and equipment 148 81 (29,678) (27,437) (29,530) (27,356)Unabsorbed capital allowance 34,589 21,694 – – 34,589 21,694Provisions 37,858 23,525 (3,488) – 34,370 23,525

Tax assets/(liabilities) 72,595 86,460 (33,166) (27,437) 39,429 59,023

companyOther items 10 1,659 – – 10 1,659

unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items: Group 31.12.2011 31.12.2010 rM’000 rM’000

Unutilised tax losses 7,457 7,457Unabsorbed capital allowances 30,424 43,784

37,881 51,241

The unabsorbed capital allowances for the Group is in respect of its leasing business whereby management considered it uncertain whether the Group is able to utilise the benefits in the future.

Deferred tax assets have not been recognised because it is envisaged that the unabsorbed capital allowances and unutilised tax losses of the respective subsidiaries will not be utilised against their future taxable profits.





13. investMents in subsidiaries

company 31.12.2011 31.12.2010 rM’000 rM’000

at costQuoted shares in Malaysia 106,986 106,986Unquoted shares in Malaysia 1,604,127 1,613,648

1,711,113 1,720,634Less: Impairment losses – (162,992)

1,711,113 1,557,642

Market value:Quoted shares in Malaysia 195,388 139,082

Details of the subsidiaries are as follows: ownershipname of company Principal activities interest 2011 2010 % %

Bank Islam Malaysia Berhad Islamic banking 51 51

Subsidiaries of Bank Islam Malaysia BerhadBIMB Investment Management Management of unit trusts 100 100 Berhad

BIMB Foreign Currency Foreign currency clearing house 100 100 Clearing Agency Sdn. Bhd.

Al-Wakalah Nominees Nominee services 100 100 (Tempatan) Sdn. Bhd.

Farihan Corporation Sdn. Bhd. Pawn broking business 100 80

Bank Islam Trust Company Trust and related services 100 100 (Labuan) Ltd.



Annual Report 2011

13. investMents in subsidiaries (continued)

ownershipname of company Principal activities interest 2011 2010 % %

Subsidiary of Bank Islam Trust Company (Labuan) Ltd.BIMB Offshore Company Dormant 100 100 Management Services Sdn. Bhd.

Syarikat Takaful Malaysia Berhad Family and General Takaful business 65.22 65.22

Subsidiaries of Syarikat Takaful Malaysia BerhadASEAN Retakaful Offshore retakaful business 63.09 63.09 International (L) Ltd^

P.T. Syarikat Takaful Indonesia* # Investment holding 56 56

Subsidiaries of P.T. Syarikat Takaful IndonesiaP.T. Asuransi Takaful Umum* # General Takaful business 64.70 64.70

P.T. Asuransi Takaful Keluarga* # Family Takaful business 74.78 74.78

BIMB Securities (Holdings) Sdn. Bhd. Investment holding 100 100

Subsidiary of BIMB Securities (Holdings) Sdn. Bhd.BIMB Securities Sdn. Bhd. Stockbroking 100 100

Subsidiaries of BIMB Securities Sdn. Bhd.BIMSEC Asset Management Sdn. Bhd. Investment management services 100 100

BIMSEC Nominees Nominee services 100 100 (Tempatan) Sdn. Bhd.

BIMSEC Nominees (Asing) Sdn. Bhd. Nominee services 100 100





13. investMents in subsidiaries (continued)

ownershipname of company Principal activities interest 2011 2010 % %

Syarikat Al-Ijarah Sdn. Bhd. Leasing of assets 100 100

BIMB Musyarakah Satu Sdn. Bhd.~ Venture capital company and 100 100 investment company

* Incorporated in Indonesia.^ Audited by a firm of auditors affiliated with KPMG Desa Megat & Co.# Audited by a firm of auditors other than KPMG Desa Megat & Co.~ Under member’s voluntary winding up

During the year, the Group acquired the remaining 20% interest in Farihan Corporation Sdn. Bhd.



Annual Report 2011

14. investMent in associates


at costUnquoted shares 27,582 7,492 5,019 5,019Less: Share of post-acquisition losses (1,383) (2,473) – - Impairment losses (5,018) (5,018) (5,018) (5,018)

21,181 1 1 1

The principal activities of the associates and the interest of the Group are as follows:

name of company Principal activity country of ownership incorporation interest 2011 2010 % %

Islamic Banking and Provides training and Malaysia 48 48 Finance Institute Malaysia consultancy services Sdn. Bhd.

Amana Bank Ltd Provides Islamic Sri Lanka 20 – financial services

The summarised financial information is not adjusted for the percentage ownership held by the Group, Amana Bank Ltd, as follows:

Profit/ total total revenue (loss) assets liabilities2011 rM’000 rM’000 rM’000 rM’000

Amana Bank Ltd 6,306 (6,917) 402,133 320,020





15. ProPerty, Plant and equiPMent

furniture, computerGroup **land fixtures equipment and and office Motor and building fittings equipment vehicles software totalcost rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009- as previously stated 58,885 145,324 57,123 2,887 290,576 554,795- effect of adopting amendments to FRS 117 25,965 – – – – 25,965

At 1 July 2009, restated 84,850 145,324 57,123 2,887 290,576 580,760Additions 8,232 35,196 11,760 1,342 54,172 110,702Reclassifications 698 (1,457) 759 – – –Transfer from assets held for sale 1,467 – – – – 1,467Disposals (332) (1,916) (625) (1,222) (6,953) (11,048)Written off (20,266) (13,628) (583) – (584) (35,061)Fair value loss (664) – – – – (664)Exchange difference 69 (442) (64) (23) (360) (820)

At 31 December 2010/ 1 January 2011, restated 74,054 163,077 68,370 2,984 336,851 645,336Additions 5,147 34,165 9,756 632 30,024 79,724Reclassifications (1,264) 1,127 (64) – 201 –Disposals (1,067) (175) (201) (329) (13,034) (14,806)Written off (1,816) (2,878) (4,583) – (6) (9,283)Fair value gain 1,459 – – – – 1,459Exchange difference 60 116 25 10 72 283

at 31 december 2011 76,573 195,432 73,303 3,297 354,108 702,713



Annual Report 2011

15. ProPerty, Plant and equiPMent (continued)

furniture, computerGroup **land fixtures equipment and and office Motor and building fittings equipment vehicles software totalDepreciation and impairment loss rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009 Accumulated depreciation 23,892 103,183 43,955 2,269 209,356 382,655 Accumulated impairment loss 11,424 – 2 – – 11,426

- as previously stated 35,316 103,183 43,957 2,269 209,356 394,081- effect of adopting amendments to FRS 117 1,165 – – – – 1,165

At 1 July 2009, restated 36,481 103,183 43,957 2,269 209,356 395,246Depreciation for the period 6,194 24,523 6,756 591 34,933 72,997Disposals (304) (1,744) (7,489) (1,216) (5) (10,758)Write off (18,426) (11,974) – – (545) (30,945)Exchange difference 83 (418) (69) (20) (355) (779)

At 31 December 2010/1 January 2011, restated Accumulated depreciation 24,028 113,570 43,155 1,624 243,384 425,761 Accumulated impairment loss – – – – – –

24,028 113,570 43,155 1,624 243,384 425,761Depreciation for the year 4,263 20,804 5,788 404 24,272 55,531Reclassifications – – (156) – 156 –Disposals (1,067) (154) (186) (229) (12,978) (14,614)Write off (1,615) (2,649) (4,304) – (6) (8,574)Exchange difference 15 102 23 8 71 219

at 31 december 2011 Accumulated depreciation 25,624 131,673 44,320 1,807 254,899 458,323 Accumulated impairment loss – – – – – –

25,624 131,673 44,320 1,807 254,899 458,323






furniture, computerGroup **land fixtures equipment and and office Motor and building fittings equipment vehicles software totalCarrying amounts rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009, restated 48,369 42,141 13,166 618 81,220 185,514

At 31 December 2010/1 January 2011, restated 50,026 49,507 25,215 1,360 93,467 219,575

At 31 December 2011 50,949 63,759 28,983 1,490 99,209 244,390



Annual Report 2011


building improvements** land and building freehold freehold leasehold leasehold and land building land building renovations totalcost rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009- as previously stated 10,326 3,251 – – 45,308 58,885- effect of adopting amendments to FRS 117 – – 16,330 9,635 – 25,965

At 1 July 2009, restated 10,326 3,251 16,330 9,635 45,308 84,850Additions – 35 – – 8,197 8,232Reclassifications – (6) – – 704 698Assets held for sale – 954 – 513 – 1,467Disposals – – – – (332) (332)Written off – – – – (20,266) (20,266)Fair value gain/(loss) – – 139 (803) – (664)Exchange difference – (26) – (14) 109 69

At 31 December 2010/1 January 2011, restated 10,326 4,208 16,469 9,331 33,720 74,054Additions – 209 – 707 4,231 5,147Reclassifications – – (1,616) 1,616 (1,264) (1,264)Disposals – – – – (1,067) (1,067)Written off – – – – (1,816) (1,816)Fair value gain – 893 – 566 – 1,459Exchange difference – 38 – 19 3 60

at 31 december 2011 10,326 5,348 14,853 12,239 33,807 76,573






building improvements** land and building freehold freehold leasehold leasehold and land building land building renovations total Depreciation and impairment loss rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009 Accumulated depreciation – 2,322 – – 21,570 23,892 Accumulated impairment loss – – – – 11,424 11,424

– as previously stated – 2,322 – – 32,994 35,316- effect of adopting amendments to FRS 117 – – 376 789 – 1,165

At 1 July 2009, restated – 2,322 376 789 32,994 36,481Depreciation for the period – 412 262 398 5,122 6,194

Disposals – – – – (304) (304)Writen off – – – – (18,426) (18,426)Exchange difference – (12) – (14) 109 83

At 31 December 2010 Accumulated depreciation – 2,722 638 1,173 19,495 24,028 Accumulated impairment loss – – – – – –

– 2,722 638 1,173 19,495 24,028Depreciation for the year – 193 292 – 3,778 4,263Reclassifications – – (420) 420 – –Disposals – – – – (1,067) (1,067)Write off – – – – (1,615) (1,615)Exchange difference – 6 – 6 3 15

At 31 December 2011Accumulated depreciation – 2,921 510 1,599 20,594 25,624Accumulated impairment loss – – – – – –

– 2,921 510 1,599 20,594 25,624

Carrying amounts

At 1 July 2009, restated 10,326 929 15,954 8,846 12,314 48,369

At 31 December 2010/ 1 January 2011, restated 10,326 1,486 15,831 8,158 14,225 50,026

At 31 December 2011 10,326 2,427 14,343 10,640 13,213 50,949



Annual Report 2011


furniture, officecompany fixtures equipment and Motor and fittings renovation vehicles computer totalCost rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009 46 854 169 173 1,242Additions – – – 34 34Disposal – – – (6) (6)

at 31 december 2010 46 854 169 201 1,270Additions 9 690 – 8 707

At 31 December 2011 55 1,544 169 209 1,977

DepreciationAt 1 July 2009 23 280 85 84 472Depreciation for the period 17 213 63 76 369Disposal – – – (4) (4)

at 31 december 2010 40 493 148 156 837Depreciation for the year 7 143 21 25 196

At 31 December 2011 47 636 169 181 1,033

Carrying amountsAt 1 July 2009 23 574 84 89 770

At 31 December 2010 6 361 21 45 433

At 31 December 2011 8 908 – 28 944





16. General takaful and faMily takaful funds’ balance sheet as at 31 deceMber 2011

31.12.2011 31.12.2010 General family General family takaful takaful takaful takaful fund fund total fund fund total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assets

Investment properties 26,620 210,619 237,239 29,234 206,980 236,214Investments 508,119 2,825,359 3,333,478 630,589 3,164,455 3,795,044Investment-linked takaful assets – 194,506 194,506 – 201,051 201,051Financing receivables – – – 6,320 72,376 78,696Retakaful assets 47,462 72,810 120,272 63,565 43,009 106,574Receivables 518,112 625,369 1,143,481 302,303 91,301 393,604Cash and bank balances 47,770 265,819 313,589 11,841 9,304 21,145

1,148,083 4,194,482 5,342,565 1,043,852 3,788,476 4,832,328

Less: Inter fund balances (32,533) (45,446)

5,310,032 4,786,882

liabilities

Payables 99,463 152,046 251,509 120,545 171,492 292,037Provision for outstanding claims 883,655 102,681 986,336 775,598 52,904 828,502Investment-linked takaful liabilities – 5,679 5,679 – 3,774 3,774

983,118 260,406 1,243,524 896,143 228,170 1,124,313

Less: Inter fund balances (32,533) (45,446)

1,210,991 1,078,867

General Takaful and Family Takaful participants’ funds 164,965 3,934,076 4,099,041 147,709 3,560,306 3,708,015

1,148,083 4,194,482 5,310,032 1,043,852 3,788,476 4,786,882



Annual Report 2011

17. dePosits froM custoMers

(i) by type of deposit Group 31.12.2011 31.12.2010 rM’000 rM’000

non-Mudharabah fundDemand deposits 8,412,372 7,090,732Savings deposits 2,599,243 2,576,870Negotiable Islamic Debt Certificates (NIDC) 5,622,290 5,819,875Others 106,718 80,336

16,740,623 15,567,813

Mudharabah fundSavings deposits 1,263,591 987,346General investment deposits 1,851,695 2,449,607Special investment deposits 8,352,294 7,793,341

11,467,580 11,230,294

28,208,203 26,798,107

Maturity structure of investment deposits and NIDCs are as follows:

Due within six months 13,403,835 10,365,051More than six months to one year 1,444,323 4,616,743More than one year to three years 1,020,357 638,204More than three years to five years 29,404 20,955More than five years – 421,870

15,897,919 16,062,823

(ii) by type of customer

Government and statutory bodies 7,769,225 6,795,607Business enterprises 7,188,454 8,536,877Individuals 4,754,178 4,511,477Others 8,496,346 6,954,146

28,208,203 26,798,107





18. dePosits and PlaceMents of banks and other financial institutions

Group 31.12.2011 31.12.2010 rM’000 rM’000

Mudharabah fund:Licensed banks 253,122 307,984Other financial institutions 131,506 70,145

384,628 378,129

19. other liabilities

Group company 31.12.2011 31.12.2010 31.12.2011 31.12.2010 note rM’000 rM’000 rM’000 rM’000

Clients’ and dealers’ credit balances 79,290 90,036 – -Trust account 176 721 – -Sundry payables 518,651 412,301 1,731 680Amount due to subsidiaries – 4 – 4

598,117 503,062 1,731 684

The amount due to subsidiaries are non-trade, unsecured, not subject to financing charge and has no fixed terms of repayment.

20. Profit equalisation reserve (“Per”)

Group 31.12.2011 31.12.2010 rM’000 rM’000

At 1 July – 46,369Recognised in statement of comprehensive income – (46,369)

At 31 December – -



Annual Report 2011

21. share caPital

Group and companyshare capital number number amount of shares amount of shares 31.12.2011 31.12.2011 31.12.2010 31.12.2010 rM’000 ’000 rM’000 ’000

Authorised:Ordinary shares of RM1 each 2,000,000 2,000,000 2,000,000 2,000,000One Special Rights Redeemable Preference Share of RM1 * * * *

2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paid:Ordinary shares of RM1 each

On issue at 1 January 2011/1 July 2009 1,066,790 1,066,790 1,066,790 1,066,790

* Represents RM1

22. other reserves

fair capital statutory value translation Group reserve reserve reserve reserve total rM’000 rM’000 rM’000 rM’000 rM’000

At 1 July 2009– As previously stated 638,370 408,109 (2,576) 13,983 1,057,886– Effect of adopting FRS 139 – – (510) – (510)

At 1 July 2009, restated 638,370 408,109 (3,086) 13,983 1,057,376Foreign exchange translation differences – – – 19,188 19,188Unrealised net gain on revaluation of financial assets available-for-sale – – 47,456 – 47,456Transfer to statutory reserve – 105,003 – – 105,003





22. other reserves (continued)

fair capital statutory value translation Group reserve reserve reserve reserve total rM’000 rM’000 rM’000 rM’000 rM’000

At 31 December 2010 638,370 513,112 44,370 33,171 1,229,023Foreign exchange translation differences – – – (4,562) (4,562)Unrealised net gain on revaluation of financial assets available-for-sale – – 21,171 – 21,171Transfer to statutory reserve – 91,586 – – 91,586

At 31 December 2011 638,370 604,698 65,541 28,609 1,337,218

The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not distributable as cash dividends.

The capital reserve arose out of the issuance of bonus issues in a subsidiary of RM6,863,000 and gain arising from the dilution of interest in a subsidiary of RM631,507,000 and is not distributable as cash dividends.

23. incoMe derived froM investMent of dePositors’ funds

Group 12 months 18 months ended ended 31.12.2011 31.12.2010 rM’000 rM’000

Income derived from investment of:(i) General investment deposits 132,729 200,173(ii) Other deposits 1,261,189 1,635,568

1,393,918 1,835,741



Annual Report 2011

23. incoMe derived froM investMent of dePositors’ funds (continued)


(i) income derived from investment of general investment deposits

financing income and hibahFinancing, advances and others 86,808 129,293Financial assets:– Held-for-trading 381 513– Available-for-sale 32,475 48,777– Held-to-maturity 747 903Money at call and deposit with financial institutions 6,347 15,294

126,758 194,780

Of which Financing income earned on impaired financing 4,392 11,539

other dealing incomeNet gain/(loss) from sale of financial assets held-for-trading 641 (34)Net gain on revaluation of financial assets held-for-trading 2,015 3,846

129,414 198,592

other operating incomeNet gain from sale of financial assets available-for-sale 3,188 1,580Gain on redemption of financial assets held-to-maturity 127 –Gain on disposal of leased assets – 1

132,729 200,173





23. incoMe derived froM investMent of dePositors’ funds (continued)


(ii) income derived from investment of other deposits

financing income and hibahFinancing, advances and others 823,211 1,054,871Financial assets:– Held-for-trading 3,649 4,154– Held-to-maturity 7,417 7,754– Available-for-sale 306,923 398,789Money at call and deposit with financial institutions 59,849 125,631

1,201,049 1,591,199

Of which Financing income earned on impaired financing 42,120 96,498

other dealing incomeNet gain/(loss) from sale of financial assets held-for-trading 6,177 (373)Net gain on revaluation of financial assets held-for-trading 18,858 31,390

1,226,084 1,622,216

other operating incomeNet gain from sale of financial assets available-for-sale 33,780 13,341Gain on redemption of financial assets held-to-maturity 1,325 –Gain on disposal of leased assets – 11

1,261,189 1,635,568



Annual Report 2011

24. incoMe derived froM investMent of shareholders’ funds


financing income and hibahFinancing, advances and others 8,714 5,973 – –Financial assets:– Available-for-sale 86,929 137,866 – –Money at call and deposit with financial institutions 10,856 18,340 2,579 2,081

106,499 162,179 2,579 2,081other dealing incomeNet gain from foreign exchange transactions 31,808 24,387 – –Net loss from sale of financial assets held-for-trading (44) (725) – –Net derivatives loss (8,618) (7,162) – –

129,645 178,679 2,579 2,081

other operating incomeNet gain from sale of financial assets available-for-sale 17,843 7,203 – –Profit on sale of foreign currencies 2,335 4,776 – –Reversal of allowance for diminution in value of investments 38 2,322 345 510Reversal of allowance for doubtful debts 240 2,624 – –Profits from General Takaful and Family Takaful funds attributable to the Group 183,365 221,832 – –Gross dividend income from securities:

Quoted in Malaysia 2,142 1,170 – –Unit trust in Malaysia 351 657 – –Unit trust outside Malaysia 878 130 – –Unquoted in Malaysia 10,426 8,928 – –

Gross dividend income subsidiary companies – – 101,218 43,468Fees and commission 291,846 331,568 – 125Net gain/(loss) on disposal of property, plant and equipment 2,429 (1,423) – –Rental income 308 8 – –Others 286 2,098 – 1,031

642,132 760,572 104,142 47,215





25. allowance for iMPairMent on financinG and advances


Allowance for impaired financing, advances and others– collective assessment allowance 204,593 538,979– individual assessment allowance 119,056 124,827Impaired financing and advances recovered (129,381) (274,833)Bad debts and financing recovered (150,245) (181,271)

44,023 207,702

26. allowance for/(reversal of) iMPairMent on investMents


Financial assets:– available-for-sale 18,158 19,727 – –– held-to-maturity (2,752) – – –

15,406 19,727 – –

Investment in subsidiaries – – (156,027) –Investment in associate – 148 – 148

15,406 19,875 (156,027) 148



Annual Report 2011

27. incoMe attributable to dePositors


Deposits from customers– Mudharabah Fund 263,713 347,238– Non-Mudharabah Fund 190,205 248,315Deposits and placements of banks and other financial institutions– Mudharabah Fund 19,215 21,622

473,133 617,175

28. Personnel exPenses


Salaries and wages 241,462 317,771 1,050 2,738Allowances and bonuses 129,335 136,899 1,736 1,037Employees’ Provident Fund 42,875 52,823 401 574Directors’ remuneration 2,833 4,100 1,496 2,490Others 39,063 60,803 390 659

455,568 572,396 5,073 7,498





29. other overhead exPenses


Promotion 112,882 120,058 188 76Establishment 184,331 264,668 910 956General expenses 138,068 225,768 1074 1,318

435,281 610,494 2,172 2,350

Included in other overhead expenses are:

Auditors’ remuneration– Statutory audit KPMG 1,107 1,003 55 50 Other auditors 79 89 – –– Other services KPMG 390 1,146 22 125Depreciation of property, plant and equipment 55,531 72,997 196 369Rental of properties 43,145 55,382 391 587Property, plant and equipment written off 709 4,116 – –Rental of equipment 5,648 24,108 – –



Annual Report 2011

29. other overhead exPenses (continued)

(a)(i) Aggregate remuneration of Directors of the Company categorised into appropriate components are as follows:


executive director:Fees and allowances 209 297 – –Salaries, bonuses and EPF contributions 1,001 1,775 1,001 1,775Benefits-in-kind 102 151 73 151

1,312 2,223 1,074 1,926non-executive directors:Fees and allowances 1,498 1,936 455 698Benefits-in-kind 125 70 40 17

Total 2,935 4,229 1,569 2,641

Total (excluding benefits-in-kind) 2,708 4,008 1,456 2,473

(ii) Shariah Supervisory Council 305 491 – –

Salaries, bonuses and EPF contributions of Executive Director for the corresponding 18 months amongst others include bonus payout for the financial year ended 30 June 2009, as well as bonus payout for the 12 months financial period ended 30 June 2010.





30. 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 is as follows:


Other key management personnel:– Short-term employee benefits 22,538 39,357 837 1,487– Benefits-in-kind 437 727 51 232

22,975 40,084 888 1,719

Short-term employee benefits for the corresponding 18 months amongst others include bonus payout for the financial year ended 30 June 2009, as well as bonus payout for the 12 months financial period ended 30 June 2010.



Annual Report 2011

31. tax exPense

(i) Major components of tax expense Group company 12 months 18 months 12 months 18 months ended ended ended ended 31.12.2011 31.12.2010 31.12.2011 31.12.2010 rM’000 rM’000 rM’000 rM’000

Current tax expense:Malaysia – current year 134,783 149,650 23,900 7,054 – prior years 535 (44,441) (456) (23)

135,318 105,209 23,444 7,031

Deferred tax expense: Origination and reversal of temporary differences 31,682 37,375 (15) – (Over)/Under provision in prior year (13,672) (19,960) 1,664 –

18,010 17,415 1,649 –

153,328 122,624 25,093 7,031

(ii) reconciliation of effective tax expense

Profit before tax 567,600 588,155 252,924 37,219

Income tax using Malaysia tax rate of 25% 141,900 147,039 63,231 9,305Non-deductible expenses 46,435 42,956 455 1,003Recognition of previously unrecognised deferred tax assets (3,340) (20) – –Non-taxable income (18,541) (2,950) (39,808) (3,254)Other items 11 – 7 –

166,465 187,025 23,885 7,054Under/(Over) provided in prior year 535 (44,441) (456) (23)(Over)/underprovision of deferred tax asset (13,672) (19,960) 1,664 –

Tax expense 153,328 122,624 25,093 7,031





32. earninGs Per share

basic earnings per ordinary shareThe calculation of basic earnings per ordinary share at 31 December 2011 was based on the profit attributable to owners of the Company and the weighted average number of ordinary shares in issue during the year/period: Group 12 months 18 months ended ended 31.12.2011 31.12.2010 rM’000 rM’000

Profit attributable to owners of the Company 203,252 230,837

Weighted average number of ordinary shares 1,066,790 1,066,790

Group 31.12.2011 31.12.2010 sen sen

Basic earnings per ordinary share 19.05 21.64

33. dividends

Dividends recognised by the Company: sen total per share amount date of2011 (net of tax) rM’000 payment

Final 2010 ordinary 1.20 12,802 15 June 2011Interim 2011 ordinary 3.50 37,337 6 october 2011

Total amount 50,139

2010Final 2009 ordinary 0.90 9,601 17 December 2009Interim 2010 ordinary 1.12 12,001 1 October 2010

Total amount 21,602



Annual Report 2011

33. dividends (continued)

After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial period upon approval by the owners of the Company. sen total per share amount2011 (net of tax) rM’000

Final ordinary 7.25 77,342

34. related Party transactions

identity of related partiesFor the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The Group has a related party relationship with its subsidiaries (see note 13), associates (see note 14) and holding corporation of the Company.

(a) The significant related party transactions of the Group and the Company, other than key management personnel compensation, are as follows:

Group company transaction amount for transaction amount for 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

SubsidiariesManagement fees receivables – – – 125Income receivable attributable on deposits placed – – 736 892

Holding corporationRental of premises payable 6,727 2,989 – –Income payable attributable on deposits placed 43,087 27,117 – –

Other related companiesIncome receivable from financing, advances and others 2,682 4,427 – –Net gain on forex transaction 1,552 811 – –Income payable attributable on deposits placed 1,295 1,358 – –





34. related Party transactions (continued)

identity of related parties (continued)(b) The significant outstanding balances of the Group and the Company with related party, are as follows:

Group company net balance outstanding net balance outstanding as at as at 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Subsidiariesamounts due fromCurrent account and investment deposits – – 5,404 221

Holding corporationamount due toCurrent account and investment deposits 1,295,005 1,381,422 – –

Other related companiesamount due fromFinancing, advances and others 93,456 69,090 – –amount due toDemand and investment deposits 299,800 112,632 – –

35. caPital adequacy

The Risk Weighted Capital Ratio (“RWCR”) 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.

capital adequacy ratiosThe Bank is required to comply with the core capital ratio and risk-weighted capital adequacy ratio prescribed by BNM. The Bank was in compliance with all prescribed capital ratios throughout the year.

The Bank’s capital adequacy ratios remained strong. The table below shows the composition of the regulatory capital and capital adequacy ratios as at 31 December 2011 determined according to the requirements of the Capital Adequacy Framework for Islamic Banks (CAFIB) as required under the Islamic Banking Act (IBA) 1983.



Annual Report 2011

35. caPital adequacy (continued)

The Risk Weighted Capital Ratio (RWCR) of Bank Islam as at 31 December 2011 is as follows:

(a) the capital adequacy ratios of bank islam as at 31 december 2011:

31.12.2011 31.12.2010 rM’000 rM’000

before proposed dividendTier 1 Capital Ratio 15.27% 15.75%Risk-Weighted Capital Ratio 16.47% 16.99%

after proposed dividendTier 1 Capital Ratio 15.00% 15.21%Risk-Weighted Capital Ratio 16.21% 16.44%

(b) tier i and tier ii capital components of bank islam as at 31 december 2011:

tier i capital

Paid-up share capital 2,265,490 2,265,490Share premium 500,020 500,020Accumulated losses (1,132,381) (1,185,132)Other reserves 974,594 795,013Less: Deferred tax assets (23,386) (44,224)

total tier i capital 2,584,337 2,331,167

tier ii capitalCollective assessment allowance* 224,776 182,452

total tier ii capital 224,776 182,452

total capital 2,809,113 2,513,619Less: Investments in subsidiaries (21,180) –

capital base 2,787,933 2,513,619

* Excludes portion of collective assessment allowance restricted from Tier II capital by BNM amounting to RM123,779,000 (2010: RM162,590,000).






(c) the breakdown of risk-weighted assets by each major risk category is as follows: 31.12.2011 31.12.2010 rM’000 rM’000

Credit risk 14,495,066 12,507,496Market risk 501,309 572,562Operational risk 1,929,294 1,718,698

16,925,669 14,798,756

(d) the off-balance sheet and counterparties credit risk for the Group are as follows:

31 december 2011 Positive fair value of credit risk Principal derivative equivalent weighted amount contracts amount assetnature of item rM’000 rM’000 rM’000 rM’000

Credit related exposuresDirect credit substitutes 452,553 452,553 444,839Assets sold with recourse 2 2 2Transaction related contingent items 884,095 442,048 435,825Short term self-liquidating trade related contingencies 288,665 57,733 57,221Other commitments, such as formal standby facilities and credit lines, with an original maturity of:-not exceeding one year 1 – –-exceeding one year 589,414 294,707 274,384Unutilised credit card lines 817,113 163,423 122,567Any 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 3,897,622 – –

6,929,465 1,410,466 1,334,838



Annual Report 2011


(d) the off-balance sheet and counterparties credit risk for the Group are as follows (continued):


Derivative Financial InstrumentsForeign exchange related contracts - less than one year 1,644,655 5,589 14,344 8,409 - one year to less than five years 40,244 – 2,754 1,944Profit rate related contracts - less than one year 171,740 7,549 5,582 1,116 - one year to less than five years 500,000 – 12,000 2,400

2,356,639 13,138 34,680 13,869

Other Treasury related exposuresObligations under an on-going underwriting agreement – – –

– – –

Total 9,286,104 13,138 1,445,146 1,348,707






(d) the off-balance sheet and counterparties credit risk for the Group are as follows (continued):


Credit related exposuresDirect credit substitutes 459,840 459,840 439,315Assets sold with recourse 242 242 242Transaction related contingent items 846,719 423,360 396,877Short term self-liquidating trade related contingencies 312,745 62,549 61,078Other commitments, such as formal standby facilities and credit lines, with an original maturity of: - not exceeding one year 1,003 201 224 - exceeding one year 618,138 309,068 251,715Unutilised credit card lines 768,840 153,768 115,326Any 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 4,118,965 – –

7,126,492 1,409,028 1,264,777

Derivative Financial InstrumentsForeign exchange related contracts - less than one year 5,208,060 42,284 93,866 26,161Profit rate related contracts - one year to less than five years 671,740 10,055 27,304 7,007

5,879,800 52,339 121,170 33,168

Other Treasury related exposuresObligations under an on-going underwriting agreement 75,000 37,500 37,500

75,000 37,500 37,500

Total 13,081,292 52,339 1,567,698 1,335,445



Annual Report 2011

36. financial risk ManaGeMent Policies

The Group has exposure to the following risks from its use of financial instruments:• Credit risk• Market risk• Liquidity risk

The Group’s exposures to the above risks are mainly attributed to its main operating subsidiaries, Bank Islam Malaysia Berhad (“Bank Islam” or “the Bank”) and Syarikat Takaful Malaysia Berhad (“Takaful”).

credit riskCredit 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.

(a) bankingBank Islam’s credit risk arises from all transactions that could lead to actual, contingent or potential claims against any party, borrower or obligor. The Bank recognises four kinds of credit risk in its portfolio: Default Risk, Settlement Risk, Country Risk and Contingent Financing Risk.

credit risk governanceThe management of credit risk is principally carried out by using sets of policies and guidelines approved by Bank Islam’s Board Risk Committee (BRC), guided by the Risk Appetite Statement approved by Bank Islam’s Board of Directors.

The Management Risk Control Committee (“MRCC”) is responsible under the authority delegated by the BRC for managing credit risk at strategic level. The 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 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 ratings methodologies and models, acceptable collaterals and valuation, and the review, rehabilitation and restructuring of problematic and delinquent financing.





36. financial risk ManaGeMent Policies (continued)

(a) banking (continued)

Management of credit riskThe management of credit risk is being performed by two distinct departments within the Risk Management Department (“RMD”), Credit Analysis and Credit Risk Management and three departments outside of the RMD domain, namely, Credit Administration, Credit Recovery and Credit Monitoring Unit of Internal Audit. The combined objectives are, amongst others:

• 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;• To conform with statutory, regulatory and internal credit requirements.

The Bank monitors its credit exposures either on a portfolio basis or individual basis by annual reviews. Credit risk is proactively monitored through a set of early warning signals that could trigger immediate reviews of (certain part of) the portfolio. The affected portfolio or financing is placed on a watch list to enforce close monitoring and prevent financing from turning non-performing 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 Board and to avoid credit risk contagion to a single customer, sector, product, Shariah contract, etc.

Credit risk arising from dealing and investing activities are managed by the establishment of limits which includes counter parties limits and permissible acquisition of private entities’ instruments, subject to specified minimum rating threshold. Furthermore, the dealing and investing activities are monitored by an independent middle office unit.

(b) takafulTakaful 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 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 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.



Annual Report 2011


credit risk (continued)

Maximum exposure to credit riskThe 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.

Group 31.12.2011 31.12.2010 rM’000 rM’000

Cash and short-term funds 3,460,092 2,762,195Deposits and placements with banks and other financial institution 1,075,330 412,798Financial assets held-for-trading 1,228,952 2,279,891Derivative financial assets 15,877 80,108Financial assets available-for-sale 11,281,711 12,936,655Financial assets held-to-maturity 331,486 215,944Financing, advances and others 14,565,295 12,284,733

Sub-total 31,958,743 30,972,324

Credit related obligation: Credit commitments 6,929,465 7,126,492 Other Treasury related exposures – 75,000

Sub-total 6,929,465 7,201,492

Total credit exposures 38,888,208 38,173,816






credit risk (continued) – concentration of credit risk for Group

cash and short- term funds and commit-Group deposits and financial financial financial mentsas at placements with assets assets assets financing, on-balance and31 december 2011 financial held-for- derivative available held-to- advances sheets contin-rM’000 institutions trading assets -for-sale maturity and others# total gencies@

Primary agriculture – – – 94,216 – 149,182 243,398 227,525Mining and quarrying – – – – – 48,249 48,249 428,773Manufacturing (including agro-based) – – – 7,456 – 904,779 912,235 987,798Electricity, gas and water – 20,999 – 3,441,440 – 7,221 3,469,660 402,393Wholesale & retail trade, and hotels & restaurants – – – 40,433 – 558,811 599,244 497,495Construction – 10,032 – 748,456 111,369 756,014 1,625,871 1,180,678Real estate – – – 105,411 – 385,261 490,672 188,562Transport, storage and communications – – – 952,849 – 233,766 1,186,615 483,200Finance, insurance and business activities 860,181 1,197,921 15,877 5,891,450 220,117 180,770 8,366,316 540,917Education, health and others – – – – – 122,204 122,204 795,619Household sectors – – – – – 11,016,473 11,016,473 241,665Other sectors 3,675,241 – – – – 202,565 3,877,806 954,840

4,535,422 1,228,952 15,877 11,281,711 331,486 14,565,295 31,958,743 6,929,465

# Gross financing, advances and others@ Commitment and contingencies excluding derivative assets



Annual Report 2011


credit risk (continued) – concentration of credit risk for Group (continued)

cash and short- term funds and commit-Group deposits and financial financial financial mentsas at placements with assets assets assets financing, on-balance and31 december 2010 financial held-for- derivative available held-to- advances sheets contin-rM’000 institutions trading assets -for-sale maturity and others# total gencies@

Primary agriculture – – – 96,410 – 182,111 278,521 146,548Mining and quarrying – – – – – 897 897 9,786Manufacturing (including agro-based) – – – 70,535 – 791,995 862,530 1,126,126Electricity, gas and water – – – 1,122,257 – 150,860 1,273,117 453,231Wholesale & retail trade, and hotels & restaurants – – – 131,754 – 479,868 611,622 656,031Construction – – – 356,803 – 508,293 865,096 –Real estate – – – 109,593 – 187,445 297,038 1,310,717Transport, storage and communications – 16,306 – 1,539,352 – 408,349 1,964,007 547,321Finance, insurance and business activities 352,798 2,263,585 80,108 9,506,722 215,944 154,408 12,573,565 614,481Education, health and others – – – – – 85,375 85,375 775,606Household sectors – – – – – 9,321,823 9,321,823 183,514Other sectors 2,822,195 – – 3,229 – 13,309 2,838,733 1,378,131

3,174,993 2,279,891 80,108 12,936,655 215,944 12,284,733 30,972,324 7,201,492

# Gross financing, advances and others@ Commitment and contingencies excluding derivative assets







credit quality of gross financing and advancesGross financing and advances of the main subsidiary, Bank Islam, are classified as follows:

• Neither past due nor impaired financing Financing 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 Those financing which its contractual profit or principal payments are past due, but the Group believe that impairment is

not appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the Group.

• 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.

The table below summarises the credit quality of the Group’s gross financing according to the above classifications.

Group 31.12.2011 31.12.2010 rM’000 rM’000

Financing, advances and others

Neither past due nor impaired 13,866,046 11,336,180Past due but not impaired 319,459 396,332Impaired 379,790 552,221

14,565,295 12,284,733Allowance for impaired financing, advances and others– collective assessment allowance (348,555) (345,041)– individual assessment allowance (75,770) (79,061)

14,140,970 11,860,631



Annual Report 2011



credit quality of gross financing and advances (continued)

(i) neither past due nor impaired financing Group 31.12.2011 31.12.2010 rM’000 rM’000

Excellent to good 10,409,626 6,052,669Satisfactory 2,945,123 3,657,993Fair 511,297 1,625,518

13,866,046 11,336,180

Internal rating definition:-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.

(ii) Past due but not impaired financing Group 31.12.2011 31.12.2010 rM’000 rM’000

By ageing

Month-in-arrears 1 210,518 255,656Month-in-arrears 2 108,941 140,676

319,459 396,332

Past due but not impaired financing are those for which contractual profit or principal payments are past due, but the Group believe that impairment is not appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the Group.







credit quality of gross financing and advances (continued)

(iii) impaired financing

Impaired financing by assessment type Group 31.12.2011 31.12.2010 rM’000 rM’000

Individually assessed 133,864 242,748of which:

Month-in-arrears 0 54,325 76,828Month-in-arrears 1 – 4,193Month-in-arrears 2 6,193 2,181Month-in-arrears 3 and above 73,346 159,546

Collectively assessed 245,926 309,473

379,790 552,221

Impaired financing of which rescheduled and restructured financing Group 31.12.2011 31.12.2010 rM’000 rM’000

Consumer 63,412 65,759Business 43,110 86,139

106,522 151,898

Rescheduled and restructured financing are financing that have been rescheduled or restructured due to deterioration in borrowers’ financial position and when the Group has made concessions that it would not otherwise consider. Once the financing is rescheduled or restructured, its satisfactory performance is monitored for a period of six months before it is reclassified to performing.



Annual Report 2011



Credit quality(i) Financing, advances and others by line of business segregated by reference to internal rating system:

consumer business total2011 rM’000 rM’000 rM’000

Excellent to good 7,681,380 2,728,246 10,409,626Satisfactory 2,448,780 496,343 2,945,123Fair 334,710 176,587 511,297Past due but not impaired 305,351 14,108 319,459Impaired 218,856 160,934 379,790

Total 10,989,077 3,576,218 14,565,295

2010

Excellent to good 4,719,862 1,332,807 6,052,669Satisfactory 2,710,591 947,402 3,657,993Fair 1,255,461 370,057 1,625,518Past due but not impaired 369,777 26,555 396,332Impaired 268,768 283,453 552,221

Total 9,324,459 2,960,274 12,284,733







Credit quality (continued)(ii) Other financial assets (excluding equity securities) by external party rating is as follows:

financial financial financial assets assets assets held-for– derivative available held-to Group trading assets -for-sale maturity total2011 rM’000 rM’000 rM’000 rM’000 rM’000

Government bonds and treasury bills 1,188,069 – 3,996,969 – 5,185,038Islamic debts securities

Rated AAA 24,947 – 2,761,603 – 2,786,550Rated AA1 to AA3 15,936 – 1,073,115 24,758 1,113,809Rated A1 to A3 – – – 149,980 149,980Lower than A – – 18,396 – 18,396Unrated-Goverment guaranteed bonds – – 3,148,977 – 3,148,977Unrated-Quasi-goverment – – 84,468 – 84,468Unrated-Others – – 45,267 156,748 202,015

Derivative assets Bank and financial institution counterparties – 15,877 – – 15,877

1,228,952 15,877 11,128,795 331,486 12,705,110

2010

Government bonds and treasury bills 2,252,690 – 7,255,134 – 9,507,824Islamic debts securities

Rated AAA 10,450 – 3,271,517 – 3,281,967Rated AA1 to AA3 – – 1,157,516 – 1,157,516Rated A1 to A3 – – 60,624 61,650 122,274Lower than A – – 10,084 – 10,084Unrated-Goverment guaranteed bonds 16,307 – 950,233 – 966,540Unrated-Quasi-goverment – – 80,283 – 80,283Unrated-Others – – 25,065 154,294 179,359

Derivative assets Bank and financial institution counterparties – 80,108 – – 80,108

2,279,447 80,108 12,810,456 215,944 15,385,955



Annual Report 2011


Market risk

overviewAll the Group’s businesses are subject to the risk that market prices and rates will move, resulting in profit or losses to the Group. Furthermore, significant or sudden movements in rates could affect the Group’s liquidity/funding position. The Group is exposed to the following main market factors:

- Profit rate 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;

- displaced commercial risk: the risk arising from assets managed by the Group on behalf of depositors/investors as the Group follows the practice of potentially foregoing part or all of its Mudarib share of profit on these assets;

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 segment.

bankingBank Islam separates exposures to market risk into either trading or non-trading portfolios. Trading portfolios include those 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 governanceThe management of market risk is principally carried out by using risk limits approved by the BRC, guided by the 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 their respective BRC for managing market risk at strategic level.






Market risk - banking (continued)

Management of market riskAll market risk exposures are managed by Treasury. The aim is to ensure that all market risks are consolidated at Treasury, which has the necessary skills, tools, management and governance to manage such risks professionally. Limits 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.

Market Risk Management Department (“MRMD”) is an independent risk control function, responsible for ensuring efficient implementation of market risk management policies. The respective MRMD are also responsible for developing market risk management guidelines, measurement techniques, behavioural assumptions and limit setting methodologies. Any excesses against the prescribed limits are reported immediately to the Senior Management. Strict escalation procedures are well documented and approved by the BRC. In addition, the market risk exposures and limits are regularly reported to the ALCO and BRC.

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 than 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 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 in the non-trading portfolioProfit 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 BRC and independently monitored monthly by MRMD. Exposures and limits are regularly discussed and reported to ALCO and BRC.

The table below shows the projected sensitivity at Bank 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.

2011 2010 –100bps +100bps –100bps +100bps increase/(decrease) rM million

bank islamImpact on EaR 58.08 (58.08) 97.62 (97.62)Impact on EVE 155.16 (155.16) 150.93 (150.93)



Annual Report 2011



Management of market risk (continued)

(i) Profit rate risk in the non-trading portfolio (continued)Profit rate risk in the banking book is defined as the exposure of the non-trading products of the Bank to profit rates. Non-trading portfolios are subject to prospective profit rate movements which could reduce future earnings. Profit rate risk arises principally from mismatches between future yields on assets and their funding costs.

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). For 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 Treasury to mitigate the impact of the profit rate risk. In reality, depending on the view on future market movements, Treasury would proactively seek to change the profit rate exposure profile to minimise losses and to optimise net revenues. The nature of the hedging and risk mitigation strategies corresponds to the market instruments available. These strategies range from the use of traditional market instruments, such as profit rate swaps, to more intricate hedging strategies to address inordinate profit rate risk exposures.

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 MRMD on a weekly basis against limits approved by the BRC. PV01 exposures and limits are regularly discussed and reported to ALCO and BRC.

(ii) Market risk in the trading PortfolioMarket risk in the trading portfolio is monitored and controlled using Value-at-Risk (“VaR”). VaR limit is approved by the BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and reported to ALCO and BRC.

A summary of the VaR position of the Bank’s trading portfolios at the reporting date is as follows:

as at 31.12.2011 average Maximum Minimum

bank islam rM’000 rM’000 rM’000 rM’000

Profit rate risk 911,201 834,260 2,293,646 89,945Foreign exchange risk 45,507 176,106 659,742 14,026

Overall 956,708 1,010,366 2,953,388 103,971








(ii) Market risk in the trading Portfolio (continued)Value-at-riskVaR 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; and• 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.

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 BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and reported to ALCO and BRC.



Annual Report 2011




(ii) Market risk in the trading Portfolio (continued)Value-at-risk (continued)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 Management and the BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the Bank.

(iii) foreign exchange riskTrading positionsIn 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.

Foreign exchange limits are approved by the BRC and independently monitored daily by MRMD. Exposures and limits are regularly discussed and reported to ALCO and BRC.

Sensitivity AnalysisConsidering that other risk variables remain constant, the foreign currency revaluation sensitivity for the Group as at reporting date is summarised as follows: 2011 2010 –1% +1% –1% +1% depreciation appreciation depreciation appreciationbank islam rM’000 rM’000 rM’000 rM’000

US Dollar (2,214) 2,214 8,139 (8,139)Euro 1,069 (1,069) (20) 20Others (112,728) 112,728 (310,276) 310,276






Market risk (continued)

takafulThe key features of Takaful’s market risk management practices and policies are as follows:

- Wide market risk policy setting out the evaluation and determination of components of market risk for Takaful. Compliance with the policy is monitored and reported monthly to the Risk Management Committee (“RMC”) and exposures and breaches are reported as soon as practicable.

- Set asset allocation, portfolio limit structure and diversification benchmark to ensure that assets back specific takaful contract liabilities and that assets are held to deliver income and gains for policyholders in line with terms of the respective contracts expectations of policies. Takaful’s policies on asset allocation, portfolio limit structure and diversification benchmark have been set in line with Takaful’s risk management policy after taking cognisance of the regulatory requirements in respect of maintenance of assets and solvency.

Takaful also issues unit-linked investment policies. In the unit-linked business, the policyholders bear investment risk on the assets held in the unit-linked funds as the policy benefits are directly linked to value of the assets in the funds. Takaful’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.

Profit yield riskProfit 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 profit risk, whereas fixed rate/yield instruments expose Takaful to fair value profit risk.

Takaful’s profit risk policy requires Management to manage the risk by maintaining an appropriate mix of variable and fixed rate/yield instruments. The policy also requires Management to manage the maturities of profit-bearing financial assets and liabilities. Gaps between variable and fixed rate/yield instruments and their maturities, exceeding a tolerable amount, will be managed by Takaful through derivative instruments. 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. Takaful has no significant concentration of profit yield risk.



Annual Report 2011


Market risk - takaful (continued)

Profit yield risk (continued)For Takaful, impact is only on fixed rate instruments classified as AFS. Change in market profit yield only affects fixed rate investments held by Takaful.

impact on impact on profit before tax equity*takaful change in variables rM’000 rM’000

31 December 2011Profit rate +50 basis point – (1,580)Profit rate –50 basis point – 2,347

* impact on Equity reflects adjustments for tax, when applicable.







Profit rate riskThe table below summarises the Group’s exposure to profit rate risk. The table indicates average profits rates at the reporting date and the periods in which the financial instruments reprice or mature, whichever is earlier.

Group <-----------------------non trading book-------------------------->as at effective 31 december 2011 up to 1 >1-3 >3-12 1-5 over 5 non profit trading profit raterM’000 month months months years years sensitive book total %

Assets Cash, balances and placements with banks 2,904,101 425,000 335,000 – – 871,321 – 4,535,422 2.63Financial assets held-for-trading – – – – – – 1,228,952 1,228,952 3.62Derivative financial assets – – – – – – 15,877 15,877 0.64Financial assets available-for-sale 497,432 1,252,541 1,514,284 5,659,473 2,342,995 14,986 – 11,281,711 4.19Financial assets held-to-maturity 23,287 9,000 153,461 35,000 110,738 – – 331,486 3.61Financing, advances and others – performing 4,174,586 110,680 3,361,000 4,130,242 2,361,645 47,352 – 14,185,505 7.12– impaired net of allowances – – – – – (44,535) – (44,535) –Other assets – – – – – 6,716,374 – 6,716,374 –

total assets 7,599,406 1,797,221 5,363,745 9,824,715 4,815,378 7,605,498 1,244,829 38,250,792



Annual Report 2011



Profit rate risk (continued)


LiabilitiesDeposits from customers 13,648,978 1,832,130 236,327 104,736 – 12,386,032 – 28,208,203 1.83Deposits and placements of banks and other financial institutions 377,930 – 6,698 – – – – 384,628 1.92Derivative financial liabilities – – – – – – 23,299 23,299 0.93Bills and acceptance payable – – – – – 259,153 – 259,153 3.09Other liabilities – – – – – 7,551,419 – 7,551,419 –

total liabilities 14,026,908 1,832,130 243,025 104,736 – 20,196,604 23,299 36,426,702

equityEquity attributable to shareholders of the Company – – – – – 1,824,090 – 1,824,090

total liabilities and shareholders’ equity 14,026,908 1,832,130 243,025 104,736 – 22,020,694 23,299 38,250,792

On-balance sheet profit sensitivity gap (6,427,502) (34,909) 5,120,720 9,719,979 4,815,378 (14,415,196) 1,221,530 –Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 400,000 – (500,000) – – – –

total profit sensitivity gap (6,327,502) 365,091 5,120,720 9,219,979 4,815,378 (14,415,196) 1,221,530 –









AssetsCash, balances and placements with banks 2,251,840 – 100,000 – – 823,153 – 3,174,993 2.18Financial assets held-for-trading – – – – – – 2,279,891 2,279,891 2.54Derivative financial assets – – – – – – 80,108 80,108 0.71Financial assets available-for-sale 1,251,216 1,942,259 1,497,191 6,016,553 2,229,436 – – 12,936,655 3.66Financial assets held-to-maturity – – – 146,742 69,202 – – 215,944 3.43Financing, advances and others– performing 1,102,445 773,502 626,960 2,740,830 6,488,775 – – 11,732,512 7.39– impaired net of allowances – – – – – 128,119 – 128,119Other assets – – – – – 5,306,524 – 5,306,524

total assets 4,605,501 2,715,761 2,224,151 8,904,125 8,787,413 6,257,796 2,359,999 35,854,746



Annual Report 2011





LiabilitiesDeposits from customers 13,675,481 1,031,074 1,210,525 138,195 – 10,742,832 – 26,798,107 1.87Deposits and placements of banks and other financial institutions 371,431 – – 6,698 – – – 378,129 3.24Derivative financial liabilities – – – – – – 66,708 66,708 0.49Bills and acceptance payable 163,191 – – – – – – 163,191 2.23Other liabilities – – – – – 6,793,876 – 6,793,876

total liabilities 14,210,103 1,031,074 1,210,525 144,893 – 17,536,708 66,708 34,200,011

equityEquity attributable to shareholders of the Company – – – – – 1,654,735 – 1,654,735

total liabilities and shareholders’ equity 14,210,103 1,031,074 1,210,525 144,893 – 19,191,443 66,708 35,854,746

On-balance sheet profit sensitivity gap (9,604,602) 1,684,687 1,013,626 8,759,232 8,787,413 (12,933,647) 2,293,291 –Off-balance sheet profit sensitivity gap (profit rate swaps) 100,000 400,000 – (500,000) – – – –

total profit sensitivity gap (9,504,602) 2,084,687 1,013,626 8,259,232 8,787,413 (12,933,647) 2,293,291 –






liquidity risk

overviewLiquidity 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.

bankingIn 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.

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 depositor 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 Bank Negara Malaysia Liquidity Framework and practices, limits and triggers approved by the BRC and ALCO. These limits and triggers vary to take account of the depth and liquidity of the local market in which the Bank operates. The Bank maintains a strong liquidity position and manages the liquidity profile of its assets, liabilities and commitments to ensure that cash flows are appropriately balanced and all obligations are met when due.

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 depositor 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.



Annual Report 2011


liquidity risk - banking (continued)

liquidity and funding risk governanceThe management of liquidity and funding risk is principally undertaken using risk limit mandates approved by the BRC and management action triggers assigned by the ALCO.

ALCO is responsible under the authority delegated by the BRC for managing liquidity and funding risk at strategic level.

Management of liquidity and funding riskAll liquidity risk exposures are managed by Treasury. The aim is to ensure that liquidity and funding risk are consolidated at 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.

MRMD is an independent risk control function, responsible for ensuring efficient implementation of liquidity and funding risk management policies. MRMD 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 Senior Management. Strict escalation procedures are well documented and approved by the 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 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 Management and the BRC with an assessment of the financial impact of identified extreme events on the liquidity and funding risk exposures of the Bank.

Another 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 crises while minimising adverse long-term implications to the Bank.






liquidity risk (continued)

takafulThe following policies and procedures are in place to mitigate exposure to liquidity risk at Takaful 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 on a monthly basis, whilst exposures and breaches are reported to the Risk Management Committee on an ad-hoc basis. The policy is regularly reviewed for pertinence and 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 contracts contains clauses permitting the immediate draw down of funds to meet claims payments should claims events exceed certain amount.



Annual Report 2011



Maturity analysisThe table below summarises the Group’s undiscounted cash flows by remaining contractual maturities.

up to 1 >1 to 3 >3 to 6 >6 to 12 overGroup as at 31 December 2011 on demand month months months months 1 year totalrM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assetsCash, balances and placements with banks 3,675,241 100,181 425,000 285,000 50,000 – 4,535,422Securities portfolio – 820,251 1,335,998 1,967,349 452,523 8,266,028 12,842,149Derivative financial assets – 5,346 1,320 169 8,301 741 15,877Financing, advances and others – 4,174,586 110,680 1,730,274 1,678,078 6,447,352 14,140,970Other assets – – – – – 6,716,374 6,716,374

Total Assets 3,675,241 5,100,364 1,872,998 3,982,792 2,188,902 21,430,495 38,250,792

liabilitiesDeposits from customers 12,297,351 9,260,314 4,330,227 439,604 1,708,758 171,949 28,208,203Deposits and placements of banks and other financial institutions – 377,930 – – 6,698 – 384,628Derivative financial liabilities – 5,555 644 263 8,130 8,707 23,299Other liabilities – – – – – 7,810,572 7,810,572

Total Liabilities 12,297,351 9,643,799 4,330,871 439,867 1,723,586 7,991,228 36,426,702

equityEquity attributable to equity holders of the Company – – – – – 1,824,090 1,824,090

on balance sheet net liquidity gap (8,622,110) (4,543,435) (2,457,873) 3,542,925 465,316 11,615,177 –

commitments and contingencies (822,145) (1,438,399) (1,242,637) (643,234) (1,856,794) (3,282,895) (9,286,104)

net liquidity gap (9,444,255) (5,981,834) (3,700,510) 2,899,691 (1,391,478) 8,332,282 (9,286,104)







Maturity analysis (continued)

up to 1 >1 to 3 >3 to 6 >6 to 12 overGroup as at 31 December 2010 on demand month months months months 1 year totalrM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assetsCash, balances and placements with banks 2,822,195 252,798 – 100,000 – – 3,174,993Securities portfolio – 2,512,603 2,890,112 466,054 1,018,443 8,545,278 15,432,490Derivative financial assets – 24,952 9,192 8,106 27,804 10,054 80,108Financing, advances and others – 3,097,357 773,502 314,415 312,545 7,362,812 11,860,631Other assets – – – – – 5,306,524 5,306,524

Total Assets 2,822,195 5,887,710 3,672,806 888,575 1,358,792 21,224,668 35,854,746

liabilitiesDeposits from customers 10,674,384 9,100,751 4,327,025 624,120 1,887,361 184,466 26,798,107Deposits and placements of banks and other financial institutions – 371,430 – – – 6,699 378,129Derivative financial liabilities – 12,162 3,151 10,240 29,005 12,150 66,708Other liabilities – – – – – 6,957,067 6,957,067

Total Liabilities 10,674,384 9,484,343 4,330,176 634,360 1,916,366 7,160,382 34,200,011

equityEquity attributable to equity holders of the Company – – – – – 1,654,735 1,654,735

on balance sheet net liquidity gap (7,852,189) (3,596,633) (657,370) 254,215 (557,574) 12,409,551 –

commitments and contingencies (1,359,102) (2,435,647) (1,931,970) (2,181,283) (1,576,951) (3,596,339) (13,081,292)

net liquidity gap (9,211,291) (6,032,280) (2,589,340) (1,927,068) (2,134,525) 8,813,212 (13,081,292)



Annual Report 2011

37. fair value of financial assets and liabilities

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 balance sheet date.

Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in assumptions could materially affect these estimates and resulting fair value estimates.

Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of FRS 1322004, Financial Instruments: Disclosure and Presentation which requires the fair value information to be disclosed.

The following table summarises the carrying and fair values of the financial assets and liabilities on the balance sheet date:

carrying value fair value 31.12.2011 31.12.2010 31.12.2011 31.12.2010Group rM’000 rM’000 rM’000 rM’000

financial assetsCash and short-term funds 3,460,092 2,762,195 3,460,092 2,762,195Deposits and placements with banks and other financial institutions 1,075,330 412,798 1,075,330 412,798Derivative financial assets 15,877 80,108 15,877 80,108

financial assetsHeld-for-trading 1,228,952 2,279,891 1,228,952 2,279,891Held-to-maturity 331,486 215,944 331,486 215,944Available-for-sale 11,281,711 12,936,655 11,281,711 12,936,655Financing, advances and others 14,140,970 11,860,631 14,140,970 11,860,631

financial liabilitiesDeposits from customers 28,208,203 26,798,107 28,208,203 26,798,107Deposits and placements of banks and other financial institutions 384,628 378,129 384,628 378,129Derivative financial liabilities 23,299 66,708 23,299 66,708Bills and acceptance payable 259,153 163,191 259,153 163,191





37. fair value of financial assets and liabilities (continued)

carrying value fair value 31.12.2011 31.12.2010 31.12.2011 31.12.2010company rM’000 rM’000 rM’000 rM’000

financial assetsCash and short-term funds 89,898 63,815 89,898 63,815Financial assets available-for-sale 12,296 12,229 12,296 12,229

The fair value of the Group’s financial instruments which include cash and short-term funds, deposits and placements with banks and other financial institutions and short-term borrowings are not materially sensitive to shifts in market profit rate because of the limited term to maturity of these instruments.

As such, the carrying value of these financial assets and liabilities at balance sheet date approximate their fair values.

The fair values are based on the following methodologies and assumptions:

deposits and placements with banks and other financial institutionsFor 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-saleThe 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.

financing, advances and othersTheir 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 customersThe 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.



Annual Report 2011


deposits and placements of banks and other financial institutionsThe estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market profit rates for deposits and placements with similar remaining year to maturities.

bills and acceptance payableThe 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.

fair value hierarchyFRS 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.

• 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.

The levels of fair value hierarchy into which fair value measurements are categorised in their entirety based are as follows:

level 1 level 2 level 3 total2011 rM’000 rM’000 rM’000 rM’000

Securities held-for-trading – 1,228,952 – 1,228,952Securities available-for-sale * 105,773 11,093,403 67,549 11,266,725Derivative assets – 15,877 – 15,877Derivative liabilities – 23,299 – 23,299

* excludes those unquoted securities stated at cost and promissory notes stated at fair value.






fair value hierarchy (continued)The following table presents the changes in Level 3 instruments for the financial year ended 31 December 2011 for the Group:

at Gain/ transfer at 1.1.2011 (losses) settlement in/(out) 31.12.2011 rM’000 rM’000 rM’000 rM’000 rM’000

Securities available-for-sale 112,656 (17,345) (94,819) 67,057 67,549

38. caPital coMMitMents

Group 31.12.2011 31.12.2010 rM’000 rM’000

Property, plant and equipment Contracted but not provided for in the financial statements 56,640 52,333

Approved but not contracted for and not provided for in the financial statements 24,376 36,633

81,016 88,966



Annual Report 2011

39. lease coMMitMents

The Group have lease commitments in respect of equipment on hire and rental of premises, all of which are classified as operating leases. A summary of the non-cancellable long term commitments are as follows:

Group 31.12.2011 31.12.2010 rM’000 rM’000

Within one year 27,976 3,154Between one and five years 95,043 48,087More than five years 605,842 –

728,861 51,241

Included in the above are lease commitments with the holding corporation amounting to RM609,236,000 (2010: Nil).

40. 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. The Directors monitor the adequacy of capital on an ongoing basis.

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 are subject to regulatory requirements from Bank Negara Malaysia and Bursa Malaysia Berhad.





41. continGent liability

bankingOn 20 April, 2010, Bank Islam has referred a dispute in connection with a Services Agreement and Software Agreement (Agreements) with a vendor for arbitration. The Bank claims rescission of the Agreements and a refund of the sum paid to-date of RM19.03 million and/or damages, compensation / cost of funds on all sums found to be due to it and an appropriate order as to costs. The vendor has subsequently also filed a counterclaim. The arbitration has commenced on 15 February 2012. Based on the legal opinion obtained, the Directors of Bank Islam are of the view that the vendor’s counterclaim can be successfully resisted and therefore no provision has been recognised in respect of this matter.

42. oPeratinG seGMent inforMation

Performance is now 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 used to measure performance as management believes that such information is the most relevant in evaluating segmental results relative to other entities that operate within these industries. In the preceding year, performance was measured based on segmental results from operating activities and included items directly attributable to a segment as well as those that could be allocated on a reasonable basis.

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 segmentsThe 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.



Annual Report 2011

42. oPeratinG seGMent inforMation (continued)

banking takaful others elimination consolidated31.12.2011 rM’000 rM’000 rM’000 rM’000 rM’000

Business segmentsSegment result

Revenue from external customers 1,666,313 362,362 7,375 – 2,036,050Inter-segment revenue – 815 106,606 (107,421) –

Total revenue 1,666,313 363,177 113,981 (107,421) 2,036,050

Net income from operations (before allowance for

impairment on financing andother assets) 1,189,206 363,177 113,981 (103,447) 1,562,917

Operating overheads (643,595) (261,759) (15,389) 1,469 (919,274)

Operating results 545,611 101,418 98,592 (101,978) 643,643Allowance for impairment on financing (44,023) – – – (44,023)Allowance for contingent liability (15,231) – – – (15,231)Allowance for impairment on other assets (15,406) – – – (15,406)Share in the results of associate company (1,383) – – – (1,383)

Profit before zakat and taxation 469,568 101,418 98,592 (101,978) 567,600

Segment assets 32,186,451 5,883,924 2,067,638 (1,887,221) 38,250,792





42. oPeratinG seGMent inforMation (continued)

banking takaful others elimination consolidated31.12.2010 rM’000 rM’000 rM’000 rM’000 rM’000

Business segmentsSegment result

Revenue from external customers 2,174,058 407,204 15,051 – 2,596,313Inter-segment revenue 11,016 – 30,818 (41,834) –

Total revenue 2,185,074 407,204 45,869 (41,834) 2,596,313

Net income from operations (before allowance for

impairment on financing andother assets) 1,609,254 407,204 45,869 (36,820) 2,025,507

Operating overheads (880,190) (309,318) (22,093) 1,826 (1,209,775)

Operating results 729,064 97,886 23,776 (34,994) 815,732Allowance for impairment on financing (207,702) – – – (207,702)Allowance for impairment on other assets (19,875) – – – (19,875)

Profit before zakat and taxation 501,487 97,886 23,776 (34,994) 588,155

Segment assets 30,386,052 5,272,584 1,901,675 (1,705,565) 35,854,746



Annual Report 2011

43. 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 31.12.2011 31.12.2010 rM’000 rM’000

credit-related exposuresDirect credit substitutes 452,553 459,840Assets sold with recourse 2 242Transaction related contingent items 884,095 846,719Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 589,414 618,138Short term self liquidating trade related contingencies 288,665 312,745Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 1 1,003Unutilised credit card lines 817,113 768,840Any 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 3,897,622 4,118,965

6,929,465 7,126,492

derivative financial instrumentsForeign exchange related contracts 1,684,899 5,208,060 Less than one year 1,644,655 5,208,060 One year to less than 5 years 40,244 –Profit rate related contracts 671,740 671,740 Less than one year 171,740 – One year to less than 5 years 500,000 671,740

2,356,639 5,879,800

Obligations under an on-going underwriting agreement – 75,000

9,286,104 13,081,292





44. siGnificant events durinG the financial year

(a) Investment in Associated CompanyOn 7 February 2011, the Group completed the share subscription exercise for the 20% stake in Sri Lanka based Amana Bank Ltd. The 20% stake was acquired via the subscription of Amana Bank’s new shares for a total consideration of about RM21.3 million and a share swap of Bank Islam’s existing shareholdings in Amana Investment Ltd for Amana Bank’s shares. The total cost of investment is RM22.6 million.

(b) Acquisition of remaining 20% stake in Farihan Corporation Sdn BhdOn 11 August 2011, the Group acquired the remaining 20% in Farihan Corporation Sdn Bhd, thus making it a 100% wholly owned subsidiary of the Group. The remaining stake was purchased for a total consideration of RM0.9 million and was satisfied by internal funding.

45. coMParative fiGures

Following the adoption of Amendments to FRS 117, FRS 4 and presentation of derivatives on a gross basis, certain comparative figures of the Group have been reclassified to ensure consistency with the current year’s presentation.

Group as as previously restated statedas at 31 december 2010 rM’000 rM’000

statement of financial Position

Property, plant and equipment 219,575 195,586Prepaid lease payments – 23,989Derivative financial assets 80,108 44,326Derivative financial liabilities (66,708) (30,926)General Takaful and Family Takaful assets 4,786,882 4,458,749General Takaful and Family Takaful liabilities (1,078,867) (504,190)General Takaful and Family Takaful participants’ funds (3,708,015) (3,954,559)

other overhead expenses

Depreciation of property, plant and equipment 72,997 72,337Amortisation of prepaid lease payment – 660



Annual Report 2011

45. coMParative fiGures (continued)

Group as as previously restated statedas at 30 June 2009 rM’000 rM’000

statement of financial Position

Property, plant and equipment 185,514 160,714Prepaid lease payments – 24,800Derivative financial assets 26,441 19,776Derivative financial liabilities (28,476) (21,811)General Takaful and Family Takaful assets 4,190,220 3,947,615General Takaful and Family Takaful liabilities (1,012,727) (495,274)General Takaful and Family Takaful participants’ funds (3,177,493) (3,452,341)

other overhead expenses

Depreciation of property, plant and equipment 44,597 44,173Amortisation of prepaid lease payment – 424





46. suPPleMentary inforMation on the breakdown of realised and unrealised Profits or losses

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting year, into realised and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2011, into realised and unrealised profits or losses, pursuant to the directive, is as follows:

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Total retained profits/(accumulatedlosses) of the Company and itssubsidiaries– realised (664,059) (1,056,682) 144,092 (35,249)– unrealised (32,662) 65,355 10 1,659

(696,721) (991,327) 144,102 (33,590)Less: Consolidation adjustments (486,175) (252,729) – –

total retained profits/ (1,182,896) (1,244,056) 144,102 (33,590)(accumulated losses)

The determination of realised and unrealised profits is based on the Guidance of Special 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.



Annual Report 2011

Statement by Directorspursuant to Section 169(15) of the Companies Act, 1965

Statutory Declarationpursuant to Section 169(16) of the Companies Act, 1965

In the opinion of the Directors, the financial statements set out on pages 84 to 192 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2011 and of their financial performance and cash flows for the year then ended.

In the opinion of the Directors, the information set out in Note 46 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 Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

………………………………………………………… …………………………………………………………tan sri samsudin bin osman Johan bin abdullah

Kuala Lumpur,

Date: 30 March 2012

I, Mohamad azlan 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 84 to 193 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 30 March 2012.

…………………………………………….Mohamad azlan Mohamad alam

Before me:




Independent Auditors’ Report to the members of BIMB Holdings Berhad

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 2011 of the Group and of the Company, and the income statements, statements of comprehensive income, changes in equity and cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 84 to 192.

Directors’ Responsibility for the Financial StatementsThe Directors of the Company are responsible for the preparation of these financial statements that give a true and fair view in accordance with the Companies Act, 1965 and Financial Reporting Standards in Malaysia and 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’ ResponsibilityOur 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 Company’s preparation of the 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 Company’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.

OpinionIn our opinion, the financial statements have been properly drawn up in accordance with the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of their financial performance and cash flows for the financial year then ended.



Annual Report 2011

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 subsidiary companies 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 subsidiary companies of which we have not acted as auditors, which are indicated in Note 13 to the financial statements.

c) We are satisfied that the accounts of the subsidiary companies 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 subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

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 46 to the financial statements has been compiled by the Group and the Company as required by the Bursa Malaysia Securities Listing Requirements. 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 of 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.

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.

kPMG desa Megat & co. adrian lee lye wangFirm Number: AF 0759 Approval Number: 2679/11/13(J)Chartered Accountants Chartered Accountant

Petaling Jaya,

Date: 30 March 2012

Independent Auditors’ Report (continued)to the members of BIMB Holdings Berhad




ProPerty Listing for BiMB grouP:

no. LocationDescription of existing use tenure

Age ofBuilding(years)

Land, Built-up Area(square feet)

net BookValue as at31.12.2011

(rM)

Date of Acquisition

Date of sale and Purchase

Agreement

1. HS (D) 80625PT 45 Seksyen 87Jalan Tun RazakBandar Kuala Lumpur

Building site Leasehold for 99 years expiring on 29.12.2093

NA 6,597 13,331,126.73 30.12.1994 NA

2. No PT 1708 & 1709H S (M) 2660 & 2661Batu 5½, Jalan CherasKuala Lumpur

Vacant land Leasehold for 99 years expiring on 02.04.2085

NA 4,443 66,436.38 03.04.1986 NA

3. Lot No PT 805-HSD 1323Mukim Bagan Nakhoda OmarSabak BernamSelangor

Vacant land Leasehold for 99 years expiring on 03.02.2101

NA 405,000 604,889.73 25.03.1999 NA

ProPerty Listing for sAisB:



Land, Built-up Area(square feet)


(rM)

Date of Acquisition

Date of sale and Purchase

Agreement

1. No. P.T. Lot 002600 &H.S.(D) 815 & 816,Lot 002601No. 71 & 73Jalan Taman Selat OffJalan Bagan LuarButterworthPulau Pinang

4-storey shophouse/office for Bank Islam Operation

Freehold 26 171 & 273 960,018.03 30.09.1985 NA

Properties owned by BHB Group197



ProPerty Listing for tAkAfuL MALAysiA:



Land,Built-up Area(square feet)


(rM)

Date of Acquisition

Date of revaluation

1 Lot 557 & 559Plaza MelakaJalan Hang Tuah75300 Melaka

Two units of 4½storey Shophouse/Office

Freehold 28 3,485/14,434

1,340,000 03.05.1985 31.12.2011

2. No. 325A & 325BBlok 41, Kompleks Perniagaan Fajar91000 TawauSabah

Three units of 4 storey Commercial Complex/Office

999 years townlease expiringon 31.12.2895

20 4,025/6,037

2,700,000 12.07.1991 31.12.2011

3. No. 64 & 65Kompleks JitraJalan Sungai Korok06000 JitraKedah Darul Aman

Two units of 2 storeyShophouse/Office

Freehold 25 3,095/6,935

800,000 30.09.1991 31.12.2011

4. No. 23, Medan Istana 3Bandar Ipoh Raya30450 IpohPerak Darul Ridzuan

One unit of 3 storeyShophouse/Office

99 years leaseexpiring on30.03.2081

16 1,539/4,255

480,000 20.09.1995 31.12.2011

5. No. 84, Batu 3¼Jalan Gombak53000 Kuala Lumpur

One unit of 5 storey Shophouse/Office

Freehold 25 1,883/8,700

1,300,000 22.12.1995 31.12.2011

6. Lot 6966, Blok 59Muara TuangJalan Datok Mohd Musa94300 Kota SamarahanSarawak

One unit of 3 storey Shophouse/Office


16 1,312/3,750

620,000 07.07.1995 31.12.2011

7. Lot 54 & 55Bandar Wilayah JasaJalan Bunga Raya91100 Lahad DatuSabah


99 years town lease expiring on 31.12.2090

16 2,400/7,200

1,520,000 27.12.1995 31.12.2011

8. No. 24, Jalan USJ 10/1B47620 UEP Subang JayaSelangor Darul Ehsan


Freehold 17 3,200/9,600

4,500,000 08.06.1996 31.12.2011

198www.bimbholdings.com






(rM)

Date of Acquisition

Date of revaluation

9. No. 15 & 17Jalan KelibangLangkawi Mall07000 Kuah, LangkawiKedah Darul Aman


Freehold 18 1,440/7,720

550,000 17.07.1993 31.12.2011

10. No. 26 & 28Jalan Perda BaratBukit MertajamSeberang Prai14000 Pulau Pinang


Freehold 13 3,293/8,840

1,230,000 04.10.1996 31.12.2011

11. No. 433, 434 & 435Jalan Kulas93400 KuchingSarawak

Three units of 4 storeyShophouse/Office

Freehold 16 4,817/18,892

4,046,107 02.01.1996 31.12.2011

12. No. 312, Jalan Bandar 13Taman Melawati53100 Kuala Lumpur


Freehold 17 1,920/7,070

1,500,000 30.06.1994 31.12.2011

13 No. 20, Fasa 1AJalan Haji Manan86000 KluangJohor Darul Ta’zim


99 years lease 15 2,658/9,930

1,650,000 27.03.1992 31.12.2011

14. Lot 13 & 14Lazenda Commercial Centre Jalan Okk Abdullah 87007 Wilayah Persekutuan Labuan

Two units of 3 storeyOffice building

999 years lease expiring on 30.06.2902

17 2,504/7,200

1,900,000 14.01.1997 31.12.2011

15. Lot 6967, Blok 59Muara TuangJalan Datok Mohd Musa94300 Kota SamarahanSarawak



16 1,312/3,750

620,000 09.04.1996 31.12.2011

16. Lot 28, 30 & 32Jalan 2/3A, Pasar Borong68100 SelayangSelangor Darul Ehsan



24 4,447/16,800

2,700,000 Lot No.28 & 30

17.02.1997

Lot No. 3212.05.1997

31.12.2011

31.12.2011

Properties owned by BHB Group







(rM)

Date of Acquisition

Date of revaluation

17. Lot 12680Level 1 & MezzanineJalan Bukit Timbalan80000 Johor BahruJohor Darul Ta’zim

Two floors of 13 storeyOffice building


13 8,354* 2,390,000 09.03.1998 31.12.2011

18. Lot 12680, Level 3Jalan Bukit Timbalan80000 Johor BahruJohor Darul Ta’zim

One floor of 13 storeyOffice building


13 6,594* 1,450,000 06.01.1999 31.12.2011

19. Lot 14(S1) & 15(S1)Indah Point, Section 12Pulau IndahIndustrial Park42000 Klang West PortSelangor Darul Ehsan

Two units of 4 storeyShophouse/Office (vacant)


12 3,300/10,560

660,000 19.12.1996 31.12.2011

20. No. 1 & 2Jalan KelicapTaman Pekan Baru34200 Parit BuntarPerak Darul Ridzuan



24 3,956/7,044

730,000 18.09.1999 31.12.2011

21. No. 46 & 47Darul TakafulJalan Rahmat83000 Batu PahatJohor Darul Ta’zim

Two units of 4 StoreyShophouse/Office

Freehold 22 3,220/12,092

1,420,000 18.09.1999 31.12.2011

22. No. 180 & 181Jalan Tuan Hitam22000 JertehTerengganu Darul Iman


Freehold 21 3,200/12,250

1,560,000 18.09.1999 31.12.2011

23. Lot 82, 84 & 86Jalan Rugbi 13/30Seksyen 1340100 Shah AlamSelangor Darul Ehsan



12 6,339/11,309

2,520,000 07.05.1997 31.12.2011







(rM)

Date of Acquisition

Date of revaluation

24. No. 229, Jalan Shahab 2Shahab PerdanaJalan Sultanah Sambungan05350 Alor StarKedah Darul Aman

One unit of 2½ storeyShophouse/Office

Freehold 15 1,400/3,570

480,000 15.07.1999 31.12.2011

25. Lot No. 3803Jalan Dato’ Ulu Muar72000 Kuala PilahNegeri Sembilan Darul Khusus



12 2,001/3,120

450,000 01.07.1997 31.12.2011

26. No. 45, Jalan Teluk Sisek25000 KuantanPahang Darul Makmur



11 3,200/8,019

2,100,000 15.09.2000 31.12.2011

27. No. 27, 29 & 31Pusat Komersil Temerloh28000 TemerlohPahang Darul Makmur

Three units of 2½ storeyShophouse/Office


11 4,195/15,050

1,800,000 02.10.2000 31.12.2011

28. No. 2 & 4Jalan 6C/743650 Bandar Baru BangiSelangor Darul Ehsan



24 6,383/8,032

1,540,000 08.09.1999 31.12.2011

29. Lot 14 Seremban City CentreJalan Tuanku Munawir70000 SerembanNegeri Sembilan Darul Khusus



15 1,500/14,589

3,375,000 19.05.2000 31.12.2011

30. No. 29, Jalan DelimaPusat Perdagangan Pontian82000 PontianJohor Darul Ta’zim



10 3,899/10,248

1,400,000 23.03.2002 31.12.2011

31. Lot 11 & 12Kompleks Seri TeminJalan Ibrahim08000 Sungai PetaniKedah Darul Aman



26 2,800/11,020

1,328,000 08.09.1999 31.12.2011








(rM)

Date of Acquisition

Date of revaluation

32. Lot 1129 & 1130Bangunan Darul TakafulJalan Sultan Ismail20100 Kuala TerengganuTerengganu Darul Iman

One unit of 12 storeyOffice building

35 years sub leaseexpiring on27.02.2037

9 3,600/23,637

6,700,000 29.12.1997 31.12.2011

33. No. 616 & 617Jalan Besar73000 TampinNegeri Sembilan Darul Khusus



19 4,498/8,685

950,000 17.09.1999 31.12.2011

34. No. 6, Jalan 6C/743650 Bandar Baru BangiSelangor Darul Ehsan



24 1,905/3,508

660,000 09.08.2002 31.12.2011

35. Suite 3B/GBlok 3B, Plaza SentralJalan Stesen Sentral 550470 Kuala Lumpur

One floor of 22 storey Office building

Freehold 10 6,409* 7,600,000 26.06.2001 31.12.2011

36. No. 26 & 27Jalan Tanjung Pasar Baru18500 MachangKelantan Darul Naim

Two units of 2 storey Office building


30 1,600/4,000

620,000 17.09.1999 31.12.2011

37. No. 330 & 331Jalan Sultan Yahya Petra15720 Kota BharuKelantan Darul Naim

Two units of 4½storey Office building


29 3,200/15,200

1,870,000 03.07.2002 31.12.2011

38. Dataran KewanganDarul TakafulJalan Sultan Sulaiman50000 Kuala Lumpur

Two units ofOffice buildingMain Block – 26 storeyAnnexe Block – 29 storey

Freehold Main Block

-38

Annexe Block

-31

90,427/393,508

165,000,000 08.10.2004 31.12.2011

39. No. 2408Taman Samudera32040 Sri ManjungPerak Darul Ridzuan


99 years leaseexpiring on 19.05.2091

15 2,800/5,300

820,000 10.08.2004 31.12.2011







(rM)

Date of Acquisition

Date of revaluation

40. No. 76A & 76Pusat PerniagaanJalan Tupai34000 TaipingPerak Darul Ridzuan


Freehold 8 3,134/18,304

1,530,000 18.08.2003 31.12.2011

41. No. 10 & 11Jalan Sultan Yahya Petra15200 Kota BharuKelantan Darul Naim



9 3,852/9,120

1,980,000 03.07.2002 31.12.2011

42. No. 4197Jalan Teluk Wanjah05200 Alor StarKedah Darul Aman

One unit of 4 storeyOffice building

Freehold 9 8,716/18,440

3,240,000 27.07.2002 31.12.2011

43. No. 10 & 8 Jalan Padi Emas 5/2 Bandar Baru UDA 81200 Johor BahruJohor Darul Takzim



6 3,080/ 8,024

1,420,000 30.11.2004 31.12.2011

44. No. 4 Kompleks Seri TeminJalan Ibrahim08000 Sungai PetaniKedah Darul Aman

One unit of 4 storey Office building


26 1,400/ 5,510

660,000 11.09.2005 31.12.2011

45. No. 16 Jalan CenderawasihJalan Kilang Lama09000 Kulim Kedah Darul Aman


Freehold 12 1,600/ 4,172

420,000 29.11.2005 31.12.2011

46. Lot 1340, Miri Waterfront Commercial Centre98000 MiriSarawak



7 1,400/ 5,500

1,200,000 20.01.2006 31.12.2011








(rM)

Date of Acquisition

Date of revaluation

47. No. 6 Jalan Padi Emas 5/2Bandar Baru UDA 81200 Johor BahruJohor Darul Takzim



6 1,540/ 4,012

710,000 14.02.2006 31.12.2011

48. No. 148 Kompleks Munshi Abdullah75200 Melaka

One unit of 4½ storey Office building


18 1,470/ 6,117

720,000 21.03.2006 31.12.2011

49. No. 16474 & 16475Pusat Perniagaan InderapuraJalan Tras Raub Pahang Darul Makmur



12 3,218/ 9,280

1,360,000 27.10.2006 31.12.2011



Shareholding Statistics

Analysis of Holdings as at 30 March 2012

Authorised Share Capital: RM2,000,000,000Paid-up Capital: RM1,066,789,896Class of Share: Ordinary Share of RM1.00 eachVoting Rights: One (1) vote per ordinary share

size of shareholdings no. of Holders no. of Holdings % Malaysia foreign Malaysia foreign Malaysia foreign

1-99 170 3 3,165 67 0.00 0.00100-1,000 1,228 15 994,551 11,500 0.09 0.001,001-10,000 3,771 55 16,976,462 322,000 1.59 0.0310,001-100,000 801 52 22,107,464 2,208,400 2.07 0.21100,001-53,339,493 (*) 147 28 225,512,203 16,813,000 21.14 1.5853,339,494 and above (**) 4 0 781,841,084 0 73.29 0.00Directors’ Holding 0 0 0 0 0.00 0.00

Total 6,121 153 1,047,434,929 19,354,967 98.19 1.81

* Less than 5% of issued holdings** 5% and above of issued holdings

Directors’ shareholding as at 30 March 2012

no. of sharesno. names of Directors Direct Holdings %

1. Tan Sri Samsudin Osman – –2. Encik Johan Abdullah – –3. Tan Sri Ismail Adam – –4. Dato’ Paduka Ismee Ismail – –5. Encik Salih Amaran Jamiaan – –6. Encik Zahari @ Mohd Zin Idris – –7. Puan Zaiton Mohd Hassan – –8. Encik Syed Elias Abd. Rahman Alhabshi – –9. Puan Rozaida Omar – –



Distribution table According to Category of Holders as at 30 March 2012

no. of Holders no. of shares %

Malaysia foreign Malaysia foreign Malaysia foreign

Category of shareholders Bumiputranon

Bumiputra Bumiputranon

Bumiputra Bumiputranon

Bumiputra

1) Individual 1,338 3,796 60 7,565,962 32,536,559 1,528,031 0.71 3.05 0.14

2) Body corporate

a) Banks/Finance Companies 31 6 0 722,317,184 1,661,300 0 67.71 0.16 0.00

b) Investment Trusts/Foundation/Charities 1 0 0 2,412,540 0 0 0.23 0.00 0.00

c) Other Types of Companies 44 43 0 44,594,834 4,930,650 0 4.18 0.46 0.00

3) Government Agencies/Institutions 20 0 0 66,984,780 0 0 6.28 0.00 0.00

4) Nominees 487 355 93 61,605,620 102,825,500 17,826,936 5.77 9.64 1.67

5) Others 0 0 0 0 0 0 0.00 0.00 0.00

Total 1,921 4,200 153 905,480,920 141,954,009 19,354,967 84.88 13.31 1.81

no. of Holders no. of shares %

Grand Total 6,274 1,066,789,896 100.00

Holders with Holdings of 5% and above as at 30 March 2012

no. name Holdings %

1. Lembaga Tabung Haji 554,167,839 51.952. Amanahraya Trustee Berhad Skim Amanah Saham Bumiputera 95,000,000 8.913. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 74,236,600 6.964. Permodalan Nasional Berhad 58,436,645 5.48



List of top 30 Holders as at 30 March 2012

no. name Holdings %

1. Lembaga Tabung Haji 554,167,839 51.952. Amanahraya Trustees Berhad Skim Amanah Saham Bumiputera 95,000,000 8.913. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 74,236,600 6.964. Permodalan Nasional Berhad 58,436,645 5.485. Amsec Nominees (Tempatan) Sdn Bhd Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI) 30,764,500 2.886. Felda Holdings Bhd 24,947,998 2.347. Majlis Agama Islam dan Adat Melayu Terengganu 10,405,000 0.988. Majlis Ugama Islam Sabah 10,318,999 0.979. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (CIMB Prin) 9,513,100 0.8910. Majlis Ugama Islam Sabah 9,178,000 0.8611. Kumpulan Wang Persaraan (Diperbadankan) 8,936,700 0.8412. Amin Baitulmal Johor 8,316,000 0.7813. Amsec Nominees (Tempatan) Sdn Bhd 8,311,400 0.78 AMBank (M) Bhd (Hedging)14. CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Bank Berhad (EDP 2) 5,673,100 0.5315. Majlis Agama Islam Negeri Pulau Pinang 5,544,000 0.5216. Majlis Amanah Rakyat 5,544,000 0.5217. Affin Nominees (Tempatan) Sdn Bhd Affin Fund Management Sdn Bhd for Majlis Ugama Islam dan Adat Resam Melayu Pahang 5,544,000 0.5218. Majlis Agama Islam Selangor 5,543,488 0.5219. Citigroup Nominees (Tempatan) Sdn Bhd Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities) 5,018,400 0.4720. Citigroup Nominees (Asing) Sdn Bhd CBNY for Dimensional Emerging Markets Value Fund 4,601,200 0.4321. Majlis Agama Islam dan Adat Istiadat Melayu Kelantan 4,532,799 0.4222. Universal Trustee (Malaysia) Berhad CIMB-Principal Equity Fund 3,477,400 0.3323. Harakah Islamiyah (HIKMAH) 3,056,000 0.2924. Warisan Harta Sabah Sdn Bhd 2,865,000 0.2725. HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for Pertubuhan Keselamatan Sosial (CIMB-P 6939-404) 2,717,500 0.2526. Yayasan Kelantan Darulnaim 2,412,540 0.2327. HSBC Nominees (Asing) Sdn Bhd BNYM Lux for EFH Funds SCA SICAV-SIF 2,308,500 0.2228. Pertubuhan Kebajikan Islam Malaysia (PERKIM) 2,242,294 0.2129. Pertubuhan Kebajikan Islam Malaysia (PERKIM) 1,979,292 0.1930. Majlis Agama Islam dan Adat Melayu Perak Darul Ridzuan 1,848,000 0.17

Total 967,440,294 90.69



Regional Group Network

Bank islam Malaysia Berhad(98127-X)11th Floor, Wisma Bank IslamJalan Dungun, Bukit Damansara50490 Kuala LumpurTel : 03-2088 8000Fax : 03-2088 8033Website : www.bankislam.com.my

Al-Wakalah nominees (tempatan)sdn Bhd(122372-P)11th Floor, Wisma Bank IslamJalan Dungun, Bukit Damansara50490 Kuala LumpurTel : 03-2088 8000Fax : 03-2088 8033

BiMB investment Management Berhad(276246-X)19th Floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTe : 03-2161 2524/ 2924Fax : 03-2161 2464

BiMB foreign Currency Clearing Agency sdn Bhd(507913-V)11th Floor, Wisma Bank IslamJalan Dungun, Bukit Damansara50490 Kuala LumpurTel : 03-2088 8000Fax : 03-2088 8033

Bank islam trust Company (Labuan) Ltd(LL04013)Level 5 (I), Main Office TowerFinancial Park ComplexJalan Merdeka87000 Wilayah Persekutuan LabuanTel : (6) 087-451 806Fax : (6) 03-451 808

BiMB offshore Company Management services sdn Bhd(587171-M)Level 5 (I), Main Office TowerFinancial Park ComplexJalan Merdeka, 87000 Wilayah Persekutuan LabuanTel : (6) 087-451 806Fax : (6) 03-451 808

farihan Corporation sdn Bhd(558474-D)19th floor, Menara Bank IslamNo. 22, Jalan Perak50450 Kuala LumpurTel : 03-2782 1333Fax : 03-2782 1355

syarikat takaful Malaysia Berhad(121646-K)26th Floor, Blok AnnexDataran Kewangan Darul TakafulNo. 4, Jalan Sultan Sulaiman50000 Kuala LumpurTel : 03-2268 1984Fax : 03-2274 2864Website : www.takaful-malaysia.com.my

Asean retakaful international (L) Ltd(LL01129)Level 14, Blok 4Financial Park ComplexJalan Merdeka87000 Wilayah Persekutuan LabuanTel : 087-451 301 / 087-451 302 /

087-451 303Fax : 087-451 300

P.t Asuransi takaful keluargaGraha B, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100 Jakarta, 12790 IndonesiaTel : 6221-799 1234 / 6221-799 2345Fax : 6221-790 1435

P.t Asuransi takaful umumGraha A, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100 Jakarta, 12790 IndonesiaTel : 6221-799 1234 / 6221-799 2345Fax : 6221-790 1944

P.t syarikat takaful indonesiaGraha A, Graha Takaful IndonesiaJalan Mampang Prapatan RayaNo. 100 Jakarta, 12790 IndonesiaTel : 6221-799 1234 / 6221-799 2345Fax : 6221-790 1435

BiMBseC securities sdn Bhd(290167-X)32nd FloorMenara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2691 8887Fax : 03-2691 8854Website : www.bimbsec.com.my

BiMBseC nominees (Asing) sdn Bhd(319820-P)32nd FloorMenara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTel : 03-2691 8887Fax : 03-2691 8854



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 15th Annual General Meeting of the Company to be held at Tun Rahah Grand Hall, Level 1, Menara Yayasan Tun Razak, 200 Jalan Bukit Bintang, 55100 Kuala Lumpur on Tuesday, 8 May 2012 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 2011 together with the Reports of the Directors and Auditors thereon.

ordinary resolution 2 To approve the payment of final single tier dividend of 7.25% in respect of the financial year ended 31 December 2011.

ordinary resolution 3 To re-elect Tan Sri Samsudin Osman, a Director who is retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible has offered himself for re-election.

ordinary resolution 4 To re-elect Tuan Syed Elias Abd. Rahman Alhabshi, a Director who is retiring by rotation in accordance with Article 61 of the Company’s Articles of Association and being eligible has offered himself for re-election.

ordinary resolution 5 To re-elect Puan Rozaida Omar, a Director who is retiring pursuant to Article 61 of the Company’s Articles of Association and being eligible has offered herself for re-election.

ordinary resolution 6 To re-appoint Encik Salih Amaran Jamiaan, a Director who is retiring pursuant to Section 129 of the Companies Act, 1965 and has offered himself for re-appointment.

ordinary resolution 7 To approve the payment of Directors’ fees of RM495,000 for the financial year ended 31 December 2011.

ordinary resolution 8 To re-appoint Messrs. KPMG Desa Megat & Co. as 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 9 To approve the Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Proposed New Shareholders’ Mandate for additional Recurrent Related Party Transactions of a Revenue or Trading Nature.

special resolution 1 To approve the Proposed Amendments to the Company’s Articles of Association.

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

Signed by *individual member/*officer or attorney of member/*authorised nominee of (beneficial owner)

No. of shares held : Securities Account No. : Date :

If appointment of proxy is under seal

The Common Seal of was hereto affixed in accordance with its Articles of Association in the presence of :-

Director Director/SecretaryIn its capacity as *member/*attorney of member/*authorised nominee of

(beneficial owner)

Seal

No. of shares held : Securities Account No. : Date :

(Company No. 423858-X)(Incorporated in Malaysia under the Companies Act, 1965)

Form of Proxy

important notes:

(1) A member of the Company entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and vote for him.

(2) 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.

(3) Where a member appoints more than one (1) proxy the appointment shall specify the proportions of his holdings to be represented by each proxy.

(4) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 31st. Floor, Menara Bank Islam 22, Jalan Perak, 50450 Kuala Lumpur, not less than 48 hours before the time fixed for holding of the meeting or any adjournment thereof.

(5) A proxy may vote on a show of hands or 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.

(6) 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

fold Here

fold Here

BiMB HoLDings BerHAD (423858-X)

31st. Floor, Menara Bank Islam22, Jalan Perak, 50450 Kuala Lumpur

STAMP

...2012/04/16 · BIMB HOLDINGS BERHAD BIMB HOLDINGS BERHAD (423858-X) 31st Floor, Menara Bank...

Documents

Transcript of ...2012/04/16 · BIMB HOLDINGS BERHAD BIMB HOLDINGS BERHAD (423858-X) 31st Floor, Menara Bank...