2012

Annual

Report

CitibankBerhad

Our Principles

The four key principles - the values that guide us as we perform our mission are:

Common Purpose

One team, with one goal: serving our clients and stakeholders.

Responsible Finance

Conduct that is transparent, prudent and dependable.

Ingenuity

Enhancing our clients’ lives through innovation that harnesses the breadth and

depth of our information, global network, and world-class products.

Leadership

Talented people with the best training who thrive in a diverse meritocracy that

demands excellence, initiative and courage.

Directors’ Report

Statement by Directors

Statutory Declaration

Shariah Committee‘s Report

Independent Auditors’ Report

Statements of Financial Position

Statements of Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Corporate Information

Chairman’s Statement

CEO’s Statement

Board of Directors - Profile

Statement of Corporate Governance

Risk Management

Statement of Internal Audit andInternal Control

Management Reports

Shariah Committee

Ratings Statement

Awards & Accolades

Corporate Citizenship at Citibank Berhad

Valuing Our People

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Contents

Registered Office45th Floor, Menara Citibank

165 Jalan Ampang50450, Kuala Lumpur

Date of incorporation22 April 1994

AuditorsKPMG

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I am pleased to present the Bank's annual report for the financial year ended 31 December 2012. On behalf of the board, I would like to thank Jonathan Christian Larsen for his leadership as Chairman from January 2010 to December 2012. The Board would like to welcome Dato‘ Dr. Thillainathan Ramasamy and Anil Wadhwani as Independent Non - Executive Director and Non-Independent Non -Executive Director respectively. 2012 was a momentous year for Citigroup (Citi) as we celebrated our 200th year, a milestone few institutions ever reach. It has been our privilege to support some of the biggest ideas in modern history. We thank all our clients and employees who, over the centuries, helped conceive and make them happen. For our parent company, Citigroup, revenues, net of interest expense, stood at US$70.2 billion, down 10% versus the prior year. Excluding CVA/DVA and the impact of minority investments, revenues were $77.1 billion, up 1% from 201 1. While our earnings reflect a continually challenging environment, Citi made progress on several fronts including an increase in revenues from Transaction Services and Global Consumer Banking from the prior year period. In Malaysia, our banking operations yielded positive results due to the prevailing business and investment-conducive economic environment. The government‘s expansionary policies and incentives such as the Economic Transformation Programme, higher wages, capital spending by public and private sectors, and domestic consumption are expected to support continued economic growth.

Bank Negara Malaysia has forecasted the industry to remain resilient despite increasing competition locally and on-going global uncertainties. The sector is underpinned by strong capital base, high liquidity and sustained profits with commendable core capital ratios of 1 3.1% and risk-weighted capital ratios of 14.9%. Citibank Berhad‘s (Citibank) strategy is well aligned with three dominant, long-secular trends: globalisation, urbanisation and digitisation. 2012 was a year of challenges, changes and successes for Citi. For two centuries, Citi‘s central mission has been to enable economic progress, and to support our clients on their journey from ambition to achievement. As we continue on our journey, I know that great things lie ahead for the franchise – both globally and here in Malaysia. I‘m proud to have been appointed Chairman and I appreciate the support and guidance of the other Board members during my transition into this new role.

Mr. Terence Kent Cuddyre

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Overview In 2012, the global economy continued to experience modest growth. Governments and central banks in several major and emerging economies in the US and Euro zone intermittently announced policies and intervened to stamp the downward slide. This negative growth trajectory and corresponding weak market demands generally slowed economic activity in Asia but the region still recorded a reasonably strong growth. Despite the global economic slowdown, the Malaysian economy registered a respectable 5.6% annual growth, underscored mainly by private and public sector investments particularly in transportation, construction, oil and gas and utilities subsectors. The banking sector leveraged on the domestic economic environment and registered a stable performance, buttressed by strong capital ratios, good profits and sufficient liquidity. During the year, to further bolster the banking industry, Bank Negara announced four improvements including reducing complexity and increasing transparency; stronger focus on more responsible and sustainable financial business practice; and reinforcing buffers to withstand future shocks.

2012 - The Year in Review

In 2012, the Bank continued to offer innovative products and quality services to help our customers make informed decisions to grow their savings and investment portfolio.

For the financial year ended 31 December 2012, the Bank registered a pre-tax profit of RM790 million, compared with RM857 million achieved the previous year. Total net income was RM1.85 billion in 2012, a marginal decrease from 2011 . The Bank‘s return on equity before tax decreased to 19.0% for the financial period ended 31 December 2012 compared with 22.5% in 2011. Our liquidity continues to be exceptionally strong, with cash and short term funds and placements with financial institutions in excess of RM10.6 billion. The bank‘s risk weighted capital adequacy ratio stood at a comfortable 16.9% (before dividend), based on its audited capital base as at 31 December 2012. The Bank‘s net interest income was RM1.2 billion in 2012 while non-interest income increased to RM650 million in 2012 from RM630 million in 2011 .

Business Highlights in 2012

Citibank successfully cemented its position as a leading financial institution with the launch of a range of enhanced and innovative products and services in 2012.

Some of the key business highlights in 2012 included: • The launch of securities lending services via our OpenLend

platform - aimed at enabling investors to take advantage of the lucrative earning opportunities in Asian markets.

• Enhanced Citibank value proposition for the emerging affluent segment with a 24-hour electronic chat or e-chat service, a first by a financial institution in Malaysia, and a Call Me service, which allowed travelling customers to request a call back from Citibank anytime, anywhere.

• Increased number of countries for Citi Global Transfer (CGT) to more than 30 to enable free and instant funds transfers within Citibank accounts across the world.

• Value-added benefits for our Cards customers – benefits ranging from free insurance protection, hospitalisation benefits, compensation for losses suffered from snatch thefts and exclusive, queue-free KLIA airport limo taxi rides home.

• The launch of an online home loan approval tool that helped customers establish their loan eligibility status instantly. Also piloted a 10 minutes approval service based on credit bureau requirements, which gave customers a quicker and complete result of their loan eligibility against the longer market practice of 3-5 days.

• Re-launched our new Learning and Development Centre at Menara Citibank – a testament to our on-going commitment and investment in employee development and learning.

• Broadened our access to customers through our ubiquitous virtual presence via Citibank‘s webpage, Twitter, YouTube, Blog, Facebook and LinkedIn.

• Physical access at over 1 1 ,000 ATMs nationwide through 20 Malaysian Electronic Payment System (MEPS) member banks at 2,000 locations nationwide, making Citibank the first foreign bank in Malaysia to gain complete access to the MEPS Interbank GIRO.

In recognition of our banking products and services, we were awarded the Reader‘s Digest Trusted Brand Award 2012 for the third time running in the finance category and we were awarded Best Foreign Cash Management Bank in Malaysia by Asiamoney, Best International Trade Bank in Malaysia by Trade Finance and Best Corporate / Institutional Internet Bank in Malaysia by Global Finance.

As at end 2012, we retained our leadership positions in credit cards, FX Options, Government Bond Trading and Custody and Cash Management. We are also amongst the top three in the Wealth Management segment. Our brand image was further heightened as we continued to reach out and provide quality service and products to our customers all over Malaysia.

Consumer Banking

Credit Cards

Although the Malaysian economy grew at a healthy rate amidst an overall sluggish global economy, our research showed consumers had become increasingly discerning about savings and in selecting credit cards that offered the best value-for-money propositions. Hence, we remained completely cognisant of consumer spending trends and behaviour patterns, in particular, their banking and lifestyle needs. We practiced responsible finance and ensured our credit cards offered tangible value and strong benefits by incorporating enhanced benefits into our product offerings. Citibank Platinum Cardholders were awarded free insurance protection on purchases made with their Citibank cards. Depending on the type of cards held, cardholders enjoyed worry-free shopping as their purchases were fully protected based on our three insurance benefit options, namely extended warranty, purchase or refund at no extra cost. We also introduced Cash Assure Plus 400, which provided a daily income of RM400 as a hospitalisation benefit to customers and Snatch Protect that offered compensation for losses sustained from snatch thefts. For Citibank PremierMiles cardholders, we offered exclusive, queue-free KLIA airport limo taxi rides home when they returned from their overseas trip. Cardholders who swiped their card a minimum of three times while travelling abroad could redeem their free ride home from a Citibank Priority Booth at the Airport Limo (M) Sdn Bhd counter, where a dedicated staff ushered them straight to a waiting limo. This benefit was in addition to discounts offered on duty free shopping at KLIA, airport lounge access for both local and global travellers and card miles that could be redeemed to fly to over 150 destinations on more than 70 international airlines including Malaysian Airlines (Enrich), Thai Airways (Royal Orchid Plus), Singapore Airlines (KrisFlyer), Cathay Pacific (Asia Miles) and Delta Airlines (SkyMiles). Together with our co-brand partner, AirAsia, we launched the AirAsia-Citibank Platinum Visa and AirAsia-Citibank Gold Visa Credit cards, which gave our customers new benefits such as upgrades to AirAsia‘s X Premium FlatBed seats, free in-flight meals and free seat selection.

The co-brand cards also gave consumers the opportunity to effectively manage their monthly purchases by consolidating their daily and business expenses on one card. This enabled them to save more on their travel and lifestyle needs as they could use the benefits and evergreen AirAsia Points earned. Other benefits card members enjoyed were exclusive privileges including up to 50% off at over 800 hotels worldwide, dining deals and other offers at over 4,000 dining outlets across the globe. Consumers could also earn 3X AirAsia Points for every Ringgit spent, based on a tiered spending system. The AirAsia Points could be redeemed for AirAsia e-Gift vouchers, items from the Citibank Rewards Catalogue or for Instant Rewards redemption at selected merchants nationwide. Citibank also made dreams come true for 18 Citibank VISA Credit cardholders who each won two passes to catch the London 2012 Olympic Games. The prizes offered included round trip air fares to London for two, accommodation at the Hilton London Metropole Hotel, and tickets to watch the Olympic Games. Citibank teamed up with renowned jeweller, Tiffany & Co for its sparking bridal campaign and treated loyal customers to special gifts for purchases made at Tiffany stores in Pavilion KL and KLCC. Meanwhile, for our tech-loving card members, we jointly organised contests with Samsung and gave away 300 units of Samsung SIII and 500 units of items like 55inch TV, Galaxy Note II and Table Cameras. Our value proposition and exemplary service have helped us remain the market leader in the credit card industry in terms of credit card usage. Bearing testimony to this, Citibank was awarded the Reader’s Digest Trusted Brand Award 2012 for the third time running in the finance category. Retail Banking

The volatility of the capital markets did not dampen Citibank’s retail banking business in 2012. We strived to address clients’ dynamic needs, foster stronger relationships and provide stand-out products and services with better return on investments. As the emerging affluent segment is a top priority for Citi across Asia, last February we re-launched our Rethink Banking value proposition for this segment to include some enhanced features such as 24-hour electronic chat or e-chat service to customers, a first by a financial institution in the country, and a “Call Me” service especially useful for travelling customers who can request a call back from Citibank 24x7, from anywhere in the world. We also made available a dedicated personal banker as a single point of contact as well as benefits on selected products and services. The improved value proposition followed results of a consumer research conducted by Citibank, which focused on preferences, financial needs and lifestyle changes of emerging affluent clients. During the year, we expanded the number of countries for Citi Global Transfer (CGT) to more than 30 to enable free and instant funds transfers within Citibank accounts across the world.

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We also launched the new i-Wealth Goal Planner that allowed consumers to understand their financial goals and how to achieve them. We continued to expand our investment services by capitalising on our exclusive partnership in Malaysia with Franklin Templeton Investments with the launch of the Templeton Global Total Return Fund last November. The partnership offered a unique opportunity for our high net worth investors to diversify their investment portfolio. Via the Templeton Global Total Return Fund, Citibank offered qualified Malaysian investors the opportunity to tap into an award-winning and actively managed global fixed income portfolio. In line with our position as a leading bank in research and advisory services, we held a market outlook presentation by Citibank's Director and Senior Investment Strategist and continued to organise our Leadership series, throughout the year, in Kuala Lumpur, Penang and Johor Bahru. Our existing investment customers were also invited to attend product and market presentations by Chief Executive Officers and Chief Information Officers of Citibank’s strategic investment management partners. Mortgages

In line with Bank Negara‘s responsible lending aimed at containing increasing household debt, prudent lending guidelines were slowly introduced into the market. The new guidelines levelled the playing field to some extent and ensured the mortgage industry stayed relatively healthy, stable and fair. From 2012, we concentrated our mortgage business on three key strategies, namely targeting the affluent and emerging affluent segments, building the prime developers channel (without bridging loans) and increasing sales force productivity. These helped drive mortgage growth 37% year-on-year and stabilised our portfolio of End Net Receivables or net money owed. Based on research findings on what our target consumers wanted from their home loans, we created a new Customer Value Proposition (CVP) that changed the home loan service process. Last June, we launched the first phase; an online self-service home loan indicative approval tool that instantly informed customers of their loan eligibility. In December, we piloted a 10 minute indicative approval service based on credit bureau requirements. This service offered customers a faster and more conclusive indication of their loan eligibility in 10 minutes versus the market practice of 3-5 days. We launched this first-to-market approach at all our branches in January 2013 to good reviews. We will continue enhancing our CVP in phases. Institutional Client Group

Global Transaction Services

Treasury and Trade Solutions

Our innovation in Cash Management enabled us to facilitate the digitisation and globalisation of our corporate and institutional clients. For our corporate clients, we launched a new mobile banking service called CitiDirect Mobile. A large majority of

our clients embraced data analytics tools based on cloud computing technology that introduced them to new insights into their operational flows and electronic statements. With our automated global cash management solutions, clients were able to control their offshore operations from Malaysia, supporting the development of the treasury management industry locally. Trade finance experienced strong demand from the expanding domestic economy. Import and supply chain services registered high growth in various industry segments. This enabled Citibank to be well positioned to facilitate trade flows through our global network while online trade services provided convenience and accessibility to our clients‘ broader supply chain partners. The bank once again won accolades from three international publications. Citibank was awarded Best Foreign Cash Management Bank in Malaysia by Asiamoney, Best International Trade Bank in Malaysia by Trade Finance and Best Corporate / Institutional Internet Bank in Malaysia by Global Finance in industry polls conducted by these publications respectively. Securities Services

Citibank‘s Securities and Fund Services registered another good year as both Asset Under Custody (AUC) and transaction volumes reached all-time highs on the back of improved market conditions and additional mandates from new and existing clients. We achieved Top-Rated status in the 2012 Global Custodian Emerging Markets survey for both Leading and Cross Border Clients, reflecting our ability to meet client demands and to stay at the forefront of customer service. We also used our knowledge, experience and expertise in post-trade services to actively engage in various initiatives to enhance market infrastructures. Securities and Banking

Global Markets

Citibank launched its securities lending services via its OpenLend platform to enable offshore and domestic investors‘ access to revenue opportunities in the Malaysian market as part of our commitment to expand our product offering. The new service leverages our on-the-ground expertise and global product capabilities through our core in-country infrastructure, as well as our product and relationship management teams. OpenLend is part of Citibank‘s investment services in 72 markets globally, delivered through the OpenInvestor platform. Islamic Banking Division

In 2012, Citibank successfully launched an innovative Islamic investment strategy for institutional clients that dynamically adjusted their asset allocation to various Islamic assets globally according to market trends. Our first major transaction was executed with an Islamic fund manager using Citibank‘s new Islamic Negotiable Instrument platform.

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This strategy received positive reception from clients, and was part of a larger effort by Citibank to promote Malaysia as a centre of Islamic wealth management under the ambit of the Malaysia International Finance Centre (MIFC). Our Citi Transaction Services continued to develop cross-border Shariah compliant services with the implementation of automated liquidity management solutions, with funds over US$50 million under management, for clients across Citi branches in Asia and Europe. These services were aimed at supporting the growth of Islamic investments offshore and multinational treasury management centres in Malaysia. Significant Events & Accolades

For three consecutive years, in the finance category, Citibank was awarded the Reader‘s Digest Trusted Brand Award 2012. Three publications recognised Citibank with accolades - Best Foreign Cash Management Bank in Malaysia by Asiamoney, Best International Trade Bank in Malaysia by Trade Finance and Best Corporate / Institutional Internet Bank in Malaysia by Global Finance. The Community We Work and Live In

At Citi, we aim to conduct business in a manner that creates value for our clients, shareholders, people and communities. We reinforce our commitment to Responsible Finance and financial inclusion with innovative business endeavours, with robust philanthropic investments and by recruiting and supporting a diverse workforce — because being a good corporate citizen starts with operating responsibly. As a financial institution and a group, we embrace the challenge to help reach the 2.5 billion people in the world with no access to financial services. In Malaysia, our corporate citizenship initiatives continued to focus on supporting and helping people of all ages understand and practice financial management so that they can better manage their lives and livelihood. Last year, Citi Foundation allocated US$210,000 to fund a number of financial education initiatives with community partners. Citibank and ERA Consumer Malaysia reached out to 800 kindergarten children between the ages of four and six in urban and rural areas via My First Ringgit- our customised financial education programme. For our Stretching Your Ringgit financial education series, we organised 20 financial education workshops for 800 young workers, from ages 18 to 35 years, in 10 states in Peninsular Malaysia. We also partnered with Astro to air radio infomercials on Hitz.fm, Era FM and My FM as part of our continuing effort to increase awareness and encourage the practice of financial management amongst the low to middle income groups. The inaugural CITI-UPM Financial Empowerment for Mature Women programme was launched for low income women, who earned less than US$1,000 and lived within the Klang Valley. We collaborated with Habitat For Humanity (HFH) to equip 50 low income families in the Klang Valley with practical financial knowledge to improve their homes.

Last year, Citi Global Community Day had an added significance as it coincided with Citi‘s 200th anniversary. Globally, more than 110,000 Citi volunteers participated in 1,300 service projects in 92 countries around the world that benefitted local communities. In Malaysia, the Soup Kitchen for the Homeless‘ theme prevailed for our Global Community Day, which saw around 7,000 Citibank volunteers take part in various community-based activities. Our People

At Citi, people are our biggest asset. Our efforts would not be possible without the strength of a diverse and skilled global workforce. During the year, we facilitated approximately 110 internal employee moves under the 2+3 policy whilst the Leadership Enhancement & Accelerated Development (L.E.A.D) programme provided accelerated career development opportunities for 164 selected employees. We also launched an Employee Assistance Program (EAP) to provide support services such as counselling, wellness talks and on-site consultations to all permanent employees of Citibank. Under Citi Live Well, more than 870 employees attended 14 talks on interesting work and health related topics. Key Business Priorities for 2013

We aim to leverage on our global presence, digitised banking technologies, innovative spirit, in-depth skill set, knowledge and experience, to be first- to-market with cutting-edge market relevant product and services that will continue to differentiate us in the market with our target clients. Our key business priorities for 2013 include the following:

• Maintain robust risk management practices and a high level of vigilance on asset quality.

• Invest strategically in innovation and focus in delivering stronger value propositions to our clients.

• Continue operational improvement and cost efficiency.

• Build or reinforce market leadership in credit cards, mortgage and the affluent segment.

• Strengthen relationship with customers and focus on client satisfaction, loyalty and retention.

• Drive rigorous talent identification and development.

Outlook for 2013

The world economy is expected to recover, albeit unevenly and moderately in 2013. Countries in the Asian region, including Malaysia, are forecast to register robust growth and remain largely resilient relative to the weaker global environment. The Malaysian banking sector is projected to remain positive, buoyed by the government‘s economic transformation initiatives, diverse natural resources, supportive regulatory policies and Bank Negara‘s close supervisory activities.

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At the bank level, Citi’s more than 200-year legacy of innovation will continue to take centre stage. We will continue to listen to our customers, innovate and proactively deliver market-appropriate and differentiated products and services to our target clients. We will continue to exercise prudence and governance in our operations, mitigate risks and further our presence as a leading financial institution and contribute constructively to the growth of the local banking industry.

Sanjeev NanavatiChief Executive Officer

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Mr. Terence Cuddyre joined the Bank on 14 December 2010 as a Non Independent Non Executive Director. He serves on the Audit Committee and Risk Management Committee of the Bank. He is currently Citigroup Country Officer for Brunei, a position which he assumed on 1 July 2009 and cluster head for Bangladesh, Sri Lanka and Brunei. Prior to that, he spent four years as the Head of Training for the Asia Pacific region (Citi Centre for Advanced Learning). He has also served as Citigroup Country Officer for Thailand (2002 – 2005) and was North Asia Regional Risk Officer (2000 – 2001). Mr. Cuddyre joined Citigroup in 2000 after 23 years with Bank of America. He held numerous international roles including Country Head of Ireland, Korea, Hong Kong and China. He also held several risk positions in North America and Asia. He has also been active in the American Chamber of Commerce, serving on the boards in Hong Kong, Korea and China. In Thailand, he served as Chairman. Mr. Cuddyre holds a B.A. in Economics from University of California, Santa Barbara and a MBA from the Wharton Business School, University of Pennsylvania.

Mr. Terence Kent Cuddyre

Mr. Sanjeev Nanavati was appointed the Bank‘s Chief Executive Officer on 5 October 2007. He is responsible for Citibank‘s retail banking, credit cards, corporate banking, investment banking, global transaction services, equities, fixed income and treasury activities in Malaysia. Before moving to Malaysia, he was Managing Director and Global Head of Citigroup Depository Receipt Services based in New York and Hong Kong, responsible for all aspects of the ADR / GDR product offering globally. Mr. Nanavati joined the Citigroup Depository Receipt Services Management team in July 2001 and strategically repositioned the business, creating a differentiated value proposition for clients. Prior to joining Citigroup, he was the Head of Corporate and Investment Banking for 6 years at one of the largest international banks in India and prior to that worked for 12 years with a major U.S. bank in M&A and Capital Markets, working in the United States and Hong Kong. Mr. Nanavati holds an MBA Degree from Syracuse University in the United States. At present, he is the President for the American Malaysian Chamber of Commerce and also a Council member of the Association of Banks in Malaysia.

Mr. Sanjeev Nanavati

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Dato‘ Siow Kim Lun is currently a board member of Kumpulan Wang Persaraan, UMW Holdings Berhad, W Z Steel Berhad, Eita Resources Berhad, Hong Leong Assurance Berhad and MainStreet Advisers Sdn Bhd. He is also a member of the Land Public Transport Commission. From 1993 to 2006, Dato‘ Siow was with the Securities Commission (SC), where he has served as the Director of its Issues and Investment Division and the Director of its Market Supervision Division. Prior to joining the SC, Dato‘ Siow has worked in the investment banking and financial services industry in Malaysia for over 12 years. Dato‘ Siow holds an MBA from the Catholic University of Leuven, Belgium and a Bachelor of Economics (Hons) from the National University of Malaysia. He has also attended the Advanced Management Program at Harvard Business School. Dato‘ Siow has been a director of Citibank Berhad since April 2007. He is presently the Chairman of the Bank‘s Risk Management Committee, and a member of the Nominating Committee and Audit Committee.

Dato’ Siow Kim Lun

Tan Sri Dato' Hj Omar joined the Bank on 3 May 2000 as an Independent Non Executive Director. He serves as the Chairman of the Nominating Committee, and a member of the Risk Management Committee and the Audit Committee of the Bank. He is a Non-Executive Director of UEM Group Berhad and UEM Builders Berhad and also serves as a Non-Executive Director on the Board of KLCC (Holdings) Sdn Bhd, Cyberview Sdn Bhd, PNB Commercial Sdn Bhd and Selia Senggara Sdn Bhd. He has spent more than three decades serving the government as a civil engineer in the Public Works Department (PWD) of Malaysia and during this long tenure, he held many positions in the department, culminating in the position of PWD's Director-General from 1996 to 1999. Tan Sri Dato' Hj Omar has particular expertise in structural engineering and water supply engineering, his professional work experience has been varied though, including design assignments as well as project management to general management. He has been the President of The Board of Engineers Malaysia, The Malaysian Water Association and Malaysian Structural Steel Association at various times between 1988 and 1999. Tan Sri Dato' Hj Omar holds a Master of Science from the University of Southampton and a Bachelor of Engineering from the University of Malaya. He is a Fellow of the Institution of Engineers Malaysia and a professional engineer registered with the Board of Engineers Malaysia.

Tan Sri Dato' Hj Omar B. Ibrahim

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Dato‘ Dr. R. Thillainathan was appointed to the Board on 6 September 2012 as an Independent Non Executive Director. He is the Chairman of the Audit Committee, and a member of the Risk Management Committee, and Nominating Committee. He sits on the Boards of Bursa Malaysia Berhad, Petronas Dagangan Berhad, Genting Berhad, Allianz General Insurance Company (Malaysia) Berhad, Allianz Life Insurance Malaysia Berhad, Allianz Malaysia Berhad and Asia Capital Reinsurance Malaysia Sdn Bhd. He is also a board member of Private Pension Administrator Malaysia and Wawasan Open University Sdn Bhd. He has been with the Genting Group since 1989. He was the Chief Operating Officer of the company from 2002 to 2006 and retired as an Executive Director in 2007. Dato‘ Dr. R. Thillainathan has extensive years of experience in finance and banking and is actively involved in numerous professional and national bodies. He is also a member of the Working Group of the Economic Council of the Government of Malaysia and Group of Experts of ASEAN Capital Markets Forum. He was also the past president of the Malaysian Economic Association. He holds a First Class Honours in Bachelor of Arts (Economics), University of Malaya (1968) and obtained his Masters and PhD in Economics from the London School of Economics. He is also a Fellow of the Institute of Bankers, Malaysia.

Dato’ Dr. R. Thillainathan

Ms. Agnes Liew Yun Chong was appointed a Non Independent Non Executive Director of the bank on 1 November 2010. She is also a member of the Risk Management Committee and Nominating Committee of Citibank Berhad. Ms. Agnes Liew is responsible for Citigroup’s Corporate Bank in Asia Pacific. The Asia Pacific Corporate Bank is the coverage organisation that delivers the full spectrum of product solutions and Citi‘s extensive global network that spans over 100 countries, to institutional clients across 16 markets in Asia, including large public and private corporations. She is also a member of the Global Corporate Banking Operating Committee (NY) and chairs the Asia Pacific Corporate Banking Operating Committee. Ms. Agnes Liew joined Citi as a Management Associate in 1982 and during her career with Citi, has held a number of diverse key management positions in Risk and Banking in Asia Pacific. Between 2000 and 2003, Agnes was the Corporate Bank Head of Singapore. In 2003, Agnes was appointed Country Risk Manager of the Corporate and Investment Bank, Citi Taiwan. She subsequently moved into the Regional Risk Management Office in Asia Pacific and assumed the role of Head of Risk, ASEAN, Corporate and Investment Bank in 2005. Between 2007 and 2010, Ms. Agnes Liew led Global Subsidiaries Group in Asia Pacific and was responsible for the relationship coverage of global multinational subsidiaries across 16 markets. Under her leadership, the Global Subsidiaries Group in Asia has grown to be a significant pillar of the Global Banking franchise. During that time, she was also the Global Banking Head of ASEAN (ex Singapore), responsible for the relationship coverage of large corporate clients, including financial institutions.

Ms. Agnes Liew was names by Finance Asia in 2011 as one of the Top 20 Women in Finance in Asia. Ms. Agnes Liew holds an LL.B (Hons) from the University of Singapore and is a member of the Supreme Court of Singapore.

Ms. Agnes Liew Yun Chong

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Mr. Anil Wadhwani joined the Board as a Non Independent Non Executive Director on 22 February 2013 and is a member of the Audit Committee. He is currently Citi Asia Pacific Regional Head of Cards and Personal Loans. He is also the South East Asia Cluster Head for International Personal Banking as well as the Consumer Business for Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Prior to his current roles, he was the Chief Executive Officer of Citibank Singapore Ltd and the Consumer Markets Head for Singapore. In May 2010 he took on additional responsibility for the Rethink Banking segment across the region. Citi Consumer business has changed the competitive landscape in Singapore where Mr. Anil Wadhwani has driven distribution and growth, built perceptual scale and asserted Citi‘s leadership position in the market place. In his regional role, he worked in partnership with the countries to spearhead the Rethink Banking segment. Mr. Wadhwani is a long-term Citi employee. Having joined the bank in 1992, he worked in various frontline assignments in Cards and Retail Banking as well as leading Customer Franchise in India. Among other achievements, he established the Suvidha franchise in multiple geographies in India, which is widely regarded as a unique customer acquisition and delivery model and serves as a template for many of Citi Bank-At-Work initiatives around the world. Mr. Wadhwani graduated with a Bachelor of Commerce and Masters in Management Studies from Mumbai University.

Mr. Anil Wadhwani

The Bank aspires to achieve the highest standards in ethical conduct by delivering our promise to clients, reporting our financial results accurately and transparently and maintaining full compliance with all laws, rules and regulations governing the Bank's business operations. The Bank has also taken the necessary steps to ensure conformity with Bank Negara Malaysia's (BNM) Guidelines on Corporate Governance for Licensed Institutions (Revised BNM / GP1). Board Composition The Board comprises seven members. The following is the board line-up:

• Mr. Terence Kent Cuddyre Non-Independent Non-Executive Director / Chairman (appointed Chairman with effect from 12 March 2013) • Mr. Sanjeev Nanavati Non-Independent Executive Director / Chief Executive Officer • Tan Sri Dato' Hj Omar B. Ibrahim Independent Non-Executive Director • Dato' Siow Kim Lun Independent Non-Executive Director • Ms. Agnes Liew Yun Chong Non-Independent Non-Executive Director • Dato’ Dr. Thillainathan a/l Ramasamy Independent Non-Executive Director (appointed with effect from 6 September 2012) • Mr. Anil Wadhwani Non-Independent Non-Executive Director (appointed with effect from 22 February 2013) • Mr. Jonathan Christian Larsen Non-Independent Non-Executive Director / Chairman (resigned with effect from 11 December 2012) The individual profiles of the above mentioned directors are set out on pages 10 to 13 of this report.

The composition of the Bank's Board of Directors is in compliance with the Revised BNM/GP1, which requires at least one-third of the board members to be independent directors. The presence of three non-independent non-executive directors and three independent non-executive directors enables the Bank to view all relevant issues objectively and in a balanced manner. This further enhances the accountability of the decision making process within Citibank Berhad. The presence of the non-executive directors is also beneficial as it provides room for new perspectives and ideas that could help improve the effectiveness and efficiency of the Board on the whole. The revised BNM/GP1 guideline stipulates the need for a maximum of one Executive Director in the Bank's Board of Directors line-up.

Mr. Terence Kent Cuddyre, who joined the Bank on 14 December 2010, was appointed Chairman of the Bank on 12 March 2013 in place of Mr. Jonathan Larsen who resigned from the same position on 11 December 2012. Roles and Responsibilities The primary responsibility of the Board of Directors is to provide effective governance in terms of the Bank's affairs for the benefit of all shareholders and also to balance the interests of different constituencies such as customers, employees, suppliers and the local community. Among other things, the Board also reviews and approves the Bank's strategic business plans annually, oversees the management of the business and monitors the Bank's actual performance against projections. The Board also ensures that the infrastructure, internal controls and risk management processes within the Bank remains robust and are implemented in a consistent and timely manner. In addition, the Board carries out various other functions and responsibilities as stipulated in the guidelines and directives issued by BNM from time to time. In relation to the requirements stated under the revised BNM/GP1, the Bank has submitted an application to BNM for deviation of Principle 10 (shareholders should be entirely independent of the management and that the CEO should derive authority only from the Board) and Principle 12 (regular communication to be held with shareholders). On 3 May 2006, BNM approved the Bank’s official request for the above-mentioned deviations. As the Bank falls under the global structure of Citi, the Board also ensures that the Bank adopts applicable Citi policies in relation to credit approval processes and operational manuals. As a means to ensure the Bank has a beneficial influence on the economy of the local community, the Directors have a continuous responsibility to provide banking services and facilities that are conducive to a well-balanced economic growth. Frequency and Conduct ofBoard Meetings and Attendance The Board of Directors meet at least six times a year in order to effectively discharge their duties as well as to comply with the revised BNM/GP1 guideline requirements. During Board meetings, the Directors are provided with an agenda, papers on the Bank's most recent financial performance, risk management reports, budgets, new business initiatives or product launches, Board committees meetings' minutes and updates on industry regulations or policy changes. The Board also receives business presentations on topical matters, subject to such requests. The Board meeting agenda and papers are distributed to all Directors prior to the scheduled meetings so as to grant them sufficient time to review all materials/issues that will be discussed during the actual meeting. This procedure goes a long way in ensuring that all Board meeting discussions as well as decisions made/taken, are meaningful and based on accurate facts and figures.

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The proceedings of all Board meetings are also taken down as official minutes and such minutes are later circulated for the Directors' perusal prior to confirmation during the following meetings. The attendance record for each Board member for the financial year ended 31 December 2012 is as shown below:

Number of Board Meetings

Name of Director Held Attended

Mr. Terence Kent Cuddyre 7 7

Mr. Sanjeev Nanavati 7 7

Tan Sri Dato' Hj Omar B. Ibrahim 7 7

Dato‘ Siow Kim Lun 7 6

Ms. Agnes Liew Yun Chong 7 6

Dato’ Dr. Thillainathan a/l Ramasamy 2* 2 (appointed on 6 September 2012)

Mr. Jonathan Christian Larsen 7 6 (resigned on 11 December 2012)

* Reflects the number of meetings held during the time the Director held office.

Board Committees The Board of Directors established several 'Board Committees' to assist them in the overall management and supervision of the Bank's business operations. The committee members shall be appointed by the Board upon recommendation of the Nominating Committee. Each committee has its own written charter, clearly outlining the mission and responsibilities of the respective committee as well as well-defined terms of reference approved by the Board. Pursuant to the revised BNM / GP1 guideline, the Board is also required to establish the following additional committees besides the existing Audit Committee then: • Nominating Committee

• Remuneration Committee

• Risk Management Committee

The Bank has since set up the Nominating Committee and Risk Management Committee. The Bank submitted an application to BNM for a waiver from establishing the Remuneration Committee. On 3 May 2006, BNM granted the Bank approval on the above application.

Audit Committee

Composition and Frequency of Meetings The Audit Committee was established in 1994. The attendance record for each Audit Committee member for the financial year ended 31 December 2012 is as shown follow:

Number of Meetings

Name of Audit Committee Member Held Attended

Dato’ Dr. Thillainathan a/l Ramasamy 1* 1 (Chairman) (Appointed as Chairman/member of Audit Committee on 6 September 2012)

Tan Sri Dato' Hj Omar B. Ibrahim 4 4

Dato‘ Siow Kim Lun 4 4

Mr. Terence Kent Cuddyre 4 4 * Reflects the number of meetings held during the time the Director held office.

All the Audit Committee members are non-executive directors of the Bank.

Terms of Reference The Board has approved the terms of reference for the Audit Committee. The main objective of the Audit Committee is to review the financial position of Citibank Berhad, its internal controls, performance and findings of the internal and external auditors as well as to recommend appropriate remedial action (if necessary). The Audit Committee's main responsibilities are as follows: a. Ensure that the financial accounts are prepared in a

timely and accurate manner with frequent reviews on the adequacy of provisions for contingencies, and bad and doubtful debts.

b. Review the balance sheet and profit and loss account for submission to the Board of Directors and ensure the prompt publication of annual accounts.

c. Review the annual financial statements before submission to the Board, focusing on:

1. Compliance with accounting standards and other legal requirements

2. Changes in accounting policies and practices

3. Significant issues and unusual events arising from the audit

4. Going concern assumption

5. Major judgemental areas

d. Conduct a complete review prior to publishing the annual report to ensure compliance with regulatory requirements.

e. Review the effectiveness of internal controls, including the scope of the internal audit programme, its role, resources of the internal audit functions and ensure it has the necessary authority to carry out its work, internal audit findings as well as recommend action to be taken by management, whenever necessary. The reports of internal auditors and the Audit Committee should not be subject to the clearance of the Board of Directors.

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f. Evaluate appointment, performance and provide appraisal and feedback on the remuneration package offered to the chief internal auditor.

g. Leverage on the Bank‘s performance management and talent inventory development process in overseeing the performance evaluation of the internal auditors.

h. Review with the external auditors, the scope of their audit plan, internal accounting controls, audit reports, assistance given by the management and its staff to the auditors as well as their findings and recommended action(s) to be taken. Select and recommend external auditors for appointment by the Board annually.

i. Discuss problems and reservations arising from the interim and final external audits, including any matters the external auditors may wish to deliberate (in the absence of management, where necessary).

j. Review external auditor‘s letter to management and the latter‘s response to the same.

k. Review related party transactions and identify any potential conflict of interest situation(s) that may arise within the Bank including any transactions, procedure or course of conduct which questions the integrity of the management.

l. Review resignation letters from the external auditors of Citibank Berhad.

m. Select external auditors to be appointed by the Board, unless otherwise advised (such as not suitable for re-appointment supported by valid justifications / grounds).

n. Review any external expert‘s terms and scope of engagement, working arrangement with the internal auditors and reporting requirements to ensure these are clearly established.

o. Leverage on the oversight provided by Regional Compliance Control or engage any external party to perform assessment on the continuing effectiveness of the internal audit function.

Nominating Committee Composition and Frequency of Meetings The Nominating Committee was established in 2006. The attendance record for each Nominating Committee member for the financial year ended 31 December 2012 is as shown below:

Number of Meetings

Name of Nominating Committee Member Held Attended

Tan Sri Dato‘Hj Omar B. Ibrahim 3 3 (Chairman)

Mr. Sanjeev Nanavati 3 3

Dato‘ Siow Kim Lun 3 2

Ms. Agnes Liew Yun Chong 3 3

Dato‘ Dr. Thillainathan a/l Ramasamy 2* 2 (appointed as Nominating Committee member on 6 September 2012)

Mr. Jonathan Christian Larsen 2* 1 (resigned as Nominating Committee member on 7 December 2012) * Reflects the number of meetings held during the time the Director held office.

The constitution of the Nominating Committee comprises four non-executive directors and one executive director.

Terms of Reference The Board has approved the terms of reference for the Nominating Committee. The main objective of the Nominating Committee is to provide a formal and transparent procedure for the appointment of directors as well as assessing the effectiveness of individual directors, the Board as a whole and also the performance of the CEO along with other key senior management staff. The Nominating Committee‘s main responsibilities are as follows: a. Review and assess the adequacy of the Bank‘s Code of

Conduct and other internal policies and guidelines and monitor that the principles described therein are being incorporated into the Bank‘s culture and business practices.

b. Establish minimum requirements for the Board, i.e. required mix of skills, experience, qualification and other core competencies required of a director. The Committee is also responsible for establishing minimum requirements for the CEO. The requirements and criteria should be approved by the full Board.

c. Review the appropriateness of the size of the Board relative to its various responsibilities. Review the overall composition of the Board, taking into consideration factors such as business experience and specific areas of expertise of each Board member and make recommendations to the Board as necessary.

d. Review and assess that the directors do not have any directorship(s) which could potentially result in conflict of interest(s).

e. Recommend to the Board the number of committees required, identify their respective responsibilities, propose a suitable Chairperson as well as suggest ordinary members for the different committees. This includes advising the Board on committee member appointments and removal of such members from the relevant committees or from the Board, rotation of the committee members and Chairperson as well as proposals on individual committee structures and operations.

f. Assist the Board in developing criteria to identify and select qualified individuals who may be nominated for election to the Board, which shall reflect, at a minimum, all applicable laws, rules and governing regulations. This includes assessing directors for re-appointment before an application for approval is submitted to BNM. The actual decision as to who shall be nominated should be the responsibility of the full Board.

g. Recommend to the Board qualified individuals to become members of the Board.

h. Review and recommend periodically to the Board, the compensation structure for non-executive directors.

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i. Recommend to the Board the removal of a director / CEO from the Board / Management, if the director / CEO is ineffective, errant and negligent in discharging his responsibilities.

j. Assess annually the effectiveness of the Board as a whole in meeting its responsibilities and the contribution of each director to the effectiveness of the Board, contribution of the Board‘s various committees and the performance of the CEO.

k. Report annually to the Board with an assessment of the Board‘s performance and such assessment is conducted based on an objective performance criteria. Such performance criteria to be approved by the full Board.

l. Leveraging on the Bank‘s Performance Management and Talent Inventory development process in overseeing the appointment, management succession planning and performance evaluation of key senior management staff, except that (as recommended by Bank Negara Malaysia) the Committee shall play an active role in reviewing and recommending the nominees for the position of Chief Executive Officer, Chief Financial Officer and Chief Risk Officer.

m. Assess annually to ensure the directors and key senior management staff are not disqualified under section 56 of the Banking and Financial Institution Act 1989 (BAFIA).

n. Plan and ensure all directors receive appropriate and continuous training program in order to keep abreast with the latest developments in the industry.

o. Conduct an annual review of the Committee‘s performance and report the results to the Board periodically, assess the adequacy of its charter and recommend changes to the Board as needed.

p. Report regularly to the Board on the Committee‘s activities.

q. Perform any other duties and responsibilities expressly delegated to the Committee by the Board from time to time.

Risk Management Committee Composition and Frequency of Meetings The Risk Management Committee was established in 2006. The attendance record for each Risk Management Committee member for the financial year ended 31 December 2012 is as shown below:

Number of Meetings

Name of Risk Management Committee Member Held Attended

Dato‘ Siow Kim Lun (Chairman) 4 4

Tan Sri Dato‘Hj Omar B. Ibrahim 4 4

Ms. Agnes Liew Yun Chong 4 3

Mr. Terence Kent Cuddyre 4 4

Dato‘ Dr. Thillainathan a/l Ramasamy 1* 1 (appointed as Risk Management Committee member on 6 September 2012)

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

All the Risk Management Committee members are non-executive directors of the Bank.

Terms of Reference The Board has approved the terms of reference for the Risk Management Committee. The main objective of the Risk Management Committee is to oversee the senior management‘s activities in managing credit, market, liquidity, operational, legal and other risk(s) while ensuring proper risk management process is properly in place and functioning well. The Risk Management Committee‘s main responsibilities are as follows: a. Ratify the adoption of Citi risk management strategies,

policies, and risk tolerance; and recommend the same for the Board‘s approval.

b. Discuss with Management the Bank‘s major credit, market, liquidity and operational risk exposures and steps that the Management has taken to monitor and control such exposures, including the Bank‘s risk assessment and risk management policies.

c. Assess the adequacy of risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these are operating effectively.

d. Ensure appropriate infrastructure, resources and systems are in place for actual risk management implementation, i.e. ensure staff responsible for implementing the risk management system perform their duties independently of the Bank‘s risk taking activities.

e. Periodically review management reports on risk exposure, risk portfolio, composition and other risk management activities.

f. Review periodically with management, including independent Risk Officer, Head of Compliance and Legal Counsel, any correspondence(s) with or action by, regulators or governmental agencies, any material legal affairs of the Bank and the Bank‘s compliance with applicable laws and regulations.

g. Report regularly to the Board on the Committee‘s activities.

h. Review annually and report to the Board on its own performance.

i. Review and assess the adequacy of its charter annually and recommend any proposed changes to the Board for approval.

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Please refer to Pillar 3 disclosure

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Citibank Berhad's Board of Directors is responsible to establish and maintain adequate internal control over financial reporting standards and related issues. The Bank's internal control system is designed to provide reasonable assurance to the company's management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with the provisions under the Companies Act 1965 and other applicable approved standards in Malaysia. All internal control systems no matter how well designed and implemented have inherent limitations. In view of the limitations, therefore, even the best of systems determined to be effective can only provide a reasonable assurance in relation to the preparation and presentation of financial statements. A comprehensive system of controls is maintained to ensure that all transactions are executed in accordance with the management's authorization, assets are safeguarded and that the financial records are reliable. The management also takes relevant steps to see that information and communication flows are effective and monitor the performance of internal control procedures. Citibank Berhad's risk management policies, procedures and practices set out the foundation to the risk architecture governing its business activities. The management conducts business monitoring initiatives and periodic self-assessment in accordance with the Manager‘s Control Assessment / Operational Risk policy for all applicable businesses. Control system weaknesses resulting in corrective actions will be documented and escalated to the management for tracking purposes. Citibank Berhad's Internal Audit reports to the Audit Committee. It performs regular reviews of the business processes to assess the effectiveness of the control environment and highlights significant risks affecting the company. The scope of the audit activities are reviewed and endorsed by the Audit Committee while audits are carried out on a risk -based approach, to provide an independent and objective report on operational and management activities. The Audit Committee regularly reviews and deliberates with management on the actions taken on internal control issues identified in reports prepared by Internal Audit, the external auditors, regulatory authorities and the management themselves.

The management of Citibank Berhad has also set up a Country Coordinating Committee, Business Risk Compliance and Control Committee, Legal Vehicle Committee, Asset and Liability Committee, Country Legal and Compliance Committee and Management Committee as part of its monitoring function to ensure effective management and supervision of the areas under the respective Committee's purview.

Citibank Berhad has also adopted the Citi Code of Conduct which expresses the values that each employee is expected to appreciate and apply in their respective working life. Ethics hotlines are made available to employees who wish to voice concerns about suspected violations of law or industry regulation as well as actions that may fail to live up to the Bank's high standards of ethical conduct. The Bank has an internal policy prohibiting retaliatory actions against any individual for raising legitimate concerns or questions regarding ethical matters, or for reporting suspected violations.

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The pre-set agenda, management reports and other ad-hoc proposals or applications are circulated to the Directors prior to the actual Board meetings. This enables the Board of Directors to assess the overall performance of the Bank and make sound management decisions. Management reports presented to the Board include, among others, the following: ■ Economic Updates

■ Business Plans

■ Year to date Financial Performance Report

■ Financial performance by major business segments

■ Quarterly Performance Scorecard

■ Comparative analysis of banks

■ Semi-annual BNM Stress Tests Results

■ Credit Risk Management Report

■ Liquidity & Market Risk Management Reports

■ Quarterly Derivative Outstanding Report

■ Minutes of Audit Committee meetings

■ Minutes of Risk Management Committee meetings

■ Minutes of Nominating Committee meetings

■ Minutes of Shariah Committee meetings

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Citibank Berhad's Shariah Committee is responsible for the provision of Shariah oversight in relation to Citibank Berhad‘s Islamic Banking business operations. The duties and responsibilities of the Shariah Committee are governed by the Shariah Governance Framework for Islamic Financial Institution as issued by the Bank Negara Malaysia (BNM). For the year 2012, the Shariah Committee met 10 times. Additionally, individual Shariah Committee members participated in various business discussions where Shariah advice was required prior to submission to the full Shariah Committee. Citibank Berhad‘s Islamic Banking business operations were subjected to a full Shariah audit conducted jointly by Citibank Berhad‘s Internal Audit together with Citi‘s Global Islamic Control unit. The Shariah Committee reviewed the findings of the Shariah audit and was satisfied with the report and its findings. Citibank Berhad‘s Shariah Committee effective from 1 June 2012 included the following distinguished members: ■ Professor Dr. Abdul Ghafar Ismail / Chairman Dr. Abdul Ghafar Ismail has been a Professor in the Banking and Finance faculty of Universiti Kebangsaan Malaysia (UKM) since 2003. He is currently Head of the Research Centre for Islamic Economics and Finance and AmBank Group Resident Fellow for Perdana Leadership Foundation. A lecturer since 1987, he has vast experience in teaching Islamic economics courses such as Islamic banking; risk management in Islamic banking; financial economics; advanced macroeconomics; money, Zakat and real economy; money and capital market in Islam; Islamic economic system; Islamic economic analysis; and deposits and the financing operations of Islamic banking institutions. His work has been extensively published in several referred journals, among others, Review of Islamic Economics, Journal of Islamic Economics, Banking and Finance, Humanomics, International Journal of Islamic and Middle Eastern Finance and Management, Journal of Financial Services Marketing, International Research Journal of Finance and Economics and Qualitative Research in Financial Markets. His most recent book is Money, Islamic Banks and Real Economy, published by Cengage Learning. His papers have been presented in many international and local conferences including the International Seminar on Islamic Economics and Finance, IRTI International Conference and Malaysia Finance Association Conference. Professor Dr. Abdul Ghafar Ismail’s research interests include the learning process and growth theory, inter-temporal allocation of resources, learning economics from Al-Quran and Al-Hadith, capital adequacy standard for Islamic Banks, and the workings of monetary policy in a dual banking system. He holds a PhD from the University of Southampton, England.

■ Professor Dr. Norhashimah Mohd Yasin Dr. Norhashimah Mohd Yasin is a Professor of Comparative Banking Law at the Civil Law department, Ahmad Ibrahim Kulliyah of Law, International Islamic University of Malaysia. She regularly lectures, researches and presents papers at local and international seminars and conferences on the areas of Islamic banking, Islamic insurance (Takaful), money laundering and terrorism financing. She has published articles in national and international journals. Her articles on Islamic Banking have also appeared in a book edited by Dato‘ Syed Idid called Judicial Decisions Affecting Bankers and Financiers (published by the Malayan Law Journal). She is the author of two books, Legal Aspects of Money Laundering from the Common Law Perspective (published in 2007 by LexisNexis) and Islamisation / Malaynisation: The Role of Islamic Law in the Economic Development of Malaysia (published in 1996 by A.S. Noordeen). She is a contributing editor of the Annotated Statute on Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and the Takaful Act 1984. She is a member of the Advocates and Solicitors Disciplinary Board and also sits on the Board of Trustees for Yayasan Asnita, a Non Governmental Organisation. She also conducts training for Bank Negara Malaysia, Labuan Financial Services Authority, commercial banks, developing financial institutions, insurance companies and legal firms in Malaysia and Brunei Darussalam.

Professor Dr. Norhashimah holds a PhD in Law from the University of Warwick, England, and is a qualified Advocate and Solicitor of the High Court of Malaysia. She is also a certified legal translator. ■ Associate Professor Dr. Shofian bin Ahmad Dr. Shofian bin Ahmad is currently an Associate Professor with the Shariah Department at Universiti Kebangsaan Malaysia (UKM) where he specialises in Islamic transactions (Muamalat) and the Islamic economy. He is the Head of the Department of Shariah at the Faculty of Islamic Studies and has served in various administrative positions at the faculty since 1994. He supervises Ph.D. and Masters candidates at UKM and conducts doctoral and Masters level thesis assessments. He is also actively involved in research and is a Research Fellow at UKM‘s Institut Kajian Rantau Asia Barat. He is also extensively involved in publications as an article assessor for several academic journals. Associate Professor Dr. Shofian holds a PhD in Shariah and Law from the University of Malaya, Kuala Lumpur. ■ Mat Noor Mat Zain Mat Noor Mat Zain is a member of the Citibank Berhad’s Shariah Committee where he has contributed his specialist knowledge of Fiqh Muamalah, Islamic contract law and Islamic family law and extensive research experience in the area of Islamic finance since May 2011 . He is also a consultant for the Pakarunding initiative at

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Universiti Kebangsaan Malaysia (UKM) and an expert consultant for the Malaysian Government’s JAWHAR programmes related to the provision of Fidyah and Kafarah manuals. He has presented numerous papers related to Islamic banking and finance at both domestic and international levels and has been appointed consulting editor for The Journal Of Muamalat And Islamic Finance Research published by the Islamic Science University of Malaysia.

In addition to his consulting and editorial work, he is a lecturer at the Department of Shariah at UKM’s Faculty of Islamic Studies. He teaches several courses related to Muamalah and Islamic jurisprudence including “Fiqh Muamalat”, “Islamic Finance”, and “The Principles of Islamic Jurisprudence”. He has a Bachelor’s degree in Shariah Studies from the Islamic University of Medina, Saudi Arabia as well as a Masters in Islamic Studies (specializing in Muamalat) from the Faculty of Islamic Studies at UKM. He is currently pursuing his studies in the field of Islamic Contracts and is researching topics including Instruments of Islamic Hedging and Terms and Conditions in Standard Form Contracts. ■ Nik Abdul Rahim bin Nik Abdul Ghani Nik Abdul Rahim Nik Abdul Ghani is a lecturer and former tutor at Universiti Kebangsaan Malaysia (UKM)‘s Department of Shariah at the Faculty of Islamic Studies. He is an expert consultant and speaker for the UKM‘s Centre for Islam and UKM‘s Islamic law-related training programmes. He is also a member of the committee of Klinik Hukum Syarak and Guaman Syarie, Department of Shariah. He is a member of the Research Center for Islamic Economics and Finance and has written in-depth research papers and articles on Shariah issues arising in Islamic Banking and finance. He is a published author featured in national and international journals, seminar proceedings and books. His most recent article, Maslahah as a Source of Islamic Transactions (Muamalat) has been recently published in UKM‘s Journal of Islamiyyat. He has written books on Islamic teaching and motivation and is a regular columnist for the popular magazine SOLUSI by Telaga Biru for which he writes the “Maqasid Syariah” (Objectives of Islamic Law) column. Apart from teaching, research and writing, he is actively involved in religious and academic activities, especially those related to economics and Islamic law. He participates in seminars and discussions conducted by Government agencies and Non Governmental Organisations (NGOs), gives religious speeches in the state of Selangor and appears on religious television programmes on RTM, Media Prima and ASTRO. He is also a regular speaker for “Renungan”, a religious programme that airs on THR Gegar radio. Fluent in Arabic, Nik Abdul Rahim bin Nik Abdul Ghani holds a Masters Degree in Shariah from UKM and a B.A (Hons) in Shariah from the Islamic University of Medina, Saudi Arabia. He is currently a doctoral candidate in the field of Islamic Finance at the International Centre for Education in Islamic Finance (INCEIF).

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RAM Rating Services Berhad (RAM) has, on 21 January 2013, reaffirmed Citibank Berhad‘s respective long and short term financial institution ratings of AAA and P1 with an outlook on the long term ratings remaining stable. Citibank Berhad‘s ratings are premised on its entrenched market position in the consumer banking arena, strong funding and liquidity profile, sturdy profitability, and healthy capitalization.

Bank Rating Symbols and Definitions: AAA A financial institution rated AAA has a superior

capacity to meet its financial obligations. This is the highest long-term FIR assigned by RAM Ratings.

P1 A financial institution rated P1 has a strong

capacity to meet its short-term financial obligations. This is the highest short-term FIR assigned by RAM Ratings.

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Contact Centre Association of Malaysia

Corporate AwardsBest People Contact Center - Gold AwardBest In-House Inbound Contact Center (above 100 seats) – Silver AwardBest Technology & Innovation Contact Center – Silver Award Individual AwardBest Contact Center Professional (Aria Putera Kamal) – Gold Award X-Factor Challenge AwardCitiPhone Dancing Group (Kejora Mustika) – Silver Award

Asiamoney Cash Management Poll

1 Foreign Cash Management Bank for Large and Medium-size Corporates1 Cross Border Cash Management Services for Large and Medium-size Corporates1 Domestic Cash Management Services for Large and Medium-size Corporates

Global Finance Best Internet Bank

Best Corporate/Institutional Internet Bank

Trade Finance Awards for Excellence

Best International Trade Bank

CIMB Principal Top AUM Builder for Fixed Income

Visa Malaysia Bank Awards

Largest Payment Volume for the year – Visa Consumer CreditLargest Payment Volume for the year – Visa PremiumLargest Payment Volume for the year – Visa PlatinumHighest Payment Volume Growth for the year – Visa Signature

Reader’s Digest Trusted Brand

Finance category (banking products and services)

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Citibank and ERA Consumer Malaysia kicked off with the second year of Citibank‘s customised financial education programme ‘My First Ringgit’, aimed at educating and instilling good financial habits among young children. A component of Citibank‘s ‘Stretching Your Ringgit’, ‘My First Ringgit’ reached out to 800 kindergarten children between the ages of four and six in both urban and rural areas in Malaysia. In the ‘My First Ringgit’ workshops, children learnt to manage personal finances, make calculated choices and act responsibly through a fun and informative game kit available in English and Bahasa Malaysia. The game kit touched on the topics of various uses of money, the value of each note and coin, understanding the differences between needs and wants and the importance of saving and sharing with those in need. The ‘Stretching Your Ringgit’ financial education series targeted young workers through financial education workshops and a major radio infomercial campaign. We organised 20 financial education workshops aimed at 800 young workers, aged between 18 and 35, in 10 states in Peninsular Malaysia, from October 2012 until January

The Community We Work and Live In

At Citi, the concept of corporate citizenship is a unifying

theme that is at the core of our operations and the way we

do business. In 2012, we continued our tradition of

responsible citizenship by leveraging our local presence in

virtually all corners of the world, along with the expertise

and commitment of our people.

In Malaysia, Citibank‘s corporate citizenship initiatives

focuses largely on supporting programmes that help

people take control of their finances by improving their

financial behaviours and making informed decisions about

financial products and services.

Last year, Citibank and ERA Consumer Malaysia (Education

& Research Association for Consumers) collaborated to

implement four financial education programmes.

2013. The workshops were tailored to train and educate young workers on efficient and prudent financial planning and financial management. Based more on interactive learning through exercises and activities, the training covered areas such as Goal Setting, Analysing One‘s Financial Self-Worth; Budgeting, Managing Debt and Mindful Consumption. We also partnered with Astro to air a total of 168 radio infomercials on Hitz.fm, Era FM and My FM in October 2012. The three stations offered a reach of 1.5 million listeners and costs US$121,500.00 The topics aired included ‘Making Your Financial Plan’; ‘Keeping Credit in Check’; ‘Managing Your Debt’; and ‘Spend Within Your Means’. The radio infomercials were part of our continuing effort to increase awareness and to further encourage the practice of financial management amongst the low to middle income groups. Citibank also built richer content in the ERA Consumer‘s microsite to increase knowledge and online accessibility so readers can obtain financial related information as an empowerment tool. We have collaborated with ERA Consumer for four years to spread the message of financial responsibility to Malaysians.

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Citibank also launched the inaugural CITI-UPM Financial Empowerment programme for mature women, who earned less than US$1,000 and lived in towns, suburbs and surrounding areas within the Klang Valley. The programme was adapted from the Citi-Tsao Financial Education Programme for Mature Women in Singapore to the Malaysian context. In 2012, the Citi Foundation grant was initially used to conduct needs assessment for 800 women, organise focus group discussions among 80 women, adapt the existing financial education curriculum for mature women; build UPM staff capacity; raise public awareness on the importance of financial education for women aged 40 and above; plan and develop a strategy, formulate a proposal to identify a pool of trainers and conduct training for trainers. By 2013, UPM should be able to fully implement the curriculum for 800 women to help them become financially independent and empowered in their old age. The programme should also be able to achieve a 100% increase in the number of women who could develop a retirement plan and demonstrate positive financial behaviours to achieve their financial goals. Another of our meaningful financial education initiatives was our collaboration with Habitat For Humanity (HFH) that involved equipping 50 low income families in the Klang Valley with practical financial knowledge to improve their shelter or homes. Citi Foundation granted funds to build HFH‘s capacity to develop and deliver a financial education curriculum, using a dialogue based adult education methodology, to beneficiaries in partner communities. A two-day programme was conducted for 30 indigenous families in Sg. Pelek, and 20 families from areas in Rawang and Selayang. Three volunteers from the Citi Management Associates (MA) programme attended and assisted trainers during the programme.

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Global Community Day Last year, Citi Global Community Day had an added significance as it coincided with Citi‘s 200th anniversary. We marked this milestone honouring two centuries of our history by contributing and working together to strengthen the communities in which we live and work. Nearly 100,000 Citi volunteers, the largest number of participants ever, gathered in the days leading up to and including Global Community Day to participate in 1,300 service projects in 92 countries worldwide that benefitted local communities. In Malaysia, we chose the theme ‘Soup Kitchen for the Homeless‘ for our Global Community Day, which spanned over two weeks from 4th June to 15th June. We recognised that while Citibank provided financial services and helped companies build their businesses for over 50 years in Malaysia, there are those among us who still faced challenges with life‘s essentials that we take for granted. The soup kitchen project was our way to make a meaningful difference in our local community. In the Klang Valley, our 3,800 strong employees participated in this effort with NGO partner Pertiwi Soup Kitchen and Kechara Soup Kitchen. In total, our volunteers managed to feed over 7,000 homeless citizens, making it the largest global community day in Malaysia. Citibank volunteers also helped distribute food and drinks and dispensed first aid to the disadvantaged in Chow Kit, Kotaraya and Jalan Imbi. In JB and Penang, over 400 Employees worked with NGO partner KAWAN and Kechara Soup Kitchen to feed the homeless while 30 employees from our Kuantan branch participated in cleaning up Sg Lembing‘s Panorama Hill. Citibank volunteers also treated 100 children from Persatuan Kebajikan Berkat Johor Bahru, Amitabha Centre and Pusat Kebajikan Kalvari Johor to a day of fun and laughter at the Johor Bahru Zoo. The children, aged five and above, enjoyed a tour of the zoo which included a mini animal hunt as well as drawing and colouring activities. The children and volunteers also talked about their experiences and what they had learnt throughout the day in an impromptu sharing session. Citi Global Community Day once again offered an annual opportunity for Citibank employees, family and friends around the world to gather as one to demonstrate a shared commitment to our respective communities.

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In Citi, we believe that talent grows talent. Our people philosophy focuses on providing the best learning & development platforms ranging from talent & development programs, mentoring, on-the-job learning to career pathing initiatives, supported by key processes and policies – all in a conducive and nurturing work environment. With a flexible work culture, the geographical reach and the richness of diversity of our businesses, we have the ability to provide each Citibanker with the opportunity to have a career of a lifetime. In 2012, we continue our efforts in the talent space. Our Management Associate (MA) and Graduate Executive (GE) Programmes attracted the best talent in the market - we hired a total of 10 Management Associates and 19 Graduate Executives in 2012, giving us a total of 29 MAs and 51 GEs whom we have hired since 2010 as part of our strategy to build future leadership. Our Leadership Enhancement & Accelerated Development (L.E.A.D) programme, currently in its fourth year, continues to be focused and relevant for the top 2% of our best employees. For the 2012/2013 launch, there was great response to the two customised programs especially for the L.E.A.D pool by renowned gurus in their own field - Rajeev Peshwaria of the International Centre for Leadership in Finance (ICLIF) and Dr. Fons Trompenaars, author of ‘Riding the Waves of Culture’. Leveraging our global presence in 160 countries and the diversity of our businesses, Citi is second to none in our ability to provide in-country, regional and global mobility opportunities. This is evidenced by the 110 internal transfers, including our export of talent to China, Japan and London, and our import of talent from other Citi companies including India, Philippines and Latin America. From a learning & development viewpoint, our consistent approach to training and development across the company ensures that we have a unified culture and a set

of standards that transcend business, product and regional lines. In 2012, Citibank rolled out 1 1 1 classroom programmes totalling 34,792 training hours for 2,014 Citibankers. Separately under the e-learning platform, a total of 1,407 Citibankers participated in virtual trainings / webinars of various topics. A key component to ensure that we are able to keep Citibankers engaged and motivated is to provide a conducive and nurturing work environment, with focus on mental and physical health. Under the Citi Live Well platform, the Employee Assistance Programme (EAP) was launched in November aimed at providing support services such as counselling, wellness talks and on-site consultations to all Citibankers. The counselling sessions, which are strictly confidential, can be conducted via face-to-face, Skype and / or email or a 24-hours hotline. In addition to that, Citi Live Well organised 14 talks with topics covering key health tips, office ergonomics, types of food and exercises throughout the year with employee attendance totalling more than 870. The Voice of Employee (VOE) platform continues to enable us to have fun and develop team-building activities to build camaderie and strengthen the professional relationship that we have with each other. VOE champions from each business unit developed and implemented various initiatives, ranging from movie days to team building outings. We were also able to garner feedback from Citibankers on the improvements that we can make as an organisation through 47 sessions of focus group discussions that was conducted for various business units. There will always be continued focus on building the talent pipeline, developing and implementing relevant programs, initiatives, policies and processes to ensure we provide the best that we can for our employees.

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FinancialStatement

Contents

Directors’ Report

Statement by Directors

Statutory Declaration

Shariah Committee‘s Report

Independent Auditors’ Report

Statements of Financial Position

Statements of Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

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The Directors have pleasure in submitting their report and the audited financial statements of the Group and the Bank for the year ended 31 December 2012.

Principal activitiesThe Bank is principally engaged in banking and related financial services that also include Islamic Banking business whilst the principal activities of the subsidiaries are stated in Note 12 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Results Group and Bank

RM’000

Profit before taxation 789,577 Taxation (210,970) Profit after taxation 578,607

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

DividendsSince the end of the previous financial year, the Bank paid a final ordinary dividend of 329 sen per ordinary share less tax at 25% totaling RM300 million (247 sen net per ordinary share) in respect of the year ended 31 December 2011 on 13 June 2012.

The final ordinary dividend recommended by the Directors in respect of the year ended 31 December 2012 is 548 sen per ordinary share less tax at 25% totaling RM500 million (411 sen net per ordinary share).

Bad and doubtful debts and financingBefore the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that actions had been taken in relation to the writing off of bad debts and financing and the making of provisions for impaired loans and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate provisions made for impaired loans, advances and financing.

At the date of this report, the Directors are not aware of any circumstances, which would render the amount written off for bad debts and financing, or the amount of the provision for impaired loans, advances and financing, in the financial statements of the Group and the Bank inadequate to any substantial extent.

Current assetsBefore the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that the value of any current assets, other than debts and financing, which were unlikely to be realised in the ordinary course of business, as shown in the accounting

records of the Group and the Bank, have been written down to an amount which they might be expected to realise.

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

Valuation methodsAt the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities in the financial statements of the Group and the Bank misleading or inappropriate.

Contingent and other liabilitiesAt the date of this report, there does not exist:

(a) any charge on the assets of the Group or the Bank 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 or of the Bank that has arisen since the end of the financial year other than in the ordinary course of business.

No contingent or other liability of the Group and the Bank have 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 the Bank to meet their obligations as and when they fall due.

Change of circumstancesAt the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and the Bank, that would render any amount stated in the financial statements misleading.

Items of an unusual natureThe results of the operations of the Group and the Bank 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, in the opinion of the Directors, to affect substantially the results of the operations of the Group and the Bank for the current financial year in which this report is made.

Compliance with Bank Negara Malaysia’s expectations on financial reportingIn the preparation of the financial statements, the Directors have taken reasonable steps to ensure that Bank Negara Malaysia’s expectations on financial reporting have been complied with, including those as set out in the Guidelines on Financial Reporting for Financial Institutions and the Guidelines on Classification and Impairment Provisions for Loans/Financing.

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

• Sanjeev Nanavati • Tan Sri Dato’ Hj. Omar Bin Ibrahim• Dato’ Siow Kim Lun @ Siow Kim Lin• Agnes Liew Yun Chong• Terence Kent Cuddyre• Dato’ Dr Thillainathan A/L Ramasamy (appointed on 6 September 2012)• Anil Wadhwani (appointed on 22 February 2013)• Jonathan Christian Larsen (resigned on 11 December 2012)

Directors’ interests in sharesThe interests in the ordinary shares and options over shares of the Bank and of its related corporations of those who were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of USD1 each At At 1 .1 .2012 Bought Sold 31.12.2012Shares in Citigroup Inc. Direct interests Sanjeev Nanavati 22,225 1,773 - 23,998 Dato’ Siow Kim Lun @ Siow Kim Lin 900 - - 900 Agnes Liew Yun Chong 10,112 3,937 - 14,049 Terence Kent Cuddyre 1,956 330 87 2,199

Number of ordinary shares of USD1 each At At 1.1.2012 Granted Vested 31.12.2012Capital Accumulation Program/ Supplementary CAP/SEA in Citigroup Inc.

Sanjeev Nanavati 2,787 10,479 2,401 10,865 Agnes Liew Yun Chong 13,941 8,817 3,937 18,821 Terence Kent Cuddyre 1,086 1,244 330 2,000

Number of options over ordinary shares of USD1 each At At 1.1.2012 Granted Forfeited 31.12.2012 Stock Option Plan in Citigroup Inc.

Sanjeev Nanavati 6,727 - 429 6,298 Agnes Liew Yun Chong 3,879 - 279 3,600 Terence Kent Cuddyre 2,281 - 1,465 816

None of the other Directors holding office at 31 December 2012 had any interest in the ordinary shares and options over shares of the Bank and of its related corporations during the financial year.

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Directors’ benefitsSince the end of the previous financial year, no Director of the Bank has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Bank) by reason of a contract made by the Bank or a related company 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 were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures of the Bank or any other body corporate apart from the Directors above who were granted options to subscribe for shares in the ultimate holding company under various stock incentive and purchase schemes where the price and terms are as determined by the said schemes.

Issue of shares and debenturesThere were no changes in the issued and paid-up capital of the Bank during the financial year.

There were no debentures issued during the financial year.

Options granted over unissued sharesNo options were granted to any person to take up unissued shares of the Bank during the financial year.

AuditorsThe auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Sanjeev Nanavati

Dato‘ Dr. Thillainathan A/L Ramasamy

Kuala LumpurDate: 4 March 2013

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In the opinion of the Directors, the financial statements set out on pages 37 to 154 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Bank as of 31 December 2012 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Sanjeev Nanavati

Dato‘ Dr. Thillainathan A/L Ramasamy

Kuala LumpurDate: 4 March 2013

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I, Tang Wan Chee, the officer primarily responsible for the financial management of Citibank Berhad, do solemnly and sincerely declare that the financial statements set out on pages 37 to 154 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 4 March 2013.

Tang Wan Chee

Before me:

Commissioner for Oaths

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We, Dr. Abdul Ghafar bin Ismail, Dr. Norhashimah Yasin, Dr. Shofian Ahmad, Mat Noor Mat Zain and Nik Abdul Rahim Nik Abdul Ghani being the members of Citibank Berhad Shariah Committee hereby confirm that we have reviewed the principles and the contracts relating to the transactions and applications introduced by Citibank Berhad’s Islamic Banking Division during the financial year ended 31 December 2012.

We have also conducted our review to form an opinion as to whether the Citibank Berhad’s Islamic Banking Division has complied with the Shariah principles and with the Shariah rulings issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us.

The management of Citibank Berhad’s Islamic Banking Division is responsible for ensuring that the financial institution conducts its business in accordance with Shariah principles. It is our responsibility to form an independent opinion, based on our review of the operations of the Citibank Berhad’s Islamic Banking Division, and to report to you.

We have assessed the work carried out by Shariah review and Shariah audit which included examining, on a test basis, each type of transaction, the relevant documentation and procedures adopted by the Citibank Berhad’s Islamic Banking Division.

We planned and performed our review so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Citibank Berhad’s Islamic Banking Division has not violated the Shariah principles.

In our opinion:

1. the contracts, transactions and dealings entered into by the Citibank Berhad’s Islamic Banking Division during the year ended 31 December 2012 that we have reviewed are in compliance with the Shariah principles; and

2. the allocation of profit and charging of losses relating to investment accounts conform to the basis that had been approved by us in accordance with Shariah principles.

We, the members of Citibank Berhad Shariah Committee, do hereby confirm that the operations of the Citibank Berhad’s Islamic Banking Division for the year ended 31 December 2012 have been conducted in conformity with the Shariah principles.

We beg Allah the Almighty to grant us success and lead us on the right path.

Wassalamu Alaikum Wa Rahmatullahi Wa Barakatuh.

Professor Dr. Abdul Ghafar Ismail Professor Dr. Norhashimah YasinChairman of the Shariah Committee Member of the Shariah Committee

Assoc. Prof. Dr. Shofian Ahmad Mat Noor Mat ZainMember of the Shariah Committee Member of the Shariah Committee

Nik Abdul Rahim Nik Abdul GhaniMember of the Shariah Committee

Kuala LumpurDate: 4 March 2013

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Report on the Financial StatementsWe have audited the financial statements of Citibank Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and the Bank, and the statements of comprehensive income, changes in equity and cash flows of the Group and the Bank for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 37 to 154.

Directors’ Responsibility for the Financial StatementsThe Directors of the Bank are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ 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 entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Group and the Bank as of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory RequirementsIn 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 Bank and its subsidiaries have been properly kept in accordance with the provisions of the Act.

b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Bank’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.

c) Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other MattersThis report is made solely to the members of the Bank, 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 Ahmad Nasri bin Abdul WahabFirm Number: AF 0758 Approval Number: 2919/03/14(J)Chartered Accountants Chartered Accountant

Petaling Jaya, MalaysiaDate: 4 March 2013

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Group Bank

31.12.2012 31.12.2011 1 .1 .2011 31.12.2012 31.12.2011 1 .1 .2011

Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 3 10,293,235 11,968,440 10,481,033 10,293,215 11,968,420 10,481,013

Deposits and placements with banks and other financial institutions 4 296,775 1,516,673 811,660 296,775 1,516,673 811,660

Securities purchased under resale agreements 743,921 1,218,993 404,417 743,921 1,218,993 404,417

Financial assets held-for-trading 5 3,045,057 2,336,849 1,852,463 3,045,057 2,336,849 1,852,463

Financial investments available-for-sale 6 3,399,436 5,225,508 3,105,488 3,399,436 5,225,508 3,105,488

Loans, advances and financing 7 19,276,194 20,357,327 19,480,874 19,276,194 20,357,327 19,480,874

Other assets 9 832,926 1,305,988 1,317,716 832,926 1,305,988 1,317,716

Statutory deposits with Bank Negara Malaysia 10 438,840 398,080 - 438,840 398,080 -

Deferred tax assets 11 17,292 796 59,300 17,292 796 59,300

Investments in subsidiary companies 12 - - - 20 20 20

Plant and equipment 13 109,343 120,905 108,781 109,343 120,905 108,781

Total assets 38,453,019 44,449,559 37,621,732 38,453,019 44,449,559 37,621,732

Liabilities

Deposits from customers 14 28,932,489 30,070,705 28,843,990 28,932,489 30,070,705 28,843,990

Deposits and placements of banks and other financial institutions 15 2,855,220 7,777,097 2,322,925 2,855,220 7,777,097 2,322,925

Bills and acceptances payable 133,076 63,761 47,982 133,076 63,761 47,982

Other liabilities 16 2,246,414 2,522,573 2,797,462 2,246,414 2,522,573 2,797,462

Total liabilities 34,167,199 40,434,136 34,012,359 34,167,199 40,434,136 34,012,359

Equity

Share capital 17 121,697 121,697 121,697 121,697 121,697 121,697

Reserves 18 4,164,123 3,893,726 3,487,676 4,164,123 3,893,726 3,487,676

Total equity attributable to equity holder of the Bank 4,285,820 4,015,423 3,609,373 4,285,820 4,015,423 3,609,373

Total liabilities and equity 38,453,019 44,449,559 37,621,732 38,453,019 44,449,559 37,621,732

Off-balance sheet exposures 36 79,345,922 79,632,078 81,239,637 79,345,922 79,632,078 81,239,637

The notes on pages 42 to 154 are an integral part of these financial statements.

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Group and Bank

2012 2011

Note RM’000 RM’000

Revenue 2(b) 2,358,094 2,379,755

Interest income 20 1,669,075 1,712,550

Interest expense 21 (511,581) (489,805)

Net interest income 1,157,494 1,222,745

Net income from Islamic banking operations 37(n) 39,445 37,080

Other operating income 22 649,574 630,125

Total net income 1,846,513 1,889,950

Other operating expenses 23 (934,098) (887,846)

Operating profit 912,415 1,002,104

Allowance for loans, advances and financing 24 (122,838) (144,741)

Profit before taxation 789,577 857,363

Tax expense 25 (210,970) (165,330)

Profit for the year 578,607 692,033

Other comprehensive expense, net of income tax

Net profit/(loss) on revaluation of financial investments available-for-sale (8,210) 14,017

Other comprehensive income/(expense) for the year, net of income tax (8,210) 14,017

Total comprehensive income for the year 570,397 706,050

Profit for the year attributable to:

Owner of the Bank 578,607 692,033

Total comprehensive income attributable to:

Owner of the Bank 570,397 706,050

Earnings per share - basic (sen) 26 475 569

The notes on pages 42 to 154 are an integral part of these financial statements.

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Attributable to owner of the Bank

Non-distributable Distributable

Share Share Statutory Fair Value Retained Total

Note Capital Premium Reserve Reserve Profits Reserves Total

Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 121,697 380,303 121,697 (6,630) 2,992,306 3,487,676 3,609,373

Net income on revaluation of financial investments available-for-sale - - - 14,017 - 14,017 14,017

Total other comprehensive income for the year - - - 14,017 - 14,017 14,017

Profit for the year - - - - 692,033 692,033 692,033

Total comprehensive income for the year - - - 14,017 692,033 706,050 706,050

Dividends to owner of the Bank - - - - (300,000) (300,000) (300,000)

Total contribution to owner 27 - - - - (300,000) (300,000) (300,000)

At 31 December 2011 121,697 380,303 121,697 7,387 3,384,339 3,893,726 4,015,423

Note 17 Note 18

At 1 January 2012 121,697 380,303 121,697 7,387 3,384,339 3,893,726 4,015,423

Net loss on revaluation of financial investments available-for-sale - - - (8,210) - (8,210) (8,210)

Total other comprehensive expense for the year - - - (8,210) - (8,210) (8,210)

Profit for the year - - - - 578,607 578,607 578,607

Total comprehensive (expense)/ income for the year - - - (8,210) 578,607 570,397 570,397

Dividends to owner of the Bank - - - - (300,000) (300,000) (300,000)

Total contribution to owner 27 - - - - (300,000) (300,000) (300,000)

At 31 December 2012 121,697 380,303 121,697 (823) 3,662,946 4,164,123 4,285,820

Note 17 Note 18

Group Bank

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before taxation 789,577 857,363 789,577 857,363

Adjustments for:

Amortisation of premium less accretion of discount of financial investments available-for-sale (27,739) (3,047) (27,739) (3,047)

Allowance for bad and doubtful debts

(net of write-back) 122,838 144,741 122,838 144,741

Depreciation 36,534 35,713 36,534 35,713

Dividends from unquoted investment securities (28) (28) (28) (28)

Unrealised gain from revaluation of financial assets held-for-trading (41) (977) (41) (977)

Gain from disposal of financial investments available-for-sale (20,581) (13,063) (20,581) (13,063)

Loss on disposal of plant and equipment 392 1,023 392 1,023

Operating profit before working capital changes 900,952 1,021,725 900,952 1,021,725

Changes in working capital:

Deposits and placements with banks and other financial institutions 1,219,898 (705,013) 1,219,898 (705,013)

Securities purchased under resale agreements 475,072 (814,576) 475,072 (814,576)

Financial assets held-for-trading (708,167) (483,409) (708,167) (483,409)

Loans, advances and financing 958,295 (1,021,194) 958,295 (1,021,194)

Other assets 456,566 70,232 456,566 70,232

Statutory deposits with Bank Negara Malaysia (40,760) (398,080) (40,760) (398,080)

Deposits from customers (1,138,216) 1,226,715 (1,138,216) 1,226,715

Deposits and placements of banks and other financial institutions (4,921,877) 5,454,172 (4,921,877) 5,454,172

Bills and acceptances payable 69,315 15,779 69,315 15,779

Other liabilities (248,004) (277,598) (248,004) (277,598)

Cash (used in)/generated from

operating activities (2,976,926) 4,088,753 (2,976,926) 4,088,753

Income taxes paid (239,125) (162,621) (239,125) (162,621)

Net cash (used in)/generated from operating activities (3,216,051) 3,926,132 (3,216,051) 3,926,132

The notes on pages 42 to 154 are an integral part of these financial statements.

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Group Bank

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000Cash flows from investing activities

Dividend from investment securities 28 28 28 28

Purchase of plant and equipment (26,034) (49,183) (26,034) (49,183)

Proceeds from disposal of plant and equipment 670 324 670 324

Purchase of financial investments available-for-sale (6,174,833) (7,311,535) (6,174,833) (7,311,535)

Redemption of financial investments available-for-sale 1,626,774 499,387 1,626,774 499,387

Proceeds from disposal of financial investments available-for-sale 6,414,241 4,722,254 6,414,241 4,722,254

Net cash generated from/(used in) investing activities 1,840,846 (2,138,725) 1,840,846 (2,138,725)

Cash flows from financing activities

Dividend paid to owner (300,000) (300,000) (300,000) (300,000)

Net cash used in financing activities (300,000) (300,000) (300,000) (300,000)

Net (decrease)/increase in cash and cash equivalents (1,675,205) 1,487,407 (1,675,205) 1,487,407

Cash and cash equivalents at 1 January 11,968,440 10,481,033 11,968,420 10,481,013

Cash and cash equivalents at

31 December (Note 3) 10,293,235 11,968,440 10,293,215 11,968,420

The notes on pages 42 to 154 are an integral part of these financial statements.

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1

Citibank Berhad (“the Bank”) is a public limited liability company, incorporated and domiciled in Malaysia. The address of both its principal place of business and registered office of the Bank is as follows:

45th Floor, Menara Citibank 165 Jalan Ampang50450 Kuala Lumpur

The consolidated financial statements of the Bank as at and for the year ended 31 December 2012 comprise the Bank and its subsidiaries (together referred to as the “Group”).

The Bank is principally engaged in banking and related financial services that also include Islamic Banking business whilst the principal activities of the subsidiaries are as stated in Note 12 to the financial statements.

The immediate holding company is Citigroup Holdings (Singapore) Pte. Ltd., a company incorporated in Singapore and the ultimate holding company is Citigroup Inc., a company incorporated in the United States of America.

The financial statements were authorised for issue by the Board of Directors on 4 March 2013.

1. Basis of preparation

A. Statement of compliance The financial statements of the Group and the Bank

have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. These are the Group’s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied.

In the previous years, the financial statements of the Group and the Bank were prepared in accordance with Financial Reporting Standards (“FRSs”) in Malaysia as modified by Bank Negara Malaysia’s Guidelines. The abovementioned transition to MFRSs had led to the withdrawal of Special Accounting Treatment for financial liabilities as being stated in Bank Negara Malaysia’s Guidelines on Financial Reporting for Banking Institutions and consequentially, the Group and the Bank had designated the entire structured products as financial liabilities fair value through profit or loss as oppose to the previous bifurcate method. The financial impact arising from aforementioned change in accounting policies is disclosed in Note 38 to the financial statements.

The financial statements also incorporate those activities relating to Islamic Banking which have been undertaken by the Bank. Islamic Banking refers generally to the acceptance of deposits and granting of financing under the Shariah principles.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Bank:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012

• Amendments to MFRS 101, Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013

• MFRS 10, Consolidated Financial Statements • MFRS 11, Joint Arrangements • MFRS 12, Disclosure of Interests in Other Entities • MFRS 13, Fair Value Measurement • MFRS 119, Employee Benefits (2011) • MFRS 127, Separate Financial Statements (2011) • MFRS 128, Investments in Associates and Joint

Ventures (2011) • IC Interpretation 20, Stripping Costs in the

Production Phase of a Surface Mine • Amendments to MFRS 7, Financial Instruments:

Disclosures – Offsetting Financial Assets and Financial Liabilities

• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards – Government Loans

• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)

• Amendments to MFRS 101, Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)

• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)

• Amendments to MFRS 132, Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)

• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)

• Amendments to MFRS 10, Consolidated Financial Statements: Transition Guidance

• Amendments to MFRS 11, Joint Arrangements: Transition Guidance

• Amendments to MFRS 12, Disclosure of Interests in Other Entities: Transition Guidance

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014

• Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities

• Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities

• Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities

• Amendments to MFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015

• MFRS 9, Financial Instruments (2009) • MFRS 9, Financial Instruments (2010)

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1. Basis of preparation (continued)

A. Statement of compliance (continued)

• Amendments to MFRS 7, Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and Transition Disclosures

The Group and the Bank plan to apply the above mentioned standards, amendments and interpretations:

• from the annual period beginning on 1 January 2013 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 July 2012 and 1 January 2013, except for MFRS 11, 127, 128, IC Interpretation 20 and Amendments to MFRS 11 which are not applicable to the Group and the Bank.

• from the annual period beginning on 1 January 2014 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2014.

• from the annual period beginning on 1 January 2015 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2015.

Material financial impact of initial application of MFRS 9, Financial Instruments is discussed below:

(i) MFRS 9, Financial Instruments (2009 & 2010) MFRS 9 replaces the guidance in MFRS 139, Financial

Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities.

This standard requires all financial assets to be classified based on an entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. Financial assets are to be initially measured at fair value. Subsequent to initial recognition, depending on the business model under which these assets are acquired, these will be measured at either fair value or amortised cost.

This standard also specifies the requirements for the classification and measurement of financial liabilities, which are generally similar to the requirements of the original MFRS 139. However, this standard requires that for financial liabilities designated at fair value through profit or loss, changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income, whereas the remaining amount of the change in fair value will be presented in the income statement.

The adoption of MFRS 9 may result in a change in accounting policy. The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.

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The initial application of the other applicable standards, amendments and interpretations are not expected to have any material financial impact to the current and prior periods of the financial statements of the Group and the Bank upon their first adoption.

B. Basis of measurement The financial statements have been prepared on

the historical cost basis other than those disclosed in Note 2.

C. Functional and presentation of currency The financial statements are presented in Ringgit

Malaysia (RM), which is the Group’s and the Bank’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

D. Use of estimates and judgements The preparation of financial statements in conformity

with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:

• Note 2(g) - Impairment losses on loans, advances and financing

Collective impairment allowance for loan losses represents management's estimate of probable losses inherent in the portfolio. The allowance is available to absorb probable loan losses inherent in the overall portfolio.

The allowance attributed to these loans is established via a process that estimates the probable losses inherent in the portfolio based upon various analysis. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, together with analysis that reflect current trends and conditions.

• Note 2(f) - Fair value estimation for financial assets and liabilities

The determination of fair value for financial assets and liabilities for which there is no observable market price that requires the use of valuation techniques as described in accounting policy in Note 2(f)(vi).

2. Significant accounting policies The accounting policies set out below have been applied

consistently to the periods presented in these financial statements and in preparing the opening MFRS statements of financial position of the Group and the Bank at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated.

A. Basis of consolidation

i. Subsidiaries Subsidiaries are entities, including unincorporated

entities, controlled by the Bank. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Bank has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Investments in subsidiaries are measured in the Bank’s statement of financial position at cost less any impairment losses, unless the investment is held for sale or distribution. The cost of investments includes transaction costs.

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Bank.

ii. Transactions eliminated on consolidation Intra-group balances and transactions, and any

unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

B. Revenue

Revenue comprises of gross interest income, commission and other income derived from banking operations and net income from Islamic Banking operation.

C. Interest and financing income and expense

Interest income and expense are recognised in the profit or loss using the effective interest method. The

1. Basis of preparation (continued)

D. Use of estimates and judgements (continued)

• Note 19 - Actuarial valuation for employee benefits

The liability for the defined benefit plan is recognised as the present value of the defined benefit obligation less the fair value of the Plan’s assets, plus unrecognised actuarial gain, less unrecognised past service cost and unrecognised actuarial losses as described in Note 2(o)(iii).

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effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently.

The calculation of the effective interest rate includes all fees and points paid or received, transaction costs, and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability.

Interest income and expense presented in the statements of comprehensive income include:

• Interest on financial assets and liabilities at amortised cost on an effective interest rate basis; and

• Interest on financial assets held-for-trading, financial investments available-for-sale on an effective interest rate basis.

D. Fee and commission income

Fee and commission income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate.

Other fees and commission income, including placement fees, account servicing fees, investment management fees, sales commission, are recognised as the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on a straight-line basis over the commitment period. When it is probable that a loan commitment will result in a specific lending arrangement, commitment fees are included in the measurement of the effective interest rate.

Other fees and commission expense relates mainly to management and service fees, which are expensed as the services are received.

E. Net trading income

Net trading income comprises gains less losses related to trading assets and liabilities, and includes all realised and unrealised fair value changes, interest, dividends and foreign exchange differences.

F. Financial assets and liabilities

i. Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Bank becomes a party to the contractual provisions of the instrument.

2. Significant accounting policies (continued)

F. Financial assets and liabilities (continued)

i. Initial recognition and measurement (continued)

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

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. Financial instrument categories and subsequent measurement

The Group and the Bank categorise financial instruments as follows:

Financial assets

a. Financial assets at fair value through profit or loss

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

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

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

b. Held-to-maturity investments Held-to-maturity investments category

comprises debt instruments that are quoted in an active market and the Group or the Bank has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

c. Loans and receivables Loans and receivables category comprises

debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

d. Financial investments available-for-sale Available-for-sale category comprises

investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

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

Financial liabilities

All financial liabilities are subsequently

measured at amortised cost other than those categorised as fair value through profit or loss.

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

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

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with the gain or loss recognised in profit or loss.

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2. Significant accounting policies (continued)

F. Financial assets and liabilities (continued)

iii. Regular way purchase or sale of financial assets

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

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

a. the recognition of an asset to be received and the liability to pay for it on the trade date, and

b. derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

iv. Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

v. Offsetting

Financial assets and liabilities are offset and the net amount reported in the statements of financial position when, and only when, the Group and the Bank have a legal right to set off the amounts and intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Group’s and the Bank’s trading activity.

vi. Fair value measurement

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date.

The determination of fair values of financial assets and financial liabilities are based on quoted market prices or dealer price quotation, for financial instruments traded in active markets without any deduction for transaction cost. The Group and the Bank also use widely recognised valuation models for determining the fair value of common and simpler financial instruments such as options and interest rate and currency swaps. For these financial instruments, inputs into models are market observable.

The Group and the Bank use valuation techniques to determine the fair value of financial assets and liabilities where quoted prices in an active market are not available. The valuation techniques used for different financial instruments are selected to reflect how the market would be expected to price the instruments, using inputs that reasonably reflect risk-return factors inherent in the instruments. Depending upon the characteristics of the financial instruments, observable market factors are available for use in most valuations, while other valuations may involve a greater degree of judgement and estimation.

The value produced by a model or other valuation techniques is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation adjustments are recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the statements of financial position.

G. Impairment

i. Financial assets

At each reporting date, the Group and the Bank assess whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets categorised as held to maturity and receivable

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2. Significant accounting policies (continued)

G. Impairment (continued)

i. Financial assets (continued)

are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably. Impairment losses are measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original effective interest rate.

The Group and the Bank assess whether objective evidence of impairment exists individually for financial assets that are individually significant. For financial assets that are not individually significant, assessment of objective evidence of impairment is done individually or/and collectively.

Objective evidence that a loan or a loan portfolio is impaired includes observable data that could include the following loss events:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• observable data relating to a portfolio of financial assets such as:

i) adverse changes in the payment status of borrowers in the portfolio; and

ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

• the disappearance of an active market for a security.

Above all, a loan is also classified as impaired if the repayment conduct of the loan is past due for more than 90 days of either principal, interest or both.

If the Group and the Bank determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a separate collective assessment of impairment.

For the purposes of the collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics by using a grading process that considers obligor 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 likelihood of receiving all amounts due under a facility according to the contractual terms of the assets being evaluated.

In assessing the collective impairment, the Group and the Bank use methods as listed below depending on the loan portfolio:-

i) Statistical modeling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether the current economic and credit conditions are such that the actual losses incurred are likely to be greater or less than suggested historical modeling. Default rates, loss rates and expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure they remain appropriate;

ii) Based upon historical delinquency flow rates, charge-off statistics and loss severity, adjusted for management’s judgement as to whether current economic and credit conditions are such that actual losses are likely to be greater or less than suggested by historical modeling.

Losses are recognised in the profit or loss and reflected in an allowance account against loans and advances.

An impairment loss in respect of financial investments available-for-sale is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an financial investments available-for-sale has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

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

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2. Significant accounting policies (continued) G. Impairment (continued)

i. Financial assets (continued)

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

ii. Other assets

The carrying amounts of other assets (except for deferred tax asset and assets arising from employee benefits) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units.

The recoverable amount of an asset or cash-generating unit 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 or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the profit or loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the other assets in the unit (groups of units) on a prorata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable

amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

H. Repurchase and resale agreement

Securities purchased under resale agreements are securities which the Group and the Bank had purchased with a commitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the statements of financial position.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank have sold from its portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligations to repurchase the securities in its entirety are reflected as a liability on the statements of financial position. The securities sold under repurchase agreements are treated as pledged assets and continue to be recognised as assets in the statements of financial position.

I. Cash and cash equivalents Cash and cash equivalents consist of cash and bank

balances and short term funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, with original maturity within one month.

Cash and cash equivalents are categorised and measured as loans and receivables in accordance with policy Note 2(f) and carried at amortised cost in the statements of financial position.

J. Plant and equipment

i. Recognition and measurement

Items of plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

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 assets and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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

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2. Significant accounting policies (continued) J. Plant and equipment (continued)

i. Recognition and measurement (continued)

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

ii. Subsequent costs

The cost of replacing a component of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group and the Bank, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of plant and equipment are recognised in profit or loss as incurred.

iii. Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of the asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group and the Bank will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative periods are as follows:

• building and leasehold land 40 years - 50 years • installations 8 years - 14 years • furniture and equipment 2 years - 10 years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

K. Leased assets

i. Finance lease

Leases in terms of which the Group or the Bank assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

ii. Operating lease

Leases, where the Group or the Bank does not assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

L. Bills and acceptances payable

Bills and acceptances payable represent the Group’s and the Bank's own bills and acceptances rediscounted and outstanding in the market.

M. Foreign currency

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

Monetary assets and liabilities denominated in foreign currencies at the reporting period are retranslated to the functional currency of the Group and the Bank 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 financial investments available-for-sale equity instruments, which are recognised in other comprehensive income.

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2. Significant accounting policies (continued)

N. Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is 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 end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that are not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

O. Employee benefits

i. Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related services are provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group and the Bank have 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 and the Bank contribute to the Employees Provident Fund (“EPF”) for eligible employees on a monthly basis. Obligations for contributions to EPF are recognised as an expense in the statements of comprehensive income in the year to which they relate. Once the contributions have been paid, the Group and the Bank have no further payment obligations.

ii. Defined contribution plan

In addition to the contribution requirement by law, the Group and the Bank are contributing additional amounts for those employees eligible under the defined contribution plan. The contribution is made to Citibank Malaysia Official Staff Retirement Plan ("the Plan") and is recognised as an expense in the statements of comprehensive income as incurred.

iii. Defined benefit plan The Bank and certain related companies

contribute to the Citibank Malaysia Official Staff Retirement Plan ("the Plan") for eligible officers. Contributions are made based on an external actuarial report to the Plan, which is a defined benefit scheme and defined contribution scheme (as explained in item (ii) above), and is funded to the extent permitted by tax allowable Bank contributions.

The amount recognised in the statements of financial position represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of the Plan’s assets. The benefit is calculated using the Projected Unit Credit Method in order to determine its present value. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value to any economic benefits in the form of refunds or reductions in future contributions to the fund. Amortisation of unrecognised gains or losses are included as a component of the annual expense for a year if, as of the beginning of the year, that cumulative net unrecognised gains or losses exceeds 10% of the greater of the Plan’s liability or value of the Plan’s assets. If amortisation is required, the amortisation is that excess divided by the expected average remaining working lives of the employees participating in the Plan.

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2. Significant accounting policies (continued) O. Employee benefits (continued)

iii. Defined benefit plan (continued)

When the benefits of the Plan are improved, the

portion of the increased benefits relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised in profit or loss.

iv. Share-based compensation

The Group and the Bank participate in equity-settled and cash-settled share based compensation plan for the employees that is offered by the ultimate holding company, Citigroup Inc.. The fair value of the services received in exchange for the grant of the options is recognised as an expense in the profit or loss over the vesting periods of the grant.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that

are expected to vest. At each reporting date, the Group and the Bank revise its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the profit or loss.

P. Foreclosed properties

Foreclosed properties are those acquired in full or partial satisfaction of debts, are stated at cost less accumulated impairment losses.

Q. Provisions

A provision is recognised if, as a result of a past event, the Group and the Bank have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

R. Deposits from customers and deposits and placements of banks and financial institutions

Deposits from customers are stated at placement values and adjusted for accrued interest. Deposits and placements of banks and financial institutions are stated at placement values.

3. Cash and short term funds

31.12.2012 31.12.2011 1 .1 .2011

Group RM’000 RM’000 RM’000 Cash and balances with banks and other financial institutions 88,995 61,830 61,683

Money at call and deposit placements maturing within one month 10,204,240 11,906,610 10,419,350

10,293,235 11,968,440 10,481,033

Bank Cash and balances with banks and other financial institutions 88,975 61,810 61,663

Money at call and deposit placements maturing within one month 10,204,240 11,906,610 10,419,350

10,293,215 11,968,420 10,481,013

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4. Deposits and placements with banks and other financial institutions

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Licensed banks 296,775 1,516,673 811,660

5. Financial assets held-for-trading

Group and Bank

31.12.2012 31.12.2011 1.1.2011

At fair value RM’000 RM’000 RM’000

Malaysian Government Treasury Bills 103,053 101,468 101,520

Malaysian Government Securities 642,680 1,004,580 130,739

Malaysian Government Investment Issues 267,104 13,572 136,604

Bank Negara Malaysia Bills/Notes 2,032,220 1,217,229 1,468,506

Corporate Notes/Private debt securities - - 15,094 3,045,057 2,336,849 1,852,463

6. Financial investments available-for-sale

Group and Bank

31.12.2012 31.12.2011 1.1.2011

At fair value RM’000 RM’000 RM’000

Malaysian Government Treasury Bills/Securities* 1,698,966 3,368,908 2,202,157

Bank Negara Malaysia Bills 788,073 - 227,218

Malaysian Government Investment Issues 904,898 1,849,101 537,506

Yankee bonds/US bonds - - 131,108

3,391,937 5,218,009 3,097,989

At cost

Unquoted securities 7,499 7,499 7,499

3,399,436 5,225,508 3,105,488

* Malaysian Government Securities of the Group and the Bank amounting to RM130 million at 1 January 2011 was utilised to meet the Statutory Reserve Requirement as further explained in Note 10.

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7. Loans, advances and financing

i. By type Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Overdrafts 408,205 298,496 243,261 Term loans/financing

- housing loans/financing 8,956,129 9,192,709 9,827,111

- hire purchase receivables 808 1,592 3,175

- lease receivables 570 698 3,678

- other term loans/financing 1,350,200 1,474,378 1,266,750

Bills receivable 740,065 954,240 458,410

Trust receipts 13,100 15,671 14,147

Claims on customers under acceptance credits 922,132 1,125,751 1,111,455

Staff loans 91,719 94,091 101,585

Share margin financing 180,455 182,814 189,523

Credit cards receivables 6,093,593 5,951,843 5,702,121

Revolving credit 1,099,443 1,676,499 1,197,172

Other loans 6,578 3,491 -

19,862,997 20,972,273 20,118,388

Unearned interest and income (23,970) (30,185) (38,615)

Gross loans, advances and financing 19,839,027 20,942,088 20,079,773

Less: Allowance for impaired loans, advances and financing

- Collective assessment allowance (357,064) (365,325) (369,357)

- Individual assessment allowance (205,769) (219,436) (229,542)

Net loans, advances and financing 19,276,194 20,357,327 19,480,874

ii. By type of customer

Domestic non-bank financial institutions

- others 502,069 649,573 299,856

Domestic business enterprises

- small and medium enterprises 423,326 454,944 408,191

- others 2,823,232 3,662,412 2,727,617

Individuals 15,869,348 15,958,134 16,365,585

Foreign entities 221,052 217,025 278,524

19,839,027 20,942,088 20,079,773

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7. Loans, advances and financing (continued)

iii. By interest/profit rate sensitivity Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000 Fixed rate

Housing loans/financing 741,937 823,612 887,577

Hire purchase receivables 808 1,592 3,175

Other fixed rate loans/financing 9,181,998 10,028,423 8,977,936

Variable rate

BLR plus 9,034,808 9,229,388 9,825,153

Cost plus 879,476 859,073 385,932

19,839,027 20,942,088 20,079,773

iv. By sector

Primary agriculture 93,268 105,178 35,022

Mining and quarrying 32,050 18,991 7,7088

Manufacturing (including agriculture based) 1,705,728 2,409,915 1,710,721

Electricity, gas and water 84,073 86,890 32,295

Construction 43,163 45,704 46,104

Wholesale, retail trade, restaurants and hotels 758,725 921,932 841,024

Transport, storage and communication 307,544 301,573 137,600

Finance, insurance, real estate and business services 639,076 800,246 512,027

Education, health and others 9,862 16,160 19,933

Household

- consumption credit 6,689,390 6,501,532 6,246,231

- residential 8,751,212 9,001,842 9,623,221

- purchase of securities 180,455 182,814 189,523

- others 248,291 271,947 306,610

Other sectors 296,190 277,364 371,754

19,839,027 20,942,088 20,079,773

v. By purpose

Purchase of securities 180,455 182,814 189,523

Purchase of landed property 9,321,539 9,584,490 10,243,017

Purchase of fixed assets excluding land and building 3,500 5,406 9,545

Personal use 693,920 660,946 698,800

Credit card 6,093,593 5,951,843 5,702,121

Construction 17,112 22,009 8,562

Working capital 3,478,277 4,446,136 3,214,915

Other purposes 50,631 88,444 13,290

19,839,027 20,942,088 20,079,773

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7. Loans, advances and financing (continued)

vi. Residual contractual maturity Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Maturing within one year 9,691,474 10,620,083 6,711,563

One to five years 739,269 714,320 3,099,068

Over 5 years 9,408,284 9,607,685 10,269,142

19,839,027 20,942,088 20,079,773

vii. By geographical distribution

Within Malaysia 19,839,027 20,942,088 20,079,773

8. Impaired loans, advances and financing

i. Movements in impaired loans, advances and financing are as follows: Group and Bank

2012 2011 2010

RM’000 RM’000 RM’000

At 1 January 518,800 540,814 491,317

Classified as impaired during the year 694,620 767,545 724,457

Reclassified as performing during the year (361,861) (393,385) (325,418)

Amount recovered (205,842) (233,862) (178,916)

Amount written off (163,863) (162,312) (170,626)

At 31 December 481,854 518,800 540,814

Individual assessment allowance (205,769) (219,436) (229,542)

Net impaired loans, advances and financing 276,085 299,364 311,272

Ratio of net impaired loans and financing to gross loans

and financing less individual assessment allowance 1.41% 1.44% 1.57%

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8. Impaired loans, advances and financing (continued)

ii. Movements in impairment provisions for loans, advances and financing are as follows:

Group and Bank

2012 2011 2010

RM’000 RM’000 RM’000 Collective assessment allowance

At 1 January 365,325 369,357 360,407

(Written back)/Allowance made during the year, net (8,261) (4,032) 8,950

At 31 December 357,064 365,325 369,357

As % of gross loans, advances and financing less individual assessment allowance 1.82% 1.76% 1.86%

Individual assessment allowance

At 1 January 219,436 229,542 221,588

Allowance made during the period 10,957 16,888 34,644

Written back during the year (19,777) (19,418) (12,984)

Written off during the year (4,847) (7,576) (13,706)

At 31 December 205,769 219,436 229,542

iii. Impaired loans, advances and financing by sector Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Primary agriculture 7,689 7,328 8,937

Mining and quarrying 373 373 -

Manufacturing (including agriculture based) 33,651 32,041 36,178

Construction 13,492 14,934 17,026

Wholesale, retail trade, restaurants and hotels 16,300 18,082 20,070

Transport, storage and communication 71 84 104

Finance, insurance, real estate and business services 7,556 9,970 12,081

Household

- consumption credit 117,880 114,802 116,112

- residential 264,529 299,025 307,265

- purchase of securities 19,831 20,475 20,795

Other purposes 482 1,686 2,246

481,854 518,800 540,814

iv. Impaired loans, advances and financing by geographical distribution

Within Malaysia 481,854 518,800 540,814

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9. Other assets Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000 Interest/Income receivable 42,295 66,150 45,836

Other debtors, deposits and prepayments 293,651 414,094 264,640

Derivative assets (Note 30) 472,092 820,647 1,007,240

Tax recoverable 24,888 5,097 -

832,926 1,305,988 1,317,716

10. Statutory deposits with Bank Negara Malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act 1958 (revised - 1994) to satisfy the Statutory Reserve Requirement (“SRR”), the amount of which is determined as a set percentage of total eligible liabilities.

In accordance with BNM’s circular titled “Regulatory Treatment related to the Statutory Reserve Requirement Incentive for Principal Dealers and Islamic Principal Dealers” issued on 10 July 2009, the Bank being a principal dealer appointed by BNM, is allowed to utilise Malaysia Government Securities (“MGS”) holdings to meet the SRR. As at 1 January 2011 , MGS of the Group and the Bank with nominal amount of RM130 million are utilised for SRR determination purposes. These securities are classified under financial investments available-for-sale (Note 6).

11. Deferred tax assets

Deferred tax assets and liabilities are attributable to the followings:

Plant and Reserves equipment - - Available Capital -for-sale allowances Provisions securities Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2011 (19,594) 76,416 2,478 59,300

Recognised in profit or loss (260) (53,304) - (53,564)

Recognised in other comprehensive income - - (4,940) (4,940)

At 31 December 2011/ At 1 January 2012 (19,854) 23,112 (2,462) 796

Recognised in profit or loss 5,038 8,721 - 13,759

Recognised in other comprehensive income - - 2,737 2,737

At 31 December 2012 (14,816) 31,833 275 17,292

Deferred tax assets and liabilities are offset above as there is a legally enforceable right to set off current tax

assets against current tax liabilities.

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11 . Deferred tax assets (continued) The recognised deferred tax assets and liabilities are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000 Plant and equipment - capital allowances (14,816) (19,854) (19,594)

Provisions 31,833 23,112 76,416

Fair value of available-for-sale securities 275 (2,462) 2,478

17,292 796 59,300

12. Investments in subsidiary companies Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000 Unquoted shares at cost – in Malaysia 20 20 20 Details of the wholly owned subsidiaries are as follows:

Effective Country of Ownership Name of subsidiary Principal activity incorporation Interest 31.12.2012 31.12.2011 1 .1 .2011 % % % Citigroup Nominee (Malaysia) Sdn. Bhd. Nominee company Malaysia 100 100 100 Citigroup Nominees (Tempatan) Sdn. Bhd.* Nominee company Malaysia 100 100 100 Citigroup Nominees (Asing) Sdn. Bhd.* Nominee company Malaysia 100 100 100

* Wholly owned by Citigroup Nominee (Malaysia) Sdn. Bhd. All income and expenditure arising from the activities of the subsidiaries have been recognised in the Bank’s

statement of comprehensive income.

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13. Plant and equipment Building on Furniture leasehold and Group and Bank land Installations equipment Total

Cost RM’000 RM’000 RM’000 RM’000

At 1 January 2011 6,234 97,137 313,701 417,072

Additions 347 22,489 26,347 49,183

Disposals - (5,499) (9,261) (14,760)

Write offs - - (843) (843)

At 31 December 2011/1 January 2012 6,581 114,127 329,944 450,652

Additions 73 6,439 19,522 26,034

Disposals (256) (9,206) (17,182) (26,644)

At 31 December 2012 6,398 111,360 332,284 450,042

Depreciation

At 1 January 2011 4,011 84,913 219,367 308,291

Charge for the year 462 6,490 28,761 35,713

Disposals - (5,412) (8,002) (13,414)

Written offs - - (843) (843)

At 31 December 2011/1 January 2012 4,473 85,991 239,283 329,747

Charge for the year 411 10,050 26,073 36,534

Disposals (196) (9,018) (16,368) (25,582)

At 31 December 2012 4,688 87,023 248,988 340,699

Carrying amounts

At 1 January 2011 2,223 12,224 94,334 108,781

At 31 December 2011/1 January 2012 2,108 28,136 90,661 120,905

At 31 December 2012 1,710 24,337 83,296 109,343

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14. Deposits from customers

i. By type of deposit Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Demand deposits 11,908,032 10,026,162 9,869,460

Saving deposits 762,393 935,372 837,370

Fixed deposits 9,791,266 9,559,230 11,583,915

Other deposits 6,289,233 9,463,856 6,449,080

Negotiable instruments of deposit 144,403 75,917 80,002

Others - cash collateral 37,162 10,168 24,163

28,932,489 30,070,705 28,843,990

ii. Maturity structure of fixed deposits, other deposits and negotiable instruments of deposit are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Due within six months 12,652,604 15,085,465 13,035,307

Six months to one year 3,084,133 3,396,307 4,425,735

One year to three years 371,650 385,752 351,701

Three years to five years 116,515 231,479 100,254

Over five years - - 200,000

16,224,902 19,099,003 18,112,997

iii. By type of customer Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Government and statutory bodies 281,570 177,672 27,390

Business enterprises 15,755,296 17,418,215 15,065,326

Individuals 9,810,329 9,799,589 10,276,013

Others 3,085,294 2,675,229 3,475,261

28,932,489 30,070,705 28,843,990

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15. Deposits and placements of banks and other financial institutions

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Licensed banks 2,746,513 7,777,097 2,046,727

Licensed finance companies 108,707 - 276,198

2,855,220 7,777,097 2,322,925

16. Other liabilities Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Interest/Profit payable 52,883 65,949 57,354

Other creditors and accruals 1,664,584 1,685,973 1,649,851

Provision for retirement benefits (Note 19(i)) 270 701 372

Taxation - - 45,765

Derivative liabilities (Note 30) 528,677 769,950 1,044,120

2,246,414 2,522,573 2,797,462

17. Share capital Group and Bank

Number Number Number

Amount of shares Amount of shares Amount of shares

31.12.2012 31.12.2012 31.12.2011 31.12.2011 1.1.2011 1.1.2011

RM’000 ’000 RM’000 ’000 RM’000 ’000

Ordinary shares of RM1 each:

Authorised 500,000 500,000 500,000 500,000 500,000 500,000

Issued and fully paid 121,697 121,697 121,697 121,697 121,697 121,697

18. Reserves Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Share premium 380,303 380,303 380,303

Statutory reserve 121,697 121,697 121,697

Fair value reserve (823) 7,387 (6,630)

Retained profits 3,662,946 3,384,339 2,992,306

4,164,123 3,893,726 3,487,676

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18. Reserves (continued)

The share premium arose from the issuance of 121,696,972 ordinary shares of RM1 each at an issue price of RM4.125 per share.

The statutory reserve is maintained in compliance with Section 36 of the Banking and Financial Institutions Act 1989 and is not distributable as cash dividends. No transfers were made to the statutory reserve during the year as the Bank has met the reserve requirements.

The fair value reserve is in respect of unrealised fair value gains and losses on financial investments available-for-sale.

Subject to agreement by the Inland Revenue Board, the Bank has Section 108 tax credit and tax exempt income to frank approximately RM1.11 billion of its distributable reserves at 31 December 2012 if paid out as dividends.

The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As such, the Section 108 tax credit balance as at 31 December 2012 will be available to the Bank until such time the credit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.

19. Employee benefits

i. Retirement benefits

The amounts recognised in the statements of financial position are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Present value of the funded obligation 31,391 35,439 34,633

Fair value of plan assets (38,934) (37,343) (37,488)

(7,543) (1,904) (2,855)

Unrecognised past service costs (4) (12) (20)

Unrecognised actuarial gains 7,817 2,617 3,247

Liability recognised in statements of financial position 270 701 372

The Group and the Bank make contributions to a fully funded defined benefit scheme for its employees. Contributions to the fund are made to a separately administered fund. Under the fund, eligible employees are entitled to one and a half month of the final/last drawn salary multiplied by the Plan service not in excess of 40 upon attainment of the retirement age of 55. For employees who leave before the attainment of the retirement age, the retirement benefit will be computed based on the scale rate stipulated in the rules of the Fund.

On 1 January 2007, majority of the Plan members’ benefits accrued under the Defined Benefit Plan were converted to the new Defined Contribution Plan. Only those staff who satisfied the criteria below, will continue to be maintained under the Defined Benefit Plan.

a. Age as at 31 December 2006: at least 40 years

b. Years of service as at 31 December 2006: at least 5 years

c. Sum of age and years of service as at 31 December 2006: at least 55 years

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19. Employee benefits (continued)

i. Retirement benefits (continued)

Plan assets comprise: Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Equities 11,291 9,709 10,984

Property 15,807 15,796 15,782

Securities 11,018 9,971 9,597

Others 818 1,867 1,125

38,934 37,343 37,488

Movement in the present value of the defined benefit obligations:

Group and Bank

2012 2011

RM’000 RM’000

Defined benefit obligations at 1 January 35,439 34,633

Benefits paid by the plan (3,248) (2,315)

Current service costs and interest 3,221 3,323

Actuarial gains (4,021) (202)

Defined benefit obligations at 31 December 31,391 35,439

Movement in the fair value of plan assets:

Group and Bank

2012 2011

RM’000 RM’000

Fair value of plan assets at 1 January 37,343 37,488

Contributions paid into the plan 1,301 426

Benefits paid by the plan (3,248) (2,315)

Expected return on plan assets 2,370 2,577

Actuarial (losses)/gains 1,168 (833)

Fair value of plan assets at 31 December 38,934 37,343

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19. Employee benefits (continued)

i. Retirement benefits (continued)

The amounts recognised in the statements of comprehensive income are as follows:

Group and Bank

2012 2011

RM’000 RM’000

Current service costs 1,515 1,559 Interest cost 1,706 1,764

Expected return on plan assets (2,370) (2,577)

Cost of settlement 202 -

Prior service costs 8 9

Amount included under “personnel costs” 1,061 755

Actual return on plan assets 3,538 1,745

Movement in the net liability recognised in the statements of financial position are as follows:

Group and Bank

2012 2011

RM’000 RM’000

Opening net liability as at 1 January 701 372

Recommended expenses as above 1,061 755

Contributions paid (1,301) (426)

Prior year contributions (191) -

270 701

The latest valuation of the Defined Benefit Plan as at 31 December 2012 was conducted by Towers Watson (Malaysia) Sdn. Bhd.. The unfunded portion of the total liability will continue to be borne by Citibank Berhad. Projected unit credit method is used to calculate the actuarial present value of promised retirement benefits.

Principal actuarial assumptions used at the reporting date (expressed as weighted averages):

Group and Bank

2012 2011

Discount rate 4.25% 5.00%

Rate of increase in salary levels 6.00% 7.00%

Expected long-term rate of return on plan assets 6.50% 6.50%

Price inflation 3.50% 3.50%

Assumptions regarding future mortality are based on published statistics and mortality tables. The average

life expectancy of an individual retiring is at the age of 55 years.

The overall expected long-term rate of return on assets is 6.5% per annum. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.

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19. Employee benefits (continued)

i. Retirement benefits (continued)

Historical information

Group and Bank 2012 2011 2010 2009 2008

RM’000 RM’000 RM’000 RM’000 RM’000

Present value of the defined benefit obligation 31,391 35,439 34,633 34,093 26,926

Fair value of plan assets (38,934) (37,343) (37,488) (25,972) (18,991)

(Surplus)/Deficit in the plan (7,543) (1,904) (2,855) 8,121 7,935

Experience adjustments arising on plan assets - (gains)/losses (1,168) 833 (9,602) (2,127) 2,774

Experience adjustments arising on plan liabilities - (gains)/losses (2,866) (686) (1,342) 4,850 36

Assumption adjustment on plan liabilities – (gains)/losses (1,155) 484 508 566 1,262

The Group and the Bank’s expected contribution to be paid to the funded defined benefit plan in year 2013 is approximately RM865,000.

ii. Share option plan

The Group and the Bank have a number of stock option programmes for its officers and employees as part of a discretionary award package. Options are granted on Citigroup Inc.’s stock at the market value denominated in US dollar at the time of grant. Option granted in October 2009 has a six years term and will vest 33% each year over a three years period, provided the staff remains continuously employed in the Group and the Bank.

Group and Bank

2012 2011

Outstanding at 1 January 661,935 677,773

Granted - -

Exercised - (393)

Transfer in 55,874 21,388

Lapsed/Cancelled (33,979) (36,833)

Outstanding at 31 December 683,830 661,935

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19. Employee benefits (continued)

ii. Share option plan (continued)

Details of share options granted during the year:

Group and Bank

2012 2011 Expiry dates - -

Average grant price per ordinary share (RM) - -

Aggregated proceeds if shares are issued (RM’000) - -

Details of share options exercised during the year:

Year of expiry - 2014

Average exercise price per ordinary share (RM) - 12.97

Aggregated issue proceeds (RM’000) - 5

Fair value at date of vesting (RM’000) - 2,399

Terms of the options outstanding at 31 December:

Group and Bank

2012 2011 Expiry dates Exercise price - 415

- 26,980

- 1,839

- 750

- 635

635 -

- 11,188

11,188 -

- 620,128

672,007 -

683,830 661,935

iii. Share capital accumulation plan (CAP)

The Group and the Bank have a number of capital accumulation programmes for its officers and employees. The Core CAP is a discretionary award of restricted shares. The number of CAP shares in a Core CAP award is calculated using a 25% discount from the market price of Citigroup common stock. Supplemental CAP is a discretionary retention award programme composed of an award of CAP shares. The difference between Supplemental CAP award and a Core CAP award is that generally, a Supplementary CAP is given in addition to the discretionary award package and the number of shares awarded will not be based on a discount from the market price of Citigroup common stock. CAP granted in 2012 typically vest 25% each year for four years, with the first vesting date occurring 12 months after the grant date. Shares acquired upon exercise of a CAP option generally may not be sold for two years following the exercise date.

RM 155.47

RM 133.82

RM 144.33

RM 107.74

RM 172.82

RM 166.35

RM 77.70

RM 74.79

RM 12.97

RM 12.48

Jan 2012

Feb 2012

Feb 2012

Aug 2012

Jan 2013

Jan 2013

Jan 2014

Jan 2014

Oct 2015

Oct 2015

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19. Employee benefits (continued)

iii. Share capital accumulation plan (CAP) (continued)

Group and Bank

2012 2011

Outstanding at 1 January 485,525 606,369

Granted 416,375 297,605

Vested (24,950) 20,438

Lapsed/cancelled (269,016) (220,324)

Net transferred out (354) (218,563)

Outstanding at 31 December 607,580 485,525

Details of CAP granted during the year:

Group and Bank

2012 2011

Expiry dates Jan 16, 2016 Jan 17, 2015

Average grant price per ordinary share (RM) 9.34 15.95

Aggregated proceeds if shares are issued (RM’000) 3,889 4,748

Details of CAP vested during the year:

Average exercise price per ordinary share (RM) 8.93 25.02

Aggregated issue proceeds (RM’000) 4,355 6,171

Fair value at date of vesting (RM’000) 1,695 2,745

Terms of the CAP outstanding at 31 December:

Group and Bank

2012 2011 Year of expiry Grant price

- 19,602

- 7,004

- 497

- 94,804

35,232 -

- 140,932

61,905 -

- 222,686

131,856 -

104,795 -

273,792 -

607,580 485,525

RM 62.76

RM 83.68

RM 47.96

RM 14.85

RM 14.29

RM 11.17

RM 10.76

RM 15.95

RM 15.36

RM 9.34

RM 9.34

Jan 2012

Jan 2012

Oct 2012

Jan 2013

Jan 2013

Jan 2014

Jan 2014

Jan 2015

Jan 2015

Jan 2015

Jan 2016

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20. Interest income Group and Bank

2012 2011

RM’000 RM’000 Loans and advances

- Interest income other than recoveries from impaired loans 1,168,629 1,216,577

- Recoveries from impaired loans 53,571 45,277

Money at call and deposit placements with financial institutions 197,510 247,359

Financial assets held-for-trading 48,848 50,702

Financial investments available-for-sale 97,967 84,187

Securities purchased under resale agreements 29,357 28,367

1,595,882 1,672,469

Accretion of discount 73,193 40,081

Total interest income 1,669,075 1,712,550

21. Interest expense Group and Bank

2012 2011

RM’000 RM’000

Deposits and placements of banks and other financial institutions 29,567 31,535

Deposits from customers 478,274 453,295

Others 3,740 4,975

511,581 489,805

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22. Other operating income Group and Bank

2012 2011

RM’000 RM’000 Fee income:

Commission 145,628 138,542

Service charges and fees 15,568 15,202

Guarantee fees 6,775 6,698

Bankcard fees 221,601 167,817

Insurance premium and referral 28,105 19,578

Other fee income 46,753 36,995

464,430 384,832

Trading income:

Unrealised gain from revaluation of financial

assets held-for-trading 41 977

Net gain from sales of securities

- Financial assets held-for-trading 7,052 27,571

- Financial investments available-for-sale 19,447 7,332

Gross dividends from financial investments available-for-sale 28 28

26,568 35,908

Other income:

Foreign exchange profit

- unrealised gain 112,462 161,915

- realised gain 31,552 30,393

Gain from derivatives 14,954 18,099

Loss on disposal of plant and equipment (392) (1,022)

158,576 209,385

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23. Other operating expenses Group and Bank

2012 2011

RM’000 RM’000

Personnel costs - Salaries, allowances and bonuses 334,821 323,600

- Contributions to Employees Provident Fund 42,291 37,592

- Staff benefits and other compensations 42,654 41,300

- Others 10,925 6,927

430,691 409,419

Establishment costs

- Depreciation 36,534 35,713

- Rental of premises 24,171 21,526

- Hire of equipments 4,120 2,603

- Utilities 6,334 6,677

- Others 17,793 18,436

88,952 84,955

Marketing expenses

- Advertisement and promotional expenses 47,077 44,560

- Others 1,327 1,518

48,404 46,078

Administrative and general expenses

- Processing cost 250,907 179,803

- Auditors’ remuneration

- Statutory audit 361 346

- Other services 263 191

- Stationeries and supplies 4,810 6,748

- Communication expenses 6,948 16,055

- Maintenance of office equipment 3,694 4,385

- Others 99,068 139,866

366,051 347,394

Total other operating expenses 934,098 887,846

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23. Other operating expenses (continued)

Group and Bank

2012 2011

RM’000 RM’000 i. CEO and Directors’ remuneration

Executive Directors (including CEO) Salary and other remuneration, including meeting allowances 2,011 2,314

Bonuses 1,032 971

Benefits-in-kind 430 392

Share-based payment (29) 830

Non-executive Directors Fees 232 300

3,676 4,807

ii. Other key management personnel:

- short-term employee benefits 2,902 3,144

Salary Benefits- and others in- remunerations Fees Bonuses kind Total

RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors and CEO

Sanjeev Nanavati 2,011 - 1,032 430 3,473

Non-executive Directors

Jonathan Christian Larsen - - - - -

Tan Sri Dato’ Hj Omar Ibrahim - 100 - - 100

Dato’ Siow Kim Lun @

Siow Kim Lin - 100 - - 100

Agnes Liew Yun Chong - - - - -

Terence Kent Cuddyre - - - - -

Dato’ Dr. Thillainathan A/L

Ramasamy - 32 - - 32

2,011 232 1,032 430 3,705

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24. Allowance for loans, advances and financing Group and Bank

2012 2011

RM’000 RM’000 Allowance for loans, advances and financing:

Individual assessment

- allowance made during the year 10,957 16,888

- written back (19,777) (19,418)

Collective assessment

- written back (8,261) (4,032)

Impaired loans, advances and financing

- written back (90,145) (79,678)

- written off 230,064 230,981

122,838 144,741

25. Tax expense Group and Bank

2012 2011

RM’000 RM’000 Malaysian income tax

- current year 204,436 220,302

- prior year under/(over) provision 20,293 (108,536)

224,729 111,766 Deferred tax expense

- Origination and reversal of temporary differences (5,999) (13,956)

- Prior year (over)/under provision (7,760) 67,520

210,970 165,330

A reconciliation of the income tax expense between the statutory tax expense and effective tax expense is as follows:-

Group and Bank

2012 2011

RM’000 RM’000

Profit before taxation 789,577 857,363

Income tax using Malaysian tax rate of 25% 197,394 214,341

Non-deductible expenses 1,043 431

Others - (8,426)

198,437 206,346

Under/(Over) provision in prior year 12,533 (41,016)

210,970 165,330

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26. Earnings per share

The earnings per ordinary share has been calculated based on the profit for the year of RM578,607,000 (2011 - RM692,033,000) divided by 121 ,696,972 units of ordinary shares of RM 1 each issued as at the financial years ended.

27. Dividends Dividends recognised by the Bank are:

Sen Total per share amount Date of (net of tax) RM’000 payment 2012 Final 2011 ordinary 247 300,000 13 June 2012

2011 Final 2010 ordinary 247 300,000 28 June 2011

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 equity holder of the Bank.

Sen Total per share amount (net of tax) RM’000

Final ordinary - 31 December 2012 411 500,000

28. Significant related party transactions and balances

For the purpose of these financial statements, parties are considered to be related to the Group or the Bank if the Group or the Bank 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 or the Bank and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The related parties of the Group and the Bank are:

(i) Parent companies Parent companies of the Group and the Bank are Citigroup Holdings (Singapore) Pte. Ltd. and

Citigroup Inc.

(ii) Other related companies Entities which are related by virtue of having Citigroup Holdings (Singapore) Pte. Ltd. or Citibank

Overseas Investment Corporation as the holding companies or having Citigroup Inc. as the ultimate holding company.

(iii) 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 or the Bank either directly or indirectly. The key management personnel of the Group or the Bank includes all the Directors and certain members of senior management of the Group or the Bank. Key management personnel compensation is disclosed in Note 23.

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28. Significant related party transactions and balances (continued)

Transactions and balances with parent companies and other related companies Group and Bank Group and Bank

2012 2011

RM’000 RM’000 RM’000 RM’000

Parent Other related Parent Other related companies companies companies companies Income

Interest on interest bearing deposits 19,591 13,530 66,901 49,251

Other income 5,314 115,170 24,042 348,784

24,905 128,700 90,943 398,035

Expenditure

Interest on interest bearing deposits - 7,587 - 27,803

Other expenses 14,044 207,587 14,309 559,225

14,044 215,174 14,309 587,028

Amount due from

Interest bearing deposits - 1,888,117 - 7,542,592

Current account balances 8,315 317,517 - 1,522,230

Other balances 33,650 121,069 124,982 1,059,365

41,965 2,326,703 124,982 10,124,187

Amount due to

Interest bearing deposits - 6,257 - 7,531,210

Current account balances 39,905 117,600 147,870 248,537

Other balances 31,965 931,205 134,169 250,231

71,870 1,055,062 282,039 8,029,978

All related party transactions are conducted at arm’s length basis and on normal commercial terms which are not

more favourable than those generally available to public.

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29. Credit transactions and exposures with connected parties Group and Bank

2012 2011

RM’000 RM’000

Outstanding credit exposures with connected

parties of which: 1,643,454 2,438,114

Total credit exposure which is non-performing

or in default - -

Total credit exposures 65,626,933 68,594,284

Percentage of outstanding credit exposures to

connected parties

- as a proportion of total credit exposures 2.50% 3.55%

- as a proportion of capital base 36.65% 57.25%

- which is non-performing or in default 0.00% 0.00%

The disclosure on Credit Transactions and Exposures with Connected Parties above are presented in accordance with para 9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties, which became effective on 1 January 2008.

Based on these guidelines, a connected party refers to the following:

i. Directors of the Bank and their close relatives;

ii. Controlling shareholder and his close relatives;

iii. Executive Officer, being a member of management having authority and responsibility for planning, directing and/or controlling the activities of the Bank, and his close relatives;

iv. Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status of existing credit transactions, either as a member of a committee or individually, and their close relatives;

v. Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv) above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor, and their subsidiaries or entities controlled by them;

vi. Any person for whom the persons listed in (i) to (iv) above is a guarantor; and

vii. Subsidiary of or an entity controlled by the Bank and its connected parties.

Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. They also include holdings of equities and private debt securities issued by the connected parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions no more favourable than those entered into with other counterparties with similar circumstances and creditworthiness. Due care has been taken to ensure that the creditworthiness of the connected party is not less than that normally required of other persons.

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30. Derivative financial instruments

2012 2011 2010

Positive Negative Positive Negative Positive Negative

Contract fair fair Contract fair fair Contract fair fair

amount value value amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Foreign exchange related contracts:

- Forwards 43,496,302 68,211 98,562 44,501,232 202,448 96,410 44,990,550 264,681 310,204

- Cross currency interest rate swaps 5,946,434 176,445 175,376 5,212,667 294,397 294,535 6,948,760 423,054 311,223

- Options 2,093,720 5,099 5,021 2,034,702 9,026 2,956 703,871 3,205 3,213

Interest rate contracts:

- Futures 1,445,000 - - 3,915,000 - - 7,384,086 - -

- Swaps 22,806,028 212,748 231,305 22,286,981 298,967 351,462 28,199,721 281,970 372,410

- Options 454,262 45 1,308 474,793 397 2,494 1,082,406 2,026 5,275

Equity related contracts 212,919 5,604 5,604 178,235 7,893 7,893 1,321,876 14,927 14,956

Others 274,330 3,940 11,501 785,672 7,519 14,200 731,077 17,377 26,839

76,728,995 472,092 528,677 79,389,282 820,647 769,950 91,362,347 1,007,240 1,044,120

Note 9 Note 16 Note 9 Note 16 Note 9 Note 16

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31. Financial risk management

The Group’s and the Bank’s risk management framework are designed to monitor, evaluate and manage the principal risk they assume in conducting its activities. These risks include the following:

• credit risk

• market risk

• operational risk

1. Credit Risk

Credit risk is the potential for financial loss resulting from the failure of a borrower or counterparty to honour its financial or contractual obligations. Credit arises in lending, trading, and derivatives transactions, securities transactions, settlement and when the Group or the Bank acts as an intermediary on behalf of its clients and other third parties.

The credit risk management process of the Group and the Bank relies on corporate-wide standards to ensure consistency and integrity, with business-specific policies and practices to ensure applicability and ownership. While business managers and independent risk management are jointly responsible for managing risk/return trade offs as well as establishing limits and risk management practices, the origination and approval roles are clearly defined and segregated. In addition to conforming to established corporate standards, independent credit risk management is responsible for establishing policies that comply with local regulations and any other relevant legal requirements.

Independent credit risk management is also responsible for implementing portfolio limits, including obligor limits through risk rating, maturity and business segments limits to ensure diversification of portfolios, monitoring business risk management performance, providing on-going assessment of portfolio credit risk and approving new products.

Continuous monitoring of credit behaviour aided by sophisticated scoring modules, plus portfolio delinquency performance allows independent credit risk management to constantly assess the health of the credit portfolio.

The Group and the Bank secure various forms of collateral to mitigate credit risk exposures. The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows:

o for residential mortgages - charges over residential properties

o for commercial property loans - charges over the properties being financed

o for share margin financing - pledges over quoted securities

o for other loans - charges over business assets such as premises, inventories, trade receivables or deposits

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31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration

The following tables present the Group’s maximum exposure to credit risk of its on and off balance sheet financial instruments at each reporting dates, by industry and geographical anaylsis, before taking into account collateral held or other credit enhancements.

i. By Industry analysis

Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Services, Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 2,845,000 - 7,448,235 - - - - - - - - - 10,293,235

Deposits and placements with bank and other financial institutions - - 296,775 - - - - - - - - - 296,775

Securities purchased under resale agreements 743,921 - - - - - - - - - - - 743,921

Financial assets held- for-trading 3,045,057 - - - - - - - - - - - 3,045,057

Financial investments available-for-sale 3,391,937 - - - - - - - - - - 7,499 3,399,436

Loans, advances and financing - 15,869,348 639,076 93,268 32,050 1,705,728 84,073 43,163 758,725 307,544 9,862 296,190 19,839,027

Other assets - - 660,749 2,246 - 3,142 1,002 20 9,330 4,306 56 152,075 832,926

Statutory deposits with Bank Negara Malaysia 438,840 - - - - - - - - - - - 438,840

10,464,755 15,869,348 9,044,835 95,514 32,050 1,708,870 85,075 43,183 768,055 311,850 9,918 455,764 38,889,217

Contingent liabilities - - 2,691,936 - - - - - - - - - 2,691,936

Commitments - 23,454,557 1,668,806 - - - - - - - - - 25,123,363

Total Credit Exposures 10,464,755 39,323,905 13,405,577 95,514 32,050 1,708,870 85,075 43,183 768,055 311,850 9,918 455,764 66,704,516

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Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Services, Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 2,141,000 - 9,827,440 - - - - - - - - - 11,968,440

Deposits and placements with bank and other financial institutions - - 1,516,673 - - - - - - - - - 1,516,673

Securities purchased under resale agreements 1,218,993 - - - - - - - - - - - 1,218,993

Financial assets held- for-trading 2,336,849 - - - - - - - - - - - 2,336,849

Financial investments available-for-sale 5,218,009 - - - - - - - - - - 7,499 5,225,508

Loans, advances and financing - 15,958,135 800,246 105,178 18,991 2,409,915 86,890 45,704 921,932 301,573 16,160 277,364 20,942,088

Other assets - - 947,626 10,816 747 67,562 835 20 14,143 5,997 - 258,242 1,305,988

Statutory deposits with Bank Negara Malaysia 398,080 - - - - - - - - - - - 398,080

11,312,931 15,958,135 13,091,985 115,994 19,738 2,477,477 87,725 45,724 936,075 307,570 16,160 543,105 44,912,619

Contingent liabilities - - 2,267,554 - - - - - - - - - 2,267,554

Commitments - 21,974,557 2,822,702 - - - - - - - - - 24,797,259

Total Credit Exposures 11,312,931 37,932,692 18,182,241 115,994 19,738 2,477,477 87,725 45,724 936,075 307,570 16,160 543,105 71,977,432

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

i. By Industry analysis (continued)

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Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Services, Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 4,576,600 - 5,904,433 - - - - - - - - - 10,481,033

Deposits and placements with bank and other financial institutions - - 811,660 - - - - - - - - - 811,660

Securities purchased under resale agreements 404,417 - - - - - - - - - - - 404,417

Financial assets held- for-trading 1,837,369 - - - - - 10,094 - 5,000 - - - 1,852,463

Financial investments available-for-sale 3,097,989 - - - - - - - - - - 7,499 3,105,488

Loans, advances and financing - 16,365,585 512,027 35,022 7,708 1,710,721 32,295 46,104 841,024 137,600 19,933 371,754 20,079,773

Other assets - - 624,296 1,802 2,042 87,222 173 21 13,637 17,822 3 570,698 1,317,716

9,916,375 16,365,585 7,852,416 36,824 9,750 1,797,943 42,562 46,125 859,661 155,422 19,936 949,951 38,052,550

Contingent liabilities 617 - 2,307,478 - - - - - 1,114 - - - 2,309,209

Commitments - 21,912,163 1,632,020 - - - - - - - - - 23,544,183

Total Credit Exposures 9,916,992 38,277,748 11,791,914 36,824 9,750 1,797,943 42,562 46,125 860,775 155,422 19,936 949,951 63,905,942

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

i. By Industry analysis (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents deposited by the subsidiaries which were eliminated in the above tables.

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 5,014,113 4,270,060 72,291 36,979 40,832 410,781 422,321 25,858 10,293,235

Deposits and placements with banks and other financial institutions 4,419 139,406 - 152,950 - - - - 296,775

Securities purchased under resale agreements 743,921 - - - - - - - 743,921

Financial assets held- for-trading 3,045,057 - - - - - - - 3,045,057

Financial investments available-for-sale 3,399,436 - - - - - - - 3,399,436

Loans, advances and financing 19,839,027 - - - - - - - 19,839,027

Other assets 462,705 775 19,010 4,735 - 243,740 101,961 - 832,926

Statutory deposits with Bank Negara Malaysia 438,840 - - - - - - - 438,840

32,947,518 4,410,241 91,301 194,664 40,832 654,521 524,282 25,858 38,889,217

Contingent liabilities 2,152,869 22,092 224,288 - 1,598 60,242 63,577 167,271 2,691,937

Commitments 25,123,363 - - - - - - - 25,123,363

Total Credit Exposures 60,223,750 4,432,333 315,589 194,664 42,430 714,763 587,859 193,129 66,704,517

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

ii. By Geographical analysis

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31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

ii. By Geographical analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 5,232,143 3,902,079 144,827 6,436 12,527 702,090 444,941 1,523,397 11,968,440

Deposits and placements

with banks and other

financial institutions 1,251,495 106,278 - 158,900 - - - - 1,516,673

Securities purchased

under resale agreements 1,218,993 - - - - - - - 1,218,993

Financial assets held-

for-trading 2,336,849 - - - - - - - 2,336,849

Financial investments

available-for-sale 5,225,508 - - - - - - - 5,225,508

Loans, advances and

financing 20,942,088 - - - - - - - 20,942,088

Other assets 758,559 14,533 681 4,904 1,520 126,964 240,823 158,004 1,305,988

Statutory deposits with

Bank Negara Malaysia 398,080 - - - - - - - 398,080

37,363,715 4,022,890 145,508 170,240 14,047 829,054 685,764 1,681,401 44,912,619

Contingent liabilities 1,627,769 19,180 469,849 - 1,624 63,232 36,688 49,212 2,267,554

Commitments 24,797,259 - - - - - - - 24,797,259

Total Credit Exposures 63,788,743 4,042,070 615,357 170,240 15,671 892,286 722,452 1,730,613 71,977,432

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31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

ii. By Geographical analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 6,884,986 3,113,155 8,654 48,309 61,220 13,639 76,082 274,988 10,481,033

Deposits and placements

with banks and other

financial institutions 495,159 162,326 - 154,175 - - - - 811,660

Securities purchased

under resale agreements 404,417 - - - - - - - 404,417

Financial assets held-

for-trading 1,847,463 - - 5,000 - - - - 1,852,463

Financial investments

available-for-sale 2,974,380 - - - - 131,108 - - 3,105,488

Loans, advances and financing 20,079,773 - - - - - - - 20,079,773

Other assets 792,847 12,958 277 20,162 513 126,856 208,795 155,308 1,317,716

33,479,025 3,288,439 8,931 227,646 61,733 271,603 284,877 430,296 38,052,550

Contingent liabilities 1,742,225 29,560 285,447 - 2,653 67,602 33,459 148,263 2,309,209

Commitments 23,544,183 - - - - - - - 23,544,183

Total Credit Exposures 58,765,433 3,317,999 294,378 227,646 64,386 339,205 318,336 578,559 63,905,942

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

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31. Financial risk management (continued)

B. Deposits and placements with banks and other financial institutions

i. Deposits and placements with banks and other financial institutions analysis by credit rating Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

AAA - 320,000 300,000

AA to AA- - - 100,000

A+ to A- 296,775 1,196,673 316,501

Unrated - - 95,159

296,775 1,516,673 811,660

ii. Deposits and placements with banks and other financial institutions analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Malaysia 4,419 1,251,495 495,159

Other 292,356 265,178 316,501

296,775 1,516,673 811,660

C. Other securities Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Financial assets held-for-trading 3,045,057 2,336,849 1,852,463

Financial investments available-for-sale 3,399,436 5,225,508 3,105,488

6,444,493 7,562,357 4,957,951

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31. Financial risk management (continued)

C. Other securities (continued)

i. Other securities analysis by credit rating

At the reporting date, the credit quality of investment in other securities by designation of an external credit assessment institution is as follows:-

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

AAA 6,500 6,500 11,500

A+ to A- 3,297,538 4,427,380 4,804,249

Unrated 3,140,455 3,128,477 142,202

6,444,493 7,562,357 4,957,951

ii. Other securities analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Malaysia 6,444,493 7,562,357 4,821,844

Other - - 136,107

6,444,493 7,562,357 4,957,951

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31. Financial risk management (continued)

D. Credit quality of Loans, advances and financing Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Loans, advances and financing

- neither past due nor impaired 17,429,100 18,703,942 17,498,596

- past due but not impaired 1,928,073 1,719,346 2,040,363

- impaired 481,854 518,800 540,814

Gross amount 19,839,027 20,942,088 20,079,773

Individual assessment allowance (205,769) (219,436) (229,542)

Collective assessment allowance (357,064) (365,325) (369,357)

Carrying amount 19,276,194 20,357,327 19,480,874

Neither past due nor impaired

Included in the total loans, advances and financing of neither past due nor impaired are renegotiated loans. The analysis below represents the carrying amount of loans that would otherwise be past due or impaired if their terms had not been renegotiated. These renegotiated loans are considered neither past due nor impaired after they have been monitored as impaired loans until a minimum number of payments have been received under the new terms.

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Renegotiated loans 790,739 876,855 846,099

Past due but not impaired

Analysis of loans, advances and financing to customers that are past due but not impaired analysed based on aging are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

1 - 29 dpd 1,434,140 1,228,861 1,419,750

30 - 59 dpd 356,567 331,993 437,370

60 - 89 dpd 137,366 158,492 183,243

90 - 119 dpd - - -

120 - 180 dpd - - -

>180 dpd - - -

1,928,073 1,719,346 2,040,363

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31. Financial risk management (continued)

D. Credit quality of Loans, advances and financing (continued)

Impaired

Loans and advances are classified as impaired when they meet one of the following criteria:

i. principal or interest or both are past due for three (3) months or more;

ii. where there is an individual impairment provision on the loan;

iii. impaired loans that have been rescheduled or restructured that have not met the continuous repayment behavior based on the revised rescheduled and/or restructured terms over the observation period.

Loans and advances to customers that are individually impaired analysed by age are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Current 28,676 10,957 15,786

1 - 29 dpd 11,820 8,319 13,959

30 - 59 dpd 27,948 12,305 12,688

60 - 89 dpd 30,907 31,738 34,317

90 - 1 19 dpd 64,577 74,426 57,572

120 - 180 dpd 104,157 104,047 118,518

>180 dpd 213,769 277,008 287,974

481,854 518,800 540,814

Estimated value of collaterals against past due but not impaired and impaired loans are RM709,848,000 (2011 - RM766,045,000).

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31. Financial risk management (continued) 2. Market Risk

Market risk encompasses price risk and liquidity risk, both arising in the normal course of business operations of the Group and the Bank. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return on risk.

Market risk in the Group and the Bank are managed through corporate-wide standards and business-specific policies and procedures with the help of responsible personnel and committees delegated by the Board of Directors such as the Risk Management Committee, Asset and Liability Committee and Market Risk Management. The business is required to establish risk measures, limits and controls, clearly defining approved risk profiles within the parameters of the Group’s and the Bank’s overall risk appetite and for operating within the established market risk limit framework. Independent market risk management establishes policies and procedures, approves limits and monitors exposures against limits.

Price Risk Price risk is the risk associated to earnings arising from changes in interest rate, foreign exchange rates, equity

and commodity prices and in their implied volatilities. Price risk arises in non-trading as well as trading portfolios. Price risk in non-trading portfolio is measured predominantly through earnings-at-risk and factor sensitivities supplemented with additional tools such as stress testing and cost-to-close analysis. Price risk in trading portfolios is measured through tools such as factor sensitivities, value-at-risk and stress testing.

Interest rate risk primarily results from the timing differences in the repricing of interest bearing assets, liabilities and commitments. It is also related to positions from non-interest bearing liabilities including shareholders’ funds and current accounts, as well as from certain fixed rate loans and liabilities.

The Group and the Bank are exposed to such risks associated with the effects of the fluctuations in the prevailing market interest rates on its financial positions and cash flows.

Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor. For the sensitivity analysis provided in this section, the Group and the Bank have used a 100 basis points movement for interest rates and a 6% movement in foreign exchange rates to measure the impact of these market risk movements on the Group and the Bank.

Interest rate risk – Sensitivity analysis At 31 December 2012, it is estimated that a general increase of 100 basis points in interest rate, with all other

variables held constant, would decrease the Group’s and the Bank’s profit before tax by approximately RM64,554,000 whereas a general decrease of 100 basis points in interest rate, with all other variables held constant, would have an equal but opposite effect.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the reporting date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date and that all other variables, in particular foreign exchange rates, remain constant. The above basis point increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual reporting date.

Foreign currency risk – Sensitivity analysis As at 31 December 2012, it is estimated that a movement of 6% in Ringgit Malaysia (RM) against foreign

currencies, with all other variables held constant, would result in maximum loss of approximately RM6,658,000.

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to the Group’s and the Bank’s exposure to currency risk for both derivative and non-derivative financial instruments in existence at that date, and that all other variables, in particular interest rate, remains constant. The sensitivity analysis includes balances where the denomination of the balances is in a currency other than the Ringgit Malaysia (RM).

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual reporting date. Results of the analysis represent an aggregation of the effects on the Group’s and the Bank’s profit before tax measured in the respective functional currencies, translated into Ringgit Malaysia (RM) at the exchange rate ruling at the balance sheet date for presentation purposes.

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31. Financial risk management (continued)

2. Market Risk (continued)

Liquidity Risk Liquidity risk is the risk that the Group and the Bank will not be able to meet its financial commitments when due.

Under the Group’s and the Bank’s internal liquidity risk management policy, there is a set of standards for the measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk. Management of liquidity is performed on a daily basis and is monitored by the Treasurer. The Asset and Liability Committee and the Treasurer undertake the joint responsibility of overall liquidity risk management which covers establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and periodic stress tests.

The Group and the Bank include the net cash flow position for derivatives as part of their daily liquidity reports under off-balance sheet items, which are consolidated together with the on-balance sheet items to monitor the overall liquidity position of the Group and the Bank. The daily report prepared to monitor the daily liquidity position is known as the Market Access Report (“MAR”). It is prepared by major currencies and it has maturity analysis ranging from overnight to more than 2 years and limits are set for each tenor bucket. Maturity mismatches are monitored through the daily MAR report for necessary treasury actions on funding and gapping.

Limits are determined by the ultimate holding company and are reviewed as often as on a quarterly basis and is done in conjunction with the liquidity stress testing.

The following table indicates the effective interest rate at the reporting dates and periods in which the financial instruments reprice or mature, whichever is earlier.

i. Interest/profit rate risk

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 9,042,370 - - - - 1,250,865 - 10,293,235 1.56%

Deposits and placements with banks and other financials institutions - 274,439 19,719 2,617 - - - 296,775 3.36%

Securities purchased under resale agreements 743,921 - - - - - - 743,921 2.78%

Financial assets held-for-trading - - - - - - 3,045,057 3,045,057 3.30%

Financial investments available-for-sale 107,414 281,064 771,654 1,601,846 637,458 - - 3,399,436 3.29%

Loans, advances and financing

- performing 1,574,100 878,875 6,284,063 790,872 9,829,263 (357,064) - 19,000,109 6.32%

- impaired - - - - - 276,085 - 276,085

Other assets - - - - - 360,834 472,092 832,926

Statutory deposits with Bank Negara Malaysia - - - - - 438,840 - 438,840

Deferred tax assets - - - - - 17,292 - 17,292

Plant and equipment - - - - - 109,343 - 109,343

Total assets 11,467,805 1,434,378 7,075,436 2,395,335 10,466,721 2,096,195 3,517,149 38,453,019

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and Shareholders’ equity

Deposits from customers 23,132,976 1,619,909 3,691,439 488,165 - - - 28,932,489 1.65%

Deposits and placements of banks and other financial institutions 2,731,565 16,062 1,014 106,579 - - - 2,855,220 1.04%

Bills and acceptances payable - - - - - 133,076 - 133,076

Other liabilities - - - - - 1,717,737 528,677 2,246,414

Total liabilities 25,864,541 1,635,971 3,692,453 594,744 - 1,850,813 528,677 34,167,199

Shareholders’ equity - - - - - 4,285,820 - 4,285,820

Total liabilities and shareholders' equity 25,864,541 1,635,971 3,692,453 594,744 - 6,136,633 528,677 38,453,019

On-balance sheet interest sensitivity gap (14,396,736) (201,593) 3,382,983 1,800,591 10,466,721 (4,040,438) 2,988,472

Off-balance sheet interest sensitivity gap (138,000) (296,000) 296,000 (154,000) 86,000 - -

(14,534,736) (497,593) 3,678,983 1,646,591 10,552,721 (4,040,438) 2,988,472

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 10,324,608 - - - - 1,643,832 - 11,968,440 1.55%

Deposits and placements with banks and other financial institutions - 733,854 619,328 163,491 - - - 1,516,673 2.67%

Securities purchased under resale agreements 1,218,993 - - - - - - 1,218,993 2.10%

Financial assets held-for-trading - - - - - - 2,336,849 2,336,849 3.04%

Financial investments available-for-sale - 307,638 1,436,145 2,807,965 673,760 - - 5,225,508 2.78%

Loans, advances and financing

- performing 1,696,851 1,422,520 6,993,639 632,761 9,677,517 (365,325) - 20,057,963 6.60%

- impaired - - - - - 299,364 - 299,364

Other assets - - - - - 485,341 820,647 1,305,988

Statutory deposits with Bank Negara Malaysia - - - - - 398,080 - 398,080

Deferred tax assets - - - - - 796 - 796

Plant and equipment - - - - - 120,905 - 120,905

Total assets 13,240,452 2,464,012 9,049,112 3,604,217 10,351,277 2,582,993 3,157,496 44,449,559

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and Shareholders’ equity

Deposits from customers 24,011,170 1,485,006 3,957,298 617,231 - - - 30,070,705 1.66%

Deposits and placements of banks and other financial institutions 3,365,590 3,485,651 802,972 122,884 - - - 7,777,097 0.40%

Bills and acceptances payable - - - - - 63,761 - 63,761

Other liabilities - - - - - 1,752,623 769,950 2,522,573

Total liabilities 27,376,760 4,970,657 4,760,270 740,115 - 1,816,384 769,950 40,434,136

Shareholders’ equity - - - - - 4,015,423 - 4,015,423

Total liabilities and Shareholders' equity 27,376,760 4,970,657 4,760,270 740,115 - 5,831,807 769,950 44,449,559

On-balance sheet interest sensitivity gap (14,136,308) (2,506,645) 4,288,842 2,864,102 10,351,277 (3,248,814) 2,387,546

Off-balance sheet interest sensitivity gap (223,464) (467,705) 811,510 92,589 95,340 - -

(14,359,772) (2,974,350) 5,100,352 2,956,691 10,446,617 (3,248,814) 2,387,546

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 9,763,380 - - - - 717,653 - 10,481,033 1.50%

Deposits and placements with banks and other financial institutions - 578,355 51,793 181,512 - - - 811,660 4.29%

Securities purchased under resale agreements 404,417 - - - - - - 404,417 1.35%

Financial assets held-for-trading - - - - - - 1,852,463 1,852,463 2.69%

Financial investments available-for-sale - - 277,443 2,719,300 108,745 - - 3,105,488 3.39%

Loans, advances and financing

- performing 1,385,605 975,383 6,324,229 246,547 10,607,195 (369,357) - 19,169,602 6.71%

- impaired - - - - - 311,272 - 311,272

Other assets - - - - - 310,476 1,007,240 1,317,716

Deferred tax assets - - - - - 59,300 - 59,300

Plant and equipment - - - - - 108,781 - 108,781

Total assets 11,553,402 1,553,738 6,653,465 3,147,359 10,715,940 1,138,125 2,859,703 37,621,732

31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and Shareholders’ equity

Deposits from customers 19,323,608 2,476,715 6,391,713 651,954 - - - 28,843,990 1.27%

Deposits and placements of banks and other financial institutions 512,996 1,438,808 256,016 115,105 - - - 2,322,925 0.89%

Bills and acceptances payable - - - - - 47,982 - 47,982

Other liabilities - - - - - 1,753,342 1,044,120 2,797,462

Total liabilities 19,836,604 3,915,523 6,647,729 767,059 - 1,801,324 1,044,120 34,012,359

Shareholders’ equity - - - - - 3,609,373 - 3,609,373

Total liabilities and shareholders' equity 19,836,604 3,915,523 6,647,729 767,059 - 5,410,697 1,044,120 37,621,732

On-balance sheet interest sensitivity gap (8,283,202) (2,361,785) 5,736 2,380,300 10,715,940 (4,272,572) 1,815,583

Off-balance sheet interest sensitivity gap (21,735) (666,608) 4,069 844,350 (61,670) - -

(8,304,937) (3,028,393) 9,805 3,224,650 10,654,270 (4,272,572) 1,815,583

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The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

31. Financial risk management (continued)

ii. Foreign currency risk

Foreign currency risk results in the Group's exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The tables below summarise the RM equivalent amount of the Group's and the Bank’s exposure to foreign currency exchange rate risk as at reporting date:

Group MYR USD JPY Others Total

2012 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 3,639,362 485,947 4,917,767 1,250,159 10,293,235

Deposits and placements with banks and other financial institutions - 89,973 157,369 49,433 296,775

Securities purchased under resale agreements 743,921 - - - 743,921

Financial assets held- for-trading 3,045,057 - - - 3,045,057

Financial investments available-for-sale 3,399,436 - - - 3,399,436

Loans, advances and financing 17,978,104 1,122,670 130,747 44,673 19,276,194

Other assets 5,273,902 (4,505,351) 264,222 (199,847) 832,926

Statutory Deposits with Bank Negara Malaysia 438,840 - - - 438,840

Deferred tax assets 17,292 - - - 17,292

Plant and equipment 109,343 - - - 109,343

Total assets 34,645,257 (2,806,761) 5,470,105 1,144,418 38,453,019

Liabilities

Deposits from customers 22,162,490 5,608,506 45,365 1,116,128 28,932,489

Deposits and placements of banks and other financial institutions 247,027 2,136,044 310,700 161,449 2,855,220

Bills and acceptances payable 5,985 125,480 894 717 133,076

Other liabilities 8,120,452 (6,216,305) 284,924 57,343 2,246,414

Total liabilities 30,535,954 1,653,725 641,883 1,335,637 34,167,199

Shareholder’s equity 4,285,820 - - - 4,285,820

Total liabilities and Shareholder’s equity 34,821,774 1,653,725 641,883 1,335,637 38,453,019

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Group MYR USD JPY Others Total

2011 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 2,980,351 6,930,088 170,487 1,887,514 11,968,440

Deposits and placements with banks and other financial institutions 505,000 742,652 167,942 101,079 1,516,673

Securities purchased under resale agreements 1,218,993 - - - 1,218,993

Financial assets held- for-trading 2,336,849 - - - 2,336,849

Financial investments available-for-sale 5,225,508 - - - 5,225,508

Loans, advances and financing 18,653,054 1,537,447 156,882 9,944 20,357,327

Other assets (3,083,664) 4,901,670 868,509 (1,380,527) 1,305,988

Statutory Deposits with Bank Negara Malaysia 398,080 - - - 398,080

Deferred tax assets 796 - - - 796

Plant and equipment 120,905 - - - 120,905

Total assets 28,355,872 14,111,857 1,363,820 618,010 44,449,559

Liabilities

Deposits from customers 24,439,971 4,054,517 38,882 1,537,335 30,070,705

Deposits and placements of banks and other financial institutions 187,698 7,138,063 438,673 12,663 7,777,097

Bills and acceptances payable 913 57,499 2,372 2,977 63,761

Other liabilities (545,278) 3,382,608 885,192 (1,199,949) 2,522,573

Total liabilities 24,083,304 14,632,687 1,365,119 353,026 40,434,136

Shareholder’s equity 4,015,423 - - - 4,015,423

Total liabilities and Shareholder’s equity 28,098,727 14,632,687 1,365,119 353,026 44,449,559

31. Financial risk management (continued)

ii. Foreign currency risk (continued)

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31. Financial risk management (continued)

ii. Foreign currency risk (continued)

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Group MYR USD JPY Others Total

2010 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 5,175,951 4,275,961 165,662 863,459 10,481,033

Deposits and placements with banks and other financial institutions 400,000 214,965 56,762 139,933 811,660

Securities purchased under resale agreements 404,417 - - - 404,417

Financial assets held- for-trading 1,852,463 - - - 1,852,463

Financial investments available-for-sale 2,974,380 131,108 - - 3,105,488

Loans, advances and financing 18,793,515 500,705 165,477 21,177 19,480,874

Other assets 9,906,208 (9,071,471) 985,692 (502,713) 1,317,716

Deferred tax assets 59,300 - - - 59,300

Plant and equipment 108,781 - - - 108,781

Total assets 39,675,015 (3,948,732) 1,373,593 521,856 37,621,732

Liabilities

Deposits from customers 22,151,301 5,676,701 28,576 987,412 28,843,990

Deposits and placements of banks and other financial institutions 539,841 1,499,724 273,162 10,198 2,322,925

Bills and acceptances payable 911 31,405 2,706 12,960 47,982

Other liabilities 12,268,286 (10,018,370) 1,064,106 (516,560) 2,797,462

Total liabilities 34,960,339 (2,810,540) 1,368,550 494,010 34,012,359

Shareholder’s equity 3,609,373 - - - 3,609,373

Total liabilities and Shareholder’s equity 38,569,712 (2,810,540) 1,368,550 494,010 37,621,732

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2012 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 8,580,461 461,909 - - - - - - 1,250,865 10,293,235

Deposits and placements with banks and other financial institutions - - 274,439 11,946 7,773 2,617 - - - 296,775

Securities purchased under resale agreements 743,921 - - - - - - - - 743,921

Financial assets held-for-trading 196,739 79,120 847,024 1,097,814 116,764 392,288 179,792 135,516 - 3,045,057

Financial investments available-for-sale 107,414 249,271 339,203 278,926 185,318 1,063,988 537,858 637,458 - 3,399,436

Loans, advances and financing 900,546 673,554 878,875 116,095 6,167,968 278,854 512,018 9,829,263 (80,979) 19,276,194

Other assets 290,454 9,934 30,680 62,163 44,207 145,409 97,319 51,034 101,726 832,926

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 438,840 438,840

Deferred tax assets - - - - - - - - 17,292 17,292

Plant and equipment - - - - - - - - 109,343 109,343

Total assets 10,819,535 1,473,788 2,370,221 1,566,944 6,522,030 1,883,156 1,326,987 10,653,271 1,837,087 38,453,019

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity

The following maturity profile is based on the remaining period at the balance sheet date to the contractual maturity.

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No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2012 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities and Shareholders’ funds

Deposits from customers 19,155,138 3,977,838 1,619,909 607,306 3,084,132 371,651 116,515 - - 28,932,489

Deposits and placements of banks and other financial institutions 1,179,500 1,552,065 16,062 900 114 106,579 - - - 2,855,220

Bills and acceptances payable 718,963 (167,158) (323,072) (95,657) - - - - - 133,076

Other liabilities 1,787,198 13,987 39,193 68,710 53,603 169,608 73,139 40,698 278 2,246,414

Total liabilities 22,840,799 5,376,732 1,352,092 581,259 3,137,849 647,838 189,654 40,698 278 34,167,199

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 4,164,123 4,164,123

Total equity attributable to equity holder of the bank - - - - - - - - 4,285,820 4,285,820

Total liabilities and equity 22,840,799 5,376,732 1,352,092 581,259 3,137,849 647,838 189,654 40,698 4,286,098 38,453,019

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity (continued)

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No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2011 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 6,423,830 3,900,778 - - - - - - 1,643,832 11,968,440

Deposits and placements with banks and other financial institutions - - 733,854 354,781 264,547 162,597 894 - - 1,516,673

Securities purchased under resale agreements - 1,218,993 - - - - - - - 1,218,993

Financial assets held-for-trading - 127,356 1,098,792 293,885 390,371 446,387 (97,677) 77,735 - 2,336,849

Financial investments available-for-sale - - 307,638 811,937 624,208 1,759,444 1,048,521 673,760 - 5,225,508

Loans, advances and financing 372,170 1,372,220 1,466,563 1,130,554 6,070,508 323,064 404,260 9,731,856 (513,868) 20,357,327

Other assets 476,969 87,648 75,400 92,727 35,722 315,181 56,571 100,344 65,426 1,305,988

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 398,080 398,080

Deferred tax assets - - - - - - - - 796 796

Plant and equipment - - - - - - - - 120,905 120,905

Total assets 7,272,969 6,706,995 3,682,247 2,683,884 7,385,356 3,006,673 1,412,569 10,583,695 1,715,171 44,449,559

31. Financial risk management (continued)

(iii) Analysis of assets and liabilities by remaining maturity (continued)

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No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2011 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities and Shareholders’ funds

Deposits from customers 14,856,097 9,155,073 1,485,006 560,991 3,396,307 386,132 231,099 - - 30,070,705

Deposits and placements of banks and other financial institutions 1,432,250 1,933,340 3,485,651 638,927 164,045 122,884 - - - 7,777,097

Bills and acceptances payable 1,016,844 (250,384) (366,546) (336,153) - - - - - 63,761

Other liabilities 1,757,892 51,804 43,039 44,453 20,287 384,451 84,553 93,170 42,924 2,522,573

Total liabilities 19,063,083 10,889,833 4,647,150 908,218 3,580,639 893,467 315,652 93,170 42,924 40,434,136

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 3,893,726 3,893,726

Total equity attributable to equity holder of the bank - - - - - - - - 4,015,423 4,015,423

Total liabilities and equity 19,063,083 10,889,833 4,647,150 908,218 3,580,639 893,467 315,652 93,170 4,058,347 44,449,559

31. Financial risk management (continued)

(iii) Analysis of assets and liabilities by remaining maturity (continued)

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No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2010 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 8,557,099 1,018,710 - - - - - - 905,224 10,481,033

Deposits and placements with banks and other financial institutions - - 578,355 19,707 32,086 178,874 2,638 - - 811,660

Securities purchased under resale agreements - 404,417 - - - - - - - 404,417

Financial assets held-for-trading - 20,329 666,005 546,891 388,186 192,269 193,534 (154,751) - 1,852,463

Financial investments available-for-sale - - - 49,986 227,458 2,009,960 709,339 108,745 - 3,105,488

Loans, advances and financing 205,605 971,738 1,022,388 452,409 6,093,780 119,013 369,641 10,352,473 (106,173) 19,480,874

Other assets 323,754 72,516 138,915 230,998 32,102 283,367 107,563 69,729 58,772 1,317,716

Deferred tax assets - - - - - - - - 59,300 59,300

Plant and equipment - - - - - - - - 108,781 108,781

Total assets 9,086,458 2,487,710 2,405,663 1,299,991 6,773,612 2,783,483 1,382,715 10,376,196 1,025,904 37,621,732

31. Financial risk management (continued)

(iii) Analysis of assets and liabilities by remaining maturity (continued)

No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2010 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities and Shareholders’ funds

Deposits from customers 11,988,182 7,335,425 2,476,715 1,954,259 4,437,455 381,723 270,231 - - 28,843,990

Deposits and placements of banks and other financial institutions 303,475 209,521 1,438,808 226,532 29,484 1,582 113,523 - - 2,322,925

Bills and acceptances payable 1,019,456 (289,259) (497,553) (184,662) - - - - - 47,982

Other liabilities 1,786,816 75,224 154,836 94,731 84,948 275,760 197,010 60,481 67,656 2,797,462

Total liabilities 15,097,929 7,330,911 3,572,806 2,090,860 4,551,887 659,065 580,764 60,481 67,656 34,012,359

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 3,487,676 3,487,676

Total equity attributable to equity holder of the bank - - - - - - - - 3,609,373 3,609,373

Total liabilities and equity 15,097,929 7,330,911 3,572,806 2,090,860 4,551,887 659,065 580,764 60,481 3,677,029 37,621,732

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity (continued)

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The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

31. Financial risk management (continued)

iv. Analysis of financial liabilities by contractual undiscounted cash flows

The table below details the remaining contractual maturities at the balance sheet date of the Group’s financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or if floating, based on current rates at the balance sheet date) and the earliest date the Group can be required to pay.

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 28,932,489 29,151,704 23,271,812 1,588,924 3,799,559 491,409 -

Deposits and placements of banks and other financial institutions 2,855,220 2,855,766 2,731,826 16,069 1,015 106,856 -

Bills and acceptances payable 133,076 133,076 604,725 (337,359) (134,290) - -

Other liabilities 2,246,414 2,246,415 680,523 2,843 3,238 663 1,559,148

Total 34,167,199 34,386,961 27,288,886 1,270,477 3,669,522 598,928 1,559,148

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 30,070,705 30,226,365 24,150,629 1,405,722 4,060,241 609,773 -

Deposits and placements of banks and other financial institutions 7,777,097 7,781,241 3,365,836 3,487,778 804,141 123,486 -

Bills and acceptances payable 63,761 63,761 756,769 (359,864) (333,144) - -

Other liabilities 2,522,573 2,522,573 1,832,099 50,237 72,927 472,592 94,718

Total 40,434,136 40,593,940 30,105,333 4,583,873 4,604,165 1,205,851 94,718

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31. Financial risk management (continued)

iv. Analysis of financial liabilities by contractual undiscounted cash flows (continued)

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 28,843,990 28,987,677 21,297,447 1,512,703 5,523,671 623,834 30,022

Deposits and placements of banks and other financial institutions 2,322,925 2,323,975 2,164,426 605 42,985 115,959 -

Bills and acceptances payable 47,982 47,982 730,196 (497,553) (184,661) - -

Other liabilities 2,797,462 2,797,462 1,929,697 154,835 179,679 472,770 60,481

Total 34,012,359 34,157,096 26,121,766 1,170,590 5,561,674 1,212,563 90,503

3. Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. It includes reputation and franchise risk associated with business practices or market conduct that the Group and the Bank may undertake and includes the risk of failing to comply with applicable laws, regulations and Citigroup policies.

Operational risk is inherent in the Group’s and the Bank’s business activities and is managed through an overall framework with checks and balances that include recognised ownership of the risk by businesses and independent risk management oversight. The Group and the Bank mitigate their operational risk by setting up its key controls and assessments according to Citigroup’s and Regulators’ standards. They are also evaluated, monitored, and managed by its sound governance structure.

The Group’s and the Bank’s Self-Assessments and Operational Risk Framework include the Risk and Control Self-Assessment and the Operational Risk Policy, and define the Group’s and the Bank’s approach to operational risk management. The objective of the policy is to establish a consistent approach to assessing relevant risks and the overall control environment across the Group and the Bank, to facilitate adherence to regulatory requirements and other corporate initiatives.

32. Financial assets and liabilities

32.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

a. Loans and receivables (“L&R”);

b. Fair value through profit or loss (“FVTPL”):

- Held for trading (“HFT”);

c. Financial investments available-for-sale (“AFS”);

d. Other liabilities (“OL”).

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32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) -HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2012

Financial Assets

Cash and short-term funds 10,293,235 10,293,235 - -

Deposits and placements

with banks and other

financial institutions 296,775 296,775 - -

Securities purchased under

resale agreements 743,921 743,921 - -

Financial assets held-for-trading 3,045,057 - 3,045,057 -

Financial investments available-for-sale 3,399,436 - - 3,399,436

Loans, advances and financing 19,276,194 19,265,906 10,288 -

Statutory deposits with

Bank Negara Malaysia 438,840 438,840 - -

Derivatives financial assets 472,092 - 472,092 -

Interest/Income receivable 42,295 42,295 - -

Total financial assets 38,007,845 31,080,972 3,527,437 3,399,436

Financial Liabilities

Deposits from customers 28,932,489 28,919,114 13,375 -

Deposits and placements

of banks and other

financial institutions 2,855,220 2,855,220 - -

Bills and acceptances payable 133,076 133,076 - -

Derivatives financial

liabilities 528,677 - 528,677 -

Interest/Profit payable 52,883 52,883 - -

Total financial liabilities 32,502,345 31,960,293 542,052 -

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32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) -HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2011

Financial Assets

Cash and short-term funds 11,968,440 11,968,440 - -

Deposits and placements

with banks and other

financial institutions 1,516,673 1,516,673 - -

Securities purchased under

resale agreements 1,218,993 1,218,993 - -

Financial assets held-for-trading 2,336,849 - 2,336,849 -

Financial investments available-for-sale 5,225,508 - - 5,225,508

Loans, advances and financing 20,357,327 20,336,374 20,953 -

Statutory deposits with

Bank Negara Malaysia 398,080 398,080 - -

Derivatives financial assets 820,647 - 820,647 -

Interest/Income receivable 66,150 66,150 - -

Total financial assets 43,908,667 35,504,710 3,178,449 5,225,508

Financial Liabilities

Deposits from customers 30,070,705 29,426,292 644,413 -

Deposits and placements

of banks and other

financial institutions 7,777,097 7,777,097 - -

Bills and acceptances payable 63,761 63,761 - -

Derivatives financial

liabilities 769,950 - 769,950 -

Interest/Profit payable 65,949 65,949 - -

Total financial liabilities 38,747,462 37,333,099 1,414,363 -

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32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) -HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2010

Financial Assets

Cash and short-term funds 10,481,033 10,481,033 - -

Deposits and placements

with banks and other

financial institutions 811,660 811,660 - -

Securities purchased under

resale agreements 404,417 404,417 - -

Financial assets held-for-trading 1,852,463 - 1,852,463 -

Financial investments available-for-sale 3,105,488 - - 3,105,488

Loans, advances and financing 19,480,874 19,480,874 - -

Derivatives financial assets 1,007,240 - 1,007,240 -

Interest/Income receivable 45,836 45,836 - -

Total financial assets 37,189,011 31,223,820 2,859,703 3,105,488

Financial Liabilities

Deposits from customers 28,843,990 28,843,990 - -

Deposits and placements

of banks and other

financial institutions 2,332,925 2,332,925 - -

Bills and acceptances payable 47,982 47,982 - -

Derivatives financial

liabilities 1,044,120 - 1,044,120 -

Interest/Profit payable 57,354 57,354 - -

Total financial liabilities 32,326,371 31,282,251 1,044,120 -

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The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

32. Financial assets and liabilities (continued)

32.2 Fair value of financial instruments

The following table summarises the fair values of the financial assets and liabilities carried on the statements of financial position as at 31 December of the Group.

31.12.2012 31.12.2011 1.1.2011

Carrying Fair Carrying Fair Carrying Fair

value value value value value value

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short term funds 10,293,235 10,293,235 11,968,440 11,968,440 10,481,033 10,481,033

Deposits and placements with banks and other financial institutions 296,775 296,772 1,516,673 1,516,534 811,660 822,904

Securities purchased under resale agreements 743,921 743,921 1,218,993 1,218,993 404,417 404,417

Financial assets held-for-trading 3,045,057 3,045,057 2,336,849 2,336,849 1,852,463 1,852,463

Financial investments available-for-sale 3,399,436 3,399,436 5,225,508 5,225,508 3,105,488 3,105,488

Loans, advances and financing 19,276,194 19,227,290 20,357,327 20,234,356 19,480,874 19,018,880

Other assets 832,926 832,926 1,305,988 1,305,988 1,317,716 1,317,716

Deposits from customers 28,932,489 28,932,441 30,070,705 30,051,422 28,843,990 28,790,690

Deposits and placements of banks and other financial institutions 2,855,220 2,855,220 7,777,097 7,777,097 2,322,925 2,322,930

Bills and acceptances payable 133,076 133,076 63,761 63,761 47,982 47,982

Other liabilities 2,246,414 2,246,414 2,522,573 2,522,573 2,797,462 2,797,462

The methods and assumptions used in estimating the fair values of financial instruments are as follows:

a. Cash and Short Term Funds, and Securities Purchased under Resale Agreements

The carrying amounts are a reasonable estimate of the fair values because of their short-term nature.

b. Deposits and Placements with Financial Institutions

The fair values of deposits and placements with remaining maturities less than one year are estimated to approximate their carrying values. For deposits and placements with maturities of more than one year, the fair values are estimated based on discounted cash flows using the prevailing market rates of similar remaining maturities.

c. Financial Assets Held-for-Trading and Financial Investments Available-for-Sale

The fair values are estimated based on quoted or observable market prices as at statements of financial position date. Where such quoted or observable market prices are not available, the fair values are estimated using pricing models or discounted cash flow techniques. Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for similar instruments as at statements of financial position date.

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32. Financial assets and liabilities (continued) 32.2 Fair value of financial instruments (continued)

d. Loans, Advances and Financing

The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values. For fixed rate loans and Islamic loans with maturities of more than one year, the fair values are estimated based on expected future cash flows of contractual instalment payments and discounted at prevailing rates at statements of financial position date offered for similar loans to new borrowers with similar credit profiles, where applicable. In respect of impaired loans, the fair values are deemed to approximate the carrying values, net of individual assessment allowance for bad and doubtful debts and financing. Collective assessment allowance is excluded from the carrying value.

e. Deposits from Customers and Deposits and Placements of Banks and Other Financial Institutions

The fair values for deposit liabilities payable on demand (demand and savings deposits) or with remaining maturities of less than one year are estimated to approximate their carrying values at statements of financial position date. The fair values of fixed deposits with remaining maturities of more than one year are estimated based on discounted cash flows using rates currently offered for deposits of similar remaining maturities. The fair values of Islamic deposits are deemed to approximate their carrying values as at statements of financial position date as the profit rates are determined at the end of their holding periods based on the profit generated from the assets invested. For negotiable instrument of deposits, the estimated fair values are based on quoted or observable market prices at the statements of financial position date. Where such quoted or observable market prices are not available, the fair values of negotiable instruments of deposits are estimated using discounted cash flow techniques.

f. Bills and Acceptances Payable

The carrying amounts are a reasonable estimate of their fair values because of their short-term nature.

g. Other Assets and Other Liabilities

The fair values of other assets and other liabilities are assumed to approximate their carrying values due to the short term nature of these financial instruments or the fact that they are derived by using the market rates at reporting date.

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32. Financial assets and liabilities (continued)

32.3 Fair value hierarchy

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• 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).

• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

Group and Bank RM’000 RM’000 RM’000 RM’000

31 December 2012

Financial assets

Financial investments available-for-sale 3,391,937 - - 3,391,937

Financial assets held-for-trading 3,045,057 - - 3,045,057

Loans, advances and financing - 10,288 - 10,288

Derivative financial assets - 464,501 7,591 472,092

6,436,994 474,789 7,591 6,919,374

Financial liabilities

Deposits from customers - 13,375 - 13,375

Derivative financial liabilities - 521,237 7,440 528,677

- 534,612 7,440 542,052

Level 1 Level 2 Level 3 Total

Group and Bank RM’000 RM’000 RM’000 RM’000

31 December 2011

Financial assets

Financial investments available-for-sale 5,218,009 - - 5,218,009

Financial assets held-for-trading 2,336,849 - - 2,336,849

Loans, advances and financing - 20,953 - 20,953

Derivative financial assets - 809,255 11,392 820,647

7,554,858 830,208 11,392 8,396,458

Financial liabilities

Deposits from customers - 644,413 - 644,413

Derivative financial liabilities - 759,944 10,006 769,950

- 1,404,357 10,006 1,414,363

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32. Financial assets and liabilities (continued)

32.3 Fair value hierarchy (continued)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

Group and Bank

2012 2011

RM’000 RM’000

Financial assets

Balance at 1 January 11,392 14,148

Total lossed recognised in profit or loss: Attributable to losses relating to assets or liabilities that: - have not been realised (3,801) (2,756)

Balance at 31 December 7,591 11,392

Financial liabilities

Balance at 1 January 10,006 2,850

Total gains recognised in profit or loss: Attributable to gains relating to assets or liabilities that: - have not been realised (2,566) 7,156

Balance at 31 December 7,440 10,006

The unrealised gains/(losses) have been recognised in other operating income/ expenses in profit or loss.

Changing one or more of the inputs to reasonable alternative assumptions would not change the value significantly for the financial assets in Level 3 of the fair value hierarchy.

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33. Lease commitments

The Group and the Bank have lease commitments in respect of rented premises and equipment for hire, all of which are classified as operating leases. A summary of the non-cancellable long term commitments, net of sub leases are as follows:

Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Within 1 year 27,213 25,953 24,355

Between 1 and 5 years 30,426 6,199 27,750

34. Capital commitments Group and Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Capital expenditures:

Authorised and contracted for 33,905 21,181 49,627

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35. Capital adequacy

A. The capital adequacy ratios are as follows:

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 20,634,205 22,272,830 19,954,371

Total market RWA 2,223,864 2,019,640 2,398,682

Total operational RWA 3,546,462 3,525,964 3,550,272

Total Risk Weighted Asset 26,404,531 27,818,434 25,903,325

Computation of Capital Ratios

Tier 1 Capital 4,269,626 4,004,778 3,559,181

Capital Base* 4,484,017 4,258,544 3,795,134

Before deducting proposed dividends:

Core capital ratio 16.17% 14.40% 13.74%

Risk weighted capital ratio 16.98% 15.31% 14.65%

After deducting proposed dividends:

Core capital ratio 14.28% 13.32% 12.58%

Risk weighted capital ratio 15.09% 14.23% 13.49%

* In arriving at the capital base used in the ratio calculations of the Bank, the proposed dividends were not deducted.

Detailed information on the risk exposures above are disclosed in the Pillar 3 disclosures of the annual report as prescribed under BNM’s Risk Weighted Capital Adequacy Framework (Basel II) – Disclosures requirements (Pillar 3).

With effect from 1 January 2011, the capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.

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35. Capital adequacy

A. The capital adequacy ratios are as follows:

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 20,634,205 22,272,830 19,954,371

Total market RWA 2,223,864 2,019,640 2,398,682

Total operational RWA 3,546,462 3,525,964 3,550,272

Total Risk Weighted Asset 26,404,531 27,818,434 25,903,325

Computation of Capital Ratios

Tier 1 Capital 4,269,626 4,004,778 3,559,181

Capital Base* 4,484,017 4,258,544 3,795,134

Before deducting proposed dividends:

Core capital ratio 16.17% 14.40% 13.74%

Risk weighted capital ratio 16.98% 15.31% 14.65%

After deducting proposed dividends:

Core capital ratio 14.28% 13.32% 12.58%

Risk weighted capital ratio 15.09% 14.23% 13.49%

* In arriving at the capital base used in the ratio calculations of the Bank, the proposed dividends were not deducted.

Detailed information on the risk exposures above are disclosed in the Pillar 3 disclosures of the annual report as prescribed under BNM’s Risk Weighted Capital Adequacy Framework (Basel II) – Disclosures requirements (Pillar 3).

With effect from 1 January 2011, the capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.

35. Capital adequacy (continued)

B. The components of Tier I and Tier II Capital are as follows:

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Tier I Capital

Paid up ordinary share capital 121,697 121,697 121,697

Share premium 380,303 380,303 380,303

Retained profits 3,662,946 3,384,339 2,992,306

Other reserves 121,697 121,697 121,697

Less: Deferred tax assets (17,017) (3,258) (56,822)

Total Tier I Capital (Core Capital) 4,269,626 4,004,778 3,559,181

Tier II Capital

Collective assessment allowance* 214,411 253,786 235,973

Total Tier II Capital 214,411 253,786 235,973

Total Eligible Tier II 214,411 253,786 235,973

Less: Investments in subsidiary companies (20) (20) (20)

Capital Base 4,484,017 4,258,544 3,795,134

* Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM142.7 million (31.12.2011: RM111.5 million; 1.1.2011: RM133.4 million).

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36. Off-balance sheet exposures

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows: 2012 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Direct credit substitutes 1,775,552 1,775,552 1,614,183

Transaction related contingent items 459,766 229,883 193,184

Short term self liquidating trade related contingencies 223,238 44,648 34,165

Forward asset purchases 233,379 233,379 168,747

Foreign exchange related contracts:

One year or less 24,502,920 450,794 279,071

Over one year to five years 4,118,926 417,698 231,938

Over five years 91,650 19,022 19,022

Interest/Profit rate related contracts:

One year or less 8,194,786 133,790 30,061

Over one year to five years 13,016,035 438,593 143,666

Over five years 1,276,778 123,369 51,781

Equity related contracts:

One year or less 82,608 7,192 1,438

Over one year to five years 130,311 13,794 7,484

Over five years - - -

Debt security contracts and other commodity contracts:

One year or less 56,113 7,466 5,479

Over one year to five years 60,497 9,299 4,712

Over five years - - -

Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 568,688 113,738 113,738

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,074,639 537,320 399,334

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 4,861,934 - -

Unutilised credit card lines 18,618,102 3,723,620 2,795,626

Total 79,345,922 8,279,157 6,093,629

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36. Off-balance sheet exposures (continued) 2011 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Direct credit substitutes 1,707,320 1,707,320 1,410,933

Transaction related contingent items 399,731 199,865 158,071

Short term self liquidating trade related contingencies 148,283 29,657 22,854

Forward asset purchases 12,220 12,220 6,110

Foreign exchange related contracts:

One year or less 24,279,480 568,900 387,454

Over one year to five years 4,180,829 532,616 322,054

Over five years 91,650 18,855 18,855

Interest/Profit rate related contracts:

One year or less 6,343,210 18,265 7,496

Over one year to five years 14,940,969 474,983 158,715

Over five years 2,342,535 248,393 110,993

Equity related contracts:

One year or less 54,639 4,577 1,648

Over one year to five years 123,596 16,482 8,593

Over five years - - -

Debt security contracts and other commodity contracts:

One year or less - 3,687 1,843

Over one year to five years 210,358 27,579 23,095

Over five years - - -

Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 990,462 198,092 198,092

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 598,618 299,309 227,000

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 5,376,095 - -

Unutilised credit card lines 17,832,083 3,566,418 2,677,910

Total 79,632,078 7,927,218 5,741,716

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36. Off-balance sheet exposures (continued) 2010 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Direct credit substitutes 1,489,992 1,489,992 1,288,190

Transaction related contingent items 395,970 197,985 180,418

Short term self liquidating trade related contingencies 422,631 84,526 127,781

Forward asset purchases 617 617 -

Foreign exchange related contracts:

One year or less 24,729,003 758,795 561,289

Over one year to five years 3,637,939 539,734 321,023

Over five years - - -

Interest/Profit rate related contracts:

One year or less 7,896,887 37,105 13,589

Over one year to five years 16,604,797 586,871 255,311

Over five years 1,800,014 191,416 64,169

Equity related contracts:

One year or less 388,457 25,785 12,867

Over one year to five years 153,686 24,797 12,399

Over five years - - -

Debt security contracts and other commodity contracts:

One year or less 175,461 34,810 32,976

Over one year to five years - - -

Over five years - - -

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 421,905 210,952 158,455

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 5,014,737 - -

Unutilised credit card lines 18,107,541 3,621,508 2,722,693

Total 81,239,637 7,804,893 5,751,160

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37. The operations of Islamic Banking

Statements of financial position as at 31 December 2012

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Assets

Cash and short term funds (a) 91,705 68,863 394,301

Financial assets held-for-trading (b) 671,823 - 343,179

Financial investments available-for-sale (c) 58,071 431,792 271,553

Financing, advances and other loans (d) 397,083 444,160 500,800

Deferred tax assets 1,411 239 1,142

Other assets (f) 9,249 15,593 164,651

Total assets 1,229,342 960,647 1,675,626

Liabilities

Deposits from customers (g) 907,552 660,741 1,111,152

Other liabilities (h) 66,523 76,325 370,345

Total liabilities 974,075 737,066 1,481,497

Islamic banking funds (i) 255,267 223,581 194,129

Total liabilities and Islamic banking funds 1,229,342 960,647 1,675,626

Off-balance sheet exposures (s) 1,207,205 658,992 1,534,730

The notes on pages 123 to 140 are an integral part of these financial statements.

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37. The operations of Islamic Banking (continued)

Statements of comprehensive income for financial year ended 31 December 2012

Bank

2012 2011

RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 31,994 38,528

Provision for financing, advances and other written back (k) 6,179 822

Total attributable income 38,173 39,350

Income attributable to depositors (l) (6,880) (6,719)

Total attributable to the Bank 31,293 32,631

Income derived from investment of Islamic Banking Funds (m) 14,331 5,271

Total net income 45,624 37,902

Other operating expenses (o) (2,879) (2,857)

Profit before taxation 42,745 35,045

Tax expense (p) (10,686) (6,799)

Profit for the year 32,059 28,246

Other comprehensive (loss)/income, net of tax Net (loss)/gain on revaluation of financial investments available-for-sale (373) 1,206

Other comprehensive (loss)/income for the year, net of tax (373) 1,206)

Total comprehensive income for the year 31,686 29,452

Profit for the year attributable to:

Equity holder of the Bank 32,059 28,246

Total comprehensive income attributable to:

Equity holder of the Bank 31,686 29,452

The notes on pages 123 to 140 are an integral part of these financial statements.

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37. The operations of Islamic Banking (continued)

Statements of changes in Islamic Banking Funds for the year ended 31 December 2012

Bank

Capital Fair value Retained

funds reserve profits Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2011 20,000 (664) 174,793 194,129

Fair value of financial investments available-for-sale - 1,206 - 1,206

Total other comprehensive income for the year - 1,206 - 1,206

Profit for the year - - 28,246 28,246

Total comprehensive income for the year - 1,206 28,246 29,452

At 31 December 2011/ 1 January 2012 20,000 542 203,039 223,581

Fair value of financial investments available-for-sale - (373) - (373)

Total other comprehensive loss for the year - (373) - (373)

Profit for the year - - 32,059 32,059

Total comprehensive income for the year - (373) 32,059 31,686

At 31 December 2012 20,000 169 235,098 255,267

Note 37(i)

The notes on pages 123 to 140 are an integral part of these financial statements.

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37. The operations of Islamic Banking (continued)

Statements of cash flows for financial year ended 31 December 2012

Bank

2012 2011

RM’000 RM’000

Cash flows from operating activities

Profit before taxation 42,745 35,045

Adjustments for:

Amortisation of premium less accretion of discount of investment securities (5,594) 491

Provision for financing, advances and

others written back (6,179) (822)

Gain from disposal of financial investments available-for-sale (1,228) (945)

Mark-to-market loss/(gain) on financial assets held-for-trading 685 (88)

Operating profit before working capital changes 30,429 33,681

Changes in working capital:

Financial assets held-for-trading (672,508) 343,267

Financing, advances and others 53,256 57,462

Other assets 6,344 149,058

Deposits from customers 246,811 (450,411)

Other liabilities (10,897) (292,716)

Cash used in operating activities (346,565) (159,659)

Income taxes paid (10,686) (8,994)

Net cash used in operating activities (357,251) (168,653)

Cash flows from investing activities

Purchase of financial investments available-for-sale (736,011) (424,780)

Proceeds from disposal of financial investments available-for-sale 1,116,104 267,995

Net cash generated from/(used in) investing activities 380,093 (156,785)

Net increase/(decrease) in cash and cash equivalents 22,842 (325,438)

Cash and cash equivalents at 1 January 68,863 394,301

Cash and cash equivalents at 31 December (Note 37(a)) 91,705 68,863

The notes on pages 123 to 140 are an integral part of these financial statements.

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37. The operations of Islamic Banking (continued)

a. Cash and short term funds Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Cash and balances with banks and other financial institutions 3,705 2,863 4,301

Money at call and deposit placements maturing within one month 88,000 66,000 390,000

91,705 68,863 394,301

b. Financial assets held-for-trading Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

At fair value

Bank Negara Malaysia Islamic Bills 662,090 - 336,868

Malaysian Government Treasury Bills 9,733 - 6,311

671,823 - 343,179

c. Financial investments available-for-sale Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

At fair value

Malaysian Government Investment Issues 58,071 431,792 271,553

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37. The operations of Islamic Banking (continued)

d. Financing, advances and other loans

i. By type Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Term financing

- Housing financing 418,414 475,960 536,474

- Hire purchase receivables 808 1,592 3,175

- Lease receivables 570 631 2,878

- Other term financing - - 42

419,792 478,183 542,569

Unearned income (20,022) (25,140) (32,059)

Gross financing, advances and others 399,770 453,043 510,510

Less:

Allowance for impaired financing, advances and others

- Collective assessment allowance (543) (6,764) (7,626)

- Individual assessment allowance (2,144) (2,119) (2,084)

Total net financing, advances and others 397,083 444,160 500,800

ii. By contract

Bai’Bithamin Ajil 30,669 34,701 42,101

Ijarah Muntahia Bittamilik 1,378 2,223 6,095

Diminishing Musharakah 367,723 416,119 462,314

399,770 453,043 510,510

iii. By type of customer

Domestic business enterprises

- Small and medium enterprises 1,355 2,206 5,812

- Others 3,227 2,419 2,829

Individuals 395,188 448,418 501,869

399,770 453,043 510,510

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37. The operations of Islamic Banking (continued)

d. Financing, advances and other loans (continued)

iv. By profit rate sensitivity Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Fixed rate

- Housing financing 398,392 450,820 504,416

- Hire purchase receivables 808 1,592 3,174

- Other fixed rate/financing 570 631 2,920

399,770 453,043 510,510

v. By sector

Manufacturing (including agriculture based) 1,377 2,156 3,923

Wholesale, retail trade, restaurants and hotels - - 98

Transport, storage and communication - 67 2,040

Finance, insurance, real estate and business services - - 33

Household - residential 395,188 448,418 501,869

Other sectors 3,205 2,402 2,547

399,770 453,043 510,510

vi. By purpose

Purchase of landed property 398,393 450,820 504,416

Purchase of fixed assets excluding land and building 1,377 2,223 6,094

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37. The operations of Islamic Banking (continued)

e. Impaired financing, advances and other loans

i. Movements in impaired financing, advances and other loans are as follows:

Bank

2012 2011 2010

RM’000 RM’000 RM’000

At 1 January 9,629 13,257 10,215

Classified as impaired during the year 2,354 57 8,987

Amount recovered (2,225) (3,685) (3,200)

Amount written off - - (2,745)

At 31 December 9,758 9,629 13,257

Individual assessment allowance (2,144) (2,119) (2,084)

Net impaired financing, advances and others 7,614 7,510 11,173

Ratio of net impaired financing, advances and others to total gross financing, advances and others less individual assessment allowance 1.90% 1.66% 2.19%

ii. Movements in impaired financing, advances and other loans are as follows:

Bank

2012 2011 2010

RM’000 RM’000 RM’000

Collective assessment allowance

At 1 January 6,764 7,626 8,026

Allowance written back during the year (6,221) (862) (400)

At 31 December 543 6,764 7,626

As % of gross financing, advances and others less individual assessment allowance 0.14% 1.49% 1.49%

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37. The operations of Islamic Banking (continued)

e. Impaired financing, advances and other loans (continued)

ii. Movements in impaired financing, advances and other loans are as follows (continued):

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Individual assessment allowance

At 1 January 2,119 2,084 4,743

Allowance made during the year 133 179 203

Allowance written back during the year (91) (138) (117)

Amount written off (17) (6) (2,745)

At 31 December 2,144 2,119 2,084

iii. Impaired financing, advances and other loans by sector

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Manufacturing (including agriculture based) 1,377 1,380 1,446

Household - residential 8,381 8,249 11,811

9,758 9,629 13,257

f. Other assets Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Profit receivables 876 4,440 3,666

Other debtors, deposits and prepayments 6,352 8,529 14,760

Revaluation gain on profit rate undertaking contracts (Note 37(s)) 2,021 2,624 146,225

9,249 15,593 164,651

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37. The operations of Islamic Banking (continued)

g. Deposits from customers

i. By type of deposit Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Non-Mudharabah Fund

Demand deposits 685,700 495,235 878,181

Saving deposits 53,787 69,912 69,203

Other deposits 60,294 59,540 125,996

Negotiable Instruments of Deposits 85,581 - -

Mudharabah Fund

General investment deposits 22,190 36,054 37,772

907,552 660,741 1,111,152

ii. By type of customer Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Government and statutory bodies 145,853 8,339 24

Business enterprises 191,370 208,987 642,811

Individuals 498,605 333,959 302,084

Others 71,724 109,456 166,233

907,552 660,741 1,111,152

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37. The operations of Islamic Banking (continued)

h. Other liabilities Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Profit payable 65 64 57

Other creditors and accruals 62,880 73,637 224,063

Taxation 1,557 - -

Revaluation loss on profit rate undertaking contracts (Note 37(s)) 2,021 2,624 146,225

66,523 76,325 370,345

i. Islamic banking funds Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Fund allocated 20,000 20,000 20,000

Fair value reserve 169 542 (664)

Retained earnings 235,098 203,039 174,793

255,267 223,581 194,129

j. Income derived from investment of depositors’ funds and others

Bank

2012 2011

RM’000 RM’000

Income derived from investment of:

(i) General investment deposits 27,937 36,193

(ii) Other deposits 4,057 2,335

31,994 38,528N

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37. The operations of Islamic Banking (continued)

j. Income derived from investment of depositors’ funds and others (continued)

i. Income derived from investment of general deposits

Bank

2012 2011

RM’000 RM’000

Finance income and hibah

Financing, advances and other loans 14,365 15,712

Money at call and placements with financial institutions 5,592 8,245

Income from financial investments available- for-sale 3,903 10,046

23,860 34,003

Accretion of discount less amortisation of premium 4,032 1,966

Total finance income and hibah 27,892 35,969

Other operating income

Fee income 45 224

Income from general investment deposits 27,937 36,193

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37. The operations of Islamic Banking (continued)

j. Income derived from investment of depositors’ funds and others (continued)

ii. Income derived from investment of other deposits

Bank

2012 2011

RM’000 RM’000

Finance income and hibah

Financing, advances and others 2,086 1,121

Money at call and placements with financial institutions 812 489

Income from financial investments available- for-sale 567 596

3,465 2,206

Accretion of discount less amortisation of premium 586 116

Total finance income and hibah 4,051 2,322

Other operating income

Fee income 6 13

Income from investment of other deposits 4,057 2,335

k. Provision for financing, advances and others written back

Bank

2012 2011

RM’000 RM’000

Individual assessment allowance

- made in the financial year (133) (179)

- written back 91 138

Collective assessment allowance

- reversal during the year 6,221 863

6,179 822

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37. The operations of Islamic Banking (continued)

l. Income attributable to depositors

Bank

2012 2011

RM’000 RM’000

Deposits from customers

- Mudharabah Fund 3,845 3,751

- Non-Mudharabah Fund 2,974 2,887

Deposits and placements of banks and other

financial institutions

- Non-Mudharabah Fund - 24

Others 61 57

6,880 6,719

m. Income derived from investment of Islamic Banking Capital Funds

Bank

2012 2011

RM’000 RM’000

Financing, advances and others 3,932 2,386

Money at call and placements with financial institutions 1,530 1,040

Income from financial investments available-for-sale 1,068 1,267

6,530 4,693

Accretion of discount less amortisation of premium 976 (235)

Total finance income and hibah 7,506 4,458

Other operating income

(Loss)/Gain from financial assets held-for-trading (685) 88

Gain from financial investments available-for-sale 1,228 945

Fee income 1,395 1,628

Income/(Loss) from trading activities 4,685 (1,848)

Insurance premium and referral 202 -

6,825 813

Income from Islamic Banking Capital Funds 14,331 5,271

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37. The operations of Islamic Banking (continued)

n. Income from Islamic banking operations

For consolidation with the conventional operations, income from Islamic banking operations comprises the following:

Bank

2012 2011

Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 31,994 38,528

Income attributable to depositors (l) (6,880) (6,719)

Income derived from investment of Islamic Banking Funds (m) 14,331 5,271

39,445 37,080

o. Other operating expenses

Bank

2012 2011

RM’000 RM’000

Personnel costs

- Salaries, allowances and bonuses 97 222

- Contributions to Employees Provident Fund 7 23

- Staff benefits and other compensations 31 14

- Others - 1

Establishment costs

- Utilities 4 -

Administrative and general expenses

- Others 2,740 2,597

2,879 2,857

Included in other operating expenses is the Syariah Committee’s remuneration of RM139,000 (2011 - RM108,000).

p. Taxation

Bank

2012 2011

RM’000 RM’000

Current tax expense 11,780 9,884

Deferred tax expense (1,094) (3,085)

10,686 6,799

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37. The operations of Islamic Banking (continued)

q. Capital adequacy

i. The capital adequacy ratios are as follows: Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Computation of Total Risk Weighted

Assets (“RWA”)

Total credit RWA 189,349 199,050 436,946

Total market RWA 192,293 20,319 79,687

Total operational RWA 73,421 84,785 92,001

Total Risk Weighted Assets 455,063 304,154 608,634

Computation of Capital Ratios

Tier 1 Capital 253,585 222,620 193,840

Capital Base 253,805 229,006 201,034

Core capital ratio 55.73% 73.19% 31.85%

Risk weighted capital ratio 55.77% 75.29% 33.03%

With effect from 1 January 2011, the capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Bank has adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.

ii. The components of Tier I and Tier II Capital are as follows:

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Tier I Capital

Fund allocated 20,000 20,000 20,000

Retained earnings 235,098 203,039 174,793

Less: Deferred tax assets (1,513) (419) (953)

Total Tier I Capital (Core Capital) 253,585 222,620 193,840

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37. The operations of Islamic Banking (continued)

q. Capital adequacy (continued)

ii. The components of Tier I and Tier II Capital are as follows (continued):

Bank

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Tier II Capital

Collective assessment allowance* 220 6,386 7,194

Capital Base 253,805 229,006 201,034

* Excludes collective assessment allowance on impaired financing restricted from Tier II Capital by BNM of RM323,000 (2011 – RM378,000).

r. Off-balance sheet exposures

The off-balance sheet exposures and their related counterparty credit risk of the Bank for each reporting dates are as follows:

2012 Credit Risk Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Interest/Profit rate related contracts:

One year or less 100,000 100 104

Over one year to five years 500,000 19,854 12,971

Over five years - - -

Debt security contracts and other

commodity contracts:

One year or less 100,000 - -

Over one year to five years 500,000 19,953 12,991

Over five years - - -

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of over one year 7,205 3,603 2,613

Total 1,207,205 43,510 28,679

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2011 Credit Risk Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Interest/Profit rate related contracts:

One year or less - - -

Over one year to five years 350,000 9,000 4,200

Over five years 300,000 19,721 11,144

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of up to one year 158 32 32

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of over one year 8,834 4,416 3,275

Total 658,992 33,169 18,651

2010

Foreign exchange related contracts:

One year or less 828,235 152,975 152,975

Over one year to five years - - -

Over five years - - -

Interest/Profit rate related contracts:

One year or less 138,758 139 139

Over one year to five years 550,000 20,842 14,546

Over five years - - -

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of over one year 16,736 8,341 3,312

Any commitments that are unconditionally

cancelled at any time by the Bank

without prior notice or that effectively

provide for automatic cancellation

due to deterioration in a borrower’s

creditworthiness 1,001 - -

Total 1,534,730 182,297 170,972

37. The operations of Islamic Banking (continued)

r. Off-balance sheet exposures (continued)

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 88,000 - - - - 3,705 - 91,705 2.08%

Financial assets

held-for-trading - - - - - - 671,823 671,823 2.27%

Financial investments available-for-sale - 1,781 6,005 50,285 - - - 58,071 4.47%

Financing, advances and others

- performing 389 2,138 3,475 1,066 382,944 (543) - 389,469 4.94%

- impaired - - - - - 7,614 - 7,614

Deferred tax assets - - - - - 1,411 - 1,411

Others assets - - - - - 7,228 2,021 9,249

Total assets 88,389 3,919 9,480 51,351 382,944 19,415 673,844 1,229,342

t. Profit rate risk

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2012 2011 2010

Positive Negative Positive Negative Positive Negative

Contract fair fair Contract fair fair Contract fair fair

amount value value amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Foreign exchange

related contracts:

- Cross currency Islamic

profit rate undertaking - - - - - - 1,521,749 139,724 139,724

Others

- Islamic profit

rate undertaking 1,200,000 2,021 2,021 800,000 2,624 2,624 927,515 6,501 6,501

1,200,000 2,021 2,021 800,000 2,624 2,624 2,449,264 146,225 146,225

Note 37(f) Note 37(h) Note 37(f) Note 37(h) Note 37(f) Note 37(h)

37. The operations of Islamic Banking (continued)

s. Derivative financial instruments

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and

Islamic Banking funds

Deposits from customers 754,388 5,152 60,020 87,992 - - - 907,552 0.81%

Other liabilities - - - - - 64,502 2,021 66,523

Total liabilities 754,388 5,152 60,020 87,992 - 64,502 2,021 974,075

Islamic Banking funds - - - - - 255,267 - 255,267

Total liabilities and Islamic

Banking funds 754,388 5,152 60,020 87,992 - 319,769 2,021 1,229,342

On-balance sheet profit

sensitivity gap (665,999) (1,233) (50,540) (36,641) 382,944 (300,354) 671,823

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 66,000 - - - - 2,863 - 68,863 2.82%

Financial investments available-for-sale - - 80,000 351,792 - - - 431,792 2.81%

Financing, advances and other loans

- performing 1,446 - 422 2,065 439,481 (6,764) - 436,650 4.80%

- impaired - - - - - 7,510 - 7,510

Deferred tax assets - - - - - 239 - 239

Others assets - - - - - 12,969 2,624 15,593

Total assets 67,446 - 80,422 353,857 439,481 16,817 2,624 960,647

37. The operations of Islamic Banking (continued)

t. Profit rate risk (continued)

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Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 390,000 - - - - 4,301 - 394,301 2.12%

Financial assets held-for-trading - - - - - - 343,179 343,179 13.98%

Financial investments available-for-sale - - - 271,553 - - - 271,553 10.57%

Financing, advances and other loans

- performing 214 210 1,598 1,215 494,016 (7,626) - 489,627 4.36%

- impaired - - - - - 11,173 - 11,173

Deferred tax assets - - - - - 1,142 - 1,142

Others assets - - - - - 18,426 146,225 164,651

Total assets 390,214 210 1,598 272,768 494,016 27,416 489,404 1,675,626

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and

Islamic Banking funds

Deposits from customers 604,061 - 8,432 48,248 - - - 660,741 1.53%

Other liabilities - - - - - 73,701 2,624 76,325

Total liabilities 604,061 - 8,432 48,248 - 73,701 2,624 737,066

Islamic Banking funds - - - - - 223,581 - 223,581

Total liabilities and Islamic

Banking funds 604,061 - 8,432 48,248 - 297,282 2,624 960,647

On-balance sheet profit

sensitivity gap (536,615) - 71,990 305,609 439,981 (280,465) -

37. The operations of Islamic Banking (continued)

t. Profit rate risk (continued)

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37. The operations of Islamic Banking (continued)

t. Profit rate risk (continued)

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Bank Month Months Months Years Years Sensitive Book Total Rate

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and

Islamic Banking Funds

Deposits from customers 995,179 5,567 49,057 61,349 - - - 1,111,152 0.76%

Other liabilities - - - - - 224,120 146,225 370,345

Total liabilities 995,179 5,567 49,057 61,349 - 224,120 146,225 1,481,497

Islamic Banking Funds - - - - - 194,129 - 194,129

Total liabilities and

Islamic Banking Funds 995,179 5,567 49,057 61,349 - 418,249 146,225 1,675,626

On-balance sheet profit sensitivity gap (604,965) (5,357) (47,459) 211,419 494,016 (390,833) 343,179

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38. Changes in accounting policies

38.1 Effect of adopting MFRS framework

As stated in Note 1(a), these are the first financial statements of the Group and the Bank prepared in accordance with MFRSs. Accordingly, the Group and the Bank have applied MFRS First-time Adoption of Malaysian Financial Reporting Standards upon their adoption of the MFRSs on 1 January 2012. The MFRSs adoption did not result in any financial impact to the Group and the Bank other than the financial impact arising from the change in accounting policy for structured products.

The adoption of the MFRSs has resulted in the following changes:

MFRS 139 Financial Instruments: Recognition and Measurement (“MFRS 139”) – accounting policy on measurement of structured products

Prior to the transition to MFRS 139, the Bank had adopted the bifurcate method, as required by Bank Negara Malaysia’s Guidelines on Financial Reporting for Banking Institutions (“the Guidelines”), in measuring its structure products whereby the host contract will be accounted for at amortised cost whilst the embedded derivative within the host contract is designated as fair value through profit or loss.

Upon the transition to MFRS 139 on 1 January 2012, the abovementioned requirement under the Guidelines had been withdrawn and banking institutions in Malaysia is given an option to designate the host contract, together with the embedded derivative as fair value through profit or loss, as allowed under MFRS 139. The Bank had opted to designate the entire structured products as financial liabilities fair value through profit or loss.

This change in accounting policy has been accounted retrospectively. The financial impact on the Group’s and the Bank’s financial position and financial performance are set out in the following tables and accompanying notes.

38.1 .1 Reconciliation of financial position

Group 31.12.2011 1 .1 .2011

Effect of Effect of

transition transition Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Assets

Cash and short term fund 11,968,440 - 11,968,440 10,481,033 - 10,481,033

Deposits and placements with banks

and other financial institutions 1,516,673 - 1,516,673 811,660 - 811,660

Securities purchased under resale agreements 1,218,993 - 1,218,993 404,417 - 404,417

Financial assets held-for-trading 2,336,849 - 2,336,849 1,852,463 - 1,852,463

Financial investments

available-for-sale 5,225,508 - 5,225,508 3,105,488 - 3,105,488

Loans, advances and financing 38.1.5(a) 20,357,257 70 20,357,327 19,480,745 129 19,480,874

Other assets 38.1.5(b) 1,306,012 (24) 1,305,988 1,317,760 (44) 1,317,716

Statutory deposits with Bank Negara Malaysia 398,080 - 398,080 - - -

Deferred tax assets 796 - 796 59,300 - 59,300

Plant and equipment 120,905 - 120,905 108,781 - 108,781

Total assets 44,449,513 46 44,449,559 37,621,647 85 37,621,732

38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1 .1 Reconciliation of financial position (continued)

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Group 31.12.2011 1 .1 .2011

Effect of Effect of

transition transition Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Liabilities

Deposits from customers 38.1.5(c) 30,051,586 19,119 30,070,705 28,788,863 55,127 28,843,990

Deposits and placements of banks and

other financial institutions 7,777,097 - 7,777,097 2,322,925 - 2,322,925

Bills and acceptances payable 63,761 - 63,761 47,982 - 47,982 Other liabilities 38.1.5(d) 2,537,714 (15,141) 2,522,573 2,846,402 (48,940) 2,797,462

Total liabilities 40,430,158 3,978 40,434,136 34,006,172 6,187 34,012,359

Equity

Share capital 121,697 - 121,697 121,697 - 121,697

Reserves 3,897,658 (3,932) 3,893,726 3,493,778 (6,102) 3,487,676

Total equity attributable to equity holder of the Bank 4,019,355 (3,932) 4,015,423 3,615,475 (6,102) 3,609,373

Total liabilities and equity 44,449,513 46 44,449,559 37,621,647 85 37,621,732

38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1 .1 Reconciliation of financial position (continued)

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Bank 31.12.2011 1 .1 .2011

Effect of Effect of

transition transition Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Assets

Cash and short term fund 11,968,420 - 11,968,420 10,481,013 - 10,481,013

Deposits and placements with banks

and other financial institutions 1,516,673 - 1,516,673 811,660 - 811,660

Securities purchased under resale agreements 1,218,993 - 1,218,993 404,417 - 404,417

Financial assets held-for-trading 2,336,849 - 2,336,849 1,852,463 - 1,852,463

Financial investments

available-for-sale 5,225,508 - 5,225,508 3,105,488 - 3,105,488

Loans, advances and financing 38.1.5(a) 20,357,257 70 20,357,327 19,480,745 129 19,480,874

Other assets 38.1.5(b) 1,306,012 (24) 1,305,988 1,317,760 (44) 1,317,716

Statutory deposits with Bank Negara Malaysia 398,080 - 398,080 - - -

Deferred tax assets 796 - 796 59,300 - 59,300

Investments in subsidiary companies 20 - 20 20 - 20

Plant and equipment 120,905 - 120,905 108,781 - 108,781

Total assets 44,449,513 46 44,449,559 37,621,647 85 37,621,732

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1 .1 Reconciliation of financial position (continued)

Bank 31.12.2011 1 .1 .2011

Effect of Effect of

transition transition Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Liabilities

Deposits from customers 38.1.5(c) 30,051,586 19,119 30,070,705 28,788,863 55,127 28,843,990

Deposits and placements of banks and

other financial institutions 7,777,097 - 7,777,097 2,322,925 - 2,322,925

Bills and acceptances payable 63,761 - 63,761 47,982 - 47,982 Other liabilities 38.1.5(d) 2,537,714 (15,141) 2,522,573 2,846,402 (48,940) 2,797,462

Total liabilities 40,430,158 3,978 40,434,136 34,006,172 6,187 34,012,359

Equity

Share capital 121,697 - 121,697 121,697 - 121,697

Reserves 3,897,658 (3,932) 3,893,726 3,493,778 (6,102) 3,487,676

Total equity attributable to equity holder of the Bank 4,019,355 (3,932) 4,015,423 3,615,475 (6,102) 3,609,373

Total liabilities and equity 44,449,513 46 44,449,559 37,621,647 85 37,621,732

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.2 Reconciliation of comprehensive income for the year ended 31 December 2011

Group and Bank Effect of

transition

Note FRSs to MFRSs MFRSs

RM’000 RM’000 RM’000

Revenue 2,402,424 (22,669) 2,379,755

Interest income 38.1.5(e) 1,713,571 (1,021) 1,712,550

Interest expense 38.1.5(f) (514,644) 24,839 (489,805)

Net interest income 1,198,927 23,818 1,222,745

Net income from Islamic Banking

operations 38.1.5(g) 29,670 7,410 37,080

Other operating income 38.1.5(h) 659,183 (29,058) 630,125

Total net income 1,887,780 2,170 1,889,950

Other operating expenses (887,846) - (887,846)

Operating profit 999,934 2,170 1,002,104

Allowance for loans, advances

and financing (144,741) - (144,741)

Profit before taxation 855,193 2,170 857,363

Tax expense (165,330) - (165,330)

Profit for the year 689,863 2,170 692,033

Other comprehensive income, net of tax

Net profit on revaluation of financial

investments available-for-sale 14,017 - 14,017

Total other comprehensive

income for the year 14,017 - 14,017

Total comprehensive income

for the year 703,880 - 706,050

Profit for the year attributable to:

Owner of the Bank 689,863 - 692,033

Total comprehensive income

attributable to:

Owner of the Bank 703,880 - 706,050

38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.3 Reconciliation of statements of cash flows for 2011

There are no material differences between the statements of cash flows presented under MFRSs and the statements of cash flows presented under FRSs.

38.1.4 Capital adequacy

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31 December 2011

Effect of

transition

FRS to MFRS MFRS

RM’000 RM’000 RM’000

Tier I Capital

Paid up ordinary share capital 121,697 - 121,697

Share premium 380,303 - 380,303

Retained profits 3,388,271 (3,932) 3,384,339

Other reserves 121,697 - 121,697

Less: Deferred tax assets (3,258) - (3,258)

Total Tier I Capital (Core Capital) 4,008,710 (3,932) 4,004,778

Tier II Capital

Collective assessment allowance 253,786 - 253,786

253,786 - 253,786

Total Eligible Tier II 253,786 - 253,786

Less: Investments in subsidiary

companies (20) - (20)

4,262,476 (3,932) 4,258,544

38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.4 Capital adequacy (continued)

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1 January 2011

Effect of

transition

FRS to MFRS MFRS

RM’000 RM’000 RM’000

Tier I Capital

Paid up ordinary share capital 121,697 - 121,697

Share premium 380,303 - 380,303

Retained profits 2,998,408 (6,102) 2,992,306

Other reserves 121,697 - 121,697

Less: Deferred tax assets (56,822) - (56,822)

Total Tier I Capital (Core Capital) 3,565,283 (6,102) 3,559,181

Tier II Capital

Collective assessment allowance 235,973 - 235,973

235,973 - 235,973

Total Eligible Tier II 235,973 - 235,973

Less: Investments in subsidiary

companies (20) - (20)

3,801,236 (6,102) 3,795,134

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations

(a) Loans, advances and financing

Group and Bank

31 December 2011 1 January 2011

Effect of Effect of

transition transition

FRS to MFRS MFRS FRS to MFRS MFRS

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Gross loans, advances and financing 20,942,018 70 20,942,088 20,079,644 129 20,079,773

Allowance for impaired loans, advances and financing

- Collective assessment allowance (365,325) - (365,325) (369,357) - (369,357)

- Individual assessment allowance (219,436) - (219,436) (229,542) - (229,542)

Net loans, advances and financing 20,357,257 70 20,357,327 19,480,745 129 19,480,874

Interest/Income receivable 66,174 (24) 66,150 45,880 (44) 45,836

Other debtors, deposits and prepayments 414,094 - 414,094 264,640 - 264,640

Derivative assets 820,647 - 820,647 1,007,240 - 1,007,240

Tax recoverable 5,097 - 5,097 - - -

1,306,012 (24) 1,305,988 1,317,760 (44) 1,317,716

(b) Other assets

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations (continued)

(c) Deposits from customers

(i) By type of deposit

Group and Bank

31 December 2011 1 January 2011

Effect of Effect of transition transition

FRS to MFRS MFRS FRS to MFRS MFRS

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Demand deposits 10,026,162 - 10,026,162 9,869,460 - 9,869,460

Saving deposits 935,372 - 935,372 837,370 - 837,370

Fixed deposits 9,559,230 - 9,559,230 11,583,915 - 11,583,915

Other deposits 9,444,737 19,119 9,463,856 6,393,953 55,127 6,449,080

Negotiable instruments of deposit 75,917 - 75,917 80,002 - 80,002

Others – cash collateral 10,168 - 10,168 24,163 - 24,163

30,051,586 19,119 30,070,705 28,788,863 55,127 28,843,990

Due within six months 15,085,525 (60) 15,085,465 13,005,161 30,146 13,035,307

Six months to one year 3,395,429 878 3,396,307 4,412,942 12,793 4,425,735

One year to three years 372,522 13,230 385,752 338,543 13,158 351,701

Three years to five years 226,408 5,071 231,479 101,224 (970) 100,254

Over five years - - - 200,000 - 200,000

19,079,884 19,119 19,099,003 18,057,870 55,127 18,112,997

(ii) Maturity structure of fixed deposits, other deposits and negotiable instruments of deposits

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations (continued)

(c) Deposits from customers (continued)

(iii) By type of customer

Group and Bank

31 December 2011 1 January 2011

Effect of Effect of transition transition

FRS to MFRS MFRS FRS to MFRS MFRS

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Government and statutory bodies 177,664 8 177,672 27,368 22 27,390

Business enterprises 17,418,167 48 17,418,215 15,065,326 - 15,065,326

Individuals 9,795,376 4,213 9,799,589 10,241,578 34,435 10,276,013

Others 2,660,379 14,850 2,675,229 3,454,591 20,670 3,475,261

30,051,586 19,119 30,070,705 28,788,863 55,127 28,843,990

Interest/Profit payable 81,090 (15,141) 65,949 106,294 (48,940) 57,354

Other creditors and accruals 1,673,582 - 1,673,582 1,640,664 - 1,640,664

Provision for retirement benefits 701 - 701 372 - 372

Profit Equalisation Reserve 12,391 - 12,391 9,187 - 9,187

Taxation - - - 45,765 - 45,765

Derivative liabilities 769,950 - 769,950 1,044,120 - 1,044,120

2,537,714 (15,141) 2,522,573 2,846,402 (48,940) 2,797,462

(d) Other liabilities

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations (continued)

(e) Interest income

Group and Bank 31 December 2011 Effect of transition

FRS to MFRS MFRS

RM’000 RM’000 RM’000

Loans and advances

- Interest income other than recoveries

from impaired loans 1,217,598 (1,021) 1,216,577

- Recoveries from impaired loans 45,277 - 45,277

Money at call and deposit placements

with financial institutions 247,359 - 247,359

Financial assets held-for-trading 50,702 - 50,702

Financial investments available-for-sale 84,187 - 84,187

Securities purchased under resale agreements 28,367 - 28,367

1,673,490 (1,021) 1,672,469

Accretion of discount 40,081 - 40,081

Total interest income 1,713,571 (1,021) 1,712,550

Deposits and placements of banks

and other financial institutions 31,535 - 31,535

Deposits from customers 478,134 (24,839) 453,295

Others 4,975 - 4,975

514,644 (24,839) 489,805

(f) Interest expense

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations (continued)

(g) Income from Islamic Banking operations

Group and Bank 31 December 2011 Effect of transition

FRS to MFRS MFRS

RM’000 RM’000 RM’000

Income derived from investment of

depositors’ funds and others 41,732 - 41,732

Profit Equalisation Reserve (3,204) - (3,204)

Income attributable to depositors (14,240) 7,521 (6,719)

Income derived from investment of

Islamic Banking funds 5,382 (111) 5,271

29,670 7,410 37,080

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38. Changes in accounting policies (continued)

38.1 Effect of adopting MFRS framework (continued)

38.1.5 Notes to reconciliations (continued)

(h) Other operating income

Group and Bank 31 December 2011 Effect of transition

FRS to MFRS MFRS

RM’000 RM’000 RM’000

Fee income:

Commission 138,542 - 138,542

Service charges and fees 15,202 - 15,202

Guarantee fees 6,698 - 6,698

Bankcard fees 167,817 - 167,817

Insurance premium and referral 19,578 - 19,578

Other fee income 36,995 - 36,995

384,832 - 384,832

Trading income:

Unrealised gain from revaluation of

financial assets held-for-trading 977 - 977

Net gain from sales of securities

- Financial assets held-for-trading 27,571 - 27,571

- Financial investments available-for-sale 7,332 - 7,332

Gross dividends from financial

investments available-for-sale 28 - 28

35,908 - 35,908

Other income:

Foreign exchange profit

- unrealised gain 161,915 - 161,915

- realised gain 30,393 - 30,393

Gain from derivatives 47,157 (29,058) 18,099

Loss on disposal of plant and equipment (1,022) - (1,022)

238,443 (29,058) 209,385

659,183 (29,058) 630,125

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38. Changes in accounting policies (continued)

38.2 Other change in accounting policies

On 19 May 2011, Bank Negara Malaysia issued its revised Guidelines on Profit Equalisation Reserve (“revised PER Guidelines”), which was effective for annual periods beginning on or after 1 July 2011. The Islamic Banking operation of the Bank has adopted these revised PER Guidelines with effect from 1 January 2012 and has discontinued its existing Profit Equalisation Reserve in its management of displaced commercial risk.

This change in accounting policy is accounted for prospectively, and hence had no effect on comparative figures.

Citibank Berhad (297089M)

45th Floor, Menara Citibank

165 Jalan Ampang

50450 Kuala Lumpur

Tel : 03-2383 8585

Fax : 03-2383 6000

www.citibank.com.my

2012

PILLAR 3

DISCLOSURE

CitibankBerhad

Contents

3 Introduction

3 Capital Adequacy

9 Capital Structure

10 Risk Management

1 1 Credit Risk

38 Securitization

38 Market Risk

39 Operational Risk

39 Equities

39 Interest Rate Risk/Rate of Return Risk

in the Banking Book (IRR/RORBB)

40 Profit Sharing Investment Accounts

and Shariah Governance

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Attestation by CEO regarding Basel II – Pillar 3 Disclosure as at 31 December 2012

To the best of my knowledge I confirm that the Basel II – Pillar 3 disclosure for the financial period ending 31 December 2012 has been prepared and submitted to Bank Negara Malaysia in accordance with the Guideline on Risk Weighted Capital Adequacy Framework (Basel II) – Disclosure Requirement (Pillar 3).

Sanjeev NanavatiChief Executive OfficerCitibank BerhadDate: 29 March 2013

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P i l l a r 3 D i s c l o s u r e

1. Introduction

Citibank Berhad was incorporated in Malaysia on 22 April 1994 and has its registered office at 165 Jalan Ampang, 50450 Kuala Lumpur, Malaysia. The Bank is licensed under the Banking and Financial Institution Act 1989 (“BAFIA”). The Bank also operates an Islamic window under the Islamic Banking Scheme licensed under the BAFIA Act 1989.

The group organization structure of Citibank Berhad is detailed below:-

The subsidiaries of Citibank Berhad are consolidated using the purchase method of accounting. The basis of consolidation for financial accounting purposes is the same as that used for regulatory purposes.

The Capital Requirements Directive (CRD), often referred to as Basel II, introduced the need for banks operating under this new legislative framework to publish certain information relating to their risk management and capital adequacy. The disclosure of this information is known as Pillar 3 and is designed to complement the other two pillars of the Basel II, namely the minimum capital requirements (Pillar 1) and the supervisory review process (Pillar 2). The disclosure has been prepared in accordance with the Guidelines for Risk Weighted Capital Adequacy Framework (Basel II) – Disclosure Requirements (Pillar 3) (BNM/RH/GL 001-32) and Capital Adequacy Framework for Islamic Banks (CAFIB) – Disclosure Requirements (Pillar 3) (BNM/RH/GL 007-18) issued by Bank Negara Malaysia (“BNM”).

Since 1 January 2008, the capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Group and the Bank have adopted Standardized Approach (SA) for Credit Risk and Market Risk, and the Basic Indicator Approach (BIA) for Operational Risk.

There are no significant restrictions or major impediments on transfer of funds or regulatory capital within the Group.

There were no capital deficiencies in any of subsidiaries of the Group as at the financial year end.

This Pillar 3 disclosure should be read in conjunction with Citibank Berhad’s Financial Statements for the corresponding financial year.

2. Capital Adequacy

The Bank’s capital management is designed to ensure that it maintains sufficient capital consistent with the Bank’s risk profile and all applicable regulatory standards and guidelines. The Bank adopts a balanced approach in risk taking, balancing senior management and Board of Directors oversight with well-defined independent risk management functions. The Board engages senior management regularly in key activities that may impact capital assessment and adequacy.

Other than paid up capital of the Bank, the bank’s capital is historically generated via retained earnings from the business.

100%

Citigroup Nominees (Tempatan) Sdn. Bhd.*

Citigroup Nominees(Asing) Sdn. Bhd.*

Citibank Berhad

Citigroup Nominee (Malaysia) Sdn. Bhd.

100% 100%

* Principal activity is as a nominee company

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P i l l a r 3 D i s c l o s u r e

2. Capital Adequacy (continued)

The risk weighted assets and Capital Adequacy Ratios of Citibank Berhad are as follows:-

Dec 2012 Dec 2011

RM’000 RM’000

Computation of Total Risk Weighted Assets (RWA)

Total Credit RWA 20,634,205 22,272,830

Credit RWA Absorbed by PSIA - -

Total Market RWA 2,223,864 2,019,640

Market RWA Absorbed by PSIA - -

Total Operational RWA 3,546,462 3,525,964

Large Exposure Risk RWA for Equity Holdings - -

Total Risk Weighted Assets 26,404,531 27,818,434

Computation of Capital Ratios

Tier 1 Capital 4,269,625 4,004,777

Capital Base 4,484,017 4,258,543

Before deducting proposed dividends

Core Capital Ratio 16.17% 14.40%

Risk-Weighted Capital Ratio 16.98% 15.31%

After deducting proposed dividends / dividend payment

Core Capital Ratio 14.27% 13.32%

Risk-Weighted Capital Ratio 15.08% 14.23%

The risk weighted assets and Capital Adequacy Ratios for the Islamic Banking Window are as follows:

Dec 2012 Dec 2011

RM’000 RM’000

Computation of Total Risk Weighted Assets (RWA)

Total Credit RWA 189,349 199,050

Credit RWA Absorbed by PSIA - -

Total Market RWA 192,293 20,319

Market RWA Absorbed by PSIA - -

Total Operational RWA 73,421 84,785

Large Exposure Risk RWA for Equity Holdings - -

Total Risk Weighted Assets 455,063 304,154

Computation of Capital Ratios

Tier 1 Capital 253,585 222,620

Capital Base 253,805 229,006

Core Capital Ratio 55.73% 73.19%

Risk-Weighted Capital Ratio 55.77% 75.29%

The above ratios are well above the regulatory requirements for Total Capital Adequacy Ratios of 8%.

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P i l l a r 3 D i s c l o s u r e

2. Capital Adequacy (continued) The following tables details the classes of RWA and the types of exposure of the Bank as at 31 December 2012:

Risk Total Risk

Weighted Weighted Minimum

Risk Assets Assets Capital

Item Exposure Class Gross Net Weighted Absorbed after effects Requirement

Exposures Exposures Assets by PSIA of PSIA at 8%

RM’000 RM’000 RM'000 RM'000 RM'000 RM'000

1.0 Credit Risk (Standardized Approach) On-Balance Sheet Exposures

Sovereigns/Central Banks 7,455,677 7,455,677 - - - -

Banks, Development Financial

Institutions and MDBs 7,763,938 7,766,036 2,039,903 - 2,039,903 163,192

Corporates, Insurance Cos

and Securities Firms 3,296,569 3,270,133 3,303,533 - 3,303,533 264,283

Regulatory Retail 7,139,914 6,996,425 5,248,888 - 5,248,888 419,911

Residential Mortgages 8,412,891 8,408,268 3,078,025 - 3,078,025 246,242

Higher Risk Assets 15,133 15,125 22,699 - 22,699 1,816

Other Assets 522,123 527,538 308,426 - 308,426 24,674

Defaulted Exposures 526,911 526,911 539,103 - 539,103 43,128

Total for On- Balance Sheet Exposures 35,133,155 34,966,112 14,540,576 - 14,540,576 1,163,246

Off-Balance Sheet Exposures

OTC Derivatives 1,621,018 1,621,018 774,652 - 774,652 61,972

Off balance sheet exposures other

than OTC derivatives or

credit cerivatives 6,641,128 6,634,465 5,299,256 - 5,299,256 423,940

Defaulted Exposures 17,011 17,011 19,721 - 19,721 1,578

Total for Off- Balance Sheet Exposures 8,279,157 8,272,494 6,093,629 - 6,093,629 487,490

Total On and Off- Balance Sheet Exposures 43,412,312 43,238,606 20,634,205 - 20,634,205 1,650,736

2.0 Large Exposures Risk Requirement - - - - - -

3.0 Market Risk Long Short Net (Standardized Approach) position position position

Interest Rate Risk 293,185 (202,257) 90,928 1,518,573 - 1,518,573 121,486

Foreign Currency Risk 681,547 (563,210) 118,337 681,547 - 681,547 54,524

Equity Risk - - - - - - -

Commodity Risk - - - - - - -

Options Risk 62,179 (107,176) (44,997) 23,744 - 23,744 1,900

Inventory Risk - - - - - - -

4.0 Operational Risk (Basic Indicator Approach) 3,546,462 - 3,546,462 283,716

Total RWA 26,404,531 - 26,404,531 2,112,362

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2. Capital Adequacy (continued)

The following tables details the classes of RWA and the types of exposure of the Islamic Banking Window as at 31 December 2012:

Risk Total Risk

Weighted Weighted Minimum

Risk Assets Assets Capital

Item Exposure Class Gross Net Weighted Absorbed after effects Requirement

Exposures Exposures Assets by PSIA of PSIA at 8%

RM’000 RM’000 RM'000 RM'000 RM'000 RM'000

1.0 Credit Risk (Standardized Approach) On-Balance Sheet Exposures

Sovereigns/Central Banks 146,947 146,947 - - - -

Banks, Development Financial

Institutions and MDBs 59,106 59,106 22,013 - 22,013 1,761

Corporates - - - - - -

Residential Mortgages 391,386 391,386 139,413 - 139,413 11,153

Other Assets 10,057 10,057 6,366 - 6,366 509

Defaulted Exposures 5,953 5,953 5,953 - 5,953 476

Total for On- Balance Sheet Exposures 613,449 613,449 173,745 - 173,745 13,899

Off-Balance Sheet Exposures

OTC Derivatives 19,953 19,953 12,991 - 12,991 1,039

Off balance sheet exposures other

than OTC derivatives or

credit cerivatives 3,603 3,603 2,613 - 2,613 209

Total for Off- Balance Sheet Exposures 23,556 23,556 15,604 - 15,604 1,248

Total On and Off- Balance Sheet Exposures 637,005 637,005 189,349 - 189,349 15,147

2.0 Large Exposures Risk Requirement - - - - - -

3.0 Market Risk Long Short Net (Standardized Approach) position position position

Benchmark Rate Risk 15,383 - 15,383 192,293 - 192,293 15,384

Foreign Currency Risk - - - - - - -

Equity Risk - - - - - - -

Commodity Risk - - - - - - -

Options Risk - - - - - - -

Inventory Risk - - - - - - -

4.0 Operational Risk (Basic Indicator Approach) 73,421 - 73,421 5,874

Total RWA 455,063 - 455,063 36,405

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2. Capital Adequacy (continued) The following table details the classes of RWA and the types of exposure of the Bank as at 31 December 2011 :

Risk Total Risk

Weighted Weighted Minimum

Risk Assets Assets Capital

Item Exposure Class Gross Net Weighted Absorbed after effects Requirement

Exposures Exposures Assets by PSIA of PSIA at 8%

RM’000 RM’000 RM'000 RM'000 RM'000 RM'000

1.0 Credit Risk (Standardized Approach) On-Balance Sheet Exposures

Sovereigns/Central Banks 9,030,212 9,030,212 - - - -

Banks, Development Financial

Institutions and MDBs 11,391,310 11,391,310 2,970,273 - 2,970,273 237,622

Corporates, Insurance Cos

and Securities Firms 4,393,905 4,371,348 4,330,295 - 4,330,295 346,424

Regulatory Retail 6,988,379 6,829,936 5,126,118 - 5,126,118 410,089

Residential Mortgages 8,590,218 8,590,218 3,164,308 - 3,164,308 253,145

Higher Risk Assets 21,719 21,719 32,578 - 32,578 2,606

Other Assets 537,019 537,019 304,500 - 304,500 24,360

Defaulted Exposures 589,414 589,414 603,041 - 603,041 48,243

Total for On- Balance Sheet Exposures 41,542,176 41,361,176 16,531,114 - 16,531,114 1,322,489

Off-Balance Sheet Exposures

OTC Derivatives 1,914,337 1,914,337 1,040,746 - 1,040,746 83,260

Off balance sheet exposures other

than OTC derivatives or

credit cerivatives 5,994,435 5,988,951 4,679,442 - 4,679,442 374,355

Defaulted Exposures 18,445 18,445 21,528 - 21,528 1,722

Total for Off- Balance Sheet Exposures 7,927,218 7,921,734 5,741,716 - 5,741,716 459,337

Total On and Off- Balance Sheet Exposures 49,469,393 49,282,910 22,272,830 - 22,272,830 1,781,826

2.0 Large Exposures Risk Requirement - - - - - -

3.0 Market Risk Long Short Net (Standardized Approach) position position position

Interest Rate Risk 317,676 (217,840) 99,836 1,590,904 - 1,590,904 127,272

Foreign Currency Risk 170,564 (405,320) (234,756) 405,320 - 405,320 32,426

Equity Risk - - - - - - -

Commodity Risk - - - - - - -

Options Risk - - - - - - -

Inventory Risk 23,630 (3,731) 19,900 23,416 - 23,416 1,873

4.0 Operational Risk (Basic Indicator Approach) 3,525,964 - 3,525,964 282,077

Total RWA 27,818,434 - 27,818,434 2,225,474

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2. Capital Adequacy (continued)

The following tables details the classes of RWA and the types of exposure of the Islamic Banking Window as at 31 December 2011 :

Risk Total Risk

Weighted Weighted Minimum

Risk Assets Assets Capital

Item Exposure Class Gross Net Weighted Absorbed after effects Requirement

Exposures Exposures Assets by PSIA of PSIA at 8%

RM’000 RM’000 RM'000 RM'000 RM'000 RM'000

1.0 Credit Risk (Standardized Approach) On-Balance Sheet Exposures

Sovereigns/Central Banks 502,232 502,232 - - - -

Corporates 842 842 842 - 842 67

Residential Mortgages 443,796 443,796 165,277 - 165,277 13,222

Higher Risk Assets 58 58 88 - 88 7

Other Assets 11,213 11,213 8,350 - 8,350 668

Defaulted Exposures 5,843 5,843 5,843 - 5,843 467

Total for On- Balance Sheet Exposures 963,984 963,984 180,400 - 180,400 14,432

Off-Balance Sheet Exposures

OTC Derivatives 28,721 28,721 15,344 - 15,344 1,228

Off balance sheet exposures other

than OTC derivatives or

credit cerivatives 4,447 4,447 3,305 - 3,305 264

Defaulted exposures 1 1 1 - 1 -

Total for Off- Balance Sheet Exposures 33,169 33,169 18,651 - 18,651 1,492

Total On and Off- Balance Sheet Exposures 997,153 997,153 199,050 - 199,050 15,924

2.0 Large Exposures Risk Requirement - - - - - -

3.0 Market Risk Long Short Net (Standardized Approach) position position position

Benchmark Rate Risk 1,625 - 1,625 20,319 - 20,319 1,625

Foreign Currency Risk - - - - - - -

Equity Risk - - - - - - -

Commodity Risk - - - - - - -

Options Risk - - - - - - -

Inventory Risk - - - - - - -

4.0 Operational Risk (Basic Indicator Approach) 84,785 - 84,785 6,783

Total RWA 304,154 - 304,154 24,332

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3. Capital Structure

The following details the capital structure for the Group and Bank: Group and Bank

Dec 2012 Dec 2011

RM’000 RM’000

Tier I CapitalPaid Up Share Capital 121,697 121,697

Share Premium 380,303 380,303

Retained earnings 3,662,946 3,384,339

Other Reserves 121,697 121,697

4,286,643 4,008,036

less: Deferred Tax Assets (17,018) (3,259)

Total Tier 1 Capital 4,269,625 4,004,777 Tier II CapitalCollective assessment allowance for impaired loans and financing 214,411 253,786

Total Tier II Capital 214,411 253,786

Total Eligible Tier 2 Capital 214,411 253,786

less: Investment in Subsidiaries (20) (20)

Capital Base 4,484,017 4,258,543

The following details the capital structure for the Islamic Banking Window:

Dec 2012 Dec 2011

RM’000 RM’000

Tier I CapitalFund allocated 20,000 20,000

Retained earnings 235,098 203,039

Other reserves - -

less: Deferred Tax Assets (1,513) (419)

Total Tier 1 Capital 253,585 222,620 Tier II CapitalCollective assessment allowance for impaired financing, advances and other loans 220 6,386

Capital Base 253,805 229,006

The capital structure of the Group and the Bank as disclosed above does not have any specific terms and conditions attached to them.

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4. Risk Management

A sound risk management process, strong internal controls and well documented policies and procedures are the foundation for ensuring the safety and soundness of the Bank. The Board and Senior Management ensure that capital levels are adequate for the Bank’s risk profile. They also ensure that the risk management and control processes are appropriate in the light of the Bank’s risk profile and business plans.

The Bank has put in place a risk management system, which leverages in part the risk management framework developed by Citigroup, to oversee and monitor material risks faced by the Bank, including credit, market and operational risks. The Audit Committee assists the Board in overseeing legal, compliance and operational risks and is supported by the Bank’s audit and compliance functions. The Audit Committee will review the audit findings of the compliance and internal audit functions at its quarterly meetings, including management’s response to the audit findings and progress of the related corrective action plans. The Bank’s management, Audit Committee and relevant bank personnel will update the Board during its quarterly meetings about pertinent operational, legal and compliance risk management issues which have arisen during the quarter such as reporting risk positions and performance, capital requirements, risk and control limits.

The Bank has a Risk Management Committee, which together with the Audit Committee and management team assists the Board in fulfilling its oversight responsibility relating to the establishment and operation of a risk management system. The Risk Management Committee has particular oversight of credit, market and liquidity risk; reviews acquisition and disposal of large securities positions of the Bank; and monitors the progress of the Basel II implementation.

The compositions of the Audit Committee and Risk Management Committee are disclosed in the Statement of Corporate Governance in Citibank Berhad’s Annual Report.

Strategies & Policies

The Bank's risk management framework recognizes the diversity of the organization's activities by balancing the Board's strong supervision with well-defined independent risk management functions within each business area.

The risk management framework is firmly based on the following six principles, applicable across the board for all businesses and risk types:

• Risk management policies are integrated with business plans and strategies;

• All risks and returns resulting from this are owned and managed by an accountable business unit;

• All risks are managed within a limited framework while the risk limits are endorsed by the business management and approved by an independent risk management organization;

• All risk management policies are clearly and formally documented;

• All risks are measured using well defined methodologies, including stress testing; and

• All risks are comprehensively reported across the organization.

Risks are regularly reviewed by independent risk managers, senior business managers and whenever appropriate, by the Board of Directors themselves.

The independent risk managers are responsible for establishing and implementing risk management policies and practices within their business units while ensuring consistency with Citi’s corporate standards.

The independent risk managers are ultimately accountable to the Board and on a day-to-day basis; they are also individually responsible for meeting and responding to the needs of their respective business units, apart from overseeing their existing portfolio risks.

To assess adequacy of the Bank’s capital to support its current and future activities, the Bank has identified material risks applicable to the Citibank Berhad’s lines of business, in accordance with the Guidelines for Risk Weighted Capital Adequacy Framework (Basel II) – Internal Capital Adequacy Assessment Process (Pillar 2) issued by BNM (BNM/RH/GL 001-33). Material risks are regularly reviewed by senior management and presented to the Board of Directors. For the purpose of Pillar 3, the following material risks are discussed in this document: Credit Risk, Market Risk (comprising Price Risk, Liquidity Risk, Interest Rate Risk in the Banking Book (“IRRBB”)) and Operational Risk.

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5. Credit Risk

Credit risk is the potential for financial loss resulting from the failure of a borrower or counter party to honor its financial or contractual obligations.

Credit risk arises in lending, trading and derivatives transactions, securities transactions, settlement and when the Bank acts as an intermediary on behalf of its clients and other third parties. For the retail bank, credit risk arises by way of the borrower being unable to fulfill his contractual commitments thereby resulting in causing credit losses to the Bank.

5.1 Credit Risk management policy

While business managers and independent risk management are jointly responsible for managing the risk/return tradeoffs as well as establishing limits and risk management practices, the origination and approval roles are clearly defined and segregated.

In addition to conforming to established corporate standards, independent credit risk management is responsible for establishing local policies that comply with local regulations and any other relevant legal requirements.

These standards will cover credit origination, measurement and documentation as well as problem recognition, classification and remedial actions. In addition, specific write-off criterion is set according to Citigroup’s corporate requirements or the BNM guideline BNM/RH/GC-007-17 on Classification and Impairment Provisions for Loans/Financing, whichever is more stringent.

Independent credit risk management is also responsible for implementing portfolio limits, including obligor limits through risk rating, maturity and business segments to ensure diversification of portfolio. The Risk management team also evaluates the immediate to long term risks for all products and segments thus providing for profitability on a long term sustainable basis.

Continuous monitoring of credit behavior aided by sophisticated debt rating modules, plus portfolio delinquency performance allows independent credit risk management to constantly assess the health of the credit portfolio.

5.2 Definition of past due and impaired loans

Definition of past due loans are disclosed in Note 2(g) of the financial statements.

A loan is impaired when there is objective evidence that demonstrates that a loss event has occurred after the initial recognition of the loan, and that the loss event has an impact on the future cash flows of the loan.

Objective evidence that a loan or a loan portfolio is impaired includes observable data that could include the following loss events:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• observable data relating to a portfolio of financial assets such as :

i) adverse changes in the payment status of borrowers in the portfolio; and

ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

Under the revised policy issued by BNM on Classification and Impairment Provisions for Loan Financing, if the repayment conduct of the loan is past due for more than 90 days of either principal, interest or both, the loan shall be classified as impaired. The Bank applies this policy in addition to the above when determining if a loan is impaired.

5.3 Impairment Provision

The Bank complies with the Malaysian Financial Reporting Standards (“MFRS”) 139, Financial Instruments: Recognition and Measurement for loan impairment.

5.3.1 Individual Impairment

The Bank assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. For financial assets that are not individually significant assessment for impairment is done individually and/or collectively. If the Group determines that no objective

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5. Credit Risk (continued) 5.3 Impairment Provision (continued)

5.3.1 Individual Impairment (continued)

evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. Impairment losses are measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original effective interest rate.

5.3.2 Collective Impairment

For the purposes of the collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics by using a grading process that considers obligor 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 likelihood of receiving all amounts due under a facility according to the contractual terms of the assets being evaluated.

In assessing the collective impairment, the Bank uses methods as listed below depending on the loan portfolio:

i) Statistical modeling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether the current economic and credit conditions are such that the actual losses incurred are likely to be greater or less than suggested historical modeling. Default rates, loss rates and expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure they remain appropriate;

ii) Based upon historical delinquency flow rates, charge-off statistics and loss severity, adjusted for management’s judgement as to whether current economic and credit conditions are such that actual losses are likely to be greater or less than suggested by historical modeling.

5.4 Distribution of loans, advances and financing

The following information on loans, advances and financing are disclosed in Note 7 in the financial statement as at 31 December 2012:-

1) Geographical distribution 2) Sector 3) Residual contractual maturity

5.5 Past due loans, individual impairment provision, collective impairment provision, charges for individual impairment provision and write offs by sector

The following tables detail past due loans, individual impairment provision, collective impairment provision, charges for individual impairment provision and write offs by sector as at 31 December 2012:-

The information on impaired loans by geographic area and reconciliation of changes in loan impairment provisions are disclosed in Note 8.

5.5.1 Past due loans The following table details past due

loans by sector of the Group and the Bank as at 31 December 2012:

RM'000

Primary agriculture 1,200

Mining and quarrying 572

Manufacturing 1,820

Electricity, gas, water 336

Construction 2,187

Wholesale, retail trade, restaurant and hotels 2,137

Transport, storage and communication -

Finance, insurance, real estate, and business services 10,760

Education, health, household & others 1,909,061

Community, social and personal services -

Total 1,928,073

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5. Credit Risk (continued) 5.5 Past due loans, individual impairment provision,

collective impairment provision, charges for

individual impairment provision and write offs by

sector (continued)

5.5.1 Past due loans (continued)

The following table details past due loans by sector of the Islamic Banking Window as at 31 December 2012:

The following table details past due loans by sector of the Group and the Bank as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 57,568

Community, social and personal services -

Total 57,568

RM'000

Primary agriculture 2,588

Mining and quarrying 553

Manufacturing 1,592

Electricity, gas, water 370

Construction 2,549

Wholesale, retail trade, restaurant and hotels 8,757

Transport, storage and communication 243

Finance, insurance, real estate, and business services 7,129

Education, health, household & others 1,695,565

Community, social and personal services -

Total 1,719,346

RM'000

Primary agriculture 6,790

Mining and quarrying 24

Manufacturing 33,275

Electricity, gas, water -

Construction 12,863

Wholesale, retail trade, restaurant and hotels 15,982

Transport, storage and communication 649

Finance, insurance, real estate, and business services 7,393

Education, health, household & others 128,653

Community, social and personal services 140

Total 205,769

The following table details past due loans by sector of the Islamic Banking Window as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 60,454

Total 60,454

5.5.2 Individual impairment provision

The following table details individual impairment provision by sector of the Group and the Bank as at 31 December 2012:

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5. Credit Risk (continued) 5.5 Past due loans, individual impairment provision,

collective impairment provision, charges for

individual impairment provision and write offs by

sector (continued)

5.5.2 Individual impairment provision (continued)

The following table details individual impairment provision by sector of the Islamic Banking Window as at 31 December 2012:

The following table details individual impairment provision by sector of the Group and the Bank as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing 1,377

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 767

Community, social and personal services -

Total 2,144

RM'000

Primary agriculture 6,793

Mining and quarrying 24

Manufacturing 31,645

Electricity, gas, water -

Construction 13,426

Wholesale, retail trade, restaurant and hotels 16,301

Transport, storage and communication 654

Finance, insurance, real estate, and business services 8,270

Education, health, household & others 142,323

Community, social and personal services -

Total 219,436

RM'000

Primary agriculture 1,111

Mining and quarrying 317

Manufacturing 9,862

Electricity, gas, water 288

Construction 51

Wholesale, retail trade, restaurant and hotels 2,917

Transport, storage and communication 4,230

Finance, insurance, real estate, and business services 1,781

Education, health, household & others 336,507

Community, social and personal services -

Total 357,064

The following table details individual impairment provision by sector of the Islamic Banking Window as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing 1,380

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 739

Community, social and personal services -

Total 2,119

5.5.3 Collective impairment provision

The following table details collective impairment provision by sector of the Group and the Bank as at 31 December 2012:

P i l l a r 3 D i s c l o s u r e

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5. Credit Risk (continued) 5.5 Past due loans, individual impairment provision,

collective impairment provision, charges for

individual impairment provision and write offs by

sector (continued)

5.5.3 Collective impairment provision (continued)

The following table details collective impairment provision by sector of the Islamic Banking Window as at 31 December 2012:

The following table details collective impairment provision by sector of the Group and the Bank as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 543

Community, social and personal services -

Total 543

RM'000

Primary agriculture 277

Mining and quarrying 423

Manufacturing 17,412

Electricity, gas, water 2,244

Construction 179

Wholesale, retail trade, restaurant and hotels 4,021

Transport, storage and communication 336

Finance, insurance, real estate, and business services 17,235

Education, health, household & others 323,198

Community, social and personal services -

Total 365,325

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing 5,034

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services 12

Education, health, household & others 5,911

Community, social and personal services -

Total 10,957

The following table details collective impairment provision by sector of the Islamic Banking Window as at 31 December 2011:

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 6,764

Community, social and personal services -

Total 6,764

5.5.4 Charges for individual impairment

provision

The following table details charges for individual impairment provision by sector of the Group and the Bank as at 31 December 2012:

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5. Credit Risk (continued) 5.5 Past due loans, individual impairment provision,

collective impairment provision, charges for

individual impairment provision and write offs by

sector (continued)

5.5.4 Charges for individual impairment provision

(continued)

The following table details charges for individual impairment provision by sector of the Islamic Banking Window as at 31 December 2012:

The following table details charges for individual impairment provision by sector of the Group and the Bank as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 41

Community, social and personal services -

Total 41

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing 829

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication 602

Finance, insurance, real estate, and business services -

Education, health, household & others 15,457

Community, social and personal services -

Total 16,888

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing 1,748

Electricity, gas, water -

Construction 563

Wholesale, retail trade, restaurant and hotels 319

Transport, storage and communication 5

Finance, insurance, real estate, and business services 889

Education, health, household & others 1,322

Community, social and personal services -

Total 4,847

The following table details charges for individual impairment provision by sector of the Islamic Banking Window as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 40

Community, social and personal services -

Total 40

5.5.5 Write offs

The following table details write offs by sector of the Group and the Bank as at 31 December 2012:

P i l l a r 3 D i s c l o s u r e

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5. Credit Risk (continued) 5.5 Past due loans, individual impairment provision,

collective impairment provision, charges for

individual impairment provision and write offs by

sector (continued)

5.5.5 Write offs (continued)

The following table details write offs by sector of the Islamic Banking Window as at 31 December 2012:

The following table details write offs by sector of the Group and the Bank as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 15

Community, social and personal services -

Total 15

RM'000

Primary agriculture 261

Mining and quarrying -

Manufacturing 1,578

Electricity, gas, water -

Construction 3,764

Wholesale, retail trade, restaurant and hotels 518

Transport, storage and communication 8

Finance, insurance, real estate, and business services 618

Education, health, household & others 829

Community, social and personal services -

Total 7,577

The following table details write offs by sector of the Islamic Banking Window as at 31 December 2011 :

RM'000

Primary agriculture -

Mining and quarrying -

Manufacturing -

Electricity, gas, water -

Construction -

Wholesale, retail trade, restaurant and hotels -

Transport, storage and communication -

Finance, insurance, real estate, and business services -

Education, health, household & others 6

Community, social and personal services -

Total 6

P i l l a r 3 D i s c l o s u r e

CREDIT QUALITY GRADES AND ELIGIBLE ECAIs

Credit Quality Grade 1 2 3 4 5 6 Unrated

Reveleus CQG (Basel Credit Ratings)

Rating Source Rating Agencies AAA A+ BBB+ BB+ B+ CCC+ Unrated

CCC+

AAA CCC

AA+ A+ BBB+ BB+ B+ CCC-

Central Fitch Ratings AA A BBB BB B CC

AA- A- BBB- BB- B- C

D

Caa1

Aaa Caa2

Central Moody's Investor Services Aa1 A1 Baa1 Ba1 B1 Caa3

Aa2 A2 Baa2 Ba2 B2 Ca

Aa3 A3 Baa3 Ba3 B3 C

CCC+

CCC

Central Standard & Poor's AAA CCC-

AA+ A+ BBB+ BB+ B+ CC

AA A BBB BB B C

AA- A- BBB- BB- B- D

AAA C1

Local Rating Agency Aa1 A1 BBB1 BB1 B1 C2

Malaysia Berhad (RAM) Aa2 A2 BBB2 BB2 B2 C3

Aa3 A3 BBB3 BB3 B3 D

AAA

Local Malaysian Rating AA+ A+ BBB+ BB+ B+

Corporation Berhad (MARC) AA A BBB BB B C

AA- A- BBB- BB- B- D

5. Credit Risk (continued)

5.6 External Credit Assessment Institutions (ECAIs)

In terms of assessing Counterparty Credit Risk, Citibank Berhad uses ratings by global agencies Fitch Ratings, Moody’s Investor Services, and Standard & Poor’s. Citibank Berhad also uses ratings from local agencies Rating Agency Malaysia (RAM) Berhad and Malaysian Rating Corporation (MARC) Berhad.

The Bank uses a regional system called Asia Pacific Reveleus to calculate its risk weighted assets and this system receives its external ratings from a credit system that has a feed for external ratings from approved ECAIs. The mapping of external ratings to the respective counterparties and exposures is automated in the system.

The Bank uses issue-specific ratings for securities. In general, where no issue-specific rating exists, the credit rating assigned to the counterparty of a particular credit exposure is used. Where an exposure has neither an issue-specific rating nor counterparty rating, it is deemed as unrated.

The alignment of the alphanumerical scale of each recognized ECAIs used by Citibank Berhad is detailed in the table below:

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5. Credit Risk (continued)

The following tables show Citibank Berhad’s rated and unrated exposures according to ratings by ECAIs:

5.6.1 Ratings of Corporates by Approved ECAIs

December 2012

Group and Bank

Ratings of Corporates by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated S&P AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Total RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to C Unrated MARC AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated

Public Sector Entities (applicable for entities risk - - - - - - weighted based on their external ratings as corporates)

Insurance Cos, Securities Firms and Fund Managers 71 15,956 7,042 - 21,528 44,597 Corporates 6,546 263,945 235 - 5,851,517 6,122,243

Islamic Banking Window

Ratings of Corporates by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated S&P AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Total RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to C Unrated MARC AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated

Entities (applicable for entities risk - - - - - - weighted based on their external ratings as corporates)

Insurance Cos, Securities Firms and Fund Managers - - - - - -

Corporates - - - - - -

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5. Credit Risk (continued)

The following tables show Citibank Berhad’s rated and unrated exposures according to ratings by ECAIs: (continued)

5.6.1 Ratings of Corporates by Approved ECAIs (continued)

December 2011

Group and Bank

Ratings of Corporates by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated S&P AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Total RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to C Unrated MARC AAA to AA- A+ to A- BBB+ toBB- B+ to D Unrated

Public Sector Entities (applicable for entities risk - - - - - - weighted based on their external ratings as corporates)

Insurance Cos, Securities Firms and Fund Managers 4,262 12,369 - - 26,370 43,001 Corporates 20,169 24,103 4,211 - 6,461,548 6,510,031

Islamic Banking Window

Ratings of Corporates by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated S&P AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated Total RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to C Unrated MARC AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated

Public Sector Entities (applicable for entities risk - - - - - - weighted based on their external ratings as corporates)

Insurance Cos, Securities Firms and Fund Managers - - - - - -

Corporates - - - - 874 874

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5. Credit Risk (continued) 5.6.2 Short Term Ratings of Banking Institutions and Corporates by Approved ECAIs

This disclosure does not apply to Citibank Berhad as it uses long term ratings for all exposures.

5.6.3 Ratings of Sovereigns and Central Banks by Approved ECAIs

December 2012

Group and Bank

Ratings of Sovereign/Central Banks by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

Sovereigns/

Central Banks - 7,484,617 - - - - 7,484,617

Islamic Banking Window

Ratings of Sovereign/Central Banks by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

Sovereigns/

Central Banks - 146,947 - - - - 146,947

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5. Credit Risk (continued)

5.6.3 Ratings of Sovereigns and Central Banks by Approved ECAIs (continued)

December 2011

Group and Bank

Ratings of Sovereign/Central Banks by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

Sovereigns/

Central Banks - 9,050,336 - - - - 9,050,336

Islamic Banking Window

Ratings of Sovereign/Central Banks by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

Sovereigns/

Central Banks - 502,232 - - - - 502,232

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5. Credit Risk (continued)

5.6.4 Ratings of Banking Institutions by Approved ECAIs

December 2012

Group and Bank

Ratings of Banks, Development Financial Institutions and MDBs by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

RAM AAA to AA3 A to A3 BBB1+ to BB3 BB1 to B3 C1 to D Unrated

MARC AAA to AA- A+ to A- BBB+ to BB- BB+ to B- C+ to D Unrated

Banks, Development

Financial Institutions

and MDBs 1,327,558 6,902,723 49,512 501 38 9,228,616 17,508,948

Islamic Banking Window

Ratings of Banks, Development Financial Institutions and MDBs by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

RAM AAA to AA3 A to A3 BBB1+ to BB3 BB1 to B3 C1 to D Unrated

MARC AAA to AA- A+ to A- BBB+ to BB- BB+ to B- C+ to D Unrated

Banks, Development

Financial Institutions

and MDBs 45,084 - - - - 40,507 85,591

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5. Credit Risk (continued)

5.6.4 Ratings of Banking Institutions by Approved ECAIs (continued)

December 2011

Group and Bank

Ratings of Banks, Development Financial Institutions and MDBs by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

RAM AAA to AA3 A to A3 BBB1 to BB3 BB1 to B3 C1 to D Unrated

MARC AAA to AA- A+ to A- BBB+ to BB- BB+ to B- C+ to D Unrated

Banks, Development

Financial Institutions

and MDBs 1,117,837 11,192,600 270,715 632 - 666,160 13,247,944

Islamic Banking Window

Ratings of Banks, Development Financial Institutions and MDBs by Approved ECAIs (amounts in RM'000)

Moodys Aaa to Aa3 A1 to A3 Baa1 to Ba3 Ba1 to B3 Caa1 to C Unrated

S&P AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated

Exposure Class Fitch AAA to AA- A+ to A- BBB+ to BB- BB+ to B- CCC+ to D Unrated Total

RAM AAA to AA3 A to A3 BBB1 to BB3 BB1 to B3 C1 to D Unrated

MARC AAA to AA- A+ to A- BBB+ to BB- BB+ to B- C+ to D Unrated

Banks, Development

Financial Institutions

and MDBs - 16,721 12,000 - - - 28,721

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation Citibank Berhad uses credit risk mitigation

for the following exposure classes: 1) Corporates 2) Regulatory Retail

Citibank Berhad uses eligible guarantees and financial collaterals which are primarily cash and equity for credit risk mitigation. At present, the Bank does not make use of credit derivatives and on and off-balance sheet netting in its credit risk mitigation process.

For the purpose of calculating and assessing Net Credit RWA, the Bank takes into account eligible collaterals pledged by the customers with the Bank, that are primarily cash deposits and equities.

The Bank’s Credit Department is guided by its Credit Policy and Procedures for collateral valuation and management. It marks to market the CRM eligible financial collateral value on a daily/weekly/monthly (whichever is applicable) basis. Collateral valuations and re-valuations must be completed daily for SFTs, OTC and Margin Lending by the various Operations Units and Collateral/Margin Departments. Collateral haircuts are applied in a number of circumstances such as where there is a material positive correlation between the credit quality of the counterparty and the value of the collateral, or where there are currency or maturity mismatches. The Bank has appropriately sound and well managed systems and procedures for requesting and promptly receiving additional collateral for transactions whose terms require maintenance of collateral values at specified thresholds as documented in the respective legal agreements.

The Bank has procedures to ensure that appropriate information is available to support the collateral process and to make timely and accurate margin calls feed correctly into the Margin applications from upstream systems. These also provide a daily credit exposure report. There are also reports identifying counterparties that have not met their requirement for additional collateral to satisfy specified initial margin amount and variation margin thresholds. In addition, there is risk reporting of counterparty exposures at an individual and an aggregated level.

As the end of December 2012, the Bank’s gross credit exposure is RM 43,412 mil, of which RM 287 mil was offset by CRM. After applying required risk weights, the Bank’s Credit RWA is RM 20,634 mil. Given the immateriality of CRM, which is 1% of total credit exposure, asset class breakdowns are not provided and for the same reason, there is no CRM risk concentration exposure to the Bank.

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table shows the total exposure amounts after credit risk mitigation, for the financial year ended 31 December 2012:

December 2012

Group and Bank

Exposures after Netting and Credit RIsk Mitigation Insurance Total Sovereigns Banks, Cos, Higher Specialised Exposures Total Risk Risk & Central PSEs MDBs Securities Corporates Regulatory Residental Risk Other Financing/ Securitization Equity after Netting Weighted Weights Banks and FDIs Firms & Retail Mortgages Assets Assets Investment and Credit Assets Fund Risk Mitigation Managers RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 7,484,617 - - - - - - - 213,696 - - - 7,698,313 -

10% - - - - - - - - - - - - - -

20% - - 7,067,898 71 6,546 - - - 52,576 - - - 7,127,091 1,425,418

35% - - - - - - 7,834,557 - - - - - 7,834,557 2,742,095

50% - - 2,161,590 15,956 52,478 484 469,458 - - - - - 2,699,966 1,349,983

75% - - - - - 10,704,611 598,805 - - - - - 11,303,416 8,477,562

90% - - - - - - - - - - - - - -

100% - - 97,675 12,405 5,616,620 103,731 427,704 - 308,861 - - - 6,566,996 6,566,996

110% - - - - - - - - - - - - - -

125% - - - - - - - - - - - - - -

135% - - - - - - - - - - - - - -

150% - - 968 - 3,042 16,887 3,578 30,886 - - - - 55,361 83,042

270% - - - - - - - - - - - - - -

350% - - - - - - - - - - - - - -

400% - - - - - - - - - - - - - -

625% - - - - - - - - - - - - - -

937.5% - - - - - - - - - - - - - -

1250% - - - - - - - - - - - - - -

Total Exposures 7,484,617 - 9,328,131 28,432 5,678,686 10,825,713 9,334,102 30,886 575,133 - - - 43,285,700 20,645,096

Risk-Weighted Assets by Exposures - - 2,593,502 20,397 5,648,731 8,157,762 3,858,999 46,329 319,376 - - - 20,645,096 -

Average Risk Weight 0% 0% 28% 72% 99% 75% 41% 150% 56% 0% 0% 0% 48% 0%

Deduction from Capital Base - - - - - - - - - - - - - -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table details the total exposure amounts of the Islamic Banking Window after credit risk mitigation as at 31 December 2012:

December 2012

Islamic Banking Window Exposures after Netting and Credit RIsk Mitigation Insurance Total Sovereigns Banks, Cos, Higher Specialised Exposures Total Risk Risk & Central PSEs MDBs Securities Corporates Regulatory Residental Risk Other Financing/ Securitization Equity after Netting Weighted Weights Banks and FDIs Firms & Retail Mortgages Assets Assets Investment and Credit Assets Fund Risk Mitigation Managers RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 146,947 - - - - - - - 3,691 - - - 150,638 -

10% - - - - - - - - - - - - - -

20% - - 45,084 - - - - - - - - - 45,084 9,017

35% - - - - - - 375,864 - - - - - 375,864 131,552

50% - - 15,975 - - - 15,482 - - - - - 31,457 15,728

75% - - - - - - 3,642 - - - - - 3,642 2,731

90% - - - - - - - - - - - - - -

100% - - 18,000 - - - 5,953 - 6,366 - - - 30,319 30,319

110% - - - - - - - - - - - - - -

125% - - - - - - - - - - - - - -

135% - - - - - - - - - - - - - -

150% - - - - - - - - - - - - - -

270% - - - - - - - - - - - - - -

350% - - - - - - - - - - - - - -

400% - - - - - - - - - - - - - -

625% - - - - - - - - - - - - - -

937.5% - - - - - - - - - - - - - -

1250% - - - - - - - - - - - - - -

Total Exposures 146,947 - 79,059 - - 0 400,941 - 10,057 - - - 637,004 189,348

Risk-Weighted Assets by Exposures - - 35,004 - - 0 147,978 - 6,366 - - - 189,348

Average Risk Weight 0% 0% 44% 0% 0% 0% 37% 0% 63% 0% 0% 0% 30%

Deduction from Capital Base - - - - - - - - - - - - - -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table details the total exposure amounts of the Group and the Bank after credit risk mitigation as at 31 December 2011 :

December 2011

Group and Bank

Exposures after Netting and Credit RIsk Mitigation Insurance Total Sovereigns Banks, Cos, Higher Specialised Exposures Total Risk Risk & Central PSEs MDBs Securities Corporates Regulatory Residental Risk Other Financing/ Securitization Equity after Netting Weighted Weights Banks and FDIs Firms & Retail Mortgages Assets Assets Investment and Credit Assets Fund Risk Mitigation Managers RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 9,050,336 - - - - - - - 231,446 - - - 9,281,782 -

10% - - - - - - - - - - - - - -

20% - - 9,834,138 4,262 26,790 - - - 1,340 - - - 9,866,530 1,973,306

35% - - - - - - 7,720,334 - - - - - 7,720,334 2,702,117

50% - - 3,335,705 12,369 189,956 - 811,519 - - - - - 4,349,548 2,174,774

75% - - - - - 10,383,747 322,184 - - - - - 10,705,931 8,029,448

90% - - - - - - - - - - - - - -

100% - - 78,101 26,370 6,291,093 106,273 483,914 - 304,232 - - - 7,289,982 7,289,982

110% - - - - - - - - - - - - - -

125% - - - - - - - - - - - - - -

135% - - - - - - - - - - - - - -

150% - - - - 2,193 18,361 5,819 42,428 - - - - 68,801 103,202

270% - - - - - - - - - - - - - -

350% - - - - - - - - - - - - - -

400% - - - - - - - - - - - - - -

625% - - - - - - - - - - - - - -

937.5% - - - - - - - - - - - - - -

1250% - - - - - - - - - - - - - -

Total Exposures 9,050,336 - 13,247,944 43,001 6,510,031 10,508,381 9,343,770 42,428 537,019 - - - 49,282,910 22,272,830

Risk-Weighted Assets by Exposures - - 3,712,781 33,407 6,394,718 7,921,625 3,842,157 63,641 304,500 - - - 22,272,830

Average Risk Weight 0% 0% 28% 78% 98% 75% 41% 150% 57% 0% 0% 0% 45%

Deduction from Capital Base - - - - - - - - - - - -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table details the total exposure amounts of the Islamic Banking Window after credit risk mitigation as at 31 December 2011 :

December 2011

Islamic Banking Window Exposures after Netting and Credit RIsk Mitigation Insurance Total Sovereigns Banks, Cos, Higher Specialised Exposures Total Risk Risk & Central PSEs MDBs Securities Corporates Regulatory Residental Risk Other Financing/ Securitization Equity after Netting Weighted Weights Banks and FDIs Firms & Retail Mortgages Assets Assets Investment and Credit Assets Fund Risk Mitigation Managers RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 502,232 - - - - - - - 2,863 - - - 505,095 -

10% - - - - - - - - - - - - - -

20% - - 16,721 - - - - - - - - - 16,721 3,344

35% - - - - - - 377,760 - - - - - 377,760 132,216

50% - - - - - - 66,014 - - - - - 66,014 33,007

75% - - - - - - 4,437 - - - - - 4,437 3,328

90% - - - - - - - - - - - - - -

100% - - 12,000 - 874 - 5,844 - 8,350 - - - 27,068 27,068

110% - - - - - - - - - - - - - -

125% - - - - - - - - - - - - - -

135% - - - - - - - - - - - - - -

150% - - - - - - - 58 - - - - 58 88

270% - - - - - - - - - - - - - -

350% - - - - - - - - - - - - - -

400% - - - - - - - - - - - - - -

625% - - - - - - - - - - - - - -

937.5% - - - - - - - - - - - - - -

1250% - - - - - - - - - - - - - -

Total Exposures 502,232 - 28,721 - 874 - 454,056 58 11,213 - - - 997,153 199,050

Risk-Weighted Assets by Exposures - - 15,344 - 874 - 174,395 88 8,350 - - - 199,050

Average Risk Weight 0% 0% 53% 0% 100% 0% 38% 150% 74% 0% 0% 0% 20%

Deduction from Capital Base - - - - - - - - - - - -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table shows the total exposure which is covered by eligible guarantees and financial collaterals as at 31 December 2012:

December 2012

Group and Bank

Exposures Exposures Exposures

Exposures Covered by Covered by Covered by

Exposure Class before CRM Guarantees/Credit Eligible Financial Other Eligible

Derivatives Collateral Collateral

RM’000 RM’000 RM'000 RM'000

Credit Risk On-Balance Sheet Exposures

Sovereigns/Central Banks 7,455,677 - - -

Banks, Development Financial

Institutions and MDBs 7,763,938 - - -

Corporates, Insurance Cos

and Securities Firms 3,296,569 12,859 26,436 -

Regulatory Retail 7,139,914 - 184,828 -

Residential Mortgages 8,412,891 - - -

Higher Risk Assets 15,133 - - -

Other Assets 522,123 - - -

Defaulted Exposures 526,911 - - -

Total for On- Balance Sheet Exposures 35,133,155 12,859 211,264 -

Off-Balance Sheet Exposures

OTC Derivatives 1,621,018 6,698 - -

Off balance sheet exposures other

than OTC derivatives or credit derivatives 6,641,128 49,705 6,663 -

Defaulted Exposures 17,011 - - -

Total for Off- Balance Sheet Exposures 8,279,157 56,403 6,663 -

Total On and Off- Balance Sheet Exposures 43,412,312 69,262 217,927 -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table details the total exposure which is covered by eligible guarantees and financial collaterals of the Islamic Banking Window as at 31 December 2012:

December 2012

Islamic Banking Window

Exposures Exposures Exposures

Exposures Covered by Covered by Covered by

Exposure Class before CRM Guarantees/Credit Eligible Financial Other Eligible

Derivatives Collateral Collateral

RM’000 RM’000 RM'000 RM'000

Credit Risk On-Balance Sheet Exposures

Sovereigns/Central Banks 146,947 - - -

Banks, Development Financial

Institutions and MDBs 59,106 - - -

Corporates, Insurance Cos

and Securities Firms - - - -

Residential Mortgages 391,386 - - -

Other Assets 10,057 - - -

Defaulted Exposures 5,953 - - -

Total for On- Balance Sheet Exposures 613,449 - - -

Off-Balance Sheet Exposures

OTC Derivatives 19,953 - - -

Off balance sheet exposures other

than OTC derivatives or credit derivatives 3,603 - - -

Total for Off- Balance Sheet Exposures 23,556 - - -

Total On and Off- Balance Sheet Exposures 637,005 - - -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table shows the total exposure which is covered by eligible guarantees and financial collaterals as at 31 December 2011 :

December 2011

Group and Bank

Exposures Exposures Exposures

Exposures Covered by Covered by Covered by

Exposure Class before CRM Guarantees/Credit Eligible Financial Other Eligible

Derivatives Collateral Collateral

RM’000 RM’000 RM'000 RM'000

Credit Risk On-Balance Sheet Exposures

Sovereigns/Central Banks 9,030,212 - - -

Banks, Development Financial

Institutions and MDBs 11,391,310 - - -

Corporates, Insurance Cos

and Securities Firms 4,393,905 52,608 22,557 -

Regulatory Retail 6,988,379 - 199,007 -

Residential Mortgages 8,590,218 - - -

Higher Risk Assets 21,719 - - -

Other Assets 537,019 - - -

Defaulted Exposures 589,414 - - -

Total for On- Balance Sheet Exposures 41,542,176 52,608 221,565 -

Off-Balance Sheet Exposures

OTC Derivatives 1,914,337 23,812 - -

Off balance sheet exposures other

than OTC derivatives or credit derivatives 5,994,435 96,322 5,484 -

Defaulted Exposures 18,445 - - -

Total for Off- Balance Sheet Exposures 7,927,218 120,134 5,484 -

Total On and Off- Balance Sheet Exposures 49,469,393 172,742 227,049 -

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5. Credit Risk (continued)

5.7 Credit Risk Mitigation (continued)

The following table details the total exposure which is covered by eligible guarantees and financial collaterals for the Islamic Banking Window as at 31 December 2011 :

December 2011

Islamic Banking Window

Exposures Exposures Exposures

Exposures Covered by Covered by Covered by

Exposure Class before CRM Guarantees/Credit Eligible Financial Other Eligible

Derivatives Collateral Collateral

RM’000 RM’000 RM'000 RM'000

Credit Risk On-Balance Sheet Exposures

Sovereigns/Central Banks 502,232 - - -

Corporates 842 - - -

Residential Mortgages 443,796 - - -

Higher Risk Assets 58 - - -

Other Assets 11,213 - - -

Defaulted Exposures 5,843 - - -

Total for On- Balance Sheet Exposures 963,984 - - -

Off-Balance Sheet Exposures

OTC Derivatives 28,721 - - -

Off balance sheet exposures other

than OTC derivatives or credit derivatives 4,447 - - -

Defaulted Exposures 1 - - -

Total for Off- Balance Sheet Exposures 33,169 - - -

Total On and Off- Balance Sheet Exposures 997,153 - - -

5.8 Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR)

The risk that a counterparty will not fulfill its financial obligations is fundamental in the bank’s management of counterparty credit risk. The process for approving a counterparty’s risk exposure limits is two-fold: guided by the core credit policies, procedures and standards, and the experience and judgment of credit risk professionals. All corporate exposures are subject to these credit policies.

Credit Risk Principles, Policies and Procedures mandate a comprehensive analysis of the proposed credit exposure or transaction, review of external agency ratings, financial and corporate due diligence including support, management profile and qualitative factors.

The total facility amount, including direct, contingent and pre-settlement exposure, is aggregated and the credit officer reviews the approved tables within policy that appoints the appropriate level of authority that needs to review and approve.

The utilization of collateral is of critical importance in the mitigation of risk. In house legal counsel in consultation with approved external legal counsel will determine whether collateral documentation is enforceable and gives the Bank the right to liquidate or take possession in a timely manner in the event of the default, insolvency, bankruptcy or other defined credit event of the obligor.

As mentioned in Section 5.7, majority of the collateral received is in the form of cash deposit and equities while the rest relate to guarantees, so the impact of a credit grading downgrade will have minimal impact on the collateral valuation.

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5. Credit Risk (continued)

5.8 Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR) (continued)

The following table shows the Group and Bank’s off-balance sheet exposures and risk weighted assets for the financial year 2012:

Principal Positive Fair Value Credit Risk Item Description Amount of Derivative Equivalent Weighted Contracts Amount Assets

RM’000 RM’000 RM'000 RM'000

1 Direct credit substitutes 1,775,552 1,775,552 1,614,183 2 Transaction related contingent Items 459,766 229,883 193,184 3 Short term self liquidating trade related contingencies 223,238 44,648 34,165 4 Assets sold with recourse - - - 5 Forward asset purchases 233,379 233,379 168,747 6 Obligations under an on-going underwriting agreement - - - 7 Lending of banks’ securities or the posting of securities as collateral by banks, including instances where these arise out of repo-style transactions. (i.e. repurchase / reverse repurchase and securities lending / borrowing transactions.) - - - 8 Foreign exchange related contracts One year or less 24,502,920 163,765 450,794 279,071 Over one year to five years 4,118,926 78,616 417,698 231,938 Over five years 91,650 5,275 19,022 19,022 9 Interest / Profit rate related contracts One year or less 7,394,786 15,941 133,790 30,061 Over one year to five years 13,016,035 150,080 438,593 143,666 Over five years 1,276,778 44,630 123,369 51,781 10 Equity related contracts One year or less 82,608 - 7,192 1,438 Over one year to five years 130,311 5,604 13,794 7,484 Over five years - - - - 11 Gold and other precious metal contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 12 Other commodity contracts One year or less 56,113 1,855 7,466 5,479 Over one year to five years 60,497 2,064 9,299 4,712 Over five years - - - - 13 Credit derivative contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 14 OTC derivative transactions and credit derivative contracts subject to valid bilateral netting agreements - - - - 15 Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,074,639 537,319 399,334 16 Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 568,688 113,738 113,738 17 Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 4,861,934 - - 18 Unutilised credit card lines 18,618,102 3,723,620 2,795,626 19 Off-balance sheet items for securitisation exposures - - - 20 Off-balance sheet exposures due to early amortisation provisions - - -

Total 78,545,922 467,831 8,279,156 6,093,629

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5. Credit Risk (continued)

5.8 Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR) (continued)

The following table shows the Group and Bank’s off-balance sheet exposures and risk weighted assets for the Bank’s Islamic Window for the financial year 2012:

Principal Positive Fair Value Credit Risk Item Description Amount of Derivative Equivalent Weighted Contracts Amount Amount RM’000 RM’000 RM'000 RM'000

1 Direct credit substitutes - - - 2 Transaction related contingent Items - - - 3 Short term self liquidating trade related contingencies - - - 4 Assets sold with recourse - - - 5 Forward asset purchases - - - 6 Obligations under an on-going underwriting agreement - - - 7 Commitment to buy back Islamic securities under sales and buy back agreement transactions - - - 8 Foreign exchange related contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 9 Benchmark rate related contracts One year or less 100,000 - - - Over one year to five years 500,000 1,953 19,953 12,991 Over five years - - - - 10 Equity related contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 11 Gold and other precious metal contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 12 Other commodity contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 13 OTC derivative transactions and credit derivative contracts subject to valid bilateral netting agreements - - - - 14 Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 7,205 3,603 2,613 15 Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year - - - 16 Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness - - - 17 Unutilised credit card lines - - - 18 Off-balance sheet items for securitisation exposures - - -

Total 607,205 1,953 23,556 15,604

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5. Credit Risk (continued)

5.8 Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR) (continued)

The following table shows the Group and Bank’s off-balance sheet exposures and risk weighted assets for the financial year 2011 :

Principal Positive Fair Value Credit Risk Item Description Amount of Derivative Equivalent Weighted Contracts Amount Assets RM’000 RM’000 RM'000 RM'000 1 Direct credit substitutes 1,707,320 1,707,320 1,410,933 2 Transaction related contingent Items 399,731 199,865 158,071 3 Short term self liquidating trade related contingencies 148,283 29,657 22,854 4 Assets sold with recourse - - - 5 Forward asset purchases 12,220 12,220 6,110 6 Obligations under an on-going underwriting agreement - - - 7 Lending of banks’ securities or the posting of securities as collateral by banks, including instances where these arise out of repo-style transactions. (i.e. repurchase / reverse repurchase and securities lending / borrowing transactions.) - - - 8 Foreign exchange related contracts One year or less 24,279,480 297,746 568,900 387,454 Over one year to five years 4,180,829 202,986 532,616 322,054 Over five years 91,650 3,275 18,855 18,855 9 Interest / Profit rate related contracts One year or less 6,343,210 10,712 18,265 7,496 Over one year to five years 14,940,969 183,777 474,983 158,715 Over five years 2,342,535 103,713 248,393 110,993 10 Equity related contracts One year or less 54,639 1,299 4,577 1,648 Over one year to five years 123,596 6,594 16,482 8,593 Over five years - - - - 11 Gold and other precious metal contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 12 Other commodity contracts One year or less - 3,687 3,687 1,843 Over one year to five years 210,358 2,336 27,579 23,095 Over five years - - - - 13 Credit derivative contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 14 OTC derivative transactions and credit derivative contracts subject to valid bilateral netting agreements - - - - 15 Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 598,618 299,309 227,000 16 Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 990,462 198,092 198,092 17 Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 5,376,095 - - 18 Unutilised credit card lines 17,832,083 3,566,418 2,677,910 19 Off-balance sheet items for securitisation exposures - - - 20 Off-balance sheet exposures due to early amortisation provisions - - -

Total 78,632,078 816,124 7,927,218 5,741,716

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5. Credit Risk (continued)

5.8 Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR) (continued)

The following table shows the Islamic Banking Window’s off-balance sheet exposures and risk weighted assets for the financial year 2011 :

Principal Positive Fair Value Credit Risk Item Description Amount of Derivative Equivalent Weighted Contracts Amount Amount RM’000 RM’000 RM'000 RM'000

1 Direct credit substitutes - - - 2 Transaction related contingent Items - - - 3 Short term self liquidating trade related contingencies - - - 4 Assets sold with recourse - - - 5 Forward asset purchases - - - 6 Obligations under an on-going underwriting agreement - - - 7 Commitment to buy back Islamic securities under sales and buy back agreement transactions - - - 8 Foreign exchange related contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 9 Benchmark rate related contracts One year or less - - - - Over one year to five years 350,000 - 9,000 4,200 Over five years 300,000 1,721 19,721 11,144 10 Equity related contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 11 Gold and other precious metal contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 12 Other commodity contracts One year or less - - - - Over one year to five years - - - - Over five years - - - - 13 OTC derivative transactions and credit derivative contracts subject to valid bilateral netting agreements - - - - 14 Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 8,834 4,417 3,275 15 Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 158 32 32 16 Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness - - - 17 Unutilised credit card lines - - - 18 Off-balance sheet items for securitisation exposures - - -

Total 658,992 1,721 33,169 18,651

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6. Securitization

At present, Citibank Berhad does not have any exposures to securitization transactions. Hence, this disclosure is not applicable.

7. Market Risk

Market risk encompasses price risk and liquidity risk, both arising in the normal course of business operations in a global financial intermediary. At Citibank Berhad, market risk is managed through corporate-wide standards, business policies and procedures with the help of responsible personnel and committees delegated by the Board of Directors (for example, the Asset and Liability Committee and Market Risk Management).

The business is required to establish risk measures, limits and controls, clearly defining approved risk profiles within the parameters of the Bank's overall risk appetite.

The result of every risk assessment and review exercise is then presented to the Board of Directors for feedback and recommended action (if necessary).

7.1 Price Risk

Price risk is the risk associated to earnings arising from changes in interest rates, foreign exchange rates, equity and commodity prices (wherever relevant) and in their implied volatilities. Price risk arises in both non-trading portfolios and trading portfolios.

Interest rate risk in non-trading portfolios is inherent in many client-related activities, primarily lending and deposit taking from both individuals and corporations.

The risk arises due to factors including the timing of rate resetting and maturity period between assets and liabilities, change in the profile of assets and liabilities whereby the maturity period differs in response to alterations in market interest rates, changes in the form of the yield curve and modifications in the spread between various market rate indices.

Interest Rate Exposure (IRE) is used as a tool to monitor such interest rate risk and is calculated as the pre-tax earning impact of an instantaneous parallel increase or decrease in the yield curve.

IRE is supplemented with additional measurements including stress testing the

impact on earnings and equity for non-linear interest rate movements and analysis of portfolio duration, basis risk, spread risk, volatility risk and cost-to-close.

Price risk in trading portfolios is measured through a complementary set of tools such as factor sensitivities, value-at-risk and stress testing.

It is the responsibility of the independent market risk management to ensure that factor sensitivities are calculated, monitored and in most cases limited, for all relevant risks taken in a trading portfolio. In addition, stress testing is performed on trading portfolios on a regular basis to estimate the impact of extreme market movements.

7.2 Liquidity Risk

Liquidity risk can best be defined as risks that the Bank may not be able to meet in terms of a financial commitment to customers, creditors or investors, when due.

Under the Bank's internal Liquidity Risk Management policy, there are set standards for the measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk.

This is in addition to the requirements of BNM's New Liquidity Framework, which requires that a certain surplus liquidity position be maintained to meet pre-defined withdrawal amounts.

Management of liquidity is performed on a daily basis and is monitored by the Country Treasurer. Along with the Country Treasurer and the Corporate Treasurer, the Asset and Liability Committee (ALCO) undertakes the joint responsibility of overall liquidity risk management which covers establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and assumptions for periodic stress tests.

The Bank's liquidity management process includes:

• Establishing liquidity limit based on the size of the balance sheet, depth of the market, experience level of management, stability of the liabilities and liquidity of the assets under both business as usual scenario and stress scenarios;

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7. Market Risk (continued)

7.2 Liquidity Risk (continued)

• Daily maturity profiling of the Bank's assets and liabilities including behavioral analysis of major third party sources and uses of funds versus liquidity limits;

• Perform simulated liquidity stress testing periodically relative to significant changes in key funding sources, credit ratings, contingent uses of funding and market disruptions;

• Preparing annual funding and liquidity plan which includes analysis of the annual balance sheet as well as the economic and business conditions impacting the liquidity of the Bank;

• Use liquidity ratios to monitor the structural elements of the Bank's liquidity position;

• Review potential concentrations of funding; and

• Monitor market triggers which are internal and/or external market or economic factors that may cause a change to market liquidity.

8. Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems as well as from external events.

It includes reputation and franchise risks associated with the Bank's business practices or market conduct. It also includes the risk of failing to comply with applicable laws, regulations, and Citi policies.

The Citi Self Assessment and Operational Risk Framework includes the Citi Risk & Control Self-Assessment/Operational Risk Policy and Standards (“The Policy”), which clearly defines the Bank's approach to operational risk management.

The Operational Risk policy codifies the core governing principles for operational risk management and provides a consistent, value added framework for assessing, communicating operational risk and the overall effectiveness of the internal control environment across Citi.

The policy covers the following:

• The Policy focuses on Important Risks and Key Controls and not all risks and controls;

• The senior management is responsible for the oversight of the operational risk management framework, including fostering an organizational culture that places high priority on effective operational risk management and adherence to sound internal controls, including all applicable policies;

• The identification of key operational risks & controls to be done on a collaborative effort, with the input from business and functional areas;

• Key operational risks identified will be assessed on a regular basis through key risk indicators to monitor potential significant risk inherent in the business; and

• Operational losses are collected and reported to senior management.

The Bank’s management places a very high value on maintaining an effective control environment to mitigate operational risk. Therefore, a number of tools have been put in place to mitigate this risk. These tools range from conducting Risk & Control Self-Assessments (“RCSA”), operational loss reporting and several escalations mechanisms related to operational risk. It is the Business Risk, Compliance & Control Committee (“BRCC”) that governs operational risk within the Bank. The Committee meets on a quarterly basis and discusses operational risk related items according to a standard agenda. The Audit Committee is the independent governing body monitoring operational risk within the Bank.

The Bank uses Basic Indicator approach for calculating Operational Risk Capital.

9. Equities

This disclosure is not applicable as Citibank Berhad does not have any exposures to equities.

10. Interest Rate Risk/Rate of Return Risk in the Banking Book (IRR/ RORBB)

Interest rate risk in banking book arises from both interest bearing and non-interest bearing assets and liabilities. Interest rate risk is monitored on a daily basis within the approved limits framework set by the Regional Market Risk Management and considers changes of economic value per 1% interest rate increase for each currency as an index for internal control.

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10. Interest Rate Risk/Rate of Return Risk in the Banking Book (IRR/RORBB) (continued)

Assets and liabilities, which are contractual in nature, are monitored up to the re-pricing tenors. Consumer loans having long term re-pricing exposures are subjected to prepayment assumptions based on historical studies on customer early payout behavior. Non-interest bearing and perpetual products, e.g. current/saving accounts, credit cards, ready credit, are monitored for interest rate risk on core balances. The core balances are computed based on statistical regression analysis.

Potential interest rate risk in banking book is monitored through interest rate exposure at 100 bps parallel move in interest rates. Interest rate exposure at each major currency level for the banking book as below:

Impact on Positions as at 31 Dec 2012

+100bps Up Move (RM’000)

Increase/(Decline) Increase/(Decline)

in Earnings in Economic Value

Currency

MYR (32,448) (32,448)

SGD (45) (45)

USD (224) (224)

GBP +181 +181

JPY (17) (17)

AUD (5) (5)

EUR (5) (5)

Impact on Positions as at 31 Dec 2011

+100bps Up Move (RM’000)

Increase/(Decline) Increase/(Decline)

in Earnings in Economic Value

(73,681) (73,681)

(11) (11)

+6,210 +6,210

(13) (13)

(33) (33)

+56 +56

(16) (16)

11. Profit Sharing Investment Accounts and Shariah Governance

11.1 Profit Sharing Investment Accounts

This disclosure is not applicable as Citibank Berhad’s Islamic Banking Window does not have any Profit Sharing Investment Accounts.

11.2 Shariah Governance

This is disclosed in Citibank Berhad’s Annual Report, under the section “Shariah Committee”.

Citibank Berhad (297089M)

45th Floor, Menara Citibank

165 Jalan Ampang

50450 Kuala Lumpur

Tel : 03-2383 8585

Fax : 03-2383 6000

www.citibank.com.my