Financial Statement Half Year 2015 v3 - Al Rajhi Bank · FOR HALF YEAR ENDED 30 JUNE 2015 2nd...

AL RAJHI BANKING & INVESTMENT CORPORATION (MALAYSIA) BHD

(Incorporated in Malaysia)

Company No. 719057-X

1

INTERIM FINANCIAL STATEMENTS

FOR THE FINANCIAL HALF YEAR ENDED

30 JUNE 2015

Registered Office

Ground Floor, East Block

Wisma Selangor Dredging

142-B Jalan Ampang

50450 Kuala Lumpur




2

INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2015

Group and Bank Note Unaudited

30 June 2015

Audited 31 Dec 2014

RM’000 RM’000 ASSETS Cash and short-term funds 113,146 358,672 Deposits and placements of banks and other financial institutions 251,999 233,115 Hedging financial instruments 9 95 1,630 Securities held-for-trading 10 5,515 5,099 Securities held-to-maturity 11 1,468,854 1,426,084 Financing and advances 12 5,146,698 4,774,809 Other assets 38,743 32,758 Statutory deposits with Bank Negara Malaysia 232,564 216,364 Investment properties 105,000 105,000 Property and equipment 13,107 13,051 Intangible assets 28,867 31,706 Deferred tax assets 72,645 72,645

Total Assets 7,477,233 7,270,933

LIABILITIES AND SHAREHOLDER’S EQUITY Liabilities Deposits from customers 13 5,335,279 5,477,854 Deposits and placements of banks and other financial institutions 14 1,078,011 777,289 Hedging financial instruments 9 1,833 685 Bills and acceptances payable 20,001 12,551 Other liabilities 66,483 48,940 Subordinated Sukuk 251,233 232,883

Total Liabilities 6,752,840 6,550,202

Shareholder’s equity Share capital 1,000,000 1,000,000 Reserves (275,607) (279,269)

Total Shareholder’s Equity 724,393 720,731

Total Liabilities and Shareholder’s Equity 7,477,233 7,270,933

COMMITMENTS AND CONTINGENCIES 21 1,655,599 1,732,323

CAPITAL ADEQUACY 24 Core capital ratio 13.775% 13.832% Risk-weighted capital ratio 20.626% 20.167% The Interim Financial Statements should be read in conjunction with the audited financial statements of the Group and the Bank for the year ended 31 December 2014.




3

INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME

FOR HALF YEAR ENDED 30 JUNE 2015

2nd Quarter Ended Half Year Ended

Group and Bank Group and Bank Note 30 June

2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Revenue 93,663 88,375 186,279 170,692

Income derived from investment of depositors’ funds and others

15 84,277 80,573

169,153

155,326

Income derived from investment of shareholders’ funds

16

9,387

7,802

17,126

15,366

Allowance for impairment on financing 17 (1,971) (6,718) (5,986) (9,093) Other expenses directly attributable to the investment of the depositors’ funds

(9)

(2)

(13)

(4)

Total distributable income 91,684 81,655 180,280 161,595 Income attributable to depositors 18 (50,059) (43,922) (99,100) (82,849)

41,625 37,733 81,180 78,746

Personnel expenses (18,203) (18,876) (35,330) (37,814) Other overheads and expenditures (20,423) (19,520) (42,189) (40,049)

Profit before zakat and taxation 2,999 (663) 3,661 883 Zakat - - - - Taxation - - - -

Net profit for the financial period

2,999

(663)

3,661

883

Other comprehensive income: Items that may be reclassified to profit or loss in subsequent periods:

- Transfer to Wakalah Reserve - - - -

Total comprehensive income for the financial period

2,999

(663)

3,661

883

The Interim Financial Statements should be read in conjunction with the audited financial statements of the Group and the Bank for the year ended 31 December 2014.




4

INTERIM FINANCIAL STATEMENTS UNAUDITED STATEMENT OF CHANGES IN EQUITY

FOR HALF YEAR ENDED 30 JUNE 2015 Non-distributable Group and Bank

Share

Statutory

Securities

Accumulated

capital reserve available-for-sale Losses Total

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2015 1,000,000 3,975 - (283,244) 720,731 Total comprehensive income for the financial period - - - 3,661 3,661

At 30 June 2015

1,000,000 3,976 - (279,583) 724,393

Non-distributable Group and Bank

Share

Statutory

Securities

Accumulated

capital reserve available-for-sale Losses Total

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2014 1,000,000 1,574 - (285,645) 715,929 Total comprehensive income for the financial period - - - 883 883

At 30 June 2014 1,000,000 1,574 - (284,762) 716,812





5

INTERIM FINANCIAL STATEMENTS UNAUDITED CASH FLOW STATEMENT FOR HALF YEAR ENDED 30 JUNE 2015

Group and Bank 30 June

2015 30 June

2014 RM’000 RM’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit / (loss) before zakat and taxation 3,661 883 Adjustments for:

Depreciation of property and equipment 3,164 3,724 Amortisation of intangible assets 6,448 6,269 Allowance for impairment on financing 9,762 11,516 Bad debt on financing – Written off 46 18 Bad debt on financing – Recovered (3,823) - Unrealised loss on revaluation of securities held-for-trading/ investment properties

(144)

(161)

Unrealised gain/ (loss) from foreign exchange translations 4,280 1,549

Operating cashflow before workings capital changes

23,394 23,798

(Increase) / decrease in Operating Assets Deposits and placements with banks and other financial institutions (23,164) 1,687 Hedging financial instruments 1,535 - Financing and advances (377,874) (35,042) Other assets (5,985) (1,521) Statutory deposits with Bank Negara Malaysia (16,200) 10,804 Increase / (decrease) in Operating Liabilities Deposits from customers (142,575) 1,117,694 Deposits and placements of banks and other financial institutions 320,220 (1,014,320) Hedging financial instruments - - Bills and acceptances payable 7,450 (514) Other liabilities 17,273 (737)

Net cash generated (used in) / from operating activities (195,926) 101,849

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (3,220) (3,003) Purchase of intangible asset (3,609) (2,639) Securities held-to-trading - - Securities available-for-sale - - Securities held-to-maturity (42,771) (397,610)

Net cash used in investing activities (49,600) (403,252)





6

INTERIM FINANCIAL STATEMENTS UNAUDITED CASH FLOW STATEMENT

FOR HALF YEAR ENDED 30 JUNE 2015 (CONTINUED) Group and Bank 30 June

2015 30 June

2014 RM’000 RM’000 CASH FLOW FROM FINANCING ACTIVITIES Issuance of Subordinated Sukuk - -

Net cash generated from financing activities - -

NET DECREASE IN CASH AND SHORT-TERM FUNDS (245,526) (301,403) Cash and Cash Equivalents as at 1 January 358,672 455,387

CASH AND SHORT-TERM FUNDS AS AT 30 JUNE 2014 113,146 153,984





7

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 1. BASIS OF PREPARATION The unaudited condensed interim financial statements have been prepared in accordance with the

applicable requirements of MFRS 134: Interim Financial Reporting in Malaysia issued by Malaysian Accounting Standards Board (MASB), Financial Reporting for Islamic Banking Institution policy issued by Bank Negara Malaysia (BNM), the provisions of the Companies Act, 1965 and Shariah requirements.

The unaudited condensed interim financial statements should be read in conjunction with the audited

financial statements for the year ended 31 December 2014. The explanatory notes attached to the consolidated condensed interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the year ended 31 December 2014.

2. ACCOUNTING POLICIES The significant accounting policies and methods of computation applied in the unaudited condensed

interim financial statements are consistent with those adopted in the most recent audited financial statements for the year ended 31 December 2014, except for the adoption of the following:

Amendments to MFRS 119: Defined Benefits Plans: Employee Contributions Annual improvements to MFRSs 2010 - 2012 cycle Amendments to MFRS contained in the documents entitled “Annual Improvements 2011-2013 cycle” Amendments to MFRS 3: Business Combination Amendments to MFRS 8: Operating Segments Amendments to MFRS 13: Fair Value Measurement Amendments to MFRS 116: Property, Plant and Equipment Amendments to MFRS 124: Related party disclosures MFRS 138: Intangible Asset

The adoption of MFRSs above do not have any financial impact on the Group and the Bank as they mainly help to clarify the requirements of or provide further explanations to existing MFRSs.

The following MFRSs and IC Interpretations have been issued by the MASB and are not yet effective:

Effective for the financial period beginning on or after 1 January 2016: MFRS 11: Accounting for acquisitions in Joint Operations Amendments to MFRS 127: Equity Method in Separate Financial Statements Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Amendments to MFRSs contained in the document entitled “Annual Improvements to MFRSs 2012–2014 Cycle” MFRS 14: Regulatory Deferral Accounts Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants Effective for the financial period beginning on or after 1 January 2017: MFRS 15: Revenue from Contracts with Customers




8

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 2. ACCOUNTING POLICIES (CONTINUED)

Effective for the financial period beginning on or after 1 January 2018: MFRS 9: Financial Instruments (IFRS 9 Financial Instruments as issued by IASB in July 2014)

3. AUDITORS’ REPORT ON PRECEDING ANNUAL FINANCIAL STATEMENTS

The auditors’ report on the audited annual financial statements for the financial year ended 31 December 2014 was not qualified.

4. COMMENTS ABOUT SEASONAL OR CYCLICAL FACTORS The operations of the Group and the Bank were not materially affected by any seasonal or cyclical factors in the 2

nd Quarter Ended 30 June 2015.

5. UNUSUAL ITEMS DUE TO THEIR NATURE, SIZE OR INCIDENCE There were no unusual items affecting the assets, liabilities, equity, net income or cash flows of the Group and the Bank in the 2

nd Quarter Ended 30 June 2015.

6. CHANGES IN ESTIMATE There were no changes in estimates of amounts reported in prior financial years that have a material effect in the 2

nd Quarter Ended 30 June 2015..

7. DEBT AND EQUITY SECURITIES There were no issuances, cancellation, repurchases, resale or repayments of debt and equity securities in the 2

nd Quarter Ended 30 June 2015..

8. DIVIDENDS PAID There were no dividends paid during the 2

nd quarter and six months ended 30 June 2015.




9

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA

9. HEDGING FINANCIAL INSTRUMENTS

10. SECURITIES HELD-FOR-TRADING 11. SECURITIES HELD-TO-MATURITY

Group and Bank Unaudited

30 June 2015 Audited

31 Dec 2014 RM’000 RM’000 At amortised cost Unquoted :

Islamic government securities in Malaysia 1,418,099 1,418,459 Islamic private debt securities in Malaysia 50,755 7,625

1,468,854 1,426,084

Notional Fair Value Amount Assets Liabilities Group and Bank10 RM’000 RM’000 RM’000

30 June 2015 Foreign currency forward contracts 10,490 95 1,833

31 Dec 2014 Foreign currency forward contracts 38,398 1,630 685



31 Dec 2014 RM’000 RM’000 At fair value Quoted securities: Unit Trust 5,515 5,099




10

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 12. FINANCING AND ADVANCES

(a) Financing and advances analysed by types and Shariah contracts are as follows:

Unaudited 30 June 2015

Group and Bank Bai’ Bithaman Ajil

Qard

Total net financing and advances

RM’000 RM’000 RM’000 At amortised cost Term Financing:

Corporate financing 3,196,860 - 3,196,860 Personal financing 707,319 - 707,319 Home financing 1,182,767 - 1,182,767

SME financing 73,443 - 73,443 Vehicle financing 82,486 - 82,485 Shop-house financing 40,869 - 40,869 Charge cards - 1,827 1,827

5,283,744 1,827 5,285,571 Less: Allowance for impairment loss - Collective assessment (96,560) - Individual assessment (42,313)

Total net financing and advances 5,146,698

Audited 31 Dec 2014

Group and Bank

Bai’ Bithaman Ajil

Qard

Total net financing and advances

RM’000 RM’000 RM’000 At amortised cost Term Financing:

Corporate financing 2,762,340 - 2,762,340 Personal financing 749,463 - 749,463 Home financing 1,179,749 - 1,179,749

SME financing 86,297 - 86,297 Vehicle financing 86,142 - 86,142 Shop-house financing 38,443 - 38,443 Charge cards - 2,086 2,086

Gross financing and advances 4,902,434 2,086 4,904,520 Less: Allowance for impairment loss - Collective assessment (86,569) - Individual assessment (43,142)

Total net financing and advances 4,774,809




11

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 12. FINANCING AND ADVANCES (Continued)

(b) Financing and advances analysed by type of customers are as follows:



31 Dec 2014 RM’000 RM’000 Domestic non-bank financial institutions 34,669 163,384 Domestic business enterprise 1,571,454 1,148,660 Individuals 1,981,448 2,022,625 Foreign entities 1,698,000 1,569,851

5,285,571 4,904,520

(c) Financing and advances analysed by profit rate sensitivity are as follows: Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000 Fixed rate: Corporate financing 1,688,105 1,253,219 Personal financing 707,319 749,463 SME financing 73,443 86,297 Home financing 16,595 18,402 Vehicle financing 82,485 86,142 Charge card 1,827 2,086 Shop-house financing 1,010 1,074 Variable rate: Home financing 1,166,173 1,161,347 Shop-house financing 39,859 37,369

Corporate financing 1,508,755 1,509,121

5,285,571 4,904,520

(d) Financing and advances analysed by maturity structure are as follows:



31 Dec 2014 RM’000 RM’000 Due within three months 824,418 471,687 More than three months to one year 371,307 351,243 More than one year to five years 2,170,751 2,082,619 More than five years 1,919,095 1,998,971

5,285,571 4,904,520




12

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 12. FINANCING AND ADVANCES (Continued) (e) Financing and advances analysed by geographical distribution are as follows:



31 Dec 2014 RM’000 RM’000

Malaysia 3,752,741 3,367,791 Saudi Arabia 1,508,755 1,509,121 Other Countries 24,075 27,608

5,285,571 4,904,520

(f) Financing and advances analysed by economic purpose are as follows: Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000

Purchase of securities 1,609,060 1,571,317 Working capital 1,471,633 1,087,655 Purchase of property – residential property 1,193,754 1,191,375 Personal use 707,319 749,463 Purchase of commercial complex 131,657 131,256 Purchase of vehicles 82,485 86,142 Others 45,288 39,437 Purchase of shop-house 41,186 38,443 Charge card 1,827 2,086 Purchase of industrial buildings and factories 1,362 1,384 Construction - 5,962

5,285,571 4,904,520




13


(g) Financing and advances analysed by sectors are as follows: Group and Bank Unaudited

30 June 2015

Audited 31 Dec 2014

RM’000 RM’000 Household 2,015,585 2,055,803 Telecommunication 1,508,755 1,508,979 Wholesale & Retail trade 342,321 263,184 Manufacturing 405,390 316,478 Finance intermediation 392,879 203,516 Construction 325,171 303,623 Real estate, renting and business activities 187,697 130,586 Transportation 54,173 54,596 Electricity, gas and water supply 48,615 34,893 Agriculture, hunting and related service activities 3,115 3,484 Fishing, Operation of Fish Hatcheries, Fish Farms 1,361 1,384 Other business 554 827 Forestry, logging and related services activities 127 167

5,285,571 4,904,520

(h) Movements in impaired financing and advances Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000 At 1 January 75,098 101,374 Impaired during the financial period / year 42,529 121,621 Reclassified as non impaired (11,758) (39,002) Recoveries (33,346) (79,119) Write-off (601) (29,776)

71,922 75,098

Ratio of net impaired financing and advances to gross financing and advances less individual impairment allowances 0.56% 0.66% Included in amount classified as impaired during the financial period is profit accrued on impaired financing of RM30,750,031 (2014: RM101,350,235).




14


(i) Movements in the allowances for impaired financing and advances



31 Dec 2014 RM’000 RM’000 Collective assessment allowance At 1 January 86,569 96,781 Allowance made during the financial period (Note 17(b)) 9,991 16,135 Amount written off - (26,347)

Closing balance 96,560 86,569

As % of total gross financing and advances less individual impairment allowances

1.84% 1.78%

Individual assessment allowance At 1 January 43,142 44,041 Allowance made during the financial period (Note 17(a)) 285 3,247 Amount recovered during the financial period (Note 17(a)) (513) (717) Amount written off (601) (3,429)





15


(j) Impaired financing analysed by geographical distribution are as follows:



31 Dec 2014 RM’000 RM’000 Malaysia 71,922 75,098

71,922 75,098

(k) Impaired financing analysed by economic purpose are as follows:



31 Dec 2014 RM’000 RM’000 Working capital 41,217 41,553 Purchase of properties - residential 12,291 17,945 Personal use 16,230 14,086 Purchase of transport vehicles 1,109 476 Purchase of shophouse 819 820 Charge card 256 218

71,922 75,098

(l) Impaired financing analysed by sector are as follows:



31 Dec 2014 RM’000 RM’000 Household 30,705 33,545 Manufacturing 36,223 36,223 Wholesale & retail trade 4,869 5,205 Real estate, renting and business activities 71 71 Construction 54 54

71,922 75,098




16

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 13. DEPOSITS FROM CUSTOMERS

(i) By type of deposit Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000 Savings deposits Qard 50,352 52,150 Mudarabah 122,979 127,400 Demand deposits Qard 404,052 456,456 Mudarabah 636,699 473,975 Term deposit Commodity Murabahah 2,806,459 2,449,228 General investment account Mudarabah 39,880 53,922 Wakalah 1,274,084 1,864,015

Other deposits 774 708

5,335,279 5,477,854

(ii) By type of customer Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000 Business enterprises 2,160,718 1,573,634 Government and statutory bodies 719,312 1,280,875 Individuals 309,756 293,589 Others 2,145,495 2,329,756

5,335,279 5,477,854

(iii) By maturity structure Group and Bank Unaudited


31 Dec 2014 RM’000 RM’000 Due within three months 3,968,093 4,100,609 More than three months to one year 1,359,414 1,377,245 More than one year to five years 3,627

4,145 - - More than five years

5,335,279 5,477,854




17

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 14. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS



31 Dec 2014 RM’000 RM’000 Non-Mudharabah Funds Licensed Islamic banks 511,719 446,169 Licensed financial institutions 566,292 331,120

1,078,011 777,289

15. INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS

2

nd Quarter Ended Half Year Ended

Group and Bank Group and Bank

30 June 2015

30 June 2014

30 June 2015

30 June 2014

RM’000 RM’000 RM’000 RM’000 Income derived from investment of: (i) General investment deposits 409 440 904 1,316 (ii) Other deposits 83,868 80,133 168,249 154,010

84,277 80,573 169,153 155,326

(i) Income derived from investment of general investment deposits


Group and Bank Group and Bank 30 June

2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Finance income and hibah Financing and advances 405 435 894 1,291 Money at call and deposit with financial institutions

4

5

10

25

Total finance income and hibah 409 440 904 1,316




18

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 15. INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS (Continued)

(ii) Income derived from investment of other deposits

16. INCOME DERIVED FROM INVESTMENT OF SHAREHOLDERS’ FUNDS



2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Finance income and hibah Money at call and deposit with financial

institutions

112

145

225

378 Other operating income

- Gain from foreign exchange translations 1,866 1,936 4,010 4,269 - Rental Income 1,500 937 3,001 2,021 - Realised gain on gold 356 471 943 1,377 - Unrealised gain/(loss) on revaluation of

securities held-for-trading

(230)

161

145

161 - Others 241 93 317 187 Other income

- Service charges 1,806 1,637 3,749 3,584 - Commission received 3,736 2,422 4,736 3,389

9,387 7,802 17,126 15,366



2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Finance income and hibah Financing and advances 68,668 65,204 138,434 127,724 Securities held-to-maturity 14,530 13,883 28,408 23,794 Money at call and deposit with financial institutions 669 880 1,351 2,126 Accretion of discount 1 166 56 366

83,868 80,133 168,249 154,010




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EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 17. ALLOWANCE FOR IMPAIRMENT ON FINANCING

2



2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Allowance for impaired financing and advances: (a) Individual assessment allowance

- provided during the financial quarter - 1,181 285 3,173 - written back (331) (730) (513) (730)

(b) Collective assessment allowance

- provided during the financial quarter 4,207 7,371 9,991 9,074 (c) Bad debts on financing

- recovered (1,951) (1,121) (3,823) (2,441) - written off 46 17 46 17

1,971 6,718 5,986 9,093

18. INCOME ATTRIBUTABLE TO DEPOSITORS

2



2015 30 June

2014 30 June

2015 30 June

2014 RM’000 RM’000 RM’000 RM’000 Deposits from customers - Mudharabah 1,899 1,901 4,033 3,770 - Non-Mudharabah 25,692 28,528 50,321 54,259 - Wakalah 16,636 9,005 33,546 17,065 Deposits and placements of banks and other financial institutions - Non-Mudharabah 5,832 4,488 11,200 7,755

50,059 43,922 99,100 82,849




20

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 19. SUBSEQUENT EVENTS There were no material events subsequent to the end of the reporting date that require disclosure or

adjustments to the unaudited interim financial statements. 20. CHANGES IN THE COMPOSITION OF THE GROUP There were no changes in the composition of the Group since the last audited financial statements as

at 31 December 2014. 21. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Group made various commitments and incurred certain

contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions.

The commitments and contingencies and the related risk-weighted exposures of the Group as at the end of financial year are as follows:

Unaudited


31 Dec 2014

Principal

amount

Credit equivalent

amount

Risk weighted

amount

Principal

amount

Credit equivalent

amount

Risk weighted

amount Group/Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Direct credit substitute - - - - - - Transaction-related contingent

items 480,076

240,038 188,300 271,985 135,993 111,340 Trade-related contingencies 24,745 4,949 4,755 28,481 5,696 5,112 Irrevocable commitments to

extend credit:

-Maturity not exceeding one year 713,756 142,751 142,643 891,517 178,303 178,025 -Maturity exceeding one year 420,650 207,041 185,820 481,761 237,443 212,299 Foreign exchange-related

contracts

5,887

-

-

20,974

-

- Miscellaneous 10,485 119 119 37,605 495 495

1,655,599 594,898 521,637 1,732,323 557,930 507,271




21


22. CREDIT EXPOSURE ARISING FROM CREDIT TRANSACTIONS WITH CONNECTED PARTIES


Audited 31 Dec 2014

Outstanding credit exposures with connected parties (RM’000) 7,710 6,460

Percentage of outstanding credit exposures to connected parties as proportion of capital base

0.8%

0.7%

Percentage of outstanding credit exposures to connected parties as proportion of total outstanding credit exposures

0.1%

0.1%

Percentage of outstanding credit expenses with connected parties which is non-performing or in default

0.0%

0.0%

The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with para 9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties for Islamic Banks.




22

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 23. FINANCIAL RISK MANAGEMENT

(a) Overview

The Group’s risk management practice seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its key areas of credit, market, liquidity and operational risks.

(b) Financial instrument by category

The table below provide an analysis of financial instruments categorised as follows:

i. Financing and receivables (FR); ii. Securities held-to-maturity (HTM);

iii. Securities held-for-trading (HFT); iv. Securities available-for-sale (AFS); v. Other financial liabilities (Other FL).

Carrying

amount

FR

HFT

AFS

HTM

Other FL Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Unaudited 30 June2015

Financial Assets Cash and short term funds 113,146 113,146 - - - - Deposit and placement with banks and others financial institutions

251,999

251,999

-

-

-

- Hedging financial

instrument

95

95

-

-

-

- Financing and advances 5,146,698 5,146,698 - - - - Securities held-to-maturity 1,468,854 - - - 1,468,854 - Securities held-for-trading 5,515 - 5,515 - - - Other assets 38,743 38,743 - - - -

7,025,050 5,550,681 5,515 - 1,468,854 -

Financial Liabilities Deposits from customers 5,335,279 - - - - 5,335,279 Deposits and placements of

banks and other financial institutions 1,078,011 -

-

- - 1,078,011 Hedging financial instrument 1,833 - - - - 1,833 Bills and acceptances payable

20,001

-

-

-

-

20,001

Other liabilities 66,482 - - - - 66,482 Subordinated Sukuk 251,233 251,233

6,752,839 - - - - 6,752,839




23

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 23. FINANCIAL RISK MANAGEMENT (Continued)

(b) Financial Instrument by category (Continued)

Carrying amount

FR

HFT

AFS

HTM

Other

FL Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Audited 31 Dec 2014

Financial Assets Cash and short term funds 358,672 358,672 - - - - Deposits and placements with banks and other financial institutions

233,115

233,115

-

-

-

- Hedging financial instrument 1,630 1,630 - - - - Financing and advances 4,774,809 4,774,809 - - - - Securities held-to-maturity 1,426,084 - - - 1,426,084 - Securities held-for-trading 5,099 - 5,099 - - - Securities available-for-sale - - Other assets 32,758 32,758 - - - -

6,832,167 5,400,984 5,099 - 1,426,084 -

Financial Liabilities Deposits from customers 5,477,8584 - - - - 5,477,854 Deposits and placements of

banks and other financial institutions 777,289 -

-

- - 777,289 Hedging financial instrument 685 685 Bills and acceptances payable

12,551

-

-

-

-

12,551

Other liabilities 48,940 - - - - 48,940 Subordinated Sukuk 232,883 232,883

6,550,202 - - - - 6,550,202

(c) Credit Risk Management

(i) Credit Risk management overview

Credit risk is the potential loss of revenue as a result of defaults by borrowers or counterparties through the Group’s and the Bank’s lending, hedging, trading and investing activities. The primary exposure to credit risk arises through its financing and advances as well as financial transactions with counterparties including interbank money market activities and debt securities. The amount of credit exposure is represented by the carrying amounts of the assets in the balance sheet.

The management of credit risk is governed by credit policies and guidelines documenting the lending standards, discretionary power for financing approval, credit risk rating, collateral and valuation, review, and restructuring of problematic and delinquent financing. The management of counterparties is guided by counterparty limit, counterparty ratings, tenure and types of permissible transactions and these are subject to regular review.




24


(c) Credit Risk Management (Continued)

(ii) Maximum exposure to credit risk

The maximum exposure to credit risk at the statement of financial position is the amount on the statement of financial position as well as off balance sheet financial instruments, without taking into account of any collateral held or credit enhancements. For contingent liabilities, the maximum exposure to credit risk is the maximum that the Bank would have to pay if the obligations of the instruments issued are called upon. For credit commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers. The table below shows the maximum exposure to credit risk of the Bank:



31 Dec 2014 RM’000 RM’000 Credit risk exposure relating to on-balance sheet assets: Cash and short term funds 113,146 358,672 Deposits and placements with banks and other financial institution

251,999 233,115

Hedging financial instruments 95 1,630 Securities held-for-trading 5,515 5,099 Securities held-to-maturity 1,468,854 1,426,084 Financing and advances 5,146,698 4,774,809 Other assets 16,863 7,961

7,003,169 6,807,370 Credit risk exposure of off-balance sheet items:

Commitment and contingencies 1,655,599 1,732,323

Total maximum credit risk exposure 8,658,768 8,539,693

The financial effect of collateral (quantification of the extent to which collateral and other credit enhancements mitigate credit risk) held for financing and advances as at 30 June 2015 for the Bank is 30.9% (31 Dec 2014: 35.1%). The financial effect of collateral held for the other financial assets is not significant.




25



(iii) Credit Risk Concentration

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic and other conditions. The Group analysed the credit risk concentration by industry segments and geographic in which the customer is engaged.

(a) Credit Risk - Credit Risk Concentration - By Industry Analysis

Government and Central

Banks Financial Services

Transport, Tele-

communication, Education and

Other Business Services

Agricultural, Manufacturing,

Utility, Research &

Development, Wholesale & Retail Trade,

Hotel and Restaurant

Construction & Real Estate

Residential Mortgages

Motor Vehicle

Financing

Other Consumer Financing Total

Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Unaudited 30 June 2015 Short term funds - 113,146 - - - - - - 113,146 Deposits and placements with banks and other financial institutions

-

251,999

-

-

-

-

-

-

251,999

Hedging financial

instrument - - 95 - - - - - 95

Securities held-for-trading - 5,515 - - - - - - 5,515 Securities held-to-maturity 1,014,921 403,178 - 50,754 - - - - 1,468,854 Net financing and advances 392,879 1,563,311 395,539 512,868 1,182,767 82,485 1,016,849 5,146,698 Other assets - - 16,863 - - - - - 16,863

Total 1,014,921 1,166,717 1,580,268 446,293 512,868 1,182,767 82,485 1,016,849 7,003,169

Audited 31 Dec 2014 Short term funds 36 358,636 - - - - - - 358,672 Deposits and placements with banks and other financial institutions

-

233,115

-

-

-

-

-

-

233,115 Hedging financial

instrument - 440 1,190 - - - - - 1,630

Securities held-for-trading - 5,099 - - - - - - 5,099 Securities held-to-maturity 1,015,168 403,290 - 7,626 - - - - 1,426,084 Net financing and advances - 230,516 1,564,401 619,590 434,209 1,164,007 84,934 677,152 4,774,809 Other assets - - 7,961 - - - - - 7,961

Total 1,015,204 1,231,096 1,573,552 627,216 434,209 1,164,007 84,934 677,152 6,807,370




26



(iii) Credit Risk Concentration (Continued)

(b) Credit Risk - Credit Risk Concentration - By Geographical Analysis

Group and Bank Malaysia Saudi Arabia

Other Countries Total

RM’000 RM’000 RM’000 RM’000 Unaudited 30 June 2015

Cash and short term funds 102,425 1,796 8,925 113,146 Deposits and placements with banks and other financial institution

-

-

251,999 251,999

Hedging financial instrument 95 - - 95 Securities held-for-trading 5,515 - - 5,515 Securities held-to-maturity 1,468,854 - - 1,468,854 Net financing and advances 3,613,867 1,508,755 24,075 5,146,697 Statutory deposits with BNM 232,564 - - 232,564 Other assets 16,863 - - 16,863

Total 5,440,182 1,510,551 285,000 7,235,734

Audited 31 Dec 2014

Cash and short term funds 184,878 127,359 46,435 358,672 Deposits and placements with banks and other financial institution

- - 233,115 233,115

Hedging financial instrument 1,630 - - 1,630 Securities held-for-trading 5,099 - - 5,099 Securities available-for-sale - - - - Securities held-to-maturity 1,426,084 - - 1,426,084 Net financing and advances 3,238,080 1,509,121 27,608 4,774,809 Statutory deposits with BNM 216,364 - - 216,364 Other assets 7,961 -- 7,961

Total 5,080,096 1,636,480 307,158 7,023,734

(iv) Collateral

The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows: • for personal housing financing : mortgages over residential properties • for commercial property financing : charges over the properties being financed • for vehicle financing : charges over the vehicles financed • for other financing : charges over business assets such as premises, inventories, trade receivables or deposits

There are no assets held by the Bank as at 30 June 2014 as a result of taking possession of collaterals held as securities.

Repossessed properties are made available for sale in an orderly fashion, with the proceeds used to reduced or repay the outstanding indebtedness. The Bank generally does not occupy the premises repossessed for its business use.




27



(v) Credit quality of financial assets

For the purposes of disclosure relating to MFRS 7, all financial assets are categorized into the following:- - neither past due nor impaired - past due but not impaired - impaired The Bank assesses credit quality of financing and advances using internal rating techniques tailored to the various categories of products and counterparties. These techniques have been developed internally and combine statistical analysis with credit officers’ judgment.

Internal ratings Description - Investment grade Strong(est) credit quality which associated with general

standards of investment grade as per defined by international rating agency such as Standard and Poor’s (S&P), Moody’s, Fitch, and Japan Credit Rating Agency (JCR).

- Non-investment grade Weaker credit quality which associated with general

standards of non-investment grade as per defined by international rating agency such as Standard and Poor’s (S&P), Moody’s, Fitch, and Japan Credit Rating Agency (JCR).

The credit quality of financial assets other than financing and advances are determined based on the ratings of counterparties as defined by Moody’s or equivalent ratings of other international rating agencies as defined below:

- AAA to AA3 - A1 to A3 - Baa1 to Baa3 - P1 to P3 - Non rated




28


(c) Credit Risk Management (Continued) (vi) Credit quality of financial assets – gross financing and advances



31 Dec 2014 RM’000 RM’000 Neither past due nor impaired 4,873,191 4,610,415 Past due but not impaired 340,459 219,007 Impaired 71,922 75,098

Gross financing and advances 5,285,571 4,904,520 Less: Collective impairment allowance (96,560) (86,569)

Individual impairment allowance (42,313) (43,142)

Net financing and advances 5,146,698 4,774,809

The ageing of financing and advances as at the end of the financial period / year are as follows:



31 Dec 2014 RM’000 RM’000 Current 4,873,191 4,610,415 Past due 1-30 days 273,699 146,799 Past due 31-90 days 66,760 72,208 Past due more than 90 days 71,922 75,098

5,285,571 4,904,520 Collective impairment (96,560) (86,569) Individual impairments (42,313) (43,142)

Net financing and advances 5,146,698 4,774,809




29



(vii) Credit quality of financial assets – securities portfolio and other financial assets

Short term funds

Deposits and placements of

banks and other fin.

institutions

Hedging financial

instruments

Financial assets/

investments portfolios

Statutory deposit with

BNM

Other assets

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Unaudited 30 June 2015

Neither past due nor impaired

113,146 251,999 95 1,474,369 232,564 17,853

113,146 251,999 95 1,474,369 232,564 17,853

Audited 31 Dec 2014

Neither past due nor impaired

358,672 233,115 1,630 1,431,184 216,364 7,961

358,672 233,115 1,630 1,431,184 216,364 7,961

(a) Analysed by rating agency designation are as follows:-

Short term funds

Deposits and placements of

banks and other fin.

institutions

Hedging financial

instruments

Financial assets/


Statutory deposit with

BNM

Other assets

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Unaudited 30 June 2015

AAA to A- 33,669 - - 1,418,099 - - BBB+ to B- 38,738 - - - - - Unrated 40,739 251,999 95 56,270 232,564 17,853

113,146 251,999 95 1,474,369 232,564 17,853

Audited 31 Dec 2014

AAA to A- 285,189 - - 1,418,459 - - BBB+ to B- 36,391 - - - - - Unrated 37,092 233,115 1,630 12,725 216,364 7,961

358,672 233,115 1,630 1,431,184 216,364 7,961




30



(viii) Credit quality of impaired financial assets

(a) Impaired financial assets analysed by geographic purpose are as follows:-

Financing & advances

Financial assets /


Total RM’000 RM’000 RM’000 Unaudited 30 June 2015

Malaysia 71,922 - 71,922

71,922 - 71,922

Audited 31 Dec 2014

Malaysia 75,098 - 75,098

75,098 - 75,098




31



(viii) Credit quality of impaired financial assets (Continued)

(b) Impaired financial assets analysed by industry sector are as follows:-

Financing & advances

Financial assets/


Total Unaudited 30 June 2015

RM’000 RM’000 RM’000

Household 36,223 - 36,223 Manufacturing 30,705 - 30,705 Wholesale & retail trade 4,869 - 4,869 Other business - - - Real estate, renting and business

activities

71

-

71 Construction 54 - 54

71,922 - 71,922

Audited 31 Dec 2014

Household 33,545 - 33,545 Manufacturing 36,223 - 36,223 Wholesale & retail trade 5,205 - 5,205 Other business - - - Real estate, renting and business

activities

71

-

71 Construction 54 - 54

75,098 - 75,098

(ix) Reconciliation of allowance

The movements in the allowance for impairment losses of financing and advances during the financial period / year are as follows:

Unaudited


31 Dec 2014 RM’000 RM’000 At 1 January 129,711 140,822 Impairment loss recognised - 2,624 Adjustment on impairment loss recognised during the year

10,276 16,758

Impairment loss reversed (513) (717) Impairment written-off (601) (29,776)





32


(d) Market Risk Management

Market risk sensitivity assessment is based on the changes in key variables; such as profit rates while all other variables remain unchanged. The sensitivity factors used are assumptions based on parallel shifts in the key variables and the impact on the re-priced mismatches of assets and liabilities position of the bank.

(i) Profit rate sensitivity analysis



31 Dec 2014

Impact on profit after

tax

Impact on Equity


tax

Impact on Equity

RM’000 RM’000 RM’000 RM’000 + 100 basis points (6,621) (98,018) (8,392) (104,179) - 100 basis points 6,621 98,018 8,392 104,179

(ii) Foreign currency sensitivity analysis

The foreign currency sensitivity represents the effect of the appreciation or depreciation of the foreign currency rates on the consolidated currency position, while other variables remain constant.



31 Dec 2014


tax

Impact on Equity


tax

Impact on Equity

RM’000 RM’000 RM’000 RM’000 + 5% 275 275 157 157 - 5% (275) (275) (157) (157)




33


(d) Market Risk Management

(iii) Profit Rate Risk

The Group is exposed to various risks associated with the effects of fluctuations in the prevailing levels of yield/profit rate on its financial position. The rate of return risk is the potential impact of market factors affecting rates on returns in comparison with the expected rates of return for investment account holders. Yield/profit rate is monitored and managed by the ALCO to protect the income of its operations. The assets and liabilities at carrying amount are categorised by the earlier of the next contractual repricing dates and maturity dates as follows:-

Non-trading book Group and Bank Unaudited 30 June 2015

Up to 1

month >1-3

months

>3-12

months

1-5

years

> 5

years

Non- profit

sensitive

Trading

book

Total

Effective

profit rate RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % Assets Cash and short term funds 60,296 - - - - 52,850 - 113,146 0.61 Hedging financial instruments - - - - - - 95 95 - Deposits and placements with banks and

other financial institutions - 25,123 226,111 - - 766 - 251,999 0.82

Securities held-for-trading - - - - - - 5,515 5,515 -

Securities held-to-maturity - - - - 1,449,154 19,700 - 1,468,854 3.99 Financing and advances - performing 1,610,054 355,488 367,706 2,155,492 700,393 24,517 - 5,213,650 5.52

- non performing(1)

- - - - - (66,951) - (66,951) Statutory deposits with Bank Negara Malaysia - - - - - 232,564 - 232,564 Other assets

(2) - - - - - 258,362 - 258,362

1,670,350 380,611 593,617 2,155,492 2,149,547 521,808 5,610 7,477,233




34


(d) Market Risk Management (Continued)

(iii) Profit Rate Risk (Continued) Non-trading book Group and Bank Unaudited 30 June 2015

Up to 1

month >1-3

months

>3-12

months

1-5

years

> 5

years

Non- profit

sensitive

Trading

book

Total

Effective

profit rate RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities Deposits from customers 1,810,569 1,102,279 1,344,347 7,772 576,678 493,633 - 5,335,279 3.45 Deposits and placements with banks and other financial institutions

510,267

380,000

181,893

-

-

5,851

-

1,078,011 3.82

Hedging financial instruments - - - - - - 1,833 1,833 - Bills and acceptance payable - - - - - 20,001 - 20,001 Other liabilities -

- - -

- -

- -

- 251,233

66,483 -

- -

66,483 251,233

Subordinated Sukuk

Total liabilities 2,320,837 1,482,279 1,526,240 7,772 827,911 585,968 1,833 6,752,840

Shareholders’ fund - - - - - 724,393 - 724,393

Total liabilities and shareholders’ funds 2,320,837 1,482,279 1,526,240 7,772 827,911 1,310,361 1,833 7,477,233

On-balance sheet profit sensitivity gap (650,487) (1,101,669) (932,423) 2,147,720 1,321,635 (788,553) 3,777

Off-balance sheet profits sensitivity gap - - - - - 1,655,599 - Total profit sensitivity gap (650,487) (1,101,669) (932,423) 2,147,720 1,321,635 867,046 3,777

Note: (1) This is arrived at after deducting the collective and individual impairment allowance from the outstanding gross non performing financing. (2) Other assets include property and equipment, deferred tax assets and statutory deposits with Bank Negara Malaysia.




35



(iii) Profit Rate Risk (Continued)

Non-trading book Group and Bank Unaudited 31 Dec 2014

Up to 1

month >1-3

months

>3-12

months

1-5

years

> 5

years

Non- profit

sensitive

Trading

book

Total

Effective

profit rate RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 % Assets Cash and short term funds 305,305 - - - - 53,367 - 358,672 1.09 Hedging financial instruments - - - - - - 1,630 1,630 - Deposits and placements with other FI - 130,410 102,466 - - 239 - 233,115 1.10 Securities held-for-trading - - - - - - 5,099 5,099 -

Securities held-to-maturity - 7,626 - - 1,399,198 19,260 - 1,426,084 3.98 Financing and advances - performing 1,405,403 199,766 1,856,686 599,291 785,067 23,210 - 4,829,422 5.50 - non performing

(1) - - - - - (54,613) - (54,613)

Other assets(2)

- - - - - 471,524 - 471,524 -

1,710,708 337,802 1,959,151 559,291 2,184,265 512,987 6,729 7,270,933




36



(iii) Profit Rate Risk (Continued) Non-trading book Group and Bank Unaudited 31 Dec 2014

Up to 1

month >1-3

months

>3-12

months

1-5

years

> 5

years

Non- profit

sensitive

Trading

book

Total

Effective

profit rate RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities Deposits from customers 1,995,249 1,576,157 1,364,254 - - 542,194 - 5,477,854 2.90 Deposits and placements with banks and other financial institutions

380,000

365,000

30,000

-

-

2,289

-

777,289 3.89

Hedging financial instruments - - - - - - 685 685 - Bills and acceptance payable - - - - - 12,551 - 12,551 - Other liabilities -

- - -

- -

- -

- 232,883

48,940 -

- -

48,940 232,883

- Subordinated Sukuk

Total liabilities 2,375,249 1,941,157 1,394,254 - 232,883 605,974 685 6,550,202 -

Shareholders’ fund - - - - - 720,731 - 720,731

Total liabilities and shareholders’ funds 2,375,249 1,941,157 1,394,254 - 232,883 1,326,705 685 7,270,933

On-balance sheet profit sensitivity gap (664,541) (1,603,355) 564,897 559,291 1,951,382 (813,718) 6,044

Off-balance sheet profits sensitivity gap - - - - - 1,732,323 - Total profit sensitivity gap (664,541) (1,603,355) 564,897 559,291 1,951,382 918,605 6,044

Note: (1) This is arrived at after deducting the collective and individual impairment allowance from the outstanding gross non performing financing. (2) Other assets include property and equipment, deferred tax assets and statutory deposits with Bank Negara Malaysia.




37


23. FINANCIAL RISK MANAGEMENT (Continued)

(d) Operational Risk Management

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This risk is managed through established operational risk management processes, proper monitoring and reporting of the business units’ adherence to established risk policies, procedures and limits by independent control and support units, and oversight provided by the management and the Board. The operational risk management processes encompass appropriate documentation of processes and procedures within the framework of system of internal controls, regular disaster recovery and business continuity planning and simulations, self-compliance audit and internal audit.

(f) Liquidity Risk

Liquidity risk relates to the ability of the Group and of the Bank to maintain sufficient liquid assets to meet financial commitments and obligations when they fall due at a reasonable cost. The Assets and Liabilities Management Committee is the primary party responsible for liquidity management based on guidelines approved by the Risk Management Committee. The management of the liquidity risk is aligned to the New Liquidity Framework issued by Bank Negara Malaysia supplemented by liquidity risk management control and limits and a liquidity stress testing program. Liquidity limits are set for cash flow mismatches. In addition, liquidity trigger limits and concentration ratios are in place to serve as liquidity early warning indicators.

The table below analyses assets and liabilities based on the remaining behavioural maturity based on the requirements of BNM guidelines:

Group and Bank Unaudited – 30 June 2015

Up to 7 days

>7 days-1 month

>1-3 months

>3-6 months

>6-12 months

> 1year

Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Assets Cash and short term funds 71,658 41,489 - - - - 113,146 Hedging financial instruments - - - - - 95 95 Deposits and placements with banks and other FI

- - - 25,145 226,854 - 251,999

Securities held-for-trading 5,515 - - - - - 5,515 Securities held-to-maturity - - - - 1,449,154 19,700 1,468,854 Financing and advances 379,207 55,771 357,771 309,453 61,746 3,982,751 5,146,698 Statutory deposits with BNM 232,564 - - - - - 232,564 Other assets 18,962 1,109 2,472 3,286 2,018 230,515 259,352

Total assets 707,905 98,368 360,243 337,883 1,739,771 4,233,062 7,477,233 Liabilities Deposits from customers 408,740 1,048,626 1,226,806 659,379 585,607 1,406,121 5,335,279 Deposits and placements

of banks and other FI

140,331

372,348

382,631

142,208

40,494

-

1,078,012 Hedging financial instruments - - - - - 1,833 1,833 Bills and acceptance payable 20,001 - - - - - 20,001 Other liabilities 12,311

- - -

6,865 -

47,308 -

- -

- 251,233

66,483 251,233 Subordinated Sukuk

Total liabilities 581,382 1,420,973 1,616,302 848,893 626,102 1,659,187 6,752,840 Shareholders’ fund - - - - - 724,393 724,393

Total liabilities and shareholders’ fund

581,382 1,420,973 1,616,302 848,893 626,102 2,385,580 7,477,233

Net maturity mismatch 127,513 (1,322,605) (1,256,059) (511,010) 1,113,669 1,848,491




38


(f) Liquidity Risk (Continued)

Group and Bank Audited - 31 Dec 2014

Up to 7 days

>7 days-1 month

>1-3 months

>3-6 months

>6-12 months

> 1year

Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Assets Cash and short term funds 147,046 211,626 - - - - 358,672

Hedging financial instruments 1,191 217 222 - - - 1,630 Deposits and placements of banks

and other financial - - - 139,835 93,280 - 233,115

Securities held-for-trading 5,099 - - - - - 5,099

Securities available-for-sale - - - - - - -

Securities held-to-maturity - 7,626 - - 1,399,198 19,260 1,426,084

Financing and advances 173,582 86,724 200,969 141,379 209,993 3,962,162 4,774,809

Statutory deposits with Bank Negara Malaysia

216,364 - - - - - 216,364

Other assets 31,173 286 2,297 1,252 2,286 217,866 255,160

Total assets 574,455 306,479 203,488 282,466 1,704,757 4,199,288 7,270,933 Liabilities Deposits from customers 643,139 1,116,792 1,686,309 864,924 640,216 526,474 5,477,854 Deposits and placements

of banks and other financial institutions

120,592

260,761

365,858

30,078

-

-

777,289 Hedging financial instruments - - - 685 - - 685 Bills and acceptance payable 12,551 - - - - - 12,551 Other liabilities 15,994 - 4,448 28,498 - - 48,940 Subordinated Sukuk - - - - - 232,883 232,883

Total liabilities 792,279 1,377,553 2,056,615 924,185 640,216 759,357 6,550,202 Shareholders’ fund - - - - - 720,731 720,731

Total liabilities and shareholders’ fund

792,276 1,377,553 2,056,615 924,185 640,216 1,480,088 7,270,933

Net maturity mismatch (217,821) (1,071,074) (1,853,127) (641,719) 1,064,541 2,719,200




39


(f) Liquidity Risk (Continued)

The following table presents the cash outflows for the Group’s financial liabilities by remaining contractual maturities on undiscounted basis. The balances in the table below will not agree to the balances reported in the statements of financial position as the table incorporates all contractual cash flows, on an undiscounted basis, relating to both principal and profit payments.

Group and Bank Unaudited 30 June 2015

Up to 7

days

>7 days-1

month

>1-3

months

>3-6

months

>6-12

months

> 1year

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Liabilities Deposits from customers 409,179 1,050,482 1,233,228 666,876 607,579 1,146,934 5,114,280 Deposits and placements


140,404

373,210

385,116

144,454

41,696

-

1,084,972 Hedging financial instruments - - - - - 1,833 1,833 Bills and acceptance payable 20,001 - - - - - 20,001 Other liabilities 12,311

- - -

6,865 -

47,307 -

- -

- 251,233

66,482 251,233 Subordinated Sukuk

Total liabilities 581,895 1,423,693 1,625,210 858,728 649,276 1,400,000 6,538,800

Group and Bank Audited 31 Dec 2014

Up to 7

days

>7 days-1

month

>1-3

months

>3-6

months

>6-12

months

> 1year

Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Liabilities Deposits from customers 643,497 1,118,742 1,696,011 875,650 654,044 500,200 5,488,144 Deposits and placements


120,668

261,307

368,262

30,502

-

-

780,739 Hedging financial instruments - - - 685 - - 685 Bills and acceptance payable 12,551 - - - - - 12,551 Other liabilities 15,994 - 4,448 28,498 - - 48,940 Subordinated Sukuk - - - - - 232,883 232,883

Total liabilities 792,710 1,380,049 2,068,721 935,335 654,044 733,083 6,563,942




40


23. FINANCIAL RISK MANAGEMENT (Continued)

(g) Capital Management Policy

Capital risk is defined as the risk that the Group has insufficient capital to provide a sufficient resource to absorb predetermined levels of losses or that the capital structure is inefficient. Capital risk appetite is set by the Board and reported through various metrics that enable the Group to manage capital constraints and shareholder expectations. The Assets and Liabilities Management Committee regularly revise performance against risk appetite. A capital exposure arises where the Group has insufficient regulatory capital resources to support its strategic objectives and plans, and to meet external shareholder requirements and expectations. The Group’s capital management policy is focused on optimising value for shareholders. Capital Management and Basel II The infrastructure implementation that has been completed has already yielded significant benefits to the Group and puts the businesses on an advanced footing to:

• Enhance our economic capital management;

• Refine risk based pricing methods for the products and services; and

• Improve asset quality across the businesses of the Group. The Group continues to develop sustainable capabilities for continuous improvements in the use and adoption of the advanced approaches of the Basel II capital accord. The Bank had obtained BNM’s approval to apply the Standardised Approach for Credit Risk.




41


24. CAPITAL ADEQUACY

With effect from 1 January 2008, the capital adequacy ratios of the Bank are computed in accordance with Bank Negara Malaysia Capital Adequacy Framework for Islamic Banks (‘CAFIB’): Standardised Approach for Credit and Market Risk and Basic Indicator Approach for Operational Risk.

(a) The capital adequacy ratios are as follows:



31 Dec 2014 RM’000 RM’000 Tier-1 capital Paid-up share capital 1,000,000 1,000,000 Statutory reserve 3,976 - Accumulated losses (279,583) (279,269)

724,393 720,731 Less: Deferred tax (72,645) (72,645)

Total Tier-1 capital 651,748 648,086

Tier-2 capital Collective assessment allowance 72,921

251,233 63,909

232,883 Subordinated Sukuk

Total Tier-2 capital 324,154 296,792

Capital base 975,902 944,878

CET 1 / Core capital ratio

13.775%

13.832%

Risk-weighted capital ratio 20.626% 20.167%

The Bank has applied paragraph 7.2 of the Concept Paper – Risk Weighted Capital Adequacy Framework (Basel II) and CAFIB – Disclosure Requirement (Pillar 3) dated 5 December 2008.




42


24. CAPITAL ADEQUACY (Continued)


Group and Bank Risk Gross Net Weighted Capital Exposure Class Exposures Exposures Assets Requirements RM’000 RM’000 RM’000 RM’000 Credit Risk On-Balance Sheet Exposures Sovereigns/Central Banks 1,652,171 1,652,171 - - Banks, Development Financial Institutions &

MDBs 323,086 321,168 94,473 7,558

Corporate 3,224,298 3,210,061 2,421,151 193,692 Regulatory Retail 820,367 819,847 614,885 49,191 Residential Real Estate (RRE) Financing 1,170,022 1,170,022 565,713 45,257 Other assets 91,010 91,010 50,754 4,060 Defaulted Exposures 6,630 6,573 7,868 629

Total for On-Balance Sheet Exposures 7,287,584 7,270,852 3,754,845 300,387

Off-Balance Sheet Exposures Off-balance sheet exposures other than OTC derivatives or credit derivatives

594,898 594,898 521,636 41,731

Total for Off-Balance Sheet Exposures 594,898 594,898 521,636 41,731

Total On and Off-Balance Sheet Exposures 7,882,482 7,865,750 4,276,481 342,118

Large Exposures Risk Requirement - - - - Long Short Market Risk Position Position Foreign Currency Risk 121,531 - 121,531 9,722 Operational Risk - - 333,489 26,679

Total RWA and Capital Requirements 4,731,502 378,520




43



Audited

31 Dec 2014

Group and Bank Risk Gross Net Weighted Capital Exposure Class Exposures Exposures Assets Requirements RM’000 RM’000 RM’000 RM’000 Credit Risk On-Balance Sheet Exposures Sovereigns/Central Banks 1,634,858 1,634,858 - - Banks, Development Financial Institutions &

MDBs 555,711 555,711 111,143 8,891

Corporate 2,798,795 2,785,280 2,347,538 187,803 Regulatory Retail 871,638 870,303 652,727 52,218 Residential Real Estate (RRE) Financing 1,161,337 1,161,337 587,818 47,025 Other assets 43,233 43,233 7,626 610 Defaulted Exposures 10,733 10,733 12,666 1,013

Total for On-Balance Sheet Exposures 7,076,305 7,061,455 3,719,517 297,560

Off-Balance Sheet Exposures Off-balance sheet exposures other than OTC derivatives or credit derivatives

557,930 557,930 507,271 40,582

Total for Off-Balance Sheet Exposures 557,930 557,930 507,271 40,582

Total On and Off-Balance Sheet Exposures 7,634,235 7,619,385 4,226,788 338,142

Large Exposures Risk Requirement - - - - Long Short Market Risk Position Position Foreign Currency Risk 119,562 - 119,562 9,565 Operational Risk - - 338,971 27,118

Total RWA and Capital Requirements 4,685,321 374,825




44



Group and Bank Unaudited - June 2015

Exposures after netting and credit risk mitigation (“CRM”) Risk Weights

Sovereigns/ Central Bank

Banks, DFIs & MDBs Corporate

Regulatory Retail

Residential Real Estate

Equity exposures

Others Assets

Total exposure

after netting and CRM

Total Weighted Assets

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Performing Exposures 0% 1,652,172 - - - - - 40,255 1,692,427 - 20% - 266,743 617,581 - - - - 736,937 147,387 35% - - - - 525,172 - - 389,016 136,156 50% - 151,199 - - 978,659 - - 753,239 376,619 75% - - 2,640,321 1,795,063 318,365 - - 2,716,428 2,037,321 100% - - 2,985,452 - 55,300 - 101,509 1,571,130 1,571,130 150% - - - - - - - - -

Total 1,652,172 417,943 6,243,354 1,795,063 1,877,495 - 141,764 7,859,177 4,268,614 Defaulted Exposures 35% - - - - - - - - - 50% - - - - - - - - - 100% - - - - 7,968 - - 3,984 3,984 150% - - - 1,403 5,070 - - 2,589 3,884

Total - - - 1,403 13,038 - - 6,573 7,868

1,652,172

417,943

6,243,354

1,796,465

1,890,533

-

141,764

7,865,750

4,276,481 Total Performing and Defaulted




45


24. CAPITAL ADEQUACY (Continued) Group and Bank

Audited - Dec 2014 Exposures after netting and credit risk mitigation (“CRM”)

Risk Weights

Sovereigns/ Central Bank

Banks, DFIs & MDBs Corporate

Regulatory Retail

Residential Real Estate

Equity exposures

Others Assets

Total exposure

after netting and CRM

Total Weighted Assets

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Performing Exposures 0% 1,634,858 - - - - - 35,607 1,670,465 - 20% - 557,629 75,578 - - - - 633,207 126,641 35% - - - - 338,719 - - 338,719 118,552 50% - - - - 634,617 - - 634,617 317,309 75% - - 1,509,121 970,590 240,381 - - 2,720,092 2,040,068 100% - - 1.560,096 - 43,831 - 7,626 1,611,553 1,611,552 150% - - - - - - - - -

Total 1,634,858 557,629 3,144,795 970,590 1,257,548 - 43,233 7,608,653 4,214,122 Defaulted Exposures 50% - - - - - - - - - 100% - - - 57 6,808 - - 6,865 6,865 150% - - - 753 3,114 - - 3,867 5,801

Total - - - 810 9,922 - - 10,732 12,666

1,634,858

557,629

3,144,795

971,400

1,267,470

-

43,233

7,619,385

4,226,788 Total Performing and Defaulted




46


24. CAPITAL ADEQUACY (Continued) Group and Bank Unaudited – 30 June 2015 Disclosure on Rated Exposures according to Rating by ECAIs

Exposure Class AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ to B- Below B- Unrated Total 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

On and Off Balance-Sheet Exposures

Credit Exposure – Standardised Approach

Sovereigns/Central Banks - - - - - - 1,652,172 - - - - - - 1,652,172 Banks, Development Financial

Institutions & MDBs 5,230 - - - 257,125 343 22,611 - 287 - 37,302 - 188 323,086

Corporate - - - - 1,508,755 - - - - - - - 2,007,377 3,516,132 Regulatory Retail - - - - - - - - - - - - 1,026,3116 1,026,310 Residential Real Estate (RRE) Financing

-

-

-

-

-

-

-

-

-

-

-

-

1,257,040

1,257,040

Other assets - - - - - - - - - - - - 91,010 91,010

Total 5,230 - - - 1,765,880 343 1,674,783 - 287 - 37,302 - 4,381,926 7,865,750




47


24. CAPITAL ADEQUACY (Continued) Group and Bank Audited - 31 Dec 2014 Disclosure on Rated Exposures according to Rating by ECAIs

Exposure Class AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ to B- Below B- Unrated Total 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

On and Off Balance-Sheet Exposures

Credit Exposure – Standardised Approach

Sovereigns/Central Banks - - - - - - 1,634,858 - - - - - - 1,634,858 Banks, Development Financial

Institutions & MDBs 6,036 - - - 360,969 4,535 148,678 - 248 - 36,150 - 1,286 557,629

Corporate - - - - 1,509,121 - - - - - - - 1,649,187 3,158,308 Regulatory Retail - - - - - - - - - - - - 972,737 972,737 Residential Real Estate (RRE) Financing

- - - - - - - - - - - - 1,267,470 1,267,470

Other assets - - - - - - - - - - - - 43,233 43,233

Total 6,036 - - - 1,869,817 4,535 1,783,536 - 248 - 36,150 - 3,933,912 7,634,235




48



Group and Bank

Disclosure on Credit Risk Mitigation

Unaudited

30 June 2015

Audited

31 Dec 2014

Exposure Class

Exposures Exposures Exposures Covered by Exposures Covered by

Before CRM Eligible Collateral

Before CRM

Eligible Collateral

RM’000 RM’000 RM’000 RM’000 Credit Risk On-Balance Sheet Exposures Sovereigns/Central Banks 1,652,172 - 1,634,858 - Banks, Development Financial Institutions & MDBs 323,086 - 555,711 - Corporate 3,224,298 61,670 2,798,795 68,464 Regulatory Retail 820,367 896 871,638 4,534 Residential Real Estate (RRE) Financing 1,170,021 - 1,161,337 - Other assets 91,010 - 43,233 - Defaulted Exposures 6,630 - 10,733

Total for On-Balance Sheet Exposures 7,287,584 62,566 7,076,305 72,998

Off-Balance Sheet Exposures Off-balance sheet exposures other than OTC derivatives or credit derivatives 594,898 - 557,930 -

Total for Off-Balance Sheet Exposures 594,898 - 557,930 -

Total On and Off-Balance Sheet Exposures 7,882,482 62,566 7,634,235 72,998




49



Group and Bank Disclosure on Off Balance Sheet and Counterparty Credit Risk

Unaudited


31 Dec 2014

Principal

amount

Credit equivalent

amount

Risk weighted

amount

Principal

amount

Credit equivalent

amount

Risk weighted

amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Direct credit substitutes - - - Transaction-related contingent items 480,076 240,038 188,300 271,985 135,993 111,340 Short term self liquidating trade related contingencies 24,745 4,949 4,755 28,481 5,696 5,112 Foreign exchange related contracts - One year or less 5,887 - - 20,974 - - Credit derivative contracts - One year or less 10,485 119 119 37,605 495 495 Other commitments, such as formal standby facilities and credit

lines, with an original maturity of over one year

409,703

207,041

185,821

470,301

235,151

210,580 Other commitments, such as formal standby facilities and credit

lines, with an original maturity up to one year

713,756

140,562

141,001

891,517

178,303

178,025 Unutilised credit card lines 10,947 2,189 1,642 11,460 2,292 1,719

1,655,599 594,898 521,637 1,732,323 557,930 507,271




50

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 25. SEGMENTAL INFORMATION

Segmental reporting by the Bank was prepared in accordance with MFRS 8 ‘Operating Segments’ (‘MFRS 8’). Following the management approach of MFRS 8, operating segments are reported in a manner consistent with the internal reporting provided to the chief operation decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity.

All inter-segment transactions are conducted on an arm’s length basis and on normal commercial terms not more favourable than those generally available to the public.

The business segment results are prepared based on the Bank’s internal management reporting, which reflect the organisation’s management structure. Internal allocation of costs has been used in preparing the segmental reporting.

The Bank’s business segment can be organised into the following main segments reflecting the Bank’s internal reporting structure: The Bank comprises the following main business segments:

(i) Retail Operations

Retail operations focus on providing product and services to individual customers and small- and medium-sized enterprises. The products and services offered to customers include credit facilities, charge cards, remittance services, deposit collection and investment products.

(ii) Treasury and Capital Market Operations

The treasury and capital market operations are involved in proprietary trading in treasury related products and services such as foreign exchange, money market operations and securities trading. Income from customer trading is reflected under Retail Operations.

(iii) Corporate Investment Banking

Corporate Investment Banking operations provide a full range of financial services to corporate customers as well as small and medium sized enterprises. The products and services offered include long and short term financing such as working capital financing, asset financing, project financing as well as trade financing.




51

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 25. SEGMENTAL INFORMATION (Continued)

Bank

Retail Banking

Treasury &

Money Market

Corporate Investment

Banking

Total

Unaudited RM’000 RM’000 RM’000 RM’000 30 June 2015 Total revenue 102,742 66,842 16,695 186,279

Result Segment result 45,490 28,269 7,434 81,193 Unallocated corporate

expenses

(77,532)

Profit before zakat and taxation 3,661

Zakat and taxation -

Net loss for the financial period 3,661 Other comprehensive income: - Wakalah transfer to reserve -

Total comprehensive income for the financial period

3,661

Other information Segment assets 1,842,027 305,254 3,596,230 5,743,512 Unallocated corporate assets 1,733,721

Total assets 7,477,233

Segment liabilities 2,658,064 3,755,226 - 6,413,290

Unallocated corporate liabilities 339,550

Total liabilities 6,752,840

Other segment items Capital expenditure 1,417 (31) 211 1,597

Unallocated capital expenditure 3,727

5,325

Depreciation 3,180 136 479 3,795

Unallocated depreciation 5,817

9,612

Other non-cash (income)/expenses (3,274) - 9,260 5,986




52

EXPLANATORY NOTES PERSUANT TO MALAYSIAN FINANCIAL REPORTING STANDARDS 134 (“MFRS 134”) AND GUIDELINES ON FINANCIAL REPORTING FOR LICENSED ISLAMIC BANKING INSTITUTIONS ISSUED BY BANK NEGARA MALAYSIA 25. SEGMENTAL INFORMATION (Continued)

Bank

Retail Banking

Treasury &

Money Market

Corporate Investment

Banking

Total

Audited RM’000 RM’000 RM’000 RM’000 31 Dec 2014 Total revenue 192,416 133,787 30,024 356,226

Result Segment result 59,438 76,013 28,529 163,980 Unallocated corporate

expenses

(153,978)

Profit before zakat and taxation 10,002

Zakat and taxation (5,200)

Net loss for the financial year 4,802 Other comprehensive income: - Securities available-for-sale -

Total comprehensive income for the financial year

4,802

Other information Segment assets 1,961,972 540,864 3,081,754 5,584,590 Unallocated corporate assets 1,686,343

Total assets 7,270,933

Segment liabilities 2,916,142 3,339,001 - 6,255,143

Unallocated corporate liabilities 295,059

Total liabilities 6,550,202

Other segment items Capital expenditure 2,758 61 190 3,009

Unallocated capital expenditure 8,530

11,539

Depreciation 7,209 238 971 8,418

Unallocated depreciation 12,020

20,438

Other non-cash (income)/expenses 15,086 - 1,494 16,580




53


26. REVIEW OF PERFORMANCE FOR THE FINANCIAL HALF YEAR ENDED 30 JUNE 2015 AGAINST

THE CORRESPONDING FINANCIAL QUARTER OF THE PRECEDING YEAR

For the financial period ended 30 June 2015, the Group and Bank recorded a higher net profit of RM3.66 million as compared to a net profit of RM0.88 million in the preceding year’s corresponding period.

27. PROSPECTS FOR 2015

2015 continue to be a challenging year for the banking sector with greater competition in both retail and corporate sector and tighter regulatory environment. Nevertheless, the Bank is geared to face the challenges, drafting a more precise strategy to grow the business selectively targeting new market segments at the same time continue to strengthen its governance.

Financial Statement Half Year 2015 v3 - Al Rajhi Bank · FOR HALF YEAR ENDED 30 JUNE 2015 2nd...

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