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Directors’ Report
For the financial year ended 31 December 2008
The Directors have pleasure in submitting their Report and the Audited Financial Statements of the Group and of CIMB Bank
Berhad (“CIMB Bank” or “the Bank”) for the financial year ended 31 December 2008.
Principal activities
The principal activities of the Bank during the financial year are commercial banking and the provision of related financial services,
including Islamic banking. The principal activities of the significant subsidiaries as set out in Note 11 to the Financial Statements,
consist of Islamic banking, offshore banking, debt factoring, trustees and nominee services, and property ownership and
management. There was no significant change in the nature of these activities during the financial year.
Financial results
1,574,698 1,678,036
Dividends
The dividends on ordinary shares and redeemable preference shares paid or declared by the Bank since 31 December 2007 were
as follows:
RM’000
610,000
The Directors now propose a second interim gross dividend of approximately 6.72 sen per share, less 25% income tax on
2,974,009,486 Redeemable Preference Shares of RM0.01 each, amounting to RM150,000,000. The second interim dividend was
approved by the Board of Directors in a resolution dated 23 January 2009.
Directors’ Report
For the financial year ended 31 December 2008
At the date of this Report, the Directors are not aware of any circumstances which would render the amounts written off for bad
debts and financing, or the amount of the allowance for doubtful debts and financing in the Financial Statements of the Group and
the Bank, inadequate to any substantial extent.
Current assets
Before the Financial Statements of the Group and of the Bank were made out, the Directors took reasonable steps to ascertain that
any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the
accounting records of the Group and the Bank had been written down to an amount which they might be expected so to realise.
At the date of this Report, the Directors are not aware of any circumstances which would render the values attributed to current
assets in the Financial Statements of the Group and the Bank misleading.
Valuation methods
At the date of this Report, the Directors are not aware of any circumstances which have arisen which render adherence to the
existing method of valuation of assets or liabilities of the Group and the Bank misleading or inappropriate.
(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the
liability of any other person; or
(b) any contingent liability of the Group or the Bank which has arisen since the end of the financial year other than in the ordinary
course of banking business.
No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the
ability of the Bank and its subsidiaries to meet their obligations when they fall due.
Change of circumstances
At the date of this Report, the Directors are not aware of any circumstances not otherwise dealt with in this Report or the Financial
Statements of the Group and of the Bank, that would render any amount stated in the Financial Statements misleading.
(a) the results of the Group’s and the Bank’s operations for the financial year have not been substantially affected by any item,
transaction or event of a material and unusual nature other than those disclosed in Notes 4, 50 and 56 to the Financial
Statements; and
(b) except as disclosed in Note 51 to the Financial Statements, there has not arisen in the interval between the end of the financial
year and the date of this Report any item, transaction or event of a material and unusual nature likely to affect substantially the
results of the operations of the Group or the Bank for the financial year in which this Report is made.
Directors’ Report
For the financial year ended 31 December 2008
Directors
The names of the Directors of the Bank in office since the date of the last Report and at the date of this Report are:
Directors
Tan Sri Dato’ Seri Haidar bin Mohamed Nor
Dato’Sri Mohamed Nazir bin Abdul Razak
Tan Sri G.K. Rama Iyer
Dato’ Dr. Mohamad Zawawi bin Ismail
Datuk Dr. Syed Muhamad bin Syed Abdul Kadir
Dato’ Zainal Abidin bin Putih
Dato’ Mohd Shukri bin Hussin
Dato’ Seri Yeap Leong Huat
Tunku Dato’ Ahmad Burhanuddin
Dr. Gan Wee Beng
In accordance with Article 97 of the Bank’s Articles of Association, Dato’ Dr. Mohamad Zawawi Ismail, Dato’ Zainal Abidin Putih
and Dato’ Mohd Shukri Hussin retire from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves
for re-election.
Tan Sri G.K. Rama Iyer who is above the age of seventy (70) years, retires from the Board at the Annual General Meeting pursuant
to Section 129 of the Companies Act, 1965. Under Section 129(6) of the Companies Act, 1965 it is proposed to pass a resolution
to re-elect him as a Director of the Bank to hold office until the next Annual General Meeting of the Bank.
Subsidiary company
BHLB Trustee Berhad
Dato’ Seri Yeap Leong Huat* 70,000 - (70,000) -
Directors’ Report
For the financial year ended 31 December 2008
According to the Register of Directors’ Shareholdings, the beneficial interests of the Directors who held office at the end of the
financial year in the shares and share options of the ultimate holding company during the financial year are as follows:
None of the other Directors in office at the end of the financial year had any interest in the shares and share options of the Bank,
the holding company, the ultimate holding company and the Bank’s related companies.
Directors’ Report
For the financial year ended 31 December 2008
Directors’ benefits
Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive any benefit (other
than the benefit included in the aggregate amount of emoluments received or due and receivable by Directors shown in Note 43
to the Financial Statements or the fixed salary as a full time employee of the Bank) by reason of a contract made by the Bank or a
related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has
a substantial financial interest.
Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which
the Bank is a party with the object or objects 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 other than share options of the ultimate holding company.
Directors’ Report
For the financial year ended 31 December 2008
Malaysian Rating Long Term Rating : AA+ Indicates very strong capacity to meet its
Corporation Berhad Short Term Rating : MARC-1 financial commitments and ability to withstand
Date accorded: Outlook : Stable adversity. The institution also possesses a
December 2008 good track record and has no readily apparent
weaknesses.
Moody’s Investors Long Term Rating: A3 Indicates good credit quality. However, elements
Services Ltd Long Term Subordinated may be present that suggest a susceptibility
Date accorded: Debt : Baa1 to impairment over the long term.
December 2008 Short Term Rating : P-1
Outlook : Stable
Fitch Ratings Ltd Long Term Ratings: BBB+ Indicates currently low expectation of credit risk.
Date accorded: Long Term Subordinated Capacity for timely payment of financial
April 2008 Debt : BBB commitment is adequate. However, adverse
Short Term Rating : F2 changes in circumstances and in economic
Outlook : Positive conditions are more likely to impair this capacity.
Standard & Poor’s Long Term Rating: BBB+ Indicates adequate capacity to meet its financial
Rating Agency Short Term Rating : A-2 commitments. However, adverse economic
Date accorded: Outlook : Stable conditions or changing circumstances are
September 2008 more likely to lead to a weakened capacity
of the obligor to meet its financial commitments.
Shariah Committee
All the Islamic banking businesses of the CIMB Group come under the purview of the CIMB Islamic Shariah Committee, which
resides at CIMB Islamic Bank Berhad (“CIMB Islamic”).
As per BNM/GPS1 (Guideline on the Governance of Shariah Committee for Islamic Financial Institutions), the Shariah Committee
advises the Group on the operations of its Islamic banking business to ensure that the Group is not involved in any elements/
activities which are not approved under Shariah. In advising on such matters, the Shariah Committee also considers the views of
the Shariah Council/Committees of relevant authorities like Bank Negara Malaysia and the Securities Commission on issues relating
to the activities and operations of Islamic banking and financing.
Directors’ Report
For the financial year ended 31 December 2008
Zakat obligations
CIMB Islamic is obliged to pay business zakat to comply with the principles of Shariah. CIMB Islamic does not pay zakat on behalf
of the shareholders or depositors.
Auditors
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Kuala Lumpur
7 April 2009
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Dato’ Seri Haidar bin Mohamed Nor and Tunku Dato’ Ahmad Burhanuddin, being two of the Directors of CIMB Bank
Berhad, hereby state that, in the opinion of the Directors, the Financial Statements set out on pages 078 to 262 are drawn up
so as to give a true and fair view of the state of affairs of the Group and of the Bank as at 31 December 2008 and of the results
and cash flows of the Group and of the Bank for the financial year ended on that date, in accordance with the provisions of the
Companies Act, 1965, the MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank
Negara Malaysia Guidelines.
Kuala Lumpur
7 April 2009
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Kim Kenny, being the officer primarily responsible for the financial management of CIMB Bank Berhad, do solemnly and sincerely
declare the Financial Statements set out on pages 078 to 262 are, in my opinion, 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.
Kim Kenny
Subscribed and solemnly declared by the abovenamed Kim Kenny at Kuala Lumpur before me, on 7 April 2009.
Auditors’ Responsibility
Our 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 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 judgement, 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 Bank’s
preparation and fair presentation of the Financial Statements 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 Bank’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.
Opinion
In our opinion, the Financial Statements have been properly drawn up in accordance with the Companies Act, 1965, the MASB
Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and the Bank Negara Malaysia Guidelines so
as to give a true and fair view of the financial position of the Group and of the Bank as of 31 December 2008 and of their financial
performance and cash flows for the year then ended.
(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 of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 11 to the Financial Statements.
(c) 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.
(d) The 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 Matters
This 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.
Kuala Lumpur
7 April 2009
Balance Sheets
As at 31 December 2008
Assets
Cash and short-term funds 2 21,966,362 27,774,626 14,308,346 23,115,966
Securities purchased under resale agreements 2,967,770 4,308,971 2,967,770 4,308,971
Deposits and placements with banks
and other financial institutions 3 2,139,459 5,120,678 4,967,910 5,339,365
Securities held for trading 4 9,564,281 14,233,869 6,517,399 10,814,173
Available-for-sale securities 5 7,360,190 6,699,411 6,503,390 5,832,506
Held-to-maturity securities 6 11,625,970 3,473,316 8,685,401 3,366,167
Derivative financial instruments 25 5,335,535 1,710,930 5,126,006 1,636,344
Loans, advances and financing 7 95,687,146 80,617,533 84,922,177 73,011,777
Other assets 8 2,095,571 1,404,250 1,933,236 1,202,351
Deferred taxation 9 304,537 408,971 263,993 370,523
Tax recoverable 248,055 6,750 226,786 -
Statutory deposits with central banks 10 2,723,540 3,038,272 2,453,934 2,933,983
Investment in subsidiaries 11 - - 2,245,919 2,321,488
Investment in jointly controlled entity 12 127,701 124,448 124,448 124,448
Investment in associate 13 587,280 791 595,814 -
Amount due from holding company
and ultimate holding company 14 278,350 276,778 246,872 248,715
Amount due from subsidiaries 15 - - 197,618 467,432
Amount due from related companies 16 90,926 100,368 90,819 87,949
Deferred consideration 17 - - - 46,314
Goodwill 18 3,695,075 3,695,075 3,559,075 3,559,075
Intangible assets 19 412,288 465,625 400,857 456,062
Prepaid lease payments 20 29,618 32,437 25,197 27,967
Property, plant and equipment 21 728,713 658,950 564,047 473,643
Investment properties 22 100,175 97,421 100,175 97,421
Balance Sheets
As at 31 December 2008
Liabilities
Deposits from customers 23 127,625,741 112,189,637 107,105,025 99,307,364
Deposits and placements of banks
and other financial institutions 24 8,614,530 12,694,895 10,569,514 13,785,163
Obligations on securities sold under
repurchase agreements - 605,780 - 1,000
Derivative financial instruments 25 4,849,035 1,610,036 4,820,357 1,610,595
Bills and acceptances payable 3,091,173 4,463,113 3,085,915 4,462,145
Amount due to Cagamas Berhad 993,818 2,004,707 993,818 2,004,707
Amount due to subsidiaries 15 - - 178,140 357,760
Amount due to related companies 16 15,432 1,977 9,398 -
Other liabilities 26 2,751,252 2,969,203 2,400,962 2,790,533
Provision for taxation and zakat 5,698 104,294 - 89,316
Redeemable asset-backed bonds 27 - 31,772 - -
Irredeemable Convertible Unsecured Loan Stocks 28 667,000 667,000 667,000 667,000
Other borrowings 29 1,039,350 992,100 - -
Subordinated obligations 30 4,573,212 2,004,856 5,386,548 2,685,889
Redeemable preference shares 31(a), (b) 813,336 1,981,033 - 1,300,000
155,039,577 142,320,403 135,216,677 129,061,472
Liabilities directly associated with
non-current assets/disposal groups
classified as held for sale 57 29,499 556,090 - -
Total liabilities 155,069,076 142,876,493 135,216,677 129,061,472
Equity
Capital and reserves attributable to
equity holders of the Bank
Ordinary share capital 32 2,974,009 2,974,009 2,974,009 2,974,009
Reserves 34 9,859,290 8,931,335 8,649,475 7,723,045
12,833,299 11,905,344 11,623,484 10,697,054
Perpetual preference shares 33 200,000 200,000 200,000 200,000
Redeemable preference shares 31(c) 29,740 - 29,740 -
Minority interests 18,879 29,727 - -
Total equity 13,081,918 12,135,071 11,853,224 10,897,054
Total equity and liabilities 168,150,994 155,011,564 147,069,901 139,958,526
Commitments and contingencies 25 307,223,451 278,186,549 295,630,457 273,710,057
Credit equivalent 25 16,621,342 15,908,617 14,936,213 14,559,520
Net assets per ordinary share (RM) * 4.39 4.07 3.99 3.66
* Net assets per ordinary share is calculated by dividing the total equity less minority interests, by the number of ordinary share capital in issue.
Income Statements
For the financial year ended 31 December 2008
Net profit after taxation and zakat 1,574,698 1,732,545 1,678,036 1,178,487
Attributable to:
Equity holders of the Bank 1,572,746 1,729,605 1,678,036 1,178,487
Minority interests 1,952 2,940 - -
Earnings per share attributable to ordinary equity
holders of the Bank - basic/fully diluted (sen) 45 43.20 47.50 46.09 32.37
Dividend:
- per ordinary share of 2.00 sen
(2007: 20.27 sen) less 26% (2007: 27%) tax 46 1.48 14.80 1.48 14.80
At 1 January 2008 2,974,009 - 4,157,074 2,547,114 1,055 (139,230) 98,644 (1,085,928) 735,457 - 2,617,149 11,905,344 200,000 29,727 12,135,071
Net change in
available-for-sale
securities, net of tax 34 - - - - - - 306 - - - - 306 - - 306
Currency translation
difference 34 - - - - - 85,527 - - - - - 85,527 - (178) 85,349
Income and expense
recognised directly
For the financial year ended 31 December 2008
Transfer to
statutory reserves 34 - - - 610,260 - - - - - - (610,260) - - - -
Final dividends for the
financial year ended
31 December 2007 46 - - - - - - - - - - (300,000) (300,000) - - (300,000)
Interim and special
dividends for the
financial year ended
31 December 2008 46 - - - - - - - - - - (310,000) (310,000) - - (310,000)
Capitalised to
redeemable
preference shares 31(c) - 29,740 - - - - - - - - (29,740) - - - -
Net investment
hedge in overseas
operations and
subsidiaries 34 - - - - - - - - - (122,336) - (122,336) - - (122,336)
Acquisition of associate - - - - - - 32,167 - - - - 32,167 - - 32,167
Disposal of subsidiary - - - - - (715) - - - - - (715) - (12,622) (13,337)
At 31 December 2008 2,974,009 29,740 4,157,074 3,157,374 1,055 (54,418) 131,117 (1,085,928) 735,457 (122,336) 2,939,895 12,863,039 200,000 18,879 13,081,918
082
(13491-P)
Revaluation
reserve -
CIMB Bank Berhad
At 1 January 2007 2,974,009 4,157,074 2,217,874 601 (9,138) 71,624 (1,085,928) 735,457 1,657,205 10,718,778 200,000 26,148 10,944,926
Net change in available-for-sale
securities, net of tax 34 - - - - - 27,020 - - - 27,020 - - 27,020
Currency translation difference 34 - - - - (130,092) - - - - (130,092) - 639 (129,453)
Income and expense recognised
directly in equity - - - - (130,092) 27,020 - - - (103,072) - 639 (102,433)
Net profit for the financial year - - - - - - - - 1,729,605 1,729,605 - 2,940 1,732,545
Total recognised income and
expense for the financial year - - - - (130,092) 27,020 - - 1,729,605 1,626,533 - 3,579 1,630,112
Transfer to statutory reserves 34 - - 329,240 454 - - - - (329,694) - - - -
Final dividends for the
financial year ended
31 December 2006 46 - - - - - - - - (189,965) (189,965) - - (189,965)
Special interim dividend for
the financial year ended
31 December 2007 46 - - - - - - - - (250,002) (250,002) - - (250,002)
At 31 December 2007 2,974,009 4,157,074 2,547,114 1,055 (139,230) 98,644 (1,085,928) 735,457 2,617,149 11,905,344 200,000 29,727 12,135,071
Statements of Changes in Equity
For the financial year ended 31 December 2008
Non-distributable Distributable
Revaluation
reserve -
Redeemable Exchange available- Perpetual
Share preference Share Statutory fluctuation for-sale Merger Capital Hedging Retained preference Total
capital shares premium reserve reserve securities deficit reserve reserve profits Total shares equity
The Bank Note 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
At 1 January 2008 2,974,009 - 4,157,074 2,601,434 (32,769) 55,458 (1,047,872) 746,852 - 1,242,868 10,697,054 200,000 10,897,054
084
(13491-P)
Revaluation
reserve -
CIMB Bank Berhad
At 1 January 2007 2,974,009 4,157,074 2,306,812 (11,550) 66,983 (1,047,872) 853,341 798,970 10,097,767 200,000 10,297,767
Net change in available-for-sale securities,
net of tax 34 - - - - (11,525) - - - (11,525) - (11,525)
Currency translation difference 34 - - - (21,219) - - - - (21,219) - (21,219)
Income and expense recognised directly
in equity - - - (21,219) (11,525) - - - (32,744) - (32,744)
Net profit for the financial year - - - - - 1,178,487 1,178,487 - 1,178,487
Total recognised income and expense for
the financial year - - - (21,219) (11,525) - - 1,178,487 1,145,743 - 1,145,743
Transfer to statutory reserve 34 - - 294,622 - - - - (294,622) - - -
Transaction with shareholders - - - - - - (106,489) - (106,489) - (106,489)
Final dividends for the financial year
ended 31 December 2006 46 - - - - - - - (189,965) (189,965) - (189,965)
Special interim dividend for the financial
year ended 31 December 2007 46 - - - - - - - (250,002) (250,002) - (250,002)
At 31 December 2007 2,974,009 4,157,074 2,601,434 (32,769) 55,458 (1,047,872) 746,852 1,242,868 10,697,054 200,000 10,897,054
Statements of Changes in Equity
For the financial year ended 31 December 2008
CIMB Bank Berhad
(13491-P)
Net cash generated from/(used in) operating activities 2,868,601 13,602,395 (3,066,637) 10,904,017
Net change in cash and cash equivalents (5,807,674) 10,456,534 (8,808,219) 8,055,614
Effects of exchange rate differences (590) (128,619) 599 (48,573)
Cash and cash equivalents
at beginning of financial year 27,774,626 17,446,711 23,115,966 15,108,925
Cash and cash equivalents at end of financial year 2 21,966,362 27,774,626 14,308,346 23,115,966
The following accounting policies have been used consistently in dealing with items that are considered material in relation to the
Financial Statements.
A Basis of preparation
The Financial Statements of the Group and the Bank are prepared under the historical cost convention, modified by the
revaluation of available-for-sale securities, securities held for trading, all derivative contracts, investment properties and non-
current assets/disposal groups held for sale.
The Financial Statements of the Group and the Bank have been prepared in accordance with the Financial Reporting Standards,
MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia (“BNM”)
Guidelines, Shariah requirements and the provisions of the Companies Act, 1965.
The Financial Statements incorporate those activities relating to Islamic banking which have been undertaken by the Bank and
its wholly-owned subsidiaries, CIMB Islamic Bank Berhad (“CIMB Islamic”) and CIMB Bank (L) Limited. Islamic banking refers
generally to the acceptance of deposits, granting of financing and dealing in Islamic Securities under the Shariah principles.
BNM has granted indulgence to the Group and the Bank and other local banks in Malaysia from complying with the requirements
on the impairment of loans under the revised ‘Guideline on Financial Reporting for Licensed Institutions’ (“BNM/GP8”).
Paragraph 4, Appendix A of the revised BNM/GP8 requires the impaired loans to be measured at their estimated recoverable
amount. This requirement is principally similar to the requirement under FRS 139 - Financial Instruments: Recognition and
Measurement. During the financial year, BNM issued a revised circular on BNM/GP3 which requires impaired credit facilities to
be measured at their recoverable amount. This requirement supersedes paragraph 4, Appendix A of the revised BNM/GP8.
In view of the deferment of the implementation of FRS 139 in Malaysia, the Group and the Bank and other local banks in
Malaysia will be deemed to be in compliance with the requirement on the impairment of loans under the revised BNM/GP8 if
the allowance for non-performing loans, advances and financing is computed based on BNM’s guidelines on the ‘Classification
of Non-Performing Loans and Provision for Substandard, Bad and Doubtful Debts’ (“BNM/GP3”) requirements.
The preparation of Financial Statements in conformity with the provisions of the Companies Act, 1965, Financial Reporting
Standards and Bank Negara Malaysia Guidelines requires the use of certain critical accounting estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial
Statements, and the reported amounts of income and expenses during the reported period. It also requires the Directors to
exercise their judgement in the process of applying the Group’s and the Bank’s accounting policies. Although these estimates
and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ from those
estimates.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the Financial Statements, are disclosed in Note 52.
(a) Standards, amendments to published standards and interpretations that are applicable to the Group and Bank
and are effective
The new accounting standards, amendments to published standards and interpretations to existing standards that are
effective for the Group and the Bank for the financial year ended 31 December 2008 are as follows:
• Amendment to FRS 121 - The Effect of Changes in Foreign Exchange Rates - Net Investment in a Foreign
Operations
The adoption of the new accounting standards, amendments to published standards and interpretations did not have a
material impact on the Financial Statements of the Group and Bank.
(b) Standards, amendments to published standards and interpretations to existing standards that are applicable
to the Group but not yet effective
The new standards and IC Interpretations that are applicable to the Group but which the Group and the Bank have not
early adopted, are as follows:
• FRS 8 Operating Segments (effective for accounting periods beginning on or after 1 July 2009). This new standard
requires a ‘management approach’, under which segment information is presented on the same basis as that used
for internal reporting purposes. The Group and the Bank will apply this standard when effective.
• IC Interpretation 9 Reassessment of Embedded Derivatives (effective for accounting periods beginning on or after
1 January 2010). IC Interpretation 9 requires an entity to assess whether an embedded derivative is required to be
separated from the host contract and accounted for as a derivative when the entity first becomes a party to the
contract. Subsequent reassessment is disallowed unless there is a change in the terms of contract that significantly
modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.
The Group and the Bank will apply this standard when effective.
• IC Interpretation 10 Interim Financial Reporting and Impairment (effective for accounting periods beginning on or after
1 January 2010). IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and
investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet
date. The Group and the Bank will apply this standard when effective.
• The following standards will be effective for annual periods beginning on or after 1 January 2010. The Group will apply
these standards from financial periods beginning on 1 January 2010. The Group has applied transitional provisions in
the respective standards which exempts entities from disclosing the possible impact arising from the initial application
of the standard in the financial statements of the Group and the Bank.
(i) FRS 139 Financial Instruments: Recognition and Measurement. This new standard establishes principles for
recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial
items. Hedge accounting is permitted only under strict circumstances. However, with effect from 1 January 2005,
the revised BNM/GP8 has adopted certain FRS 139 principles in recognising and measuring financial assets,
financial liabilities, derivative financial instruments and hedge accounting. The relevant accounting policies are set
out in Notes G, M and U to the Financial Statements.
Investment in subsidiaries is stated at cost less accumulated impairment losses. Where there is an indication of
impairment, the carrying amount of the investment is assessed. A write down is made if the carrying amount exceeds
its recoverable amount.
External costs directly attributable to an acquisition, other than the costs of issuing shares and other capital instruments,
are included as part of the cost of acquisition.
The consolidated Financial Statements include the Financial Statements of the Bank and all its subsidiaries made up to
the end of the financial year.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from
the date that control ceases. Subsidiaries are consolidated using the purchase method of accounting, except for business
combinations involving entities or businesses under common control with agreement dates on or after 1 January 2006,
which are accounted for using the pooling-of-interests method.
Under the purchase method of accounting, the results of subsidiaries acquired or disposed of during the year are included
from the date of acquisition up to the date of disposal. The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable
to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The
excess of the cost of acquisition over the fair value of the Group’s share of the identifiable assets, liabilities and contingent
liabilities acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of
the assets, liabilities and contingent liabilities of the subsidiary acquired, the difference is recognised directly in the income
statement.
Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity interests
that are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities’ share of the
fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes
in the subsidiaries’ equity since that date.
In contrast to FRS 3, FAS 141 does include, as an Appendix, limited accounting guidance for transactions under common
control which, as with FRS 3, are outside the scope of that accounting standard. The guidance contained in FAS 141
indicates that a form of accounting that is similar to pooling-of-interests method may be used when accounting for
transactions under common control.
Having considered the requirements of FRS 108 and the guidance included within FAS 141, the Directors consider
appropriate to use a form of accounting which is similar to pooling-of-interests when dealing with business combinations
involving entities or businesses under common control.
Under the pooling-of-interests method of accounting, the results of entities or businesses under common control are
presented as if the merger had been effected throughout the current and previous years. The assets and liabilities
combined are accounted for based on the carrying amounts from the perspective of the common control shareholder
at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any
resulting credit difference is classified as equity and regarded as a non-distributable reserve. Any resulting debit difference
is adjusted against any suitable reserve. Any share premium, capital redemption reserve and any other reserves which are
attributable to share capital of the merged enterprises, to the extent that they have not been reduced by a debit difference,
are reclassified and presented as movement in other capital reserve.
All material transactions and balances between group companies are eliminated and the consolidated Financial Statements
reflect external transactions only. Where necessary, the accounting policies of subsidiaries have been changed to ensure
consistency with the policies adopted by the Group.
Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiary’s identifiable
assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a
revaluation.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of
its net assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the
subsidiary, and is recognised in the consolidated income statement.
The Group’s interest in jointly controlled entities is accounted for in the consolidated Financial Statements by the equity
method of accounting.
Equity accounting involves recognising the Group’s share of the post acquisition results of the joint venture in the income
statement and its share of post acquisition movements within reserves in reserves. The cumulative post acquisition
movements are adjusted against the cost of the investment and include goodwill on acquisition, net of accumulated
impairment loss (if any).
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The
Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its
share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements
are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate.
Where an account is classified as non-performing, interest accrued and recognised as income prior to the date the loans
are classified as non-performing are reversed out of income and set off against the accrued interest receivable amount in the
balance sheet. Subsequently, the interest earned on non-performing loans is recognised as income on a cash basis instead
of being accrued and suspended at the same time as prescribed previously. Customers’ accounts are classified as non-
performing where repayments are in arrears for 3 months or more from the first day of default for loans and overdrafts, and
after 3 months from maturity date for trade bills, bankers’ acceptances and trust receipts.
Income from Islamic banking business is recognised on an accrual basis in accordance with the principles of Shariah.
Commitment fees, guarantee fees, portfolio management fees and income from asset management and securities services
which are material are recognised as income based on a time apportionment method.
A general allowance based on a percentage of the loans portfolio is also made to cover possible losses which are not
specifically identified.
An uncollectible loan or portion of a loan classified as bad is written off after taking into consideration the realisable value of
collateral, if any, when in the judgement of the management, there is no prospect of recovery.
The Bank’s allowance for non-performing debts and financing is in conformity with the minimum requirements of BNM/GP3.
Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank had
sold from their portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligation to
repurchase the securities are reflected as a liability on the balance sheet.
The difference between sale and repurchase price as well as purchase and resale price is treated as interest and accrued over
the life of the resale/repurchase agreement using the effective yield method.
G Securities
The Group and the Bank classify their securities portfolio into the following categories: securities held for trading, available-for-
sale securities and held-to-maturity securities. Management determines the classification of securities at initial recognition.
G Securities (Continued)
(a) Securities held for trading (Continued)
Pursuant to the amendments to the Revised BNM/GP8 guidelines, the Bank and its banking subsidiaries are now permitted
by BNM for the period from 1 July 2008 to 31 December 2009 to reclassify non-derivatives held for trading securities into
held-to-maturity securities or available-for-sale securities. In the 4th quarter of 2008, the Bank and its banking subsidiaries
reclassified a portion of their securities in the held for trading category to held-to-maturity category based on current
market prices at the relevant dates of the reclassification. Further details of the reclassification are set out in Note 4 to these
Financial Statements.
Reclassifications are made at the fair value at the date of the reclassification. The fair values of the securities becomes the
new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before the reclassification
date are subsequently made. The effective interest rates for the securities reclassified to held-to-maturity category is
determined at the reclassification date. Further changes in estimates of future cash flows are recognised as an adjustment
to the effective interest rates.
Securities are initially recognised at fair value plus transaction costs for all securities not carried at fair value through profit or loss
and securities not held for trading. Securities are derecognised when the rights to receive cash flows from the securities have
expired or where the Group or the Company have transferred substantially all risks and rewards of ownership.
Securities held for trading and available-for-sale securities are subsequently carried at fair value, except for investments in equity
instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured in
which case the investments are stated at cost. Gains and losses arising from changes in the fair value of the securities held for
trading category are included in the income statement in the period which they arise. Gains and losses arising from changes
in fair value of available-for-sale securities are recognised directly in equity, until the securities are derecognised or impaired at
which time the cumulative gains or loss previously recognised in equity are recognised in the income statement.
Held-to-maturity securities are subsequently measured at amortised cost using the effective interest method. Gains or losses
arising from the de-recognition or impairment of the securities are recognised in the income statement.
Interest from securities held for trading, available-for-sale securities and held-to-maturity securities is calculated using the
effective interest method and is recognised in the income statement. Dividends from available-for-sale equity instruments are
recognised in the income statement when the entity’s right to receive payment is established.
The fair values of quoted securities are based on quoted prices in active markets. If the market for an instrument is not active
and for unquoted securities, the Group and the Bank establish fair value by using valuation techniques. These include the
use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques
commonly used by market participants.
Freehold land is not depreciated as it has an infinite life. Other property, plant and equipment are depreciated on a straight line
basis to write off the cost of the assets to their residual values over their estimated useful lives, summarised as follows:
Depreciation on assets under construction commences when the assets are ready for their intended use.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Property, plant and equipment are reviewed for impairment at each balance sheet date and whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Where the carrying amount of an asset is greater
than its estimated recoverable amount, it is written down to its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in non-
interest income.
I Intangible assets
(a) Goodwill
Goodwill arises on business combinations when the cost of acquisition exceeds the fair value of the Bank’s share of the
identifiable assets, liabilities and contingent liabilities acquired. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (“CGU”) for the purpose of impairment testing. Goodwill is tested annually
for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.
Impairment testing is performed annually by comparing the present value of the CGU’s projected cash flows against the
carrying amount of its net assets which include the allocated goodwill. The allocation is made to those CGUs or groups of
CGUs that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group
and the Bank allocate goodwill to each business unit (Note 18).
Under the current applicable approved accounting standards for business combinations, FRS 3 - Business Combinations
which apply to the accounting for business combinations for which the agreement date is on or after 1 January 2006, the
provisions of the standard are applied prospectively and no retrospective changes in respect of accounting for business
combinations prior to 1 January 2006 have been made. Under FRS 3, previously recognised negative goodwill (if any) has
been derecognised with a corresponding adjustment to the opening balances of retained earnings.
Intangible assets that have an indefinite useful life, or are not yet ready for use, are tested for impairment annually. This
impairment test may be performed at any time during the year, provided it is performed at the same time every year. An
intangible asset recognised during the current period is tested before the end of the current year.
Intangible assets that have a finite useful life are stated at cost less accumulated amortisation and accumulated impairment
losses, and are amortised over their estimated useful lives.
Intangible assets are amortised over their finite useful lives as follows:
Leases which do not meet such criteria are classified as operating lease and the related rentals are charged to income
statement as incurred.
Others
Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the income statement on a straight line basis over the
period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor
by way of penalty is recognised as an expense in the period in which termination takes place.
The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration
given or received) unless the fair value of the instrument is evidenced by comparison with other observable current market
transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose
variables include only data from observable markets. When such evidence exists, the Group and the Bank recognise
profits immediately.
At the inception of the transaction, the Group and the Bank document the relationship between hedging instruments and
hedged items, as well as their risk management objective and strategy for undertaking various hedge transactions. The Group
and the Bank also document their assessment, both at hedge inception and on an ongoing basis, of whether the derivatives
that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item
for which the effective interest method is used is amortised to the income statement over the period to maturity. The
adjustment to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the
equity security.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement.
Gains and losses accumulated in the equity are included in the income statement when the foreign operation is partially
disposed or sold.
N Borrowings
Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent periods,
borrowings are stated at amortised cost using the effective yield method; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.
Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these
preference shares are recognised in the income statement as interest expense.
The Group receives fee income for various services provided to the SPV. These fees are determined on an arms length basis
and are recognised on an accrual basis. Deferred consideration/balance of hire purchase receivables obtained under this
programme are held at cost and an allowance is made for any impairment loss based on the position of the SPV and its
underlying assets.
P Currency translations
(a) Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated Financial Statements are
presented in Ringgit Malaysia, which is the Group’s and the Bank’s functional and presentation currency.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are
analysed between translation differences resulting from changes in the amortised cost of the security and other changes
in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in
profit or loss, and other changes in the carrying amount are recognised in equity.
Translation differences on non-monetary financial assets and liabilities, such as equity instruments held at fair value through
profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets
such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and of
borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity.
When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised
in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;
• income and expenses for each income statement are translated at average exchange rates (unless this average is
not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the transactions); and
• all resulting exchange differences are recognised as a separate component of equity.
Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the Financial Statements. However, deferred income tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the
temporary differences can be utilised.
Deferred income tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax related to fair value re-measurement of available-for-sale securities, which are charged or credited directly
to equity, is also credited or charged directly to equity and is subsequently recognised in the income statement together with
the deferred gain or loss.
Deferred income tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
R Share capital
(a) Classification
Ordinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Other shares
are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to
holders of a financial instrument classified as an equity instrument are charged directly to equity.
(c) Dividends
Dividends on ordinary shares are recognised as a liability when the shareholders’ right to receive the dividend is established.
S Employee benefits
(a) Short term employee benefits
The Group and the Bank recognise a liability and an expense for bonuses. The Group and the Bank recognise a provision
where contractually obliged or where there is a past practice that has created a constructive obligation.
Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which
the associated services are rendered by employees of the Group and Bank.
The Group’s and Bank’s contributions to defined contribution plans are charged to the income statement in the period to
which they relate. Once the contributions have been paid, the Group and the Bank have no further payment obligations.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments
is available.
The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at the balance sheet
date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains/losses and past
service cost.
The Group and the Bank determine the present value of the defined benefit obligation and the fair value of any plan assets
with sufficient regularity such that the amounts recognised in the Financial Statements do not differ materially from the
amounts that would be determined at the balance sheet date.
The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries,
considering the estimated future cash outflows using market yields at balance sheet date of government securities which
have currency and terms to maturity that approximate the terms of the related liability.
Plan assets in excess of the defined obligation are subject to the asset limitation specified in FRS 119 - Employee Benefits.
Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. The amount of
net actuarial gains and losses recognised in the income statement is determined by the corridor method in accordance
with FRS 119 and is charged or credited to income over the average remaining service lives of the related employees
participating in the defined benefit plan.
Past-service costs are recognised immediately in income, unless the changes to the plan are conditional on the employees
remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised
on a straight-line basis over the vesting period.
(i) Share options granted by the ultimate holding company under the Modified Executive Employee Share Option Scheme
(“EESOS”).
As allowed in the transition provisions of FRS 2 - Share-based Payment, the Group and the Bank have elected not to
apply FRS 2 to these equity instruments which were granted:
FRS 2 only applies to transactions involving a transfer of equity instruments between shareholders and option holders,
hence entitlements based on ordinary shares of the ultimate company granted under the Management Equity Scheme
(‘MES’) is out of the scope of FRS 2.
T Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non financial assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to
the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in
recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which
case it is taken to revaluation surplus.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting
the allowance account. The amount of the reversal is recognised in the income statement.
V Foreclosed properties
Foreclosed properties are stated at the lower of cost and net realisable value. When an indication of impairment exists, the
carrying amount of the asset is assessed and written-down to its recoverable amount.
W Provisions
Provisions are recognised by the Group and the Bank when all of the following conditions have been met:
(i) the Group and the Bank have a present legal or constructive obligation as a result of past events:
(ii) it is probable that an outflow of resources to settle the obligation will be required; and
(iii) a reliable estimate of the amount of obligation can be made.
Where the Group and the Bank expect a provision to be reimbursed, the reimbursement is recognised as a separate asset but
only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
W Provisions (Continued)
Provisions are measured at the present values of the expenditures expected to be required to settle the obligation using a pre-
tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. The increase
in the provision due to passage of time is recognised as interest expense.
Y Zakat
This represents business zakat. It is a contribution amount payable by CIMB Islamic Bank berhad (“CIMB Islamic”)to comply with
the principles of Shariah. Zakat provision is calculated based on ‘Adjusted Growth’ method, at 2.5% for individual Bumiputra
shareholders of Bumiputra-Commerce Holdings Berhad, the Bank’s ultimate holding company.
On issue of a financial instrument that contains both a liability and an equity component, the fair value of the liability portion is
determined using a market interest rate for an equivalent financial instrument; this amount is carried as liability on the amortised
cost basis until extinguished on conversion or maturity of the instrument. The remainder of the proceeds is allocated to the
conversion option which is recognised and included in shareholders’ equity; the value of the conversion option is not changed
in subsequent periods.
AB Segment reporting
Segment reporting is presented for enhanced assessment of the Group’s risks and returns. A business segment is a group
of assets and operations engaged in providing products or services that are subject to risk and returns that are different from
those of other business segments. A geographical segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are different from those components.
Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment
that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the
segment. Segment revenue, expense, assets and segment liabilities are determined before intra-group balances and intra-
group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and
transactions are between group enterprises within a single segment.
AD Investment properties
Investment properties, comprising principally land and office buildings, are held for long term rental yields or for capital
appreciation or both, and are not occupied by the Group, and the Bank.
Investment properties are stated at fair value, representing the open-market value determined annually by external valuers.
Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the
specific asset. If this information is not available, the Group and the Bank use alternative valuation methods such as recent
prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the income statement
as part of other income.
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are
expected from its disposal, it shall be derecognised (eliminated from the balance sheet). The difference between the net
disposal proceeds and the carrying amount is recognised in profit or loss in the period of the retirement or disposal.
1 General information
The Bank is principally engaged in all aspects of commercial banking and in the provision of related financial services, including
Islamic banking. The principal activities of the significant subsidiaries as set out in Note 11 to the Financial Statements, consist
of Islamic banking, offshore banking, debt factoring, trustees and nominee services, and property ownership and management.
There was no significant change in the nature of these activities during the financial year.
The holding company of the Bank is CIMB Group Sdn Bhd and the Directors regard the ultimate holding company as Bumiputra-
Commerce Holdings Berhad (“BCHB”), a quoted company, both of which are incorporated in Malaysia.
The address of the Bank’s registered office is 5th Floor, Bangunan CIMB, Jalan Semantan, Damansara Heights, 50490 Kuala
Lumpur, Malaysia.
The Bank’s principal place of business is at No. 6, Jalan Tun Perak, 50050 Kuala Lumpur, Malaysia.
Included in the Bank’s and Group’s cash and short-term funds are RM236,891 (2007: RM236,891) of money at call and
deposit placements relating to a jointly controlled entity, Proton Commerce Sdn Bhd (“PCSB”).
Included in the Group’s cash and short term funds are the following monies held in trust in relation to the Group’s stockbroking
business:
The Group
2008 2007
RM’000 RM’000
Client’s trust balances - 25,472
Dealers’ representatives’ balances - 9,345
- 34,817
Included in the Bank’s deposits and placements with banks and other financial institutions are exposures to Restricted Profit
Sharing Investment Accounts (“RPSIA”), as part of an arrangement with CIMB Islamic. The RPSIA is a contract based on
the Mudharabah principle between the Bank and CIMB Islamic to finance a specific business venture where the Bank solely
provides capital and the business ventures are managed solely by the entrepreneur. The profit of the business venture is shared
between both parties based on a pre-agreed ratio and management fees.
As at 31 December 2008, the RPSIA placements amounted to RM3,020 million (2007: RM374 million) for a tenure between 1
to 3 months at profit rates from 3.56% to 3.93% per annum (2007: 3.56% to 3.93% per annum).
Unquoted securities
In Malaysia
Shares 5,001 - 5,001 -
Private and Islamic debt securities 1,416,966 6,704,160 1,401,255 6,683,741
1,421,967 6,704,160 1,406,256 6,683,741
Outside Malaysia
Private and Islamic debt securities 516,970 2,301,781 387,137 306,357
Securities held for trading of RMNil (2007: RM995,000) have been pledged to third parties in relation to securities sold under
repurchase agreements.
In the 4th quarter of 2008, the Bank and its banking subsidiaries reclassified a portion of their securities in held for trading
category to the held-to-maturity category based on current market prices at the relevant dates of the reclassification. The
reclassification has been accounted for in accordance with the BNM circular on ‘Reclassification of Securities under Specific
Circumstances’ dated 17 October 2008, which is effective from 1 July 2008 until 31 December 2009.
The fair value of the securities reclassified from held for trading category to held-to-maturity category, as of the respective dates
of reclassification are RM5,955,065,000 and RM4,396,670,000 for the Group and the Bank, respectively.
Included in the non-interest income (Note 38) is the net gains/(losses) arising from the change in fair value recognised in the
income statement in respect of the reclassified securities:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Net fair value (loss)/gain (110,605) (30,228) 12,449 (198)
As of date of reclassification, the effective interest rates on the reclassified held for trading securities, based on the new cost
is an average of 6.63% per annum and 6.52% per annum for the Group and the Bank respectively, with expected recoverable
cash flows of approximately RM6,110,905,000 and RM4,430,456,000 for the Group and the Bank respectively, including any
coupons receivable on the securities.
5 Available-for-sale securities
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Money market instruments
Unquoted
Malaysian Government Securities 109,729 177,504 99,710 53,221
Khazanah bonds 58,376 193,238 9,791 127,456
Government Investment Issue 187,714 15,195 66,477 15,195
Commercial papers 134,040 29,707 134,040 29,707
Malaysian Government treasury bills - 87,906 - 87,906
Other Government treasury bills - 50,003 - -
Bank Negara Malaysia bills - 23,322 - 13,375
Cagamas bonds 296,925 397,330 248,011 362,910
Bank Negara negotiable notes - 125,393 - 125,393
786,784 1,099,598 558,029 815,163
Quoted securities
In Malaysia
Unit trusts 703,889 702,318 703,889 702,318
Shares - 6,669 - 5,500
703,889 708,987 703,889 707,818
Outside Malaysia
Shares - 7,627 - 7,627
Private debt securities 115,216 - 115,216 -
115,216 7,627 115,216 7,627
Unquoted securities
In Malaysia
Private debt securities 5,401,347 4,689,956 5,001,921 4,288,143
Shares 378,104 381,032 378,989 380,457
Loan stocks 30,715 18,183 30,715 18,183
5,810,166 5,089,171 5,411,625 4,686,783
Outside Malaysia
Shares 9,606 22,244 633 121
Private equity funds 83,953 68,384 - -
Unit trust funds 136,578 59,318 - -
Private debt securities - 29,866 - -
230,137 179,812 633 121
7,646,192 7,085,195 6,789,392 6,217,512
6 Held-to-maturity securities
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Money market instruments
Unquoted
Malaysian Government Securities 149,967 - 149,967 -
Cagamas bonds 294,817 290,000 294,817 290,000
Bank Negara Malaysia negotiable notes - 98,057 - 98,057
444,784 388,057 444,784 388,057
Unquoted securities
In Malaysia
Shares 462 270 192 -
Loans stocks 32,478 32,478 - -
Danaharta Urus Sdn Bhd bonds 929,639 1,151,932 929,639 1,151,932
Private debt securities 7,738,316 1,737,931 6,538,110 1,635,072
8,700,895 2,922,611 7,467,941 2,787,004
Outside Malaysia
Private debt securities 2,324,723 - 570,525 -
Private debt securities amounting to RM954 million are funded by a RPSIA depositor, as part of an arrangement with CIMB
Islamic.
Included in the held-to-maturity securities are securities transferred from the held for trading category during the last quarter of
the year, with the following carrying value and fair value as at 31 December 2008 (2007: no such reclassification permitted):
Total net loans, advances and financing 95,687,146 80,617,533 84,922,177 73,011,777
(a) Included in the Bank’s loans, advances and financing balances are RM2,061,944,000 (2007: RM2,064,458,000)
of net loans relating to that of a jointly controlled entity, PCSB. The revenue and risks of these accounts are shared
equally between the Bank and the joint venture partner, Proton Edar Sdn Bhd, pursuant to the terms of a Joint
Venture Agreement.
(b) Included in other term loans is RM3,021,205,464 (2007: RMNil) provided on normal commercial terms which is
exempted from general allowance by Bank Negara Malaysia.
2,177,618 -
The fair values of interest rate swaps as at 31 December 2008 were RM202,404,724 (2007: RMNil).
(d) As part of an arrangement with CIMB Islamic in relation to the RPSIA, the Bank records as deposits and placements
with banks and other financial institutions, its exposure in the arrangement (See Note 3), whereas CIMB Islamic
records its exposure as loans, advances and financing. The RPSIA arrangement exposes the Bank to the risks and
rewards on the financing and accordingly, the Bank account for all the general allowance and specific allowances for
bad and doubtful financing arising from the RPSIA financing.
As at 31 December 2008, the gross exposure and general allowance relating to RPSIA financing are RM1,893 million
(2007: RMNil) and RM32 million (2007: RMNil) respectively.
(iii) By interest rate sensitivity
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Fixed rate
- Housing loans 5,048,818 3,857,299 4,704,226 3,500,520
- Hire-purchase receivables 11,421,719 11,995,147 9,605,869 10,497,861
- Other fixed rate loans 24,370,875 15,830,952 22,841,668 14,979,184
Variable rate
- BLR plus 41,327,282 38,156,423 40,913,189 38,128,948
- Cost-plus 10,056,076 12,117,063 7,402,107 6,252,386
- Other variable rates 8,370,713 3,914,569 3,864,587 4,080,097
(v) Non-performing loans, advances and financing by economic purpose:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Personal use 246,826 251,857 224,972 239,902
Credit card 70,400 57,668 70,400 57,668
Purchase of consumer durables 950 1,005 950 1,005
Construction 329,641 442,512 309,509 423,295
Residential property (housing) 1,585,234 1,759,557 1,529,613 1,698,746
Non-residential property 438,087 558,248 422,317 520,240
Purchased of fixed assets other than land
and building 66,745 40,165 14,830 14,718
Purchase of securities 69,980 119,446 45,119 93,749
Purchase of transport vehicles 354,539 587,988 314,476 474,102
Working capital 2,193,798 2,833,053 2,095,621 2,745,816
Other purpose 117,578 102,212 116,001 101,202
Net non-performing loans, advances and financing^ 2,488,054 3,452,963 2,201,984 3,176,312
^ Excludes specific allowances on performing loans amounting to RM198,787,000 (2007: RMNil) for the Group and
RM198,728,000 (2007: RMNil) for the Bank.
Specific allowance
At 1 January 3,300,748 3,240,620 3,194,131 3,144,799
Allowance made during the financial year 1,508,387 1,999,713 1,364,169 1,918,625
Allowance made and charged to deferred assets 878 5,062 878 5,062
Amount written back in respect of recoveries (718,893) (816,349) (608,735) (726,203)
Amount written back from NPL sale (61,099) - (60,416) -
Amount written off (648,042) (1,109,824) (591,362) (1,031,935)
Sale of non-performing loans (194,711) - (189,943) -
Amount transferred in respect of loans converted
to securities - (1,849) - -
Disposal of Islamic banking operations to
CIMB Islamic - - - (104,654)
Write back in relation to jointly controlled entity (4,329) (9,132) (4,329) (9,132)
Amount transferred from I-Prestige Sdn Bhd - - 35,589 -
Reclassified to non-current assets held for sale - (1,090) - -
Exchange fluctuation 1,572 (6,403) 570 (2,431)
General allowance
At 1 January 1,377,254 1,361,692 1,233,088 1,283,046
Net allowance made/(write back) during the
financial year 229,830 24,461 217,803 (18,546)
Write back in relation to jointly controlled entity - (658) - (658)
Disposal of Islamic banking operations to
CIMB Islamic - - - (28,617)
Reclassified to non-current assets held for sale - (464) - -
Exchange fluctuation (586) (7,777) (4,356) (2,137)
8 Other assets
The Group The Bank
Note 2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
(a) Deferred assets comprise mainly the carrying value of the excess of liabilities over assets of Common Forge Berhad taken
over by SBB Berhad (formerly known as Southern Bank Berhad) in 2000 and will be reduced progressively by a scheme
of arrangement which has been agreed by Bank Negara Malaysia. Movements in deferred assets during the financial year
are as follows:
The Group and The Bank
2008 2007
RM’000 RM’000
9 Deferred taxation
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, have been offset and shown
in the balance sheet:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
General Revaluation
allowance reserve- Unutilised
for doubtful Accelerated available Unrealised Other tax losses
debts and tax for-sale gain on temporary and capital Intangible
financing depreciation securities derivatives differences allowances assets Total
The Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 31 December 2007 461,115 (49,610) (19,008) 726 72,997 37,422 (94,671) 408,971
120
The movements in deferred tax assets and liabilities during the financial year comprise the following:
(13491-P)
CIMB Bank Berhad
General Revaluation
allowance reserve-
for doubtful Accelerated available Other
General Revaluation
allowance reserve- Unutilised
for doubtful Accelerated available Other tax losses
debts and tax for-sale temporary and capital Intangible
financing depreciation securities differences allowances assets Total
The Bank Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
For the financial year ended 31 December 2008
The non-interest bearing statutory deposits maintained with Bank Negara Malaysia are in compliance with Section 37(1)(c)
of the Central Bank of Malaysia Act, 1958 (revised 1994), the amounts of which are determined at set percentages of total
eligible liabilities. The non-interest bearing statutory deposits of foreign branches are maintained with respective central banks
in compliance with the applicable legislation.
11 Investment in subsidiaries
The Bank
Note 2008 2007
RM’000 RM’000
2,506,417 2,561,136
Less: Allowance for impairment loss (260,498) (239,648)
2,245,919 2,321,488
(ii) On 18 March 2008, BHL Venture Bhd, a wholly-owned subsidiary of the Bank undertook a capital reduction exercise to
distribute RM300,860,905 to the Bank via the cancellation of 178,545,000 ordinary shares of RM1.00 each amounting
to RM178,545,000 and the cancellation of its entire share premium account amounting to RM122,315,905.
(iii) On 1 April 2008, the Bank disposed its 60% equity interest in South East Asian Bank Ltd to British American Investment
Co (Mauritius) Ltd.
The Bank
2008 2007
RM’000 RM’000
124,448 124,448
On 22 October 2003, Bumiputra-Commerce Finance Berhad (“BCF”) entered into a joint venture agreement with Proton
Edar Sdn Bhd (“PESB”) for the purposes of building and operating a competitive vehicle financing business in Malaysia for
vehicles distributed by PESB. Subsequently, a jointly controlled entity was incorporated under the name of Proton Commerce
Sdn Bhd (“PCSB”) which is 50%:50% owned by BCF and PESB respectively. PCSB is primarily responsible for developing,
managing and marketing hire purchase loans for vehicles sold to the customers of PESB. Pursuant to the joint venture, BCF
issued RM200 million Perpetual Preference Shares (“PPS”) which were fully subscribed by PCSB. Pursuant to the vesting of
the finance company business and the related assets and liabilities of BCF to the Bank and the subsequent capital reduction
exercise undertaken by BCF in 2006, the BCF PPS were cancelled, and the Bank issued RM200 million PPS to PCSB.
Under the joint venture, the assets and liabilities of PCSB are recorded and accounted for by the Bank in a Special Project
Account (“SPA”) for and on behalf of PCSB. The respective balances in this SPA as at balance sheet date are consolidated and
reported as the assets and liabilities of the Bank.
All income and expenses arising from PCSB’s activities are recorded in the books of PCSB. At the Group, the 50% share of
profit and loss from the operations of PCSB is shown as a line item in the income statement. For the 12 months period ended
2008, PCSB recorded a profit after taxation of RM6,506,098 (2007: profit after taxation of RM6,820,000) and the Group’s
share of this profit is RM3,253,049 (2007: profit of RM3,410,000).
2008 2007
RM’000 RM’000
Assets
Cash and short-term funds 237 237
Loans and advances 2,061,944 2,064,458
Other assets 4,423 4,647
Held-to-maturity securities 90,000 90,000
Liabilities and equity
Deposits and placements of banks and other financial institutions 1,030,504 741,833
Amount due to Cagamas Berhad 68,158 291,884
Other liabilities 452,539 442,579
Amount due to related company (Nota 26) 405,403 483,046
Perpetual preference shares 200,000 200,000
200,000 200,000
Commitments and contingencies 30,840 17,360
The Group’s share of income and expenses of the joint venture is as follows:
2008 2007
RM’000 RM’000
2008 2007
RM’000 RM’000
13 Investment in associate
The Group
2008 2007
RM’000 RM’000
At 1 January 791 242
Acquisition of associate (note 56(a)(i)) 595,814 -
Disposal of associate (note 56(b)(iv)) (595) -
Dividend from associate (500) -
Share of (loss)/profit (40,565) 567
Revaluation reserve - available-for-sale securities 32,167 -
Exchange fluctuation 168 (18)
587,280 791
The Bank
2008 2007
RM’000 RM’000
Investment in associate as at 31 December 2008 includes premium on acquisition of RM379,003,000 (2007: RMNil), which is
the provisional amount that relates to the acquisition of 42.13% equity interest in BankThai Public Company Limited (‘BankThai’)
during the financial year.
2008 2007
RM’000 RM’000
(40,565) 567
The Group’s share of the assets and liabilities of the associates is as follows:
2008 2007
RM’000 RM’000
208,277 791
Commitments and contingencies 9,149,942 -
Details of the associate held by CIMB Bank (L) Limited are as follows:
Percentage of equity held
2008 2007
Name of company Principal activities % %
CIMB Bank (L) Limited has disposed its entire equity interest in Navis-CIMB General Partner Ltd. in September 2008.
As set out in Note 51(a) of these financial statements, on 13 January 2009, BankThai Public Company Limited became a
92.04% owned subsidiary.
The amounts due from holding company and ultimate holding company are unsecured, interest free and recallable on demand.
The amounts due from/(to) subsidiaries are unsecured, interest free and recallable on demand.
The amounts from/(to) related companies are unsecured, interest free and recallable on demand.
17 Deferred consideration
The deferred consideration (“consideration”) equals the total initial purchase price for the hire purchase receivables sold by BCF
to a special purpose vehicle, Auto ABS One Berhad, less cash paid to BCF. The consideration bears an average interest rate
of 8% per annum. The consideration is receivable after all indebtedness of Auto ABS One Berhad to Malaysian Trustee Berhad
and the holders of the redeemable asset-backed bonds arising under the transaction of documents and other obligations
having priority over the consideration have been satisfied in full.
On 28 February 2008, the redeemable asset-backed bonds were redeemed and all other obligations were repaid in full. The
consideration became receivable and was fully settled.
18 Goodwill
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Cost
At 1 January 3,695,075 3,966,649 3,559,075 3,965,075
Disposal of interest in subsidiaries - (195,000) - -
Disposal of Islamic banking operations to CIMB Islamic - - - (136,000)
Reclassified to non-current assets held for sale (Note 57(iv)) - (76,574) - (75,000)
Written off due to disposal of indirect subsidiary - - - (195,000)
Impairment
At 1 January - - - -
Impairment charge - (3,000) - (198,000)
Reclassified to non-current assets held for sale (Note 57(iv)) - 3,000 - 3,000
Written off due to disposal of indirect subsidiary - - - 195,000
At 31 December - - - -
18 Goodwill (continued)
A segment-level summary of the goodwill allocation is presented below:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any
CGU to exceed its recoverable amount.
18 Goodwill (Continued)
Impairment test for goodwill (Continued)
Impairment charge
The impairment charge of RM195 million in the Bank in the previous financial year arises from the disposal of CIMB Wealth
Advisors Berhad and SBB Asset Management Sdn Bhd as disclosed in Note 56(c)(i) and has been written off. The “Others”
CGU was affected by the impairment charge write-off.
19 Intangible assets
Credit card
customer Core Computer
relationships deposits software Total
The Group Note RM’000 RM’000 RM’000 RM’000
2008
Cost or valuation
At 1 January 153,091 263,612 275,708 692,411
Additions - - 51,531 51,531
Disposals/write-off - - (14) (14)
Reclassified from property, plant and equipment 21 - - 8,289 8,289
Reclassified from non-current assets held for sale 57(i) - - 301 301
Exchange fluctuation - - 4 4
Amortisation
At 1 January 19,134 49,428 158,224 226,786
Amortisation during the financial year 12,758 32,951 65,662 111,371
Disposals/write-off - - (14) (14)
Reclassified from property, plant and equipment 21 - - 1,886 1,886
Reclassified from non-current assets held for sale 57(i) - - 202 202
Exchange fluctuation - - 3 3
Credit card
customer Core Computer
relationships deposits software Total
The Group Note RM’000 RM’000 RM’000 RM’000
2007
Cost or valuation
At 1 January 153,091 263,612 232,986 649,689
Additions - - 76,267 76,267
Disposals/write-off - - (38,825) (38,825)
Reclassified from property, plant and equipment 21 - - 5,987 5,987
Reclassified to non-current assets held for sale 57(i) - - (707) (707)
Amortisation
At 1 January 6,833 17,125 130,126 154,084
Amortisation during the financial year 12,301 32,303 51,137 95,741
Disposals/write-off - - (10,514) (10,514)
Reversal of impairment - - (12,000) (12,000)
Reclassified to non-current assets held for sale 57(i) - - (525) (525)
Credit card
customer Core Computer
relationships deposits software Total
The Bank RM’000 RM’000 RM’000 RM’000
2008
Cost or valuation
At 1 January 153,091 263,612 263,979 680,682
Additions - - 49,122 49,122
Transferred from CIMB Islamic - - 19 19
Amortisation
At 1 January 19,134 49,428 156,058 224,620
Amortisation during the financial year 12,758 32,951 58,637 104,346
Credit card
customer Core Computer
relationships deposits software Total
The Bank RM’000 RM’000 RM’000 RM’000
2007
Cost or valuation
At 1 January 153,091 263,612 232,031 648,734
Additions - - 69,888 69,888
Disposals - - (37,940) (37,940)
Amortisation
At 1 January 6,833 17,125 129,669 153,627
Amortisation during the financial year 12,301 32,303 48,018 92,622
Disposals - - (9,629) (9,629)
Reversal of impairment - - (12,000) (12,000)
The valuation of credit card customer relationships was determined through the sum of the discounted future excess earnings
attributable to existing credit card customers over the remaining life span of the customer relationships. Income from existing
credit card base was projected, adjusted for expected attrition and taking into account applicable costs to determine future
excess earnings. The discount rate used in the valuation of credit card customer relationships was 11.7%, which is arrived at
using the weighted average cost of capital adjusted for the risk premium after taking into consideration the average market
cost of equity.
The valuation of core deposits was derived by discounting the anticipated future benefits in the form of net interest savings from
core deposits. The discount rate used was 9.6%, which was derived from the average of the weighted average cost of capital
and the cost of equity, reflecting the lower risk premium for core deposit intangibles compared with equity returns.
The remaining amortisation period of credit card customer relationships and core deposits range from 5 to 9 years, respectively.
Amortisation
At 1 January 9,591 3,309 12,900
Amortisation during the financial year 922 135 1,057
Disposals/write-off (1,556) - (1,556)
Exchange fluctuation 6 115 121
2007
Cost
At 1 January 38,433 4,738 43,171
Reclassified to property, plant and equipment 21 (2,745) - (2,745)
Reclassified to non-current assets held for sale 57(v) (376) - (376)
Disposals/write-off (27) - (27)
Exchange fluctuation - (54) (54)
Amortisation
At 1 January 7,847 2,957 10,804
Reclassified to property, plant and equipment 21 (40) - (40)
Reclassified to non-current assets held for sale 57(v) (167) - (167)
Amortisation during the financial year 1,440 77 1,517
Disposals/write-off (16) - (16)
Exchange fluctuation - (96) (96)
Renovations, Computer
Buildings on Buildings on office Computer equipment
Buildings on long term short term equipment, equipment and
Freehold freehold leasehold leasehold furniture and and Motor software
land land land land fittings hardware vehicles under lease Total
The Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2008
Cost
At 1 January 106,014 191,242 95,115 19,504 550,903 399,936 35,862 52,640 1,451,216
Additions - - - - 108,174 106,036 5,574 3,417 223,201
Disposals/write-off (1,015) (6,195) - - (14,446) (5,866) (5,959) (349) (33,830)
Reclassification - - 3,611 (3,611) (3,810) 209 - 3,601 -
Reclassified to
intangible assets 19 - - - - - (8,289) - - (8,289)
Reclassified from/(to)
non-current assets
held for sale 57(i) - - - - (45) 313 - - 268
Exchange fluctuation - (406) (697) (44) (739) 180 16 (897) (2,587)
At 31 December 104,999 184,641 98,029 15,849 640,037 492,519 35,493 58,412 1,629,979
138
(13491-P)
Renovations, Computer
CIMB Bank Berhad
The above property, plant and equipment include renovations, computer equipment and hardware under construction at cost RM30,285,632.
For the financial year ended 31 December 2008
21 Property, plant and equipment (Continued)
Renovations, Computer
Buildings on Buildings on office Computer equipment
Buildings on long term short term equipment, equipment and
Freehold freehold leasehold leasehold furniture and and Motor software
land land land land fittings hardware vehicles under lease Total
The Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2007
Cost
At 1 January 108,316 202,318 135,480 28,700 523,623 359,454 41,049 45,792 1,444,732
Additions - - 6,546 - 102,116 115,131 7,795 7,863 239,451
Disposals/write-off - (9,162) (161) - (50,862) (54,360) (11,799) (1,015) (127,359)
Reclassification - - (832) 832 1,629 (1,754) 125 - -
Reclassified to
investment properties 22 - - (42,310) (8,709) - - - - (51,019)
Reclassified from
prepaid lease payments 20 - 2,745 (785) - - - - - 1,960
Reclassified to intangible
assets 19 - - - - (5,987) - - - (5,987)
Reclassified to
non-current assets
held for sale 57(i)(ii)(iii)(v) (750) (5,069) (2,572) (977) (19,744) (19,429) (1,320) - (49,861)
Exchange fluctuation (1,552) 410 (251) (342) 128 894 12 - (701)
At 31 December 106,014 191,242 95,115 19,504 550,903 399,936 35,862 52,640 1,451,216
140
(13491-P)
Renovations, Computer
CIMB Bank Berhad
31 December 2007 106,014 115,726 55,120 9,783 189,998 143,281 15,098 23,930 658,950
For the financial year ended 31 December 2008
The above property, plant and equipment include renovations, computer equipment and hardware under construction at cost of RM16,445,332.
21 Property, plant and equipment
Renovations, Computer
Buildings on Buildings on office Computer equipment
Buildings on long term short term equipment, equipment and
Freehold freehold leasehold leasehold furniture and and Motor software
land land land land fittings hardware vehicles under lease Total
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2008
Cost
At 1 January 50,722 114,269 77,291 16,495 520,892 374,569 33,071 1,946 1,189,255
Additions - - - - 106,694 105,108 5,152 123 217,077
Disposals/write-off (1,015) (2,895) - - (13,084) (5,634) (5,842) (27) (28,497)
Reclassifications - - 3,611 (3,611) (3,601) - - 3,601 -
Exchange fluctuation - (406) (874) (44) (783) 164 6 (897) (2,834)
As at 31 December 2008 49,707 110,968 80,028 12,840 610,118 474,207 32,387 4,746 1,375,001
Accumulated depreciation
At 1 January - 60,192 35,574 7,735 348,189 243,168 18,808 1,946 715,612
Charge for the financial year - 1,913 2,022 322 59,927 50,012 2,366 298 116,860
Disposals/write-off - (1,844) - - (7,559) (5,372) (5,296) (27) (20,098)
Reclassification - - 1,519 (1,519) (412) - - 412 -
Exchange fluctuation - (406) (376) (5) (566) 112 (17) (162) (1,420)
As at 31 December 2008 - 59,855 38,739 6,533 399,579 287,920 15,861 2,467 810,954
The above property, plant and equipment include renovations, computer equipment and hardware under construction at cost of RM27,730,988.
142
(13491-P)
Renovations, Computer
CIMB Bank Berhad
As at 31 December 2007 50,722 114,269 77,291 16,495 520,892 374,569 33,071 1,946 1,189,255
Notes to the Financial Statements
For the financial year ended 31 December 2008
21 Property, plant and equipment (Continued)
Renovations, Computer
Buildings on Buildings on office Computer equipment
Buildings on long term short term equipment, equipment and
Freehold freehold leasehold leasehold furniture and and Motor software
land land land land fittings hardware vehicles under lease Total
The Bank Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2007
Accumulated
depreciation
At 1 January - 58,491 44,185 8,165 302,591 231,645 24,451 1,969 671,497
Charge for the financial year - 1,920 1,230 451 47,484 47,850 2,097 12 101,044
Disposals/write-off - (132) (97) - (3,636) (34,340) (7,804) (35) (46,044)
Reclassification - - - - 1,883 (1,967) 84 - -
Reclassified to investment
properties 22 - - (9,141) - - - - - (9,141)
Reclassified from prepaid
lease payments 20 - 40 - - - - - - 40
Reclassified to
non-current assets
held for sale 57(v) - (119) (603) (759) - - - - (1,481)
Exchange fluctuation - (8) - (122) (133) (20) (20) - (303)
As at 31 December 2007 - 60,192 35,574 7,735 348,189 243,168 18,808 1,946 715,612
The above property, plant and equipment include renovations, computer equipment and hardware under construction at cost of RM16,304,332.
22 Investment properties
Buildings on Buildings on
short term long term
leasehold land leasehold land Total
The Group and the Bank RM’000 RM’000 RM’000
2008
At 1 January 44,519 52,902 97,421
Fair value adjustments (2,141) - (2,141)
Exchange fluctuation 2,321 2,574 4,895
Buildings on Buildings on
short term long term
leasehold land leasehold land Total
The Group and the Bank RM’000 RM’000 RM’000
2007
At 1 January - - -
Reclassified from property, plant and equipment 8,709 33,169 41,878
Fair value adjustments 36,384 19,774 56,158
Exchange fluctuation (574) (41) (615)
The investment properties are valued annually at fair value based on market values determined by independent qualified
valuers. The following amounts have been reflected in the income statement:
2008 2007
RM’000 RM’000
(i) During the financial year, the Bank has undertaken a fair value hedge on the interest rate risk of the negotiable
instruments of deposit amounting to RM1,104,900,000 (2007: RM930,000,000) using interest rate swaps.
The Group and The Bank
2008 2007
RM’000 RM’000
1,118,320 934,765
The fair values of interest rate swaps as at 31 December 2008 were RM44,861,369 (2007: RM17,892,000).
The maturity structure of fixed deposits and negotiable instruments of deposit is as follows:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are
reflected in “Derivative financial instruments” Assets and Liabilities respectively.
These commitments and contingencies are not secured over the assets of the Group and the Bank, except for certain
securities held for trading being pledged as credit support assets for certain over-the-counter derivative contracts.
2008 2007
Credit Risk Credit Risk
equivalent weighted equivalent weighted
Principal amount* amount Principal amount* amount
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Credit-related
Direct credit substitutes 1,840,720 1,809,540 1,231,300 1,797,765 1,797,765 1,554,395
Transaction-related contingent
items 4,379,188 2,189,594 1,710,147 4,549,710 2,274,856 1,921,981
Short-term self-liquidating
trade-related contingencies 3,700,924 737,396 511,436 3,217,282 643,455 383,464
Islamic Financing sold directly
and indirectly to Cagamas
with recourse 294,946 294,946 294,946 575,918 575,918 575,918
Obligations under underwriting
agreement 65,000 32,500 32,500 85,000 42,500 42,500
Irrevocable commitments to
extend credit :
- maturity not exceeding
one year 35,316,004 - - 36,531,623 - -
- maturity exceeding one year 8,751,965 4,375,983 3,721,781 10,056,536 5,028,178 4,396,414
Forward asset purchase 104,052 14 10 5,000 24 12
Miscellaneous commitments
and contingencies 4,722,384 320,398 65,012 2,756,215 3,677 2,192
2008 2007
Credit Risk Credit Risk
equivalent weighted equivalent weighted
Principal amount* amount Principal amount* amount
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Treasury-related
Foreign exchange related
contracts :
- less than one year 35,372,264 308,096 111,756 21,790,607 615,310 149,065
- one year to less than 5 years 1,769,837 867,286 211,566 5,345,876 663,791 163,264
- five years and above 2,040,476 733,002 283,815 3,209,939 562,478 242,587
39,182,577 1,908,384 607,137 30,346,422 1,841,579 554,916
Interest rate related contracts :
- less than one year 114,353,287 13,008 2,623 94,113,253 136,220 27,227
- one year to less than 5 years 71,481,378 2,162,265 499,791 63,194,850 2,355,940 479,983
- five years and above 7,634,070 2,059,072 442,869 7,742,413 1,208,505 260,744
193,468,735 4,234,345 945,283 165,050,516 3,700,665 767,954
Equity related contracts
- less than one year 5,602,078 116,973 25,687 23,170,530 - -
- one year to less than 5 years 9,737,250 596,904 177,659 - - -
- five years and above 57,628 4,365 873 44,032 - -
15,396,956 718,242 204,219 23,214,562 - -
Total treasury-related
commitments
and contingencies 248,048,268 6,860,971 1,756,639 218,611,500 5,542,244 1,322,870
Included in the Group’s commitments and contingencies above is RM30,840,000 (2007: RM17,360,000) of irrevocable
commitments to extend credit with maturity less than one year relating to a jointly controlled entity, PCSB.
The Bank has given a continuing guarantee to Bank Negara Malaysia to meet the liabilities and financial obligations and
requirements of its subsidiaries, CIMB Bank (L) Limited and CIMB (L) Limited, arising from its offshore banking business in
the Federal Territory of Labuan.
2008 2007
Credit Risk Credit Risk
equivalent weighted equivalent weighted
Principal amount* amount Principal amount* amount
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Credit-related
Direct credit substitutes 1,538,499 1,538,499 960,259 1,560,930 1,560,930 1,317,559
Transaction-related contingent
items 3,827,518 1,913,759 1,511,102 4,282,001 2,141,001 1,801,280
Short-term self-liquidating
trade-related contingencies 3,388,686 677,737 478,249 2,903,157 580,631 320,640
Obligations under underwriting
agreement 15,000 7,500 7,500 35,000 17,500 17,500
Irrevocable commitments to
extend credit :
- maturity not exceeding
one year 32,082,352 - - 34,484,080 - -
- maturity exceeding one year 7,491,232 3,745,616 3,307,623 9,446,665 4,723,332 4,098,816
Forward assets purchase 99,052 14 10 5,000 24 12
Miscellaneous commitments
and contingencies 6,228,040# 567,869 312,482 3,452,916# 1,863 378
2008 2007
Credit Risk Credit Risk
equivalent weighted equivalent weighted
Principal amount* amount Principal amount* amount
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Treasury-related
Foreign exchange related
contracts :
- less than one year 34,720,138 295,712 108,225 21,678,187 613,228 148,615
- one year to less than 5 years 1,842,592 873,708 212,851 5,345,876 663,791 163,264
- five years and above 2,020,476 729,052 282,290 3,209,939 562,478 242,587
38,583,206 1,898,472 603,366 30,234,002 1,839,497 554,466
Interest rate related contracts :
- less than one year 114,398,325 13,016 2,625 94,113,253 136,220 27,227
- one year to less than 5 years 68,562,547 2,040,193 475,377 62,033,739 2,336,822 476,159
- five years and above 7,765,721 2,062,033 443,461 7,988,784 1,221,700 263,383
190,726,593 4,115,242 921,463 164,135,776 3,694,742 766,769
Equity related contracts
- less than one year 3,425,246 78,016 17,896 23,170,530 - -
- one year to less than 5 years 8,196,303 390,608 136,400 - - -
- five years and above 28,730 2,881 576 - - -
11,650,279 471,505 154,872 23,170,530 - -
Total treasury-related
commitments
and contingencies 240,960,078 6,485,219 1,679,701 217,540,308 5,534,239 1,321,235
* The credit equivalent amount is arrived at using the credit conversion factors as per Bank Negara Malaysia guidelines.
Effective 1 October 2008, the following approaches have been adopted for the computation of the credit equivalent
and risk-weighted assets:
- adoption of bilateral netting as provided under the Standardised Approach Framework which involves the
weighting of net claims rather than gross claims with the same counterparties arising out of the full range of
forwards, swaps, options and similar derivative contracts.
- irrevocable commitments to extend credit (undrawn loans) have been revised to include only those undrawn loans
whereby all conditions precedent have been met.
# Included in miscellaneous commitment and contingencies is a commitment by the Bank to place an additional
RM1,507 million (2007: RM719 million) with CIMB Islamic in relation to the RPSIA arrangement (See Note 3).
The Bank has confirmed that it will provide continuing financial support to certain of its wholly-owned subsidiaries to
meet their liabilities and financial obligations as and when they fall due and to carry on their businesses without significant
restriction on their operations.
26 Other liabilities
The Group The Bank
Note 2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Interest payable 544,351 575,613 557,552 514,089
Due to brokers and clients - 891 - -
Profit equalisation reserve (a) - 2,200 - -
Accrued employee benefits (b) 9,822 8,709 9,822 8,663
Post employment benefit obligations (c) 55,324 71,180 55,189 71,174
Sundry creditors 474,492 186,811 172,172 136,400
Expenditure payable 369,379 657,741 358,761 646,092
Amount due to special purpose vehicle of jointly
controlled entity (Note 12) 405,403 483,046 405,403 483,046
Provision for legal claims 186,750 267,230 186,750 267,230
Others 705,731 715,782 655,313 663,839
At 31 December - 2,200 - -
The amounts recognised in the balance sheet in respect of defined benefit plans are determined as follows:
The Group and The Bank
2008 2007
RM’000 RM’000
Present value of funded obligations 170,709 142,191
Fair value of plan assets (83,622) (89,696)
Unrecognised actuarial (loss)/gains (41,156) 8,141
The amount recognised in the income statement in respect of defined benefit plans is as follows:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Current service cost 9,780 9,744 9,780 9,744
Interest cost 8,417 8,268 8,417 8,268
Expected return on plan assets (5,924) (4,542) (5,924) (4,542)
Curtailment/settlement costs (11,330) - (11,330) -
Total included in personnel costs (Note 39) 943 13,470 943 13,470
The actual return on plan assets of the Group and the Bank were RM15,082,892 (2007: RM12,999,416) respectively.
The movements in the fair value of plan assets for the financial year is as follows:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
At 1 January 89,696 70,198 89,696 68,717
Expected return on plan assets 5,924 4,542 5,924 4,542
Actuarial (losses)/gains (21,007) 8,458 (21,007) 8,458
Employer contributions 12,498 11,596 12,498 11,596
Assets reclassified as non-current assets
held for sale - (1,481) - -
Benefits paid (3,489) (3,617) (3,489) (3,617)
To develop the expected long-term rate of return on assets assumption, the Bank considered the current level of
expected returns on risk free investments (primarily government bonds), the historical level of the risk premium
associated with the other asset classes in which the portfolio is invested and the expectations for future returns of
each asset class. The expected return for each asset class was then weighted based on the target asset allocation
to develop the expected long-term rate of return on assets assumption for the portfolio.
^ The Bank included a special 8.00% revision for employees in Grade 34, 35 and 36 who are entitled to salary
revisions under the Association of Bank Officers in Malaysia and CIMB Executive Staff Union collective agreements
for the year 2009 only.
Expected contribution to post employment benefits plan for the financial year ended 31 December 2009 is
RM20,000,000 (2008: RM14,000,000) to both the Group and the Bank.
The Group
As at 31 December
Present value of defined benefit obligation 170,709 142,191 136,444 162,734 153,375
Fair value of plan assets (83,622) (89,696) (70,198) (105,352) (89,373)
Experience adjustments on plan liabilities 31,827 2,650 8,232 1,686 (2)
Experience adjustments on plan assets (21,007) (8,458) (774) - -
The Bank
As at 31 December
Present value of defined benefit obligation 170,709 142,191 134,584 143,554 135,737
Fair value of plan assets (83,622) (89,696) (68,717) (91,557) (88,597)
Experience adjustments on plan liabilities 31,827 2,650 8,036 1,623 N/A*
Experience adjustments on plan assets (21,007) (8,458) (771) 352 N/A*
- 32,059
Less: Unaccreted discounts - (287)
- 31,772
Discount upon issuance - 712
Less: Accumulated accretion - (425)
The Group’s Hire Purchase Receivables Securitisation Programme is funded through the issuance of bonds by a special
purpose vehicle, Auto ABS One Berhad, and deferred consideration owing by I-Prestige Sdn Bhd to the Bank. The scheme
and the issuance of Bonds are in compliance with the Securities Commission’s ‘Guidelines on the offering of Asset-Backed
Debt Securities’.
The main features of the 7.5% irredeemable convertible unsecured loan stocks (“ICULS”) 2001/2011 issued in 2001 are as
follows:
(i) Nominal value of the ICULS is RM667,000,000 in denominations or multiples of RM1,000 with detachable coupons.
(ii) The ICULS bear fixed interest at the rate of 7.5% per annum payable annually in arrears from the date of issue of the
ICULS. The detachable coupons represent the interest of the ICULS and as such, bear no further interest.
(iii) The ICULS are not redeemable for cash except upon the occurrence and declaration of an event of default as provided in
the trust deed. All outstanding ICULS will be mandatorily converted by the Bank into new ordinary shares of the Bank on
the last day of the tenure of the ICULS.
(iv) The ICULS shall constitute unsecured and subordinated obligations of the Bank.
29 Other borrowings
The Group
2008 2007
RM’000 RM’000
At 1 January 1,092,750 1,092,750
Exchange difference (53,400) (100,650)
1,039,350 992,100
In 2006, CIMB Bank (L) Limited secured a term loan facility amounting to USD300 million which will mature on 22 June
2011. It bears a floating interest rate of LIBOR+0.19% per annum. The term loan is secured by a corporate guarantee issued
by the Bank.
30 Subordinated obligations
The Group The Bank
Note 2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
- 1,024,264
The fair values of outstanding cross currency interest rate swaps and interest rate swaps at 31 December 2008 were
RMNil (2007: RM106,801,000) and RMNil (2007: RM3,558,000), respectively. The fair value hedge has been discontinued
as the subordinated notes have been fully redeemed during the financial year.
The main features of the USD300 million Subordinated Notes due 2013 Callable with Step-up in 2008 issued in 2003 (“The
Notes”) are as follows:
(i) The Notes are in bearer form, serially numbered and in denominations of USD1,000, USD10,000 and USD100,000.
(ii) The Notes bear interest at the rate of 5.125% per annum from and including 16 October 2003 to, but excluding, 16
October 2008 and, thereafter, at a rate per annum equal to the US Treasury Rate plus 3.55%. Interest will be payable
semi-annually in arrears on 16 April and 16 October, in each year, commencing 16 April 2004.
(iii) The Notes and Coupons constitute direct and unsecured obligations of the Issuer and are subordinated in the manner
described in the Conditions of the Notes and, for the avoidance of doubt, rank pari passu with the Issuer’s 7.5%
RM667 million ICULS with detachable coupons 2001/2011. The Notes and the Coupons rank and will rank pari passu
without any preference among themselves.
(v) The principal of, and interest and any additional amounts payable on the Notes will be subordinated in right of
payment upon occurrence of any Winding Up Proceeding to the prior payment in full of all deposit liabilities and all
other liabilities of the Issuer, except in each case to those liabilities which by their terms rank equally in right of payment
with or subordinated to the Notes.
(vi) The issuer may at its option, but subject to the prior written approval of Bank Negara Malaysia (“BNM”), redeem the
Notes on 16 October 2008 at their principal amount plus accrued interest.
The Bank has fully redeemed the Notes on 16 October 2008 upon obtaining approval from BNM.
The Bank may at its option, subject to the prior approval of BNM, redeem the USD200 million Notes in whole but not in
part, on 30 June 2009 at their principal amount plus accrued interest.
The USD200 million Notes were listed on the Luxembourg Stock Exchange on 30 June 2004 and qualify as Tier-2 Capital
for the purpose of the risk weighted capital ratio (‘RWCR’) computation.
(c) On 12 June 2006, the Bank obtained a USD100 million subordinated loan due on 2014 callable with step-up in 2009 from
CIMB Investment Bank Berhad. The loan bears interest at the rate of 5% per annum from, and including 12 June 2006
to, but excluding 15 October 2008 and, thereafter, at a rate per annum equal to the US Treasury Rate plus 3.7%. The
interest rate is payable semi-annually in arrears on 15 April and 15 October in each year, commencing on 12 June 2006.
The USD100 million subordinated loan qualify as Tier-2 Capital for the purpose of the RWCR computation.
The Bank has undertaken fair value hedge on the foreign exchange risk and interest rate risk of the USD100 million
subordinated loan using interest rate swaps and net investment hedge of CIMB Bank (L) Limited.
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
The fair values of interest rate swaps at 31 December 2008 were (RM2,165,621) (2007: RM5,304,000).
(d) The USD200 million 6.62% subordinated loans of the Bank were obtained from SBB Capital Corporation (“SCC”) from
the net proceeds that SCC raised through the issuance of SCC Preference Shares. The loans bear interest at a rate of
6.62% per annum payable semi-annually in arrears on 2 May and 2 November up to and including 2 November 2015.
Thereafter, interest will be reset at a floating rate per annum equal to three-month LIBOR plus 2.53%, payable quarterly
on 2 February, 2 May, 2 August and 2 November. The subordinated loans will mature on 2 November 2055. The USD200
million subordinated loans qualify as Tier-1 Capital for the purpose of the RWCR computation.
During the financial year, the Bank has undertaken fair value hedge on the interest rate risk of the USD200 million
subordinated note using interest rate swaps.
813,336 681,033
The fair values of interest rate swaps as at 31 December 2008 were RM127,438,641 (2007: RM27,875,240).
(e) The RM1.5 billion 10-year subordinated bonds (“the RM1.5 billion Bonds”) were issued by the Bank on 28 March 2008.
The Bonds were issued at par and are callable with step-up in 2013. The Bonds bear an interest rate of 4.9% per
annum payable semi-annually in arrears for the first 5 years, after which interest rate will be reset to 5.9% per annum
until maturity date.
The Bank may at its option, subject to the prior approval of BNM, redeem the RM1.5 billion Bonds in part or in whole, on
28 March 2013 at their principal amount.
The RM1.5 billion Bonds qualify as Tier-2 Capital for the purpose of the RWCR computation.
During the financial year, the Bank has undertaken fair value hedge on the interest rate risk amounting to RM600 million of
the RM1.5 billion Bonds using interest rate swaps.
The Group and The Bank
2008 2007
RM’000 RM’000
635,476 -
The fair value of interest rate swaps as at 31 December 2008 was RM46,890,284 (2007:RMNil)
(f) The RM1.0 billion subordinated bonds (“the RM1.0 billion Bonds”) were issued at par on 7 October 2008 under the
Innovative Tier-1 Capital Securities Programme which was approved by the Securities Commission on 24 September
2008. The RM1.0 billion Bonds are due on 7 October 2038 callable with step-up on 7 October 2018. The bonds bear an
interest rate of 6.7% per annum payable semi-annually in arrears for the first ten years, after which the interest rate will be
reset at a rate per annum equal to the 3-month KLIBOR plus 2.98%.
The Bank may at its option, subject to the prior approval of BNM, redeem the RM1.0 billion subordinated bonds
in whole but not in part, on 7 October 2018 or any interest payment date thereafter, at their principal amount plus
accrued interest.
The RM1.0 billion Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.
The Bonds under the first issuance were issued at par on 26 December 2008 and are due on 26 December 2058, with
optional redemption on 26 December 2018 or any distribution payment date thereafter. The Bonds bear an interest rate
of 7.2% per annum payable semi-annually in arrears.
Subject to the prior approval of BNM, the Bank shall redeem the RM1.0 billion subordinated bonds in whole but not in part,
on 26 December 2018 or any distribution payment date thereafter, at their principal amount plus accrued interest.
The Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.
Authorised
Redeemable preference shares of RM0.10 each
At 1 January 100 100
Cancelled during the financial year (100) -
At 31 December - 100
The Group and The Bank
2008 2007
RM’000 RM’000
On 1 November 2006, the Bank issued 13,000 new Redeemable Preference Shares (“RPS”) of RM0.10 each to BCHB at
a premium of RM99,999.90 per share for RM1,300,000,000 being part consideration for the transfer of the entire assets
and liabilities of SBB Berhad (formerly known as Southern Bank Berhad) from BCHB to the Bank.
(i) The RPS will be entitled to an annual gross dividend rate of 3.60% per annum payable annually in arrears on the anniversary
of the issue date.
(iii) The RPS will rank superior to ordinary shares in the event of winding up/ liquidation of the Bank.
(iv) The RPS will be redeemable at the option of the Bank (but not the holder) at anytime from the issue date subject to
approval by Bank Negara Malaysia.
The RPS qualify as Non-Innovative Tier-1 capital for RWCR calculation purposes.
During the financial year, the Bank has fully redeemed the Redeemable Preference Shares upon obtaining approval from BNM.
The Group
(b) 2008 2007
RM’000 RM’000
Authorised
Redeemable preference shares of USD0.01 each
At 1 January/31December 8 8
The Group
2008 2007
RM’000 RM’000
The Group
2008 2007
RM’000 RM’000
813,336 681,033
(i) The SCC Preference Shares are entitled to dividends which are payable in arrears on 2 May and 2 November up to and
including 2 November 2015 at a fixed rate of 6.62% per annum.
(ii) On 2 November 2015 (First Optional Redemption Date) and on each dividend date thereafter, SCC may at its option,
subject to the prior approval of Bank Negara Malaysia, redeem the SCC Preference Shares in whole but not in part, at
their principal amount plus accrued but unpaid dividends. If the SCC Preference Shares are not called on 2 November
2015, dividends will be reset at a floating rate per annum equal to three-month LIBOR plus 2.53%, payable quarterly on 2
February, 2 May, 2 August and 2 November.
(iii) The SCC Preference Shares will not be convertible into ordinary shares.
(iv) The SCC Preference Shares are guaranteed by the Bank on a subordinated basis. If the SCC Preference shares have
not been redeemed in full on or prior to 2 November 2055, the Bank shall cause the substitution of the SCC Preference
Shares with Preference Shares issued by the Bank (Substitute Preference Shares) and the SCC Preference Shares shall
be mandatorily exchanged for such Substitute Preference Shares having economic terms which are in all material aspects
equivalent to those of the SCC Preference Share.
The SCC Preference Shares were admitted to the Official List of the Singapore Exchange Securities Trading Limited and
Labuan International Financial Exchange Inc on 4 November 2005 and 24 November 2005 respectively and qualify as Tier-1
Capital for the purpose of the RWCR computation, subject to the limit as prescribed in the ‘Guidelines on Innovative Tier 1
Capital Instruments’ issued by Bank Negara Malaysia on 24 December 2004.
Authorised
Redeemable preference shares of RM0.01 each
At 1 January - -
Created during the financial year 50,000 -
At 31 December 50,000 -
In accordance with FRS 132 - Financial Instruments: Disclosure and Presentation, the RPS is recognised as an equity in the
Financial Statements. The main features of the RPS are as follows:
(i) The RPS will rank equal in all respects with each other and senior to ordinary shares.
(ii) The RPS will be fully paid-up upon issue and allotment.
(iii) The RPS will not carry any fixed dividend but ranks the most senior in terms of dividend distribution.
(v) The RPS will only be redeemable, subject to BNM’s approval, at the option of the Bank.
(vii) The RPS will not be earmarked to any particular assets or banking activities.
(viii) The RPS will not represent any fixed charge on the earnings of the Bank.
Authorised
Ordinary shares of RM1.00 each:
At 1 January/31 December 7,000,000 7,000,000
Issued and fully paid
Ordinary shares of RM1.00 each:
At 1 January/31 December 2,974,009 2,974,009
Authorised
Perpetual preference shares of RM1.00 each
At 1 January/31 December 500,000 500,000
The Group and The Bank
2008 2007
RM’000 RM’000
(b) In the event of liquidation, dissolution or winding-up of the Bank, PCSB as holder of the PPS will be entitled to receive full
repayment of the capital paid up on the PPS in priority to any payments to be made to the ordinary shareholders of the
Bank.
(c) The PPS rank pari passu in all aspects among themselves.
(d) The Bank must not redeem or buy back any portion of the PPS and the PPS will be perpetual except for any capital
reduction exercise permitted by the Companies Act, 1965 and as approved by Bank Negara Malaysia.
34 Reserves
(a) 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.
(b) Pursuant to the Finance Act, 2007 which was gazetted on 28 December 2007, dividends paid, credited or distributed to
shareholders are not tax deductible by the Bank, but is exempted from tax in the hands of the shareholders (“single tier
system”). During the year, the Bank has utilised the credit in the Section 108 balance to distribute dividend payments to
its shareholders as allowed by the transitional provision under the Finance Act, 2007. As at 31 December 2008, the Bank
has sufficient credit in the Section 108 balance to pay franked dividends and sufficient tax exempt account balances to
pay tax exempt dividends out of its entire retained earnings.
(c) Currency translation differences have arisen from translation of net assets of Labuan offshore banking subsidiaries and the
Bank’s foreign branches. These translation differences are shown under exchange fluctuation reserve.
34 Reserves (continued)
(d) Capital reserves, which are non-distributable, relate to the retained earnings of Bumiputra-Commerce Finance Berhad and
CIMB Investment Bank Berhad, and the four months profit of SBB Berhad (formerly known as Southern Bank Berhad)
from 1 July 2006 to 31 October 2006 which were transferred to the Bank, arising from the business combinations under
common control using the ‘pooling-of-interests’/merger accounting method in financial year 2006.
(e) Merger deficit, which is non-distributable, relates to the difference between the cost of the merger between the Bank and
CIMB Investment Bank Berhad and SBB Berhad (formerly known as Southern Bank Berhad) in 2006 and the value of the
net assets and reserves transferred to the Bank and the Group.
(g) Hedging reserve arise from net investment hedge activities undertaken by the Bank on overseas operations and foreign
subsidiaries. The reserve are non-distributable and are reversed to the income statement when the foreign operations and
subsidiaries are partially or fully disposed.
35 Share premium
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Relating to
- Ordinary shares 4,157,074 4,157,074 4,157,074 4,157,074
- Redeemable preference shares (Note 31(a)) - 1,299,999 - 1,299,999
36 Interest income
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
37 Interest expense
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
38 Non-interest income
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Net gain from sale of available-for-sale securities 108,326 66,465 103,283 54,011
Net gain from held-to-maturity securities 4,089 566 4,089 -
Other non-interest income
Foreign exchange gain 274,875 137,346 292,827 132,178
Rental income 15,662 15,925 10,996 10,463
Gain on disposal of property, plant and equipment 6,393 3,317 5,076 2,765
Gain/(loss) on disposal of foreclosed properties 2,520 (410) 2,520 (410)
Gain on disposal of leased assets 244 - - -
(Loss)/gain on disposal of subsidiaries (2,669) 216,753 23,693 (159)
Gain on disposal of associate 2,904 - - -
(Loss)/gain on revaluation of investment properties (2,141) 56,158 (2,141) 56,158
Capital gain from capital repayment of subsidiary - - 248,700 -
Others 61,362 78,873 58,531 61,583
359,150 507,962 640,202 262,578
39 Overheads
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
Personnel costs
- Salaries, allowances and bonuses 872,925 1,049,292 783,348 963,572
- Pension cost (defined contribution plan) 102,658 90,648 100,573 88,053
- Pension cost (defined benefit plan) (Note 26(c)(ii)) 943 13,470 943 13,470
- Termination benefits 405 - 405 -
- Overtime 32,240 33,942 26,298 30,505
- Staff incentives and other staff payments 160,995 112,177 130,545 110,901
- Medical expenses 36,446 34,788 34,266 33,590
- Others 69,967 75,695 52,578 47,930
Establishment costs
- Depreciation of property, plant and equipment 134,500 121,922 116,860 101,044
- Amortisation of prepaid lease payments 1,057 1,710 998 1,517
- Rental 102,712 84,593 104,292 88,867
- Insurance 16,862 21,629 15,257 19,391
- Repairs and maintenance 129,088 100,881 125,374 82,842
- Outsourced services 111,455 121,330 225,612 222,390
- Premium security expenses 55,729 59,782 69,656 59,746
- Utility expenses 31,247 25,823 27,707 24,217
- Others 73,378 65,878 48,985 63,599
Marketing expenses
- Sales commission 26,619 19,706 17,814 19,508
- Advertisement 136,103 103,693 119,761 101,339
- Legal fees 32,693 58,396 32,693 58,396
- Others 11,742 8,466 6,380 3,863
39 Overheads (Continued)
The above expenditure includes the following statutory disclosures:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
* PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate
and independent legal entities.
Available-for-sale securities
- made during the financial year (19,258) (36,120) (17,883) (36,120)
- written back during the financial year 106,703 112,610 106,703 112,610
87,445 76,490 88,820 76,490
Held-to-maturity securities
- made during the financial year (32,282) (3,178) (28,965) -
- written back during the financial year 1,318 - - -
(30,964) (3,178) (28,965) -
Goodwill
- made during the financial year - (3,000) (37,000) (198,000)
Subsidiaries
- (made)/written back during the financial year - - (21,178) 1,413
The goodwill impaired arose from SBB Securities which was disposed during the financial year. In 2007, the goodwill was
reclassified to non-current assets/disposal groups held for sale (Note 57).
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling
the activities of the Group and the Bank either directly or indirectly. The key management personnel of the Group and the
Bank include all the Directors of the Bank and employees of the Bank who make certain critical decisions in relation to the
strategic direction of the Bank.
Other Key
Parent related management
company Subsidiaries companies personnel
2008 RM’000 RM’000 RM’000 RM’000
Income
Interest on deposits and placements with
financial institutions 82,716 85,498 37,955 -
Interest on loans, advances and financing - 9,312 - 20
Others - 39,795 - -
Expenditure
Interest on deposits from customers and securities
sold under repurchase agreement 12,156 - - 611
Interest on deposits and placements of banks and
other financial institutions - 76,987 51,811 -
Interest on ICULS 48,760 - - -
Others - 192,605 4 -
Annual Report 2008 173
CIMB Bank Berhad
(13491-P)
Other Key
Parent related management
company Subsidiaries companies personnel
2007 RM’000 RM’000 RM’000 RM’000
Income
Interest on deposits and placements with
financial institutions 74,226 41,172 28,541 -
Interest on loans, advances and financing - 13,780 - 139
Others - 3,317 - 16
Expenditure
Interest on deposits from customers and securities
sold under repurchase agreement 21,341 - - 3,043
Interest on deposits and placements of banks and
other financial institutions 4,517 131,620 16,143 -
Interest on ICULS 46,747 - - -
Others - 143,405 16,787 -
Transactions with other related parties are aggregated because these transactions are similar in nature and no single
transaction with these parties is significant enough to warrant separate disclosure.
Other Key
Parent related management
company Subsidiaries companies personnel
2008 RM’000 RM’000 RM’000 RM’000
Amounts due to
Deposits from customers and securities sold under
repurchase agreement 301,477 141,743 77,057 31,923
Deposits and placements of banks and other
financial institutions 99,700 2,932,102 2,079,400 -
Subordinated obligations - - 345,680 -
ICULS 667,000 - - -
Others 16 25,732 5,250 66
174 Annual Report 2008
CIMB Bank Berhad
(13491-P)
Other Key
Parent related management
company Subsidiaries companies personnel
2007 RM’000 RM’000 RM’000 RM’000
Other related party balances are unsecured, non-interest bearing and has no fixed repayment terms.
Salaries and other short-term employee benefits 24,938 27,273 23,513 26,009
Unit Unit Unit Unit
Share options balance of ultimate holding company 21,802,126 20,885,000 21,552,398 20,805,000
Included in the above is the Executive Directors’ compensation which is disclosed in Note 43. The share options are
granted on the same terms and condition as those offered to other employees of the Group and the Bank.
The eligibility for participation in the scheme shall be at the discretion of the Nomination and Remuneration Committee
of BCHB. Entitlement of eligible members of senior management are non-assignable and non-transferable whereby the
Nomination and Remuneration Committee of BCHB administers the scheme on behalf of the substantial shareholder. The
options granted vest in proportions across various exercise periods.
In December 2008, the substantial shareholder of BCHB approved the extension of the MES from 28 February 2009 to 28
February 2012. The MES will continue to be in force until 28 February 2012, after which the voting rights of unexercised
balances will remain with the substantial shareholder of BCHB.
All options have the same reference price which is at RM3.48 each. The weighted average remaining contractual life is
3.2 years.
The Group The Bank
2008 2007 2008 2007
’000 ’000 ’000 ’000
Number of options:
- Granted during the financial year (units) 800 1,180 650 1,100
- As at 31 December (units) 1,201 968 1,021 888
43 Directors’ remuneration
The Directors of the Bank in office during the financial year were as follows:
Non-Executive Directors
Executive Directors
Executive Directors
- Salary and other remuneration 1,332 1,308 1,332 1,308
- Bonus 864 2,334 864 2,334
- Benefits-in-kind 75 97 75 97
Non-Executive Directors
- Fees 309 304 192 202
- Other remuneration# 1,195 1,180 894 907
- Benefits-in-kind 73 47 44 47
# Includes RMNil (2007:RM62,000) paid to Dato’ Hamzah Bakar, who is a member of the Group Audit Committee, but is not a
member of the Board of Directors of the Bank.
Consistent with the practice for certain key personnel, the bonus for 2008 will be paid in tranches, spread over 2009. In
addition, the final tranche will only be paid out in the third quarter of 2009, after certain key financial performance indicators for
the Group has been met. A similar condition is also imposed on the 2008 bonus of certain key personnel.
The Directors of the Bank and their total remuneration during the financial year are analysed below:
The Group The Bank
2008 2007 2008 2007
Number of Number of Number of Number of
directors directors directors directors
Executive Directors
RM50,000 and below - - - -
RM50,001 – RM200,000 - - - -
RM200,001 – RM250,000 - - - -
RM250,001 – RM400,000 - - - -
RM400,001 – RM450,000 - - - -
RM450,001 – RM700,000 - - - -
RM700,001 – RM750,000 1 - 1 -
RM750,001 – RM1,500,000 - 1 - 1
RM1,500,001 – RM2,500,000 1 - 1 -
RM2,500,001 – RM2,900,000 - 1 - 1
Non-Executive Directors
RM50,000 and below 2 2 2 2
RM50,001 – RM100,000 - 1 - 1
RM100,001 – RM150,000 1 2 2 2
RM150,001 – RM200,000 1 - 2 2
RM200,001 – RM250,000 2 2 1 1
RM250,001 – RM300,000 - - - -
RM300,001 – RM350,000 1 1 1 1
RM350,001 – RM400,000 - - - -
RM400,001 – RM550,000 1 1 - -
The basic and fully diluted earnings per ordinary share for the Group have been calculated based on the net profit attributable
to ordinary equity holders of the Group of RM1,572,746,000 (2007: RM1,729,605,000). For the Bank, the basic and fully
diluted earnings per ordinary share have been calculated based on the net profit attributable to ordinary equity holders of the
Bank of RM1,678,036,000 (2007: RM1,178,487,000).
Potential ordinary shares that would be issued on conversion of the Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)
are included in the weighted average number of ordinary shares used in the calculation of basic and fully diluted earnings per
share from the date of issue of the ICULS.
Ordinary shares issued arising from business combinations under common control are included in the calculation of the
weighted average number of shares from the date the business combination had been effected. The weighted average number
of shares in issue during the year of 3,641,009,000 (2007: 3,641,009,000) is used for the computation.
46 Dividends
The gross and net dividend declared per share for each financial year are as follows:
2008 2007
Amount of Amount of
Gross Net dividend Gross Net dividend
per share per share net of tax per share per share net of tax
sen sen RM’000 sen sen RM’000
Dividends recognised as
distributions to equity holders:
Final dividend
Per ordinary shares - - - 8.75 6.39 189,965
Per redeembale preference shares 13.63 10.09 300,000 - - -
Interim special dividend
Per ordinary shares 2.00 1.48 44,000 11.52 8.41 250,002
Per ordinary shares - tax exempt 2.22 2.22 66,000 - - -
Per redeemable preference shares 9.09 6.72 200,000 - - -
The proposed dividend for redeemable preference shares in respect of the financial year ended 31 December 2007 was
approved by the Bank’s shareholders and paid in the current financial year. These are shown as a deduction from the retained
profits in the statement of changes in equity.
The Directors have proposed a second interim gross dividend of approximately 6.72 sen per share less 25% income tax on
2,974,009,486 Redeemable Preference Shares of RM0.01 each, amounting to RM150,000,000. The second interim dividend
was approved by the Board of Directors in a resolution dated 23 January 2009.
47 Lease commitments
The Group and the Bank have lease commitments in respect of rented premises and equipment on hire, all of which are
classified as operating leases. A summary of the non-cancellable long-term commitments, net of sub-leases, is as follows:
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
48 Capital commitments
The Group and The Bank
2008 2007
RM’000 RM’000
Capital expenditure:
- authorised and contracted for 24,269 47,421
- authorised but not contracted for 613,028 894,642
These capital commitments are for acquisition of property, plant and equipment of RM505,631,000 (2007: RM713,679,000)
and for computer software of RM131,666,000 (2007: RM228,384,000).
49 Capital adequacy
(a) The capital adequacy ratios of the Bank are as follows:
The Bank*
2008 2007
RM’000 RM’000
16,415,186 13,682,886
Less:
Investment in subsidiaries and holding of other banking institutions’ capital (1,376,978) (861,187)
Core capital ratio 10.89% 9.66%
Risk-weighted capital ratio 14.04% 12.76%
Core capital ratio (net of proposed dividend) 10.75% 9.36%
Risk-weighted capital ratio (net of proposed dividend) 13.90% 12.46%
Tier I capital
Paid-up share capital 2,974,009 2,974,009
Perpetual preference shares 200,000 1,500,000
Non-innovative Tier I capital 1,000,000 -
Innovative Tier I capital 1,692,900 661,400
Other reserves 9,618,506 8,499,296
15,485,415 13,634,705
Less:
Deferred tax assets (263,993) (370,523)
Goodwill (3,559,075) (3,559,075)
15,038,208 12,821,699
Total risk-weighted assets for credit risks 156,256,013 102,314,159 144,373,108 89,007,883
Risk-weighted assets for market risk 4,629,925 4,629,925 11,505,792 11,505,792
Risk-weighted assets for large exposure
risk requirements 196,983 196,983 - -
* Includes the operations of CIMB Bank (L) Limited and CIMB (L) Limited.
^ In accordance with a circular by Bank Negara Malaysia (“BNM”) dated 25 April 2006, the Bank is required to deduct
50% of its investment in its jointly controlled entity, PCSB, from the capital base for purposes of computing the capital
adequacy ratio.
# In accordance with BNM guidelines on the Recognition and Measurement of Profit Sharing Investment Account as
Risk Absorbent (‘PSIA Guidelines’), the credit and market risks on the assets funded by the PSIA are included in the
risk-weighted capital (‘RWCR’) calculation, where a 100% risk-weight is assigned.
The capital adequacy ratios have incorporated market risk pursuant to BNM’s guideline on Market Risk Capital Adequacy
Framework which is effective from 1 April 2005.
See Note 56(b)(i) for the effects of the disposal on the Financial Statements of the Group.
See Note 56 (b)(ii) for the effects of the disposal on the Financial Statements of the Group.
(e) Disposal of entire equity interest in Navis-CIMB General Partner Ltd (“Navis-CIMB”)
On 18 September 2008, CIMB (L) Limited, a wholly-owned subsidiary of the Bank, had disposed its entire 25% equity
interest in Navis-CIMB to Navis Capital Partners Ltd.
See Note 56(b)(iv) for the effects of the disposal on the Financial Statements of the Group.
(g) Disposal by SBB Capital Markets Sdn Bhd (“SCMSB”), a wholly-owned subsidiary of the Bank, of its 100%
equity interest in SBB Securities Sdn Bhd (“SSSB”) to HLG Credit Sdn Bhd (“HLGC”) (“SSSB Disposal”)
SCMSB and the Bank had on 19 October 2007 entered into a conditional share sale agreement with HLGC and HLG
Capital Berhad for the proposed disposal by SCMSB of its 100% equity interest in SSSB to HLGC for a total consideration
to be determined at a later date. The transaction was completed on 22 October 2008 for a total cash consideration of
RM75.2 million based on willing buyer-willing seller basis.
See Note 56 (b)(iii) for the effects of the disposal on the Financial Statements of the Group.
(i) Acquisition of 42.13% equity stake in BankThai Public Company Limited (“BankThai”)
On 20 June 2008, the Bank’s holding company, CIMB Group Sdn Bhd, entered into a Share Purchase Agreement (“SPA”)
with Financial Institutions Development Fund (“FIDF”) to purchase or to procure the Bank to purchase 2,811,862,559 fully
paid ordinary shares of Baht 3.75 par value each in the share capital of BankThai, representing approximately 42.13%
of the total issued shares in BankThai, from FIDF for a total cash consideration of approximately Baht 5,904.9 million
(equivalent to approximately RM595.8 million) or a cash consideration of Baht 2.10 per BankThai share. The acquisition
was completed on 5 November 2008.
See Note 56(a)(i) for the effects of the acquisition on the Financial Statements of the Group.
Subsequently, on 13 January 2009, the Bank acquired a further 49.91% equity stake in BankThai as disclosed in Note 51(a).
The issue date of the Bonds and Warrants shall be a business day to be decided by CIMB Bank (L) after the conditions
precedent listed in agreement have been satisfied. The issuance of the Bonds and Warrants is subject to approvals being
obtained from the relevant regulatory authorities.
(k) Issuance of Non-Innovative Tier 1 Stapled Securities Issuance Programme (“the Programme”)
On 17 December 2008, the Securities Commission approved the issuance of up to RM4.0 billion in nominal value
outstanding at any one time comprising:
The first issuance under the programme amounting to RM1.0 billion was completed on 26 December 2008.
(b) Disposal by the Bank of certain assets, liabilities and the asset/fund management business of Southern
Investment Bank Berhad (“SIBB”) to HLG Credit Sdn Bhd (“HLGC”), a 75% indirect subsidiary of Hong Leong
Financial Group Berhad (“SIBB Disposal”)
The SIBB Disposal has been approved by the Minister of Finance II on 20 May 2008 and the vesting of certain assets and
liabilities to HLGC was completed on 31 January 2009.
Pursuant to the SPA and LA, BCHB shall dispose Menara Bumiputra-Commerce to PHBB for a total cash consideration of
RM460 million. The Bank will then lease Menara Bumiputra-Commerce for an initial lease tenure of ten years with renewal
options for two additional periods of five years each. The proposed sale and leaseback of Menara Bumiputra-Commerce
was completed on 16 February 2009.
The first step of the impairment review process requires the identification of independent operating units, dividing the
Group’s business into the various business segments. The goodwill is then allocated to these various business segments.
The first element of this allocation is based on the areas of the business expected to benefit from the synergies derived
from the acquisition. The second element reflects the allocation of the net assets acquired and the difference between the
consideration paid for those net assets and their fair value. This allocation is reviewed following business reorganisation.
The carrying value of the business segment, including the allocated goodwill, is compared to its fair value to determine
whether any impairment exists. Detailed calculations may need to be carried out taking into consideration changes in
market in which a business operates. In the absence of readily available market data, this calculation is usually based
upon discounting expected pre-tax cash flows at the Group’s and the Bank’s cost of capital, which requires exercise of
judgement.
Changes to the assumptions used by management, particularly the discount rate and the terminal growth rate, may
significantly affect the results of the impairment.
Value in use is calculated by discounting the expected future cash flows obtainable as a result of the assets’ continued
use, including those resulting from its ultimate disposal, at a market-based discount rate on pre-tax basis.
53 Segment reporting
(i) Primary reporting – business segments
Definition of segments
For management purposes, the Group is organised into six major operating divisions. The divisions form the basis on
which the Group reports its primary segment information.
Treasury
Treasury focuses on treasury activities and services which include foreign exchange, money market, derivatives and capital
market instruments trading. It also invests the Group’s proprietary capital.
Investment Banking advises on issuance of equity and equity-linked products management services. Corporate Banking
provides a broad spectrum of financial and Ringgit lending services for domestic and multinational corporations as well
as institutional and public sector clients. International Banking and Transactional Services oversees the activities of the
Group’s overseas branches in London, Singapore and Hong Kong and provides conventional and customised financial
packages in order to meet customers’ needs, with products including non-Ringgit corporate lending, nominee services
and cash management services.
Equity Derivatives develops and issues new equity derivatives instruments such as structured warrants and over-the-
counter options to provide investors with alternative investment avenues. Equity Investment and Trading is the Group’s
proprietary equity trading unit.
Retail Banking
Retail Banking focuses on innovative products and services to individual customers. It offers products such as credit
facilities (residential mortgages, personal loans, share financing, credit card and hire purchase), remittance services,
deposit collection, private banking and retail equity services.
Business Banking
Business Banking is responsible for offering products and services for customer segments comprising micro-enterprises,
small and medium-scale enterprises (“SME”s) and mid-sized corporations. Its products include credit facilities (loans,
banker’s acceptances, revolving credit, leasing, factoring, hire purchase), remittance services and deposit collection.
Corporate
and Foreign
Investment Retail Business Banking Support
2008 Treasury Banking Banking Banking Operations and others Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Net interest income
- external (385,690) 1,285,829 2,310,050 497,495 - 8,446 3,716,130
- inter-segment 951,161 (612,957) (542,303) 242,187 - (38,088) -
Corporate
and Foreign
Investment Retail Business Banking Support
2008 Treasury Banking Banking Banking Operations and others Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Corporate
and
Investment Retail Business Support
2007 Treasury Banking Banking Banking and others Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
- Malaysia, the home country of the Group, which includes all the areas of operations in the primary business
segments.
- Overseas operations, which include branch and subsidiary operations in Singapore, United Kingdom and Hong Kong.
The overseas operations are involved mainly in corporate lending and borrowing activities. With the exception of
Malaysia, no other individual country contributed more than 10% of the net interest income and of total assets.
2008
Net interest Total Total Capital
income assets liabilities expenditure
RM’000 RM’000 RM’000 RM’000
The Group
Malaysia 3,628,156 161,895,206 148,665,889 267,668
Overseas operations 87,974 6,255,788 6,403,187 7,064
The Group
Malaysia 3,495,622 146,474,521 135,034,330 307,521
Overseas operations 108,376 8,537,043 7,842,163 8,739
Risk management is an integral part of the Bank’s activities and is an important feature in all its business, operations,
delivery channels and decision-making processes. The extent to which the Bank is able to identify, assess, monitor,
manage and report each of the various types of risk is critical to its safety, soundness and profitability. The Bank’s risk
management function is independent of its operating units and reports to the Board on a regular basis. The Bank does not
embark on new businesses, introduce new products, engage in new activities or enter into new markets, unless approved
by the Group Risk Committee.
The Bank employs a Capital-at-Risk (“CaR”) framework as the common measure of risk across CIMB Group. The CaR
framework provides the basis of allocating economic capital within CIMB, to cushion against unexpected losses. CaR can
be aggregated, thus allowing measurement of the Bank’s total risk. It also provides a yardstick for evaluating risk-return
relationship in different lines of business. The CaR framework also enables measurement of return of risk-adjusted-capital,
to compare profitability across different businesses and for performance measurement in the Bank.
A group wide stress test is performed on a biannual basis to evaluate the financial impact on the Group in the event of
projected adverse economic and financial situations. This process enables the Group to assess the sufficiency of its
liquidity surplus and reserves, and whether it could continue to meet its minimum capital requirement under such scenario.
Such group wide stress test allows management to gain a better understanding of how portfolios and investments are
likely to react to changing economic conditions and how the Group can best prepare for and react to them. In addition,
the Group performs ad-hoc stress tests on selected portfolio to evaluate its performance under a given stress scenario.
The day-to-day responsibility for risk management and control is delegated to the Group Risk Committee (“GRC”). The
GRC, comprises of senior management of the Group, undertakes the oversight function for capital allocation and overall
risk limits, in line with the risk appetite determined by the Board of Directors. The GRC is supported by four specialised
sub-committees, namely the Market and International Risk Committee, the Credit Risk Committee, the Liquidity Risk
Committee and the Operational Risk Committee, each addressing one of the following:
• Market risk, arising from changes in market prices from exposure to interest rates, currency exchange rate, credit
spreads, equity and commodities prices;
• Credit risk, arising from losses due to obligor, counterparty or issuer failing to perform its contractual obligations to the
Group;
• Liquidity risk, arising from a bank’s inability to meet its present and future funding needs on a timely basis, from
mismatches between the size of assets and liabilities or their maturities; and
• Operational risk, arising from internal processes which may result from inadequacies or failures in processes, controls or
projects due to fraud, unauthorised activities, error, omission, inefficiency, systems failures or from external events.
The roles and responsibilities of the committees and sub-committees are set out in the chart below:
BOARD OF DIRECTORS
Market and International Risk Credit Risk Committee Liquidity Risk Committee Operational Risk Committee
Committee (“MIRC”) (“CRC”) (“LRC”) (“ORC”)
• Oversee exposures to • Credit approval authority • Oversee the Group’s overall • Oversee issues relating to the
market risks liquidity management operational risk and internal
• Assign and review the
control environment
• Evaluate and approve Inter-bank Limits, Sectorial • Ensure Group is able to meet
proposals for primary and Exposures, Global its cash flow obligations in • Review and evaluate
secondary market deals for Counterparty Credit Limits a timely and cost effective all Business Continuity
debt and equity instruments and Global Country Limits manner Management (BCM)/ Disaster
Recovery (DR) activities
The key responsibilities of GRD are to identify, analyse, monitor, review and report the principal risks to which the Bank
is exposed. It also helps to create shareholder value through proper allocation of risk capital, development of risk-based
pricing framework and facilitate development of new business and products.
In propagating and ensuring compliance to the Market Risk framework, GRM reviews and analyses treasury trading
strategy, positions and activities vis-à-vis changes in the financial market and performs mark-to-market as part of financial
valuation. Further, GRM also conducts validation on the risk pricing parameters and models used.
GRM is also tasked with the co-ordination of the Group’s effort towards implementation of the Basel II framework in
compliance with the International Convergence of Capital Measurement and Capital Standards prescribed by the Bank
of International Settlements and as adopted by BNM. In this regard, GRM develops, implements and validates all internal
rating and scoring models and closely monitors the usage of the rating and scoring systems to ensure relevance to current
market conditions and integrity of the ratings.
On an annual basis, GRM proposes the global CaR limit to the GRC and BRC for approval. This limit is allocated by
the GRC to the various businesses of the Group through the MIRC and the CRC. The appropriate market and credit
allocations are given by the various business units to execute their business plans each year. GRC also ensures that the
aggregate risk exposure does not exceed the global CaR limit approved by the BRC.
Credit risk arises primarily from lending activities through loans as well as commitments to support clients’ obligations
to third parties, i.e. guarantees. In sales and trading activities, credit risk arises from the possibility that counterparties
will not be able or willing to fulfil their obligation on transactions on or before settlement date. In derivatives activities,
credit risk arises when counterparties to derivative contracts, such as interest rate swaps, are not able to or willing to
fulfil their obligation to pay the Bank the positive fair value or receivable resulting from the execution of contract terms.
Credit risk may also arise where the downgrading of an entity’s rating causes the fair value of the Bank’s investment
in that entity’s financial instruments to fall.
Credit risk remains the most significant risk to which the Bank is exposed. The purpose of credit risk management
is to keep credit risk exposure to an acceptable level vis-à-vis the capital, and to ensure the returns commensurate
with risk.
Credit exposures are evaluated by the CRC and are monitored against approved limits on a regular basis. Adherence
to and compliance with single customer limit as well as assessing the quality of collateral are approaches adopted to
address concentration risk to any large sector/industry, or to a particular counterparty group or individual.
The result of severe disruption of the US sub-prime mortgage market was felt across the global financial markets in
2008, and were reflected in wider credit spread, higher volatility, tighter liquidity and ultimately, the collapse of several
large global investment banks. At the onset of the financial crisis, GC has conducted numerous reviews to scale down
the Group’s exposure in several industries/sectors, countries and counterparties that are affected by the sub-prime
and global financial crisis.
2. Market Risk
Market risk is defined as any fluctuation in the value of the portfolio resulting from changes in market prices, such as
interest rates, currency exchange rates, credit spreads, equity prices and commodities prices.
Market risk results from trading activities that can arise from customer-related businesses or from proprietary positions.
The Group hedges the exposures to market risk by employing varied strategies, including the use of derivative
instruments.
The Group adopts various measures in its risk management process to manage market risk. An accurate and timely
valuation of position is critical to provide the Group with its current market exposure. GRM values the exposure using
market price or a pricing model where appropriate.
The Group also adopts a value-at-risk (“VAR”) approach in the measurement of market risk. Backtesting is performed
to validate and reassess the accuracy of the existing VAR model. VAR is a statistical measure of the potential losses
that could occur as a result of movements in market rates and prices over a specified time horizon within a given
confidence level. Backtesting involves the comparison of the daily model-generated VAR forecast against the actual
or hypothetical profit or loss data over the corresponding period.
Stress testing is conducted to capture the potential market risk exposures from an unexpected market movement. In
formulating stress scenario, consideration is given to various aspects of the market; for example identification of areas
where unexpected losses can occur and areas where historical correlation may no longer hold true.
Policies and procedures governing risk-taking translates limits and management triggers which complements the
global CaR limit. Limits constitute the key mechanism to control allowable risk taking, and are regularly reviewed in
the face of changing business needs, market condition and regulatory changes.
Risk Middle Office (“RMO”) within GRM undertakes monitoring and oversight process at Group Treasury and Equity
Market & Derivatives trading floor, which includes reviewing and analysing treasury trading strategy, positions and
activities vis-à-vis changes in the financial market, monitoring limit usage, assessing limit adequacy and verifying
transaction prices.
3. Liquidity Risk
Liquidity risk is defined as the risk to earnings or shareholders funds from the Group’s inability to meet its present and
future (both anticipated and unanticipated) funding needs on a timely basis, arising from mismatches between the size
or maturities of assets and liabilities.
The Group’s liquidity risk management policy is to maintain hiqh quality and well diversified portfolios of liquid assets
and sources of funds. Management action triggers have been established to alert management to potential and
emerging liquidity pressures. The Group’s early warning system and contingency funding plans are in place to alert and
enable Management to act effectively and efficiently during a liquidity crisis and under adverse market conditions.
The Group’s liquidity risk management organisation and its strong liquidity position helped the Group manage through
the credit and liquidity turmoil that affected global financial markets in 2008. The Liquidity Risk Committee meets at
least once a month to discuss the liquidity risk and funding profile and is chaired by the Head of Group Risk Division.
The Asset Liability Management function, which is responsible for the independent monitoring of the Bank’s liquidity
risk profile, worked closely with Group Treasury in intensifying its surveillance on market conditions and performed
frequent stress testing on liquidity positions. Liquidity positions are monitored on a daily basis and complied with
regulatory requirements for liquidity risk. The Group maintained large buffers of liquidity throughout 2008. As result,
contingency funding plans were not required to be executed as there was sufficient liquidity to ensure safe and sound
operations from a strategic, structural and tactical perspective.
4. Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from
external events.
The existing Operational Risk Management Framework, which is revised periodically to cater for changing business
conditions, is designed objectively to monitor and control operational risk effectively leading to a sound and stable
operational environment within the Group. All operational risks, both inherent and anticipated, are properly identified,
captured, mitigated, monitored and reported in a systematic and consistent manner. The Operational Risk Committee
(“ORC”) has oversight responsibility for all Group operational activities conducted on a day-to-day basis.
The adoption of the Control Risk Self Assessment (“CRSA”) and the Self Assessment Review Project (“ShARP”) are
part of the Bank’s initiatives to ensure that operational risks within the processes in each business unit are properly
identified, analysed and mitigated on a periodic basis. Relevant Key Risk Indicators (“KRI”) are in use to track changes
that may highlight new risk concerns and potential areas of weaknesses in operational control.
Each new or varied product and changes to the process flow are subjected to a rigorous risk review through sign-offs
from the relevant support units where all critical risks are being identified and assessed independently from the risk
takers or product owners.
The Bank continued to stress the importance of adhering to internal controls and established procedures to deter
fraud and to minimize losses due to staff negligence. In order to demonstrate the seriousness of such offences, strict
disciplinary actions are instituted against staff concerned.
BNM has approved the Group’s application for direct migration to the IRB Approach. The approach for credit risk will
be Advance IRB for retail exposure and Foundation IRB for corporate exposure. Operational risk will be based on
Basic Indicator Approach and working towards Standarised Approach in 2010. Regular meetings are held with BNM
to ensure implementation initiatives are in line with their expectations.
A Basel II Steering Committee chaired by the Group CEO has been set up to oversee the implementation initiatives
across the Group with assistance of various sub-committees. Significant progress has been achieved in various
workstreams, primarily, in rating models calibration and risk datamart.
The Group employs an economic capital allocation framework, whereby capital is allocated to all business units. All
major categories of risk are measured. This is in line with the Second Pillar of Basel II framework-Supervisory Review
Process and also BNM’s Internal Capital Adequacy Assessment Process, which requires banks adopting the IRB
Approach to develop a robust risk management framework (methodologies and process) to assess the adequacy of
its internal economic capital in relation to the risk profile.
Ongoing efforts are in place to enhance the operational risk loss event reporting and data collection for the enlarged
Group. Initiatives are being made to promote a web based application to ensure loss event incidents are being
reported and captured on a timely basis and in an accurate manner. The integrated loss event database is crucial to
prepare the Group to adopt a more advanced operational measurement model.
198
(h) Interest rate risk
(13491-P)
The tables below summarise the Group’s and the Bank’s exposure to interest rate risks. Included in the tables are the Group’s and the Bank’s
CIMB Bank Berhad
assets and liabilities at their full carrying amounts, analysed by the earlier of contractual repricing or maturity dates. As interest rates and yield
curves change over time, the Group and the Bank may be exposed to loss in earnings due to the effects of interest rates on the structure of the
balance sheets. Sensitivity to interest rates arises from mismatches in the repricing dates, cash flows and other characteristics of the assets and
The Group
2008
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-interest Trading
month months months months years years sensitive book Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 20,114,833 - - - - - 1,851,529 - 21,966,362
Securities purchased under resale
agreements 1,439,221 1,528,549 - - - - - - 2,967,770
Deposits and placements with banks
and other financial institutions - 1,793,676 293,813 51,970 - - - - 2,139,459
Securities held for trading - - - - - - - 9,564,281 9,564,281
Available-for-sale securities 62,599 171,108 165,119 473,516 2,404,158 2,747,504 1,336,186 - 7,360,190
Held-to-maturity securities 79,090 263,527 115,517 290,606 4,520,286 6,324,004 32,940 - 11,625,970
Derivative financial instruments - - - - 91,752 127,439 21,088 5,095,256 5,335,535
Loans, advances and financing
- Performing 46,407,918 5,930,943 1,954,450 1,807,246 16,187,880 22,520,846 195,094 - 95,004,377
- Non-performing - - - - - - 682,769^ - 682,769
Other assets - - 281,746 20,249 - - 1,793,576 - 2,095,571
Deferred taxation - - - - - - 304,537 - 304,537
Tax recoverable - - - - - - 248,055 - 248,055
Notes to the Financial Statements
Liabilities
Deposits from customers 64,713,144 17,357,986 9,341,461 7,394,071 4,892,250 15,866 23,910,963 - 127,625,741
Deposits and placements of banks
and other financial institutions 3,753,959 3,839,264 397,399 238,929 19,011 365,232 736 - 8,614,530
Derivative financial instruments - - 2,166 - - 202,404 3,279 4,641,186 4,849,035
Bills and acceptances payable 1,243,331 1,276,781 75,689 5,591 - - 489,781 - 3,091,173
Amount due to Cagamas Berhad 11,524 73,487 298,801 136,845 473,161 - - - 993,818
Amount due to related companies - - - - - - 15,432 - 15,432
Other liabilities - - - - - - 2,751,252 - 2,751,252
Provision for taxation and zakat - - - - - - 5,698 - 5,698
Irredeemable Convertible Unsecured
Loan Stocks - - - - 667,000 - - - 667,000
Other borrowings 1,039,350 - - - - - - - 1,039,350
Subordinated obligations - - 1,037,736 - 1,535,476 2,000,000 - - 4,573,212
Redeemable preference shares - - - - - 813,336 - - 813,336
Liabilities directly associated with
non-current assets/disposal groups
classified as held for sale - - - - - - 29,499 - 29,499
Total liabilities 70,761,308 22,547,518 11,153,252 7,775,436 7,586,898 3,396,838 27,206,640 4,641,186 155,069,076
Total interest rate sensitivity gap (2,657,647) (12,859,715) (8,342,607) (5,131,849) 15,617,178 28,322,955 10,018,351
200
(h) Interest rate risk (Continued)
(13491-P)
The Group
CIMB Bank Berhad
2007
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-interest Trading
Assets
Cash and short-term funds 26,141,493 - - - - - 1,633,133 - 27,774,626
Securities purchased under resale
agreements 2,262,846 2,046,125 - - - - - - 4,308,971
Deposits and placements with banks
and other financial institutions - 4,164,019 921,361 35,298 - - - - 5,120,678
Securities held for trading - - - - - - - 14,233,869 14,233,869
Available-for-sale securities 10,120 297,003 318,616 546,649 2,461,896 1,817,464 1,247,663 - 6,699,411
Held-to-maturity securities 61,484 59,834 49,191 29,691 780,723 2,459,645 32,748 - 3,473,316
Derivative financial instruments - - - - 46,383 - 74,586 1,589,961 1,710,930
Loans, advances and financing
- Performing 43,746,585 4,676,720 1,534,914 1,246,362 10,588,991 16,742,809 5,443 - 78,541,824
- Non-performing - - - - - - 2,075,709^ - 2,075,709
Other assets - - 273,423 20,253 - - 1,110,574 - 1,404,250
Deferred taxation - - - - - - 408,971 - 408,971
Tax recoverable - - - - - - 6,750 - 6,750
Statutory deposits with central banks - - - - - - 3,038,272 - 3,038,272
Investment in jointly controlled entity - - - - - - 124,448 - 124,448
Investment in associate - - - - - - 791 - 791
Amount due from holding company
and ultimate holding company - - - - - - 276,778 - 276,778
Amount due from related companies - - - - - - 100,368 - 100,368
Goodwill - - - - - - 3,695,075 - 3,695,075
Notes to the Financial Statements
Liabilities
Deposits from customers 58,546,897 17,029,983 6,183,062 7,185,838 5,337,844 422 17,905,591 - 112,189,637
Deposits and placements of banks
and other financial institutions 6,281,340 4,660,577 1,429,755 54,229 - 268,994 - - 12,694,895
Obligations on securities sold under
repurchase agreements 605,780 - - - - - - - 605,780
Derivative financial instruments - - - 3,559 - 112,720 1,363 1,492,394 1,610,036
Bills and acceptances payable 1,372,665 1,661,621 684,829 676 - - 743,322 - 4,463,113
Amount due to Cagamas Berhad 94,831 43,554 169,263 355,672 1,341,387 - - - 2,004,707
Redeemable asset-backed bonds - - - - 31,772 - - - 31,772
Amount due to related companies - - - - - - 1,977 - 1,977
Other liabilities - - - - - - 2,969,203 - 2,969,203
Provision for taxation and zakat - - - - - - 104,294 - 104,294
Irredeemable Convertible Unsecured
Loan Stocks - - - - 667,000 - - - 667,000
Other borrowings 992,100 - - - - - - - 992,100
Subordinated obligations - - - - 980,591 1,024,265 - - 2,004,856
Redeemable preference shares - - - - - 1,981,033 - - 1,981,033
Liabilities directly associated with
non-current assets/disposal groups
classified as held for sale - - - - - - 556,090 - 556,090
Total liabilities 67,893,613 23,395,735 8,466,909 7,599,974 8,358,594 3,387,434 22,281,840 1,492,394 142,876,493
Total interest rate sensitivity gap 4,328,915 (12,152,034) (5,369,404) (5,721,721) 5,519,399 17,632,484 14,331,435
202
(h) Interest rate risk (Continued)
(13491-P)
The Bank
CIMB Bank Berhad
2008
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-interest Trading
Assets
Cash and short-term funds 12,770,875 - - - - - 1,537,471 - 14,308,346
Securities purchased under resale
agreements 1,439,221 1,528,549 - - - - - - 2,967,770
Deposits and placements with banks
and other financial institutions 2,036,331 2,781,610 44,016 105,953 - - - - 4,967,910
Securities held for trading - - - - - - - 6,517,399 6,517,399
Available-for-sale securities 57,024 161,090 140,064 416,432 2,102,215 2,518,998 1,107,567 - 6,503,390
Held-to-maturity securities - 28,717 - 262,773 2,705,032 5,688,687 192 - 8,685,401
Derivative financial instruments - - - - 91,752 127,439 3,314 4,903,501 5,126,006
Loans, advances and financing
- Performing 43,589,639 2,893,815 1,634,702 1,226,071 14,950,122 19,876,014 195,093 - 84,365,456
- Non-performing - - - - - - 556,721^ - 556,721
Other assets - - 281,745 20,250 - - 1,631,241 - 1,933,236
Taxation recoverable - - - - - - 226,786 - 226,786
Deferred taxation - - - - - - 263,993 - 263,993
Statutory deposits with central banks - - - - - - 2,453,934 - 2,453,934
Investment in subsidiaries - - - - - - 2,245,919 - 2,245,919
Investment in jointly controlled entity - - - - - - 124,448 - 124,448
Investment in associate - - - - - - 595,814 - 595,814
Amount due from holding company
and ultimate holding company - - - - - - 246,872 - 246,872
Amount due from subsidiaries - - - - - - 197,618 - 197,618
Notes to the Financial Statements
Liabilities
Deposits from customers 50,785,332 13,976,198 8,628,514 7,160,697 2,925,491 - 23,628,793 - 107,105,025
Deposits and placements of banks
and other financial institutions 6,550,343 2,005,012 353,386 132,708 1,162,296 365,033 736 - 10,569,514
Derivative financial instruments - - 2,166 - - 202,404 2,842 4,612,945 4,820,357
Bills and acceptances payable 1,243,331 1,276,781 75,689 5,591 - - 484,523 - 3,085,915
Amount due to Cagamas Berhad 11,524 73,487 298,801 136,845 473,161 - - - 993,818
Amount due to subsidiaries - - - - - - 178,140 - 178,140
Amount due to related company - - - - - - 9,398 - 9,398
Other liabilities - - - - - - 2,400,962 - 2,400,962
Irredeemable Convertible
Unsecured Loan Stocks - - - - 667,000 - - - 667,000
Subordinated obligations - - 1,037,736 - 1,535,476 2,813,336 - - 5,386,548
Total liabilities 58,590,530 17,331,478 10,396,292 7,435,841 6,763,424 3,380,773 26,705,394 4,612,945 135,216,677
Total interest rate sensitivity gap 1,302,560 (9,937,697) (8,295,765) (5,404,362) 13,085,697 24,830,365 6,807,955
204
(h) Interest rate risk (Continued)
(13491-P)
The Bank
CIMB Bank Berhad
2007
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-interest Trading
Assets
Cash and short-term funds 21,753,513 - - - - - 1,362,453 - 23,115,966
Securities purchased under resale
agreements 2,262,846 2,046,125 - - - - - - 4,308,971
Deposits and placements with banks
and other financial institutions 865,023 3,406,086 960,308 107,948 - - - - 5,339,365
Securities held for trading - - - - - - - 10,814,173 10,814,173
Available-for-sale securities 10,120 232,054 263,745 502,341 2,125,893 1,601,481 1,096,872 - 5,832,506
Held-to-maturity securities - 59,834 49,191 29,623 772,463 2,455,056 - - 3,366,167
Derivative financial instruments - - - - 46,383 - - 1,589,961 1,636,344
Loans, advances and financing
- Performing 40,156,686 2,548,146 1,102,783 1,171,235 10,403,677 15,680,583 5,443 - 71,068,553
- Non-performing - - - - - - 1,943,224^ - 1,943,224
Other assets - - 273,423 20,253 - - 908,675 - 1,202,351
Deferred taxation - - - - - - 370,523 - 370,523
Statutory deposits with central banks - - - - - - 2,933,983 - 2,933,983
Investment in subsidiaries - - - - - - 2,321,488 - 2,321,488
Investment in jointly controlled entity - - - - - - 124,448 - 124,448
Amount due from holding company
and ultimate holding company - - - - - - 248,715 - 248,715
Amount due from subsidiaries - - - - - 467,432 - 467,432
Amount due from related companies - - - - - - 87,949 - 87,949
Deferred consideration - - - - - - 46,314 - 46,314
Notes to the Financial Statements
Liabilities
Deposits from customers 51,432,469 13,567,243 5,413,159 6,909,191 4,251,753 - 17,733,549 - 99,307,364
Deposits and placements of banks
and other financial institutions 7,813,406 3,593,028 887,337 35,082 1,091,310 365,000 - - 13,785,163
Obligations on securities sold under
repurchase agreements 1,000 - - - - - - - 1,000
Derivative financial instruments - - - 3,559 112,720 - - 1,494,316 1,610,595
Bills and acceptances payable 1,372,665 1,661,621 684,829 676 - - 742,354 - 4,462,145
Amount due to Cagamas Berhad 94,831 43,554 169,263 355,672 1,341,387 - - - 2,004,707
Amount due to subsidiaries - - - - - - 357,760 - 357,760
Other liabilities - - - - - - 2,790,533 - 2,790,533
Provision for taxation - - - - - - 89,316 - 89,316
Irredeemable Convertible Unsecured
Loan Stocks - - - - 667,000 - - - 667,000
Subordinated obligations - - - - 972,101 1,713,788 - - 2,685,889
Redeemable preference shares - - - - - 1,300,000 - - 1,300,000
Total liabilities 60,714,371 18,865,446 7,154,588 7,304,180 8,436,271 3,378,788 21,713,512 1,494,316 129,061,472
Total interest rate sensitivity gap 4,333,817 (10,573,201) (4,505,138) (5,472,780) 4,912,145 16,358,332 10,909,818
Financial assets
Cash and short-term funds 3.20 1.08 3.53 4.98 3.28 1.10 3.52 5.08
Securities purchased under
resale agreement 2.83 - 3.53 - 2.83 - 3.53 -
Deposits and placements
with banks and other
financial institutions 3.38 1.93 3.54 4.76 3.54 2.07 3.54 4.68
Securities held for trading 3.63 5.46 5.08 2.77 3.70 2.59 5.17 2.77
Available-for-sale securities 5.12 - 4.90 7.09 5.22 - 4.99 -
Held-to-maturity securities 5.64 7.26 5.31 - 5.67 - 5.24 -
Loans, advances and financing 5.72 3.92 6.53 6.22 5.71 - 6.53 -
Other assets 5.93 - 5.51 - 5.93 - 5.51 -
Financial liabilities
Deposits from customers 3.22 0.56 3.41 4.83 3.36 0.62 3.42 4.22
Deposits and placements of
banks and other
financial institutions 3.20 1.43 3.20 6.14 2.89 1.54 3.19 5.01
Obligations on securities sold
under repurchase agreements - - 3.45 - - - 3.45 -
Bills and acceptances payable 3.72 - 3.67 - 3.73 - 3.67 -
Amount due to Cagamas Berhad 4.74 - 3.83 - 4.74 - 3.83 -
Redeemable asset-backed bonds - - 4.75 - - - - -
ICULS 7.50 - 7.50 - 7.50 - 7.50 -
Other borrowings - 2.19 - 4.94 - - - -
Subordinated obligations 6.07 5.61 - 3.93 6.07 6.10 - 3.93
Redeemable preference shares - 6.62 3.60 6.62 - - 3.60 -
208
(i) Credit risk (Continued)
(13491-P)
The following tables set out the credit risk concentrations of financial instruments:
The Group
CIMB Bank Berhad
2007
Short term Treasury
Others 4,167,239 - 1,010,759 841,809 115,000 78,397 5,219,594 11,432,798 15,521 2,579,309
32,895,304 4,308,971 13,466,263# 6,299,951* 3,473,046α 1,710,930 81,994,787^ 144,149,252 5,542,244 10,366,373
210
(i) Credit risk (Continued)
(13491-P)
The following tables set out the credit risk concentrations of financial instruments:
The Bank
CIMB Bank Berhad
2007
Short term Treasury
Others 4,162,833 - 1,010,759 830,023 115,000 78,398 4,402,336 10,599,349 15,521 2,555,947
28,455,331 4,308,971 10,101,217# 5,456,135* 3,366,167 1,636,344 74,244,865^ 127,569,030 5,534,239 9,025,281
Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and
observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions
regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors.
Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates.
In addition, fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of FRS
132 - Financial Instruments: Disclosure and Presentation which requires the fair value information to be disclosed.
A range of methodologies and assumptions had been used in deriving the fair values of the Group’s and the Bank’s financial
instruments at balance sheet date. The total fair value of each financial instrument approximates the total carrying value as at
the balance sheet, except for the following:
The Group The Bank
2008 2008
Carrying Carrying
amount Fair value amount Fair value
RM’000 RM’000 RM’000 RM’000
Financial assets
Deposit and placements with banks and
other financial institutions 2,139,459 2,139,609 4,967,910 4,969,036
Held-to-maturity securities 11,625,970 11,651,170 8,685,401 8,640,259
Loans, advances and financing 95,687,146 93,872,845 84,922,177 82,306,562
Financial liabilities
Deposits from customers 127,625,741 127,725,604 107,105,025 107,209,604
Deposits and placements of banks and
other financial institutions 8,614,530 8,608,757 10,569,514 10,564,134
Amount due to Cagamas Berhad 993,818 994,910 993,818 994,910
Other borrowings 1,039,350 1,039,350 - -
Subordinated obligations 4,573,212 4,527,478 5,386,548 5,220,378
Financial assets
Deposit and placements with banks and
other financial institutions 5,120,678 5,120,924 5,339,365 5,339,611
Held-to-maturity securities 3,473,316 3,361,372 3,366,167 3,255,775
Loans, advances and financing 80,617,533 79,934,908 73,011,777 72,230,064
Financial liabilities
Deposits from customers 112,189,637 112,195,658 99,307,364 99,313,385
Deposits and placements of banks and
other financial institutions 12,694,895 12,736,651 13,785,163 13,826,919
Amount due to Cagamas Berhad 2,004,707 2,008,653 2,004,707 2,008,653
Other borrowings 992,100 992,100 - -
Subordinated obligations 2,004,856 1,983,587 2,685,889 2,646,038
The carrying amount of the financial assets at the balance sheet date were not reduced to their estimated fair values as the
Directors are of the opinion that the amounts will be recoverable in full on the maturity date.
The fair values are based on the following methodologies and assumptions:
For fixed rate loans with maturities of six months or more, the fair value is estimated by discounting the estimated future cash
flows using the prevailing market rates of loans with similar credit risks and maturities.
The fair values of impaired floating and fixed rate loans are represented by their carrying value, net of specific allowance, being
the expected recoverable amount.
ICULS
The estimated fair value of ICULS approximates the carrying value as based on the Directors’ estimate, the effective interest
rate of the ICULS is a fair reflection of the current rates for such similar long term borrowings.
Subordinated obligations
The fair values for the quoted subordinated obligations are obtained from quoted market prices while the fair values for
unquoted subordinated obligations are estimated based on discounted cash flow models.
56 Business combinations
(a) Acquisitions during the financial year
(i) Acquisition of BankThai Public Company Limited
On 5 November 2008, CIMB Bank Berhad had acquired approximately 42.127% of the total issued share capital of
BankThai Public Company Limited (“BankThai”). The share of net assets arising from the acquisition are as follows:
The acquisition contributed to a share of loss of RM40,701,460 to the Group for the period from 5 November 2008
to 31 December 2008. If the acquisition had occurred on 1 January 2008, the associate would have contributed
revenue (comprise net interest income and non-interest income) and net loss of RM299,670,532 and RM62,175,105
respectively, to the Group.
The effects of the disposal on the financial position of the Group as at 31 December 2008 are as follows:
2008
RM’000
Fixed assets (112)
Intangible assets (58)
Statutory deposit (40)
Deferred tax assets (69)
Trade debtors (165)
Sundry debtors (6)
Amount due from a related company -
Deposits and placements with a licensed trustee (571)
Deposits and placements with a licensed institution (1,427)
Cash and bank balances (435)
Sundry creditors 506
Provision for taxation 75
Amount due to holding company 409
Amount due to related company 437
The effects of the disposal on the financial position of the Group as at 31 December 2008 are as follows:
2008
RM’000
Cash and short-term funds (13,262)
Deposits and placements with banks and other financial institutions (125,144)
Securities and other investments (36,500)
Derivative financial instruments (11)
Loans, advances and financing (108,797)
Other assets (4,232)
Intangible assets (1,205)
Property, plant and equipment (8,413)
Deposit from customers 268,825
Deposits and placements of banks and other financial institutions 153
Deferred tax liabilities 434
Provision for taxation 214
Other liabilities 7,268
(22,244)
Net disposal proceeds 40,002
The effects of the disposal on the financial position of the Group as at 31 December 2008 are as follows:
2008
RM’000
The effects of the disposal on the financial position of the Group as at 31 December 2008 are as follows:
2008
RM’000
Non-current assets (229)
Current assets (741)
Current liabilities 375
Net assets (595)
Net disposal proceeds 3,499
Gain on disposal before and after tax 2,904
The effects of the disposal on the financial position of the Group as at 31 December 2007 are as follows:
2008
RM’000
Cash and short-term funds (49,275)
Deposits and placements with banks and other financial institutions (21,059)
Loans, advances and financing (3,409)
Other assets (134,509)
Deferred taxation (604)
Property, plant and equipment (16,077)
Other liabilities 154,108
Current tax liabilities 1,737
(264,088)
Net disposal proceeds 481,000
The net cash flow on disposal was determined as follows:
2008
RM’000
Cash and short-term funds (296)
Deposits and placements with banks and other financial institutions (355,050)
Securities held for trading (171,678)
Available-for-sale securities (575)
Held-to-maturity securities (179,535)
Financing, advances and other loans (1,126,261)
Other assets (386,944)
Statutory deposits with Bank Negara Malaysia (50,478)
Deferred tax asset (11,604)
Deposits from customers 758,984
Deposits and placements with banks and other financial institutions 1,271,052
(388,385)
Net disposal proceeds 388,385
The net cash flow on disposal was determined as follows:
Total proceeds from disposal - cash consideration 388,385
Expenses directly attributable to the disposal, paid in cash -
Total non-current assets held for sale 82,452 762,094 42,712 115,886
Liabilities directly associated with non-
current assets classified as held for sale:
- disposal of certain liabilities of Southern
Investment Bank Berhad (i) 29,499 54,267 - -
- liabilities relating to disposal of 100%
equity interest in SBB Securities Sdn Bhd (ii) - 41,414 - -
- liabilities relating to disposal of 60%
equity interest in South East Asian Bank Ltd (iii) - 460,409 - -
(i) Disposal of certain assets, liabilities and asset/fund management business of Southern Investment Bank
Berhad (“SIBB”)
Certain assets and liabilities of SIBB have been presented as held for sale following the proposed sale to HLG Credit Sdn
Bhd (“HLGC”). The disposal was completed on 31 January 2009.
Assets
Loans, advances and financing 39,636 55,076
Intangible assets 83 182
Property, plant and equipment 21 70
Liabilities
Deposits from customers 3,507 12,448
Deposits and placements of banks and other financial institutions 25,296 41,614
Other liabilities 696 205
Liabilities directly associated with non-current assets classified as held for sale 29,499 54,267
(ii) Disposal of 100% equity interest in SBB Securities Sdn Bhd (“SBB Securities”)
The assets and liabilities of SBB Securities have been presented as held for sale as at 31 December 2007 following the
conditional share sale agreement entered with HLG Credit Sdn Bhd on 19 October 2007. The disposal was completed on
22 October 2008.
(iii) Disposal of 60% equity interest in South East Asian Bank Ltd (“SEA Bank”)
On 4 December 2007, the Bank agreed to dispose its 60% equity interest in SEA Bank to British American Investment Co
(Mauritius) Ltd. The disposal was completed on 1 April 2008.
(iv) Goodwill
Arising from items (i) above, the goodwill arising from the acquisition of SIBB is classified as non-current assets held for
sale as at 31 December 2008.
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
(v) Foreclosed properties, property, plant and equipment and prepaid lease payments
Foreclosed properties, property, plant and equipment and prepaid lease payments of the Bank whereby deposits have
been received from buyers of the properties, and where a definitive buyer has been identified have been classified as held
for sale. The disposals are expected to be completed in 2009.
58 Comparatives
(a) Restatement of comparatives
Certain comparatives were restated to conform with the current financial year’s presentation. There was no impact to the
financial performance and ratios in relation to the financial year ended 31 December 2007. The restatements are as follows:
As previously
Note reported Reclassification As restated
RM’000 RM’000 RM’000
Group
Balance sheet
Other assets (i) 1,433,265 (29,015) 1,404,250
Other liabilities (i) 2,998,218 (29,015) 2,969,203
Bank
Balance sheet
Cash and short term funds (ii) 23,490,309 (374,343) 23,115,966
Deposits and placements with banks
and other financial institutions (ii) 4,965,022 374,343 5,339,365
Other assets (i) 1,231,366 (29,015) 1,202,351
Other liabilities (i) 2,819,548 (29,015) 2,790,533
Group
Income statement
Interest income (iii) 7,171,325 25,101 7,196,426
Non-interest income (iii) 2,214,395 (25,101) 2,189,294
Bank
Income statement
Interest income (iii) 6,633,310 25,101 6,658,411
Non-interest income (iii) 2,178,106 (26,514) 2,151,592
Write-back of/(allowance for) impairment losses (iii) (121,510) 1,413 (120,097)
(i) The reclassification amount shown is the net effect of the grossing and off-setting of certain account balances as
allowed under FRS 132, comprising clearing items of credit RM131,181,000 and Credit Support Annex for derivative
transactions of debit RM102,166,000.
(ii) An amount of RM374,343,000, being the Bank’s RPSIA placed with CIMB Islamic, was classified under “Cash and short
term funds” in 2007. As required by BNM, this amount has now been reclassified to deposits and placements with banks
and other financial institutions.
Assets
Cash and short-term funds (a) 6,249,125 4,013,925 - -
Deposits and placements with banks and
other financial institutions (b) 711,989 1,149,900 377,574 -
Securities held for trading (c) 2,882,056 618,872 - -
Available-for-sale securities (d) 612,378 654,874 - -
Held-to-maturity securities (e) 1,198,056 95,148 - -
Derivative financial instruments (f) 267,369 97,790 2,349 -
Financing, advances and other loans (g) 6,259,726 2,254,224 68,268 -
Other assets (h) 99,244 71,717 2,002 -
Deferred tax assets (i) 21,369 16,851 307 -
Amount due from related company - 5,996 - -
Amount due from holding company 100,622 - - -
Statutory deposits with Bank Negara Malaysia (j) 269,224 101,144 - -
Goodwill (k) 136,000 136,000 - -
Intangible assets (l) 5,962 9,556 - -
Property, plant and equipment (m) 3,855 3,691 - -
Liabilities
Deposits from customers (n) 13,984,562 7,520,405 291,375 -
Deposits and placements of banks and
other financial institutions (o) 3,656,836 600,343 156,000 -
Derivative financial instruments (f) 46,452 1,408 - -
Bills and acceptances payable 5,258 968 - -
Other liabilities (p) 304,493 60,855 3,600 -
Amount due to holding company - 335,856 - -
Amount due to related company 4,010 - - -
Provision for taxation and zakat (q) 3,076 5,958 - -
Equity
Ordinary share capital (r) 550,000 550,000 - -
Perpetual preference shares (s) 70,000 70,000 - -
Reserves (t) 192,288 83,895 (475) -
Total net income 258,945 186,881 124 1,046
Add: Allowances for losses on financing,
advances and other loans 83,481 65,833 1,451 14,191
Less: Transfer from/(to) profit equalisation reserve (2,200) 235 - 1,075
Less: Allowances for impairment of securities 164 - - -
Revaluation
reserve
Perpetual Exchange available
Share preference Statutory fluctuation for-sale Retained
capital shares reserve reserves securities profit Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
The Group
At 1 January 2008 550,000 70,000 39,186 (999) 303 45,405 703,895
Net gain from change in fair
value of available-for-sale
securities net of deferred tax - - - - (2,022) - (2,022)
Currency translation difference - - - (2,311) - - (2,311)
Income and expenses recognised
directly in equity - - - (2,311) (2,022) - (4,333)
Net profit for the financial year - - - - - 112,726 112,726
Revaluation
reserve Retained
Perpetual Islamic Exchange available profit /
Share preference Banking Statutory fluctuation for-sale (Accumulated
capital shares funds reserve reserves securities losses) Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
The Group
At 1 January 2007 150,000 70,000 250,000 7,008 - 2,768 (5,084) 474,692
Issue of shares
during the
financial year 400,000 - - - - - - 400,000
Net gain from
change in fair value
of available-for-sale
securities net of
deferred tax - - - - - (2,465) - (2,465)
Currency translation
difference - - - - (999) - - (999)
Income and expenses
recognised directly
in equity - - - - (999) (2,465) - (3,464)
Net profit for the
financial year - - - - - - 86,461 86,461
Total recognised
income and
expenses for the
financial year - - - - (999) (2,465) 86,461 82,997
Transaction with
shareholders - - (250,000) (2,001) - - (1,793) (253,794)
Transfer to statutory
reserve - - - 34,179 - - (34,179) -
Non-
distributable Distributable
Exchange
fluctuation Accumulated
reserves loss Total
RM’000 RM’000 RM’000
Bank
At 1 January 2008 - - -
Currency translation difference (426) - (426)
Net loss for the financial year - (49) (49)
Non-
distributable Distributable
Malaysia
Islamic statutory Retained
Banking funds reserve profits Total
RM’000 RM’000 RM’000 RM’000
Bank
At 1 January 2007 250,000 2,001 5,338 257,339
Net loss for the financial year - - (3,545) (3,545)
Transaction with shareholders (250,000) (2,001) (1,793) (253,794)
At 31 December 2007 - - - -
(b) Deposits and placements with banks and other financial institutions
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
During the financial year, the Bank had reclassified certain held for trading securities to held-to-maturity category. The
reclassification has been accounted for in accordance with the BNM circular on ‘Reclassification of Securities under
Specific Circumstances’ issued during the year, and is effective from 1 July 2008 until 31 December 2009.
Included in the other operating income (Note u & v) is the net gains/(losses) arising from the change in fair value recognised
in the income statement in respect of the reclassified securities:
2008 2007
RM’000 RM’000
As of date of reclassification, the effective profit rates on the reclassified held for trading securities, based on the new cost
is an average of 5.36% per annum with expected recoverable cash flows of approximately RM40 million in face value
inclusive of coupon receivable on the securities.
Unquoted securities
Islamic commercial papers 34,832 - - -
Private debt securities 1,168,385 98,644 - -
1,203,217 98,644 - -
Amortisation of premium less accretion of discounts (4,997) (3,496) - -
1,198,220 95,148 - -
Accumulated impairment losses
Private debt securities (164) - - -
1,198,056 95,148 - -
Private debt securities amounting to RM954 million are funded by a Restricted Profit Sharing Investment Account (“RPSIA”)
depositor, as part of an arrangement with the Bank.
Included in the held-to-maturity securities are securities transferred from securities held for trading category during the financial
year, with the following carrying value and fair value as at 31 December 2008 (2007: no such reclassification permitted):
2008 2007
RM’000 RM’000
The following tables summarise the contractual or underlying principal amounts of derivative financial instruments
held at fair value through income statement and hedging purposes. The principal or contractual amounts of
these instruments reflect the volume of transactions outstanding at balance sheet date, and do not represent
amounts at risk.
In the financial statements, trading derivative financial instruments are revalued on a gross position basis and the
unrealised gains or losses are reflected in “Derivative financial instruments” Assets and Liabilities respectively.
2008 2007
Fair values Fair values
Principal Assets Liabilities Principal Assets Liabilities
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Foreign exchange
derivative
Currency forward 652,126 106 - 4,593 43 -
Currency swaps 313,695 2,349 (3,480) 107,827 - (38)
965,821 2,455 (3,480) 112,420 43 (38)
Profit rate derivatives
Profit rate swaps 3,471,419 222,386 (437) 1,751,410 97,747 (1,370)
Equity derivatives
Equity options 3,746,677 42,528 (42,535) - - -
Total derivative
assets/(liabilities) 8,183,917 267,369 (46,452) 1,863,830 97,790 (1,408)
2008 2007
Fair values Fair values
Principal Assets Liabilities Principal Assets Liabilities
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Foreign exchange
derivative
Currency swaps 293,695 2,349 - - - -
2008 2007
Risk Risk
Credit Weighted Credit Weighted
Principal equivalent* amount Principal equivalent* amount
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Credit related
Direct credit substitutes 35,057 35,057 35,057 38,247 38,247 38,247
Certain transaction-related
contingent items 381,536 190,768 113,978 190,777 95,389 95,389
Short-term self-liquidating
trade-related contingencies 147,568 29,514 3,042 269,577 53,915 53,915
Obligation under underwriting
agreements 50,000 25,000 25,000 50,000 25,000 25,000
Islamic financing sold directly
and indirectly to Cagamas
with recourse 294,946 294,946 294,946 575,918 575,918 575,918
Irrevocable commitments to
extend credit:
- maturity not exceeding
one year 1,716,834 - - 908,605 - -
- maturity exceeding
one year 586,343 293,172 76,963 247,913 123,956 116,708
Forward asset purchase 5,000 - - - - -
Miscellaneous commitments
and contingencies 1,164 1,164 1,164 1,814 1,814 1,814
Total credit-related
commitments and
contingencies 3,218,448 869,621 550,150 2,282,851 914,239 906,991
2008 2007
Risk Risk
Credit Weighted Credit Weighted
Principal equivalent* amount Principal equivalent* amount
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Treasury related
Foreign exchange related
contracts:
- less than one year 652,126 12,384 3,531 112,420 2,082 450
- five years and above 313,695 10,742 2,883 - - -
Profit rate related contracts:
- one year to less than
five years 3,471,419 124,245 24,849 1,751,410 37,711 7,542
Equity related contracts:
- less than one year 2,176,832 38,957 7,791 - - -
- one year to less than
five years 1,540,947 206,296 41,259 - - -
- five years and above 28,898 1,484 297 - - -
Total treasury-related
commitments
and contingencies 8,183,917 394,108 80,610 1,863,830 39,793 7,992
11,402,365 1,263,729 630,760 4,146,681 954,032 914,983
2008 2007
Risk Risk
Credit Weighted Credit Weighted
Principal equivalent* amount Principal equivalent* amount
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Treasury related
Foreign exchange related
contracts:
- five years and above 293,695 6,792 1,358 - - -
293,695 6,792 1,358 - - -
* The credit equivalent amount is arrived at using the credit conversion factors as per Bank Negara Malaysia guidelines.
Effective 1 October 2008, the following approaches have been adopted for the computation of the credit equivalent
and risk-weighted assets:
- adoption of bilateral netting as provided under the Standardised Approach Framework which involves the
weighting of net claims rather than gross claims with the same counterparties arising out of the full range of
forwards, swaps, options and similar derivative contracts.
- Irrevocable commitments to extend credit (undrawn loans) have been revised to include only those undrawn
loans whereby all conditions precedent have been met.
Total net financing, advances and other loans 6,259,726 2,254,224 68,268 -
Included in financing, advances and other loans of the Group are exposures to Restricted Profit Sharing Investment
Accounts (“RPSIA”), as part of an arrangement between CIMB Islamic and CIMB Bank. CIMB Bank is exposed to risks
and rewards on RPSIA financing and will account for all the general and specific allowances for bad and doubtful debts
arising thereon. As at 31 December 2008, the gross exposures to RPSIA financing is RM1,893 million (2007: RMNil) and
the general allowance relating to this RPSIA is RM32 million(2007: RMNil).
Fixed rate
- House financing 343,427 355,183 - -
- Hire-purchase receivables 1,639,046 1,224,507 - -
- Other financing 1,437,004 837,070 - -
Variable rate
- House financing 390,663 - - -
- Others 2,924,521 557,168 69,449 -
6,734,661 2,973,928 69,449 -
Less: Financing sold to Cagamas (294,946) (575,918) - -
6,439,715 2,398,010 69,449 -
Specific allowance
At 1 January 94,904 90,800 - 90,800
Allowance made during the financial year 99,584 80,712 - 14,191
Amount written back in respect of recoveries (40,608) (19,106) - -
Amount written off (54,506) (57,502) - -
Disposal of Islamic banking operations to
CIMB Islamic - - - (104,991)
At 31 December 99,374 94,904 - -
General allowance
At 1 January 48,882 41,485 - 33,800
Net allowance made during the financial year 31,827 7,589 1,451 -
Exchange fluctuation (94) (192) (270) -
Disposal of Islamic banking operations to
CIMB Islamic - - - (33,800)
General
allowance
for bad and Other
doubtful temporary
financing differences Total
The Bank RM’000 RM’000 RM’000
(k) Goodwill
Group
2008 2007
RM’000 RM’000
Cost
At 1 January 136,000 -
Arising from acquisition of Islamic Banking operations of CIMB Bank - 136,000
At 31 December 136,000 136,000
Goodwill is wholly allocated to the retail banking cash-generating unit(‘CGU’). The CGU does not carry any intangible
assets with indefinite useful lives.
The recoverable amount of CGU which are not classified as held for sale is determined based on value-in-use
calculations. These calculations use pre-tax cash flow projections based on the 2009 financial budgets approved by
Board of Directors, projected for 5 years based on the average to year historical Gross Domestic Product (“GDP”)
growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the five-
year period are extrapolated using an estimated growth rate of 5.00%. The cash flow projections are derived based
on a number of key factors including the past performance and management’s expectation of market developments.
The discount rate used in determining the recoverable amount of the CGUs is 9.80%. The discount rate is pre-tax and
reflects the specific risks relating to the CGUs.
Computer software
Cost
At 1 January 11,626 4,597
Additions 278 1,042
Reclassified (to)/from property, plant and equipment (842) 5,987
Transfer of assets to holding company (19) -
At 31 December 11,043 11,626
Amortisation
At 1 January 2,070 262
Charge for the financial year 3,829 1,808
Reclassified (to)/from property, plant and equipment (818) -
At 31 December 5,081 2,070
Net book value at 31 December 5,962 9,556
Renovations,
office
equipment, Computer
furniture equipment Motor
and fittings and software vehicles Total
The Group RM’000 RM’000 RM’000 RM’000
2008
Cost
At 1 January 4,804 21 302 5,127
Additions 1,105 - - 1,105
Reclassified from intangible assets 842 - - 842
At 31 December 6,751 21 302 7,074
Depreciation
At 1 January 1,328 5 103 1,436
Charge for the financial year 946 4 15 965
Reclassified from intangible assets 818 - - 818
At 31 December 3,092 9 118 3,219
Net book value at 31 December 2008 3,659 12 184 3,855
2007
Cost
At 1 January 7,766 14 302 8,082
Additions 3,168 7 - 3,175
Write-off (143) - - (143)
Reclassified to intangible assets (5,987) - - (5,987)
At 31 December 4,804 21 302 5,127
Depreciation
At 1 January 412 2 65 479
Charge for the financial year 916 3 38 957
At 31 December 1,328 5 103 1,436
Net book value at 31 December 2007 3,476 16 199 3,691
The above property, plant and equipment include renovations and computer equipment and software under construction
at cost of RM659,000 (2007: RM141,000).
Non-Mudharabah
Demand deposits 1,897,477 312,399 17 -
Saving deposits 301,675 133,613 - -
Fixed return investment account 1,840,535 1,159,860 291,358 -
Negotiable instruments of deposit 242,975 201,826 - -
Commodity Murabahah-i 379,480 - - -
Others 303,680 620 - -
4,965,822 1,808,318 291,375 -
Mudharabah
Demand deposits 398,731 126,719 - -
Saving deposits 92,856 32,007 - -
General investment deposits (inclusive of Special
General investment deposits of
RM5,254,880,000 (2007: RM3,869,386,000)) 6,780,540 4,682,656 - -
Specific investment deposit 1,746,613 870,705 - -
9,018,740 5,712,087 - -
13,984,562 7,520,405 291,375 -
Mudharabah
Licensed Islamic banks 64,809 100,000 - -
Licensed banks 3,074,907 500,343 154,072 -
Licensed investment banks 200,300 - - -
Other financial institutions 316,820 - 1,928 -
3,656,836 600,343 156,000 -
- 2,200 - -
The shareholders’ portion of the profit equalisation reserve of the Group and the Bank is RMNil (2007: RM217,360) and
RMNil (2007: RMNil) respectively.
Authorised
Ordinary shares of RM1.00 each:
At 1 January/31 December 900,000 900,000
Issued and fully paid
Ordinary shares of RM1.00 each:
At 1 January 550,000 150,000
Issued during the financial year - 400,000
At 31 December 550,000 550,000
Authorised
Perpetual preference shares of RM1.00 each
At 1 January/31 December 100,000 100,000
Issued and fully paid
Perpetual preference shares of RM1.00 each
At 1 January/31 December 70,000 70,000
(t) Reserves
(a) The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not
distributable as cash dividends.
(b) Revaluation reserve of available-for-sale securities comprises gains and losses arising from changes in the fair value
of available-for-sale securities. The depositors’ portion of unrealised gains on available-for-sale securities of the Group
at the end of the financial year is RM1,618,000 (2007: RM1,418,000).
83,948 24,947 - -
727 40 - (91)
Fee and commission income 990 1,753 - 49
Sundry income - 383 - 65
Included in the personnel costs are fees paid to the Shariah Committee’s members amounting to RM361,000 (2007: RM361,000).
Establishment
Rental 1,768 1,196 - -
Depreciation of property, plant and equipment 965 957 - -
Repairs and maintenance 271 2,366 - -
Overheads charged by CIMB Bank Berhad 17,675 6,494 - -
EDP expenses 3,230 8,196 - -
Insurance 268 266 - -
Others 2,771 1,691 - -
Promotion
Advertisement and publicity 13,573 2,282 - 10
Handling fees 8,333 1,427 - -
Promotion costs charged by CIMB Bank Berhad 2,751 1,688 - 279
Others 4,509 666 - -
General expenses
Auditor’s remuneration - statutory audit 104 90 - -
Amortisation of intangible assets 3,829 1,808 - -
General expenses charged by CIMB Bank Berhad 848 8,768 - -
Legal and professional fees 788 486 - 13
Communication 1,005 90 - -
Incidental expenses on banking operations 5,565 2,297 - -
Brokerage fees and commissions 3,648 894 - -
Others 2,760 3,017 143 2,140
Other Key
Parent related management
company companies personnel
2008 RM’000 RM’000 RM’000
Income
Profit income on deposits and placements with banks and other
financial institution 2,498 3,304 -
Expenditure
Profit expense on deposits and placements of banks and other
financial institution 45,952 9,127 -
Profit expense on deposits and placements of customers 43,363 11,863 36
Security services - 177 -
Amounts due from
Current accounts, deposits and placements with banks and other
financial institutions 207,870 2,500 -
Others 552 - -
Amounts due to
Deposits from customers - 27,533 1,826
Deposits and placements of banks and other financial institutions 3,381,584 265,192 -
Profit expense on deposits from customers - 10 7
Profit expense on deposits and placements of banks and other
financial institution 4,040 929 -
Outsourced back-office processing 8,091 - -
Other Key
Parent related management
company companies personnel
2007 RM’000 RM’000 RM’000
Income
Profit income on deposits and placements with banks and other
financial institution - 674 -
Expenditure
Profit expense on deposits and placements of banks and other
financial institution 9,888 214 -
Profit expense on deposits and placements of customers - - 28
Outsourced back-office processing 28,828 2,922 -
Security services - 139 -
Amounts due from
Current accounts, deposits and placements with banks and other
financial institutions 146,227 4,900 -
Others 16,246 5,996 -
Amounts due to
Deposits from customers 374,343 - 2,045
Deposits and placements of banks and other financial institutions - 126,000 -
Profit expense on deposits from customers 805 - -
Profit expense on deposits and placements of banks and other
financial institutions - 44 -
Outsourced back-office processing 9,360 - -
Transactions with other related parties are aggregated because these transactions are similar in nature and no single
transaction with these parties is significant enough to warrant separate disclosure.
Key management compensation and credit transaction and exposures with connected parties are disclosed in Note 42.
(ab) Taxation
The Group The Bank
2008 2007 2008 2007
RM’000 RM’000 RM’000 RM’000
254
(ac) Profit rate risk
(13491-P)
The tables below summarise the Group’s and the Bank’s exposure to rate of return risk. Included in the tables are the Group’s and the Bank’s
CIMB Bank Berhad
assets and liabilities at their full carrying amounts, categorised by the earlier of contractual repricing or maturity dates. As market rates and yield
curves change over time, the Group and the Bank may be exposed to loss in earnings due to the effects of market rates on the structure of the
balance sheets. Sensitivity to market rates arises from mismatches in the repricing dates, cash flows and other characteristics of the assets and
The Group
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-profit Trading
month months months months years years sensitive book Total
2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 6,027,002 - - - - - 222,123 - 6,249,125
Deposits and placements
with banks and other
financial institutions 116,700 300,289 245,000 50,000 - - - - 711,989
Securities held for trading - - - - - - - 2,882,056 2,882,056
Available-for-sale securities 5,000 - 25,055 54,380 306,832 220,536 575 - 612,378
Held-to-maturity securities 892,884 69,664 8,708 17,416 106,390 102,994 - - 1,198,056
Derivative financial
instruments - - - - - - - 267,369 267,369
Financing, advances and
other loans
- Performing 1,854,418 910,753 98,192 63,342 789,915 2,518,579 3,048 - 6,238,247
^
- Non-performing - - - - - - 21,479 - 21,479
Notes to the Financial Statements
Liabilities
Deposits from customers 7,615,406 3,444,257 704,423 218,932 1,966,670 15,866 19,008 - 13,984,562
Deposits and placements of
banks and other financial
institutions 2,639,886 1,016,950 - - - - - - 3,656,836
Derivative financial
instruments - - - - - - - 46,452 46,452
Bills and acceptances
payable 1,808 1,913 1,537 - - - - - 5,258
Other liabilities - - - - - - 304,493 - 304,493
Amount due to related
company - - - - - - 4,010 - 4,010
Provision for taxation and
zakat - - - - - - 3,076 - 3,076
Total liabilities 10,257,100 4,463,120 705,960 218,932 1,966,670 15,866 330,587 46,452 18,004,687
Total profit rate
sensitivity gap (1,361,096) (3,182,414) (329,005) (33,794) (763,533) 2,826,243 3,102,973
256
(ac) Profit rate risk (Continued)
(13491-P)
The Group
CIMB Bank Berhad
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-profit Trading
month months months months years years sensitive book Total
Assets
Cash and short-term funds 3,829,520 - - - - - 184,405 - 4,013,925
Deposits and placements
with banks and other
financial institutions - 1,044,900 75,000 30,000 - - - - 1,149,900
Securities held for trading - - - - - - - 618,872 618,872
Available-for-sale securities - 50,002 36,791 39,677 306,900 220,929 575 - 654,874
Held-to-maturity securities - - - - - 95,148 - - 95,148
Derivative financial
instruments - - - - - - - 97,790 97,790
Financing, advances and
other loans
- Performing 436,808 338,762 3,051 56,670 196,853 1,114,359 - - 2,146,503
- Non-performing - - - - - - 107,721^ - 107,721
Other assets - - - - - - 71,717 - 71,717
Deferred taxation - - - - - - 16,851 - 16,851
Statutory deposits with Bank
Negara Malaysia - - - - - - 101,144 - 101,144
Amount due to related
companies - - - - - - 5,996 - 5,996
Notes to the Financial Statements
Liabilities
Deposits from customers 3,753,505 1,996,072 581,320 100,688 1,086,091 422 2,307 - 7,520,405
Deposits and placements of
banks and other
financial institutions 600,343 - - - - - - - 600,343
Derivative financial
instruments - - - - - - - 1,408 1,408
Bills and acceptable payable - - - - - - 968 - 968
Amount due to holding
company - - - - - - 335,856 - 335,856
Other liabilities - - - - - - 60,855 - 60,855
Provision for taxation and
zakat - - - - - - 5,958 - 5,958
Total liabilities 4,353,848 1,996,072 581,320 100,688 1,086,091 422 405,944 1,408 8,525,793
Total profit rate
sensitivity gap (87,520) (562,408) (466,478) 25,659 (582,338) 1,430,014 715,254
258
(ac) Profit rate risk (Continued)
(13491-P)
The Bank
CIMB Bank Berhad
Non-trading book
Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 Non-profit Trading
month months months months years years sensitive book Total
Assets
Deposits and placements
with banks and other
financial institutions 99,377 275,911 - - 2,286 - - - 377,574
Derivative financial instruments - - - - - - - 2,349 2,349
Financing, advances and
other loans
- Performing - 68,268^ - - - - - - 68,268
Other assets - - - - - - 2,002 - 2,002
Deferred tax assets - - - - - - 307 - 307
Total assets 99,377 344,179 - - 2,286 - 2,309 2,349 450,500
Liabilities
Deposits from customers 49,161 242,214 - - - - - - 291,375
Deposits and placements of
banks and other financial
institutions 17,118 138,882 - - - - - - 156,000
Other liabilities - - - - - - 3,600 - 3,600
Total liabilities 66,279 381,096 - - - - 3,600 - 450,975
Notes to the Financial Statements
260
(ad) Credit risk
(13491-P)
The following tables set out the credit risk concentrations of financial instruments:
The Group
CIMB Bank Berhad
2008
Short term Treasury