Ar 1112

SERVING YOU BETTER
2012 ANNUAL REPORT
(6627-X)
SERVING YOU BETTER

The paradigms featured on the cover represent the milestones we have achieved in our continuous journey towards
service excellence. The series of enlarging paradigms also express our commitment to constantly expand our focus
and capacity to serve you better.
Everyday, in every way, we aim to break new ground as we heighten our standards of service excellence. Through
this focus on elevating customer experiences, delivering long-term shareholder value, adhering to responsible
practices and raising our competencies and capabilities, we intend to always make a positive difference in the way
we serve you.
The faces in the paradigm represent staff of Alliance Financial Group, Alliance Bank and its banking entities. It is our
way of thanking all our staff for their spirit towards serving you better.
DELIVERING
VALUE
041763 Alliance Bank Annual Report 2012.indd b
13/6/12 3:30:54 PM
ENHANCING
EXPERIENCES
041763 Alliance Bank Annual Report 2012.indd 1
ELEVATING
CAPABILITIES
13/6/12 3:31:10 PM
Contents
3
4
6
7
8
12
Corporate Profile
History of
Alliance Financial Group
Corporate Information
Corporate Structure
Products and Services
Financial Highlights
Leadership
14
20
22
Directors
Directors of Major Subsidiaries
Senior Management
Perspectives
26
28
32
46
Statement by Chairman of
Alliance Financial Group Berhad
Alliance Bank Malaysia Berhad
Business and Operations Review
by Group Chief Executive Officer of
Calendar of Significant Events
Accountability
54
62
65
70
71
78
Statement on Corporate Governance

Corporate Responsibility
Audit Committee Report
Statement on Internal Control
Risk Management
Additional Compliance Information
Financials
79
Financial Statements of
Statement of Board of
Directors Responsibilities
Directors Report
Statement by Directors
Statutory Declaration
Independent Auditors Report
Statements of Financial Position
Statements of
Comprehensive Income
Consolidated Statement of
Changes in Equity
Statement of Changes in Equity
Consolidated Statements of
Cash Flow
Statements of Cash Flow
Notes to the
Financial Statements
187 Abridged Financial Statements of
207 Basel II Pillar 3 Disclosure
of Alliance Bank Malaysia Berhad
Additional
Information
256
259
266
268
268
List of Properties
Directory
Analysis of Shareholdings
Substantial Shareholders
Directors Shareholdings
Notice and Form

269 Notice of Annual General Meeting
272 Appendix 1: Proposed Amendments to the
Articles of Association of the Company
Form of Proxy
13/6/12 3:41:15 PM
CORPORATE PROFILE
Alliance Financial Group Berhad was incorporated in Malaysia on 7 April 1966 and was listed on the
Main Market of Bursa Malaysia Securities Berhad on 6 July 1979. The Group is principally involved in
the provision of financial services through Alliance Bank Malaysia Berhad.
Alliance Bank Malaysia Berhad, together with its subsidiaries, Alliance Investment Bank Berhad,
Alliance Islamic Bank Berhad and Alliance Investment Management Berhad, provides a wide range of
financial products and services in commercial banking, financing, investment banking, stockbroking,
Islamic banking, unit trust funds management, fund management, investment advisory and other
related financial services.
13/6/12 3:41:19 PM
ALLIANCE FINANCIAL GROUP BERHAD (6627-X)
History of Alliance Financial Group
Banque de LIndochine opened

a sub-branch at Jalan Batu,
Kuala Lumpur (now known as
Jalan Tunku Abdul Rahman).
The name of the Bank was

changed to Banque de
LIndochine et de Suez
(Banque Indosuez). In the same
year, Banque Indosuez acquired
a building in Jalan
Raja Chulan, Kuala Lumpur, to
serve as its headquarters.
Malaysian French Bank Berhad

was incorporated to assume
the banking business of the
two local branches of Banque
Indosuez. The incorporation
was the result of the French
governments nationalisation of
Banque Indosuez and also
of the subsequent restructuring
of the Banks businesses in
Malaysia to comply with local
banking regulations.
1958
1959
1975
1982
1985
1986-1995
1998
1999
The Bank established its first

branch in Taman Maluri, Kuala
Lumpur. In the same year, eight
more branches were opened
throughout the country.
During this time, 16 branches

were established nationwide.
By February 1998, the Bank

had a network of 34 branches
nationwide, including Sabah
and Sarawak.
Multi-Purpose Bank Berhad

was selected to be one of
the anchor banks in the
Malaysian governments
bank consolidation initiative.
Multi-Purpose Bank Berhad
successfully anchored the
merger with International Bank
Malaysia Berhad, Sabah Bank
Berhad, Sabah Finance Berhad,
Bolton Finance Berhad, Amanah
Merchant Bank Berhad, and
Bumiputra Merchant Bankers
Berhad.
Banque de LIndochine
commenced operations in
Malaya with its first branch
in the Selangor Kwangtung
Association Building, Jalan
Pudu, Kuala Lumpur. This
branch was subsequently
relocated to Jalan Raja Chulan,
Kuala Lumpur, in 1975.
1996
Malaysian French Bank Berhad
changed its name to
Multi-Purpose Bank Berhad.
12/6/12 4:52:20 PM
2012 ANNUAL REPORT
The Alliance Banking Group was

established on 19 January with
the successful merger of seven
financial institutions. The
newly-merged entitys name
and logo were unveiled to
the public for the first time as
the Alliance Banking Group
comprising Alliance Bank
Malaysia Berhad (Alliance
Bank), Alliance Finance Berhad,
Alliance Merchant Bank
Berhad and Alliance Unit Trust
Management Berhad.
On 1 August,
Alliance Finance Berhad
merged with Alliance Bank.
Consequently, Hire Purchase
is now offered at all Alliance
Banks retail branches
nationwide.
On 1 January, Alliance Merchant

Bank Berhad acquired 100%
equity interest in Kuala Lumpur
City Securities (KLCS).
In August, Alliance Merchant

Bank Berhad changed its name
to Alliance Investment Bank
Berhad (AIBB). In December,
KLCS merged with AIBB to
offer a full suite of investment
banking services.
2001
2004
2005
2006
2008
2011
Alliance Islamic Bank Berhad

commenced its Islamic banking
business on 1 April after
assuming the entire Islamic
banking business portfolio of
Alliance Bank.
In January, Alliance Bank and

AIA Bhd entered into a joint
venture to form AIA AFG Takaful
Bhd., which offers a range of
Takaful savings, protection and
investment products.
2007
In April, Alliance Unit Trust
Management Berhad merged
with Alliance Capital Asset
Management Berhad to
form Alliance Investment
Management Berhad.
In June, Alliance Islamic Bank
Berhad was incorporated as
a wholly-owned subsidiary of
Alliance Bank.
In conjunction with the

change of name of its holding
company from Malaysian
Plantations Berhad to Alliance
Financial Group Berhad on
31 August, Alliance Banking
Group underwent a major
rebranding exercise and was
renamed Alliance Financial
Group.
Today
The Alliance Financial Group, comprising Alliance Bank Malaysia Berhad, Alliance Investment Bank Berhad,
Alliance Islamic Bank Berhad and Alliance Investment Management Berhad, is a dynamic, integrated financial services
group offering banking and financial services through its consumer banking, SME banking, wholesale banking, Islamic
banking, investment banking, stockbroking, unit trust and asset management businesses.
It provides easy access to its broad base of customers throughout the country via multi-pronged delivery channels
which include retail branches, Alliance Personal branches, Privilege Banking Centres, Islamic Banking Centres,
Business Centres, Investment Bank branches, direct marketing offices and unit trust agent offices located nationwide,
as well as mobile and Internet banking.
With over five decades of proud history in contributing to the financial community in Malaysia with its innovative and
entrepreneurial business spirit through its principal subsidiaries, the Group is committed to delivering the best customer
experience and creating long-term shareholder value.
041763 Alliance Bank Annual Report 2012_Pg5,18,32-45 NEW FA.indd 5
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Corporate Information
DIRECTORS
Datuk Oh Chong Peng
Chairman, Independent Non-Executive Director
Dato Thomas Mun Lung Lee

Stephen Geh Sim Whye
Tan Yuen Fah
Senior Independent Non-Executive Director
Independent Non-Executive Director
Megat Dziauddin bin Megat Mahmud

Kung Beng Hong
Ou Shian Waei
Non-Independent Non-Executive Director
Sng Seow Wah

Lee Ah Boon
(Appointed on 18 April 2012) Non-Independent Non-Executive Director
Phoon Siew Heng
(Resigned on 18 April 2012) Non-Independent Non-Executive Director
GROUP COMPANY SECRETARY
AUDITORS
Lee Wei Yen (MAICSA 7001798)
PricewaterhouseCoopers
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers
Kuala Lumpur Sentral
P.O. Box 10192
50706 Kuala Lumpur, Malaysia
REGISTERED OFFICE
3rd Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
Tel
: 03-2694 4888
Fax
: 03-2694 6200
Website : www.alliancegroup.com.my
Email : [email protected]
PRINCIPAL BANKER
BURSA MALAYSIA STOCK NAME/CODE

REGISTRAR
AFG/2488
Shareworks Sdn Bhd

No. 10-1, Jalan Sri Hartamas 8
Sri Hartamas
INTERNATIONAL SECURITIES
IDENTIFICATION NUMBER (ISIN)
Tel
Fax
: 03-6201 1120
: 03-6201 3121
MYL2488OO004
12/6/12 4:52:20 PM
2012 ANNUAL REPORT
Corporate Structure
as at 31 May 2012
100%
Alliance Investment
Bank Berhad
100%
Alliance Research
Sdn Bhd
100%
Alliance Islamic
Bank Berhad
100%
AIBB Nominees
(Tempatan) Sdn Bhd
100%
Alliance Direct
Marketing Sdn Bhd
100%
AIBB Nominees
(Asing) Sdn Bhd
100%
Alliance Bank
Malaysia Berhad
100%
AllianceGroup Nominees
(Tempatan) Sdn Bhd
(6627-X)
100%
AllianceGroup Nominees
(Asing) Sdn Bhd
70%
Alliance Investment
Management Berhad
100%
Alliance Trustee Berhad
This chart features the main operating companies and does not include inactive
companies and companies that are under members voluntary liquidation.
12/6/12 4:52:20 PM
Products and Services

ALLIANCE BANK MALAYSIA BERHAD
Personal Banking
Wealth Management
Deposits
Savings Account/Basic Savings Account

AllianceSave Pendidikan
Alliance Buddy
Alliance Senior Savers
Alliance My eSaving Account
Current Account/Basic Current Account
AllianceSave
Alliance Hybrid Account
Fixed Deposit
Alliance FDGold
Wills and Trust Services

Alliance Legacy
Structured Investment
Alliance Interest-rate Linked Structured Investment
Alliance Dual Currency Investment (DCI)
Alliance Gold-AUD Linked Structured Investment
(GOALS)
Retail Bond
MYR Retail Bond
Unit Trust Investment
Bond Funds
Balanced Funds
Equity Funds
Money Market Funds
Investment Lending and Share Services

Alliance Share Margin Financing
Margin + Trading 2-in-1 Account
External Margin Account
Alliance Share Trading
Cash Trading Account
Collaterised Trading Account
T+7 Trading Account
ESOS/IPO/Placement Financing
Investment Margin Financing
Bancassurance
Alliance Motor Insurance

Alliance Travel Protector
Alliance Premier Protector
Alliance Senior Protector
Alliance Home Protector
Alliance Mortgage Reducing Term Assurance
Alliance i-Vantage
Alliance Family Takaful Investment
Alliance Safe Assure
Alliance Passenger Assure
Alliance Mortgage Reducing Term Takaful
Premier Income 5
Global Bond Income Plan
Mortgage Reducing Term Assurance
Mortgage Level Term Assurance
Mortgage Reducing Takaful Term
Secure Plus
Loans
Alliance SaveLink Home Loan

Alliance Conventional Home Loan
Alliance SaveLink Interest Payment Option
Alliance OD/FD Express
Alliance SaveLink Commercial Property Loan
Alliance Conventional Commercial Property Loan
Alliance Hire Purchase
Cards
C
Alliance Gold and Classic Credit Cards

Alliance Platinum Credit Card
Alliance CPA Australia Gold Credit Card
Alliance CNI Gold Credit Card
Alliance CNI Gold Prepaid Card
Alliance Business Platinum Card
Alliance Chinese Independent School (CIS) Credit Card
Alliance Chinese Independent School (CIS) Prepaid Card
Alliance You:nique Rates Credit Card
Alliance You:nique Rewards Credit Card
Alliance You:nique Rebates Credit Card
Alliance You:nique Prepaid Card
Alliance Allianz Insurance Gold & Platinum Credit Cards
DiGi Simple Prepaid Card
Tiger Football Club Credit Card
Tiger Football Club Prepaid Card
Alliance My eSaving Debit MasterCard
Alliance Hybrid Standard Debit MasterCard
Alliance Hybrid Platinum Debit MasterCard
Alliance Hybrid AP Platinum Debit MasterCard
Alliance Hybrid Premium Debit MasterCard
rd
Wholesale Banking
Credit Facilities
Working Capital Financing
Term Loan
Bridging Loan
Syndicated Loan
Business Premises Financing
Supplier Financing
Business Platinum Card
Foreign Currency Loan
Trade Facilities
Letter of Credits
Trust Receipts
Bankers Acceptances
Export Bills Purchased/Discounting
Export Credit Refinancing
Export LC Negotiation
Collection Bills
Shipping Guarantees
Export LC Advising/Confirmation
Bank Guarantees (BGs)
Promissory Notes
Foreign Currency Trade Loan
Foreign Exchange
12/6/12 4:52:21 PM
2012 ANNUAL REPORT
Cash Management
Account Management
Business Current Account
Business Fixed Account
Business Foreign Currency Current Account
Business Foreign Currency Fixed Deposit
Business Internet Banking
Collection Management
Payee Corporation Service
Auto Debit Service
Bulk Cheque Collection Service
Cash in Transit
Cash Concentration Solution
Biz-Xpress Card: Deposit cum Withdrawal
function via Self-Service Terminals (ATM, CDM
and CES)
Liquidity Management
Auto Sweeping Service
Business Rewards Services
Payment Management
Payroll (Salary/EPF Monthly Contribution/
PCB-LHDN Payment/Socso Payment)
Bulk Payment
Bulk Payment with Remittance Advice
Remittances (CO/DD/FTT/FDD/IBG/RENTAS)
Fund Transfer (Own account transfer/Group
account transfer/Designated 3rd Party Transfer)
Bills Payment
Interest Rate Swap
Bancassurance
SME Banking
Credit Facilities
Working Capital Financing
Equipment Financing
Business Premises Financing
Schemes promoted by
CGC/BNM/Government
Foreign Exchange
Trade Facilities
Letter of Credits
Trust Receipts
Foreign Currency Trade Loan
Bankers Acceptances
Export Bills Purchased/Discounting
Export Credit Refinancing
Export LC Negotiation
Collection Bills
Shipping Guarantees
Export LC Advising/Confirmation
Bank Guarantees (BGs)
Promissory Notes
Supplier Credit Financing
Bancassurance
Commercial Line General Insurance
Keyman Credit-Life Insurance
Alliance Business Shield/Biz Assure
Business Credit Card
MyBusiness Platinum Card
Business Platinum Card
Cash Management
Account Management
Business Current Account
Business Fixed Deposit
Business Foreign Currency Current Account
Business Foreign Currency Fixed Deposit
Biz-Xpress Card: Deposit cum
Withdrawal function via Self-Service Terminals
(ATM, CDM and CES)
Business Internet Banking
Collection Management
Payee Corporation Service
Auto Debit Service
iBayar Facility
Bulk Cheque Collection Service
Cash in Transit
Liquidity Management
Auto Sweeping Service
Bounce Cheque Protection Service
Business Rewards Services
Payment Management
Payroll (Salary/EPF/SOCSO
Monthly Contribution/PCB-LHDN Payment)
Bulk Payment
Bulk Payment with Remittance Advice
Remittances (CO/DD/FTT/FDD/IBG/RENTAS)
Fund Transfer (Own account transfer/
Group account transfer/
Designated 3rd Party Transfer)
Bills Payment
Financial Market
Foreign Exchange Transactions
Hedging Solution
Currency Options
Interest Rate Swap
Structured Investments
Money Market Deposit
Money Market Deposit Islamic
Negotiable Instrument of Deposit
Negotiable Islamic Deposit Certificate
Banker Acceptances
Islamic Acceptance of Bills
12/6/12 4:52:27 PM
10
Products and Services (contd)
ALLIANCE ISLAMIC BANK BERHAD

Deposits
Trade Financing
Basic Savings Account-i

Wadiah Yad Dhamanah Savings Account-i
Mudharabah Savings Account-i
Alliance My eSaving Account-i
Basic Current Account-i
Wadiah Yad Dhamanah Current Account-i
Mudharabah Current Account-i
Alliance Hybrid Account-i
General Investment Account-i
Investment Account-i
Financing
Alliance CashVantage Personal Financing-i

Alliance i-Wish Home Financing-i
Alliance i-Wish Flexi Home Financing-i
Alliance Hire Purchase-i
Business Financing
Term Financing-i
Leasing-i
Biz Prop Financing-i
Cash Line Facility-i
Revolving Credit-i
Alliance i-Wish SaveLink Business Financing-i
Bridging Financing-i
Contract Financing-i
Project Financing-i
Letters of Credit-i
Trust Receipt-i
Shipping Guarantee-i
Accepted Bills-i
Bill of Exchange Negotiated/Purchase-i
Export Credit Refinancing-i
Pre-Shipment & Post-Shipment
Bank Guarantee-i
Murabahah Working Capital Financing-i
Cards
Alliance My eSaving Debit MasterCard-i

Alliance Hybrid Standard Debit MasterCard-i
Alliance Hybrid Platinum Debit MasterCard-i
Alliance Hybrid AP Platinum Debit MasterCard-i
Alliance Hybrid Premium Debit MasterCard-i
ASLAM International Debit Card
Unit Trust Investment
Islamic Equity Funds

Islamic Balanced Funds
Islamic Bond Funds
Islamic Money Market Funds
ALLIANCE INVESTMENT BANK BERHAD

Corporate Finance
Corporate Banking
Initial Public Offerings

involving public issues of new securities and/or
offers for sale of existing securities in companies
seeking listing and quotation on the Main Market
and the ACE Market of Bursa Malaysia Securities
Berhad as well as listing of Real Estate Investment
Trusts (REITs).
Secondary Offerings
involving raising of funds subsequent to the initial
public offering through rights issues, restricted
issues, private placements and special issues of
both equity and equity-linked instruments.
Corporate Restructuring Advisory
Merger, Takeover and Acquisition Advisory
Independent Advice to Minority Shareholders
Valuation of Companies
Debt Finance & Advisory

Customised solutions via Conventional and Islamic:
Structured Financing
Asset Securitisation
Project Financing
Fixed/Floating Rate Bonds
Commercial Papers/Medium Term Note Programmes
Loan Syndication
Equity Capital Markets

Underwritings and Private Placements of Initial
Public Offerings
Underwritings of Rights Issues
Primary and Secondary Private Placements of Equity
and Equity-Linked Instruments
Underwriting and Private Placements of Real Estate
Investment Trusts (REITs)
Book-Building/Accelerated Book-Building of Equity and
Equity-Linked Instruments
Credit Facilities
Bankers Acceptance
Bank Guarantee
Term Loans
Islamic Banking
Bal Bithaman Ajil

Murabahah Working Capital Financing
Islamic Accepted Bills
Mudharabah Investment Account Deposits
Kafalah Bank Guarantee
Stockbroking Products & Services

Institutional and Retail Share Trading
- Cash Trading Account
- Collaterised Trading Account
- Alliance Flexi 7
Share Margin Financing
- Alliance M-Switch
- Alliance MaxiMargin
- Alliance FBM30
Online Share Trading Services
- eAllianceShare
- Mobile Share Trading
E-Services
- Direct Credit
- E-dividend
Foreign Share Trading
Nominees and Custodian Services
Investment Research
12/6/12 4:52:32 PM
2012 ANNUAL REPORT
11
ALLIANCE INVESTMENT MANAGEMENT BERHAD

Management of Unit Trust Funds
Alliance First Fund

Alliance Vision Fund
Alliance Moneyplus Fund
Alliance Dana Adib
Alliance Tactical Growth Fund
Alliance Optimal Income Fund
Alliance Islamic Money Market Fund
Alliance Dana Alif
Alliance Global Equities Fund
Alliance Asian Bond Fund
Alliance Global Diversified Property Fund
Alliance ADVANTAGE GEM Treasures Fund
Kinabalu Institutional Money Market Fund
Alliance Islamic Institutional Money Market Fund
Alliance Regular Income Fund
Alliance Regular Income Fund 2
Provision of Fund Management and

Investment Advisory Services
Equity
Fixed Income
Mixed/Balanced
Money Market
Direct Mandates
Agency Development
Alternative Distribution Channel
ALLIANCE RESEARCH SDN BHD
Equity Research
Economic Research
Industry Research
Corporate Research
Investment Advisory Services
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

ALLIANCEGROUP NOMINEES (ASING) SDN BHD
Nominee and Custody Services
ALLIANCE TRUSTEE BERHAD

Trustee Services
12/6/12 4:52:37 PM
12
Financial Highlights
FINANCIAL YEAR ENDED 31 MARCH
2012
2011
2010
2009
2008
OPERATING RESULTS (RM million)

Net income
Profit before taxation and zakat
Net profit after taxation and zakat
1,250
644
480
1,129
553
409
1,065
409
302
1,054
303
229
1,018
502
380
39,603
24,984
35,928
32,131
1,548
3,670
18,741
36,072
22,439
32,715
28,346
1,548
3,352
15,909
31,664
21,410
28,712
23,628
1,548
2,947
14,293
31,846
19,590
29,080
25,575
1,548
2,762
15,081
27,675
16,545
25,081
21,352
1,548
2,589
13,976
KEY BALANCE SHEET DATA (RM million)

Total assets
Gross loans, advances and financing
Total liabilities
Deposits from customers
Paid-up capital
Shareholders' equity
Commitments and contingencies
SHARE INFORMATION AND VALUATIONS
Share Information
Earnings per share (sen)
Diluted earnings per share (sen)
Gross dividend per share (sen)
Net assets per share (RM)
Share price as at 31 March (RM)
Market capitalisation (RM million)
31.5
31.4
13.301
2.37
3.89
6,022
26.7
26.7
7.001
2.17
3.17
4,907
19.7
19.6
6.401
1.91
2.88
4,458
14.9
14.8
6.251
1.79
1.69
2,616
25.4
25.4
6.25
1.67
2.68
4,149
Share Valuations
Gross dividend yield (%)
Dividend payout ratio (%)
Price to earnings multiple (times)
Price to book multiple (times)
3.42
42.3
12.3
1.6
2.21
26.2
11.9
1.5
2.22
32.5
14.6
1.5
3.70
41.9
11.3
0.9
2.33
19.1
10.6
1.6
FINANCIAL RATIOS (%)

Profitability Ratios
Net interest margin on average interest-earning assets
Net return on average equity
Net return on average assets
Net return on average risk-weighted assets
Cost to income ratio
2.5
13.6
1.3
2.0
47.3
2.7
13.0
1.2
1.9
48.3
2.7
10.5
0.9
1.4
52.1
Asset Quality Ratios

Loan loss coverage
Gross impaired loans ratio
Net impaired loans ratio
Gross loan to deposit ratio
108.5
2.4
1.44
77.8
90.1
3.3
1.94
78.8
94.4
3.8
1.8
90.6
99.7
4.5
1.8
76.4
79.9
7.0
3.3
76.3
Capital Adequacy Ratios3

(after deducting proposed final dividend)
Core capital ratio
Risk-weighted capital ratio
11.52
15.22
11.95
16.09
11.13
15.40
10.30
14.65
11.19
16.06
1
2
3
2.8
8.6
0.8
1.2
53.0
2.8
16.8
1.4
2.3
46.22
Tax exempt under the single tier tax system

Included once-off write-back of other operating expenses
Computed in accordance with Bank Negara Malaysias revised Risk-Weighted Capital Adequacy Framework-Basel II with
effect from 1 January 2008
After adoption of Financial Reporting Standard (FRS) 139 loan impairment
12/6/12 4:52:41 PM
2012 ANNUAL REPORT
13
Improved Earnings
Profit Before Taxation and Zakat (RM million)
Net Return on Average Equity (%)
644
409
502
553
16.8
13.0
13.6
2011
2012
303
10.5
8.6
Financial Year
2008 2009 2010
2011
2008
2012
2009
2010
Steady Balance Sheet Growth
2008 2009 2010
2012
2008
Loans
2009
2010
2011
32,131
24,984
28,346
22,439
23,628
21,410
25,575
19,590
16,545
2011
21,352
39,603
Loans and Deposits (RM million)
36,072
31,664
31,846
27,675
Total Assets (RM million)
2012
Deposits
Continued Improvement in Assets Quality

Loan Loss Coverage (%)
Net Impaired Loans Ratio (%)
%
3.3
108.5
99.7
94.4
90.1
79.9
1.8
1.8
1.9
1.4
Financial Year
2008
2009
2010
2011
2012
Financial Year
2008
2009
2010
2011
2012
Enhanced Shareholders Value

Net Assets Per Share (RM)
Earnings Per Share (sen)
RM
sen
31.5
2.37
26.7
25.4
2.17
19.7
1.79
1.91
14.9
1.67
Financial Year
2008
2009
2010
2011
2012
Financial Year
2008
2009
2010
2011
2012
12/6/12 5:14:23 PM
14
Directors
1.
2.
3.
4.
5.
6.
7.
Datuk Oh Chong Peng

Tan Yuen Fah
Kung Beng Hong
Ou Shian Waei
13/6/12 3:36:31 PM
2012 ANNUAL REPORT
10
11 12
13
14
8.
9.
10.
11.
12.
13.
14.
15
Lee Ah Boon
Zakaria bin Abd Hamid
Kuah Hun Liang
Sng Seow Wah
Assoc. Prof. Dr Abdul Rahman bin Awang
Tuan Haji Md Ali bin Md Sarif
Phoon Siew Heng
(Resigned from the AFG and ABMB Boards on 18 April 2012)
13/6/12 3:37:08 PM
16
Directors (contd)
Datuk Oh Chong Peng
(Chairman, Independent Non-Executive Director)

Chairman of Nomination Committee,
Remuneration Committee and
Employees Share Participating Scheme Committee
(Senior Independent Non-Executive Director)

Member of Nomination Committee,
Aged 67, a Malaysian, was appointed Chairman of the Board on

21 April 2006. He had his accountancy training in London from 1964
and qualified as a Chartered Accountant in 1969. He is a Fellow of the
Institute of Chartered Accountants in England and Wales as well as
a member of the Malaysian Institute of Certified Public Accountants
(MICPA) and the Malaysian Institute of Accountants (MIA).
Aged 74, a Malaysian, was appointed to the Board on 26 September

2005. He has been in legal practice as an advocate and solicitor for
over 40 years. He is a barrister-at-law (England) and holds a Master
of Arts (MA) and Master of Law (LLM) degrees from Cambridge
University, United Kingdom (UK). He is a member of the Appeals
Committee of Bursa Malaysia Berhad and the Steering Committee of
FIDE Programme. He is also an arbitrator with the Court of Arbitration
for Sport based in Lausanne, Switzerland.
Datuk Oh joined Coopers & Lybrand (now called PricewaterhouseCoopers)

in London in 1969 and in Malaysia in 1971. He was a Partner of
Coopers & Lybrand Malaysia from 1974 and retired as a Senior Partner
in 1997. He was with the Rashid Hussain Berhad Group of Companies
between 1998 and 2003.
Datuk Oh is a Government-appointed member of the Labuan Financial
Services Authority and a member of the Steering Committee of
Financial Institutions Directors Education (FIDE) Programme. He is
a Council Member of Universiti Tunku Abdul Rahman (UTAR) and a
trustee of the UTAR Education Foundation.
His past appointments included stints as a Government-appointed
Member of the Kuala Lumpur Stock Exchange, now called Bursa
Malaysia Berhad (1990-1996), member of the Malaysian Accounting
Standards Board (2004-2009) as well as a Council Member
(1981-2001) and President (1994-1996) of MICPA.
Datuk Oh currently sits on the Boards of British American Tobacco
(Malaysia) Berhad, IJM Corporation Berhad, IJM Plantations Berhad,
Kumpulan Europlus Berhad, Malayan Flour Mills Berhad, Dialog Group
Berhad and several other companies.
.
Dato Thomas Lee is currently a Senior Partner of Lee Hishammuddin

Allen & Gledhill. He is the Chairman of Alliance Bank Malaysia Berhad
(ABMB) and Alliance Investment Bank Berhad (AIBB). He also holds
directorships in Chartis Malaysia Insurance Berhad, American
International Assurance Berhad, AIA Takaful International Berhad,
Saujana Resort (M) Berhad, AIA AFG Takaful Berhad and several other
private companies.

(Independent Non-Executive Director)
Chairman of Audit Committee and
Member of Nomination Committee
Aged 56, a Malaysian, was appointed to the Board on 5 May 2004. He
is a Chartered Accountant with the MIA since 1987 and was admitted
as a member of the MICPA in 1985.
He became a member of the Malaysian Institute of Taxation in 1992.
Since 1984, he has been a practising accountant and consultant
to several companies. He has wide experience in the financial
management of companies involved in tin mining, oil palm and rubber
plantations, manufacturing, property development and construction.
He was involved in the financial management of a number of Malaysian
manufacturing and trading companies with overseas investments,
besides serving as their tax adviser.
He is currently the Managing Director of GSW Consultants Sdn Bhd.
12/6/12 4:53:17 PM
2012 ANNUAL REPORT
Tan Yuen Fah
Kung Beng Hong

Member of Audit Committee
(Non-Independent Non-Executive Director)

Member of Audit Committee,
Nomination Committee,
Aged 67, a Singaporean, was appointed to the Board on 1 July 2005.

He holds a Bachelor of Accountancy degree from the former University
of Singapore and a Bachelor of Law degree from the University of
Wolverhampton, UK. He also holds a Post-Graduate Diploma in
Business Administration from the Manchester Business School, UK. He
is a Fellow of the Institute of Certified Public Accountants of Singapore,
Fellow of the Certified Practising Accountant, Australia, Fellow of The
Association of Chartered Certified Accountants, UK and an Associate
of the Chartered Institute of Management Accountants, UK.
Mr Tan had 11 years of experience in the commerce and industry
sector prior to joining the banking and finance sector. He joined
Overseas Union Bank Ltd, Singapore in 1979, holding various senior
positions and retired in 2002 as Executive Vice President.
He is currently a Director of ABMB, Guthrie GTS Limited, Union (2009)
Limited, Wildlife Reserves Singapore Pte Ltd, Singapore Zoological
Gardens, The Jurong Bird Park Pte Ltd and the National Kidney
Foundation in Singapore.
17
Aged 67, a Malaysian, was appointed to the Board on 21 April 2006.

He holds a Bachelor of Arts (Hons) degree in Economics from the
University of Malaya. He is a Fellow and a Council Member of the
Institute of Bankers Malaysia.
Mr Kung has 44 years working experience in the banking industry and
has held numerous senior management positions, mainly in Malaysia,
including CEO/Directorship positions in three banks. His experience
includes positions held in Citibank N.A. in the United States and
Singapore.
He is currently the Advisor of Fullerton Financial Holdings Pte Ltd and
sits on the Boards of ABMB and AIBB. He also holds directorships in
UOA Asset Management Sdn Bhd, Quill Motorcars Sdn Bhd, Asian
Institute of Finance Berhad and FIDE Forum.
Ou Shian Waei
Nomination Committee,
Aged 66, a Malaysian, was appointed to the Board on
26 September 2005. Tuan Haji Megat holds a Bachelor of Science
(Econs) (Hons) degree from the Queens University of Belfast, Northern
Ireland, and is a Fellow of the Institute of Chartered Accountants in
Ireland as well as a Chartered Accountant with the MIA.
He has more than 30 years of experience in senior managerial
capacities. He had served Golden Hope Plantations Berhad as
Group Director-Finance, Arab-Malaysian Merchant Bank Berhad as
General Manager-Operations and subsequently as General ManagerInvestment, Bank Simpanan Nasional as Finance Manager and the
Accountant-Generals Department as Treasury Accountant.
He currently sits on the Boards of ABMB, AIBB, Alliance Islamic Bank
Berhad (AIS), Alliance Investment Management Berhad (AIMB), MNRB
Holdings Berhad, MNRB Retakaful Berhad, Malaysian Reinsurance
Berhad, Pernec Corporation Berhad and several private limited
companies.

Aged 61, a Malaysian, was appointed to the Board on 1 July 2010. He
holds a Bachelor of Science degree in Chemistry from the University of
Malaya. Mr Ou started his career with a local bank as a management
trainee from 1976 to 1980. He joined IBM Malaysia in 1981 as a
trainee System Engineer and held various technical and management
positions before retiring as the Managing Director of IBM Malaysia in
January 2010 after almost 30 years of service.
Mr Ou was the PIKOM (Association of Malaysia Computer Industry)
Councillor from 1997 to 1998 and was awarded the Key Industry
Leader Award in 2006 by PIKOM (now called The National ICT
Association of Malaysia) for his contributions to Malaysias IT industry.
He was also the Chairman of the National International Technology
Council (NITC) Taskforce for IT literacy in 1997 and Adjunct Professor
for the Department of Economics & Business Administration at
Universiti Putra Malaysia from 1998 to 1999.
He currently sits on the Boards of ABMB, Chartis Malaysia Insurance
Berhad and HeiTech Padu Berhad.
12/6/12 4:53:18 PM
18
Directors (contd)
Lee Ah Boon
Phoon Siew Heng

(Resigned on 18 April 2012)

Aged 61, a Singaporean, was appointed to the Board on 18 April 2012.

He holds a Bachelor of Accounting (Hons) degree from University of
Singapore.
Mr Lee is currently the Chief Operating Officer of Fullerton Financial
Holdings (International) Pte Ltd overseeing the areas of operations and
technology, human resources, compliance, corporate communication
and special projects.
Mr Lee was with Citibank in 1990 and served in a variety of roles in the
Consumer Bank in Singapore which included CFO, Senior Operations
Officer, Head of Credit Card business and Business Manager. In
2005, he started up Citibanks Consumer Business in China and later
returned to Singapore as Regional Operations Head of Citibank, before
joining Barclays Bank in early 2009 as International Technology Head
for its Global Retail and Commercial Bank businesses.
He currently sits on the Boards of ABMB, Mekong Development Bank
and several other companies.
Aged 48, a Singaporean, was appointed to the Board on 12 July

2005. He holds a Bachelor of Economics (Hons) degree from Monash
University, Australia.
Mr Phoon was a Deputy Director in the Ministry of Finance, Singapore,
from 1988 to 1992 before he joined Standard Chartered Merchant Bank
Asia Limited from 1992 to 1999. He was with Temasek International
Pte Ltd from 1999 to September 2007, and later with Wah Hin &
Co (Pte) Ltd as an Executive Advisor from January 2008 to October
2008. He rejoined Temasek in November 2008. He was transferred to
Seatown Holdings International Pte Ltd on 1 January 2012.
Mr Phoon is currently the Executive Director and Chief Executive
Officer of Seatown Holdings International Pte Ltd and sits on the Boards
of several companies, including AIBB, Fullerton Fund Management
Company Limited, Eastern Health Alliance Pte Ltd and Infocomm
Development Authority of Singapore (IDA).
Sng Seow Wah

Aged 53, a Singaporean, was appointed to the Board on 18 November
2010. He was appointed as Group Chief Executive Officer and Director
of ABMB on 5 July 2010. He holds a Bachelors Degree in Accountancy
from the National University of Singapore, and attended the Advanced
Management Programme at the Wharton School, University of
Pennsylvania, U.S., as well as the Corporate and Investment Banking
Programme at Macquarie University, Australia.
Mr Sng is an experienced banker with many years of leading
and developing high performing organisations, in a number of
well-established regional and international banks. Prior to joining
ABMB, he was the Executive Vice President, Head of Human
Resources, Special Projects & Corporate Communications of Fullerton
Financial Holdings (International) Pte Ltd. In this capacity, Mr Sng also
held several directorships across the Asian region.
From 2003 to 2008, Mr Sng was the Executive Vice President and
Head of Enterprise Banking at OCBC Bank Singapore. Before OCBC,
he was with Citibank Singapore as the Managing Director of the Local
Corporate Group. He had also previously held senior commercial
and corporate banking positions in Banque Nationale De Paris, and
Westpac Banking Corporation.
Mr Sng currently sits on the Boards of AIBB and Malaysian Electronic
Payment System Sdn. Bhd.
13/6/12 9:44:49 PM
2012 ANNUAL REPORT
19
Other Information of Directors

(i)
Family Relationship
None of the Directors have any family relationship with each
other and/or major shareholders of the Company.
(ii) Conflict of Interest

None of the Directors have any conflict of interest with the
Company.
(iv) Attendance of Directors at Board Meetings

There were eight Board Meetings held during the financial year
ended 31 March 2012. Details of attendance of the Directors at
Board Meetings are as follows:
Name of Director
Attendance
Datuk Oh Chong Peng
8/8
8/8
8/8
Tan Yuen Fah
8/8
7/8
Kung Beng Hong
8/8
Ou Shian Waei
8/8
Sng Seow Wah
8/8
Phoon Siew Heng (Resigned on 18 April 2012)
6/8
Lee Ah Boon (Appointed on 18 April 2012)
N/A
(iii) List of Convictions for Offences

None of the Directors have been convicted for any offences
within the past 10 years.
12/6/12 4:53:18 PM
20
Directors of Major Subsidiaries
Alliance Bank
Malaysia Berhad
Alliance Investment
Bank Berhad
Alliance Islamic
Bank Berhad
(Chairman/Independent
Non-Executive Director)
Megat Dziauddin bin

Megat Mahmud
Sng Seow Wah
Megat Dziauddin bin

Megat Mahmud
(Group Chief Executive Officer/

Executive Director)
Megat Dziauddin bin

Megat Mahmud
Tuan Haji Yahya bin

in Ibrahim
Ibra
(Chief Executive Officer/
r/
Executive Director)
Phoon Siew Heng

Zakaria bin
n Abd Hamid
(Independent
nt Non-Executive Director)

Kung Beng Hong
Kung Beng Hong

Tan Yuen Fah

Kuah Hun Liang
Assoc.
oc. Prof. Dr Abdul Rahman
n Awang
bin
Sng Seow Wah

Ou Shian Waei
(Appointed on 20 July 2011)

(Non-Independent Non-Executive
ecutive Director)
Kuah Hun Liang
Tee Kim Chan
(Appointed on 15 December 2011)

(Retired on 26 July
ly 2011)
(Non-Independent
ent Non-Executive Director)
Lee Ah Boon
(Appointed on 18 April 2012)
Chua Eng Kee

(Retired on 28 January 2012)
Phoon Siew Heng

(Non-Independent Non-Executivee Director)
12/6/12 5:15:18 PM
2012 ANNUAL REPORT
21
Assoc. Prof. Dr Abdul Rahman bin Awang
Aged 59, a Malaysian, was appointed to the Board of ABMB on

24 April 2009. Encik Zakaria possesses a Bachelor of Economics
degree from the University of Malaya. He has over 33 years of
experience in banking, corporate finance and advisory services.
Aged 66, a Malaysian, was appointed to the Board of AIS on

11 February 2011. He brings with him more than 30 years of
experience in Islamic law whilst serving in various universities in
Malaysia. He is currently an Associate Professor at the Department of
Islamic Law, Ahmad Ibrahim Faculty of Laws at International Islamic
University Malaysia.
Encik Zakaria has held senior positions in various organisations

including Maybank Berhad, Bumiputra Merchant Bankers Berhad,
Technology Resources Industries Berhad, Malaysia Helicopters
Services Berhad, Natwide Group of Companies and KYM Holdings
Berhad.
Dr Abdul Rahman holds a PhD in Islamic Law from the University

of Edinburgh, United Kingdom and has obtained a Master of Laws
(Comparative Laws) from Temple University, Philadelphia, as well as a
Shariah and Law degree from Al-Azhar, University of Cairo, Egypt.
He currently sits on the Boards of AIBB, AIS and ICB Financial Group
Holdings AG.

Kuah Hun Liang
Aged 50, a Malaysian, was appointed to the Board of ABMB on
15 December 2011.
Mr Kuah has over 28 years of experience in the financial services
industry having commenced his career in Public Bank. He later joined
Deutsche Bank AG as Treasurer and was subsequently promoted
as Head of Global Markets when the bank ventured into investment
banking. Mr Kuah was appointed Executive Director of Deutsche
Bank (M) Berhad in 2000 and in 2002, he assumed the role and
responsibilities of Chief Executive Officer.
A graduate from the University of East London with a Bachelor of
Science (Hons) degree in Applied Economics, Mr Kuah was also the
former Treasurer and Director of the Malaysian-German Chamber of
Commerce and former Chairman of the Star Publications (Malaysia)
Berhad.
Aged 58, a Malaysian, was appointed to the Board of AIS on 23 March

2011. He is currently a distinguished academic fellow of the Institute
of Islamic Banking and Finance (IIBF), International Islamic University
Malaysia. Prior to joining IIBF in 2008, he was with Maybank Group
from 1976, holding various senior positions until his retirement
as Head of Planning, Maybank Islamic Berhad. He has extensive
experience in the areas of Islamic Banking, Corporate Planning, Asset
& Liability Management as well as Banking Operations.
Tuan Haji Md Ali holds a Bachelor of Economics degree from the
University of Malaya and an MBA (Finance) from University Kebangsaan
Malaysia (UKM). He also holds a Diploma in Islamic Studies and a
Post-Graduate Diploma in Islamic Law from UKM.
Mr Kuah currently sits on the Boards of AIBB, AIMB and Rexit Berhad.
12/6/12 5:15:18 PM
22
Senior Management
5
7
1. Sng Seow Wah
8
2
9
3
Group Chief Executive Officer
2. Ronnie Lim Kheng Swee

Head, Consumer Banking
3. Steve K. Miller
Head, SME Banking
4. Choo Joon Keong

Head, Wholesale Banking
5. Yeo Chin Tiong

Head, Financial Markets
6. Leong Sow Yoke

Group Chief Internal Auditor
7. Chew Siew Suan

Head, Group Human Resource
8. Victor Khor Eng Swee

Head, Group Transaction Banking
and Alternate Channels
9. Yong Kok Mun

Head, Branch Banking,
Service and Process Management
13/6/12 9:59:43 PM
2012 ANNUAL REPORT
10. Rafidz Rasiddi

11
10
18
16
14
15
13
12
17
Chief Executive Officer,

Alliance Investment Bank Berhad
11. Tuan Haji Yahya bin Ibrahim

Chief Executive Officer,
12. Raymond Leung Chun-Kow

Group Chief Operating Officer
13. Eric Lee

Group Chief Financial Officer
23
14. Amarjeet Kaur

Head, Group Corporate Strategy
and Development
15. Pang Choon Han

Group Chief Risk Officer
16. Andrew Chow Thim Kwong

Group Chief Credit Officer
17. Mary James

Group Chief Information Officer
18. Lee Wei Yen

Group Company Secretary
13/6/12 3:37:43 PM
DELIVERING
13/6/12 3:38:00 PM
LUE
We continue to build long-term shareholder value by balancing risks
with rewards, improving our asset quality and leveraging on the
strengths of our niche lines of business to deliver sustainable growth.
13/6/12 3:38:04 PM
26
Dear Shareholders
I am pleased to present the Annual Report of the Alliance Financial Group Berhad
hich was another year of profitable
for the financial year ended 31 March 2012, which
ntum from the strategic rebalancing
growth for the Group driven by the momentum
1. Understanding the real needs of our
of our banking business in January 2011.
ent of this success. The Group continues
customers has been a critical component
ndustrys increasing competition and the
to make great strides despite the industrys
t; it is now stronger than ever and poised for
challenging economic environment;
more exciting growth ahead.
Operating Environment
2011 proved to be a challenging year across all sectors. While the
global economy remained fragile in the past year due to natural
disasters, political unrests and markets in turmoil, Asias economy
continues to demonstrate its resilience against macroeconomic
headwinds, in part due to its robust financial balance sheets.
Against this background, the Malaysian economy rose 5.1%
underpinned by strong domestic demand.
At Alliance, we remained steadfast in building revenue across all
business units, serving our customers with excellence and capitalising
on new growth opportunities to increase non-interest income.
Performance Review
Profit before tax rose 16.4% to RM643.6 million. After setting
aside taxation, profit attributable to shareholders was up 17.3% at
RM479.8 million, yet another record performance from the previous
high of RM409.2 million the year before. Return on equity rose 13.6%
from 13.0% in the previous year while return on assets improved to
1.3%. Earnings per share were up 18.0% at 31.5 sen.
Arising from the expansion in the loans portfolio, net interest income
and income from Islamic banking operations rose by 3.0% to
RM930.2 million. Non-interest income, however, expanded
on a much faster rate of 20.2% due to recurring transaction
income to 26.8% from 20.8% a year ago. Loans growth was
up by 11.3% to RM25.0 billion and deposits grew 13.4% to
RM32.1 billion. Our loans-to-deposit ratio remained healthy at
77.8% compared to 78.8% last year. Prudent risk management
further improved impaired loans ratio from 3.3% to 2.4% and
is within the banking industry average levels. Loan loss coverage
improved from 90.1% to 108.5%.
In view of the expansion in business operations and information
technology infrastructure investment to support future growth,
operating costs increased moderately by 8.6% to RM591.8 million.
We further improved the cost-to-income ratio to 47.3% compared to
48.3% last year.
As at 31 March 2012, our total assets rose 9.8% to RM39.6 billion.
Our capital position remained strong with Risk-Weighted Capital Ratio
at 15.2%, well above regulatory and Basel lll requirements while
the Core Capital Ratio of 11.5% reflects continued sound capital
management.
12/6/12 4:53:27 PM
2012 ANNUAL REPORT
All this resulted in our market capitalisation improving to over

RM6.0 billion. AFG was the largest gainer in the Financial sector on
Bursa Securities in 2011 with its share price rising more than 30%,
outperforming the KL Financial Index.
Dividends
The Group declared a total dividend of 13.3 sen per share, a significant
increase from 7.0 sen the year before. The first interim dividend of
5.6 sen per share was paid on 26 August 2011 and the second
interim dividend of 7.7 sen per share was paid on 28 February 2012.
The total distribution for the financial year ended 2012 amounted to
RM203.2 million, equivalent to a dividend payout ratio of 42.3% of the
Groups net profit.
I wish to inform that the Group will henceforth adopt a dividend policy
of paying up to 50% of its net profit as dividend to shareholders,
subject to regulatory approvals.
27
We are now on a strong platform to move into the next financial

year in an increasingly competitive environment. Alliance Bank will
capitalise on our market position as a significantly improved player,
our clear niche in Consumer and Business Banking, strong capital and
good asset quality. We will build on the momentum of the past year
to capture new business opportunities and strengthen our leadership
position in targeted markets and product segments.
In particular, we will further expand our transaction banking, cash
management, treasury sales, wealth management and investment
banking businesses to build sustainable long-term revenue growth.
We will also continue to invest and upgrade our technology,
infrastructure and human capital, to enhance our capabilities to serve
our customers more effectively and efficiently, as well as step up to
higher productivity with effective cost management.
Amidst all this, we will also remain mindful of the uncertain operating
environment and undertake the necessary measures to reinforce
prudent and effective balance sheet management strategies to
mitigate risks while remaining flexible to market changes.
Corporate Development
A key corporate development during the year was the formalisation
of the eight-year bancassurance agreement between Alliance Bank
Malaysia Berhad and AIA Bhd, to market conventional life insurance
protection and savings products developed by AIA. This is our second
collaboration with AIA after a joint venture signed in January 2011 to
offer Takaful insurance. The collaboration with AIA is part of the Banks
strategy to expand the range of products in our wealth management
business.
Promising Outlook
For 2012, economic growth in the country is expected to moderate
in view of the lingering eurozone debt crisis. While the weaker global
demand may dampen Malaysian exports in the year ahead, private
sector investments and consumer spending are expected to support
gross domestic product of between 4% and 5%.
The outlook for the Malaysian banking industry is expected to remain
positive given the underlying strengths of the domestic economy and
the accelerated roll out of various projects under the governments
Economic Transformation Programme (ETP). The ETP projects will
continue to have a knock-on effect on the economy and support
corporate loans growth and capital market activities. All these bode
well for both Consumer and Business Banking; these segments will
continue to be strong growth drivers for the Group.
We have already made significant headway in tapping into the higher
level of demand for financing and transaction banking activities
arising from sectors targeted under the ETP and 10th Malaysia
Plan. Our proven expertise in the identified sectors such as
construction, oil palm plantation, real estate, retail and education
will be a key differentiator and generate more prospects to grow
non-interest income.
Given the vital roles of both the Consumer and SME market in the
growth of the Malaysian economy, we will continue to align our
resources to capture greater market share and build long term
business relationships.
In making strides towards our goal of becoming The Best Customer
Service Bank in Malaysia, we are equally committed to the
well-being of the communities we serve. During the year, we
contributed in a variety of meaningful ways to help underprivileged
homes and non-government charities. Our employees have been
remarkable volunteers in giving their time and skills to help needy
causes we support.
Acknowledgements
I am proud of the dedication of our employees and would like to thank
them for their increasingly excellent service rendered to customers
to reinforce the Alliance brand. The Group will continue to gain
employees feedback on what we can do to make the workplace
even better and enhance their professional development with exciting
career development opportunities and training.
On behalf of the Board and Management, I would like to thank
Mr Phoon Siew Heng who retired from the Board on 18 April 2012 after
seven years of valuable contribution to the Group, and to welcome
Mr Lee Ah Boon who was appointed as a Board Member of the Group,
also on 18 April 2012.
I would also like to take this opportunity to thank all our stakeholders
and customers for their loyal support, Bank Negara Malaysia,
Securities Commission Malaysia, Bursa Malaysia Securities Berhad
and other regulatory authorities for their continual guidance, as well
as fellow directors for their wise counsel and insights.
DATUK OH CHONG PENG

Chairman, Alliance Financial Group Berhad
12/6/12 4:53:28 PM
28
I am pleased to report that despite the challenging global economic conditions

in 2011, Alliance Bank Malaysia Berhad delivered to shareholders higher profits
for the financial year ended 31 March 2012. Profit after taxation rose by 16.6%
to RM484.3 million, and our return on equity further improved to 14.0%. We
continued to focus on organic growth and better asset quality to further
consolidate our position in the financial services industry. Our loans portfolio
expanded by 11.3%, and our net impaired loans ratio declined to 1.4%, whilst
the loan loss coverage rose to 108.5%, from financial year ended 31 March 2011.
Today, Alliance Bank is better positioned to capitalise on market opportunities
and deliver profitable growth in a sustainable manner.
The Year In Review
Our Business Performance
2011 continued to bring with it new challenges and stresses in

the international financial markets. Given the extensive trade links,
Malaysia was not immune from the global forces of contraction
following the downgrade of the US sovereign credit ratings, the
eurozone debt crisis and the Middle East geopolitical tensions,
as well as the earthquake that shook Japan. However, we have
been fortunate that the Government has reacted with speed and
decisiveness in the accelerated implementation of various Entry
Point Projects under its Economic Transformation Programme
and ensured an accommodative monetary policy. As a result, the
Malaysian economy expanded by 5.1%, a healthy outcome under
the circumstances, considering the fact that the worlds gross
domestic product declined to 3.8% in 2011.
Against this background, the Banks results for the financial year
ended 31 March 2012 were satisfactory, as the Bank remained
steadfast in the implementation of its business strategy of focusing
on Consumer and Business Banking, as well as relentless pursuit of
customer service excellence.
We enjoyed solid growth of 11.3% in loans to RM25.0 billion,

and outperformed the industry, gaining greater market share in
key segments of housing and SME financing. Customer deposits
increased by 10.9% to RM32.2 billion as at end-March 2012, and
the loans-to-deposits ratio was maintained at 77.7%.
Revenues from non-interest income activities rose 41.9% or
RM94.6 million in line with the focus on recurring fee income from
treasury sales and wealth management, as well as product bundling
and cross-selling of products and services. The non-interest income
ratio has risen to 26.8%, from 20.7% a year ago.
13/6/12 9:59:45 PM
2012 ANNUAL REPORT
29
During the year, we continued to upgrade our technology

infrastructure, streamlined our branch processes and enhanced
service quality and operational efficiency across all touch points in
an effort to drive higher productivity and efficiency. Our efforts in
re-engineering our front and back office operations, and aligning the
organisation structure have resulted in significant improvements in
sales productivity and service delivery, with better turnaround time
for underwriting, over-the-counter service, and complaint resolution,
as well as the drop in the cost-to-income ratio to 47.0%.
Preparing For Tomorrows Growth

We embarked on various initiatives to deepen and strengthen our
client relationships through the customer segmentation model. We
are mindful that to grow and stay relevant, the Bank must be highly
disciplined and focused on its long term competitiveness to deliver
an unsurpassed customer service to achieve its vision to be The
Best Customer Service Bank in Malaysia.
Our value proposition is based on building long-term relationships
with our customers by:
Understanding and meeting our customers needs and
expectations at every stage of their financial life cycle.
Recognising and serving our customers as individuals, each with
their own personal needs and preferences, by delivering on our
brand promise, Banking Made Personal.
Offering a full suite of products, services and solutions relevant to
the needs of our customers.
I am encouraged that the success of our initiative to develop a new
level of customer experience is already becoming evident, with the
Bank winning the coveted Excellence in SME Banking award from
the global research consultancy, IDC Financial Insights.
Challenges Ahead and Strategic Priorities

While we continue to build on this success and pursue expansion
plans to ensure sustainable growth, we are also mindful of the
changing dynamics in the industry and the need for stronger and
more resilient banks that can face up to new banking realities of
increased regulations and complexity of risks. In this regard, we are
more agile and nimble in responding to the changes in the market
place and exploiting opportunities that come our way. Hence, moving
forward from a position of strength, the Banks three key strategic
priorities for the financial year ending 31 March 2013 are:
To build a consistent and sustainable financial performance
by growing our core businesses of Consumer and Business
Banking, while pursuing fresh opportunities in new areas which
include, amongst others, wealth management, treasury sales and
bancassurance. We will also continue to reinforce our prudent,
effective balance sheet management strategies and integrated
risk management and governance to sustain profitability.
To develop Engaged Employees with the Right Values by

redefining our core values and strengthening our performance
management systems to create a culture which rewards staff for
their hard work, creativity and team work.
A detailed report is contained in the Review by the Group Chief
Executive Officer.
Acknowledgements
On behalf of the Board of Directors, I would like to thank our
shareholders, our growing number of customers, stakeholders and
business partners for their support and confidence in the Bank.
I would also like to thank my fellow directors of Alliance Bank for
their great support and hard work.
To Datuk Oh Chong Peng and the Board of Directors of our holding
company, Alliance Financial Group Berhad, I would like to place
on record my sincere appreciation for their insights, advice and
support.
Three directors have left during the year, Mr Tee Kim Chan, Mr Chua
Eng Kee and Mr Phoon Siew Heng, and I would like to thank them for
their past services. During the year, Mr Kuah Hun Liang and Mr Lee
Ah Boon joined the Board, and I would like to welcome them both.
I would also like to express my sincere thanks and gratitude to Bank
Negara Malaysia, Securities Commission Malaysia, Bursa Malaysia
Securities Berhad and other government agencies and regulatory
authorities for their continual support, guidance and assistance.
I believe that with the growth momentum supported by a strong
balance sheet and proven business model, driven by a strong and
united team, Alliance Bank will continue to deliver increasing returns
to all our stakeholders. We look forward to the new financial year
with optimism.
DATO THOMAS MUN LUNG LEE

Chairman, Alliance Bank Malaysia Berhad
To be Malaysias Best Customer Service Bank within the next

few years by building on our brand promise, Banking Made
Personal, through improvement of processes and the quality of
our service.
12/6/12 4:53:30 PM
ENH
13/6/12 3:38:42 PM
NCING
EXPERIENCES
Through customer-centric innovation, the provision of delightful

experiences and the expansion of delivery channels, we aim to build
The Best Customer Service Bank in Malaysia.
13/6/12 3:53:53 PM
32

By Group Chief Executive Officer
For the Alliance Bank Group, financial year ended 31 March 2012 was an exciting
year. We stayed focused on executing the strategic
gic initiatives and delivered net
profit after tax of RM484.3 million and return on equity of 14.0%, the highest in
recent years.
We delivered another record performance for financial year ended
31 March 2012 (FY2012), underpinned by strong growth in
non-interest income and better asset quality as well as a disciplined
approach to risk and financial management. We also enhanced our
franchise value by expanding the scale of our business operations,
tions,
while simultaneously laying the groundwork for new initiatives for the
future.
We began FY2012 by outlining the Groups medium term aspirations

for the financial performance metrics:
Achieving Growth
Malaysia has been quite well insulated from the financial and
economic turmoil of the eurozone debt crisis and natural disasters.
Although these uncertainties have not impacted business
confidence in the country, the global macro-economic
conditions, coupled with further consolidation within the banking
industry and heightened competition, contributed to a tough
operating environment. Taking these challenges in its stride,
we remained focused on the execution of our strategic plans and
initiatives, leveraging on synergies inherent within the Group to
deliver higher earnings.
To achieve asset quality that is better than industry average;
To increase non-interest income to 30% of total revenue;
To reduce cost-to-income ratio through targeted revenue growth

and improved productivity; and
To achieve return on equity that is comparable to the industry

average of between 14% and 16% by focusing on underlying
earnings momentum and effective capital management.
We are pleased to inform that the Bank is on the right track towards
achieving our medium term aspirations, and building The Best
Customer Service Bank in Malaysia as reflected by the recent
customer satisfaction survey results, sound financial performance,
and well-diversified and sustainable growth.
Financial Performance
We registered our best ever financial performance in recent years
with a record net profit after tax of RM484.3 million, representing a
16.6% year-on-year growth and our highest ever return on equity of
14.0%. The following figures highlight the performance summary of
the Group for the financial year.
13/6/12 9:56:01 PM
2012 ANNUAL REPORT
Profit Growth
Record net profit at RM484.3 million, up 16.6% year-on-year, driven by increase in non-interest income and
lower impairment charges.
Return on equity at 14.0%, up from 13.5% a year ago.
Business Expansion
Total assets expanded to RM39.6 billion or 9.8% year-on-year.

Gross loans growth of 11.3% to RM25.0 billion, underpinned by expansion in mortgage loans and SME
lending.
Deposit growth of 10.9% to RM32.2 billion.
Non-interest income expanded by 41.9% to RM320.3 million from RM225.7 million a year ago. Non-interest
income ratio improved to 26.8% from 20.7% previously.
Current Account Savings Account ratio maintained at 33.7%.
Productivity
Cost-to-income ratio dropped to 47.0%, from 47.8% a year earlier, reflecting our increased emphasis on cost
management initiatives.
Risk Management
Liquid balance sheet, with loans to deposits ratio maintained at 77.7%.

Net impaired loans ratio continued to improve to 1.4%, from 1.9% in FY2011, due to better underwriting
standards and intensified collection efforts.
Loan loss coverage rose to 108.5% from 90.1% previously, as the Bank had set aside collective provisions
under Bank Negara Malaysias transitional provision for FRS139 adoption.
Capital Management
Risk-weighted capital ratio stood at 15.2%, while Tier One capital ratio is at 11.5%, well above regulatory and
Basel III requirements.
Profit After Tax (RM million)
Non-Interest Income Ratio (%)
RM million
33
484.3
415.4
372.3
26.8
26.1
306.4
230.2
22.4
22.4
20.7
2009
2010
2011
2012
Financial Year
2008
2009
2010
2011
2012
Financial Year
2008
Return on Equity (%)
Cost-to-Income Ratio (%)
16.4
8.9
13.5
14.0
2011
2012
46.1
52.8
51.7
47.8
47.0
2008
2009
2010
2011
2012
11.0
Financial Year
2008
2009
2010
Financial Year
13/6/12 9:56:02 PM
34

By Group Chief Executive Officer of Alliance Bank Malaysia Berhad (contd)
Financial Performance
Profitability / Efficiency Ratios
Return on Equity
Return on Assets
Non-Interest Income Ratio
Cost-to-Income Ratio
Asset Quality
Gross Impaired Loans
Loan Loss Coverage Ratio
Liquidity & Capital Ratios
CASA Ratio
Loan to Deposit Ratio
Risk-Weighted Capital Ratio
Core Capital Ratio
Summarised Income Statement (RM million)

Net Interest & Islamic Banking Income
Non-Interest Income
Net Income
Operating Expenses
Net Profit After Taxation
Summarised Balance Sheet (RM billion)
Net Loans, Advances and Financing
Investment and Dealing Securities
Deposits from Customers
Total Assets
FY2011
FY2012
Change %
13.5%
1.2%
20.7%
47.8%
14.0%
1.3%
26.8%
47.0%
+0.5%
+0.1%
+5.5%
+0.8%
3.3%
90.1%
2.4%
108.5%
+0.9%
+18.4%
33.3%
77.0%
16.1%
12.0%
33.7%
77.7%
15.2%
11.5%
+0.4%
+0.7%
-0.9%
-0.5%
FY2011
FY2012
Change
Change %
906.1
225.7
1,131.8
541.7
415.4
931.4
320.3
1,251.7
588.8
484.3
25.3
94.6
119.9
47.1
68.9
+2.8%
+41.9%
+10.6%
+8.7%
+16.6%
21.8
12.1
29.0
36.0
24.4
11.4
32.2
39.6
2.6
0.7
3.2
3.6
+11.8%
-6.1%
+10.9%
+9.8%
Note: + indicates improvement in performance.
Alliance Financial Group Berhad (AFG), was RM3.89 per share, up

22.7% against RM3.17 on 31 March 2011, and it outperformed the
Kuala Lumpur Composite Index. In fact, in calendar year 2011, AFG
was the top performing financial stock, garnering an overall increase
in market capitalisation of 22.7% to RM6.0 billion and moving up
the ranking to be the 43rd largest company on Bursa Securities as
at end-December 2011.
A Greater Shareholder Value Creation

The intrinsic value of the Bank strengthened in tandem, with earnings
per share seeing a 15.7% year-on-year expansion to 81 sen. Net asset
per share rose 10.6% to RM3.64, against RM3.29 last financial year.
Arising from the improved financial performance, at the
close of FY2012, the share price of the holding company,
AFG Share Price and Volume
Volume Traded
Apr-122
Mar-122
Feb-122
Jan-122
Dec-111
Nov-111
Oct-111
Sep-111
Aug-111
2.50
Jul-111
20
Jun-111
2.75
May-111
40
Apr-111
3.00
Mar-111
60
Feb-111
3.25
Jan-111
80
Dec-100
3.50
Nov-100
100
Oct-100
3.75
Sep-100
120
Aug-100
4.00
Jul-100
Million
140
Jun-10
RM
4.25
Share Price
14/6/12 4:28:31 PM
2012 ANNUAL REPORT
35
Business Performance
Consumer Banking
Building on the momentum established, the Banks priorities for the

year were focused on:
Consumer Banking contributed RM185.2 million, or 25%, of the

Banks pre-tax profit, driven by improved cross-selling activities and
new wealth management products.
Ensuring broad revenue growth, both interest income and

non-interest income, across all areas of the Bank, through
bundling and cross-selling of innovative products and services
offered by the various lines of business, such as Consumer
Banking, SME Banking, Wholesale Banking and Financial
Markets;
Enhancing our customers overall service experience with us by
building strong and enduring relationships with our customers
and providing them with fast, simple and convenient service by
leveraging on our Customer Relationship Management system
and process re-engineering initiatives; and
Strengthening our human capital and reinforcing our core values,
as the successful execution of the Banks plans depends on the
combined knowledge, skills and commitment of our people.
The success of these strategies is clearly evident in the business

volume expansion as we successfully leveraged our streamlined
business processes, the efficiency of our operating model as well as
the introduction of new products and opportunities to drum up our
Consumer and SME businesses in difficult market conditions. Hence,
we actually achieved our best-ever gross loans growth to date of
11.3%, compared to 4.8% in previous year, outperforming the banking
industry growth of 10.9%. The total gross loans outstanding expanded
by RM2.5 billion during the year, and our market share rose to 2.5%.
Concurrently, we also continued to mobilise more deposits from
our cross-selling initiatives, with customer deposits increasing by
RM3.2 billion (10.9%) to RM32.2 billion during the year. We have also
successfully built a diversified and loyal deposits base.
The Bank also continued with the Customer Segmentation model

launched in 2010 to be more customer-centric, giving priority to
strengthening service and product propositions that cater to customers
lifestyle needs. We focused on two broad market segments, the mass
market and mass affluent segments, to offer multi-channel banking
experience.
We also focused on developing a liability-led business, enhancing our
distribution channels and launching deposit campaigns. We continued
to rebalance our deposits portfolio with better quality current and
savings accounts (CASA). As a result, the CASA ratio improved to 34%,
from 32% in the previous year.
Mortgage Loans
In lending activities, the priority was on the expansion of the
mortgage lending portfolio, as the Bank strived to capitalise on the
improved market sentiment for new housing projects. During the
year, total new housing loans approved amounted to RM4.8 billion.
The success was due mainly to:
an increase in our in-house direct sales force, tie-ups with top

developers for end-financing projects, and working closely with
direct sales agencies; and
offering competitive and value added Home Loan products via

relationship pricing, product bundling and innovative product
development to cater to different needs of the customers,
such as first-time home buyers, upgraders, re-financiers, or
investors.
The Bank also actively supported the Governments aspirations of

affordable housing under the 1Malaysia Housing Programme and
My First Home Scheme.
Besides having a robust integrated risk management framework for
optimisation of credit quality management, we also integrated and
streamlined our credit functions in loan processing to further reduce
the turnaround time to customers.
Credit Cards
Cards contributed 13% of Consumer Bankings revenue and 5% of
the total loans outstanding. The revenue was derived mainly from fees,
reflecting the increase in credit card base and merchant network, as
well as rising spend on business platinum cards.
13/6/12 9:56:02 PM
36

Hire Purchase
The hire purchase loans portfolio accounts for 2.0% of the Banks
total loan portfolio. The Bank has recently undertaken a strategic
review of the dynamics of the hire purchase business and concluded
that there is scope to build scale in the car financing market.
The Bank will expand its hire purchase centres network and
streamline the work processes as well as strengthen the relationship
with car distributors.
Personal Loans
The revenue contribution to Consumer Banking was relatively
unchanged at 17% for the past two years, as the Bank continued
to emphasise on higher yielding Personal Loans, which expanded by
15% in FY2012.
A robust credit risk framework has enabled the Personal Loans
business to keep its impaired loans ratio at less than 1%, compared
to the industry average of 2%.
Wealth Management
We enhanced our wealth management business to contribute
to greater income diversification for the Bank. Our focus was
on strengthening product development capabilities and wealth
management propositions, to offer a suite of products tailored to meet
customers risk profiles and requirements. New wealth management
products that reflected the prevailing market sentiments include high
yield bonds, gold structures and capital guaranteed investment-linked
insurance plans.
The Banks wealth advisory platform has been enhanced with the
roll-out of bundled products and the formation of a specialist team
comprising investment counselors, treasury and insurance specialists
to deliver high levels of expert advice and service to customers.
Unit Trusts and Stockbroking
Arising from the global market volatility, most retail investors preferred
simple investment products for capital preservation and regular income
stream. In response to this customer need, the Bank introduced several
fixed income and dividend-based funds, resulting in the doubling of the
average monthly Unit Trust sales volume during the year.
The Bank has engaged an independent licensed investment advisor

to undertake regular fund reviews and to provide up-to-date analysis
and recommended portfolio modeling via asset allocation strategies,
in order to enable customers to make the right investment decisions.
The Bank has also introduced a variant called Investment Lending as a
yield-enhancement and wealth-building strategy for share trading and
margin financing customers. In addition to domestic equities, other
underlying assets that are acceptable include unit trusts, structured
investments and bonds. The Banks first Investment Margin Financing
product was launched in February 2012 as a closed-ended Unit Trust
Fund.
To tap into the growing demand for Structured Investment products,
the Bank also launched two interest-rate linked investment products
during the year. The Bank will continue to diversify the range of
structured investment products to cater to the needs of investors in
different market conditions.
Bancassurance
Bancassurance revenue increased to RM20.3 million during the
year arising from the introduction of new products. In 2011, the
Bank launched two innovative regular premium products which
generated strong sales the Alliance Income Saver in May 2011 and
the FutureSave in October 2011. Another product which was popular
was the Secure Plus, a unique return-guaranteed high yield single
premium plan.
Bancassurance continues to leverage on alternative channels to
expand its customer reach. This includes the insurance partners
conducting telemarketing and Internet marketing, as well as the
mobile sales teams and the insurance specialists offering a full range
of comprehensive products to cater to customers insurance needs
and to provide financial protection advisory services.
The Bank further strengthened its relationship with AIA Bhd (AIA)
when it formalised an eight-year arrangement with AIA to offer its
customers conventional life insurance products via the Banks
branches and other alternative delivery channels. This arrangement
further complements the joint-venture established in January 2011 to
offer Takaful insurance products.
We are confident that AIAs proven track record and professional
expertise in developing innovative and comprehensive financial
protection solutions, complemented by the Banks distribution network
will benefit our customers.
13/6/12 9:56:04 PM
2012 ANNUAL REPORT
37
Deposits
Direct Marketing
The Consumer Banking deposits portfolio increased by RM400 million

to RM15.9 billion. The Hybrid Account remained our best-selling
deposits product, benefiting customers as it combines the high-yield
current or savings account together with the Alliance Debit Master
Card.
Alliance Direct Marketing remains a primary distribution channel for

the Banks core consumer products such as mortgages, personal loans
and credit cards. During the year, despite intensified competition, it
contributed 50% of total mortgage loan sales, 19% of total new credit
card acquisitions and 73% of total personal loans.
During the year, the Bank reviewed the interest rates to increase
market competitiveness and reduce overall cost of funds by mobilising
more CASA. These efforts have been reflected in the improvement of
the Banks CASA to total deposits ratio to 34%, compared with 32%
in the last financial year. We will continue to drive flagship deposits
products through customer relationships and strategic marketing.
A key part of our strategy in deposits gathering, going forward, is
through the enhancement of transactional capabilities and experience
for our customers.
SME Banking
Transaction Banking
In line with providing customers with the latest tools to conduct
their transactions, the Bank embarked on the implementation of a
new Internet Banking platform with enhanced features and new
customer-centric processes. The new platform, to be rolled out in the
second half of 2012, features:
better customer experience with shorter turnaround time;
new wealth management capabilities for customers to better

manage their savings and investments while keeping track of
any liabilities; and
refreshed easy-to-use interface coupled with powerful

transactional and security features in line with todays industry
standards.
In addition, the functionalities and features of the recently

implemented Customer Relationship Management solution enable
the Bank to serve its customers much better and deliver higher sales
productivity, as it now has a single customer view of the customers
total relationship with the Bank.
The small and medium enterprise (SME) segment remained a core

focus of the Bank, contributing 15.8% of the Banks profit before tax.
The positive impact from SME Bankings strategic initiatives is evident
from the loans growth of 15.8% and deposit growth of 15.9%, with
the number of new-to-bank Business Current Account expanding by
50% year-on-year.
Our customer loyalty rating continues to improve, with key indicators

that measure customers likelihood to recommend us to other SMEs
continuing to be significantly higher than the industry benchmark.
Enhancing Customer Relationship and Growth
Given the rising prominence of the SME segment in the economy, the
Bank has strategically aligned its resources to capture greater market
share and growth, with its 30 SME Business Centres across the
country. In the past year, SME Banking has undertaken a number of
strategic initiatives to transform its customer relationship and growth
model, with a customer value proposition of Your Trusted Partner
in Growth. Our strategic direction is to differentiate, via unrivalled
customer experience, to be the Best SME Bank in Malaysia.
The Power of Advanced Analytics
Our relationship management model goes back to the fundamentals
of personalised, long-term relationships serving customers through
the different life-stages of their business. By combining this with
the power of advanced analytics and the newly-deployed Customer
Relationship Management system, we were able to understand
our customers needs better and offer the right product to the right
customer.
13/6/12 9:56:05 PM
38

Build New Connections, Strengthen Existing Ones
Innovative Solutions
In keeping with our Banking Made Personal proposition, we

implemented several Wow service initiatives such as networking
sessions and joint events with key customers to help drive business
opportunities for them, while helping other customers establish
meaningful business connections.
Alliance SME is the first bank in Malaysia to launch the Picture

Business Credit Card (MyBusiness Platinum Card) that enables SMEs
to feature an image of their business on the face of the card. The card
also provides various payment flexibility and cost savings features
and facilities.
To champion the cause of the SME community, we have also

provided educational support to emerging segments such as the
Women Entrepreneurs Forum, and teamed up with local chambers
of commerce in various forums and seminars to discuss business
opportunities and challenges.
One of the innovative campaigns launched was the Free Banking for
1 Year Business Current Account, where new account holders get to
enjoy fee waivers for a year, for transactions performed via Alliance
Online Banking.
Wholesale Banking
Wholesale Banking contributed 15.9% of the Banks total pre-tax
profit. Loan growth for the year was 15.4%, underpinned by good
quality assets.
Wholesale Banking activities focused on sectors and industry value
chains which are closely correlated to the Economic Transformation
Programme, as well as projects identified under the 10th Malaysia
Plan. Some of the identified sectors such as construction, oil palm
plantation, real estate, retail and education are already our preferred
sectors in which we have proven expertise. We made significant
headway in tapping the higher level of demand for financing and
transaction banking activities arising from these targeted programmes.
Well-rounded SME Bankers

We continued to invest in the professional development of our staff, for
example, via structured learning roadmaps, to build a core team who
is strong in technical and inter-personal skills to serve our customers
effectively in the long term.
Proactive Risk Management Approach
We use a state-of-the-art programme lending model to achieve
quick credit turnaround time of less than one week, compared to the
industry average of two weeks. We also proactively monitor risk via
data analytics to identify key triggers and behavioral changes so that
early corrective action can be taken.
Through our Business Reward Services, a cash management

programme launched in 2010, we also managed to grow our deposits
base from existing and new clientele.
We also participated in syndicated loans and club deals, besides
working closely with Alliance Investment Bank Berhad, Treasury Sales
and Transaction Banking, to grow non-interest income in transaction
banking, foreign exchange and investment banking.
13/6/12 9:56:09 PM
2012 ANNUAL REPORT
39
Financial Markets
Besides managing the funding and liquidity requirements of the Bank,
the Financial Markets team is also responsible for marketing treasury
products to various customer segments.
To support Treasury sales-related business, we adopt a client-led
approach supported by enhanced product development capabilities
and delivery. We have built dedicated sales teams, research and
product capabilities, supported by a multi-product platform to offer
hedging solutions for SME and corporate clients and new structured
investments for Consumer Banking customers.
AIS seeks to provide fast, simple and convenient Shariah-compliant

solutions that are competitive and fulfill customer needs. AIS will
continue to work closely with the other business units to roll out
innovative products and enhance Shariah knowledge of the staff
and their customers through continuous engagement and training
sessions.
Islamic Banking
Our Islamic Banking business, which functions on a shared business
and operating platform with the rest of the Bank, is carried out
largely through Alliance Islamic Bank (AIS). It offers a full range of
comprehensive Shariah-compliant products and services.
For FY2012, AIS registered a profit before tax and zakat of
RM97.1 million, a year-on-year growth of 28.6%. It accounted for
15.1% of the Banks profits and 16.4% of total assets. During the
year, its total financing portfolio expanded by 11.0%, resulting in
the financing to deposits ratio rising to 86.5%.
Reflecting the better asset quality, the gross impaired financing ratio
improved further to 1.5%, better than the industry average of 2.5%,
while the financing loss coverage increased to 154.1% in tandem with
the higher financing growth. It also has a strong capital position, with
a Risk-Weighted Capital Ratio of 13.4% and a Core Capital Ratio of
11.5%.
As an Islamic business entity, AIS has fulfilled its obligation for zakat
payment to various entitled bodies, in particular to Pusat Pungutan
Zakat Wilayah Persekutuan and directly to individuals such as
underprivileged students pursuing their studies in various universities.
Apart from that, AIS has initiated an annual community programme
with orphanages during the holy month of Ramadhan.
Investment Banking
Alliance Investment Bank Berhad (AIBB) provides a wide range of
services which include stockbroking, corporate advisory, corporate
finance, underwriting and placement of equity securities, private
debt financing and advisory, loan syndication, corporate banking and
treasury.
In the Ratings Agency Malaysia (RAM) 2011 League Table, AIBB
was ranked No. 5 in terms of Number of Issues, and No. 7 for
Programme Value.
AIBB registered a pre-tax profit of RM53.1 million, a decline of 13.3%
due to lower income from brokerage, and an increase in operating
expenses.
AIBB will continue to focus on strengthening its franchise enhancing
capabilities within its stockbroking and research teams as well as
expanding its team of institutional dealers. It is also developing its
share trading centres, mobile and Internet broking channels and
margin financing business, to facilitate better client relationship
management and complement its traditional remisier channel.
13/6/12 9:56:13 PM
40

Stockbroking
Branch Operations & Service Quality
Revenue for the year declined by 20.8% due to lower trading income
from brokerage and other fees, in tandem with the drop in trading
volumes on Bursa Securities, as our stockbroking business remained
concentrated in the retail segment.
In line with the Banks aspiration to be The Best Customer Service

Bank in Malaysia, enhancing service quality and operational
efficiency through continuous improvement across all touch points
remained an important focus for us to build our competitive positioning.
A number of initiatives to drive customer centricity were implemented,
with the goal of making banking with us easier for our customers, and
also for our staff to serve our customers better. Some of our initiatives
were:
Capital Markets
By working more closely with Wholesale Banking, AIBBs notable
assignments completed during the year were the IPO of Peterlabs
Holdings Berhad on the ACE market and the rights issues of Gefung
Berhad, Malton Berhad and Press Metal Berhad.
The deployment of the Customer Relationship Management system

has given us a holistic view of our customers, enabling customers
requests to be fulfilled efficiently across departments, leading to
improved turnaround time.
Our branch structure was transformed to be more customercentric through the appointment of a branch manager as
the steward of the branch. Through streamlining of roles and
increased empowerment, this has translated to increased
efficiency and enhanced customer experience.
Customised training programmes were implemented for the

front-line staff to ensure that they had the skill sets to engage
with customers.
We continued to give serious attention to customer complaints,

feedback and the results of the Mystery Shopper programme
to monitor branch service standards.
We re-engineered processes to further improve the turnaround

time in various areas of operations e.g. account opening and
credit card processes, as well as leveraged on our branch
network to give customers the convenience to transact with us
at their preferred location.
Capital Markets will continue to focus on providing a wide range of

investment banking advisory services to small and medium corporates,
by leveraging on the Banks Business Banking segment.
Funds Management
The volatility of global stock markets in the year under review was
a dampener on investor sentiment towards the equity funds but
provided a boost for fixed income funds, especially those funds that
offered stable returns with fixed maturity dates. The industry remained
competitive, expanding by 7% in 2011, with over 60 new funds being
launched during the year.
Against this backdrop, Alliance Investment Management Berhad (AIMB)
did well as its revenues rose 11.1% and pre-tax profit increased to
RM2.1 million, from RM0.7 million a year earlier. It also launched two
more fixed income funds under the Alliance Regular Income Fund
(ARIF) series. The ARIF 3 and 4 achieved total sales of RM121 million
and RM71 million respectively. Following the launch of these new
funds, the total assets under management stood at RM2.3 billion as
at end-March 2012.
13/6/12 9:56:16 PM
2012 ANNUAL REPORT
To ensure that the Banks efforts are delivering results, we have

measured critical aspects of the overall customer experience, with
the following improvements:
95% of our customers were served within four minutes across

our branch network, which led to increased customer satisfaction
due to shortened waiting time.
Automated Teller Machines (ATM) and Cash Deposit Machines

availability times have improved to 99% and 96% respectively.
99% of customer-related issues were resolved within three days,

well within the industrys standard turnaround time of 10 days.
Our customers can be assured that we will continue to commit

significant resources and to re-align the customer operational
processes to build a customer first culture in our pursuit to achieve
best-in-class service standards.
41
The more notable achievements during the year included:
Enhanced customer offerings on self-service channels, such

as value added services through ATMs, improved uptime of our
ATMs, and new mobile applications for stockbroking services;
A major revamp of our Internet banking services which will be

available to customers in 2012;
The implementation of a Customer Relationship Management

system which not only provides a single view of our customers,
but also allows us the ability to capture all interactions with our
customers; and
The implementation of the Enterprise Financial solutions, which

would integrate the enterprise general ledger, budgeting and
forecasting, procurement and financial datamarts and enable
management to make more informed decisions.
In line with Bursa Securities new directive on trading platforms, we

have since upgraded our system to adopt a single front-end trading
platform. This new upgrade enables us to trade in local and foreign
markets, and to implement new order types. We expect to complete
the first phase of this project in September 2012, after which, we will
begin replacing the back-end of the systems in the coming financial
year.
We have relocated our Disaster Recovery site and are in the process
of upgrading our infrastructure to provide better recovery capabilities.
We have also successfully implemented Open Office and virtualisation
to reduce operating costs for technology.
We will also continue to invest in technology to enhance Internet
security such as the prevention of intrusions and service attacks.
Group Technology Capabilities

The Bank believes that a cohesive IT strategy and enterprise
architecture coupled with the re-engineering of business processes, is
key to promoting operational efficiency and providing a differentiated
customer experience in a cost effective manner. We have adopted the
following strategy to enhance our Banks technology capabilities:
Fast, simple and convenient customer experience across all

touch-points.
e-channels that enable customer self-service and interactions.
Customer Relationship Management system that provides

insights on customers behaviour and needs.
Improved decision making with Management Information System

that supports fast and accurate reporting and analytics.
Cost effective and productive delivery platform for all customer

transactions.
Secure, resilient and compliant banking environment.
Strengthening Risk Management

Given the uncertainties and volatility in financial markets during the
year, as well as intensified market competition, it is important that
we have a robust and holistic risk management framework as we
pursue our expansion plans. In this regard, the Bank recognises the
importance of capital and risk governance, and continues to enhance
its effective risk management capabilities to facilitate sustainable
business growth via the following key thrusts:
Strategically determining our risk appetite which focuses on

sustainable growth and implementing the Internal Capital
Adequacy Assessment Process, which integrates strategy,
processes and infrastructure, so as to ensure a more effective
utilisation of capital across the Group.
Proactive risk management, by focusing on sector analysis,

sensitivity analysis, stress-testing scenario analysis, as well as
top risk identification and mitigation.
Enhancing the approval process for the introduction of new

products and services.
13/6/12 9:56:19 PM
42

Upgrading our credit risk infrastructure, including the independent

validation of credit risk rating models, the probability of default
and loss-given-default models for consumer and business
portfolios.
Parallel monitoring and reporting of new liquidity standards and

revised capital standards under Basel III to facilitate smooth
transition upon implementation by Bank Negara Malaysia.
Conducting training to heighten risk awareness within the

Group.
Benchmarking against market practices and international

standards such as Basel Committee for Banking Supervisors and
Islamic Financial Services Board.
Human Capital and Service Quality

We recognise that the ability to attract and retain good talents in a high
performance culture is critical to our ability to drive continued business
growth, high standards of customer service and product excellence.
FY2012 has been a year of re-alignment and capacity building for
Group Human Resources. Thus, our focus has been on initiatives that
will ensure a strong foundation of growth for the Bank, such as career
progression, talent management, leadership development, learning
programmes and skill enhancement opportunities.
Group Internal Audit

The principal function of Group Internal Audit (GIA) is to provide an
independent and objective assurance that the risk management
systems, internal controls and governance processes which are
critical to the Banks business and strategic objectives are effective.
Several improvement initiatives were introduced in FY2012. The
Audit Methodology was revised and updated to reflect changes in the
internal control system and work processes and to incorporate new
activities, thereby ensuring its continued relevance and effectiveness.
A three-year Audit Planning Cycle was established to facilitate better
resource planning and the scheduling of auditable units in accordance
with the relative risk rating. A new report format was introduced and a
more timely report distribution mechanism was put in place.
GIA also launched its Guest Auditor Programme, where selected line
managers are invited to join the internal audit team as guest auditors
for audit assignments. While guest auditors gain experience and
exposure into areas of the Bank other than his or her own, GIA benefits
from their functional or business unit knowledge. This allows for the
sharing of knowledge and experience across the Bank.
In November 2011, the Bank engaged an independent review team
to perform a Quality Assessment on GIA to assess its efficiency and
effectiveness. The independent review team concluded that the
internal audit activities undertaken by GIA are in conformance with
the International Standards for the Professional Practice of Internal
Auditing issued by the Institute of Internal Auditors.
We streamlined the organisation structure for better accountability and

continued to emphasise fair and robust performance management.
We continue to build up our employees knowledge and skills through
extensive investments in training and development programmes.
To ensure that our compensation and benefits are competitive, and
to attract and retain our staff, the Bank participates in the annual
compensation and benefits survey. We also reviewed the staff
benefits, to ensure that they are aligned to prudent market practices.
We have also embarked on a job evaluation exercise to ensure that
job grades and positions accurately reflect respective job scope and
size.
Communication channels have also been set up for all staff to have
easier access to management. They include email channels, the
formalisation of the whistle blowing policy, quarterly employees
town halls at regional levels, and Pulse Lunch with the Group
Chief Executive Officer or senior management team members.
A newsletter, inAlliance, to keep employees informed of happenings
within the Group is published electronically on a monthly basis.
13/6/12 9:56:21 PM
2012 ANNUAL REPORT
43
Awards and Recognitions
We continued to receive various awards and recognitions from the

industry, affirming the Banks commitment of delivering excellence to
all its stakeholders.
Even as we enjoy success as a corporate entity, the Bank remains

dedicated in upholding our role as a responsible corporate citizen.
Corporate Responsibility at the Bank has always been more than
just about serving the community. It is a business philosophy, about
having a sustainable business strategy that is aligned with our
values and impacts in a more tangible and sustainable manner our
marketplace, workplace, environment and community.
The Bank made it to the 2011 Malaysias Top 100 Leading Graduate
Employers list. We also made it to the Top 100 Public Listed
Companies List of the 2011 Malaysian Corporate Governance Index.
These achievements indicate that we are on the right track in
growing and developing our people, and practising good corporate
governance.
The Banks SME Banking won the coveted Excellence in SME
Banking award by IDC Financial Insights at the 7th Annual Financial
Insights Innovation Award ceremony. The Bank was one of two
Malaysian banks among the 10 winners from the Asia Pacific region.
The SMI Association also recognised the Bank as a friend of SMEs,
with the Sahabat SME Award 2011, for the second consecutive year.
SME Banking was also a finalist in the Asian Banker Award, competing
against leading regional financial institutions across the Asia Pacific.
The Bank scored on the innovation front, by pioneering the first Picture
Business Credit Card in Malaysia, with the launch of the MyBusiness
Platinum Card in response to the needs of the SME community.
One of the key developments recently was the launch of our

Corporate Responsibility strategic theme, namely Financial Literacy.
In this regard, we are engaging in various initiatives to equip children
with the importance of money management.
A detailed Corporate Responsibility report can be found on page 62.
Investor Relations
The Group continues to actively engage the financial community,
stakeholders and other key constituencies of the Alliance Financial
Group to provide consistent, accurate, transparent and timely
information. This is in accordance with the principles and best
practices prescribed as part of the Groups corporate governance
policies.
Our credit card business, which has been winning local and
international awards for the last three years, received two more
awards for the You:nique Prepaid card Mohd. Khairuddin, Your Mum
Is Nagging You campaign, namely Dragons of Asia Silver Award for
the Best Use of Internet by Promotion Marketing Awards of Asia, and
the Silver Award at the Malaysia Effie Awards 2011. The Bank was
also the only banking institution to walk away with this coveted award
that is jointly organised by the Malaysian Advertising Association,
Association of Accredited Advertising Agents Malaysia (4As) and Media
Specialists Association, in association with the Malaysia External
Trade Development Corporation. As there were no Gold Effie winners,
the Silver award was the highest award.
13/6/12 9:56:22 PM
44

Engagements with the investors and other stakeholders serve

as a platform for the Group to disclose its financial performance,
strategies, business directions, and developments of interest to
the investing public. Information presented at the briefings is
uploaded onto the Alliance Financial Groups corporate website
at www.alliancegroup.com.my/quarterlyresults.html to promote
accessibility of information.
Going Forward
Uncertain prospects for the global economy and turmoil in the
eurozone may dampen consumer sentiments in 2012. Malaysias
gross domestic product growth is forecast to range between 4% and
5% this year. Monetary policy is expected to remain accommodative
and interest rates stable with the Overnight Policy Rate being retained
at 3% p.a. for the year.
The outlook for the Malaysian financial services sector is, however,
expected to remain stable given the underlying strengths of the
domestic economy and continued roll-out of the Governments
Economic Transformation Programme.
The sector is expected to benefit from the greater operational flexibility
provided in the Financial Sector Blueprint 2011-2020 recently
released by Bank Negara Malaysia, although competition is expected
to intensify from the locally-incorporated foreign banking institutions
operating in the country.
Despite these challenges, we are very excited with the prospects of
the Bank as there are opportunities to enhance our competitiveness
and build on the business growth momentum. Our core business
model of focusing on Consumer and Business Banking segments,
and driving non-interest income to achieve a higher return on equity,
remains unchanged.
Our strategic priorities are:
To build consistent and sustainable financial performance.
To become The Best Customer Service Bank in Malaysia.
To develop Engaged Employees with the Right Values.
Building consistent and sustainable financial

performance
We aim to generate long-term recurring revenues from existing and
new business opportunities by leveraging on the current growth
momentum. Our strategy is to grow our existing core business of
Consumer and Business Banking while pursuing fresh opportunities
in Investment Banking, Wholesale Banking and Financial Markets
such as Treasury Sales, Hire Purchase and Transaction Banking.
We will also continue to strengthen our credit policies and risk
management practices, to ensure that we take the necessary
measures to mitigate risks while remaining flexible to market
changes. Proactive asset and liability management will continue to
be high on our agenda. In addition, we will also continue to strengthen
our technology infrastructure as well as our Alliance Bank brand
to ensure that we have a solid foundation from which to pursue
sustainable growth.
Being The Best Customer Service Bank in

Malaysia
To continue delivering excellent customer service and experience,
we have to fulfil banking relationships by meeting customers
needs for simplicity, timeliness and convenience. We also recognise
that as customers become better connected, more informed and
more empowered, there is a need to equip our bankers with the
right tools and skill sets to anticipate and fulfil these new customer
expectations.
Our processes and systems too need to be customer-centric to provide
customers with a delightful experience of easy and efficient access
to our products and services when engaging with us. This includes
automating current customer-related processes to improve delivery
and turnaround time.
13/6/12 9:56:35 PM
2012 ANNUAL REPORT
45
Developing Engaged Employees with the Right

Values
A united and involved team is very important to the success of the
Bank. We are emphasising our core values to strengthen the right
behaviours required as part of our work culture to achieve the
Banks mission and vision. Major initiatives, amongst others, include
maintaining a fair and transparent performance management system,
collaborative cross-division joint goals to improve team work, and the
implementation of talent management and succession planning.
We will continue to work hard to sustain our growth momentum
and with committed and supportive employees, the Bank is
in a good position to achieve the key strategic objectives.
I am hopeful that, barring any unforeseen circumstances, this time
next year, we should be delivering a better financial performance,
and at the same time contribute to the stability and integrity of the
Malaysian financial system.
Appreciation
The Banks sustained growth and financial performance is due
largely to the unwavering support and loyalty, as well as the trust
and confidence of our customers, partners, investors and associates.
We would like to take this opportunity to thank our customers and to
reiterate our commitment to serve them better.
We also acknowledge the important roles played by our regulators,
especially Bank Negara Malaysia, Securities Commission Malaysia
and Bursa Malaysia Securities Berhad. Their support and guidance
have been invaluable and are deeply appreciated.
The Banks progress is also due to the hard work, dedication and
commitment of our management and staff, who have demonstrated
team work to achieve all that we have set out to do.
I also wish to express my gratitude to members of our Board for their
continued and invaluable guidance. I look forward to their support in
the coming year as we take Alliance Bank to the next level.
SNG SEOW WAH

Group Chief Executive Officer
13/6/12 9:56:37 PM
46
Calendar of Significant Events
Financial Calendar
for financial year ended 31 March 2012
Activities
Date
ANNOUNCEMENT OF RESULTS
First Financial Quarter ended 30 June 2011
Second Financial Quarter ended 30 September 2011
Third Financial Quarter ended 31 December 2011
Fourth Financial Quarter ended 31 March 2012
16 August 2011
16 November 2011
21 February 2012
23 May 2012
DIVIDEND
First Interim Dividend of 5.6 sen per share, tax exempt under
the single tier tax system
Declaration
Entitlement
Payment
Second Interim Dividend of 7.7 sen per share, tax exempt under
the single tier tax system
Declaration
Entitlement
Payment
26 July 2011
12 August 2011
26 August 2011
20 January 2012
15 February 2012
28 February 2012
ISSUE OF 2012 ANNUAL REPORT
26 June 2012
46th ANNUAL GENERAL MEETING
20 July 2012
12/6/12 4:54:23 PM
2012 ANNUAL REPORT
47
Corporate Calendar
for financial year ended 31 March 2012
12 May 2011
Alliance Bank Supports Chinese Independent
Schools through Card Programme
In conjunction with Teachers Day, the Bank presented hampers to
teachers of selected schools under its Alliance Chinese Independent
Schools Affinity Card Programme. Since 2005, the Bank has
contributed over RM600,000 via the Card Programme to support
ongoing activities at selected schools. The Card Programme is a
micro-donation facility based on a donate-as-you-spend concept
where one Timeless Bonus Point (TBP) is awarded for every Ringgit
spent. The TBP is then converted into cash value and auto-credited to
any of the selected schools nationwide.
AFG Staff Receive Professional Accreditation by

IBBM
With support from the Groups Organisational Development and
Learning, 18 staff from various departments graduated with Certified
Credit Professional and Pasaran Kewangan Malaysia Certificate
accredited by Institut Bank-Bank Malaysia. They are now certified
credit professionals in their respective portfolios.
1 June 2011
Alliance Islamic Bank Launches Shariah-Compliant
Alliance Family Takaful Investment-Linked Plan
The Banks Islamic Banking arm joined hands with Takaful Ikhlas
Sdn Bhd and FWU Malaysia Sdn Bhd to launch the Alliance Family
Takaful Investment-Linked Plan, a Shariah-compliant family takaful
investment-linked product. The savings and investment plan comes
with family takaful coverage for customers who wish to plan for their
future financial needs.
23 May 2011
Alliance Bank Goes Green at GTower
The Bank expanded its branch footprint in the heart of Kuala Lumpur
with the latest addition at GTower, Malaysias first internationallycertified Green Building. The 4,400 sq.ft. functionally-designed branch
offers a full range of Consumer, SME and Islamic Banking facilities,
complete with a 24-hour e-Banking lobby, a Privilege Banking Centre
with safe deposit box facility and a Share Trading Centre.
17 June 2011
28 May 2011
AFG Annual Dinner 2011
The Groups Board of Directors, senior management committee and
staff dressed to the theme of Legendary Heroes, and enjoyed an
evening of entertainment and fun at the Groups event of the year.
Alliance Bank Presents 2011 Women Entrepreneurs

Forum
Alliance SME Banking, in partnership with Money Compass, organised
a one-day forum to reach out to aspiring women entrepreneurs and
to extend the necessary support and assistance to empower women
towards successful entrepreneurship. It was well-attended by
women SME entrepreneurs, leaders from women and entrepreneur
associations, and corporate leaders from the IT and banking sectors.
12/6/12 4:54:23 PM
48
Corporate Calendar (contd)
6 July 2011
8 August 2011
Employees Town Hall and AFG Spirit Awards 2011
You:nique Prepaid Card Clinches Three Regional

Awards at the 2011 Promotion Marketing Awards of
Asia (PMAA) Dragons of Asia Awards
Group Chief Executive Officer and segment heads shared pivotal

key messages of how the Bank is moving forward, with over 1,500
staff from the central, northern and southern regions. At the West
Malaysias Town Hall, 13 staff were awarded the AFG Spirit Awards
2011 for their commitment and dedication in carrying out their duties.
Four other recipients were earlier honoured at the Town Hall in East
Malaysia.
13 July 2011
The You:nique Prepaid Card was awarded the following:

Best Use of the Internet in a Promotion Marketing Campaign
(Silver)
Best Product Launch or Re-Launch (Merit)
Best Small Budget Campaign (Merit)
These awards attested to the Banks creative efforts in promoting
financial planning in a non-conventional way to engage a larger
audience.
Media Briefing on APEA 2011

The Bank held a media briefing to announce its latest initiative to
support small and medium enterprises (SMEs), and to recognise
the efforts by local entrepreneurs, by becoming the official banking
partner of the prestigious Asia Pacific Entrepreneurship Awards
2011 (APEA 2011) organised by Enterprise Asia. The Awards is a
regional programme that recognises outstanding entrepreneurs
across Asia. It honours men and women who demonstrate exemplary
enterprising spirit and who are committed to social responsibilities
that come with business leadership.
19 August 2011
Going for Initial Public Offering (IPO) Seminar
Alliance Investment Bank Berhad (AIBB) and industry practitioners
delivered a half-day session to over 400 aspiring companies on what
it takes for a company to list on Bursa Securities, the benefits and
drawbacks of being listed, as well as the market outlook for the year.
The seminar was organised by the Chinese Chamber of Commerce
and Industry of Kuala Lumpur and Selangor, and Associated Chinese
Chambers of Commerce and Industry of Malaysia Socio-Economic
Research Centre, and co-organised by the Klang Chinese Chamber of
Commerce and Industry.
Fundsupermart.com Recommended Unit Trusts

Awards 2011/12
Alliance Asian Bond Fund and Alliance Global Equities, two of Alliance
Investment Management Berhads funds, were among investments
recommended by Fundsupermart.com for their exemplary track
records.
6 September 2011
Alliance Bank ilovegolf Tournament 2011
For the second year, Alliance Bank SME Banking sponsored a golf
tournament that took place at some of the countrys best golf courses.
The 10-leg tournament teed off on 15 September 2011 at The Mines
Resort & Golf Club in Kuala Lumpur and ended on 15 December 2011
at the Sutera Harbour Golf & Country Club in Sabah.
12/6/12 4:54:27 PM
2012 ANNUAL REPORT
49
20 September 2011
12 October 2011
The Edge-Bursa Malaysia KL Rat Race 2011
Malaysia Effie Awards 2011
The Group took part for the first time in The Edge-Bursa Malaysia
KL Rat Race 2011. Representing the Group were Group Chief
Executive Officer Mr Sng Seow Wah and Group Chief Internal Auditor
Ms Leong Sow Yoke who participated in the CEO Category, while
Encik Rafidz Rasiddi (Alliance Investment Bank Berhad), Mr Simon
Lee (Group Company Secretarial), Mr Yeo Chin Tiong and Mr Vijayan
Doraisamy from Financial Markets and Ms Shirley Chung Sen Kuai
from Group Special Assets took part in the Seniors Category. The
Groups participation was in support of Bursa Securities corporate
social responsibility programme and to create awareness of the less
fortunate.
Alliance Bank Credit Card, You:niques Mohd. Khairuddin, Your Mum

Is Nagging You campaign won the Silver Award at the Malaysia Effie
Awards 2011. The Bank was the only banking institution to walk away
with this coveted award. The prestigious Effie Awards is the only global
award that honours achievement in meeting and exceeding marketing
communications objectives, with a focus on effective campaigns.
28 October 2011
7 October 2011
Press Conference on Multi-Purpose Insurans Run
2012
The Bank participated in the press conference of the inaugural
Multi-Purpose Insurance Bhd Run 2012. The Bank also donated
RM100 each to 30 participating children from Yayasan Sunbeam
Home via its Alliance Save Pendidikan account in conjunction with
the Run.
8 & 9 October 2011
Press Conference on Youth Entrepreneurship and

Business Opportunities in Economic Transformation
Programme Conference
The Bank, in collaboration with the Chinese Chamber of Commerce
and Industry of Kuala Lumpur and Selangor, held a press conference
to announce the hosting of the Youth Entrepreneurship and Business
Opportunities in Economic Transformation Programme (ETP). The
event was co-organised by the Klang Chinese Chamber of Commerce
and Industry and Socio-Economic Research Centre, and supported
by the Associated Chinese Chambers of Commerce and Industry
of Malaysia, eight major Chinese youth organisations, Branding
Association of Malaysia, Malaysian Retailers Association and SMI
Association of Malaysia. The conference topics included innovative
business opportunities and technical education for youths, and
business opportunities for retail chains under the ETP.
AFG Treasure Hunt 2011

The annual AFG Treasure Hunt 2011 attracted over 600 staff in 152
cars from Klang Valley, northern and southern regions. Flagged off at
the head office in Kuala Lumpur, the hunt ended at Bukit Gambang
Resort City, Kuantan, Pahang, where treasures comprising daily
food essentials were donated to Rapha Childrens Home, Pusat
Jagaan Kanak-Kanak Terencat Akal Kuantan and Rumah Orang-Orang
Tua Indah.
12/6/12 4:54:30 PM
50
Corporate Calendar (contd)
6 December 2011
16 January 2012
Employees Town Hall
Alliance Bank Says THANK YOU to Customers
Group Chief Executive Officer shared the Groups financial performance

and the Banks outlook with 1,400 staff from Klang Valley, northern
and southern regions with the theme to be The Best Customer
Service Bank in Malaysia. Alliance bankers were called upon to
be customer-focused, deliver quality and professional service, and
to serve from the heart. A similar town hall was also held in East
Malaysia on 3 December 2011.
The Bank invited 600 clients of Consumer Banking, SME Banking,

Wholesale Banking, Financial Markets and Alliance Investment Bank
Berhad to an eight-course Chinese dinner at the Grand Ballroom,
Sime Darby Convention Centre in Kuala Lumpur, in appreciation of
their support. In addition to dinner, the Bank also invited two wellestablished market analysts and a renowned feng shui expert to
present their views on the market outlook.
8 December 2011
Malaysian Corporate Governance Index 2011
The Group was listed as one of the top 100 public-listed companies
in the Malaysian Corporate Governance (MCG) Index 2011 by the
Minority Shareholder Watchdog Group. The annual MCG Index creates
awareness and encourages best corporate governance practices
among public-listed companies in Malaysia.
Alliance Bank Honoured as Friend of SMEs
17 January 2012
Alliance Bank Launches Development Programme
to Skill Up Its Managers
The Bank embarked on its inaugural Managerial Development
Programme for 25 selected employees from different business and
support units nationwide. The six-month intensive management
training programme, launched by the Group Chief Executive Officer,
was initiated in response to feedback from the Banks Employee
Engagement Survey 2011.
The Bank was acclaimed a friend of small and medium enterprises

(SME) for the second consecutive year by the SMI Association of
Malaysia. The Bank was presented with the Sahabat SME Award
2011 at the 10th SME Recognition Award ceremony for excellent
performance in nurturing the growth of the SME market through
innovative financial solutions.
18 December 2011
Alliance Bank Among Malaysias Top 100 Leading
Graduate Employers in 2011
Alliance Bank was ranked 81st among 100 top employers of choice in
the 100 Leading Graduate Employers in Malaysia for Year 2011 survey.
More than 12,000 students, graduates and young professionals in
Malaysia participated in the survey.
12/6/12 4:54:31 PM
2012 ANNUAL REPORT
51
22 February 2012
8 March 2012
Alliance Bank Hosts First Efma Retail Banking

Advisory Council Meeting in Malaysia
Alliance Bank Launches MyBusiness Platinum Card
The Bank hosted the first European Financial Marketing Association

(Efma) Retail Banking Advisory Council Meeting in Malaysia. Over 40
leading retail bankers from local and regional banks attended the
one-day closed door meeting to exchange ideas and experience on
multi-channel banking and leveraging different channels to deliver
better service to customers.
The Bank launched the Alliance Bank MyBusiness Platinum Card

which provides small and medium enterprise business owners with
an additional platform to brand their company by having it on the
card face. The Bank complements this service by extending the full
benefits and privileges of a Platinum card to the cardmember, and
an attractive cash back feature of up to 1.25% on total monthly card
expenditure. It also allows cardmembers the option of either a longer
interest-free repayment period or cash rebate on interest paid.
24 February 2012
Alliance Bank Recognised for Excellence in SME
Banking by IDC Financial Insights
The Bank was recognised for its Excellence in SME Banking by IDC
Financial Insights at the annual 7th Financial Insights Innovation Award
(FIIA) ceremony held during the Asian Financial Services Congress in
Singapore. The Banks submission was among 172 entries received
from leading banks across the Asia Pacific (excluding Japan) region.
25 February 2012
Seminar on National Key Economic Areas
Wholesale and Retail, Greater Kuala Lumpur and
Financial Services
Alliance Bank collaborated with the Chinese Chamber of Commerce
& Industry of Kuala Lumpur and Selangor, and the Socio-Economic
Research Centre to present a seminar on three of the National Key
Economic Areas (NKEA), namely Wholesale and Retail, Greater Kuala
Lumpur, and Financial Services. Over 200 participants attended the
half-day talk at Wisma Chinese Chamber of Commerce in Kuala
Lumpur. The NKEA seminar featured speakers from the Performance
Management and Delivery Unit (PEMANDU) under the Prime Ministers
Department. There was a lively exchange between panelists and
audience on issues close to the SME sector such as financing and
business opportunities from the Economic Transformation Programme
and Government Transformation Plan.
28 March 2012
Alliance Bank Inks Bancassurance Arrangement
with AIA
The Bank formalised an eight-year Bancassurance agreement
with AIA Berhad (AIA) to provide the best-of-breed life insurance
protection and savings products to its customers. The move deepens
cooperation between the two partners following a joint venture to
offer Takaful insurance in January 2011. Under this Bancassurance
arrangement, Alliance Bank will sell, market and promote conventional
life insurance products developed by AIA via the Banks distribution
channels.
12/6/12 4:54:37 PM
ELEV
13/6/12 3:40:44 PM
TING
CAPABILITIES
A motivated and united team with the right values holds the
key to a high performance organisation.
13/6/12 3:40:48 PM
54
Statement on Corporate Governance
The Board of Directors of Alliance Financial Group Berhad has adopted

the best practice of corporate governance in all areas of its activities
with the objective of achieving business prosperity and corporate
accountability. The ultimate objective is to safeguard the interests
of all stakeholders and to enhance shareholders value. The Board
is committed to ensure that the Company is in compliance with the
guidelines on Best Practices in Corporate Governance set out in the
Malaysian Code on Corporate Governance (Revised 2007) and Bank
Negara Malaysia (BNM) Guidelines on Corporate Governance for
Licensed Institutions.
The principal duties and responsibilities of the Board are:
1. The Board of Directors
formulating the business direction and objectives of

the Group;
reviewing, adopting and approving the Groups annual

budgets, strategic plans, key operational initiatives,
major investments and funding decisions;
overseeing the conduct of business of the Group;
reviewing the risk management processes within the

Group;
assuming responsibility in succession planning within

the Group; and
reviewing the adequacy and integrity of internal

control systems and management information
systems to ensure compliance with relevant laws,
rules, regulations, directives and guidelines.
1.1 Composition
The Board comprises nine members, who are all
Non-Executive Directors, of whom six are Independent
Directors. The Board is constituted of individuals of high
calibre and diverse experience and collectively has the
necessary skills and qualifications to effectively manage
the Company and to discharge the responsibilities of the
Board. The current Board members are all very experienced
in the management of businesses and in terms of academic
background have skills in the areas of law, banking, finance,
accounting, economic, information technology and human
capital.
The presence of a majority of Independent Non-Executive
Directors also provides the necessary checks and balances
to ensure that the interests of all shareholders and the
general public are given due consideration in the decisionmaking process.
A brief profile of each Director is presented on pages 14 to
19 of this Annual Report.
1.2 Duties and Responsibilities
The Board is led by the Chairman, Datuk Oh Chong Peng,
who is an Independent Non-Executive Director.
The Chairman receives strong and positive support from
the Group Company Secretary in discharging his duties
and responsibilities to ensure the effective functioning of
the Board.
There are matters specifically reserved for the Boards
decision to ensure that the direction and control of the
Group are firmly in hand. The day-to-day conduct of the
Groups business is delegated to the employees subject
to the authority limits given. The Board is ultimately
responsible for the overall performance of the Company
and of the Group.
The Board also assumes various functions and

responsibilities that are required of them by regulatory
authorities, as specified in guidelines and directives
issued from time to time.
1.3 Board Charter
The Board has adopted a charter which was designed to
provide Directors and Officers with greater clarity regarding
the role of the Board, the requirements of Directors in
carrying out their role and discharging their duties to
the Company, and the Boards operating practices. The
charter will be reviewed from time to time and updated
in accordance with the needs of the Company and any
new regulations that may have an impact on the role and
responsibilities of the Board.
1.4 Directors Code of Ethics
The Directors in the Group adhere to the Code of Ethics
as set out in the Bank Negara Malaysias BNM/GP7 - Part
1 Code of Ethics: Guidelines on the Code of Conduct for
Directors, Officers and Employees in the Banking Industry
and the Code of Ethics for Company Directors established
by the Companies Commission of Malaysia.
1.5 Board Meetings
The Board meets on a regular basis to review business
performance, strategies, business plans and significant
policies as well as to consider business and other
proposals which require the Boards approval. Ad-hoc
Board meetings, where necessary, are held to deliberate
on corporate proposals or urgent issues which require the
Boards consideration between scheduled meetings.
12/6/12 4:54:43 PM
2012 ANNUAL REPORT
The Board met eight times during the financial year ended
31 March 2012 (FY2012). Details of each Directors
attendance during the financial year are as follows:
Name of Director
Attendance
Datuk Oh Chong Peng (Chairman)
8/8
8/8
8/8
Tan Yuen Fah
8/8
7/8
Kung Beng Hong
8/8
Ou Shian Waei
8/8
Sng Seow Wah
8/8
Phoon Siew Heng

6/8
Lee Ah Boon
N/A
1.6 Access to Information

Board members are provided with relevant proposal
papers and supporting documents at least three clear days
before the relevant Board and Board Committee meetings
to provide sufficient time for the Directors to review,
consider and obtain further information, where required,
for deliberation at meetings. Urgent proposals can be
presented less than three clear days subject to approval of
the Chairman. Senior management and advisers are invited
to attend Board meetings, where necessary, to provide
additional information and insights on the relevant agenda
items tabled at Board meetings.
The Directors have full access to the services of the
Company Secretary, whose role includes ensuring that
Board procedures, applicable rules and regulations are
complied with.
Every Director has the right to resources, whenever
necessary and reasonable, for the performance of his duties
at the cost of the Company. Directors may seek external
independent professional advice at the expense of the
Company, to assist them in making well-informed decisions
whether as a full Board or in their individual capacity.
55
1.7 Appointment and Re-election of Directors

Pursuant to the guidelines issued by BNM, the appointment
of new Directors and re-appointment of Directors upon the
expiry of their respective tenure of office as approved by
BNM, are subject to the prior approval of BNM.
Any proposed appointment of new Board members
and proposed re-appointment will be assessed by the
Nomination Committee. The Nomination Committee will,
upon its assessment, submit its recommendation to the
Board for approval subject to BNMs consent.
Upon appointment, new Directors are advised of their
legal and statutory responsibilities. All Directors are also
regularly being updated on new requirements affecting
their responsibility and are constantly reminded of their
obligations.
In accordance with the Articles of Association of the
Company, newly appointed Directors shall hold office only
until the next Annual General Meeting (AGM), and shall then
be eligible for re-election. Additionally, one-third (1/3) of
the remaining existing Directors shall retire from office at
each AGM and be eligible to offer themselves for re-election
provided always that all Directors shall retire from office at
least once every three years.
A Director of the Company who is over the age of 70 years
will retire at the AGM and may be re-appointed pursuant to
Section 129 of the Companies Act, 1965.
As the capacity, energy and enthusiasm of a Director is
not necessarily linked to age, it is deemed not appropriate
to prescribe age limits for the retirement of directors. The
Board believes in having healthy mix of age and experience
and therefore does not prescribe a minimum or maximum
age limit for its Board members apart from what is laid
down under Section 129 of the Companies Act, 1965.
The Board had adopted the policy where Non-Executive
Independent Directors after having served for 12 years will
not be considered for further re-appointment.
12/6/12 4:54:43 PM
56
Statement on Corporate Governance (contd)
1.8 Directors Training

The Board places the responsibility for training of directors
on the Nomination Committee which on a continuous basis,
evaluates and determines the training needs of Directors.
As at 31 March 2012, all the Directors have completed the
Mandatory Accreditation Programme and pursuant to the
requirement of Bursa Securities, they have attended various
training programmes during the financial year.
The Company has in place a Directors Orientation
Programme for newly appointed Directors to familiarise
themselves with the Groups business operations. The
Directors are provided with the opportunity for relevant
training programmes on an ongoing basis on areas relating
to the banking and financial industry to keep themselves
abreast with the latest developments in the marketplace
including the eight-day Financial Institutions Directors
Education (FIDE) Programme which promotes high-impact
Boards by strengthening Board competencies in dealing
with corporate governance, risk management and strategic
issues faced by the financial services industry.
During the financial year, all the Directors have attended
seminars, conferences and courses on various topics
covering accounting, tax, corporate governance, finance,
management and risk management. Some of the seminars,
conferences and courses attended by Directors are:
Advanced Corporate Tax Planning
Improving Corporate Governance in Malaysian Capital

Markets The Role of the Audit Committee
Corporate Governance Blueprint 2011 Towards

Excellence In Corporate Governance
Controversies on Financial Reporting Practices in

Malaysia An Educational Perspective
Reviewing the Risk and Control on the Quality of

Financial Statement
Malaysian Competition Act
First Asian Central Banks Watchers Conference

Promoting Financial and Monetary Stability at a Time
of Transition
Scrutinising Financial Statement Fraud and Detection

Of Red Flags For Directors and Officers Of PLCs And
Government Regulatory Agencies
Strategic ALM & Capital Adequacy
1.9 Board Committees

The Board has established various Board Committees to
assist and complement the Board in the execution of its
responsibilities. Each Board Committee operates within its
terms of reference, which clearly define its functions and
authority. The Board Committees of the Company are as
follows:
a)
Audit Committee
The Terms of Reference and the composition of the
Audit Committee are presented in the Audit Committee
Report on pages 65 to 69 of this Annual Report.
b)
Nomination Committee
Budget Seminar
FIDE Programme : Board IT Governance & Risk

Management
FIDE Programme : Board Risk Management Committee

Programme Managing Risks in Banks
FIDE programme : Insurance Insights Programme
The salient Terms of Reference of the Nomination

Committee are as follows:
FIDE Programme : Banking Insights
Operational Risk Management
Introduction to Actuarial Liability Provisioning and

Introduction to Risk Based Capital
Italian Insurance Market Overview
to establish minimum requirements for the Board

i.e. required mix of skills, experience, qualification
and other core competencies required of a
director. The Committee is also responsible for
establishing minimum requirements for the Chief
Executive Officer (CEO). The requirements and
criteria should be approved by the full Board;
State of the Market Using Business Intelligence to

optimise Profitability in a Challenging Market
Catastrophic Modeling and the Tools available in the

market today
Solvency II A non-technical Strategic Overview and

Potential Relevance to Asia
to recommend and assess the nominees for

directorship, Board committee members as well
as nominees for the CEO. This includes assessing
directors for reappointment, before an application
for approval is submitted to BNM. The actual
decision as to who shall be nominated should be
the responsibility of the full Board;
ICLIF Leadership & Governance Conference
The Nomination Committee reviews the existing mix

of skills, experience, size, effectiveness of the Board,
Board Committees and contribution of each individual
Director. It also considers and recommends to the
Board, candidates for directorships.
12/6/12 4:54:43 PM
2012 ANNUAL REPORT
to recommend to the Board the removal of a

Director/CEO from the Board/Management if the
Director/CEO is ineffective, errant and negligent
in discharging his responsibilities;
to establish a mechanism for the formal

assessment on the effectiveness of the Board as
a whole and the contribution of each Director to
the effectiveness of the Board, the contribution
of the Boards various committees and the
performance of the CEO and other key senior
management officers. Annual assessment is
conducted based on an objective performance
criterion. Such performance criteria are approved
by the full Board;
to ensure that all Directors continue to receive

appropriate training in order to keep abreast with
the latest development in the industry;
to oversee the appointment, management

succession planning and performance evaluation
of key senior management officers;
The Nomination Committee has also assessed the

independence of Independent Directors and the fitness
and propriety of the Directors.
to oversee the overall composition of the Board,

in terms of the appropriate size and skills,
and the balance between Executive Directors,
Non-Executive Directors and Independent
Directors through annual review;
to recommend to the Board the removal of

key senior management officers if they are
ineffective, errant and negligent in discharging
their responsibilities; and
to assess, on an annual basis, to ensure that the
Directors and key senior management officers
are not disqualified under Section 56 of the
Banking and Financial Institutions Act, 1989.
The Nomination Committee annually assesses

the effectiveness of the Board as a whole and the
contribution of each individual Director by way of a
set of customised self-assessment questionnaires.
In addition to the self-assessment by Directors, each
individual Directors performance will be assessed by
the Board Chairman. The results of the self-assessment
by Directors and assessment of individual Directors
by the Board Chairman are compiled by the Group
Company Secretary and tabled to the Nomination
Committee and Board for deliberation.
57
The Nomination Committee comprises entirely of

Non-Executive Directors with the majority being
independent. In FY2012, a total of four meetings were
held by the Nomination Committee. The members
of the Nomination Committee and the details of
Committee Members
Attendance
4/4
4/4
3/4
4/4
Kung Beng Hong

(Appointed on 13 March 2012)
1/1
Phoon Siew Heng

3/4
Lee Ah Boon
c)
N/A
Remuneration Committee
The Remuneration Committee reviews and makes
recommendations to the Board on the remuneration
package of Non-Executive Directors. The reviews
cover all aspects of remuneration, including but not
limited to Directors fees, allowances and benefits-inkind based on the level of responsibilities undertaken
by the particular Director concerned.
The salient Terms of Reference of the Remuneration
Committee are as follows:
Arising from the annual review, the Nomination

Committee was satisfied that the current size
and composition of the Board is appropriate and
well-balanced with the right mix of skills and that the
Board comprises individuals of calibre, credibility and
with necessary skills and qualifications to enable the
Board to discharge its responsibility effectively.
12/6/12 4:54:43 PM
58
The Remuneration Committee comprises of entirely

Non-Executive Directors with the majority being
independent. In FY2012, two meetings were held by
the Remuneration Committee. The members of the
Remuneration Committee and the details of attendance
during the financial year are as follows:
to recommend a framework of remuneration

for Directors, CEO and key senior management
officers of the Company for the full Boards
approval. The remuneration framework should
support the Companys culture, objectives and
strategy and should reflect the responsibility
and commitment, which goes with the Board
membership and responsibilities of the CEO and
senior management officers. There should be a
balance in determining the remuneration package,
which should be sufficient to attract and retain the
employees and/or directors of calibre, and yet not
excessive to the extent of the Companys funds
are used to subsidise the excessive remuneration.
This framework should cover all aspects of
remuneration including directors fees, salaries,
allowances, bonuses, options and benefits-inkind;
to provide oversight on remuneration matters of
operating subsidiaries and to recommend specific
remuneration packages for Executive Director(s)
and CEO. The remuneration package should
be structured such that it is competitive and
consistent with the Companys culture, objectives
and strategy. Salary scales drawn up should be
within the scope of the general business policy
and not be dependant on short-term performance
to avoid incentives for excessive risk-taking. As
for Non-Executive Directors and Independent
Directors, the level of remuneration should be
linked to their level of responsibilities undertaken
and contribution to the effective functioning of
the board. In addition, the remuneration of each
Board member may differ based on their level of
expertise, knowledge and experience;
to review annually the Group Policy on
remuneration of Non-Executive Directors of the
subsidiaries and to recommend the remuneration
of the Non-Executive Directors for the Boards
approval;
to approve new key senior management
appointments and remuneration package,
transfers and promotions of senior management
officers and assessing the performance of key
senior management officers of the Company; and
Committee Members
2/2
2/2
2/2
Ou Shian Waei
2/2
Kung Beng Hong
2/2
Phoon Siew Heng

to review and approve annual salary increment

and performance bonus for employees of the
Company.
Lee Ah Boon
d)
N/A

The Employees Share Participating Scheme
Committee (ESPS Committee) is a sub-committee of
the Remuneration Committee established to implement
and administer the AFG Employees Share Scheme
(ESS) in accordance with the Bye-Laws approved by
the shareholders of the Company on 28 August 2007.
The members of the ESPS Committee and the details of
Committee Members
Attendance
2/2
2/2
2/2
Ou Shian Waei
2/2
Kung Beng Hong
2/2
Phoon Siew Heng

1/2
Lee Ah Boon
Attendance
N/A
The minutes of all Board Committees are circulated to

the Board for notation.
12/6/12 4:54:43 PM
2012 ANNUAL REPORT
59
Non-Executive Directors are paid annual Directors fees and

sitting allowances for attending to Board/Board Committee
meetings. The members of Board Committees are also
paid allowances for additional responsibilities undertaken.
Directors of the Company who are employees within the
Group are remunerated separately in accordance with their
employment contracts.
1.10 Directors Remuneration

The objective of the Companys policy on Directors
remuneration is to attract and retain Directors needed to
steer the Company towards achieving its goal effectively. The
determination of the Non-Executive Directors remuneration
is a matter for the Board as a whole.
The level of remuneration of Non-Executive Directors is
linked to their level of responsibilities.
Details of the Companys Directors Remuneration (including

benefits-in-kind) for each Director in the Company and the
Group for FY2012 are set out below:
SUBSIDIARIES
COMPANY
ABMB
AIBB
AIS
AIMB
Salary,
Allowances,
Benefits-inkind and
Fees
others
RM000
RM000
Salary,
Allowances,
Benefits-inkind and
Fees
others
RM000
RM000
Salary,
Allowances,
Benefits-inkind and
Fees
others
RM000
RM000
Salary,
Allowances,
Benefits-inkind and
Fees
others
RM000
RM000
Salary,
Allowances,
Benefits-inkind and
Fees
others
RM000
RM000
Executive Directors
Company
Total
RM000
Group
Total
RM000
120
73
193
193
60
42
102
144
82
120
456
60
48
108
108
Tan Yuen Fah
60
37
97
72
38
207
Megat Dziauddin bin

Megat Mahmud
60
53
113
72
80
60
120
30
24
516
Kung Beng Hong
60
47
107
72
159
60
42
440
Ou Shian Waei
60
42
102
72
51
225
Sng Seow Wah
* 3,426
* 3,426
60
29
89
72
64
60
30
315
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total
540
371
911
504
3,900
300
88
120
30
24
5,886
Non-Executive Directors
Datuk Oh Chong Peng
(Chairman)
Phoon Siew Heng

Lee Ah Boon
* This includes the fair value of share options and share grants offered/awarded to Mr Sng Seow Wah under the Employees Share Scheme amounting to RM733,000.
ABMB: Alliance Bank Malaysia Berhad
AIBB: Alliance Investment Bank Berhad
AIS: Alliance Islamic Bank Berhad
AIMB: Alliance Investment Management Berhad
12/6/12 4:54:43 PM
60
The key features of the policy are:
2. Accountability and Audit

2.1 Financial Reporting
The annual financial statements and quarterly results are
reviewed by the Audit Committee and approved by the
Board of Directors for BNMs clearance prior to public
release. A statement by the Directors explaining the Boards
responsibility for preparing the annual financial statements
is set out on page 80 of this Annual Report.
a customer acceptance policy which requires, amongst

others, establishment of a business relationship only
after satisfactory verification and due diligence of a
new customer or persons acting on their behalf;
ongoing monitoring of transactions to detect unusual

and suspicious patterns of activity and intensified
monitoring for higher risk customers;
clear enunciation of the roles and responsibilities of

various persons within the Group, including the Board
of Directors;
requirement for reporting of suspicious transactions

and prohibition against disclosure of suspicious
transaction reports made;
co-operation with the Financial Intelligence Unit, BNM

and other regulatory authorities with no compromise
on confidentiality of customer information;
proper retention of records for the prescribed retention

period; and
ensuring staff awareness and training.
2.2 Risk Management Framework

A Risk Management report, which provides an overview
of the risk management framework within the Group, is
disclosed on pages 71 to 77 of this Annual Report.
2.3 Internal Control
A Statement on Internal Control, which provides an overview
of the state of internal control within the Group, is disclosed
on page 70 of this Annual Report.
2.4 Policy against Fraud
All employees are entrusted with the responsibility to stay
alert to risk of fraud and assist in the combat against fraud.
The Group has in place reporting procedures with regards
to fraud, robbery/burglary and including breach of the Code
of Ethics.
The standards expected by the Group are upheld and

reinforced by periodic training programmes on anti-money
laundering and counter-financing of terrorism.
2.6 Relationship with the Auditors
The Group also has in place a Whistleblower Policy which

is designed to provide an avenue for staff to report any
possible financial improprieties such as manipulation of
financial results, misappropriation of assets, intentional
circumvention of internal controls, inappropriate influence
on related party transactions by related parties, or other
improprieties. The Whistleblower Policy is also an avenue
for employees to raise concerns in relation to the specific
issues which are in the interest of integrity and justice, and
which fall outside the scope of other Group policies and
procedures.
2.5 Anti-Money Laundering and Counter-Financing of
Terrorism
The Anti-Money Laundering and Anti-Terrorism Financing
Act 2001 provides the legal framework to counter money
laundering and terrorism financing in reporting institutions.
In order to reduce the likelihood of any of the entities
within the Group becoming vehicles for money laundering,
terrorism financing and other unlawful activities, the
Group has a policy on anti-money laundering and counterfinancing of terrorism setting out the minimum standards
that are to be adopted and implemented by the entities
within the Group.
Through the Audit Committee, the Company has established

a formal and transparent relationship with the auditors,
both internal and external. The External Auditors are invited
to discuss the annual financial statements, their audit plan,
audit findings and other special matters that require the
Boards attention. The Audit Committee meets with the
External Auditors and Internal Auditors twice a year, without
the presence of the Management.
3.
The Board has adopted the best practices in corporate
governance in all its activities to ensure that we achieve
business prosperity for the benefit of all stakeholders. Whilst
we are committed to achieving our business and financial
goals in an ethical, responsible and sustainable manner, we
are also mindful of the need to fulfil our responsibilities to the
marketplace, workplace, community and the environment in
which we operate.
12/6/12 4:54:43 PM
2012 ANNUAL REPORT
4.
The objectives of the CDPP are:
Investor Relations and Shareholders

Communication
The Company acknowledges the importance of regular
communication with shareholders and investors. The Company
endeavours to maintain constant and effective communication
with shareholders through timely and comprehensive
announcements. The Board regards the AGM as an opportunity
to communicate directly with shareholders and encourages
attendance and participation. The notice of AGM is despatched
to shareholders, together with explanatory notes or circulars on
items of special business, at least 21 days prior to the meeting
date.
All correspondence to the Senior Independent Non-Executive

Director can be faxed to 03-2694 6200 or sent via e-mail to
[email protected], or by mail to the registered office of the
Company at 3rd Floor, Menara Multi-Purpose, Capital Square,
No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.
5.
Corporate Disclosure
The Corporate Disclosure Policies and Procedures for the
Group (CDPP) provides timely, consistent and fair disclosure
of corporate information to enable informed decisions by
investors.
a)
raising awareness of Directors, management and

employees on disclosure requirements and practices;
b)
providing guidance in disseminating corporate

information to, and in dealing with investors, analysts,
media representatives and the public; and
c)
ensuring compliance with the disclosure obligations under

the Main Market Listing Requirements of Bursa Securities
and other applicable laws.
The Group Company Secretary being the Corporate
Disclosure Manager (CDM), serves as the primary contact
person for matters referenced in the CDPP. He oversees
and co-ordinates disclosure of material information to
Bursa Securities. The CDM also ensures compliance
with the CDPP and undertakes reviews of any violations,
including assessment and implementation of appropriate
consequences and remedial action.
The Investor Relations team engages the financial community,

stakeholders and other key constituencies of the Group
to provide consistent, accurate, transparent and timely
information. Briefings for analysts are conducted every quarter
in conjunction with the release of the quarterly financial results
to provide consistent dialogue between the Groups Senior
Management and the investment community. During the last
12 months, the Group has participated at roadshows and
dialogues to share with the investment community the latest
updates and pertinent information on the Groups progress.
These platforms enabled the investment community to express
their views on the Groups performance and in turn, the Group
had the opportunity to manage investors expectations and
strengthen their understanding of the Group.
Shareholders, potential investors and members of
the public can access the Companys website at
www.alliancegroup.com.my for information of the Group.
They can also convey their concerns and queries to the
Senior Independent Non-Executive Director of the Company,
Dato Thomas Mun Lung Lee. The Senior Independent NonExecutive Director serves as the point of contact between the
Independent Directors and the Chairman on sensitive issues
and act as a designated contact to shareholders concerns
or queries that may be raised, as an alternative to the formal
channel of communication with shareholders.
61
Certain designated senior management staff of the Group

are authorised to communicate Group information to
the investing public. The authorised spokespersons are
regularly reminded of their responsibility to exercise
due diligence in making sure that the information to be
disseminated to the investing public is accurate, clear,
timely and complete, and that due care is observed when
responding to analysts, the media and the investing
public.
To take advantage of current information technology
to disseminate relevant information to the investing
public, all announcements released by the Company
are made accessible via the Companys website,
www.alliancegroup.com.my.
6.
Dealings in Securities
The Group has in place an internal procedure governing
dealings in securities by the Directors and employees to prevent
contravention of applicable rules and requirements, including
the provisions of the Main Market Listing Requirements of
Bursa Securities and insider trading laws.
Watch List and Restricted List are circulated regularly to
AIBB Directors and relevant employees reminding them to
refrain from dealing with relevant securities. Directors and
principal officers of the Group are also reminded on a quarterly
basis in relation to restriction in dealings in securities of the
Company during Closed Periods.
This Statement on Corporate Governance is made in accordance with

a resolution of the Board of Directors dated 30 May 2012.
12/6/12 4:54:44 PM
62
We are committed to run our business in a responsible and

sustainable manner that adds value for our stakeholders,
workplace, community and the environment. Corporate
Responsibility is an integral part of our strategy to become
The Best Customer Service Bank in Malaysia. To do this, we
leverage on our expertise and thought leadership to align our
Corporate Responsibility activities with our business. These
initiatives, in turn, are guided by the principles of accountability,
honesty, transparency, and sustainability, as well as Bursa Securities
corporate social responsibility framework.
Responsibility to the Marketplace

We continue to actively engage shareholders, investors and
customers to strengthen every aspect of our relationships with
them.
In line with the integrity and ethical conduct in all our business
dealings, the Group provides consistent, accurate, transparent and
timely information to our shareholders and investors. They receive
frequent reports from the Investor Relations team, the Financial
Markets team and Alliance Research to allow them to make decisions
based on the most up-to-date information. Announcements and
press releases are uploaded on our corporate websites for viewing
by our stakeholders and the public.
In addition, we regularly meet industry analysts to provide
information about the Groups performance that may be used
for public dissemination. The information presented at these
briefings is uploaded on the Groups corporate website at
www.alliancegroup.com.my/quarterlyresults.html to promote
accessibility of information. The Groups performance is presently
monitored by 17 international and local research houses, two more
than in the previous year. The Investor Relations team also engages
the Minority Shareholder Watchdog Group, inviting them to attend
our conferences and annual general meeting.
We are also committed to building long-term partnerships with our
customers by truly understanding their issues and concerns. This
enables us to enhance operations and to provide a complete range
of products and services to pre-empt their needs at different stages
of their life cycle and business cycle.
The Alliance Wealth Guide Quarterly Market Outlook under
Consumer Banking was launched in the second quarter of financial
year ended 31 March 2012 and features subject-matter experts who
share their views on the market outlook on a quarterly basis. The videos
are uploaded on www.alliancewealthguide.com.my for viewing by
our customers.
The Banks pro-active engagement with the small and medium
enterprises (SMEs) community was recognised abroad and at
home. The Bank won the coveted Excellence in SME Banking
honour at the 7th Financial Insights Innovation Award ceremony on
24 February 2012 held in conjunction with the Asian Financial
Services Congress. The Bank was recognised for its comprehensive
approach towards SME banking. It was one of two Malaysian banks
among the 10 winners from the Asia-Pacific region.
On the domestic front, the Bank was recognised as a friend

of SMEs for the second consecutive year for its innovative
financial solutions in nurturing the growth of SMEs. The Bank
was presented the Sahabat SME Award 2011 by SMI Association
of Malaysia at the 10th SME Recognition Award ceremony on
8 December 2011.
On 12 March 2012, the Bank introduced the Alliance Bank
MyBusiness Platinum Card which allows SME business owners to
brand their company on the card face.
The Bank was also actively involved in three seminars to skill-up
SMEs:
19 August 2011 Representatives from Alliance Investment
Bank Berhad were featured as principal speakers at the Going
for IPO seminar held at the Sime Darby Convention Centre in
Kuala Lumpur. This seminar aimed to guide SMEs on how to
get themselves listed and was promoted by the Associated
Chinese Chambers of Commerce & Industry of Malaysia, and
co-organised by the Chinese Chamber of Commerce and Industry
of Kuala Lumpur and Selangor, Associated Chinese Chambers
of Commerce & Industry of Malaysia Socio-Economic Research
Centre and Klang Chinese Chamber of Commerce and Industry.
21 September 2011 The Bank organised a Sun Tzu Art of
War seminar at the Mandarin Oriental Hotel in Kuala Lumpur
for aspiring entrepreneurs who were keen to learn how to apply
ancient military strategies for business today.
25 February 2012 - The Bank collaborated with the Chinese
Chamber of Commerce and Industry of Kuala Lumpur and
Selangor and Socio-Economic Research Centre to present a
seminar on three National Key Economic Areas Wholesale
and Retail, Greater Kuala Lumpur and Financial Services. Over
200 participants attended the half-day talk at Wisma Chinese
Chamber of Commerce in Kuala Lumpur. The seminar featured
speakers from the Performance Management & Delivery Unit
(PEMANDU) under the Prime Ministers Department that oversees
the implementation and progress of the national Economic
Transformation Programme and Government Transformation
Programme.
12/6/12 4:54:44 PM
2012 ANNUAL REPORT
63
Responsibility at the Workplace
Email for Ideas and Suggestions
The Alliance family is the most valuable asset that continues to drive
its success. We are committed to remain as an employer of choice
by providing a safe, healthy and conducive working environment for
our employees.
An email ID was set up specifically to solicit ideas and suggestions

from employees to find ways to further improve and/or streamline
processes. This inbox is accessed by the Group Chief Executive
Officer and managed by one of his key staff members.
Human capital investment is a strategic and integral part of the

Groups policies, financial commitment and business framework. Its
development is critical to our goal of being Malaysias Best Customer
Service Bank. We continue to invest in training and development
programmes that are aligned to the Groups business objectives
as well as to employees career development and professional
growth.
Employee Engagement Survey
We participate in salary and benefits surveys annually to ensure our

compensation package is competitive in the industry. In addition,
we continue to focus on talent development and career growth
opportunities to improve staff retention. We frequently engage
employees in open two-way communication via multiple channels
to seek views and feedback so that they can be served better with a
dedicated Group Human Resource team.
Development Programmes
The Group has a Talent Management Framework that provides
employees with comprehensive training programmes, skill
enhancement opportunities and career development options. In
January 2012, the Management Development Programme was
launched to groom young talents to take on future leadership
roles. This is a six-month structured leadership programme to
equip participants with essential skills to be effective managers. It
includes customised classroom and business simulation sessions,
as well as business projects. Each participant is assigned a mentor
from the senior management team of the Group to enhance their
learning experience.
This survey is conducted annually to seek employees views and

feedback on how the Group can enhance its employee value
proposition. The feedback is collected by an independent consultant,
and studied by the Group to draw up strategies for a more conducive
workplace and address areas of employees concern.
A Helping Hand
The Banks employees responded admirably yet again to help a
colleague in distress. In December 2011, a bank staff from Sabah
suffered a series of misfortunes. Co-workers quickly pitched in to
help her tide over the situation.
In recognition of our efforts to make our organisation A Great
Place to Work, we were recognised as one of 2011 Malaysias
Top 100 Leading Graduate Employers, and was listed as one of the
Top 100 Public Listed Companies of the 2011 Malaysian Corporate
Governance Index.
Responsibility to the Community

The Group gives back to the community in a variety of ways.
We continue to dedicate considerable resources to local
communities, promote education initiatives and encourage our
employees to volunteer their time and skills in such endeavours.
Our efforts are driven by activities and programmes that promote
sustainable economic development and self-sufficiency in line with
our mission, vision and core values.
Pulse Lunches
Financial Literacy Programme
The Group Chief Executive Officer and his senior management
team have scheduled lunches with employees from different
departments and branches from time to time to communicate
and help employees better understand the Groups strategies.
More importantly, this is a significant platform of communication
between senior management and employees to foster open two-way
communication, share feedback, and encourage employees to share
ideas.
Nationwide Town Halls
As financial management becomes increasingly important, we

now focus on financial literacy as the main pillar of our Corporate
Responsibility activities.
In July 2011, the Bank participated in Bank Negara Malaysias 2011
Annual Financial Education Workshops for Teachers and School
Children. Alliance Bank employees in Johor Bahru organised a
financial education workshop for 35 teachers at the Taman Molek
branch.
To ensure alignment of strategy and focus for the entire organisation,

as well as transparent communication between management and
employees, regular town hall sessions are held in both Peninsular
Malaysia and East Malaysia throughout the financial year under
review. The town hall sessions are an opportunity for management
to provide updates on the latest developments in the Group, and for
the staff to discuss their concerns and suggestions about improving
the organisation.
12/6/12 4:54:46 PM
64
Corporate Responsibility (contd)
We also launched a Financial Literacy Programme for young school

children in April 2012. This exciting programme called Money &
Math Challenge aims to teach and equip young Malaysians with
basic money skills such as saving regularly and spending wisely.
This programme also leverages on the Banks core financial services
and wealth management expertise.
Zakat
The Group fully supports Zakat contribution through Alliance Islamic
Bank Berhad (AIS), which carefully selects Shariah-compliant
and charitable causes that fit Zakat criteria. The contributions
were channelled through schools, higher education institutions,
healthcare centres and homes for the underprivileged. In 2011,
AIS donated Zakat funds to cover the cost of dialysis for kidney
patients who cannot afford such treatments. The treatments were
channeled through Islah Dialisis Sdn Bhd on behalf of AIS.
Empowering Women
We continued our support for the advancement of women in both
corporate and SME sectors, by hosting a forum themed Strive for
Success, Live in Balance. The event aimed to inspire women to take
up the challenge to become significant contributors to Malaysias
economic growth. It covered topics such as women in power,
success stories, motivation, self-alignment and lifestyle balance, as
well as prudent financial management for women entrepreneurs.
The forum featured women guest speakers from the SME sector,
and high-ranking women in the local corporate sector.
Responsibility to the Environment

We believe that every small step makes a difference towards
environmental sustainability.
While we place priority on investing in information technology
infrastructure to deliver the best service to our customers, we
continuously strive to reduce the overall energy usage to minimise
its impact on the environment. This we achieve by constantly
updating our network of servers and computers, implementing
virtualisation technologies, and consolidating our data centres.
These have resulted in overall reduction in energy consumption and
real estate footprint.
We also made it a priority to contract an IT-waste disposal specialist
to dispose obsolete machinery in compliance with processes
approved by the Department of Environment under the purview of
the Ministry of Natural Resources and Environment.
AIS employees often take time to serve as volunteers at organisations

supported by the Group by lending a helping hand or bringing festive
cheer to those living in underprivileged homes such as Raudhatul
Ikhwan Orphanage.
Supporting Non-profit Causes
The Group also continued to support the community and non-profit
organisations for the underprivileged.
12/6/12 4:54:47 PM
2012 ANNUAL REPORT
65
Audit Committee Report
Audit Committee
The Audit Committee comprises the following Directors:
Stephen Geh Sim Whye (Appointed as Chairman on 20 January 2012)

Chairman, Independent Non-Executive Director
Tan Yuen Fah (Re-designated as member on 20 January 2012)
Kung Beng Hong

Ou Shian Waei
Terms of Reference
1. Policy
It is the policy of the Company to establish an Audit Committee to
ensure that the internal and external audit functions are properly
conducted and that audit recommendations are being carried out
effectively.
2. Objectives
The objectives of this policy are:
c) the members of the Audit Committee shall elect a Chairman

from among themselves who shall be an Independent
Director; and
d) at least one member of the Audit Committee:
i) must be a member of the Malaysian Institute of
Accountants; or
ii) if he is not a member of the Malaysian Institute of
Accountants, he must have at least three years working
experience; and
a) to comply with the relevant regulatory and statutory

requirements on Audit Committee; and
aa) he must have passed the examinations specified

in Part I of the 1st Schedule of the Accountants Act
1967; or
b) to provide independent oversight of the Company and

subsidiaries financial reporting and internal control system
and ensuring checks and balances within the Company and
subsidiaries.
bb) he must be a member of one of the associations of

accountants specified in Part II of the 1st Schedule
of the Accountants Act 1967; or
3. Composition of the Audit Committee

The Audit Committee shall be appointed by the Directors which
shall fulfil the following requirements:
a) the Audit Committee must be composed of no fewer than
three members;
b) all the Audit Committee members must be Non-Executive
Directors, with a majority of them being Independent
Directors;
iii) fulfils such other requirements as prescribed or approved

by Bursa Malaysia Securities Berhad.
No alternate Director shall be appointed as a member of the
Audit Committee.
4. Secretary to the Audit Committee
The Company Secretary shall be the Secretary to the Audit
Committee.
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66
Audit Committee Report (contd)
5. Quorum
Two members of the Audit Committee shall constitute a quorum
at any meeting and majority of members present must be
Independent Directors to form a quorum.
f) To assess objectivity, performance and independence of the

External Auditors (for example by reviewing and assessing
the various relationships between the External Auditors and
the Company or any other entity);
g) To review:
6. Attendance at Meetings
with the External Auditors, the audit plan;
The Head of Group Internal Audit is invited to attend all
meetings of the Audit Committee.
with the External Auditors, their evaluation of the system

of internal controls;
The Head of Finance and the External Auditors are normally

invited to attend meetings as and when necessary.
with the External Auditors, their audit report;
Other Board members and employees may attend meetings

upon the invitation of the Audit Committee.
the assistance given by the Companys officers to the

External Auditors;
The Secretary of the Audit Committee shall provide the

necessary administrative and secretarial services for the
effective functioning of the Audit Committee. The minutes of
meetings are circulated to the Audit Committee Members and
to all other members of the Board.
the consolidated financial statements of the Company;

and
7. Frequency of Meetings
The Audit Committee shall meet at least four times a year.
However, the frequency of meetings would increase depending
on the scope of the audit activities and the number of audit
reports produced.
8. Functions of the Audit Committee
any related party transactions and conflict of interest

situation that may arise within the Group including any
transaction, procedures or course of conduct that raises
questions of management integrity;
h) To review the quarterly and year-end financial statements of
the Company, prior to the approval of the Board of Directors,
focusing particularly on:
any changes in accounting policies and practices;
significant adjustments arising from the audit;
The functions of the Audit Committee are as follows:
any other significant and unusual events;
a) To consider the appointment of the External Auditors, the

audit fee and any questions of resignation or dismissal
and whether there is reason (supported by grounds) to
believe that the External Auditors are not suitable for
re-appointment;
the going concern assumption; and

compliance with accounting standards and other legal
requirements;
b) To discuss with the External Auditors before the audit

commences, the nature and scope of the audit, and ensure
co-ordination where more than one audit firm is involved;
i) To discuss problems and reservations arising from the

interim and final audits, and any matter the External Auditors
may wish to discuss (in the absence of Management where
necessary);
c) To recommend the nomination of a person or persons as the

External Auditors;
j) To review the External Auditors Management letter and

Managements response;
d) To approve the provision of non-audit service by the External

Auditors;
k) To meet with the External Auditors without executive Board

members presence at least twice a year;
e) To ensure that there are proper checks and balances in place

so that the provision of non-audit services does not interfere
with the exercise of independent judgement of the External
Auditors;
l) To propose best practices on disclosure in financial results

and annual reports of the Company in line with the principles
set out in the Malaysian Code on Corporate Governance, other
applicable laws, rules, directives and guidelines;
12/6/12 4:54:49 PM
2012 ANNUAL REPORT
m) To review the effectiveness of internal controls and risk

management processes;
n) To do the following where an internal audit function exists:
review the adequacy of the scope, functions, competency
and resources of the internal audit function, and that it
has the necessary authority to carry out its work;
review the internal audit programme, processes, the
results of the internal audit programme, processes or
investigation undertaken and ensure that appropriate
actions are taken on the recommendations of the internal
audit function in a timely manner;
67
q) To verify the allocation of share options/share grants/

share save (where applicable) pursuant to the Companys
Employees Share Scheme at the end of each financial year
as being in compliance with the criteria of allocation pursuant
to the Employees Share Scheme and to issue a statement
verifying such allocation to be included in the annual report;
and
r) To consider and examine any other matters as defined by the
Board.
9. Authority of the Audit Committee
The Audit Committee is authorised by the Board to:
review any appraisal or assessment of the performance

of members of the internal audit function;
a) investigate any matter within the scope of the Audit

Committees duties;
approve any appointment or termination of senior staff

members of the internal audit function;
b) have full and unrestricted access to any information in the

Company;
take cognisance of resignations of internal audit staff

members and provide the resigning staff member an
opportunity to submit his reasons for resigning;
c) obtain independent professional advice or other advice,

whenever deemed necessary;
consider the major findings of internal investigations and

Managements responses;
d) make recommendations for improvements of operating

performance and management control arising from internal
and external audit recommendations;
establish an appropriate mechanism to address and

manage situations where there is a threat to the objectivity
of the internal audit; and
establish a mechanism to assess performance and
effectiveness of the internal audit function;
o) Where the internal audit function lacks the expertise needed
to perform the audit of specialised areas, external experts
may be engaged. However, the Audit Committee remains
responsible for ensuring that audit of specialised areas is
adequate;
p) In situations that external experts are engaged to carry out
review of specialised areas where internal audit is not or not
sufficiently proficient, the Audit Committee should ensure
that:
e) have the resources which are required to perform its duties;

f) have direct communication channels with the External
Auditors and person(s) carrying out the internal audit function
or activity, if any; and
g) be able to convene meetings with the External Auditors, the
Internal Auditors or both, excluding the attendance of other
directors and employees of the Company, whenever deemed
necessary.
The Chairman and/or members of the Audit Committee are
authorised by the Board to engage on a continuous basis with
senior management, the Chairman, the Chief Executive Officer,
the Head of Finance, the Head of Internal Audit and the External
Auditors in order to be kept informed of matters affecting the
Company.
terms and scope of the engagement, the working

arrangement with the internal auditors and reporting
requirements are clearly established; and
10. Reporting of Breaches to the Bursa Malaysia Securities

Berhad
if the External Auditors are engaged, the Audit Committee

is responsible for ensuring that such engagement does not
compromise the independence of the External Auditors in
their roles as statutory auditors of the Company;
Where the Audit Committee is of the view that a matter reported

by it to the Board of Directors has not been satisfactorily resolved
resulting in a breach of Bursa Malaysia Securities Berhads
Listing Requirements, the Audit Committee must promptly report
such matter to the Bursa Malaysia Securities Berhad.
12/6/12 4:54:49 PM
68
Audit Committee Report (contd)
Audit Committee Meetings held in the Financial

Year Ended 31 March 2012 (FY2012)
During the FY2012, a total of six Audit Committee meetings were
held. The details of attendance of the Committee members are as
follows:
Name of Committee Member
Attendance
6/6
Tan Yuen Fah
6/6
6/6
Kung Beng Hong
6/6
Ou Shian Waei
6/6
Summary of Activities
k) Reviewed with the Internal Auditors, the internal audit plan for
the FY2012;
l) Reviewed recurrent related party transactions entered into by
the Company and its subsidiaries;
m) Reviewed the Terms of Reference of Audit Committee;
n) Reviewed the Group Internal Audits Strategic Plan;
o) Reviewed the Group Internal Audit Charter;
p) Reviewed the Audit Risk Rating Methodology;
q) Reviewed the Summary of Fraud Cases reported to Bank Negara
Malaysia;
r) Reviewed the Internal Procedures for Related Party Transactions
and Recurrent Related Party Transactions;
The Audit Committee has during the FY2012 carried out the following
duties:
s) Met with the External Auditors without the presence of

Management twice during the year; and
a) Reviewed the quarterly results and made recommendations to

the Board for approval;
t) Met with the Internal Auditors without the presence of

Management twice during the year.
b) Reviewed with the External Auditors, the draft Audited Financial

Statements of the Company and the Group for the financial year
ended 31 March 2011;
Subsequent to the FY2012, the Audit Committee carried out the

following duties:
c) Reviewed with the External Auditors, their report on the Limited

Review of Half Year Financial Statements for the six months
period ended 30 September 2011;
d) Reviewed with the External Auditors, their management letter
together with Managements responses to the audit findings for
the financial year ended 31 March 2011;
a) Reviewed with the External Auditors, the draft Audited Financial

Statements of the Company and the Group for the FY2012;
b) Reviewed with the External Auditors, their management letter
together with Managements responses to the audit findings for
the FY2012;
c) Reviewed the non-audit services rendered by the External
Auditors;
e) Reviewed with the External Auditors, their audit plan for the
FY2012;
d) Considered the re-appointment of the External Auditors and their

audit fees for the financial year ending 31 March 2013;
f) Reviewed the non-audit services rendered by the External

Auditors;
e) Reviewed the allocation of share options and share grants

pursuant to the Employees Share Scheme of the Company for
2011 Grant;
g) Considered the re-appointment of the External Auditors and their

audit fees for the FY2012;
h) Reviewed the Statement on Internal Control, Audit Committee
Report and Risk Management Report for inclusion in the 2011
Annual Report;
i) Reviewed the allocation of share options and share grants
pursuant to the Employees Share Scheme of the Company for
2010 Grant;
f) Reviewed recurrent related party transactions entered into by

the Company and its subsidiaries;
g) Reviewed the Statement on Internal Control, Audit Committee
Report and Risk Management Report for inclusion in the 2012
Annual Report;
h) Reviewed the Terms of Reference of Audit Committee;
j) Reviewed the internal audit reports with Internal Auditors;
12/6/12 4:54:49 PM
2012 ANNUAL REPORT
i) Reviewed with the Internal Auditors, the internal audit plan for
the financial year ending 31 March 2013;
j) Reviewed the Audit Risk Rating Methodology;
k) Reviewed the Summary of Fraud Cases reported to Bank Negara
Malaysia;
l) Reviewed the Questionnaires for Annual Assessment of
Performance of the Audit Committee;
m) Met with the External Auditors without the presence of
Management; and
n) Met with the Internal Auditors without the presence of
Management.
Group Internal Audit Function

The internal audit function is undertaken by the Group Internal
Audit. The Group Internal Audits primary role is to assist the
Audit Committee to discharge its duties and responsibilities by
independently reviewing and reporting on the adequacy and
effectiveness of the system of internal controls that mitigate critical
risks.
69
Group Internal Audit adopts a risk-based approach that deploys

audit resources to focus on significant risk areas and thus, enhance
the effectiveness and efficiency of the audit function by prioritising
the audits of areas which have been assessed as having potentially
higher risks.
Group Internal Audit works collaboratively with Risk Management to
monitor the risk governance framework and the risk management
processes that are applied to ensure an acceptable level of risk
exposure which is consistent with the risk management policy of
the Group. The Internal Auditors also work closely with the External
Auditors to resolve any control issues raised by them to ensure that
significant issues are duly acted upon by Management.
The cost incurred for the Groups internal audit function during the
financial year amounted to RM5.0 million.
Statement on Employees Share Scheme (ESS)

The Audit Committee confirms that the share options and share
grants offered/awarded to eligible employees of the Company and
its subsidiaries pursuant to the ESS during the financial year under
review had been made in accordance with the criteria of allocation
pursuant to the Bye-Laws of the ESS.
The authority of the Group Internal Audit is provided in the Internal

Audit Charter, which formally documents the roles, duties and
responsibilities of the Internal Auditors. The Group Chief Internal
Auditor reports directly to the Audit Committee of the Group.
12/6/12 4:54:49 PM
70
Statement on Internal Control
Responsibility
System of Internal Control
The Board acknowledges its overall responsibility for the Groups

system of internal control and for reviewing its adequacy and
integrity. The system of internal control is designed to manage the
Groups risks within an acceptable risk profile, rather than eliminate
the risk of failure to achieve the policies and business objectives
of the Group. It can therefore only provide a reasonable but not
absolute assurance of effectiveness against material misstatement
of management and financial information or against financial losses
and fraud.
To ensure that a sound system of control is in place, the Board

has established primary processes in reviewing the adequacy and
integrity of the system of internal controls. The primary processes
include:
The Board regularly receives and reviews reports on internal control

and is of the view that the system of internal control that has been
instituted throughout the Group is sound and adequate to safeguard
the shareholders investments and the Groups assets.
The Group has instituted an on-going process for identifying,
evaluating and managing the significant risks faced by the Group
and this process includes updating the system of internal control
when there are changes to the business environment or regulatory
guidelines. The process is regularly reviewed by the Board and is
in accordance with the Statement on Internal Control: Guidance
for Directors of Public Listed Companies, issued by the Task Force
on Internal Control. The role of Management is to implement the
Boards policies, procedures and guidelines on risk and control to
identify and evaluate the risks faced and design, operate and monitor
a suitable system of internal control to manage these risks.
The Board has extended the responsibilities of the Audit Committee
(AC) to include the role of oversight on internal controls on behalf
of the Board, including identifying risk areas and communicating
critical risk issues to the Board. The AC is supported by an
independent Internal Audit function which reports directly to it.
The Internal Auditors have performed their duties with impartiality,
competency and due professional care.
Regular and comprehensive management reports are made

available to the Board on a monthly basis, covering financial
performance and key business indicators, which allow for effective
monitoring of significant variances between actual performance
against budgets and plans;
Clearly defined delegation of responsibilities to committees of the
Board and to Management including organisation structures and
appropriate authority levels;
Operational risk management framework, business continuity
management framework, code of conduct, human resource
policies and performance reward system to support business
objectives, risk management and the system of internal control;
Properly defined policies and procedures to control applications
and the environment of computer information systems;
Regular update of internal policies and procedures, to adapt to
changing risk profiles and address operational deficiencies;
Regular review of the business processes by the Groups internal
audit, to assess the effectiveness of the control environment and
highlight significant control gaps impacting the Group;
Documentation and periodic assessment of controls and processes
by all business and support units for managing key risks; and
Regular senior management meetings are held to review, identify,
discuss and resolve strategic, operational, financial and key
management issues.
Risk Management Framework
Review of the Statement by External Auditors
The Board, through its Group Risk Management Committee (GRMC)

provides oversight on risk management strategies, methodologies,
policies and guidelines, risk tolerance and other risk related matters
of the Group. Approval of risk policies by the Board is obtained
where necessitated by regulatory requirements. In addition, the
GRMC also oversees the functions of management committees such
as the Group Assets and Liabilities Management Committee and
Group Operational Risk Management Committee, which assume the
responsibility of monitoring specific areas of risks pertaining to the
Groups business activities and implement various risk management
policies and procedures.
As required by paragraph 15.23 of the Main Market Listing

Requirements of Bursa Malaysia Securities Berhad, the external
auditors have reviewed this Statement on Internal Control for the
financial year ended 31 March 2012 and have reported the results
of the review thereof to the Board.
Major risks arising from the Groups day-to-day activities in the

financial services industry comprise credit risk, liquidity risk, market
risk and operational risk. For more information on the risks and
relevant guidelines and policies, please refer to Note 43 under the
Financial Statements.
12/6/12 4:54:49 PM
2012 ANNUAL REPORT
71
Risk Management
Risk Management Philosophy
Integrated Risk Management Framework
Strong risk management culture to ensure returns that

commensurate with our financing and risk taking activities.
Proactive management of risk exposures within our risk
appetite by constantly fine tuning our risk management
approaches in line with the changing financial landscape.
The Groups Integrated Risk Management Framework (IRMF) sets

the fundamental elements to manage business and financial risks
on an integrated group-wide basis.
The IRMF supports a programme of action that is consistent with
industrys best practices to better position the Group to deal with
economic and business challenges. The main thrusts of the IRMF
are:
egy
trat
kS
Ris
k
at
log
y/
Consistent risk frameworks, policies and measurements for each type of

risk, across all lines of business i.e. enterprise-wide risk management.
Effective integration of risk policies and processes into business
decision-making.
Integration of risk strategy, risk organisation, risk processes and risk
methodology/tools.
ion
o
od
Risk Meth o l s
To
es
cess
Pro
Ris
IRMF
is
an
Risk Org
Risk Governance Framework
Board of Directors
Board Oversight Committees
Executive Committee
Group Risk Management

Committee
Group Audit Committee
Management Committees
Group Assets & Liabilities
Management Committee
Group Operational Risk

Management Committee
Risk Working Groups

Credit Risk Working Group
Product Working Group
14/6/12 4:37:24 PM
72
Risk Management (contd)
The Board of Directors, through the Group Risk Management

Committee (GRMC), is responsible for the overall risk oversight. This
includes reviewing and approving risk management policies, risk
appetite, risk exposures and limits, whilst ensuring the necessary
infrastructure and resources are in place.
Business units and risk management units are represented at the

respective committees/working groups, to reflect the joint ownership
of business and risk management responsibilities by both the risk
takers and risk managers.
GRMC is supported by specialised risk committees and risk working

groups to manage credit, market, liquidity, operational risks and
other key risks:
Credit Risk Working Group
Group Assets & Liabilities Management Committee
Group Operational Risk Management Committee
Product Working Group
Three Lines of Defence
Board of Directors
1st Line of Defence
2nd Line of Defence
3rd Line of Defence
Risk Taking Unit
Risk Control Unit
Independent Assurance
Line of Business
Group Risk Management

Department
Internal Audit
Business/Unit Risk Officers
Group Compliance
1st Line of Defence:
2nd Line of Defence:
3rd Line of Defence:
Comprises business units and

business risk units.
Comprises support functions

such as Group Risk Management
and Group Compliance.
Comprises Group Internal Audit.
The Business Units manage the

risk-reward trade-off contained
within the policies and guidelines
laid down by the Group.
Meanwhile, the Business Risk
Units are principally responsible
for monitoring and ensuring that
the conduct of their business
activities are carried out within
the approved policies, product
programme parameters and
business models.
Group Risk Management consists

of central risk units of credit,
market and operational risk and
specialised risk units of Islamic
and Investment Banking.
Provides independent
assessments of risk management
processes & infrastructure,
as well as the adequacy and
effectiveness of risk policies and
internal controls.
Responsibilities of Group Risk

Management include:
formulating risk management
framework and policies;
developing tools and
methodologies for
risk identification and
measurement;
performing independent risk
monitoring and reporting to the
GRMC and Board of Directors.
12/6/12 4:54:49 PM
2012 ANNUAL REPORT
Basel III
Capital Management
Basel II, Pillar 1 Capital Computation
The Group has adopted the following computational approval for
capital requirements under Pillar 1 of Bank Negara Malaysias (BNM)
guidelines:
Risk Weighted Capital Adequacy Framework for conventional
banks;
BNM Capital Adequacy Framework for Islamic Banks for Islamic
banks.
Risk Category
Approach
Credit Risk
Standardised Approach
Market Risk
Standardised Approach
Operational Risk
Basic Indicator Approach
Basel II, Pillar 2 Internal Capital Adequacy Assessment

Process (ICAAP)
In accordance with BNMs implementation of the Pillar 2 guidelines
Internal Capital Adequacy Assessment Process (ICAAP), the Group
had initiated its capital management planning process. The Group
had established its Capital Management Framework which covers
three dimensions i.e. strategy, process and infrastructure. The
objective is to ensure that the Group is adequately capitalised. The
Group promotes efficient use of capital by aligning business strategy,
risk appetite and expected returns with capital requirements.
In addition, the Group had formalised its Risk Appetite Statement
which aims to promote balanced, sustainable growth whilst
balancing the risk-reward trade-off. The Groups Risk Appetite
Statement expresses the quantum of risks that the Group is willing
to accept within its overall strategy. The focus areas are Strategic
and Reputational Risks with core components on capital adequacy,
liquidity, earnings volatility and asset quality.
Basel II, Pillar 3 Disclosure Requirements

Meanwhile, Pillar 3 of Basel II requires banks to provide consistent
and comprehensive disclosures for risk management practices, to
improve transparency in the financial markets and enhance market
discipline. This is in place since March 2011. Please refer to the
Basel II Pillar 3 Disclosure on page 207.
73
At the end of 2011, BNM had issued guidelines on the Implementation

of Basel III. BNMs guidelines were broadly in line with Basel standards
issued earlier in December 2010. Generally, the implementation of
the Basel III guidelines aims to strengthen the capital components
of the banking institution in order for them to be more resilient to
financial stress. The primary recommendations of Basel III include:
Higher minimum common equity and Tier-1 capital
Capital conservation and counter-cyclical buffer
Leverage ratio
Phasing out of certain capital instruments
The regulators have given these additional requirements, in addition
to Basel II, a phased-in transitional period of eight years from 2011
and full adoption in 2019. With regard to the proposed phased
de-recognition of Hybrid Tier-1 capital instruments, the Group does
not expect to be impacted as it does not have such instruments. The
Group had put in place processes to monitor the additional capital
requirements and Basel III liquidity ratios to ensure smooth transition
when these ratios are subsequently implemented by BNM.
Stress Testing
The Group carries out stress tests to estimate the potential impact of
extreme events on the Groups earnings, balance sheet and capital.
These stress tests also aim to gauge our sensitivity and vulnerability
to a sector, customer segment or product segment.
The Group has a stress testing framework which is applied to
identify:
Potential vulnerable risk areas of the Groups portfolio to stress
events. It examines an alternative future that could cause
problems to the Groups portfolio, thus enabling the Group to
assess the potential worst case scenarios and to be prepared to
face such challenges; and
Possible events or future changes in financial and economic
conditions that could have unfavourable effects on the Groups
ability to withstand such changes (particularly in relation to
the Groups capital and earnings capacity to absorb potentially
significant losses), thus enabling the Group to take steps to
manage these risks and conserve capital.
The Stress Test Working Group comprises representatives from
Group Risk, Business Risk, Group Finance and the Lines of Business.
The stress test parameters are formulated internally, taking into
account the economic scenario, plus current and forecasted key
indicators over a rolling one year period. The scenario, parameters
and eventual stress test results are presented to the Stress Test
Working Group and to the GRMC and Board for concurrence and
approval respectively.
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74
Stress tests are conducted on specific areas, line of business, entity

and group level to identify potential vulnerabilities brought about
by the events/scenarios identified. The results, including impact
on earnings and capital of the respective entities and group are
analysed and reported to the Stress Test Working Group, GRMC/
Board and BNM. Where necessary, proactive action is taken to
address weakness or vulnerability in the portfolio.
Credit Risk Management

Risk Definition:
Credit risk arises from the risk of financial loss as a result of
the failure of a customer or counter-party to discharge his
contractual obligations. The Groups credit risk exposures arise
primarily from its lending, investment and trading activities.
Credit Risk Management:

The Credit Risk Management Framework defines core policies to be
adopted by the credit granting programmes, products and business
models. The core policies, together with business level policies,
require that the Group underwrites risks that are within our risk
appetite. Regular credit reviews and business-specific early warning
frameworks ensure early detection of an imminent problem, thereby
improving the chances of remedial action or recovery.
The Group is a firm believer in building and enhancing the risk

frameworks and measurement tools to improve the capability of
managing credit risk. For example, the Group had rolled-out the
enhanced credit risk rating model/system for Wholesale Banking.
Besides that, the Group had established the Model Development
Framework which governs the model development process for
credit rating models. There is also close engagement between
business units, business risk managers and credit underwriters for
better alignment of credit policy changes and execution.
Market Risk Management

Risk Definition:
Market Risk is the risk of loss of earnings arising from changes
in interest rates, foreign exchange rates, equity prices,
commodity prices and in their implied volatilities.
Liquidity Risk takes two forms: funding liquidity risk and market
liquidity risk. Funding liquidity risk could arise if the Group is
unable to meet financial commitments when due. Market
liquidity risk arises if the Group is unable to unwind or offset its
position in the market within a short span of time, at or near the
previous market price, because of inadequate market depth or
disruptions to the marketplace.
Market Risk Management:

In the Groups Credit Risk Management, internal credit rating
scorecards/models or external credit rating are used as credit
evaluation tools to underwrite loans and invest in debt securities
as well as other credit processes. The scorecards and models are
validated regularly to ensure robustness and relevancy.
Business Risk Units monitor and report credit portfolio quality to
the Credit Risk Working Group and GRMC regularly. Such reporting
enables the identification of adverse credit trends, allowing corrective
measures, and re-alignment of risk strategies when necessary.
Functionally, Group Credit Risk Management is responsible for
managing credit risk, involving the following roles:
The Market Risk Management Framework outlines the core

policies and methodologies in managing market and liquidity risks.
The framework integrates the Groups internal policies with best
practices and relevant regulatory requirements. It is supplemented
by product specific policies that define the risk limits and parameters
for the product plus administrative procedures to handle and report
exceptions, risk monitoring and reporting.
Market risk, in the Banking Book, is supervised primarily by the
Group Assets & Liabilities Management Committee and executed
through Financial Markets whereas market risk in the Trading Book
is managed primarily by Financial Markets based on policies and
limits approved by the GRMC/Board.
formulate group-wide credit risk policies;

formulate risk control limits;
portfolio risk monitoring;
develop risk measurement methodology;
monitor and report credit exposures.
The bulk of the Groups treasury positions are held under the
Banking Book, which predominantly consists of Government bonds
with a smaller proportion of corporate bonds. The Trading Book is
relatively small, comprising mainly foreign exchange instruments,
which are primarily entered into to meet the needs of our wealth
management, commercial and corporate customers. The Bank also
engages in proprietary trading of bonds and interest rate swaps.
These activities are governed by risk limits such as cash limits,
sensitivity limits, loss limits and Value-at-Risk.
While the Group offers share financing, stockbroking and unit trust
management services to our retail customers, the treasury arm
did not undertake proprietary trading of equities and commodities
during the financial year ended 31 March 2012.
12/6/12 4:54:49 PM
2012 ANNUAL REPORT
75
Group Market Risk Management undertakes the following support

roles:
For the year under review, the Group had implemented the following
initiatives:
Formulating and reviewing the Groups market risk and asset

liability management frameworks and policies in accordance
with the Groups business direction and revised regulatory
requirements. This includes developing appropriate risk measures
and associated risk limits to manage market and liquidity risks.
Parallel monitoring and reporting of Basel III new capital and

liquidity standards in readiness of BNMs implementation of the
Basel III guidelines;
Carrying out independent monitoring of treasury activities on a

daily basis, including reporting and escalation of exceptions and
scheduled reporting of market and liquidity exposures to senior
management and Board of Directors.
Providing independent market-to-market valuation of treasury
positions and risk exposures, using rates obtained from
various sources, such as independent market price/information
providers.
Reviewing new product proposal papers (in conjunction with
other risk management units) to assess the market and liquidity
risks prior to launching new products.
Providing integrated risk management support activities
in conjunction with other Risk Management functions and
participating with other departments on joint assignments and
projects involving market risk, liquidity risk and asset-liability
management and stress testing exercises.
To assist in the management of market and liquidity risks, the Group
has invested and established the following risk infrastructure,
systems and tools and methodologies:
Establishing the internal capital adequacy process inclusive of the

Capital Management Framework and Risk Appetite Statement.

Risk Definition:
Operational risk is the risk of direct or indirect loss resulting from
inadequate or failed internal processes, people and systems or
from external events.
Operational Risk Management:
Management, escalation and reporting processes are instituted
through various management committees such as the Group
Operational Risk Management Committee and Group Risk
Management Committee as well as the Board. The responsibilities
of the committees and Board include the following:
Oversight and implementation of the Operational Risk
Management Frameworks;
Regular review of operational risks reports and profiles;
Address operational risk issues;
Risk
Exposures
Application
System
Tools / Methodologies
Ensure compliance with regulatory and internal requirements

including disclosures.
Trading
Book
Middle Office
Module
Treasury
System
Notional limits
The Group has adopted the following guiding principles for

operational risk management:
Sensitivity limit
(Price Value of a Basis Point)
Value-at-Risk
Stress testing
Back testing
Banking
Book
Assets &
Liabilities
Management
System
Sound risk management practices as outlined in the ORM

Framework, which is in accordance with Basel II and regulatory
guidelines; (For Islamic Banking, a separate ORM Framework has
been adopted to ensure compliance with the Islamic Financial
Services Board and relevant regulatory bodies.)
Board and Senior Management oversight;
Repricing gap analysis

Defined responsibilities for all staff;
Net interest income simulation
Economic value of equity
Established operational risk methodologies and processes

applied in the identification, assessment, measurement, control
and monitor of risks;
Liquidity gap analysis

Liquidity ratios & benchmarks
Liquidity stress test
Contingency funding plan
Regular dashboard reports submitted to Senior Management and

GRMC;
Continuous cultivation of an organisational culture that places
great emphasis on effective operational risk management and
adherence to sound operating controls.
12/6/12 4:54:50 PM
76
In line with the best practices for management of operational risks,

we employ several tools applicable across the Group, such as:
Internal audit plays its part in ensuring an independent assurance

of the implementation of the Framework through their regular audit
reviews and reports to the Group Audit Committee.
Risk and Control Self Assessment

Control Self Assessment
Key Risk Indicators
Loss Event Data Collection
In the past year, the Group had reviewed internal processes,

operational tools and indicators to foster improvements in process
and risk mitigation techniques. In addition, the approval process for
new products was improved to expedite the approval process whilst
balancing risk management.
The Group also ensures that the operational risk awareness

programme is conducted on an on-going basis. The training
programme includes emphasis on business continuity planning.
Meanwhile, scheduled business continuity and disaster recovery
exercises are conducted at periodic intervals.
The illustration below summarises how the operational risk tools complement one another.
12/6/12 4:54:50 PM
2012 ANNUAL REPORT
Islamic Risk Management

Risk Definition:
Shariah Compliance risk arises from the risk of failure to comply
with Shariah rules and principles determined by the relevant
Shariah advisory councils. The Shariah compliance in the
Islamic banking activities, inter alia, includes prohibition of Riba
(interest), Gharar (uncertainty) and Maisir (gambling).
Islamic Risk Management:
Islamic Risk Management focuses on managing Operational and
Shariah Compliance Risk, besides managing the credit and market
risks in Islamic Banking operations.
Under the Groups Islamic Operational Risk Management Framework,
including Shariah Governance Framework, the Group applies several
key measures, inter alia:
77
Deploying the Shariah Review and Audit Team to conduct

independent Shariah reviews regularly at various business lines
and reporting their findings to the Shariah Committee and Board.
The functions cover, amongst others, training, research and
regular assessment on Shariah compliance in the activities and
operations of the Group;
Reporting Shariah non-compliant incidents and issues to the
Shariah Committee and the Board. Any rectification should only
be carried out in consultation with the Shariah Committee and
any non-compliant income discovered during the review exercise
will be channeled to charities.
For the past year, concerted efforts were taken to improve the
Shariah review process to ensure compliance to Shariah principles
and requirements. In addition, the Group had commenced the
tracking of Shariah non-compliances data via the ORM system in
line with the risk assessment process for ICAAP. Regular training on
Shariah-related concepts and risk issues is conducted to heighten
the risk awareness within the Group.
Adopting sound risk management practices in accordance

with the Islamic Financial Services Board, and other relevant
regulatory guidelines;
Providing continuous Board and Senior Management oversight;
Emplacing qualified Shariah Committee members with
capabilities to deliberate on Shariah issues and provide sound
Shariah decisions;
Ensuring at least one representative from the Shariah Committee
in the Board of Directors;
Ensuring that the Group complies with Shariah principles in
relation to existing and new products, services and business
activities at all times, by having adequate mechanisms and
processes;
Establishing clear lines of roles and responsibilities;
Providing timely management reports;
Fostering a risk awareness culture through on-going staff
training;
12/6/12 4:54:50 PM
78
Additional Compliance Information
The following additional compliance information is provided in accordance with Paragraph 9.25 of the Main Market Listing Requirements of
Bursa Securities:
1. Utilisation of Proceeds
There were no proceeds raised from any corporate proposal during the financial year ended 31 March 2012.
2. Non-Audit Fees
Non-audit fees paid/payable to the external auditors, Messrs PricewaterhouseCoopers by the Group for the financial year ended 31 March
2012 amounted to RM620,000.
3. Variations in Results
There were no variances of 10% or more between the audited results for the financial year ended 31 March 2012 and the unaudited results
previously announced.
4. Material Contracts
There were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Group involving
Directors and major shareholders interests, either still subsisting at the end of the financial year or, if not then subsisting, entered into since
the end of the previous financial year.
5. Profit Guarantee
There was no profit guarantee given by the Company in respect of the financial year ended 31 March 2012.
6. Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued by the Company which were exercised during the financial year ended
31 March 2012.
7. Share Buy-Back
The Company did not buy back any of its shares during the financial year ended 31 March 2012.
8. American Depository Receipt (ADR) or Global Depository Receipt (GDR)

The Company did not sponsor any ADR or GDR programmes during the financial year ended 31 March 2012.
9. Sanctions and/or Penalties

There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant
regulatory bodies during the financial year ended 31 March 2012.
12/6/12 4:54:50 PM
80
81
87
87
88
90
91
92
93
94
96
97
Statement of Board of Directors Responsibilities

Directors Report
Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Statements of Changes in Equity
Consolidated Statements of Cash Flow
Notes to the Financial Statements
80
Statement of Board of Directors Responsibilities

for preparing the Annual Audited Financial Statements
The Companies Act, 1965 requires Directors to prepare financial statements for each financial year, which give a true and fair view of the state
of affairs of the Group and the Company for the financial year.
In preparing the financial statements, the Directors are responsible for the adoption of suitable accounting policies that comply with the provisions
of the Companies Act, 1965, the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Bank Negara
Malaysia Guidelines. The Directors are also responsible to ensure their consistent use in the financial statements, supported where necessary by
reasonable and prudent judgements.
The Directors hereby confirm that suitable accounting policies have been consistently applied in the preparation of the financial statements.
The Directors also confirm that the Company maintains adequate accounting records and an effective system of internal control to safeguard the
assets of the Group and the Company and prevent and detect fraud or any other irregularities.
2012 ANNUAL REPORT
81
Directors Report
The Directors present their report together with the audited financial statements of the Group and of the Company for the financial year ended
31 March 2012.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and provision of management services to the subsidiaries.
The principal activities of the subsidiaries are commercial banking and financing, Islamic banking, investment banking including provision
of stockbroking services, unit trusts and fund management, and the provision of related financial services.
There have been no significant changes in the nature of the principal activities during the financial year.
RESULTS

Group
RM000
Company
RM000

Taxation and zakat
643,603
(163,764)
260,884
(61,095)
479,839
199,789
Attributable to:
Owners of the parent
Non-controlling interests
479,355
484
199,789
479,839
199,789
RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
DIVIDENDS
The amount of dividends declared and paid by the Company since 31 March 2011 were as follows:

(i)
RM000
First interim dividend of 5.6 sen per share, tax exempt under the single tier tax system, on 1,548,105,929
ordinary shares of RM1.00 each, in respect of financial year ended 31 March 2012, was paid on
26 August 2011
85,705
Second interim dividend of 7.7 sen per share, tax exempt under the single tier tax system, on 1,548,105,929
ordinary shares of RM1.00 each, in respect of financial year ended 31 March 2012, was paid on
28 February 2012
117,495
203,200

(ii)

Dividends paid on the shares held in Trust pursuant to the Companys ESS which are classified as shares held for ESS are not accounted for in
the total equity. An amount of RM988,000 and RM1,709,000 being dividends paid for those shares were added back to the appropriation of
retained profits in respect of the first and second interim dividends respectively.
With the above-mentioned two (2) interim dividends paid, the Directors do not recommend the payment of any final dividend in respect of
the current financial year.
82
Directors Report
EMPLOYEES SHARE SCHEME
The Alliance Financial Group Berhad Employees Share Scheme (ESS) is governed by the Bye-Laws approved by the shareholders at an
Extraordinary General Meeting held on 28 August 2007. The ESS which comprises the Share Option Plan, the Share Grant Plan and the Share
Save Plan took effect on 3 December 2007 and is in force for a period of 10 years.
On 22 July 2011, the Company offered/awarded the following share options and share grants to Directors and employees of the Company and
its subsidiaries who have met the criteria of eligibility for the participation in the ESS:
(i)
9,764,000 share options under the Share Option Plan at an option price of RM3.58 per share which will be vested subject to the
achievement of performance conditions.
(ii)
2,127,600 share grants under the Share Grant Plan. The first 50% of the share grants are to be vested at the end of the second year and
the remaining 50% of the share grants are to be vested at the end of the third year from the date on which an award is made.
There were no share options offered under the Share Save Plan during the financial year.
The salient features of the ESS are disclosed in Note 30 to the financial statements.
Save for the Group Chief Executive Officer of Alliance Bank Malaysia Berhad, none of the other Directors of the Company were offered/awarded
any share options/share grants during the financial year.
Details of share options/share grants offered/awarded to Directors are disclosed in the section on Directors Interest in this report.
SHARES HELD FOR EMPLOYEES SHARE SCHEME

During the financial year ended 31 March 2012, the Trustee of the ESS had purchased 8,266,200 ordinary shares of RM1.00 each from the
open market at an average price of RM3.46 per share. The total consideration for the purchase including transaction costs was RM28,637,996.
The shares purchased are being held in trust by the Trustee of the ESS in accordance with the Trust Deed dated 3 December 2007.
During the financial year ended 31 March 2012, 1,428,150 shares have been vested and transferred from the Trustee to the eligible employees
of the Company and its subsidiaries in accordance with the terms under the Share Grant Plan of the ESS. As at 31 March 2012, the Trustee of
the ESS held 24,466,800 ordinary shares representing 1.58% of the issued and paid-up capital of the Company. Such shares are held at a
carrying amount of RM68,194,175 and further relevant details are disclosed in Note 29 to the financial statements.
BUSINESS REVIEW FOR FINANCIAL YEAR ENDED (FYE) 31 MARCH 2012

For the twelve months ended 31 March 2012, the Groups profit before tax grew 16.4%, from RM553.1 million in the previous financial year
to RM643.6 million. After setting aside taxation, the Groups net profit rose by 17.3% to RM479.8 million.
Arising from this improvement in profits, the Groups return on equity rose to 13.6% (FY2011: 13.0%) and earnings per share to 31.5 sen
(FY2011: 26.7 sen). The Group paid a higher total net dividend of 13.3 sen in FY2012, compared with 7.0 sen in the previous year.
Net interest income, including income from Islamic banking operations, however, grew by 3.0% to RM930.2 million, despite the 11.3% growth
in loans and financing. This was due to the further contraction in the net interest margin to 2.51% (FY2011: 2.69%) arising from the full year
impact of the rise in the Overnight Policy Rate (OPR) in 2010 and May 2011, as well as several increases in Statutory Reserve Requirement
(SRR) during the year.
The non-interest income ratio improved further to 26.8% (FY2011: 20.8%) driven by trading in investment securities, treasury sales,
transaction banking and wealth management. The cost to income ratio dropped to 47.3% (FY2011: 48.3%) due to more effective cost
management, as the Group continued to focus on streamlining of business operations to improve productivity and efficiency.
As deposits had expanded at a relatively faster rate of 13.4% to RM32.1 billion, compared to the loans growth at 11.3%, the Groups loans
to deposits ratio remained healthy at 77.8% (FY2011: 78.8%).
Reflecting the disciplined approach in credit risk management and collection processes, the Groups gross impaired loans ratio improved
further to 2.4% (FY2011: 3.3%), and the overall asset quality remains better than the industry average. The gross impaired loan loss coverage
ratio, has risen to 108.5% (FY2011: 90.1%), as the Group has set aside collective provisions under Bank Negara Malaysias transitional
provision for FRS 139 adoption. The Group also remains well capitalized with a risk-weighted capital ratio (RWCR) standing at 15.2%,
well above the minimum requirement of 8%.
During the year, the Group had continued with its investments to upgrade technology and infrastructure, as well as its human capital, to support
the on-going business expansion, and further enhance the Groups competitiveness in the financial services industry.
2012 ANNUAL REPORT
83
Directors Report
ECONOMIC OUTLOOK AND PROSPECTS FOR FYE 31 MARCH 2013
Bank Negara Malaysia (BNM) has projected a 4% to 5% growth in the real gross domestic product (GDP) in 2012 amidst a more challenging
external environment. This is based on expectations of the timely and full implementation of the Economic Transformation Program and other
measures announced in the 2012 Budget. Further, BNM is also expected to maintain an accommodative monetary policy to facilitate economic
growth, while responding to global developments and managing the risks of inflation.
BUSINESS OUTLOOK FOR FYE 31 MARCH 2013

Against this background of moderate GDP growth, the Group expects demand for financing and non-interest income business activities to
be sustained. The Group will continue to focus on existing business opportunities in Consumer Banking and Business Banking, while enhancing
Treasury and Transaction Banking and developing the Wealth Management and Investment Banking business. The Groups priority will be
on growing revenue, managing asset quality, enhancing its human capital, improving productivity, and building the balance sheet for
sustainable growth.
The Group expects to deliver a satisfactory performance for the next financial year ending March 2013.
RATING BY EXTERNAL RATING AGENCY

The banking subsidiary, Alliance Bank Malaysia Berhad (ABMB) is rated by Rating Agency Malaysia Berhad (RAM). Based on RAMs rating in
November 2011, ABMBs short-term and long-term ratings are reaffirmed at P1 and A1 respectively. RAM has classified these rating categories
as follows:
P1 - Financial institutions in this category have superior capacities for timely payments of obligations.
A1 - Financial institutions rated in this category are adjudged to offer adequate safety for timely payments of financial obligations. This level of
rating indicates financial institutions with adequate credit profiles, but which possess one or more problem areas, giving rise to the possibility
of future riskiness. Financial institutions rated in this category have generally performed at industry average and are considered to be more
vulnerable to changes in economic conditions than those rated in the higher categories.
DIRECTORS
The names of the Directors of the Company in office since the date of the last report and at the date of this report are:
Datuk Oh Chong Peng
Tan Yuen Fah
Megat Dziauddin Bin Megat Mahmud
Kung Beng Hong
Ou Shian Waei
Sng Seow Wah
Lee Ah Boon
Phoon Siew Heng
(appointed on 18 April 2012)

(resigned on 18 April 2012)
DIRECTORS BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a
party, whereby the Directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body
corporate, other than those arising from the share options and share grants under the ESS.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the
aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company
or related corporations as shown in Note 35(b) and Note 48(c) to the financial statements of the Company or financial statements of related
corporations) by reason of a contract made by the Company or a related corporation with any 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.
84
Directors Report
DIRECTORS INTERESTS
According to the Register of Directors Shareholdings, the interests of Directors in office at the end of the financial year in shares, share options
and share grants in the Company were as follows:

Number of Ordinary Shares of RM1.00 Each

1.4.2011
Acquired
Sold
31.3.2012
The Company
Megat Dziauddin Bin Megat Mahmud
- Direct
Sng Seow Wah - Direct
- Indirect (held through spouse, Datin Teh Yew Kheng)

Sng Seow Wah
Sng Seow Wah
3,000
3,000
105,800
105,800
35,000
35,000
Number of Options Over Ordinary Shares of RM1.00 Each

Exercise
price
RM
1.4.2011
Offered
3.15
835,300
3.58
1,279,900
Vested
Exercised
Lapsed
31.3.2012
835,300 #
1,279,900
# Subject to the achievement of performance conditions.

Number of Grants Over Ordinary Shares of RM1.00 Each

Date of
grant
1.4.2011
Sng Seow Wah
23 September 2010
133,700
Sng Seow Wah
28 July 2011
Awarded

174,400 *
Vested
31.3.2012
133,700 *
174,400
* The first 50% of the share grants are to be vested at the end of the second year and the remaining 50% of the share grants are to be vested
at the end of the third year from the date on which an award is made. Further details are as disclosed in Note 30 to the financial statements.
By virtue of their shareholdings in the Company, the above Directors are deemed to have beneficial interests in the shares of the subsidiary
companies of the Company. None of the other Directors in office at the end of the financial year had any interest in shares, share options and share
grants in the Company or its related corporations during the financial year.
SHARE CAPITAL
There was no change in the issued and paid-up capital of the Company during the financial year.
BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that proper
action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all
known bad debts had been written off and that adequate allowance had been made for doubtful debts.
At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad debts or the amount
of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.
2012 ANNUAL REPORT
85
Directors Report
CURRENT ASSETS
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ensure that any current
assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business 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 the current assets in the
financial statements of the Group and of the Company misleading.
VALUATION METHOD
At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing
method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES

At the date of this report, there does not exist:
(i)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities
of any other person; or
(ii)
any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year other than in the
ordinary course of business.
No contingent or other liability of the Group and of the Company 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 affect the ability of the Group or of the
Company to meet their obligations as and 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 financial statements of the
Group and of the Company, which would render any amount stated in the financial statements misleading.
ITEMS OF AN UNUSUAL NATURE

In the opinion of the Directors:
(i)
the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item,
transaction or event of a material and unusual nature; and
(ii)
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 which is likely to affect substantially the results of the operations of the Group and of the Company for the
financial year in which this report is made.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 51 to the financial statements.
86
Directors Report
SUBSEQUENT EVENTS
There were no material events subsequent to the end of the financial reporting period that require disclosure or adjustment to the financial
statements.
COMPLIANCE WITH BANK NEGARA MALAYSIAS EXPECTATIONS ON FINANCIAL REPORTING

In the preparation of the financial statements, the Directors have taken reasonable steps to ensure that Bank Negara Malaysias expectations
on financial reporting have been complied with, including those as set out in Guidelines on Financial Reporting for Financial Institutions and the
Guidelines on Classification and Impairment Provisions for Loans/Financing.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors dated 30 May 2012.
Datuk Oh Chong Peng

Kuala Lumpur, Malaysia
2012 ANNUAL REPORT
87
Pursuant to Section 169(15) of the Companies Act, 1965
We, Datuk Oh Chong Peng and Dato Thomas Mun Lung Lee, being two of the Directors of Alliance Financial Group Berhad, do hereby state
that, in the opinion of the Directors, the accompanying financial statements set out on pages 90 to 186 are drawn up in accordance with the
provisions of the Companies Act, 1965 and the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and
Bank Negara Malaysia Guidelines, so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2012
and of the results and the cash flows of the Group and of the Company for the financial year then ended.
The information set out in Note 54 to the financial statements have been complied in accordance with the Guidance of Special Matter No. 1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the Directors dated 30 May 2012.
Datuk Oh Chong Peng
Pursuant to Section 169(16) of the Companies Act, 1965
I, Lee Eng Leong, being the officer primarily responsible for the financial management of Alliance Financial Group Berhad, do solemnly and
sincerely declare that the accompanying financial statements set out on pages 90 to 186 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.
Subscribed and solemnly declared
by the abovenamed Lee Eng Leong
at Kuala Lumpur in the Federal
Territory on 30 May 2012.
Before me,
Sivanason a/l Marimuthu

Commissioner for Oaths
30 May 2012
Lee Eng Leong
88

to the Members of Alliance Financial Group Berhad
(Incorporated in Malaysia)
Report on the financial statements
We have audited the financial statements of Alliance Financial Group Berhad on pages 90 to 185 which comprise the statements of financial
position as at 31 March 2012 of the Group and of the Company, and the statements of comprehensive income, changes in equity and cash flows
of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set
out on Note 1 to Note 53.
Directors responsibility for the financial statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with
the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities, the Companies Act, 1965 and Bank Negara
Malaysia Guidelines, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
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 judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entitys 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 MASB Approved Accounting Standards in
Malaysia for Entities Other than Private Entities, the Companies Act, 1965 and Bank Negara Malaysia Guidelines so as to give a true and fair
view of the financial position of the Group and of the Company as at 31 March 2012 and of their financial performance and cash flows for the
year then ended.
Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries
have been properly kept in accordance with the provisions of the Act.
(b)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Companys financial statements are
in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes.
(c)
The audit reports on the financial statements of the subsidiaries did not contain any qualification and any adverse comment made
under Section 174(3) of the Act.
2012 ANNUAL REPORT
89

to the Members of Alliance Financial Group Berhad
Other reporting responsibilities
The supplementary information set out in Note 54 on page 186 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and
is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance
with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to
Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive
of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with
the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.
(No. AF: 1146)
30 May 2012
Mohammad Faiz Bin Mohammad Azmi

(No.2025/03/14 (J))
Chartered Accountant
90

as at 31 March 2012

Note
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
ASSETS
Cash and short-term funds
3
Deposits and placements with banks and other
financial institutions
4
Balances due from clients and brokers
5
Financial assets held-for-trading
6
Financial investments available-for-sale
7
Financial investments held-to-maturity
8
Derivative financial assets
9
Loans, advances and financing
10
Other assets
11
Tax recoverable
Statutory deposits
12
Investments in subsidiaries
13
Investment in associate
14
Investment property
15
Property, plant and equipment
16
Intangible assets
17
Deferred tax assets
18
1,874,333
914,038
6,501
46,858
97,713
61,698
1,491,995
9,123,201
795,256
23,712
24,360,203
78,157
15,484
1,163,083

26,552
27,748
90,293
354,902
15,341
100,228
80,519
1,938,250
9,259,940
940,726
32,047
21,796,319
87,621
3,244
291,108

28,530
27,748
104,837
357,682
109,099
19,315

269
462

1,777,505

516

300
605,700
219
799
1,777,489
285
284

Non-current assets held for sale
53
39,599,671
3,814
36,071,936

1,804,868

2,431,634
TOTAL ASSETS
39,603,485
36,071,936
1,804,868
2,431,634
32,130,962
28,345,647
2,161,005
74,915
178
26,241
22,044
870,807
611,615

7,372
23,012
1,952,200
86,743
111,159
33,347
125,776
811,890
600,000
601,272
40,507
6,792

4,354

1,529
601,272
35,928,151
32,715,333
4,354
602,801
1,548,106
2,190,517
(68,194)
1,548,106
1,847,175
(43,167)
1,548,106
320,602
(68,194)
1,548,106
323,894
(43,167)
CAPITAL AND RESERVES ATTRIBUTABLE

TO OWNERS OF THE PARENT
3,670,429
4,905
3,352,114
4,489
1,800,514

1,828,833
TOTAL EQUITY
3,675,334
3,356,603
1,800,514
1,828,833
TOTAL LIABILITIES AND EQUITY
39,603,485
36,071,936
1,804,868
2,431,634
COMMITMENTS AND CONTINGENCIES
18,741,373
15,909,028
LIABILITIES AND EQUITY

19
Deposits and placements of banks and other
20
Balances due to clients and brokers
21
Bills and acceptances payable
22
Derivative financial liabilities
9
Amount due to Cagamas Berhad
23
Other liabilities
24
Subordinated obligations
25
Long term borrowings
26
Provision for taxation
Deferred tax liabilities
18
TOTAL LIABILITIES
Share capital
Reserves
Shares held for Employees Share Scheme
27
28
29
45
The accompanying notes form an integral part of the financial statements.
2012 ANNUAL REPORT
91

for the year ended 31 March 2012

Note
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
31
32
1,328,122
(654,259)
1,203,438
(533,176)
12,947
(14,178)
18,214
(21,382)
Net interest income/(expense)

Net income from Islamic banking business
33
673,863
256,329
670,262
232,732
(1,231)

(3,168)

Other operating income
34
930,192
320,182
902,994
225,722
(1,231)
267,198
(3,168)
147,844
Net income
Other operating expenses
35
1,250,374
(591,796)
1,128,716
(544,900)
265,967
(4,113)
144,676
(4,002)
Operating profit before allowance

Allowance for losses on loans, advances
and financing and other losses
36
Write-back of/(allowance for) impairment
37
658,578
583,816
261,854
140,674
(34,640)
21,643
(33,309)
4,076

(970)
(642)
Operating profit after allowance

Share of results of associate
14
645,581
(1,978)
554,583
(1,470)
260,884

140,032

Taxation and zakat
38
643,603
(163,764)
553,113
(143,962)
260,884
(61,095)
140,032
(31,190)
479,839
409,151
199,789
108,842
Other comprehensive income:

Revaluation reserve on financial investments
available-for-sale
- Net gain/(loss) from change in fair value
- Transfer (to)/from deferred tax
85,531
(21,382)
(7,925)
1,981
Other comprehensive income/(expense), net of tax
64,149
(5,944)
Total comprehensive income for the year
543,988
403,207
199,789
108,842
Profit attributable to:

479,355
484
409,202
(51)
199,789

108,842
479,839
409,151
199,789
108,842
Total comprehensive income attributable to:

543,504
484
403,258
(51)
199,789

108,842
543,988
403,207
199,789
108,842
31.5
31.4
26.7
26.7
Interest income
Interest expense
Earnings per share attributable to

owners of the parent:
Basic (sen)
Diluted (sen)
39(a)
39(b)
304,289
304,289

1,548,106
1,548,106

1,548,106
At 31 March 2011
At 1 April 2011
Other comprehensive income
Total comprehensive income
Transfer to statutory reserve
Purchase of shares pursuant to ESS
29
Share-based payment under ESS
Transfer to retained profits on shares lapsed:
- employees of subsidiaries
- own employees
Dividends paid to shareholders
40
ESS shares vested to:
- own employees
Transfer of ESS shares purchase price
difference on shares vested
At 31 March 2012
600,129
544,368

55,761

544,368
493,477

50,891

The accompanying notes form an integral part of these financial statements.
304,289
304,289

1,548,106

At 1 April 2010
Net profit/ (loss) after taxation and zakat
Other comprehensive expense
Total comprehensive (expense)/income
Transfer to PER
40
- own employees
Transfer of ESS shares purchase price
difference on shares vested
7,013
7,013

7,013
7,013

132,769
68,620

64,149
64,149

68,620
74,564

(5,944)
(5,944)

14,001
175
(3,558)
(53)
(2,919)
(61)

13,768

6,649
13,768
(390)
(3,485)
(45)
12,341

5,347

1,033
1,033

1,033
26,388

(25,355)

Attributable to Owners of the Parent
Employees

Share
Profit

Scheme Equalisation

Share
Share
Statutory
Capital Revaluation
(ESS)
Reserve

Capital
Premium
Reserve
Reserve
Reserve
Reserve
(PER)
Group
Note
RM000
RM000
RM000
RM000
RM000
RM000
RM000
Consolidated Statements of Changes in Equity
(68,194)
3,558
53
(43,167)

(28,638)

(43,167)
3,485
45
(46,697)

1,131,283
(175)
2,919
61
(203,200)
908,084
479,355

479,355
(55,761)

908,084
390
631,114
409,202

409,202
(50,891)
25,355

(107,086)
3,670,429

(203,200)
3,352,114
479,355
64,149
543,504

(28,638)
6,649
3,352,114
3,050,595
409,202
(5,944)
403,258

5,347
(107,086)
Shares
held
Retained
for ESS
Profits
Total
RM000
RM000
RM000
4,905

(68)
4,489
484

484

4,489
4,540
(51)

(51)

NonControlling
Interests
RM000
3,675,334
(203,268)
3,356,603
479,839
64,149
543,988
(28,638)
6,649
3,356,603
3,055,135
409,151
(5,944)
403,207
5,347
(107,086)
Total
Equity
RM000
92
2012 ANNUAL REPORT
93


Non-Distributable

Employees

Share

Scheme

Share
Share
(ESS)

Capital
Premium
Reserve
Company
Note
RM000
RM000
RM000
<Distributable>
Shares
held
for
ESS
RM000
Retained
Profits
RM000
Total
Equity
RM000
At 1 April 2010
Net profit after taxation
40
ESS recharge amount received
from subsidiaries
- owned employees
Transfer of ESS shares
purchase price difference
on shares vested
1,548,106

304,289

12,341

5,347

(46,697)

3,691
108,842

(107,086)
1,821,730
108,842
5,347
(107,086)
3,485
3,485
(3,485)
(45)

45
(3,485)
(390)
390
At 31 March 2011
1,548,106
304,289
13,768
(43,167)
5,837
1,828,833
At 1 April 2011
Net profit after taxation
Purchase of shares pursuant to ESS
Transfer to retained profits on
shares lapsed:
- own employees
40
ESS recharge amount received
from subsidiaries
- owned employees
Transfer of ESS shares
purchase price difference
on shares vested
1,548,106

304,289

13,768

6,649
(43,167)

(28,638)

5,837
199,789

1,828,833
199,789
(28,638)
6,649
(2,919)
(61)

61
(203,200)
(2,919)
(203,200)
3,558
3,558
(3,558)
(53)

53
(3,558)
175
(175)
At 31 March 2012
1,548,106
304,289
14,001
(68,194)
2,312
1,800,514
The accompanying notes form an integral part of these financial statements.
94

2012
RM000
2011
RM000
643,603
553,113
(94,369)
29,374
(10,229)
(200)
20
(16,831)
(3,699)
(47,408)
185
(1,572)
34,513
14,178
(22,751)
(253,237)
(3,862)
89,744
6,280
(4,210)
(22,759)
(344)
1,460
18,239
6,649
2,046
841
1,978

(82,179)
39,592
(3,705)
329
38
(3)
(417)
(3,509)
(256)
(4,149)
36,540
21,382
(30,682)
(206,340)
(1,044)
103,804
4,801
59
(585)
(3,491)
14,420
5,347
3,399
1
1,470
7
CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments for:
Accretion of discount less amortisation of premium of financial investments
Depreciation of property, plant and equipment
Dividends from financial investments available-for-sale
(Gain)/loss on disposal of property, plant and equipment
Loss on disposal of foreclosed properties
Net gain from redemption of financial investments held-to-maturity
Net gain from sale of financial assets held-for-trading
Net gain from sale of financial investments available-for-sale
Unrealised loss/(gain) on revaluation of financial assets held-for-trading
Unrealised gain on revaluation of derivative instruments
Interest expense on subordinated obligations
Interest expense on long term borrowings
Interest income from financial investments held-to-maturity
Interest income from financial investments available-for-sale
Interest income from financial investments held-for-trading
Allowance for loan, advances and financing (net of recoveries)
Allowance for other assets
(Write-back of)/allowances for commitments and contingencies
Net write-back of financial investments available-for-sale
Net write-back of financial investments held-to-maturity
Impairment for property, plant and equipment
Amortisation of computer software
Share options/grants under ESS
Property, plant and equipment written off
Computer software written off
Share of results of associate
Loss on liquidation of subsidiaries
Operating profit before working capital changes
Changes in working capital:
Deposits and placements of banks and other financial institutions
Other liabilities
Deposits and placements with banks and other financial institutions
Other assets
Statutory deposits with Bank Negara Malaysia
367,639
447,942
3,785,315
208,805
(110,981)
22,085
75,641
2,515
460,685
(2,653,628)
1,672
(871,975)
(103,732)
4,636,994
(346,208)
(427,191)
6,150
9,719
71,346
(1,909,800)
(1,146,201)
(22,322)
(32,602)
97,699
Cash generated from operations

Taxes and zakat paid
1,184,041
(120,533)
1,385,526
(118,616)
Net cash generated from operating activities
1,063,508
1,266,910
2012 ANNUAL REPORT
95

2012
RM000
2011
RM000
CASH FLOWS FROM INVESTING ACTIVITIES

Dividends received from financial instruments available-for-sale
Interest received from financial investments held-to-maturity
Interest received from financial investments available-for-sale
Interest received from financial investments held-for-trading
Purchase of property, plant and equipment
Purchase of computer software
Purchase of shares held for ESS
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of computer software
Proceeds from disposal of foreclosed properties
Proceeds from redemption and maturity of financial investments
held-to-maturity (net of purchase)
Proceeds from disposal of financial investments available-for-sale (net of purchase)
Acquisition of investment in an associate
10,219
22,751
253,237
3,862
(22,720)
(16,300)
(28,638)
770

4,285
3,657
30,682
206,340
1,044
(14,882)
(10,400)
1,818
155
62
218,950
319,507

6,640
(3,940,354)
(30,000)
Net cash generated from/(used in) investing activities
765,923
(3,745,238)
Redemptions of subordinated bonds

Proceeds from issuance of subordinated notes
Interest paid on subordinated obligations
Repayment of long term borrowings
Interest paid on long term borrowings
Dividends paid to non-controlling interests
Dividends paid to shareholders of the Company
(600,000)
597,366
(32,778)
(600,000)
(15,450)
(68)
(203,200)
(36,540)
(21,808)
(107,086)
Net cash used in financing activities
(854,130)
(165,434)
NET CHANGE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
975,301
826,534
(2,643,762)
3,470,296
CASH AND CASH EQUIVALENTS AT END OF YEAR
1,801,835
826,534
Cash and cash equivalents comprise the following:

Less: Monies held in trust (Note 3)
1,874,333
(72,498)
914,038
(87,504)
1,801,835
826,534
CASH FLOWS FROM FINANCING ACTIVITIES
96

2012
RM000
2011
RM000
Profit before taxation
260,884
140,032
Adjustments for:
Interest income from deposits and placements with banks and other financial institutions
Interest expense on long term borrowings
Write-back of impairment in subsidiary
Allowance for impairment losses on amount due from subsidiaries
Loss on disposal of property, plant and equipment
Gross dividend income from subsidiary
103
(12,947)
14,178

970
109
6,649
(265,765)
76
(18,214)
21,382
(5,962)
642
5,347
(146,462)
Operating profit/(loss) before working capital changes

Receivables
Payables
Deposits
Subsidiaries
4,181
(3,159)
(42)
2,472
586,385
(7,118)
26
(394)
10,906
(120)

Taxes refunded
585,878
667
7,259
675
586,545
7,934
Interest received from deposits and placements with banks and other financial institutions
Purchase of shares held for ESS
Dividend received
ESS recharge amount received from subsidiaries
12,947
(28,638)
(536)
93
204,324
3,558
18,214
114,846
3,485
Net cash generated from investing activities
191,748
136,545
Dividends paid
Repayment of long term borrowings
Interest paid on long term borrowings
(203,200)
(601,272)
(14,178)
(107,086)
(21,382)
(818,650)
(128,468)
(40,357)
46,858
16,011
30,847
6,501
46,858

6,501
46,858

2012 ANNUAL REPORT
97

31 March 2012
1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa
Malaysia Securities Berhad. The registered office of the Company is located at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8,
Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.
The principal activities of the Company are investment holding and provision of management services to the subsidiaries.
The principal activities of the subsidiaries are commercial banking and financing, Islamic banking, investment banking including provision
of stockbroking services, unit trusts and fund management, and the provision of related financial services.
There have been no significant changes in the nature of the principal activities during the financial year.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on
30 May 2012.
2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted by the Group are consistent with those adopted in the annual audited financial statements for
the previous financial year, unless otherwise stated.
Standards, amendments to published standards and interpretations that are effective
The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the
Groups financial year beginning on or after 1 April 2011 are as follows:
Revised FRS 1 First-time Adoption of Financial Reporting Standards
Revised FRS 3 Business Combinations
Revised FRS 127 Consolidated and Separate Financial Statements
Amendment to FRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions
Amendment to FRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments
Amendment to FRS 1 First-time Adoption of Financial Reporting Standards
Amendment to FRS 132 Financial Instruments: Presentation - Classification of Rights Issue
Amendment to IC Interpretation 9 Reassessment of Embedded Derivatives
IC Interpretation 4 Determining whether an Arrangement contains a Lease
IC Interpretation 12 Service Concession Arrangements
IC Interpretation 16 Hedges of A Net Investment In A Foreign Operation
IC Interpretation 17 Distributions of Non-cash Assets to Owners
IC Interpretation 18 Transfer of Assets From Customers
Improvements to FRSs (2010)
Other than the adoption of Amendment to FRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments
which will impact the disclosure requirement of fair value measurement by level of a fair value measurement hierarchy, the adoption of
the other revised accounting standards, amendments and improvements to published standards and interpretations are not expected to
have a material impact on the financial statements of the Group and the Company.
98

31 March 2012
2. SIGNIFICANT ACCOUNTING POLICIES (contd)

Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but
not yet effective
The Group will apply the new standards, amendments to standards and interpretations in the following period:
Financial year beginning on/after 1 April 2012
In the next financial year, the Group will be adopting the new IFRS-compliant framework, Malaysian Financial Reporting Standards
(MFRS). MFRS 1 First-time adoption of MFRS provides for certain optional exemptions and certain mandatory exceptions for first-time
MFRS adopters.
(i)
MFRS 139 Financial instruments: Recognition and Measurement - Bank Negara Malaysia has removed the transitional provision
for banking institutions on loan impairment assessment and provisioning to comply with the FRS 139 requirements. The application
of this standard will have impact on the basis used in assessing loan impairment on collective basis and impact on the financial
statements are currently still being assessed by the Group.
(ii)
The revised MFRS 124 Related Party Disclosures (effective from 1 January 2012) removes the exemption to disclose transactions
between government-related entities and the government, and all other government-related entities. The following new disclosures
are now required for government related entities:
- The name of the government and the nature of their relationship;
- The nature and amount of each individually significant transactions; and
- The extent of any collectively significant transactions, qualitatively or quantitatively.
The application of this standard is not expected to have a material impact on the financial statements of the Group.
(iii)
Amendment to MFRS 112 Income taxes (effective from 1 January 2012) introduces an exception to the existing principle for
the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. MFRS 112 currently
requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying
amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or
through sale when the asset is measured using the fair value model in FRS 140 Investment property. As a result of the
amendments, IC Interpretation 121 Income taxes - recovery of revalued non-depreciable assets will no longer apply to investment
properties carried at fair value. The amendment also incorporate into MFRS 112 the remaining guidance previously contained in IC
Interpretation 121 which is withdrawn. The application of this standard is not expected to have a material impact on the financial
statements of the Group.
(iv)
IC Interpretation 19 Extinguishing financial liabilities with equity instruments (effective from 1 July 2011) provides clarification
when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entitys shares
or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between the carrying
value of the financial liability and the fair value of the equity instruments issued, shall be recognised in profit or loss. Entities are no
longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or loss recognised in profit or
loss. The application of this standard is not expected to have a material impact on the financial statements of the Group.
(v)
Amendment to MFRS 1 First time adoption on fixed dates and hyperinflation (effective from 1 July 2011) includes two changes
to MFRS 1. The first replaces references to a fixed date of 1 January 2004 with the date of transition to MFRSs, thus eliminating
the need for entities adopting MFRSs for the first time to restate de-recognition transactions that occurred before the date of
transition to MFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements
in accordance with MFRSs after a period when the entity was unable to comply with MFRSs because its functional currency was
subject to severe hyperinflation.
(vi)
Amendment to MFRS 7 Financial instruments: Disclosures on transfers of financial assets (effective from 1 July 2011) promotes
transparency in the reporting of transfer transactions and improve users understanding of the risk exposures relating to
transfers of financial assets and the effect of those risks on an entitys financial position, particularly those involving securitisation
of financial assets.
2012 ANNUAL REPORT
99

31 March 2012

not yet effective (contd)
The Group will apply the new standards, amendments to standards and interpretations in the following period: (contd)
Financial year beginning on/after 1 April 2013
A brief discussion of the significant new FRSs that have been issued is set out below. Due to the complexity of these new FRSs and their
proposed changes, the financial effects of their adoption are currently still being assessed by the Group.
(i)
MFRS 9 Financial instruments - classification and measurement of financial assets and financial liabilities (effective from 1 January
2015) replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification
categories: amortised cost and fair value. The basis of classification depends on the entitys business model for managing the
financial assets and the contractual cash flow characteristics of the financial asset.
The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated from
MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (FVTPL). Entities
with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liabilitys credit risk directly
in other comprehensive income (OCI). There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated
gains or losses may be transferred within equity.
The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.
MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9.
(ii)
MFRS 10 Consolidated financial statements (effective from 1 January 2013) changes the definition of control. An investor controls
an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated
in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial
statements. It replaces all the guidance on control and consolidation in MFRS 127 Consolidated and separate financial statements
and IC Interpretation 112 Consolidation special purpose entities.
(iii)
MFRS 11 Joint arrangements (effective from 1 January 2013) requires a party to a joint arrangement to determine the type
of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than its
legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint
operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities,
revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence
equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.
(iv)
MFRS 12 Disclosures of interests in other entities (effective from 1 January 2013) sets out the required disclosures for entities
reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS
128 Investments in associates. It requires entities to disclose information that helps financial statement readers to evaluate
the nature, risks and financial effects associated with the entitys interests in subsidiaries, associates, joint arrangements and
unconsolidated structured entities.
(v)
MFRS 13 Fair value measurement (effective from 1 January 2013) aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across
MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where
its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7
Financial instruments: Disclosures, but apply to all assets and liabilities measured at fair value, not just financial ones.
(vi)
The revised MFRS 127 Separate financial statements (effective from 1 January 2013) includes the provisions on separate
financial statements that are left after the control provisions of MFRS 127 have been included in the new MFRS 10.
(vii) The revised MFRS 128 Investments in associates and joint ventures(effective from 1 January 2013) includes the requirements
for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11.
(viii) Amendment to MFRS 101 Presentation of items of other comprehensive income (effective from 1 July 2012) requires entities to
separate items presented in other comprehensive income (OCI) in the statement of comprehensive income into two groups, based
on whether or not they may be recycled to profit or loss in the future. The amendment does not address which items are presented
in OCI.
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not yet effective (contd)
The Group will apply the new standards, amendments to standards and interpretations in the following period: (contd)
Financial year beginning on/after 1 April 2013 (contd)

(ix)
Amendment to MFRS 119 Employee benefits (effective from 1 January 2013) makes significant changes to the recognition
and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits.
Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall be withdrawn on application of
this amendment.
(x)
Amendment to MFRS 132 Financial instruments: Presentation (effective from 1 January 2014) does not change the current
offsetting model in MFRS 132. It clarifies the meaning of currently has a legally enforceable right of set-off that the right of
set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal
course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement
will satisfy the MFRS 132 offsetting criteria.
(xi)
Amendment to MFRS 7 Financial instruments: Disclosures (effective from 1 January 2013) requires more extensive disclosures
focusing on quantitative information about recognised financial instruments that are offset in the statement of financial position and
those that are subject to master netting or similar arrangements irrespective of whether they are offset.
(a)
Basis of Preparation
The financial statements of the Group and Company have been prepared in accordance with the provisions of the Companies
Act, 1965, Financial Reporting Standards, the MASB Approved Accounting Standards in Malaysia for Entities Other than Private
Entities and Bank Negara Malaysia (BNM) Guidelines.
The financial statements of the Group and the Company have also been prepared under the historical cost convention, except as
disclosed in this summary of significant accounting policies.
The financial statements incorporate all activities relating to the Islamic banking business which have been undertaken by the Group.
Islamic banking business refers generally to the acceptance of deposits and granting of financing under the Shariah principles.
The financial statements are presented in Ringgit Malaysia (RM) and all numbers are rounded to the nearest thousand (RM000),
unless otherwise stated.
The preparation of the financial statements in conformity with Financial Reporting Standards and BNM Guidelines requires the use
of certain critical accounting estimates and assumptions that affect the reported amount of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reported period. It also requires Directors to exercise their judgement in the process of applying the Group and
Companys accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current
events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are described in the following notes:
(i)
Annual testing for impairment of goodwill (Note 17) - the measurement of the recoverable amount of cash-generating units
are determined based on the value-in-use method, which requires the use of estimates for cash flow projections approved
by management covering a 5-year period, estimated growth rates for cash flows beyond the fifth year are extrapolated in
perpetuity and discount rates are applied to the cash flow projections.
(ii)
Allowance for losses on loans, advances and financing and other losses (Note 36) - the Group make allowance for losses
on loans, advances and financing based on assessment of recoverability. Whilst management is guided by the relevant
BNM guidelines and accounting standards, management makes judgement on the future and other key factors in respect
of the estimation of the amount and timing of the cash flows in assessing allowance for impairment of loans, advances and
financing. Among the factors considered are the Groups aggregate exposure to the borrowers, the net realisable value of the
underlying collateral value, the viability of the customers business model, the capacity to generate sufficient cash flows to
service debt obligations and the aggregate amount and ranking of all other creditor claims.
2012 ANNUAL REPORT
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(b)
Economic Entities in the Group

(i)
Subsidiaries
Subsidiaries are all those entities (including special purpose entities) over which the Group has power to govern the
financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group controls another entity.
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of
the reporting period. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.
Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting,
subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated
from the date that control ceases. The cost of acquisition is measured as fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange. Upon the adoption of the revised FRS 3 and FRS 127,
acquisition-related costs are expensed as incurred. Prior to adoption of the revised FRS 3 and FRS 127, acquisition-related
costs were included as part of the cost of business combination.
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 non-controlling interest. The excess of the
cost of acquisition over the fair value of the Groups share of the identifiable net assets acquired at the date of acquisition
is reflected as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the subsidiary
acquired, the gain is recognised directly in the statement of comprehensive income.
Non-controlling interests represents the portion of 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. At the end of the reporting period, non-controlling interests consists of amount
calculated on the date of business combination to the Group and its share of changes in the subsidiaries equity since the date
of business combination.
Upon adoption of the revised FRS 3 and FRS 127, all earnings and losses of the subsidiaries are attributed to the parent and
the non-controlling interest, even if the attribution of losses to the non-controlling interests results in a debit balance in the
shareholders equity. Profit or loss attribution to non-controlling interest for prior years is not restated. As a consequence, no
adjustments were necessary to any of the amounts previously recognised in the financial statements.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. This may indicate an impairment of the asset transferred. Accounting policy of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Groups share of its
net assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the subsidiary
is recognised in the statement of comprehensive income attributable to the parent.
(ii)
Associates
Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which
it does not control, generally accompanying a shareholding of between 20% and 50% of voting rights. Significant influence is
the power to participate in financial and operating policy decisions of associates but not power to exercise control over those
policies.
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The
Groups investment in associates includes goodwill identified on acquisition, net of any accumulated impairment.
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(b)
Economic Entities in the Group (contd)

(ii)
Associates (contd)
The Groups share of its associates post-acquisition profits or losses is recognised in the statement of comprehensive income,
and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. If the Groups share of losses of an
associate equals or exceeds its interest in the associate, the Group discontinues recognising its share of future losses. The
interest in an associate is the carrying of the investment in the associate under the equity method together with any long term
interests that, in substance, form part of the Groups net investment in the associate. After the Groups interest is reduced to
zero, additional losses are provided for, and a liability is recognised, only to the extent that the investor has incurred legal or
constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group
resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interest
in the associates, unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset
transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates
to ensure consistency of accounting policies with those of the Group.
The most recent available audited financial statements of the associates are used by the Group in applying the equity method.
Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results
is arrived at from the last audited financial statements available and management financial statements to the end of the
accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances.
(iii) Changes in ownership interests

Upon adoption of the revised FRS 127, when the Group ceases to have control, joint control or significant influence,
any retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised in profit
or loss. This fair value is its fair value on initial recognition as a financial asset in accordance with FRS 139. Any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities.
(c)
Investments in Subsidiaries and Associate
In the Companys separate financial statements, investments in subsidiaries and associate are carried at cost less accumulated
impairment. The policy for the recognition and measurement of impairment is in accordance with Note 2(j)(v). On disposal of
investments in subsidiaries and associate, the difference between disposal proceeds and the carrying amounts of the investments
are recognised in the statement of comprehensive income.
(d)
Intangible Assets
(i)
Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries over the fair value of the Groups share of the
identifiable net assets at the date of acquisition.
Goodwill is measured at cost less accumulated impairment, if any. Goodwill is no longer amortised. Instead it is allocated to
cash-generating units which are expected to benefit from the synergies of the business combination. Each cash-generating
unit represents the lowest level at which the goodwill is monitored and is not larger than a reportable business segment.
The carrying amount of goodwill is tested annually for impairment, or more frequently if events or changes in circumstances
indicate that it might be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. The policy for the recognition and measurement of impairment is in accordance with Note 2(j)(iv).
(ii)
Computer Software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring the specific
software to use. The costs are amortised over their useful lives of five years and are stated at cost less accumulated
amortisation and accumulated impairment, if any. Computer software is assessed for impairment whenever there is an
indication that it may be impaired. The amortisation period and amortisation method are reviewed at least at the end of each
reporting period.
The policy for the recognition and measurement of impairment is in accordance with Note 2(j)(v).
2012 ANNUAL REPORT
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(d)
Intangible Assets (contd)

(ii)
Computer Software (contd)
Costs associated with maintaining computer software programmes are recognised as expenses as incurred. Costs that are
directly associated with the production of identifiable and unique software products controlled by the Group, and that will
probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. These costs
include software development employee costs and appropriate portion of relevant overheads.
(iii) Other non-financial assets

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in
a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment. The useful lives of intangible assets
are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over
the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period.
Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently
if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the
cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine
whether the useful assessment continues to be supportable.
(e)
Financial Assets
The Group allocates financial assets to the following categories: loans, advances and financing; financial assets held-for-trading;
financial investments available-for-sale; and financial investments held-to-maturity. Management determines the classification
of its financial instruments at initial recognition. The policy of the recognition and measurement of impairment is in accordance
with Note 2(j).
(i)
Loans, advances and financing are non-derivative financial assets with fixed or determinable payments that are not quoted in
the active market.
Loans, advances and financing are initially recognised at fair value which is the cash consideration to originate or purchase
the loan including any transaction costs and measured subsequently at amortised cost using the effective interest rate
method, less impairment allowance.
An uncollectible loan, advance and financing or portion of a loan, advance and financing 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.
(ii)
Financial assets at fair value through profit or loss
Financial assets classified in this category consist of financial assets held-for-trading. Financial asset is classified as
held-for-trading if it is acquired principally for the purpose of selling or repurchasing in the near term or it is part of a portion
of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of
short-term profit-taking.
Financial assets held-for-trading are stated at fair value and any gain or loss arising from a change in their fair values and
the derecognition of financial assets held-for-trading are recognised in the statement of comprehensive income.
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(e)
Financial Assets (contd)

(iii) Financial investments held-to-maturity

Financial investments held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that
the Group have the positive intent and ability to hold to maturity.
Financial investments held-to-maturity are measured at amortised cost based on the effective yield method. Amortisation of
premium, accretion of discount and impairment as well as gain or loss arising from derecognition of financial investments
held-to-maturity are recognised in the statement of comprehensive income.
Any sale or reclassification of more than an insignificant amount of financial investments held-to-maturity not close to
their maturity would result in the reclassification of all financial investments held-to-maturity to financial investments
available-for-sale, and prevents the Group from classifying the similar class of financial instruments as financial
investments held-to-maturity for the current and following two (2) financial years.
(iv)
Financial investments available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity.
Financial investments available-for-sale are measured at fair value. The return and cost of the financial investments
available-for-sale are credited and charged to the statement of comprehensive income using accreted/amortised cost
based on effective yield method. Any gain or loss arising from a change in fair value after applying the accreted/amortised
cost method are recognised directly in equity through the statement of changes in equity, until the financial asset is sold,
collected, disposed of or impaired, at which time the cumulative gain or loss previously recognised in equity will be transferred
to the statement of comprehensive income.
(v)
Reclassification of financial assets
The Group may choose to reclassify non-derivative assets out from the held-for-trading category, in rare circumstances,
where the financial assets are no longer held for the purpose of selling or repurchasing in the short term. In addition, the
Group may also choose to reclassify financial assets that would meet the definition of loans and receivables out of the
held-for-trading or available-for-sale categories if the Group have the intention and ability to hold the financial asset for the
foreseeable future or until maturity.
Reclassifications are made at fair value as at the reclassification date, whereby the fair value becomes the new cost or
amortised cost, as applicable. Any fair value gains or losses previously recognised in the statement of comprehensive
income is not reversed.
As at reporting date, the Group have not made any such reclassifications of financial assets.
(f)
Financial Liabilities
Financial liabilities are initially recognised at the fair value of consideration received less directly attributable transaction costs.
Subsequent to initial recognition, financial liabilities are measured at amortised cost. The Group does not have any non-derivative
financial liabilities designated at fair value through profit or loss. Financial liabilities measured at amortised cost include deposits
from customers, deposits from banks and debt securities issued and other borrowed funds.
Interest payables are now classified into the respective class of financial liabilities.
(g)
Repurchase Agreements
Financial instruments purchased under resale agreements are instruments which the Group have purchased with a commitment to
resell at future dates. The commitment to resell the instruments are reflected as an asset in the statement of financial position.
Conversely, obligations on financial instruments sold under repurchase agreements are instruments which the Group have sold
from their portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligations to repurchase
the instruments are reflected as a liability in the statement of financial position.
2012 ANNUAL REPORT
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(h)
Investment Properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or both.
Such property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment property
is carried at cost less any accumulated depreciation and any accumulated impairment. The policy for the recognition and
measurement of impairment is in accordance with Note 2(j)(v).
Freehold land has unlimited useful life and therefore, is not depreciated.
Such property is derecognised when either it has been disposed and no future economic benefit is expected from its disposal. Any
gain or loss on the retirement or disposal is recognised in the statement of comprehensive income in the year in which they arise.
(i)
Property, Plant and Equipment and Depreciation
Property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially
recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses
in the statement of comprehensive income during the financial period in which they are incurred.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Subsequent to initial recognition, property, plant and equipment except for freehold land are stated at cost less accumulated
depreciation and accumulated impairment, if any. The policy for the recognition and measurement of impairment is in accordance
with Note 2(j)(v).
Freehold land has an unlimited useful life and therefore is not depreciated. Other property, plant and equipment are depreciated on
the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, summarised as follows:
Buildings
Office furniture and fixtures
Motor vehicles
Office equipment
Renovations
Computer equipment
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method
and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic
benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in the
statement of comprehensive income.
2%
10%
10% - 16.6%
20%
20%
33.3%
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(j)
Impairment of Assets
The carrying amounts of the Groups assets except for deferred tax assets, are reviewed at the end of each reporting period to
determine whether there are any indications of impairment. If any such indications exist, the assets recoverable amount is estimated
to determine the amount of impairment to be recognised. The policies on impairment of assets are summarised as follows:
(i)
Loans, advances and financing of the Group are classified as impaired when they fulfill either of the following criteria:
(a)
principal or interest or both are past due for three (3) months or more;
(b)
where a loan is in arrears for less than three (3) months, the loan exhibits indications of credit weaknesses; or
(c)
where an impaired loan has been rescheduled or restructured, the loan will continue to be classified as impaired
until repayments based on the revised and/or restructured terms have been observed continuously for a period of
six (6) months.
For the determination of impairment, the Group assesses at each reporting date whether there is objective evidence that
a financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event)
and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment include:
(a)
significant financial difficulty of the issuer or obligor;
(b)
a breach of contract, such as a default or delinquency in interest or principal payments;
(c)
it becomes probable that the borrower will enter bankruptcy or winding up petition is served on the borrower, significant
shareholder or significant guarantor;
(d)
adverse Center Credit Reference Information System (CCRIS) findings or unfavorable industry developments for
that borrower; and
(e)
observable data indicating that there is a measurable decrease in the estimated future cash flows including
adverse changes in the repayment behavior of the borrower or downgrade of the borrowers credit ratings.
The Group first assesses individually whether objective evidence of impairment exists for all loans deemed to be individually
significant, and individually or collectively for loans, advances and financing that are not individually significant. If it is
determined that no objective evidence of impairment exists for an individually assessed loan whether significant or not,
the loan is then collectively assessed for impairment. If there is objective evidence that an impairment has been incurred,
the amount of the loss is measured as the difference between the assets carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets
original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment is the
current effective interest rate determined under the contract.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash
flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is
probable. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss
is recognised in the statement of comprehensive income. Interest income continues to be accrued on the reduced carrying
amount and is accrued using the rate of interest used to discount the future cash flows for the purposes of measuring the
impairment. The interest is recognised as interest income.
For loans which are collectively assessed, the Groups collective assessment impairment allowance is maintained at a
minimum of 1.5% of total outstanding loans, net of individual assessment impairment allowance.
For margin balances of the stockbroking business, the accounts are classified as impaired when the closing market value
of the counter(s) so financed has fallen below 130% of the outstanding balance, and 100% impairment allowance is made
on the impaired accounts, net of collateral held, if any.
2012 ANNUAL REPORT
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(j)
Impairment of Assets (contd)

(ii)
For financial investments held-to-maturity in which there are objective evidence of impairment, impairment is measured
as the difference between the financial instruments carrying amount and the present value of the estimated future cash
flows discounted at the original effective interest rate. The amount of the impairment is recognised in the statement of
comprehensive income.
Subsequent reversals in the impairment is recognised when the decrease can be objectively related to an event occurring after
the impairment was recognised, to the extent that the financial instruments carrying amount does not exceed its amortised
cost if no impairment had been recognised. The reversal is recognised in the statement of comprehensive income.
(iii) Financial investments available-for-sale

For financial investments available-for-sale in which there are objective evidence of impairment, the cumulative unrealised
losses that had been recognised directly in equity shall be transferred from equity to the statement of comprehensive income,
even though the securities have not been derecognised. The cumulative impairment is measured as the difference between
the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment previously
recognised in the statement of comprehensive income.
In the case of quoted equity investments, a significant or prolonged decline in the fair value of the security below its cost is
also considered in determining whether objective evidence of impairment exists. Where such evidence exists, the cumulative
loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously
recognised) is removed from equity and recognised in the statement of comprehensive income.
Impairment recognised on equity instruments classified as available-for-sale is not reversed subsequent to its recognition.
Reversals of impairment on debt instruments classified as available-for-sale are recognised in the statement of comprehensive
income if the increase in fair value can be objectively related to an event occurring after the recognition of the impairment in
the statement of comprehensive income.
(iv)
Goodwill/Intangible assets
Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment, or more frequently if
events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing,
goodwill from business combinations or intangible assets are allocated to cash-generating units (CGU) which are expected
to benefit from the synergies of the business combination or the intangible asset.
The recoverable amount is determined for each CGU based on its value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. An impairment is recognised in statement of comprehensive income
when the carrying amount of the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of the CGU.
The total impairment is allocated, first, to reduce the carrying amount of goodwill or intangible assets allocated to the CGU and
then to the other assets of the CGU on a pro-rata basis.
An impairment on goodwill is not reversed in subsequent periods. An impairment for other intangible assets is reversed if,
and only if, there has been a change in the estimates used to determine the intangible assets recoverable amount since
the last impairment was recognised and such reversal is through the statement of comprehensive income to the extent
that the intangible assets carrying amount does not exceed the carrying amount that would have been determined, net of
amortisation, if no impairment had been recognised.
(v)
Other assets
Other assets such as property, plant and equipment, investment properties, computer software, foreclosed properties and
investments in subsidiaries and associates are reviewed for objective indications of impairment at the end of each reporting
period or whenever there is any indication that these assets may be impaired. Where such indications exist, impairment is
determined as the excess of the assets carrying value over its recoverable amount (greater of value in use or fair value less
costs to sell) and is recognised in the statement of comprehensive income. An impairment for an asset is reversed if, and only
if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment was
recognised.
The carrying amount is increased to its revised recoverable amount, provided that the amount does not exceed the carrying
amount that would have been determined (net of amortisation or depreciation) had no impairment been recognised for the
asset in prior years. A reversal of impairment for an asset is recognised in the statement of comprehensive income.
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(k)
Leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership.
All leases that do not transfer substantially all the risks and rewards are classified as operating leases.
(i)
Finance Leases
Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values
and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and
impairment. The corresponding liability is included in the statement of financial position as borrowings. In calculating the
present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is
practicable to determine; otherwise, the Companys incremental borrowing rate is used. Any initial direct costs are also added
to the carrying amount of such assets.
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which
represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in
the statement of comprehensive income over the term of the relevant lease so as to produce a constant periodic rate of charge
on the remaining balance of the obligations for each accounting period.
The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described
in Note 2(i). The policy for the recognition and measurement of impairment is in accordance with Note 2(j)(v).
(ii)
Operating Leases
Operating lease payments are recognised in the statement of comprehensive income on a straight-line basis over the term of
the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expenses
over the lease term on a straight-line basis.
The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease
classification. Leasehold land that normally has an indefinite economic life and where title is not expected to pass to the
lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a
leasehold land is accounted for as prepaid lease payments at the end of the reporting period. In the case of a lease of land and
buildings, the prepaid lease payments or the upfront payments made are allocated, whenever necessary, between the land
and buildings elements in proportion to the relative fair values for leasehold interest in the land element and buildings element
of the lease at the inception of the lease. The prepaid lease payments are amortised over the lease term in accordance with
the pattern of benefits provided.
(l)
Bills and Acceptances Payable
Bills and acceptances payable represent the Groups own bills and acceptances rediscounted and outstanding in the market.
(m) Equity Instruments

Ordinary shares and irredeemable convertible preference shares (ICPS) are classified as equity. Dividends on ordinary shares
and ICPS are recognised in equity in the period in which they are declared.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction
costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have
been avoided.
(n)
Subordinated Bonds
The interest-bearing instruments are recognised as liability and are recorded at face value. Interest expense are accrued based on
the effective interest rate method.
(o)
Interest-bearing Borrowings
Interest-bearing bank borrowings are recorded at the amount of proceeds received. All the borrowing costs are recognised as
expenses in the statement of comprehensive income in the period in which they are incurred.
(p)
Other Assets
Other receivables are carried at anticipated realisable values. Bad debts are written-off when identified. An estimate is made for
doubtful debts based on a review of all outstanding amounts as at the end of the reporting period.
2012 ANNUAL REPORT
109

31 March 2012

(q)
Provisions
Provisions are recognised when:

- the Group has a present legal or constructive obligation as a result of past events;
- it is probable that an outflow of resources will be required to settle the obligation; and
- a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed (for example, under an insurance contract), the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain. Provision 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.
Provisions are measured at the present value 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 the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as finance cost expense.
(r)
Balances Due From Clients and Brokers
In line with FRS 139, Bursa Malaysia Securities Berhad (the Bursa) has amended the Rules of Bursa Securities issued on
4 November 2010. In accordance with the Rules of Bursa Securities, clients accounts are classified as impaired accounts
(previously referred to as non-performing) under the following circumstances:
Criteria for classification as impaired

Types
Doubtful
Bad
Contra losses
When account remains outstanding for

16 to 30 calendar days from the date of
contra transaction.
When the account remains outstanding for

more than 30 calendar days from the date
of contra transaction.
Overdue purchase contracts
When the account remains outstanding

from T+5 market days to 30 calendar days.
When the account remains outstanding for

more than 30 calendar days.
Bad debts are written off when identified. Impairment allowances are made for balances due from clients and brokers which
are considered doubtful or which have been classified as impaired, after taking into consideration collateral held by the Group and
deposits of and amounts due to dealer representative in accordance with the Rules of Bursa Securities. Collective assessment
allowance is made based on a certain percentage of balances due from clients and brokers (excluding outstanding purchase
contracts which are not due for payment) net of individual assessment allowances already made.
(s)
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the
Group and the amount of the revenue can be measured reliably.
(i)
Recognition of Dividend Income
Dividend income from financial investments held-to-maturity, financial investments available-for-sale and investment in
subsidiaries and associates are recognised when the right to receive payment is established.
(ii)
Recognition of Interest and Financing Income
Interest income is recognised using effective interest rates, which is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the loans or, where appropriate, a shorter period to the net carrying amount
of the loan. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of
the loans but does not consider future credit losses. The calculation includes significant fees paid or received between parties
to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
Interest income is recognised in the statement of comprehensive income for all interest-bearing assets on an accrual basis.
Interest income includes the amortisation of premium or accretion of discount. Income from the Islamic banking business is
recognised on an accrual basis in accordance with the Shariah principles.
110

31 March 2012

(s)
Revenue Recognition (contd)

(iii) Recognition of Fees and Other Income

Loan arrangement fees and commissions, management and participation fees and underwriting commissions are recognised
as income when all conditions precedent are fulfilled.
Commitment, guarantee and portfolio management fees which are material are recognised as income based on time
apportionment basis.
Corporate advisory fees are recognised as income on the completion of each stage of the assignment.
Brokerage charged to clients is recognised on the day when the contracts are executed.
(t)
Recognition of Interest and Financing Expenses
Interest expense and attributable profit (on activities relating to Islamic banking business) on deposits and borrowings of the
Group are recognised on an accrual basis.
(u)
Derivative Financial Instruments and Hedging Activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured
at their fair value.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument,
and the nature of the item being hedged. The Group designate derivatives that qualify for hedge accounting as either:
(i)
Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);
(ii)
Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash
flow hedge); or
(iii)
Hedges of a net investment in a foreign operation (net investment hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as
well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
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.
(i)
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in statement of
comprehensive income, together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk.
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 profit or loss over the period to maturity.
(ii)
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in
statement of comprehensive income.
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 statement of changes in equity and is recognised when the
forecast transaction is ultimately recognised in statement of comprehensive income. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in statement of changes in equity is immediately transferred
to statement of comprehensive income.
2012 ANNUAL REPORT
111

31 March 2012

(u)
Derivative Financial Instruments and Hedging Activities (contd)

(iii) Net investment hedge

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income. The gain or
loss relating to the ineffective portion is recognised immediately in statement of comprehensive income.
Gains and losses accumulated in other comprehensive income are included in statement of comprehensive income when the
foreign operation is partially disposed of or sold.
(iv)
Derivatives that do not qualify for hedge accounting
Certain derivatives instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that
does not qualify for hedge accounting are recognised immediately in the statement of comprehensive income.
(v)
Foreign Currency Translations
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction.
At the end of each reporting period, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling
at that date.
All exchange rate differences are taken to the statement of comprehensive income.
The financial statements are presented in Ringgit Malaysia, which is also the Groups and the Companys primary functional
currency.
(w) Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income
taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the end of
reporting date.
Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting date between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences,
unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the
temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled,
based on tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is recognised as
income or an expense in the statement of comprehensive income for the period, except when it arises from a transaction which is
recognised directly in other comprehensive income or directly in equity, in which case the deferred tax is also charged or credited
to other comprehensive income or to equity, or when it arises from a business combination that is an acquisition, in which case the
deferred tax is included in the resulting goodwill.
(x)
Foreclosed Properties
Foreclosed properties are stated at the lower of carrying amount and fair value less costs to sell.
(y)
Cash and Cash Equivalents
Cash and cash equivalents as stated in the statements of cash flow comprise cash and bank balances and short-term deposits
maturity within one month that are readily convertible into cash with insignificant risk of changes in value.
(z)
Zakat
This represents Islamic business zakat. It is an obligatory amount payable by an Islamic banking subsidiary to comply with the
Shariah principles.
112

31 March 2012

(aa) Employee Benefits
(i)
Short-Term Benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated
services are rendered by employees of the Group. Short-term accumulating compensated absences such as paid annual leave
are recognised when services are rendered by employees that increase their entitlement to future compensated absences,
and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii)
Defined Contribution Plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate
entities or funds and will have no legal or constructive obligations to pay further contributions if any of the funds do not hold
sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.
Such contributions are recognised as an expense in the statement of comprehensive income as incurred. As required by law,
companies in Malaysia make contributions to the Employees Provident Fund (EPF).
(iii) Equity Compensation Benefits

The ESS comprise the Share Option Plan, the Share Grant Plan and the Share Save Plan. The ESS are an equity-settled,
share-based compensation plans, in which the Groups Directors and employees are granted or are allowed to acquire
ordinary shares of the Company.
The total fair value of the share options/share grants offered/awarded to the eligible Directors and employees are recognised
as an employee cost with a corresponding increase in the share scheme reserve within equity over the vesting period and
taking into account the probability that the scheme will vest. The fair value of the shares options/share grants are measured
at grant date, taking into account, if any, the market vesting conditions upon which the share options/share grants were
offered/awarded but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included
in assumptions about the number of share options/share grants that are expected to become exercisable/to vest.
At the end of each reporting period, the Group revises its estimates of the number of share options/share grants that are
expected to become exercisable/to vest. It recognises the impact of the revision of original estimates, if any, in the statement
of comprehensive income, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is
recognised in the share scheme reserve until the share options/share grants are exercised/vested.
The proceeds received net of any directly attributable transaction costs are credited to equity when the options are
exercised.
(ab) Contingent Liabilities and Contingent Assets

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is
a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one
or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not
probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare
case where there is a liability that cannot be recognised because it cannot be measured reliably.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent
assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
(ac) Financial Guarantee Contracts

Financial guarantee contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs
because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial
guarantees are given to banks, financial instituitions and other bodies on behalf of customers to secure loans, overdraft and other
banking facilities.
2012 ANNUAL REPORT
113

31 March 2012

(ac) Financial Guarantee Contracts (contd)

Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. The fair
value of a financial guarantee at the time of signature is zero because all guarantees are agreed on arms length terms and the value
of the premium agreed corresponds to the value of the guarantee obligation. No receivable for the future premiums is recognised.
Subsequent to initial recognition, the Groups liabilities under such guarantees are measured at the higher of the initial amount, less
amortisation of fees recognised in accordance with FRS 137 Provision, Contingent Liabilities and Contingent Assets, and the best
estimate of the amount required to settle the guarantee. These estimates are determined based on experience of similar transactions
and history of past losses, supplemented by the judgement of management. The fee income earned is recognised on a straight-line
basis over the life of the guarantee. Any increase in the liability relating to guarantees is reported in the profit or loss.
(ad) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments.
(ae) Non-current Assets Held for Sale

Non-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell
if their carrying amount is recovered principally through a sale transaction rather than through continuing use.
3. CASH AND SHORT-TERM FUNDS

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Cash and balances with banks and other

Money at call and deposit placements maturing
within one month
488,971
501,618
32
1,385,362
412,420
6,492
46,826
1,874,333
914,038
6,501
46,858
Note:
(i)
Included in the cash and short-term funds of the Group are monies held in trust by a subsidiary amounting to RM72,498,000
(2011: RM87,504,000).
(ii)
There is an amount of RM325,000 (2011: RM44,465,000) being the deposits placement by the Company with its subsidiaries.
4. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Licensed banks
Licensed investment banks
93,438
4,275
50,193
50,035

19,315
605,700
97,713
100,228
19,315
605,700
Note:
(i)
The deposits of the Company with maturity more than one month amounting to RM NIL (2011: RM600,000,000) are placed with
its subsidiaries.
(ii)
An amount of RM4,264,000 (2011: RM2,298,000) being a bank account maintained by the Company for PB Trustee Services Berhad
pursuant to the Companys ESS.
114

31 March 2012
5. BALANCES DUE FROM CLIENTS AND BROKERS

Group
2012
RM000
2011
RM000
Due from clients

Due from brokers
58,060
4,900
96,318

Less: Allowance for other losses
62,960
(1,262)
96,318
(15,799)
61,698
80,519
These represent amounts receivable by Alliance Investment Bank Berhad (AIBB) from non-margin clients and outstanding contracts
entered into on behalf of clients where settlement via the Bursa Malaysia Securities Clearing Sdn. Bhd. has yet to be made.
AIBBs normal trade credit terms for non-margin clients is three (3) market days in accordance with the Bursa Malaysia Securities Berhads
(Bursa) Fixed Delivery and Settlement System (FDSS) trading rules.
Included in the balances due from clients and brokers are impaired accounts, as follows:
Group
2012
RM000
2011
RM000
Classified as doubtful
Classified as bad
165
1,420
976
15,856
1,585
16,832
The movements in allowance for other losses are as follows:

At beginning of year
Allowance made during the year
Reversal of allowance
Amount written off

Group
2012
RM000
2011
RM000
15,799
1,536
(1,623)
(14,450)
16,482
2,214
(2,897)
1,262
15,799
6. FINANCIAL ASSETS HELD-FOR-TRADING

Group
2012
RM000
2011
RM000
Money market instruments:

Bank Negara Malaysia bills
Malaysian Government securities
Malaysian Government investment certificates
Malaysian Government treasury bills
1,371,696
20,053
100,246

1,848,299
59,951
30,000
1,491,995
1,938,250
At fair value
2012 ANNUAL REPORT
115

31 March 2012
7. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

Group
2012
RM000
2011
RM000
2,316,772
1,833,967
35,254
884,535
1,944,074
3,244,713
764,371
35,396
1,741,201
1,388,637
4,212
4,768
3,875
7,818
Unquoted securities:
Shares
Debt securities and medium term notes
135,888
1,963,731
117,587
1,956,342
9,123,201
9,259,940
At fair value
Cagamas bonds
Negotiable instruments of deposits
Bankers acceptances
Quoted securities in Malaysia:
Shares
Debt securities
8. FINANCIAL INVESTMENTS HELD-TO-MATURITY

Group
2012
RM000
2011
RM000
328,639
439,463
804,820
105,624
4,902
74,283
116,711

Accumulated impairment
842,385
(47,129)
1,032,057
(91,331)
795,256
940,726
At amortised cost
At cost
Debt securities
Debt securities
The table below shows the movements in accumulated impairment during the financial year for the Group:

Group
2012
RM000
2011
RM000
Reclassified to financial investments available-for-sale due
to conversion of bond into equity instrument
Write-back during the year
91,331
94,822
(4,902)
(39,300)
(3,491)
At end of year
47,129
91,331
116

31 March 2012
9. DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)

Derivative financial instruments are financial instruments whose values change in response to changes in prices or rates (such as foreign
exchange rates, interest rates and security prices) of the underlying instruments. These instruments allow the Group and the banking
customers to transfer, modify or reduce their foreign exchange and interest rate risk hedge relationships. The Group also transacts in
these instruments for proprietary trading purposes. The risks associated with the use of derivative financial instruments, as well as
managements policy for controlling these risks are set out in Note 43.
The table below shows the Groups derivative financial instruments as at the end of the reporting period. The contractual or underlying
notional amounts of these derivative financial instruments and their corresponding gross positive (derivative financial asset) and gross
negative (derivative financial liability) fair values as at the end of the reporting period are analysed below.

2012

Contract/
Fair Value
Contract/

Notional
Notional

Amount
Assets
Liabilities
Amount
Group
RM000
RM000
RM000
RM000
2011
Fair Value
Assets
RM000
Liabilities
RM000
Foreign exchange contracts and

commodity contracts:
- Currency forwards
- Currency swaps
- Currency spots
- Currency options
- Gold options
859,253
1,690,284
258,209
122,204
217,538
4,792
9,774
185
467
2,512
(6,243)
(8,784)
(150)
(324)
(1,102)
442,706
1,819,102
76,047
24,473
482,299
1,217
18,692
70
90
2,499
(7,713)
(18,042)
(37)
(57)
(2,499)
Interest rate related contracts:

- Interest rate swaps
2,106,781
5,982
(9,215)
2,112,000
9,479
(4,999)
Hedging Derivatives
- Interest rate swaps
14,115
(423)
5,268,384
23,712
(26,241)
4,956,627
32,047
(33,347)
Total derivative assets/(liabilities)
The Group use fair value hedges to protect against the changes in fair value of financial assets and financial liabilities due to movements
in market interest rates.
During the financial year, the Group use interest rate swaps to hedge against interest rate risk of structured deposits. There was no
ineffectiveness to be recorded from their fair value hedge.
2012 ANNUAL REPORT
117

31 March 2012
10. LOANS, ADVANCES AND FINANCING
Group
2012
RM000
2011
RM000
1,853,950
1,753,908
9,259,885
472,949
654,336
7,715,570
308,763
207,515
2,337,986
54,567
623,563
1,043,680
451,282
8,325,550
287,171
784,046
6,310,426
179,607
176,527
2,202,863
60,938
663,059
1,347,748
347,518

Add: Sales commissions and handling fees
Less: Allowance for impaired loans, advances and financing
- Individual assessment allowance
- Collective assessment allowance
24,984,046
28,523
22,439,361
24,969
(266,349)
(386,017)
(328,375)
(339,636)
Total net loans, advances and financing
24,360,203
21,796,319
Overdrafts
Term loans/financing
- Housing loans/financing
- Syndicated term loans/financing
- Hire purchase receivables
- Other term loans/financing
Bills receivables
Trust receipts
Claims on customers under acceptance credits
Staff loans [include RM92,000 loans to Directors of banking subsidiary (2011: RM121,000)]
Credit/charge card receivables
Revolving credits
Other loans
(i)
By maturity structure:
Within one year

One year to three years
Three years to five years
Over five years
7,023,573
822,931
1,253,470
15,884,072
6,868,094
771,372
1,389,244
13,410,651
24,984,046
22,439,361
(ii)
By type of customer:
Domestic non-bank financial institutions

- Stockbroking companies
- Others
Domestic business enterprises
- Small and medium enterprises
- Others
Government and statutory bodies
Individuals
Other domestic entities
Foreign entities

207,162
20,002
187,410
5,472,374
4,961,344
12,618
13,457,860
247,679
625,009
4,784,192
4,531,660
18,224
12,349,218
14,671
533,984
24,984,046
22,439,361
(iii)
By interest/profit rate sensitivity:
Fixed rate
- Other fixed rate loans/financing
Variable rate
- Base lending rate plus
- Cost plus
- Other variable rates
90,812
654,337
1,997,225
107,669
784,046
2,207,047
16,737,766
5,200,601
303,305
14,989,061
4,120,772
230,766
24,984,046
22,439,361
118

31 March 2012
10. LOANS, ADVANCES AND FINANCING (contd)
Group
2012
RM000
2011
RM000
456,010
561,763
13,100,915
354,975
703,969
11,514,820

of which: - Residential

- Non-residential
9,750,258
3,350,657
8,671,706
2,843,114
Purchase of fixed assets excluding land and buildings

Personal use
Credit card
Construction
Merger and acquisition
Working capital
Others
117,110
2,146,045
623,563
249,709
207,265
6,327,613
1,194,053
99,836
2,093,967
663,059
253,621
6,116,583
638,531
24,984,046
22,439,361
(v)
By geographical distribution:
Northern region
Central region
Southern region
East Malaysia region
1,911,286
18,825,748
2,100,061
2,146,951
1,882,761
16,442,221
2,014,167
2,100,212
24,984,046
22,439,361
(vi)
Movements in impaired loans, advances and financing (impaired loans) are as follows:
Impaired during the year
Reclassified as non-impaired during the year
Recoveries
Amount written off
741,324
441,439
(361,159)
(106,986)
(113,483)
843,866
564,613
(328,118)
(190,022)
(149,015)
At end of year
601,135
741,324
Gross impaired loans as % of gross loans, advances and financing
2.4%
3.3%
(iv)
By economic purposes:
Purchase of securities
Purchase of transport vehicles
Purchase of landed property
(vii) Movements in the allowance for impaired loans are as follows:

Individual assessment allowance

Allowance made during the year (net)
Amount written off
328,375
43,363
(105,389)
389,578
87,812
(149,015)
At end of year
266,349
328,375
Collective assessment allowance

339,636
46,381
323,644
15,992
At end of year
386,017
339,636
As % of gross loans, advances and financing less individual assessment allowance
1.6%
1.5%
2012 ANNUAL REPORT
119

31 March 2012
Group
2012
RM000
2011
RM000
5,432
5,652
251,134
10,268
8,959
283,410


- Non-residential
180,614
70,520
209,057
74,353
190
29,955
9,908
11,869
245,777
41,218
182
37,151
12,694
12,777
315,987
59,896
601,135
741,324
135,319
358,099
50,698
57,019
104,487
500,546
68,965
67,326
601,135
741,324
(viii) Impaired loans analysed by economic purposes are as follows:


Personal use
Credit card
Construction
Working capital
Others

(ix)
Impaired loans by geographical distribution:
Northern region
Central region
Southern region
11. OTHER ASSETS

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Other receivables, deposits and prepayments [Note (a)]

Trade receivables
Foreclosed properties
Amounts due from subsidiaries [Note (b)]
100,059
2,514

103,113
2,190
4,200

250

2,327
208
1,349

Less: Allowance for other losses [Note (c)]
102,573
(24,416)
109,503
(21,882)
2,577
(2,308)
1,557
(1,338)
78,157
87,621
269
219

Note:
(a)
Other receivables, deposits and prepayments
Included in other receivables, deposits and prepayments of the Group is an amount of RM22,044,000 (2011: RM25,134,000) being
the principal balance of housing loans and hire purchase loans acquired by the banking subsidiary from a state owned entity and
which have been sold to Cagamas Berhad, with recourse obligations.
(b)
Amounts due from subsidiaries
Non-interest bearing
Less: Allowance for impairment losses
Company
2012
RM000
2011
RM000
2,327
(2,308)
1,349
(1,338)
19
11
The amounts due from subsidiaries of RM2,327,000 (2011: RM1,349,000) are unsecured, interest-free and repayable upon demand.
120

31 March 2012
11. OTHER ASSETS (contd)

(c)
Movements in allowance for other losses of the Group and the Company:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Allowance net of write-back
21,882
2,534
21,853
29
1,338
970
696
642
At end of year
24,416
21,882
2,308
1,338
12. STATUTORY DEPOSITS

Statutory deposits comprise the following:

(a)
Non-interest bearing statutory deposits of RM1,162,983,000 (2011: RM291,008,000) relating to the banking subsidiaries, maintained
with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act, 2009, the amounts of which are
determined as a set percentage of total eligible liabilities.
(b)
Interest bearing statutory deposits of RM100,000 (2011: RM100,000) relating to a subsidiary, Alliance Trustee Berhad which is
maintained with the Accountant-General in compliance with Section 3(f) of the Trust Companies Act, 1949.
13. INVESTMENTS IN SUBSIDIARIES

Company
2012
RM000
2011
RM000
1,810,438

1,817,638
(7,200)

Employees Share Scheme [Note (a)]
1,810,438
14,360
1,810,438
14,344

Less: Accumulated impairment
1,824,798
(47,293)
1,824,782
(47,293)
At end of year
1,777,505
1,777,489
Note:
Unquoted shares, at cost

Liquidation of a subsidiary
(a)
This amount is in respect of the services rendered by the employees of the Companys subsidiaries, pursuant to the Employees
Share Scheme.
121
2012 ANNUAL REPORT

31 March 2012
13. INVESTMENTS IN SUBSIDIARIES (contd)

Details of the subsidiaries, which are incorporated in Malaysia, are as follows:
Name
Principal activities
Effective equity
interest
2012
2011
%
%
Subsidiaries of the Company

Banking and finance business and the provision of
related financial services
Investment holding
Investment holding
Dormant
Trustee services
Property holding
100
100
100
100
100
100
100
100
100
100
100
100
Investment banking business including Islamic banking,

provision of stockbroking services and related
financial services
Islamic banking and the provision of related
financial services
Dealing in sales and distribution of consumer and
commercial banking products
Nominee services
Nominee services
Management of unit trusts funds, provision of
fund management and investment advisory services
Liquidated
100
100
100
100
100
100
100
100
70
100
100
70
100
Alliance Research Sdn. Bhd.

AIBB Nominees (Tempatan) Sdn. Bhd.
AIBB Nominees (Asing) Sdn. Bhd.
KLCS Sdn. Bhd.
Alliance Investment Futures Sdn. Bhd.
Rothputra Nominees (Tempatan) Sdn. Bhd.
(under members' voluntary winding up)
KLCity Ventures Sdn. Bhd.
Investment advisory
Nominee services
Nominee services
Dormant
Dormant
Dormant
100
100
100
100
100
100
100
100
100
100
100
100
Liquidated
100
KLCS Asset Management Sdn. Bhd.
Liquidated
100
KLCity Unit Trust Bhd.
Liquidated
94.94
Special purpose vehicle for ESS

Hijauan Setiu Sdn. Bhd.
Setiu Integrated Resort Sdn. Bhd.
Pridunia Sdn. Bhd.
Alliance Trustee Berhad
Kota Indrapura Development Corporation Berhad
Subsidiaries of Alliance Bank Malaysia Berhad
Alliance Investment Bank Berhad

Alliance Direct Marketing Sdn. Bhd.
AllianceGroup Nominees (Asing) Sdn. Bhd.
AllianceGroup Nominees (Tempatan) Sdn. Bhd.
Alliance Investment Management Berhad
AllianceGroup Properties Sdn. Bhd.
Subsidiaries of Alliance Investment Bank Berhad
Unincorporated trust for ESS*
* Deemed subsidiary pursuant to IC 112 Consolidation: Special Purpose Entities
122

31 March 2012
14. INVESTMENT IN ASSOCIATE
Group
2012
RM000
2011
RM000
At cost
Share of post acquisition losses
30,000
(3,448)
30,000
(1,470)
26,552
28,530
Represented by:
Share of net tangible assets
26,552
28,530
Unquoted shares
Details of the associate, which is incorporated in Malaysia, is as follows:

Name
Principal activities
AIA AFG Takaful Berhad
Offering and providing of Takaful products

and services
Effective equity interest

2012
2011
%
%
30
30
The summarised financial information of the associate is as follows:

2012
RM000
2011
RM000
Assets and Liabilities

Current assets
Non-current assets
11,968
78,780
207
99,647
90,748
99,854
Current liabilities
2,242
4,665
2,242
4,665
Results
Revenue
Loss for the year
9,812
(6,594)
1,206
(4,810)
15. INVESTMENT PROPERTY

Group
2012
RM000
2011
RM000
Freehold land, at cost

Development costs
23,114
8,943
23,114
8,943
32,057
32,057
Accumulated impairment:
At beginning/end of year
(4,309)
(4,309)
27,748
27,748
The fair value of the freehold land of RM34,758,000 (2011: RM34,758,000) is derived based on an independent professional valuation using
the open market value on a direct comparison basis.
The investment property incurred direct expenses amounting to RM286,412 (2011: RM334,947) for the current financial year.
9,477
At end of year
1,953
Net Carrying Amount
2,560
At end of year
Accumulated Impairment
Charge for the year
Reclassified to non-current assets
held for sale [Note 53]
2,621
110

(171)
12,037
1,953
At end of year
(1,009)
Accumulated Depreciation
Charge for the year
Disposals
Written off
Transfer
12,567

(530)
2,962

Cost
Additions
Disposals
Written off
Transfer
2012
1,016
834
(178)
814
27

171
1,850
(530)
1,850

530
25,836
5,268
(148)
3,956
1,460
12,096
(4,542)
15,792
846

43,200
(7,143)
50,343

24,942
91,071
80,054
15,144
(38)
(4,089)

116,013
113,212
8,856
(51)
(6,004)

Leasehold land

Less

Freehold
50 years
than

land
or more
50 years
Buildings
Renovations
Group
RM000
RM000
RM000
RM000
RM000
16. PROPERTY, PLANT AND EQUIPMENT
31 March 2012
16,304
52,855
49,371
6,782
(376)
(2,922)

69,159
65,724
6,886
(409)
(3,042)

8,702
119,922
128,982
6,211
(96)
(15,175)

128,624
137,887
6,020
(97)
(15,186)

Office
equipment
Computer
and furniture
equipment
RM000
RM000
2,063
718
927
254
(458)
(5)

2,781
2,809
958
(981)
(5)

Motor
vehicles
RM000
90,293
5,268
(148)
3,956
1,460
280,056
(4,720)
278,561
29,374
(968)
(22,191)
375,617
(8,682)
387,354
22,720
(1,538)
(24,237)
Total
RM000
2012 ANNUAL REPORT
123
Accumulated Impairment
2,962
At end of year
Net Carrying Amount
2,962
At end of year
Charge for the year
Disposals
Written off
Transfer
2,962

Cost
Additions
Disposals
Written off
Transfer
2011
9,946
2,621
2,781
117

(277)
12,567
11,767

800
1,036
814
517
20

277
1,850
2,650

(800)
30,595
3,956
15,792
14,805
987

50,343
50,343

33,158
80,054
67,311
16,887
(116)
(4,028)

113,212
115,910
4,287
(1,477)
(5,508)

Leasehold land

Less

Freehold
50 years
than

land
or more
50 years
Buildings
Renovations
Group
RM000
RM000
RM000
RM000
RM000
16. PROPERTY, PLANT AND EQUIPMENT (contd)
31 March 2012
16,353
49,371
45,013
11,726
(3,665)
(3,703)

65,724
72,653
2,676
(3,983)
(5,622)

8,905
128,982
119,955
9,540
(133)
(380)

137,887
131,195
7,265
(193)
(380)

Office
equipment
Computer
and furniture
equipment
RM000
RM000
1,882
927
1,164
315
(547)
(5)

2,809
3,115
654
(955)
(5)

Motor
vehicles
RM000
104,837
3,956
278,561
251,546
39,592
(4,461)
(8,116)
387,354
390,595
14,882
(6,608)
(11,515)
Total
RM000
124
2012 ANNUAL REPORT
125

31 March 2012
16. PROPERTY, PLANT AND EQUIPMENT (contd)

Computer

equipment

RM000
Company
Office
equipment
and
furniture
RM000
Motor
vehicles
RM000
Renovations
RM000
Total
RM000
2012
Cost
Additions
Disposal
276

554

396
500
(396)
599
36

1,825
536
(396)
At end of year
276
554
500
635
1,965
Charge for the year
Disposal
276

515
9

165
46
(194)
584
48

1,540
103
(194)
At end of year
276
524
17
632
1,449
30
483
516
Cost
276
554
396
599
1,825
Charge for the year
269
7
496
19
133
32
566
18
1,464
76
At end of year
276
515
165
584
1,540
39
231
15
285
Net Carrying Amount

2011
Net Carrying Amount
17. INTANGIBLE ASSETS

Group
2012
RM000
2011
RM000
304,149
304,149
(2,084)
(2,084)
302,065
302,065
Goodwill
Cost
Accumulated Impairment:
Net Carrying Amount
126

31 March 2012
17. INTANGIBLE ASSETS (contd)

Group
2012
RM000
2011
RM000
Cost
Additions
Disposal
Written off
182,980
16,300

(1,201)
172,922
10,400
(286)
(56)
At end of year
198,079
182,980
Accumulated Amortisation
Charge for the year
Disposal
Written off
(127,363)
(18,239)

360
(113,129)
(14,420)
131
55
At end of year
(145,242)
(127,363)
52,837
55,617
354,902
357,682
Computer software
Net Carrying Amount

Total carrying amount of goodwill and computer software
(a)
Impairment test on goodwill
Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred.
Goodwill has been allocated to the Groups cash-generating units (CGU) that expected to benefit from the synergies of the
acquisitions, identified according to the business segments as follows:
Corporate banking
Commercial banking
Small and medium enterprise banking
Consumer banking
Financial markets
Corporate finance and equity capital market
Stockbroking business
Asset management
Group
2012
RM000
2011
RM000
44,758
13,459
42,621
101,565
83,284
1,838
12,433
2,107
44,758
13,459
42,621
101,565
83,284
1,838
12,433
2,107
302,065
302,065
For annual impairment testing purposes, the recoverable amount of the CGUs, which are reportable business segments, are determined
based on their value-in-use. The value-in-use calculations apply a discounted cash flow model using cash flow projections based
on financial budget and projections approved by management. The key assumptions for the computation of value-in-use include the
discount rates, cash flow projection and growth rates applied are as follows:
(i)
Discount rate
The discount rate of 10.15% - 23.30% (2011: 11.25% - 32.00%) are based on the pre-tax weighted average cost of capital
plus an appropriate risk premium, that reflect specific risks relating to the Group. The pre-tax weighted average cost of capital
is generally derived from an appropriate capital asset pricing model, which itself depends on inputs reflecting a number of
financial and economic variables including the risk-free rate in the country.
2012 ANNUAL REPORT
127

31 March 2012
17. INTANGIBLE ASSETS (contd)

(a)
Impairment test on goodwill (contd)

(ii)
Cash flow projections and growth rate
Cash flow projections are based on five-year financial budget and projections approved by management. Cash flows beyond
the fifth year are extrapolated in perpetuity using a nominal growth rate of 4.7% (2011: 6.5%) based on respective industrys
average growth rate forecasted. Cash flows are extrapolated in perpetuity due to the long term perspective of these businesses
within the Group.
Impairment is recognised in the statement of comprehensive income when the carrying amount of a CGU exceeds its recoverable
amount. This annual impairment test review reveals that there was no evidence of impairment for the financial year.
(b)
Sensitivity to changes in assumptions
Any reasonable possible change in the key assumptions would not cause the carrying amount of the goodwill to exceed the
recoverable amount of the CGU, which would warrant any impairment to be recognised.
18. DEFERRED TAX

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 net deferred tax assets and liabilities shown on the statement
of financial position after appropriate offsetting are as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
15,341
(23,012)
109,099
(6,792)
300

284
(7,671)
102,307
300
284
102,307
(88,596)
(21,382)
68,240
32,086
1,981
284
16

4
280
At end of year
(7,671)
102,307
300
284
Deferred tax assets

- to be recovered more than 12 months
- to be recovered within 12 months
14,464
877
68,233
40,866
51
249
32
252
15,341
109,099
300
284

- to be recovered more than 12 months
- to be recovered within 12 months
2,182
(25,194)
212
(7,004)
(23,012)
(6,792)
Deferred tax assets and liabilities prior to offsetting

are summarised as follows:
Deferred tax assets
51,076
(58,747)
141,702
(39,395)
302
(2)
293
(9)
(7,671)
102,307
300
284
Deferred tax assets, net

Deferred tax liabilities, net

Recognised in statement of comprehensive income
Recognised in equity
128

31 March 2012
18. DEFERRED TAX (contd)

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:
Allowance for
losses on loans,
advances and
financing
RM000
Unabsorbed
tax losses
and capital
allowances
RM000
Other
temporary
differences
RM000
Total
RM000
Deferred tax assets:

At 1 April 2010
74,016
11,622
4,498
(260)
34,583
17,243
113,097
28,605
At 31 March 2011
85,638
(73,312)
4,238
(1,050)
51,826
(16,264)
141,702
(90,626)
At 31 March 2012
12,326
3,188
35,562
51,076

Financial

investments
available-for-sale
Group

RM000
Property,
plant and
equipment
RM000
Total
RM000
Group
Deferred tax liabilities:

At 1 April 2010
24,855

(1,981)
20,002
(3,481)

44,857
(3,481)
(1,981)
At 31 March 2011
22,874

21,382
16,521
(2,030)

39,395
(2,030)
21,382
At 31 March 2012
44,256
14,491
58,747
Other temporary

differences
Company

RM000
Total
RM000
Deferred tax assets:

At 1 April 2010

293
293
At 31 March 2011
293
9
293
9
At 31 March 2012
302
302

Company

Property,
plant and
equipment
RM000
Other
temporary
differences
RM000
Total
RM000
Deferred tax liabilities:

At 1 April 2010
(53)
62
49
(49)
(4)
13
At 31 March 2011
9
(7)
9
(7)
At 31 March 2012
2012 ANNUAL REPORT
129

31 March 2012
18. DEFERRED TAX (contd)

Group

2012
2011

RM000
RM000
Deferred tax assets of the Group have not been recognised in respect of:
Unabsorbed tax losses

5,775
19. DEPOSITS FROM CUSTOMERS

Group
2012
RM000
2011
RM000
Demand deposits
Savings deposits
Fixed/investment deposits
Money market deposits
Structured deposits [Note]
9,141,209
1,700,686
15,595,344
4,091,427
1,407,325
194,971
8,010,395
1,633,845
14,580,270
3,042,274
993,052
85,811
32,130,962
28,345,647
16,483,378
4,516,406
72,776
21,536
14,449,496
4,098,314
54,539
13,247
21,094,096
18,615,596
2,151,287
1,396,323
11,845,743
15,707,697
1,029,912
998,676
1,069,088
10,111,082
15,227,162
939,639
32,130,962
28,345,647
(i)
The maturity structure of fixed/investment deposits, money market deposits

and negotiable instruments of deposits are as follows:
Due within six months

Six months to one year

(ii)
The deposits are sourced from the following types of customers:
Domestic financial institutions

Business enterprises
Individuals
Others

Note:
(a)
Structured deposits represent foreign currency time deposits with embedded foreign exchange, gold commodity linked options and
interest rate index linked placements.
(b)
The Group has undertaken a fair value hedge on the interest rate risk of the structured deposits amounting to RM14,115,000
(2011: RM Nil) using interest rate swaps.
Structured deposits
Fair value changes arising from fair value hedges
Group
2012
RM000
2011
RM000
14,115
(423)
13,692
The fair value gain of the interest rate swap in this hedge transaction as at financial year ended 31 March 2012 is RM423,000
(2011: RM Nil).
130

31 March 2012
20. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group
Licensed banks
Licensed investment banks
Licensed Islamic banks
Bank Negara Malaysia

2012
RM000
2011
RM000
976,450
180,036
245,468
759,051
744,993
280,380
6,000
920,827
2,161,005
1,952,200
21. BALANCES DUE TO CLIENTS AND BROKERS

Group
2012
RM000
2011
RM000
Due to clients
Due to brokers
74,915

80,460
6,283
74,915
86,743
These mainly relate to amounts payable to non-margin clients and outstanding contracts entered into on behalf of clients where settlement
via the Bursa Malaysia Securities Clearing Sdn. Bhd. has yet to be made.
The Groups normal trade credit terms for non-margin clients is three (3) market days according to the Bursas FDSS trading rules.
22. BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable represents the Groups own bills and acceptances rediscounted and outstanding in the market.
23. AMOUNT DUE TO CAGAMAS BERHAD

This relates to proceeds received from conventional housing loans and hire purchase loans sold directly to Cagamas Berhad with recourse
to the Group. Under the agreement, the Group undertakes to administer the loans on behalf of Cagamas Berhad and to buy back any loans
which are regarded as defective based on pre-determined and agreed upon prudential criteria set by Cagamas Berhad.
24. OTHER LIABILITIES

Other payable and accruals

Remisiers accounts
Amount due to subsidiaries [Note]
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
849,577
21,230

787,517
24,373

3,996

358
1,524
870,807
811,890
4,354
1,529
Note: The amount due to subsidiaries are unsecured, interest-free and repayable upon demand.
25. SUBORDINATED OBLIGATIONS
2012
RM000
2011
RM000

611,615
600,000
611,615
600,000
Tier - 2 Subordinated bonds

Tier - 2 Subordinated Medium Term Notes
(a)
(b)
Group
2012 ANNUAL REPORT
131

31 March 2012
25. SUBORDINATED OBLIGATIONS (contd)

(a)
Tier - 2 Subordinated bonds
The main features of the subordinated bonds are as follows:

(i)
Issue date
: 26 May 2006
(ii)
Tenure of the facility/issue
: 10-year from the Issue Date on a non-callable 5 year basis
(iii)
Anniversary date
: 26 May
(iv)
Maturity date
: 26 May 2016
(v)
Interest coupon
: 6.09% per annum, subject to revision of rate in year six
(vi)
Revision of interest
: The bonds, unless redeemed at the end of five (5) years from the settlement date, shall bear
interest of 7.59% per annum from the sixth year onwards until the final redemption
(vii) Redemption option

: The issuer may, at its option, redeem the subordinated bonds in part or in whole, at any
anniversary date on or after five (5) years from the issue date
(viii) Final redemption

: At par on maturity date
Alliance Bank Malaysia Berhad (ABMB), a wholly-owned subsidiary of the Company has fully redeemed the subordinated bonds on
26 May 2011 upon obtaining approval from Bank Negara Malaysia.
(b) Tier - 2 Subordinated Medium Term Notes

Group
2012
RM000
At cost
Accumulated unamortised discount
Interest accrued
600,000
(2,171)
13,786
611,615
On 8 April 2011, ABMB completed the issuance of RM600 million Subordinated Medium Term Notes (Subordinated Notes)
under the RM1.5 billion Subordinated Medium Term Notes Programme (Subordinated MTN Programme).
The Subordinated MTN Programme was earlier approved by Bank Negara Malaysia and the Securities Commission on 30 December
2010 and 25 February 2011 respectively. The Subordinated Notes are eligible for inclusion as Tier-2 capital of ABMB under
BNMs capital adequacy regulations.
The Subordinated Notes have been assigned a long term rating of A2 by RAM Rating Services Berhad with tenure of 10 years,
callable five (5) years after issue date and on every coupon payment date thereafter, subject to BNMs approval.
The coupon rate for the Subordinated Notes is fixed at 4.82% per annum, payable semi-annually throughout the entire tenure
and was issued at a discount. The proceeds have been used to redeem the RM600 million Subordinated Bonds of ABMB on
26 May 2011.
The main features of the Subordinated Notes are as follows:

(i)
Issue date
: 8 April 2011
(ii)
Tenure of the facility/issue
: 10 years from the issue date and callable five (5) years after the issue date
(iii)
Maturity date
: 8 April 2021
(iv)
Interest rate/coupon
: 4.82% per annum, payable semi-annually in arrears
(v)
Redemption option
: The issuer may, at its option, redeem the Subordinated Notes at any coupon date on or after
five (5) years from the issue date
(vi)
The Subordinated Notes will constitute direct and unsecured obligations of the issuer, subordinated in right and priority
of payment, to the extent and in the manner provided in the Subordinated Notes, ranking pari passu among themselves.
(vii) In the event of winding up or liquidation of the issuer, be subordinated in right of payment to all deposit liabilities and
other liabilities of the issuer, except in each case to those liabilities which by their terms rank equally in right of payment or
which are subordinated to the Subordinated Notes.
132

31 March 2012
26. LONG TERM BORROWINGS

Group/Company
2012
2011
RM000
RM000
Unsecured
Fixed rate term loan [Note (a)]
Floating rate term loan [Note (b)]
401,189
200,083
601,272
Note:
(a)
In 2011, the term loan bears a fixed interest rate at 3.5% per annum repayable by way of a bullet payment at the end of the third
year with extension option of one (1) year.
(b)
In 2011, the term loan bears interest at Cost of Fund plus 0.5% per annum repayable by way of a bullet payment at the end of the
fourth year.
The fixed rate term loan and floating rate term loan have been fully repaid on 27 July 2011 and 27 January 2012 respectively.
27. SHARE CAPITAL

Group/Company
Number of Ordinary Shares
of RM1 each
Amount
2012
2011
2012
2011
000
000
RM000
RM000
Authorised
2,000,000
2,000,000
2,000,000
2,000,000
Issued and fully paid

1,548,106
1,548,106
1,548,106
1,548,106
28. RESERVES

Note
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
600,129
7,013
132,769
14,001
304,289
1,033
544,368
7,013
68,620
13,768
304,289
1,033

14,001
304,289

13,768
304,289
_

Distributable:
Retained profits
(f)
1,059,234
939,091
318,290
318,057
1,131,283
908,084
2,312
5,837
2,190,517
1,847,175
320,602
323,894
Non-distributable:
Statutory reserve
(a)
Capital reserve
(b)
Revaluation reserve
(c)
Employees share scheme reserve
(d)
Share premium
Profit equalisation reserve
(e)
2012 ANNUAL REPORT
133

31 March 2012
28. RESERVES (contd)

Note:
(a)
The statutory reserve is maintained by the Group, in compliance with Section 36 of the Banking and Financial Institutions Act, 1989
and Section 15 of the Islamic Banking Act, 1983 and is not distributable as dividends.
(b)
The capital reserve is in respect of retained profit capitalised for a bonus issue by a subsidiary company.
(c)
The revaluation reserve is in respect of unrealised fair value gains and losses on financial investments available-for-sale.
(d)
The employees share scheme reserve relates to the equity-settled share options/grants to Directors and employees. This reserve is
made up of the estimated fair value of the share options/share grants based on the cumulative services received from Directors and
employees over the vesting period.
(e)
Profit equalisation reserve which is derived in accordance with the Framework of Rate of Return (BNM/GP2-i).
(f)
Prior to 1 January 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act, 2007 which
was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its
shareholders, and such dividends will be exempted from tax in the hands of the shareholders (single tier system). However,
there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their
shareholders using their Section 108 balance under limited circumstances. Companies also have an irrevocable option to disregard
their accumulated tax credit under Section 108 of the Income Tax Act, 1967 and opt to pay dividends under the single tier system.
The change in the tax legislation also provides for the Section 108 balance to be locked-in as at 31 December 2007 in accordance
with Section 39 of the Finance Act, 2007.
The Company has elected to distribute dividends out of its entire retained earnings under the single tier tax system.
29. SHARES HELD FOR EMPLOYEES SHARE SCHEME (ESS)

A trust has been established for the ESS and is administrated by an appointed trustee. The Trustee will be entitled from time to time to
accept financial assistance from the Company upon such terms and conditions as stipulated in the Trust Deed dated 3 December 2007 and
the Trustee may purchase the Companys shares from the open market for the purpose of the ESS. The Trustee shall refrain from exercising
any voting rights attached to these shares. In accordance with FRS 132 Financial Instruments - Presentation and Disclosure, the share
purchased for the benefit of the ESS are recorded as Share Held for ESS in the equity on the statement of financial position.
During the financial year, the Trustee of the ESS had purchased 8,266,200 ordinary shares of RM1.00 each from the open market at an
average price of RM3.46 per share. The total consideration for the purchase including transaction costs was RM28,637,996. The shares
purchased are being held in trust by the Trustee of the ESS in accordance with the Trust Deed dated 3 December 2007.
During the financial year ended 31 March 2012, 1,428,150 shares have been vested and transferred from the Trustee to the eligible
employees of the Company and its subsidiaries in accordance with the terms under the Share Grant Plan of the ESS. As at 31 March 2012,
the Trustee of the ESS held 24,466,800 ordinary shares representing 1.58% of the issued and paid-up capital of the Company.
134

31 March 2012
30. EMPLOYEES SHARE SCHEME (ESS)

The Alliance Financial Group Berhad Employees Share Scheme (ESS) is governed by the Bye-Laws approved by the shareholders at an
Extraordinary General Meeting held on 28 August 2007. The ESS which comprises of the Share Option Plan, the Share Grant Plan and the
Share Save Plan took effect on 3 December 2007 and is in force for a period of 10 years.
There were no share options offered under the Share Save Plan during the financial year.
The salient features of the ESS are as follows:

(i)
The ESS is implemented and administered by the Employees Share Participating Scheme Committee (ESPS Committee) in
accordance with the Bye-Laws.
(ii)
The total number of shares which may be available under the ESS shall not exceed in aggregate 10% of the total issued and paid-up
share capital of the Company at any one time during the existence of the ESS and out of which not more than 50% of the shares
available under the ESS shall be allocated, in aggregate, to Directors and senior management. In addition, not more than 10% of the
shares available under the ESS shall be allocated to any individual Director or employee who, either singly or collectively through his/
her associates, holds 20% or more in the issued and paid-up capital of the Company.
(iii)
The subscription price for each share under the Share Option Plan, Share Grant Plan and Share Save Plan may be at a discount (as
determined by the ESPS Committee or such other pricing mechanism as may from time to time be permitted by Bursa Malaysia
Securities Berhad or such other relevant regulatory authorities), provided that the discount shall not be more than 10% from the
5-day weighted average market price of the shares of the Company transacted on Bursa Malaysia Securities Berhad immediately
preceding the date on which an offer is made or at par value of the shares, whichever is higher.
(iv)
The ESPS Committee may at its discretion offer to any Director or employee of a corporation in the Group to participate in the ESS if
the Director or employee:
(a)
has attained the age of 18 years;
(b)
in the case of a Director, is on the board of directors of a corporation in the Group;
(c)
in the case of an employee, is employed by a corporation in the Group; and
(d)
is not a participant of any other employee share option scheme implemented by any other corporation within the Group which
is in force for the time being.
provided that the non-executive directors of the Group who are not employed by a corporation in the Group shall not be eligible to
participate in the Share Save Plan.
(v)
Under the Share Option Plan and Share Grant Plan, the ESPS Committee may stipulate the performance targets, performance period,
value and/or other conditions deemed appropriate.
(vi)
Under the Share Save Plan, the ESPS Committee may at its discretion offer Share Save Option(s) to any employees of the Group to
subscribe for the shares of the Company and the employee shall authorise deductions to be made from his/her salary.
(vii) The Company may decide to satisfy the exercise of options/awards of shares under the ESS through the issue of new shares, transfer
of existing shares or a combination of both new and existing shares of the Company.
(viii) The Company may appoint or authorise the Trustee of the ESS to acquire the Companys shares from the open market to give effect
to the ESS.

Save for the Group Chief Executive Officer of Alliance Bank Malaysia Berhad, none of the other Directors of the Company were offered/
awarded any share options/share grants during the financial year.
9,764
3.58
22,112
2.82
2.68
21,186
WAEP (RM)
5,801
7,282
8,103

3.15
7,959

7,959
2.77
(7,033)
(1,577)
(2,053)
(2,069)
(1,334)
At
beginning
Offered/
of year
awarded
Lapsed
000
000
000
2008 Share Scheme

2009 Share Scheme
2010 Share Scheme
2011 Share Scheme
Share Options
Number of Share Options
2.96
(9,229)
(4,224)
(1,218)
(1,554)
(1,459)
(774)

2011
WAEP (RM)

9,764
4,224
5,229
6,034
6,625

At
beginning
Offered/
of year
awarded
Lapsed
000
000
000
Share Options
2008 Share Scheme

2009 Share Scheme
2010 Share Scheme
2011 Share Scheme
2012 Share Scheme
Group
2012
2.82
22,112
4,224
5,229
6,034
6,625
At
end
of year
000
3.09
22,647

4,011
4,480
5,166
8,990
At
end
of year
000
(1,428)

(643)
(785)

Share Grants
Number of Share Grants
2,127

2,127
(934)

(68)
(287)
(385)
(194)
4,837
713
1,846
2,278

2,169

2,169
(1,442)
(604)
(838)

(1,326)
(109)
(297)
(526)
(394)
At
beginning
Offered/
Vested/
of year
awarded
exercised
Lapsed
000
000
000
000
4,238

711
1,752
1,775

At
beginning
Offered/
Vested/
of year
awarded
exercised
Lapsed
000
000
000
000
Share Grants
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options/grants during the financial year:
30. EMPLOYEES SHARE SCHEME (ESS) (contd)
31 March 2012
4,238
711
1,752
1,775
At
end
of year
000
4,003
680
1,390
1,933
At
end
of year
000
2012 ANNUAL REPORT
135
94
92
111

297
2.70
2008 Share Scheme

2009 Share Scheme
2010 Share Scheme
2011 Share Scheme
WAEP (RM)
3.15
92

92
At
beginning
Offered/
of year
awarded
Lapsed
000
000
000
3.11
3.58
2.80
WAEP (RM)
(109)
Share Options
219
389
(94)

(7)
(8)

2011

219
94
92
111
92

At
beginning
Offered/
of year
awarded
Lapsed
000
000
000
Share Options
2008 Share Scheme

2009 Share Scheme
2010 Share Scheme
2011 Share Scheme
2012 Share Scheme
Company
2012
31 March 2012
2.80
389
94
92
111
92
At
end
of year
000
3.08
499

92
111
85
211
At
end
of year
000
(22)

(10)
(12)

Share Grants
38

38
(5)

(2)
(3)
52
9
19
24

22

22
(18)
(9)
(9)

At
beginning
Offered/
Vested/
of year
awarded
exercised
Lapsed
000
000
000
000
56

10
24
22

At
beginning
Offered/
Vested/
of year
awarded
exercised
Lapsed
000
000
000
000
Share Grants
56
10
24
22
At
end
of year
000
67
12
20
35
At
end
of year
000
136
2012 ANNUAL REPORT
137

31 March 2012

(a)
Details of share options/grants at the end of financial year:
2008 Share Options

2009 Share Options
2010 Share Options
2011 Share Options
2012 Share Options
WAEP
RM
Exercise Period
3.07
2.70
2.38
3.15
3.58
12.12.2010 11.12.2014
02.09.2011 01.09.2015
25.08.2012 24.08.2016
23.09.2013 22.09.2017
22.07.2014 21.07.2017
Vesting Dates
(b)
2008 Share Grants
First 50% of the share grants

Second 50% of the share grants
12.12.2009
12.12.2010
2009 Share Grants

02.09.2010
02.09.2011
2010 Share Grants

25.08.2011
25.08.2012
2011 Share Grants

23.09.2012
23.09.2013
2012 Share Grants

22.07.2013
22.07.2014
Note:
(i)
2008 Share Options had since lapsed and all shares were forfeited due to performance measures were not meet during the
extended grace period.
(ii)
2008 and 2009 Share Grants were fully vested in accordance with the stipulated terms.
Allocation of shares options/grants to Executive Directors and senior management of the Group:
(i)
The aggregate maximum allocation of shares options/grants to Executive Directors and senior management of the Group
during the financial year and since commencement of the ESS is 50% of shares available under the ESS.
(ii)
The actual percentage granted to Executive Directors and senior management of the total number of shares options/grants
offered are as follows:
Since commencement of the ESS
2008 Share Scheme

2009 Share Scheme
2010 Share Scheme
2011 Share Scheme
During the financial year
2012 Share Scheme
Percentage
46.2%
48.7%
48.5%
43.5%
48.8%
138

31 March 2012

(c)
Fair value of share options/share grants offered/awarded:
The fair value of share options/share grants under the Share Option Plan and the Share Grant Plan during the financial year was
estimated by an external valuer using a binomial model, taking into account the terms and conditions upon which the share
options/share grants were offered/awarded. The fair value of share options and share grants measured at offer/award date and the
assumptions are as follows:
Share Options
Fair value of the shares as at grant date,

- 12 December 2007 (RM)
- 2 September 2008 (RM)
- 25 August 2009 (RM)
- 22 July 2011 (RM)
Weighted average share price (RM)
Weighted average exercise price (RM)
Expected volatility (%)
Expected life (years)
Risk free rate (%)
Expected dividend yield (%)
2008
2009
2010
2011
2012
0.8072

3.1000
3.0696
0.2617
7
3.57 to 4.57
1.78

0.7040

2.6600
2.6989
0.2709
7
3.79 to 5.22
1.78

0.7489

2.4000
2.3784
0.3403
7
2.04 to 4.61
1.78

0.8980

3.1300
3.1480
0.3115
7
2.92 to 4.04
1.78
0.8790
3.7200
3.5800
0.2977
6
2.93 to 4.18
3.08
2008
2009
2010
2011
2012
2.9639

3.1000
0.2617
3.57 to 4.57
1.78

2.5432

2.6600
0.2709
3.79 to 5.22
1.78

2.2941

2.4000
0.3403
2.04 to 4.61
1.78

2.9930

3.1300
0.3115
2.92 to 4.04
1.78
3.4405
3.7200
0.2977
2.93 to 4.18
3.08
Share Grants
Fair value of the shares as at grant date,

- 12 December 2007 (RM)
- 25 August 2009 (RM)
- 22 July 2011 (RM)
Weighted average share price (RM)
Expected volatility (%)
Risk free rate (%)
Expected dividend yield (%)
The expected life of the share options is based on the exercisable period of the share options and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome. No other features of the share options/share grants were incorporated
into the measurement of fair value.
The risk-free rate is employed using a range of risk-free rates for Malaysian Government Securities (MGS) tenure from 1-year to
20-year MGS.
2012 ANNUAL REPORT
139

31 March 2012
31. INTEREST INCOME

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
908,692
841,945
41,836
3,862
253,237
22,751
3,375
36,855
1,044
206,340
30,682
4,393
12,947

18,214

Accretion of discount less amortisation of premium
1,233,753
94,369
1,121,259
82,179
12,947

18,214
1,328,122
1,203,438
12,947
18,214

Money at call and deposit placements with
Others
32. INTEREST EXPENSE

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Deposits and placements of banks and

other financial institutions
Loans sold to Cagamas
Others
33,640
565,206
2,908
34,513
14,178
3,814
55,345
411,329
642
36,540
21,382
7,938

14,178

21,382
654,259
533,176
14,178
21,382
33. NET INCOME FROM ISLAMIC BANKING BUSINESS

Group
2012
RM000
2011
RM000
Income derived from investment of depositors funds and others

Income derived from investment of Islamic Banking funds
Income attributable to depositors and financial institutions
335,853
32,097
(139,025)
292,564
27,988
(112,805)

Add: Income due to head office eliminated at Group level
228,925
27,404
207,747
24,985
256,329
232,732
Note:
Net income from Islamic banking business comprises income generated from both Alliance Islamic Bank Berhad (AIS) and Islamic banking
business currently residing in Alliance Investment Bank Berhad (AIBB). Both AIS and AIBB are wholly-owned subsidiaries of Alliance Bank
Malaysia Berhad, which in turn is a wholly owned subsidiary of the Company.
140

31 March 2012
34. OTHER OPERATING INCOME

Group
(a)
Fee income:
Commissions
Service charges and fees
Portfolio management fees
Corporate advisory fees
Underwriting commissions
Brokerage fees
Guarantee fees
Processing fees
Commitment fees
Other fee income

(b)
Investment income:
Gain arising from sale/redemption of:
- Financial assets held-for-trading
- Financial investments available-for-sale
- Financial investments held-to-maturity
Unrealised (loss)/gain from revaluation of:
- Financial assets held-for-trading
- Derivative financial instruments
Realised gain on derivative financial instruments
Gross dividend income from:
- Subsidiary

(c)
Other income/(expense):
Foreign exchange gain
Gain/(loss) on disposal of property,
plant and equipment
(Loss)/gain on liquidation of subsidiaries
Others
Total other operating income
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
55,160
30,546
6,994
6,073
990
14,499
8,764
10,817
14,376
28,533
35,031
34,529
6,628
3,064
949
17,837
8,603
11,779
14,042
14,645
176,752
147,107
3,699
47,408
16,831
417
3,509
3
(185)
1,572
37,444
256
4,149
43,925
10,229

3,705

265,765
146,462
116,998
55,964
265,765
146,462
7,977
7,415
200

(20)
18,275
(329)
(7)
(38)
15,610
(109)

1,542
203
1,179
26,432
22,651
1,433
1,382
320,182
225,722
267,198
147,844
2012 ANNUAL REPORT
141

31 March 2012
35. OTHER OPERATING EXPENSES

Group
Personnel costs
- Salaries, allowances and bonuses
- Contribution to EPF
- Share options/grants under ESS
- Others
Establishment costs
- Depreciation of property, plant and equipment
- Amortisation of computer software
- Rental of premises
- Water and electricity
- Repairs and maintenance
- Information technology expenses
- Others
Marketing expenses
- Promotion and advertisement
- Branding and publicity
- Others
Administration and general expenses

- Communication expenses
- Printing and stationery
- Insurance
- Professional fees
- Others
Total other operating expenses
Included in the other operating expenses are the following:
Auditors remuneration [Note (a)]

Hire of equipment
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
290,164
47,849
6,649
31,495
254,506
42,523
5,347
30,962
1,470
307
156
138
1,329
276
119
98
376,157
333,338
2,071
1,822
29,374
18,239
27,414
6,137
9,965
33,255
20,007
39,592
14,420
26,290
5,470
10,470
29,339
13,406
103

62
10
78
3

76
133
11
12
1
144,391
138,987
256
233
11,178
4,756
4,688
8,912
4,861
4,805
20,622
18,578
13,126
3,756
5,926
13,750
14,068
11,681
4,619
10,501
13,668
13,528
2
2
1
157
1,624
4
3
1
174
1,765
50,626
53,997
1,786
1,947
591,796
544,900
4,113
4,002
1,516
3,964
2,046
841
3,172
3,626
3,399
1
98
10

88
10
142

31 March 2012
35. OTHER OPERATING EXPENSES (contd)

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
896
485
117
13
5
778
753
591
355
695
51
33
9

5
44
29
10
1,516
3,172
98
88
912
1,497
55
1,022
1,430
38
340
540
31
359
525
38
2,464
2,490
911
922
3,047
1,414
641
930
56
1,765
831
378
417
55
6,088
3,446
240
504
578
447
744
1,025
9,296
6,961
911
922
182
179
10

151
30
20
2
371
203
(a)
Auditors remuneration
Statutory audit fee

Audit related services
Tax compliance work
Tax related services
Other services
Total
(b)
Directors remuneration
Directors of the Company:

- Allowances
- Fees
- Benefits-in-kind
CEOs and Directors of Subsidiaries:

Chief Executive Officers
- Salaries and allowances
- Bonuses
- Share options/grants under ESS
- Benefits-in-kind
- Allowances
- Fees
Past Directors
- Salaries and allowances including
meeting allowance
- Fees
- Benefits-in-kind
Total
9,667
7,164
911
922
Total Directors remuneration excluding

benefits-in-kind
9,556
7,069
880
884
2012 ANNUAL REPORT
143

31 March 2012
35. OTHER OPERATING EXPENSES (contd)

2012
2011
Executive Non-Executive
Executive Non-Executive
Directors/CEOs
Directors Directors/CEOs
Directors
Directors of the Company:
Below RM50,000
RM50,001 - RM100,000
RM100,001 - RM150,000
RM150,001 - RM200,000
RM200,001 - RM250,000
RM250,001 - RM300,000
RM300,001 - RM350,000
RM350,001 - RM400,000
RM400,001 - RM450,000
Above RM450,000
Directors of the Group:
Below RM50,000
RM50,001 - RM100,000
RM100,001 - RM150,000
RM150,001 - RM200,000
RM200,001 - RM250,000
RM250,001 - RM300,000
RM300,001 - RM350,000
RM350,001 - RM400,000
RM400,001 - RM450,000
Above RM450,000

2
5
1

2
5

1

3

5
1
2
1
1

1
2
1
3
36. ALLOWANCE FOR LOSSES ON LOANS, ADVANCES AND FINANCING AND OTHER LOSSES

Group
2012
RM000
2011
RM000
43,363
87,812
Allowance for/(write-back of) losses on loans and financing:

(a) Individual assessment allowance
- Made during the year (net)
(b) Collective assessment allowance
- Made during the year (net)
(c) Bad debts on loans and financing
- Recovered
- Written off
46,381
15,992
(65,590)
8,416
(80,844)
3,988

(Write-back of)/allowance for commitments and contingencies
Allowance for other assets
32,570
(4,210)
6,280
26,948
59
6,302
34,640
33,309
144

31 March 2012
37. (WRITE-BACK OF)/ALLOWANCE FOR IMPAIRMENT

Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
(22,759)
(344)
(585)
(3,491)
1,460

970
642
(21,643)
(4,076)
970
642
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Income tax provision for current year

Deferred tax
173,433
(9,524)
153,758
(10,136)
61,128
(55)
31,476
(240)

(Over)/under provision in prior years
163,909
(258)
143,622
(22)
61,073
22
31,236
(46)
Taxation
Zakat
163,651
113
143,600
362
61,095

31,190
163,764
143,962
61,095
31,190
Write-back of impairment on securities:

- Financial investments held-to-maturity
Allowance for impairment on
property, plant and equipment (Note 16)
Allowance for impairment on debts due from subsidiaries

38. TAXATION AND ZAKAT

Group
Company
Income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the
effective income tax rate of the Group and of the Company is as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
643,603
553,113
260,884
140,032
Taxation at Malaysian statutory tax rate of 25% (2011: 25%)

Effect of expenses not deductible for tax purposes
Effect of income not subject to tax
(Over)/under provision in prior years
Unabsorbed tax losses which deferred tax recognised
during the year
160,901
6,869
(2,752)
(258)
138,283
9,393
(2,418)
(22)
65,221
852
(5,000)
22
35,008
1,278
(5,050)
(46)
(1,109)
(1,636)
Tax expense for the year
163,651
143,600
61,095
31,190
2,173
1,145
Tax savings during the year arising from:

- utilisation of tax losses brought forward from
previous year
2012 ANNUAL REPORT
145

31 March 2012
39. EARNINGS PER SHARE

(a)
Basic
The calculation of the basic earnings per share is based on net profit attributable to owners of the parent for the financial year divided
by the weighted average number of ordinary shares of RM1.00 each in issue during the financial year excluding the weighted average
shares held for ESS.
Group
2012
2011
479,355
409,202
1,548,106
(24,467)
1,548,106
(17,629)
1,523,639
1,530,477
31.5
26.7
Net profit attributable to owners of the parent (RM000)
Weighted average number of ordinary shares in issue (000)

Effect of shares bought back for ESS (000)
Basic earnings per share (sen)
(b)
Diluted
The calculation of the diluted earnings per share is based on the net profit attributable to owners of the parent for the financial
year divided by the weighted average number of ordinary shares of RM1.00 each in issue during the financial year, excluding the
weighted average shares held for ESS and taken into account the assumed Share Grants to employees under ESS were vested to the
employees as at 31 March 2012.
Group
2012
2011
479,355
409,202
1,548,106
(24,467)
4,003
1,548,106
(17,629)
4,238
1,527,642
1,534,715
31.4
26.7
Net profit attributable to owners of the parent (RM000)
Weighted average number of ordinary shares in issue (000)

Effect of shares bought back for ESS (000)
Effect of Share Grants under ESS (000)
Diluted earnings per share (sen)
146

31 March 2012
40. DIVIDENDS
Dividend in respect
of financial year
2012
2011
RM000
RM000
Net Dividends
per Ordinary Share
2012
2011
Sen
Sen
Recognised during the financial year:

First interim dividend

5.6 sen per share, tax exempt under the single tier tax system,
on 1,548,105,929 ordinary shares of RM1.00 each, declared
in the financial year ended 31 March 2012, was paid on
26 August 2011
85,705
5.54
27 August 2010
50,458
3.26
Second interim dividend
28 February 2012
117,495
7.59
28 February 2011
56,628
3.66
203,200
107,086
13.13
6.92
Dividends paid on the shares held in Trust pursuant to the Companys ESS which are classified as shares held for ESS are not accounted for
in the equity. An amount of RM2,697,000 (2011: RM1,281,000) being dividends paid for those shares were added back to the appropriation
of retained profits in respect of the dividends.
41. CAPITAL COMMITMENTS
Group
2012
RM000
2011
RM000
Capital expenditure:
Authorised and contracted for
Authorised but not contracted for
58,075
56
23,338
6,020
58,131
29,358
2012 ANNUAL REPORT
147

31 March 2012
42. MATERIAL LITIGATIONS

(a)
A corporate borrower had issued a Writ of Summons in 2005 against an agent bank for a syndicate of lenders comprising three banks
of which ABMB is one of them, claiming for general, special and exemplary damages alleging a breach of duty and contract. The
credit facilities consist of a bridging loan of RM58.5 million and a revolving credit facility of RM4.0 million which were granted by the
syndicate lenders of which the ABMBs participation was RM18.5 million. In 2002, the credit facilities were restructured to a loan of
RM30.0 million, of which the ABMBs participation was RM8.31 million, payable over seven years. The syndicated lenders had also
filed a suit against the corporate borrower for the recovery of the above-mentioned loan.
The two suits were then consolidated and heard together. On 6 May 2009, judgment was delivered against the agent bank for
special damages amounting to RM115.5 million together with interest at the rate of 6% per annum from date of disbursement to
date of realisation with general damages to be assessed by the Court. The agent banks solicitors had filed an appeal against the
said decision. The High Court had on 24 June 2009 granted a stay of execution of the judgment pending disposal of its appeal at the
Court of Appeal. The High Court of Appeal has fixed the hearing of the appeal on 19 June 2012.
The advice from the agent banks solicitors is that they have a better than even chance of succeeding in the said appeal.
(b)
ABMB had in 1999 filed a suit against a corporate borrower and the guarantor (collectively referred to as the Defendants) for the
outstanding amount due to a default in banking facility amounting to RM2.36 million. The Defendants filed a counter-claimed against
ABMB for special damages amounting to RM15.5 million and general damages to be assessed by the Court for negligence and/or
wrongful termination of the banking facilities, statutory interest on judgment sum, costs and such other and/or further relief deemed
fit by the Court.
On 4 May 2009, the High Court in Kota Kinabalu dismissed ABMBs claim and allowed Defendants claim for general damages to be
assessed by the Deputy Registrar. ABMB filed an appeal to the Court of Appeal against the High Court judgment and applied to the
High Court for a stay of execution against the said judgment. On 3 August 2009, the High Court dismissed ABMBs application for
stay of execution of the judgment. ABMB then filed an appeal to the Court of Appeal against the said decision. On 16 November 2009,
the Court of Appeal dismissed ABMBs appeal for stay of execution with no order as to costs and directed that an early hearing date
would be scheduled for ABMBs appeal proper.
On 18 January 2011, the Court of Appeal allowed ABMBs appeal by dismissing the counter-claim against ABMB and allowing
ABMBs claim against the Defendants. The Defendants filed an application for leave to appeal at the Federal Court against the
said decision. On 23 November 2011, the Federal Court dismissed the Defendants application for leave to appeal at the Federal Court
with costs of RM10,000.
Pursuant to the decision by the Federal Court, the High Court had on 10 February 2012 struck out the matter with costs to follow as
per Court of Appeal order. This essentially concludes the matter thus bringing the counter-claim against ABMB to an end.
(c)
ABMB commenced a civil suit against an individual borrower in March 2007 for recovery of an overdraft facility secured by shares
from the individual borrower and shares from a third party. The individual borrower counter-claimed against ABMB for various
declarations amongst others that ABMB had acted wrongfully or in bad faith in demanding the repayment for the facility and that
there was in existence a collateral contract between the individual borrower, ABMB and the third party. In addition, the individual
borrower is also claiming for general damages to be assessed by the courts.
Arising from the above-mentioned suit, the third party in September 2008 filed a separate suit against ABMB for force selling the
shares pledged by the third party. The third partys claim is for damages for loss of the benefit of the shares pledged to ABMB,
damages for conversion, damages for misrepresentation and for breach of contract.
The two cases were consolidated into one suit. The consolidated suits were heard from 20 till 24 February 2012. On 20 March 2012,
the High Court allowed ABMBs claim against the individual borrower and dismissed the individual borrowers counter claim against
ABMB with costs of RM150,000. The individual borrower has since filed an appeal to the Court of Appeal against the said decision.
ABMB is contesting the appeal.
On 20 March 2012, the High Court dismissed the third party suit against ABMB with costs of RM150,000. The third party has since
appealed against the said decision to the Court of Appeal. ABMB is contesting the appeal.
148

31 March 2012
43. FINANCIAL RISK MANAGEMENT POLICIES

The Group manages risk within clearly defined guidelines that are approved by the Directors. In addition, the Board of Directors of the Group
provides independent oversight to ensure that risk management policies are complied with, through a framework of established controls
and reporting process.
The guidelines and policies adopted by the Group to manage the main risks that arise in the conduct of its business activities are
as follows:
(a)
Credit Risk
Credit risk is the potential loss of revenue and/or principal arising from defaults by borrowers or counterparties through business
activities in lending, trading, investing and hedging. Exposure to credit risk may be categorised as primary or secondary.
Primary exposure to credit risk arises from loans, advances and financing. The amount of credit exposure is represented by the
carrying amount of loans, advances and financing in the statement of financial position. The lending activities in the Group are
guided by the Groups Credit Policies and Guidelines, in line with Best Practices in the Management of Credit Risk, issued by Bank
Negara Malaysia. These credit policies and guidelines also include an Internal Grading model adopted by the Group to grade its loans,
advances and financing accounts according to their respective risk profiles.
On the other hand, secondary credit exposure arise from financial transactions with counterparties (including interbank market
activities, derivative instruments used for hedging and debt instruments), of which the amount of credit exposure in respect of these
instruments is equal to the carrying amount of these assets in the statements of financial position. This exposure is monitored on an
on-going basis against predetermined counterparty limits.
The credit exposure arising from off-balance sheet activities, i.e. commitments and contingencies is set out in Note 45 to the financial
statements.
Credit risk arising from Treasury activities are managed by appropriate policies, counterparty limits and supported by the Groups
Risk Management Framework.
2012 ANNUAL REPORT
149

31 March 2012
43. FINANCIAL RISK MANAGEMENT POLICIES (contd)

(a)
Credit Risk (contd)

(i)
Maximum exposure to credit risk
The following table presents the Groups maximum exposure to credit risk of on-balance sheet and off-balance sheet financial
instruments, before taking into account of any collateral held or other credit enhancements and after allowance for impairment
where appropriate.
For on-balance sheet financial assets, the maximum exposure to credit risk equals their carrying amount. For financial
guarantees and similar contracts granted, the maximum exposure to credit risk is the maximum amount that would have to
pay if the guarantees were to be called upon. For credit related commitments and contingencies that are irrevocable over the
life of the respective facilities, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted
to customers.
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,683,092
704,169
6,500
46,857
Credit risk exposure of on-balance sheet:

Cash and short-term funds (exclude cash in hand)
Deposits and placements with banks and
(exclude equity securities)
97,713
61,698
1,491,995
100,228
80,519
1,938,250
19,315

605,700
8,983,101
795,256
23,712
24,717,697
9,138,478
940,726
32,047
22,110,986
Total on-balance sheet
37,854,264
35,045,403
25,815
652,557
Credit risk exposure of off-balance sheet:

Financial guarantees
Credit related commitments and
contingencies
463,962
453,370
13,009,027
10,499,031
Total off-balance sheet
13,472,989
10,952,401
Total maximum exposure
51,327,253
45,997,804
25,815
652,557
(a)
(ii)
Total credit risk
7,529,646

8,969,462
1,376,927
1,339,215
21,949
23,712
2,595,624
768,101

37,712
4,237,686
4,202,309

1,491,995
Credit related commitments
and contingencies
97,713
7,592,535
615,851
1,067,241
359,248
86,872
66,964
19,908
272,376
5,206

130,015
137,155
11,079,307
3,464,770
3,126,409
338,361
7,614,537

7,240,115
374,422
1,578,975
1,256,577
1,225,981
30,596
322,398

290,869
31,529
13,002,831
3,405,065
3,404,765
300
9,597,766

9,597,766
Financial,
Transport,
Insurance
Storage
Agriculture,
and
and Manufacturing,

Business Communication
Wholesale &
Residential
Services
Services
Retail Trade Construction
Mortgage
RM000
RM000
RM000
RM000
RM000
7,529,646

Deposits and placements with
banks and other financial
institutions
Balances due from clients
and brokers
Financial investments
available-for-sale
held-to-maturity

Government

and

Central
Group
Bank
2012
RM000
439,850
230
230
439,620

439,620
Motor
Vehicle
Financing
RM000
8,367,934
3,882,548
3,845,463
37,085
4,485,386

4,423,688
61,698

Other
Consumer
Loans
RM000
51,327,253
13,472,989
13,009,027
463,962
37,854,264
795,256
23,712
24,717,697
8,983,101
61,698
1,491,995
97,713
1,683,092
Total
RM000
A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that cause their ability to meet
contractual obligations to be similarly affected by changes in economic and other conditions. The analyses of credit risk concentration presented below relates only to financial
assets subject to credit risk and are based on the industry in which the counterparty is engaged.
Credit risk concentrations
Credit Risk (contd)
31 March 2012
150
(a)
(ii)
4,584,626
24,951
30,657
2,029,108
4,059,908
910,444

7,433,272
7,433,272
Total credit risk
804,322
7,781,814
832,745
28,423
and contingencies
6,949,069

1,938,250
422,381
98,567
75,937
22,630
323,814
5,236

156,460
162,118
9,643,615
2,784,116
2,442,788
341,328
6,859,499

6,559,284
300,215
1,782,217
1,328,798
1,304,866
23,932
453,419
95

421,713
31,611
9,775,035
1,276,176
1,276,176
8,498,859

8,498,859
100,228
179,499
524,670

institutions
and brokers
available-for-sale
held-to-maturity
Financial,
Transport,
Insurance
Storage
Agriculture,
and
and Manufacturing,

Business Communication
Wholesale &
Residential
Services
Services
Retail Trade Construction
Mortgage
RM000
RM000
RM000
RM000
RM000

Government

and

Central
Group
Bank
2011
RM000
Credit risk concentrations (contd)
Credit Risk (contd)
31 March 2012
558,363
1,101
1,101
557,262

557,262
Motor
Vehicle
Financing
RM000
8,601,107
4,630,898
4,593,841
37,057
3,970,209

1,390
3,888,300
80,519

Other
Consumer
Loans
RM000
45,997,804
10,952,401
10,499,031
453,370
35,045,403
940,726
32,047
22,110,986
9,138,478
80,519
1,938,250
100,228
704,169
Total
RM000
2012 ANNUAL REPORT
151
152

31 March 2012

(a)
Credit Risk (contd)

(ii)
Credit risk concentrations (contd)

Company
2012
Financial,
Insurance and
Business
Services
RM000
Total
RM000

6,500
19,315
6,500
19,315
Total credit risk
25,815
25,815

46,857
605,700
46,857
605,700
Total credit risk
652,557
652,557
2011
(iii) Collaterals

The main types of collateral obtained by the Group are as follows:

- For personal housing loans, mortgages over residential properties;
- For commercial property loans, charges over the properties being financed;
- For hire purchase, charges over the vehicles or plant and machineries financed; and
- For other loans/financing, charges over business assets such as premises, inventories, trade receivables or deposits.
(iv)
Credit quality - Loans, advances and financing
All loans, advances and financing are categorised as either:

- neither past due nor impaired;
- past due but not impaired; or
- impaired.
Past due loans, advances and financing refer to loans that are overdue by one day or more. Impaired loans are loans with
month-in-arrears more than 90 days or with impaired allowances.
Distribution of loans, advances and financing by credit quality
Group
2012
RM000
2011
RM000
Neither past due nor impaired

Past due but not impaired
Impaired
23,255,955
1,126,956
601,135
20,710,623
987,414
741,324

Sales commissions and handling fees
Less: Allowance for impairment

- Individual assessment

- Collective assessment
24,984,046
28,523
22,439,361
24,969
(266,349)
(386,017)
(328,375)
(339,636)
Net loans, advances and financing
24,360,203
21,796,319
Financial effect of collateral held for loans, advances and financing
70.9%
60.9%
2012 ANNUAL REPORT
153

31 March 2012

(a)
Credit Risk (contd)

(iv)
Credit quality - Loans, advances and financing (contd)
Credit quality of loans, advances and financing neither past due nor impaired
Analysis of loans, advances and financing that are neither past due nor impaired analysed based on the Groups internal credit
grading system is as follows:
Group
2012
RM000
2011
RM000
Grading classification
- Good
- Fair
22,379,010
876,945
19,168,648
1,541,975
23,255,955
20,710,623
The definition of the grading classification can be summarised as follows:

Good: refers to loans, advances and financing which have never been past due in the last 6 months and have never undergone
any restructuring or rescheduling exercise previously.
Fair: refers to loans, advances and financing which have been past due at some point within the last 6 months, or have
undergone restructuring or rescheduling exercise previously.
Loans, advances and financing that are past due but not impaired
An aging analysis of loans, advances and financing that are past due but not impaired is set out below.
For the purpose of this analysis an asset is considered past due and included below when any payment due under strict
contractual terms is received late or missed. The amount included is the entire financial assets, not just the payment of
principal or interest or both overdue.
Group
2012
RM000
2011
RM000
Past due up to 1 month

Past due > 1 - 2 months
909,157
187,351
30,448
773,027
186,858
27,529
1,126,956
987,414
Loans, advances and financing assessed as impaired
An analysis of loans assessed as impaired is as follows:
Group
2012
RM000
2011
RM000
Gross impaired loans/financing

Less: Allowance for impairment

- Individual assessment
601,135
741,324
(266,349)
(328,375)
Net impaired loans/financing
334,786
412,949
154

31 March 2012

(a)
Credit Risk (contd)

(v)
Repossessed collateral

The Group obtained assets by taking possession of collateral held as security as follows:

Group
2012
RM000
2011
RM000
Nature of assets
Industrial factory
Residential property
5,300
105
5,405
Repossessed or foreclosed properties are sold as soon as practicable, with the proceeds used to reduce the outstanding
indebtedness. Repossessed property is classified in the consolidated statements of financial position within other assets.
(vi)
Credit quality - Financial instruments
The table below presents an analysis of the credit quality of cash and short term funds, deposits and placements with other
financial instituitions, debt securities and derivative financial assets. Cash and short term funds herein excluding the cash
in hand. Debt securities included financial assets held-for-trading, financial investments available-for-sale and financial
investments held-to-maturity. Financial assets held-for-trading and financial investments available-for-sale are measured on
a fair value basis. The fair value will reflect the credit risk of the issuer.
2012 ANNUAL REPORT
155

31 March 2012

(a)
Credit Risk (contd)

(vi)
Credit quality - Financial instruments (contd)
Most listed and some unlisted securities are rated by external rating agencies. The Group uses external credit ratings
provided by RAM, MARC, FITCH, Moody and S&P. The table below presents an analysis of debt securities by rating agency:

Cash and

short-term

funds

RM000

Group
2012

By rating agencies
RAM
AAA
AA1
AA2
AA3
AA-
A1
Deposits and
placements Financial
Financial
with
assets
investments
financial held-for-
available-
instituitions
trading
for-sale
RM000
RM000
RM000
Financial
investments Derivative
held-to- financial
maturity
assets
RM000
RM000
Total
RM000
169,439
230,178
175
1

259,661

4,275

680,975
128,976
35,578
16,342

11,321
2,020
2,620
25
855
30
861,735
361,174
42,648
16,368
855
259,691
MARC
AAA
AA-
324,242
31,529
324,242
31,529
FITCH
AA+
A1

5,303
111

111
5,303
MOODY
AA1
AA3
AA-
A1
A2
A3
BAA1
C
5,146
12,726

551
2,032
230
314
1,463

31,914

5,146
12,726
9
551
33,946
230
314
1,463
S&P
AA
AA-
A+
A
A-
53
2,469
61,336
2,026
31,863

61,355

53
2,469
61,336
63,381
31,863
854,144
43,982
1,491,995
169

4,932,081
2,833,378
768,102
27,154
1,467 8,047,789
5,254 2,909,937
1,683,092
97,713 1,491,995
8,983,101
795,256
23,712 13,074,869
Government back
Unrated [Note]
156

31 March 2012

(a)
Credit Risk (contd)
(vi)
Credit quality - Financial instruments (contd)

Cash and

short-term

funds

RM000

Group
2011
By rating agencies
RAM
AAA
AA1
AA2
AA3
A1
C3
Deposits and
placements Financial
Financial
with
assets
investments
financial held-for-
available-
instituitions
trading
for-sale
RM000
RM000
RM000
Financial
investments Derivative
held-to- financial
maturity
assets
RM000
RM000
Total
RM000
86,461
10
211

33,499

50,029

831,253
337,646
51,098
32,193

7,003
23,265
60
3,556
6
1,032

940,979
337,716
54,865
32,199
84,560
7,003
MARC
AAA
AA-
240,381
31,610

2,338
240,381
33,948
FITCH
AA-
A1
A+
597
6,294

597
6,294
5
MOODY
AA1
AA3
A1
A2
A3
BAA1
C
3,357
5,747
563
2,068
402
795
699
3,357
5,747
563
2,068
402
795
699
S&P
AA
AA-
A
170
978
1,516
170
978
1,516
524,797
36,005
1,938,250
50,199

4,464,571
3,142,723
910,444
30,282
7,838,062
1,785 3,260,994
704,169
100,228 1,938,250
9,138,478
940,726
32,047 12,853,898
Government back
Unrated [Note]
Note:
Unrated financial instruments comprises placements with financial institutions where credit rating is not available and also
investment in banker acceptances, negotiable instruments of deposits and certain debt securities that are not rated.
2012 ANNUAL REPORT
157

31 March 2012

(b)
Market Risk
Market risk refers to the risk that fair value of future cash flows of a financial instrument will fluctuate because of the movement in
the market rates or prices; the main components being interest rate risk and foreign exchange risk.
The Group has established a framework of approved risk policies, measurement methodologies and risk limits as approved by
the Group Risk Management Committee for overall management of market risk. Market risk arising from the trading activities is
controlled via position limits, sensitivity limits and regular revaluation of positions versus current market quotations.
The Group is also susceptible to exposure to market risk arising from changes in prices of the shares quoted on Bursa Malaysia,
which will impact on the Groups balances due from clients and brokers. The risk is controlled by application of credit approvals,
limits and monitoring procedures.
(i)
Interest/profit rate risk
As a subset of market risk, interest rate/profit rate risk refers to the volatility in net interest/profit income as a result of changes
in interest rate levels/rate of return and shifts in the composition of the assets and liabilities. Interest rate/rate of return risk is
managed through interest rate sensitivity analysis. The potential reduction in net interest/profit income from an unfavourable
interest/profit rate movement is monitored and reported to Management. In addition to pre-scheduled meetings, Group Assets
and Liabilities Committee (ALCO) members will also deliberate on revising the Banks lending/financing and deposit rates in
response to changes in the benchmark rates set by the central bank.
The effects of changes in the levels of interest rates on the market value of securities are monitored closely and mark-tomarket valuations are regularly reported to Management.
The Group are exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest
rates on its financial position and cash flows. The effects of changes in the levels of interest rates on the market value of
securities are monitored regularly and the outcome of mark-to-market valuations are escalated to Management regularly.
The table below summarises the effective interest rates at the end of reporting period and the periods in which the financial
instruments will re-price or mature, whichever is the earlier.
(b)
(i)
Total liabilities carried forward
Liabilities
Deposits and placements of banks
and other financial institutions
- Trading derivatives
- Hedging derivatives
Total assets
Assets
Deposits and placements with banks
Other non-interest/profit
sensitive balances

1,013,570

18,988,098

4,179,397
462,662

40
771,753
38,858
14
16,753,117
3,716,695
15,942,492
3,066,820
93,138

1,910,031
50,081

1,631

953,177

21,326,979
1,384,073
2,581,711

1,634

226,140

124
2,353,813
627,876

338,603
4,429

150,485
134,359
5,274,850

9,566

61,329

5,203,955
709,294

608,585

88,717
11,992
1,324,782

10,844
597,829
628,462

87,647
4,336,127

1,485,718

2,493,255
357,154
40,701

423

40,278
5,524,209

1,976,860

3,314,235
233,114
Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Group
1 month
months
months
months
years
years
2012
RM000
RM000
RM000
RM000
RM000
RM000
Interest/profit rate risk (contd)
Market Risk (contd)
31 March 2012
4,846,584

13,786
10,659
36,057

4,786,082
2,496,473
1,775,374

(51,231)*
146
60,067

213,301
8,556
490,260
25,818
25,818

1,515,707
23,712

1,491,995

35,026,960
25,818
423
22,044
611,615
2,161,005
74,915
178
32,130,962
39,603,485
1,775,374
23,712
24,360,203
97,713
61,698
1,491,995
9,123,201
795,256
1,874,333
Non-
interest/
profit
Trading
sensitive
book
Total
RM000
RM000
RM000
4.54
4.92
2.02
2.90
3.36
2.31
5.46
2.32
12.00
3.00
3.79
3.55
3.04
Effective
interest/
profit
rate
%
158
(b)
(i)
16,753,117
4,573,862 (1,112,577)
Total liabilities and equity
On-balance sheet interest

sensitivity gap
5,274,850
5,274,850

1,324,782
1,324,782

1,324,782
(1,953,835) (4,565,556) 3,011,345
2,581,711
2,581,711

5,274,850
5,483,508
40,701
40,701

40,701
(6,926,636)
9,423,109
5,747,775
3,670,429
4,905
901,191
1,489,889
25,818
25,818

25,818
* Impaired loans, individual assessment allowance and collective assessment allowance of the Group are classified under the non-interest/profit sensitive column.
4,179,397
4,179,397

16,753,117

Total liabilities
Equity
sensitive balances
2,581,711
39,603,485
35,928,151
3,670,429
4,905
901,191
35,026,960
4,846,584
4,179,397
Total liabilities brought forward
16,753,117
Non-
interest/
profit
Trading
sensitive
book
Total
RM000
RM000
RM000
Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Group
1 month
months
months
months
years
years
2012
RM000
RM000
RM000
RM000
RM000
RM000
Market Risk (contd)
31 March 2012
Effective
interest/
profit
rate
%
2012 ANNUAL REPORT
159
(b)
(i)
Total liabilities carried forward
Liabilities
Total assets
Assets
sensitive balances

1,413,040

16,882,804

600,000

3,863,037
61,196

24,948
968,458
34,516
86,161
14,982,620
3,176,893
13,893,485
3,660,202
100,000

2,147,162

1,070

1,246,175
10,009
18,552,056
411,998
2,493,737
8,952

50
2,484,735
1,563,417

336,274
160

593,503
633,480
4,253,375

100,000

23,447

4,129,928
363,355

222,518

140,837

999,380

25,134

882,911

91,335
4,512,029

1,458,636

2,761,012
292,381
3,596,782

1,409,734

2,187,048

Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Group
1 month
months
months
months
years
years
2011
RM000
RM000
RM000
RM000
RM000
RM000
Market Risk (contd)
31 March 2012
4,629,376

642

7,236
52,227

4,569,271
1,853,798
1,009,869

73,313*
68
79,449

184,203
4,856
502,040
33,347
33,347

1,970,297
32,047

1,938,250

31,254,872
33,347
125,776
600,000
1,952,200
86,743
111,159
28,345,647
36,071,936
1,009,869
32,047
21,796,319
100,228
80,519
1,938,250
9,259,940
940,726
914,038
Non-
interest/
profit
Trading
sensitive
book
Total
RM000
RM000
RM000
3.77
6.09
2.13
2.55
3.04
2.19
5.67
3.05
12.00
2.82
3.50
2.75
2.90
Effective
interest/
profit
rate
%
160
(b)
(i)
14,982,620

14,982,620
3,569,436
Total liabilities
Equity
On-balance sheet interest

sensitivity gap
4,253,375
4,253,375

1,599,380
1,599,380

600,000
999,380
(930,320) (3,890,020) 2,912,649
2,493,737
2,493,737

4,253,375
3,596,782
(6,992,642)
8,846,440
5,489,837
3,352,114
4,489
859,189
1,272
1,936,950
33,347
33,347

33,347
* Impaired loans, individual assessment allowance and collective assessment allowance of the Group are classified under the non-interest/profit sensitive column.
(202,835)
3,863,037
3,863,037


sensitive balances
2,493,737
36,071,936
32,715,333
3,352,114
4,489
859,189
601,272
31,254,872
4,629,376
3,863,037
Total liabilities brought forward
14,982,620
Non-
interest/
profit
Trading
sensitive
book
Total
RM000
RM000
RM000
Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Group
1 month
months
months
months
years
years
2011
RM000
RM000
RM000
RM000
RM000
RM000
Market Risk (contd)
31 March 2012
3.60
Effective
interest/
profit
rate
%
2012 ANNUAL REPORT
161
(b)
(i)
Total liabilities
Equity
6,477
6,477
Liabilities
Other non-interest
sensitive balances
Total assets
Assets
Other non-interest
sensitive balances
19,264
19,264

Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Company
1 month
months
months
months
years
years
2012
RM000
RM000
RM000
RM000
RM000
RM000
Market Risk (contd)
31 March 2012
1,804,868
4,354
1,800,514
4,354
1,779,127
1,779,052
51
24
1,804,868
4,354
1,800,514
4,354
1,804,868
1,779,052
19,315
6,501
Non-
interest
sensitive
Total
RM000
RM000
3.17
2.96
Effective
interest
rate
%
162
(b)
(i)
Total liabilities
Equity

46,763
46,763
Liabilities
Other non-interest
sensitive balances
Total assets
Assets
Other non-interest
sensitive balances
400,000
400,000
600,000
600,000

600,000
200,000
200,000

Non-trading book

Up to
>1 3
>3 6
>6 12
>1 5
Over 5
Company
1 month
months
months
months
years
years
2011
RM000
RM000
RM000
RM000
RM000
RM000
Market Risk (contd)
31 March 2012
1,831,634
2,801
1,828,833
1,529
1,272
1,784,871
1,779,076
5,700
95
2,431,634
602,801
1,828,833
1,529
601,272
2,431,634
1,779,076
605,700
46,858
Non-
interest
sensitive
Total
RM000
RM000
3.60
2.76
2.74
Effective
interest
rate
%
2012 ANNUAL REPORT
163
164

31 March 2012

(b)
Market Risk (contd)

(ii)
Foreign currency exchange risk
Foreign currency exchange risk refers to the risk that fair value of future cash flows of a financial instrument will fluctuate
because of the movements in the exchange rates for foreign currency exchange positions taken by the Group from time to
time. For the Group, foreign exchange risk is concentrated in its commercial banking. Foreign currency exchange risk is
managed via approved risk limits and open positions are regularly revalued against current exchange rates and reported to
Management.
The following table summarises the assets, liabilities and net open position by currency as at the end of financial reporting
period, which are mainly in US, Singapore, Euro and Australian Dollars. Other foreign exchange exposures include exposure
to Japanese Yen, Pound Sterling and New Zealand Dollars.

Group
US Dollars
2012
RM000
Singapore
Dollars
RM000
Euro
Dollars
RM000
Australian
Dollars Others
RM000 RM000
Total
RM000
Assets
Other financial assets
18,243
531
2,101
1,733
9,751
32,359
123,304
277,991
1,998

817

128,288
1,047
2

3,025
9
251,592
282,880
2,009
Total financial assets
421,536
531
2,918
131,070
12,785
568,840
Liabilities
Other financial liabilities
140,435
13,944
11,489
76,066
41,668
283,602
456,778
429
3,351
1
816

31,854

17
11
492,816
441
Total financial liabilities
597,642
17,296
12,305
107,920
41,696
776,859
On-balance sheet open position

Off-balance sheet open position
(176,106)
175,430
(16,765)
24,034
(9,387)
12,081
23,150 (28,911) (208,019)

(24,927) 39,632 226,250
(676)
7,269
2,694
(1,777)
10,721
18,231
Assets
Other financial assets
12,389
163,961
7,384
2,339

1,583

38
58,245
3,425
4
72,973
168,969
7,426
Total financial assets
183,734
2,339
1,583
38
61,674
249,368
163,167
1,680
11,069
34,882
20,718
231,516
30,258
578

12

11

106
159
8
30,417
715
194,003
1,692
11,080
34,988
20,885
262,648
On-balance sheet open position

Off-balance sheet open position
(10,269)
8,285
647
5,882
(9,497)
6,575
(34,950)
(2,603)
40,789
6,005
(13,280)
24,144
(1,984)
6,529
(2,922)
(37,553)
46,794
10,864
Net open position

Group
2011
Liabilities
Net open position
2012 ANNUAL REPORT
165

31 March 2012

(b)
Market Risk (contd)

(iii) Value at risk (VaR)

Value-at-risk (VaR) reflects the maximum potential loss of value of a portfolio resulting from market movements within a
specified probability of occurrence (level of confidence); for a specific period of time (holding period). For the Group, VaR is
computed based on the historical simulation approach with parameters in accordance with BNM and Basel requirements.
Backtesting is performed daily to validate and reassess the accuracy of the VaR model. This involves the comparison of the
daily VaR values against the actual profit and loss over the corresponding period.
The table below sets out a summary of the Groups VaR profile by financial instrument types for the Trading Portfolio:

Group
Balance
2012
RM000
Instruments:
FX swap
Government securities
Private debt securities
Average
for the year
RM000
Minimum
RM000
Maximum
RM000
(549)
(12,291)
(1,707)
(885)
(14,765)
(4,477)
(18)
(6,452)
(1,045)
(44,087)
(41,399)
(7,999)
(770)
(11,487)
(5,144)
(525)
(7,650)
(3,641)
(272)
(4,256)
(1,870)
(989)
(12,201)
(6,456)
2011
Instruments:
FX swap
Government securities
Private debt securities
(iv)
Interest rate risk/rate of return risk in the banking book
The following tables present the Groups projected sensitivity to a 100 basis point parallel shock to interest rates across all
maturities applied on the Groups interest sensitivity gap as at reporting date.
2012
Group
- 100 bps
+ 100 bps
Increase/(Decrease)
RM000
RM000
2011
Group
- 100 bps
+ 100 bps
Increase/(Decrease)
RM000
RM000
Impact on net interest income

Ringgit Malaysia
As percentage of net interest income
Note:
The foreign currency impact on net interest income is considered insignificant as the exposure is less than 5% of Banking
Book assets/liabilities.
(53,366)
53,366
(44,616)
44,616
(5.7%)
5.7%
(4.9%)
4.9%
166

31 March 2012

(b)
Market Risk (contd)
Other risk measures

(v)
Stress test
Stress testing is normally used by banks to gauge their potential vulnerability to exceptional but plausible events. The Group
performs stress testing regularly to measure and alert management on the effects of potential political, economic or other
disruptive events on our exposures. The Groups stress testing process is governed by the Stress Testing Framework as
approved by the Board. Stress testing are conducted on a bank-wide basis as well as on specific portfolios. The Groups bankwide stress testing exercise uses a variety of broad macroeconomic indicators that are then translated into stress impacts on
the various business units. The results are then consolidated to provide an overall impact on the Groups financial results and
capital requirements. Stress testing results are reported to management to provide them with an assessment of the financial
impact of such events would have on the Groups profitability and capital levels.
(vi)
Sensitivity analysis
Sensitivity analysis is used to measure the impact of changes in individual stress factors such as interest/profit rates or foreign
exchange rates. It is normally designed to isolate and quantify exposure to the underlying risk. The Group performs sensitivity
analysis such as parallel shifts of interest/profit rates (in increment of 25 basis points) on its exposures, primarily on the
banking and trading book positions.
(vii) Displaced Commercial Risk

Displaced commercial risk arises from the Groups Islamic financial services offered under Alliance Islamic Bank Berhad. It
refers to the risk of losses which the Islamic Bank absorbs to make sure that Investment Account Holders are paid in rate of
return equivalent to a competitive market rate of return.This risk arises when the actual rate of return is lower than returns
expected by Investment Account Holders.
(c)
Liquidity Risk
Liquidity risk relates to the Groups ability to maintain adequate liquid assets so as to punctually meet its financial obligations and
commitments when due. Market liquidity risk refers to the potential risk that the Group is unable to liquidate its assets/securities at
or near the previous market price due to inadequate market depth or disruptions to the marketplace.
The Groups liquidity risk profile is managed using Bank Negara Malaysias New Liquidity Framework, other internal policies and
ALCO benchmarks. A contingency funding plan is also established by the Group as a forward-looking measure to ensure that liquidity
risk can be addressed according to the degrees of key risk indicators, and which incorporates alternative funding strategies which are
ready to be implemented on a timely basis to mitigate the impact of unforeseen adverse changes in liquidity in the marketplace.
2012 ANNUAL REPORT
167

31 March 2012

(c)
Liquidity Risk (contd)

(i)
Liquidity risk for assets and liabilities based on remaining contractual maturities
The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities, commitments
and counter-guarantees are important factors in assessing the liquidity of the Group. The table below provides analysis of
assets and liabilities into relevant maturity terms based on remaining contractual maturities:

Group
2012
Up to
1 month
RM000
>1 3
months
RM000
>3 6
months
RM000
>6 12
months
RM000
>1 year
RM000
Total
RM000
1,874,333
1,874,333
93,270
4,443
97,713
42,207
1,031,877

2,922,378

697,092

97,906
19,491
6,661,199
61,698
11,410,452
4,969,403
36,224
1,549,577
14,328
987,148
7,186
598,935 16,255,140
7,989 1,733,359
24,360,203
1,799,086
7,954,044
4,579,553
1,695,869
704,830 24,669,189
39,603,485
20,654,834
3,736,550
2,376,978
5,228,010
134,590
32,130,962
770,600
471,339
226,276
64,329
628,461
2,161,005
73,802
14

13,786
577,720

40

37,538

124
1,634

23,573

9,566

44,941
1,113

10,844
597,829
243,660
74,915
178
22,044
611,615
927,432

Equity
22,090,756

4,245,467

2,628,585

5,346,846

1,616,497
3,670,429
4,905
35,928,151
3,670,429
4,905
22,090,756
4,245,467
2,628,585
5,346,846
5,291,831
39,603,485
(14,136,712)
334,086
(932,716) (4,642,016) 19,377,358
Assets
institutions
and brokers
Loans, advances and
financing
Other asset balances
Total assets
Liabilities
Deposits and placements
of banks and other
Balances due to clients
and brokers
Net maturity mismatch
168

31 March 2012

(c)

(i)
Liquidity risk for assets and liabilities based on remaining contractual maturities (contd)

Group
2011
Up to
1 month
RM000
>1 3
months
RM000
>3 6
months
RM000
>6 12
months
RM000
>1 year
RM000
Total
RM000
914,038
914,038
100,228
Assets
institutions
and brokers
100,065
163
61,441
2,122,429
4,790,087
26,137

3,187,345
1,471,389
7,797

809,576
945,286
9,203

19,078
932,379 5,087,187
557,078 14,032,479
2,878
995,901
80,519
12,138,916
21,796,319
1,041,916
Total assets
7,914,132
4,766,596
1,764,228
1,492,335 20,134,645
36,071,936
18,396,643
3,205,854
2,505,723
4,146,075
91,352
28,345,647
971,566
61,203
13,074
23,447
882,910
1,952,200
85,200
86,161
514

1,272
539,469

24,948
294
600,000

39,671

50
766

24,365

101,562

48,729
1,543

22,640

600,000
240,302
86,743
111,159
125,776
600,000
601,272
892,536

Equity
20,080,825

3,931,970

2,543,978

4,319,813

1,838,747
3,352,114
4,489
32,715,333
3,352,114
4,489
20,080,825
3,931,970
2,543,978
4,319,813
5,195,350
36,071,936
(12,166,693)
834,626
(779,750) (2,827,478) 14,939,295
Liabilities
Deposits and placements of
institutions
Balances due to clients
and brokers
2012 ANNUAL REPORT
169

31 March 2012

(c)

(i)
Liquidity risk for assets and liabilities based on remaining contractual maturities (contd)

Company
2012
Up to
1 month
RM000
>1 3
months
RM000
>3 6
months
RM000
>6 12
months
RM000
>1 year
RM000
Total
RM000
6,501
6,501
19,315

122

1,778,927
19,315
1,779,052
Total assets
6,504
19,315
122
1,778,927
1,804,868
Liabilities
2,790
1,564
4,354

Equity
2,790

1,564
1,800,514
4,354
1,800,514
2,790
1,802,078
1,804,868
3,714
19,315
122
(23,151)
46,858
46,858
5,700

400,000
80
200,000
1,778,994
605,700
1,779,076
46,860
5,700
400,080
1,978,994
2,431,634
Liabilities
1,272
5
600,000
1,524
601,272
1,529

Equity
1,277

601,524
1,828,833
602,801
1,828,833
1,277
2,430,357
2,431,634
45,583
5,700
400,080
(451,363)
Assets
with banks
Company
2011
Assets
with banks
Total assets
(c)
(ii)
Derivatives settled on a gross basis

Outflow
Inflow
(597,400)
586,117
(11,283)
(544,827)
542,768
(2,059)
(718)
(57)
220,488
8,147,317
(752)
34
96,467
124,021
76,173
8,071,144
Items not recognised in the statement of financial position

Credit related commitments and contingencies
(57)

4,295,551
22,421,735
Derivatives financial liabilites

Derivatives settled on a net basis
Interest rate derivatives
Hedging derivatives
3,793,932
475,051

40
379

26,149
20,986,096
771,036
73,802
14
666
14,460
575,661
(1,839)
(251,471)
249,632
(589)
(624)
35
148,889
91,971
56,918
2,666,489
2,415,161
226,942

124
2,511

21,751
(1,458)
(58,264)
56,806
(1,145)
(1,214)
69
210,582
113,733
96,849
5,464,001
5,326,817
69,525

9,697
14,460
43,502
Up to 1 month >1-3 months >3-6 months >6-12 months

RM000
RM000
RM000
RM000
Non derivative financial liabilities

Group
2012
(2,253)
(2,801)
548
422,961
85,551
337,410
1,697,168
105,595
644,646
1,113

10,466
701,220
234,128
>1-5 years
RM000
(322)
(424)
102
4,322,752
67
4,322,685
45,994
45,994

Over 5 years
RM000
(16,639)
(1,451,962)
1,435,323
(5,084)
(5,872)
788
13,472,989
463,962
13,009,027
36,590,938
32,673,595
2,187,200
74,915
178
23,719
730,140
901,191
Total
RM000
The table below presents the cash flows payable by the Group under financial liabilities by remaining contractual maturities at the end of the reporting period. The amount
disclosed in the table are the contractual undiscounted cash flows of all financial liabilities (i.e. nominal values), which the Group manages the inherent liquidity risk based on
discounted expected cash inflows.
Contractual maturity of financial liabilities on an undiscounted basis
31 March 2012
170
(c)
(ii)
83,560
8,283,090
8,366,650
Items not recognised in the statement of financial position

Credit related commitments and contingencies
Derivatives settled on a gross basis

Outflow
Inflow
(643)
(87,071)
86,428
20,194,125
Derivatives financial liabilites

Derivatives settled on a net basis
Interest rate derivatives
18,496,981
972,010
85,200
98,025
665

1,775
539,469
(12,304)
(380,016)
367,712
(292)
135,806
79,896
55,910
4,053,661
3,297,271
61,576

32,884
379
618,270
3,610
39,671
(8,221)
(308,146)
299,925
(91)
135,368
92,500
42,868
2,592,072
2,551,908
9,267

43
1,045

5,444
24,365
(7,180)
(441,839)
434,659
82
213,622
124,509
89,113
4,415,460
4,220,324
29,934

105,643

10,830
48,729

RM000
RM000
RM000
RM000
Non derivative financial liabilities

Group
2011
Contractual maturity of financial liabilities on an undiscounted basis (contd)
31 March 2012
1,802
322,120
72,905
249,215
1,891,047
94,517
911,890
1,543

23,716

619,079
240,302
>1-5 years
RM000
1,381
1,778,835

1,778,835
Over 5 years
RM000
(28,348)
(1,217,072)
1,188,724
2,882
10,952,401
453,370
10,499,031
33,146,365
28,661,001
1,984,677
86,743
130,952
131,448
618,270
640,738
892,536
Total
RM000
2012 ANNUAL REPORT
171
(c)
(ii)
2,790
1,775
5
1,780

2011
2,790
3,610
3,610

5,444
5,444

10,830
10,830


RM000
RM000
RM000
RM000
Company
2012
Contractual maturity of financial liabilities on an undiscounted basis (contd)
31 March 2012
620,603
619,079
1,524
1,564
1,564
>1-5 years
RM000
Over 5 years
RM000
642,267
640,738
1,529
4,354
4,354
Total
RM000
172
2012 ANNUAL REPORT
173

31 March 2012

(d)
Operational and Shariah Compliance Risk
Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or
from external events. The Shariah Compliance Risk arises from the Banks failure to comply with the Shariah rules and principles
determined by the relevant Shariah regulatory councils.
Operational and Shariah Compliance risk management is a continual cyclic process which includes risk identification, assessment,
control, mitigation and monitoring. This includes analysing the risk profile of the Group, determines any causes of failure, assesses
potential loss and enhances controls to reduce/avoid risks.
Every line of business and support departments are responsible for the management of their day-to-day operational and Shariah
Compliance risks while support, monitoring and reporting is facilitated by Operational Risk Management Department. Group Internal
Audit and Shariah Review Team play the role of providing independent compliance assurance to Management and the Board.
The main activities undertaken by the Group in managing operational and Shariah Compliance risks includes the pre-identification of
risks control and self assessments; key risk indicators, reviews of documentation of the Banks processes and procedures; conducting
operational and Shariah Compliance risk awareness internal training and managing potential crisis events via the mitigation resource
of business continuity management.
The Group has implemented regulatory and Basel II requirements for capital charge for operational risk under the Basic Indicator
Approach. Ongoing monitoring and periodic policy/process changes are carried out to reduce the Groups exposure to unexpected
losses, improve control and management of operational risk, to cultivate an organizational culture that places a high priority on
effective operational risk management and adherence to sound operating controls and best practices.
44. CAPITAL ADEQUACY

The capital adequacy ratios of the banking group are computed in accordance with BNMs revised Risk-Weighted Capital Adequacy
Framework (RWCAF-Basel II). The banking group have adopted the Standardised Approach for credit risk and market risk, and the Basic
Indicator Approach for operational risk. The minimum regulatory capital adequacy requirement is 8.0% (2011: 8.0%) for the risk-weighted
capital ratio.
(a)
The capital adequacy ratios of the banking group are as follows:
2012
2011
Before deducting proposed dividends

Core capital ratio
12.00%
15.71%
12.40%
16.54%
After deducting proposed dividends

Core capital ratio

11.52%
15.22%
11.95%
16.09%
Components of Tier-I and Tier-II capital are as follows:

Tier-I capital (Core Capital)
Paid-up share capital
Irredeemable convertible preference shares
Share premium
Retained profits
Statutory reserves
Other reserves
2012
RM000
2011
RM000
596,517
4,000
597,517
1,420,731
842,167
10,018
4,905
596,517
4,000
597,517
1,194,222
786,406
10,018
4,488

Less: Purchased goodwill/goodwill on consolidation

Deferred tax assets
3,475,855
(302,065)
(15,038)
3,193,168
(302,065)
(108,808)
3,158,752
2,782,295
Total Tier-I capital
174

31 March 2012
44. CAPITAL ADEQUACY (contd)

(a)
The capital adequacy ratios of the banking group are as follows (contd):
Components of Tier-I and Tier-II capital are as follows (contd):
2012
RM000
2011
RM000

Tier-II capital
597,829
381,019
600,000
333,466
Total Tier-II capital
978,848
933,466
Total Capital
Less: Investment in subsidiaries
4,137,600
(3,620)
3,715,761
(3,620)
Total Capital Base
4,133,980
3,712,141
(b)
The breakdown of risk-weighted asset (RWA) by exposures in each major risk category are as follows:
Group
2012
RM000
2011
RM000
Credit risk
Market risk
Operational risk
23,601,495
265,432
2,445,524
20,149,305
71,884
2,222,953
Total RWA and capital requirement
26,312,451
22,444,142
Detailed information on the risk exposure above are prescribed under BNMs Risk-Weighted Capital Adequacy Framework
(Basel II) - Disclosure Requirement (Pillar 3) is presented in the Alliance Bank Malaysia Berhads Pillar 3 Report.
(c)
The capital adequacy ratios of the banking subsidiaries are as follows:
Alliance
Bank
Malaysia
Berhad
Alliance
Islamic
Bank
Berhad
Alliance
Investment
Bank
Berhad
31 March 2012
Core capital ratio
13.93%
14.37%
12.35%
14.19%
57.91%
58.39%

Core capital ratio
13.32%
13.76%
11.52%
13.36%
56.65%
57.13%
31 March 2011
Core capital ratio
14.63%
14.98%
11.65%
13.37%
57.17%
57.33%

Core capital ratio
14.09%
14.44%
11.65%
13.37%
55.51%
55.67%
2012 ANNUAL REPORT
175

31 March 2012

(c)
The capital adequacy ratios of the banking subsidiaries are as follows (contd):
Note:
(i)
The capital adequacy ratios of Alliance Islamic Bank Berhad are computed in accordance with BNMs Capital Adequacy
Framework for Islamic Banks (CAFIB). The Bank has adopted the Standardised Approach for credit risk and market risk, and
Basic Indicator Approach for operational risk. The minimum regulatory capital adequacy requirement is 8.0% (2011: 8.0%) for
the risk-weighted capital ratio.
(ii)
The capital adequacy ratios of Alliance Investment Bank Berhad are computed in accordance with BNMs revised Riskweighted Capital Adequacy Framework (RWCAF-Basel II). The Bank and the Group have adopted the Standardised Approach
for credit risk and market risk, and the Basic Indicator Approach for operational risk. The minimum regulatory capital adequacy
requirement is 8.0% (2011: 8.0%) for the risk-weighted capital ratio.
45. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group make various commitments and incur certain contingent liabilities with legal recourse to their
customers. No material losses are anticipated as a results of these transactions.
The off-balance sheet exposures and their related counterparty credit risk of the Group are as follows:

Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
397,029
549,766
153,561
70,122
397,029
274,883
30,712
35,061
397,029
274,883
30,712
35,061
4,320,657
5,793,193
2,188,661
2,160,328
1,158,639
437,732
1,786,192
1,004,648
340,525
13,472,989
4,494,384
3,869,050
3,147,488
17,730
64,522
38,478
587,000
1,110,000
423,896
130
2,592
3,260
912
14,192
20,055
182
2,838
6,467
5,268,384
23,712
99,681
47,965
18,741,373
23,712
4,594,065
3,917,015
Group
2012
Credit-related exposures
Direct credit substitutes
Transaction-related contingent items
Short-term self-liquidating trade-related contingencies
Obligation under on-going underwritting agreement
Irrevocable commitments to extent credit:
- maturity exceeding one year
- maturity not exceeding one year
Unutilised credit card lines
Derivative financial instruments

Foreign exchange related contracts:
- less than one year
- one year or less
- over one year to three years
- over three years
176

31 March 2012
45. COMMITMENTS AND CONTINGENCIES (contd)

The off-balance sheet exposures and their related counterparty credit risk of the Group are as follows (contd):

Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
423,539
515,311
143,281
423,539
257,655
28,656
423,539
257,655
28,656
1,715,131
4,729,308
3,425,831
857,565
945,862
685,166
727,272
852,441
528,386
10,952,401
3,198,443
2,817,949
2,844,627
22,568
77,079
40,842
380,000
1,447,000
285,000
257
6,465
2,757
637
29,535
15,957
127
5,907
3,192
4,956,627
32,047
123,208
50,068
15,909,028
32,047
3,321,651
2,868,017
Group
2011

- one year or less
- over three years
46. CAPITAL

The Groups capital management objectives are:

- to maintain sufficient capital resources to meet the regulatory capital requirements as set forth by Bank Negara Malaysia,
- to maintain sufficient capital resources to support the Groups risk appetite and to enable future business growth, and
- to meet the expectations of key stakeholders, including shareholders, investors, regulators and rating agencies.
In line with this, the Group aims to maintain capital adequacy ratios that are comfortably above the regulatory requirement, while balancing
shareholders desire for sustainable returns and high standards of prudence.
The Group carries out stress testing to estimate the potential impact of extreme, but plausible, events on the Groups earnings, balance
sheet and capital. The results of the stress test are to facilitate the formation of action plan(s) in advance if the stress test reveals
that the Groups capital will be adversely affected. The results of the stress test are tabled to the Group Risk Management Committee
for deliberations.
The Groups regulatory capital are determined under Bank Negara Malaysias revised Risk-weighted Capital Adequacy Framework and their
capital ratios complies with the prescribe capital adequacy ratios.
2012 ANNUAL REPORT
177

31 March 2012
47. LEASE COMMITMENTS

The Group and the Company have lease commitments in respect of equipment on hire and premises, all of which are classified as operating
leases. A summary of the non-cancellable long term commitments is as follows:
Group
Within one year

Between one and five years
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
26,744
33,788
21,295
14,183
14
770
316
810
60,532
35,478
784
1,126
The operating leases for the Group and the Companys other premises typically cover for an initial period of three years with options for
renewal. These leases are cancellable but are usually renewed upon expiry or replaced by leases on other properties. Future minimum lease
commitments are anticipated to be not less than the rental expense for 2012.
48. SIGNIFICANT RELATED PARTY TRANSACTIONS

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are the Groups and the Companys
other significant related party transactions and balances:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000

(98)

(6)
(12,869)

(18,176)
Dividend income
- subsidiary
(265,765)
(146,462)
Overhead expenses recharged

- subsidiaries
(1,998)
(1,635)
Interest expenses
- key management personnel
1,079
1,034
Management fees
- related companies
903
363
(14,498)
(40,825)
3,168
89
21,540
650,249
(a)
Transactions
Interest income
- subsidiaries
(b)
Balances
Amount due to deposits from customers

Overdraft
Money at call and deposit placements with

- subsidiaries

4,434
322
Other assets
- subsidiaries
19
11
Other liabilities
- subsidiaries
(358)
(5)
178

31 March 2012
48. SIGNIFICANT RELATED PARTY TRANSACTIONS (contd)

(i)
Related companies refer to member companies of Alliance Financial Group Berhad.
(ii)
Key management personnel refer to those persons having authority and responsibility for planning, directing and controlling the
activities of the Group and the Company, directly or indirectly, including Executive Directors and Non-Executive Directors of the
Group and the Company (including close members of their families). Other members of key management personnel of the Group are
the Group Chief Executive Officer, Group Chief Operating Officer, Group Chief Financial Officer, Group Chief Risk Officer, Group Chief
Credit Officer and Group Company Secretary.
(c)
Compensation of key management personnel
Remuneration of Directors and other members of key management for the year is as follows:
Group
Short-term employee benefits

Fees
Salary and other remuneration, including
meeting allowances
Contribution to EPF
Benefits-in-kind
Included in the total key management personnel are:

Directors remuneration (Note 35(b))
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
2,072
1,876
540
525
9,252
1,171
1,336
122
6,818
758
781
93
680
50
106
31
659
44
76
38
13,953
10,326
1,407
1,342
9,296
6,961
911
922
Executive Directors of the Group and other members of key management have been offered/awarded the following number of share
options/share grants under the ESS:
Share Options
2012
2011
000
000
Share Grants
2012
2011
000
000
Group
Directors/key management personnel appointed
during the year
Offered/awarded
Vested
Lapsed
3,050
2,289
379
309
68
2,569

(1,462)
183
1,484

(906)
7
350
(73)
(120)
24
238
(67)
(125)
At end of year
4,225
3,050
543
379
Company
Offered/awarded
Vested
276
171
(68)
221
55

28
23
(12)
29
9
(10)
At end of year
379
276
39
28
The above share options/share grants were offered/awarded on the same terms and conditions as those offered to other employees
of the Group (Note 30).
2012 ANNUAL REPORT
179

31 March 2012
49. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(a)
Comparison of carrying amount and fair value
The following table summarizes the carrying amounts of financial assets and liabilities on the Group and Companys statement of
financial position, and their fair value differentiating between financial assets and liabilities subsequently measured at fair value and
these subsequently measured at amortised cost.
2012
Carrying
amount
Fair value
RM000
RM000

Group
Financial assets
Financial liabilities
Deposits and placements of banks and
Company
Financial assets
Financial liability
2011
Carrying
amount
RM000
Fair value
RM000
1,874,333
1,874,333
914,038
914,038
97,713
61,698
1,491,995
9,123,201
795,256
23,712
24,360,203
97,713
61,698
1,491,995
9,123,201
809,381
23,712
24,755,886
100,228
80,519
1,938,250
9,259,940
940,726
32,047
21,796,319
100,228
80,519
1,938,250
9,259,940
955,844
32,047
22,137,588
32,130,962
32,129,447
28,345,647
28,345,646
2,161,005
74,915
178
26,241
22,044
611,615

2,128,981
74,915
178
26,241
20,471
611,820

1,952,200
86,743
111,159
33,347
125,776
600,000
601,272
1,912,490
86,743
111,159
33,347
125,882
615,025
598,000
6,501
6,501
46,858
46,858
19,315
19,315
605,700
605,700
601,272
598,000
Note:
The fair value of the other assets and other liabilities, which are considered short-term in nature, are estimated to be approximately
their carrying values.
180

31 March 2012
49. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (contd)

The methods and assumptions used in estimating the fair values of financial instruments are as follows:
(i)
The carrying amounts approximate fair values due to the relatively short maturity of the financial instruments.
(ii)
The fair values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due
to the relatively short maturity of the financial instruments. For those financial instruments with maturity of more than one year, the
fair values are estimated based on discounted cash flows using applicable prevailing market rates for placements of similar credit
risk and similar remaining maturity as at the end of the reporting period .
(iii) Financial assets held-for-trading, financial investments available-for-sale and financial investments held-to-maturity

The fair values are estimated based on quoted or observable market prices at the end of the reporting period. Where such quoted or
observable market prices are not available, the fair values are estimated using pricing models or discounted cash flow techniques.
Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for a
similar instrument at the end of the reporting date.
(iv)
The fair values of derivative financial instruments are obtained from quoted market rates in active market, including recent market
transactions and valuation techniques, such as discounted cash flow models, as appropriate.
(v)
The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate
their carrying values. For fixed rate loans and Islamic financing with remaining maturity of more than one year, the fair values are
estimated based on expected future cash flows of contractual instalment payments and discounted at applicable prevailing rates
at the end of the reporting period offered to new borrowers with similar credit profiles. In respect of impaired loans, the fair values
are deemed to approximate the carrying values, net of individual allowance or specific allowance for losses on loans, advances
and financing.
(vi)
The fair values of deposit liabilities payable on demand (demand and savings deposits), or deposits with maturity of less than one
year are estimated to approximate their carrying amounts. The fair values of fixed deposits with remaining maturities of more than
one year are estimated based on expected future cash flows discounted at applicable prevailing rates offered for deposits of similar
remaining maturities. For negotiable instruments of deposits, the fair values are estimated based on quoted or observable market
prices as at the end of the reporting period. Where such quoted or observable market prices are not available, the fair values of
negotiable instruments of deposits are estimated using the discounted cash flow technique.
(vii) Deposits and placements of banks and other financial institutions and bills and acceptances payable

The carrying values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts
due to the relatively short maturity of the financial instruments.
(viii) Amount due to Cagamas Berhad

The fair values of amount due to Cagamas Berhad are determined based on the discounted cash flows of future instalment payments
at applicable prevailing Cagamas rates as at the end of the reporting period.
(ix) Long term borrowings

The fair values of variable rate borrowings are estimated to approximate carrying values. For fixed rate borrowings, the fair values are
estimated based on discounted cash flow techniques using a current yield curve approximate for the remaining term to maturity.
(x)
The fair value of the subordinated bonds is estimated based on discounted cash flow techniques using a current yield curve
appropriate for the remaining term to maturity.
(xi) Balances due from/(to) clients and brokers

The carrying amounts are reasonable estimates of the fair values because of their short tenor.
2012 ANNUAL REPORT
181

31 March 2012

(b)
Financial instruments measured at fair value
Determination of fair value and fair value hierarchy
FRS 7 Financial Instruments: Disclosure require disclosure of financial instruments measured at fair value according to a hierarchy
of valuation techniques, whether the inputs used are observable or unobservable. The following level of hierarchy are used for
determining and disclosing the fair value of the financial instruments:
(i)
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii)
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
(iii)
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following tables show the Groups financial instruments which are measured at fair value at the reporting date analysed by the
various levels within the fair value hierarchy:
Group
2012
Assets
Liabilities
Group
2011
Assets
Liabilities
Level 1
RM000
Level 2
RM000
Level 3
RM000
Total
RM000

4,199

1,491,995
8,978,333
23,712

140,669

1,491,995
9,123,201
23,712
26,241
26,241

3,864

1,938,250
9,130,660
32,047

125,416

1,938,250
9,259,940
32,047
33,347
33,347
Financial instruments that are valued using quoted prices in active market are classified as Level 1 of the valuation hierarchy. This
includes listed equities and corporate debt securities which are actively traded.
Where fair value is determined using quoted prices in less active markets or quoted prices for similar assets and liabilities, such
instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Group then determine
fair value based upon valuation techniques that use as inputs, market parameters including but not limited to yield curves, volatilities
and foreign exchange rates. The majority of valuation techniques employ only observable market data and so reliability of the
fair value measurement is high. These would include government securities, corporate private debt securities, corporate notes,
repurchase agreements and most of the Groups derivatives.
The Group classifies financial instruments as Level 3 when there is reliance on unobservable inputs to the valuation model attributing
to a significant contribution to the instrument value. Valuation reserves or pricing adjustments where applicable will be used to
converge to fair value.
The valuation techniques and inputs used generally depend on the contractual terms and the risks inherent in the instrument as
well as the availability of pricing information in the market. Principal techniques used include discounted cash flows, and other
appropriate valuation models.
182

31 March 2012

(b)
Financial instruments measured at fair value (contd)
Reconciliation of movements in Level 3 financial instruments:

Group
2012
RM000
Total gains/(losses) recognised in:
- Statement of comprehensive income
- Other comprehensive income
Purchases
Disposal/redemption
125,416
At end of year
140,669
(300)
17,704
563
(2,714)
50. SEGMENT INFORMATION

The following segment information has been prepared in accordance with FRS 8 Operating Segments, which defines the requirements for
the disclosure of financial information of an entitys operating segments. The operating segments results are prepared based on the Groups
internal management reporting reflective of the organisations management reporting structure.
The Group is organised into the following key operating segments:

(i)
Consumer Banking
Consumer Banking provides a wide range of personal banking solutions covering mortgages, term loans, personal loans, hire
purchase facilities, credit cards, wealth management (cash management, investment services, share trading, bancassurance and
will writing). Consumer banking customers are serviced via branch network, call centre, electronic/internet banking channels, and
direct sales channels.
(ii)
Business Banking
Business Banking segment covers Small and Medium Enterprise (SME) and Wholesale Banking. SME Banking customers comprise
self-employed, small and medium scale enterprises. Wholesale Banking serves public-listed and large corporate business customer
including family-owned businesses. Business Banking provides a wide range of products and services including loans, trade finance,
cash management, treasury and structured solutions.
(iii) Financial Markets

Financial Markets provide foreign exchange, money market, hedging, wealth management and investment (capital market
instruments) solutions for banking customers. It also manages the assets and liabilities, liquidity and statutory reserve requirements
of the banking entities in the Group.
(iv)
Investment Banking
Investment Banking covers stockbroking activities and corporate advisory which includes initial public offering, equity fund raising,
debt fund raising, mergers and acquisitions and corporate restructuring.
(v)
Others
Others refer to mainly other business operations such as unit trust, asset management, alternative distribution channels, trustee
services and head office.
658,578
39,603,485
35,897,767
30,384
35,928,151
Segment liabilities
15,980,443
11,087,887
9,802,809
105,221
64,508
37,040,868
(1,143,101)
Unallocated liabilities

Total liabilities
42,822,690
Total assets
1,885,675
26,552
90,293
30,825
354,902
236,579
Reconciliation of segment assets to consolidated assets:

Investment in an associate
Unallocated assets
Intangible assets
16,260,377
(34,640)
21,643
(295,629)
1,250,374
(544,183)
(47,613)
39,100,913
11,284,537
(597)

954,207
(301,283)
5,654

673,863
256,329
320,182
(3,721,777)
Segment assets
13,155,522
(195)

272,361
1,551,657
(549,837)
(47,613)
12,761
27,405
(341,449)
673,863
479,839
(1,053)
21,643
(7,449)
299,199
(26,670)
(168)
661,102
228,924
661,631
12,761

Total
RM000
(8,528)

(24,267)

227,344
26,002
(31,373)
(2,078)
(15,488)

314,687
661,102

Total Inter-segment
Operations Elimination
RM000
RM000
645,581
(1,978)
(163,764)
284,355
177,596
Operating profit
Allowance for impairment on loans,
advances and financing and other losses
Write-back of impairment
272,594
(39,164)
(6,086)
1,396

24,606
(15,488)

Others
RM000
Segment result
153,329
275,827
247,934
(7,644)
271,764
941,210
(295,629)
Share of results in an associate
Taxation and zakat
501,310
(200,699)
(16,256)
452,552
(251,931)
(23,025)
Net income
Depreciation and amortisation
141,718
40,454
90,422
5,193
(3,797)
Investment
Banking
RM000
(34,640)
21,643
296,635
66,846
137,829
236,841
121,624
94,087

223,192
(81,474)
Financial
Markets
RM000
307,025
(10,390)
Business
Banking
RM000
141,180
95,661
Consumer
Banking
RM000

- external income/(expense)
- inter-segment

GROUP
2012
50. SEGMENT INFORMATION (contd)
31 March 2012
2012 ANNUAL REPORT
183
267,797
2,972
1,139
454,785
(236,522)
(27,180)
191,083
(37,035)

Net income
Depreciation and amortisation
Operating profit
(Allowance for)/write-back of impairment on loans,
advances and financing and other losses
583,816
1,128,716
(490,889)
(54,011)
670,262
232,732
225,722
670,262
32,715,333
Total liabilities
32,668,034
47,299
Segment liabilities
15,677,949
9,272,735
8,953,812
116,286
658,497
34,679,279
(2,011,245)
Unallocated liabilities
40,064,662
36,071,936
2,502,007
Total assets
248,641
28,530
104,837
112,343
357,682
15,449,464
Reconciliation of segment assets to consolidated assets:

Investment in an associate
Unallocated assets
Intangible assets
9,134,341
35,468,544
12,730,209
(4,596,118)
Segment assets
409,151
(159,052)
(162,650)
3,598

2,332
24,984
(189,966)
2,332

Total
RM000
(33,309)
4,076
742,868
1,291,366
(494,487)
(54,011)
667,930
207,748
415,688
667,930

Total Inter-segment
Operations Elimination
RM000
RM000
554,583
(1,470)
(143,962)
(302)

143,389
168,146
(24,495)
(262)
(2,660)

170,806
(2,660)

Others
RM000
Segment result
154,048
271,908
146,537
(1,945)
143,087
713,635
(159,052)
Share of results in an associate
Taxation and zakat
644

(2,589)
31,473
(30,102)
(3,960)
1,858

29,615
4,574
(2,716)
Investment
Banking
RM000
(33,309)
4,076
412
2,937
143,188
185,873
(35,240)
(7,445)
111,208
35,027
39,638
198,381
(87,173)
Financial
Markets
RM000
451,089
(168,128)
(15,164)
293,127
55,832
102,130
264,397
116,889
73,499

245,160
47,967
Business
Banking
RM000
222,475
41,922
Consumer
Banking
RM000

- external income/(expense)
- inter-segment

GROUP
2011
50. SEGMENT INFORMATION (contd)
31 March 2012
184
2012 ANNUAL REPORT
185

31 March 2012
51. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Liquidation of subsidiary
The following subsidiaries have been liquidated pursuant to Section 272(5) of the Companies Act, 1965:
(a)
Subsidiary of Alliance Bank Malaysia Berhad

(i)
(b)
AllianceGroup Properties Sdn. Bhd. - liquidated with effect from 11 November 2011.
Subsidiaries of Alliance Investments Bank Berhad

(ii)
KLCS Asset Management Sdn. Bhd. - liquidated with effect from 28 April 2011.
(iii)
KLCity Ventures Sdn. Bhd. - liquidated with effect from 11 November 2011.
(iv)
KLCity Unit Trust Berhad - liquidated with effect from 28 December 2011.
52. SUBSEQUENT EVENTS

There were no material events subsequent to the end of the financial reporting period that require disclosure or adjustment to the
financial statements.
53. NON-CURRENT ASSETS HELD FOR SALE

Group
2012
RM000
2011
RM000
Building
Freehold land
Leasehold land
2,453
1,009
352
3,814
Property, plant and equipment where deposits have been received from buyers of the properties and where a definitive buyer have been
identified will classified as non-current assets held for sale. The disposals are expected to be completed in next financial year.
186

31 March 2012
54. REALISED AND UNREALISED PROFITS

On 25 March 2010, Bursa Malaysia Securities Berhad (Bursa Malaysia) issued a directive to all listed issuers pursuant to Paragraphs 2.06
and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the
unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.
On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required.
The breakdown of retained profits of the Group and the Company as at the reporting date, into realised and unrealised profits, pursuant to
the directive, is as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,360,783
51,858
1,045,846
144,761
2,012
300
5,553
284

Less: Consolidation adjustments
1,412,641
(281,358)
1,190,607
(282,523)
2,312

5,837
Total retained profits as per accounts
1,131,283
908,084
2,312
5,837
The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and
Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the
Malaysian Institute of Accountants on 20 December 2010.
Accordingly, the unrealised retained profits of the Group and the Company as disclosed above excludes translation gains and losses on
monetary items denominated in a currency other than the functional currency and foreign exchange contracts, as these gains and losses
are incurred in the ordinary course of business of the Group and the Company, and are hence deemed as realised.
The disclosure of realised and unrealised profits above is solely for complying with the disclosure requirements stipulated in the directive of
Bursa Malaysia and should not be applied for any other purposes.
Total retained profits

- Realised
- Unrealised
Abridged
188
189
190
192
194
205

Statements of Cash Flows
188

as at 31 March 2012

Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
ASSETS
Other assets
Tax recoverable
Investments in subsidiaries
Investments in associates
Deferred tax assets
Intangible assets
1,730,290
143,461

1,342,302
7,419,911
228,622
23,712
19,727,393
79,901
14,022
901,250
801,664
30,230
87,696

238,588
958,111
954,610

1,176,190
6,329,994
633,521
32,047
17,718,442
103,509

225,300
801,664
30,230
100,847
75,272
241,141
1,874,332
93,438
61,698
1,491,995
9,123,201
795,256
23,712
24,360,203
77,799
15,019
1,162,983

27,035
89,778
15,038
354,902
911,730
100,228
80,519
1,938,250
9,259,940
940,726
32,047
21,796,319
87,008
2,442
291,008
29,038
104,553
108,808
357,682

Non-current assets held for sale
32,769,042
3,814
29,380,878

39,566,389
3,814
36,040,298
TOTAL ASSETS
32,772,856
29,380,878
39,570,203
36,040,298
LIABILITIES AND EQUITY

Other liabilities
Provision for taxation
26,958,903
1,186,730

131
26,241
22,044
720,819

12,191
611,615
23,418,868
1,390,331

111,140
33,347
125,776
663,533
35,206

600,000
32,153,643
2,161,005
74,915
178
26,241
22,044
866,788
7,372
23,012
611,615
28,997,092
1,952,200
86,743
111,159
33,347
125,776
810,317
40,507
6,792
600,000
TOTAL LIABILITIES
29,538,674
26,378,201
35,946,813
32,763,933
Share capital
Reserves
600,517
2,633,665
600,517
2,402,160
600,517
3,017,968
600,517
2,671,360
CAPITAL AND RESERVES ATTRIBUTABLE TO

OWNER OF THE PARENT
3,234,182

3,002,677

3,618,485
4,905
3,271,877
4,488
TOTAL EQUITY
3,234,182
3,002,677
3,623,390
3,276,365
TOTAL LIABILITIES AND EQUITY
32,772,856
29,380,878
39,570,203
36,040,298
COMMITMENTS AND CONTINGENCIES
16,775,305
14,758,344
18,741,373
15,909,028
2012 ANNUAL REPORT
189


2012
RM000
Bank
2011
RM000
2012
RM000
Group
2011
RM000
Interest income
Interest expense
1,263,818
(618,607)
1,126,444
(490,539)
1,328,045
(652,989)
1,203,400
(530,003)
Net interest income

645,211

635,905

675,056
256,329
673,397
232,732

645,211
316,554
635,905
213,041
931,385
320,276
906,129
225,701
Net income
961,765
(429,312)
848,946
(399,763)
1,251,661
(588,821)
1,131,830
(541,682)
Operating profit before allowance

Allowance for losses on loans, advances and financing
and other losses
532,453
449,183
662,840
590,148
(28,643)
15,187
(19,405)
4,070
(34,043)
21,643
(33,008)
4,076
Operating profit after allowance

Share of results of associates
518,997

433,848

650,440
(2,003)
561,216
(1,467)

Taxation and zakat
518,997
(131,246)
433,848
(112,438)
648,437
(164,107)
559,749
(144,381)
387,751
321,410
484,330
415,368
Other comprehensive income:

Revaluation reserve on financial investments available-for-sale
- Net gain/(loss) from change in fair value
- Transfer (to)/from deferred tax
60,377
(15,094)
(7,054)
1,763
85,531
(21,382)
(7,925)
1,981
Other comprehensive income/(expense), net of tax
45,283
(5,291)
64,149
(5,944)
433,034
316,119
548,479
409,424
Profit attributable to:

Owner of the parent
387,751

321,410

483,846
484
415,419
(51)
387,751
321,410
484,330
415,368
Total comprehensive income attributable to:

Owner of the parent
433,034

316,119

547,995
484
409,475
(51)
433,034
316,119
548,479
409,424
Earnings per share attributable to owner of the parent

- Basic (sen)
- Diluted (sen)
81
61
70
52
596,517

596,517
At 1 April 2011


Payment for ESS recharged from parent
Transfer of ESS recharged difference on shares vested
Transfer to retained profits on shares options lapsed
Dividends paid
At 31 March 2012
ICPS = Irredeemable (non-cumulative) Convertible Preference Shares.
4,000
596,517
At 31 March 2011
4,000

Share-based payment under Employees Share Scheme (ESS)
Dividends paid
4,000
4,000
596,517
At 1 April 2010

597,517
597,517
597,517
597,517
601,561
601,561
601,561
601,561
88,334
45,283

45,283
43,051
43,051
(5,291)

(5,291)
48,342
12,274

5,955
(3,161)
156
(2,479)

11,803
11,803

4,852
(3,051)
(332)

10,334
1,333,979
387,751

(156)
2,479
(204,323)
387,751

1,148,228
1,148,228
321,410

332
(114,846)
321,410

941,332

Non-distributable
Distributable

reserves
reserves

Equity
contribution

Ordinary

Share
Statutory Revaluation
from
Retained

shares
ICPS1
premium
reserve
reserves
parent
profits
Bank
RM000
RM000
RM000
RM000
RM000
RM000
RM000
Statements of Changes In Equity

3,234,182
433,034
5,955
(3,161)
(204,323)
387,751
45,283
3,002,677
3,002,677
316,119
4,852
(3,051)
(114,846)
321,410
(5,291)
2,799,603
Total
equity
RM000
190
4,000

Transfer to retained profits on shares options lapsed
Dividends paid
596,517
At 31 March 2012
4,000
596,517
At 1 April 2011
Net profit/(loss) after taxation and zakat

4,000
596,517

Transfer to PER
Dividends paid
4,000
At 31 March 2011
596,517
Net profit/(loss) after taxation and zakat

At 1 April 2010
597,517
597,517
597,517
597,517
842,167

55,761

786,406
786,406

50,891

735,515
10,018
10,018
10,018
10,018
132,769
64,149

64,149
68,620
68,620
(5,944)

(5,944)
74,564
13,733

6,494
(3,558)
172
(2,919)

13,544
13,544

5,228
(3,485)
(384)

12,185

Attributable to Equity Holder of the Bank

Equity

contribution

Ordinary
Share
Statutory
Other Revaluation
from

shares
ICPS
premium
reserve
reserves
reserves
parent
Group
RM000
RM000
RM000
RM000
RM000
RM000
RM000
Statements of Changes In Equity

1,033
1,033
1,033

(25,355)

26,388
1,420,731
483,846

(172)
2,919
(55,761)
(204,323)
483,846

1,194,222
1,194,222
415,419

384
(50,891)
25,355
(114,846)
415,419

918,801
3,618,485
547,995
6,494
(3,558)

(204,323)
483,846
64,149
3,271,877
3,271,877
409,475
5,228
(3,485)

(114,846)
415,419
(5,944)
2,975,505
Profit
equalisation
reserve
Retained
(PER)
profits
Total
RM000
RM000
RM000
4,905
484

(67)
484

4,488
4,488
(51)

(51)

4,539
Noncontrolling
interests
RM000
3,623,390
548,479
6,494
(3,558)
(204,390)
484,330
64,149
3,276,365
3,276,365
409,424
5,228
(3,485)
(114,846)
415,368
(5,944)
2,980,044
Total
equity
RM000
2012 ANNUAL REPORT
191
192


Adjustments for:
Accretion of discount less amortisation
of premium of financial investments
Amortisation of computer software
Dividends from subsidiaries
(Gain)/loss on disposal of property, plant and equipment
Net gain from redemption of financial investments held-to-maturity
Net gain from sale of financial assets held-for-trading
Net gain from sale of financial investments available-for-sale
Unrealised loss/(gain) on revaluation of
financial assets held-for-trading
Unrealised gain on revaluation of derivative instruments
Interest income from financial assets held-for-trading
Allowance for loans, advances and financing (net of recoveries)
Allowance for other assets (net of recoveries)
Net write-back of financial investments available-for-sale
Net write-back of financial investments held-to-maturity
Allowance for impairment of property, plant and equipment
(Write-back of)/allowance for commitment and contingencies
Share options/grants under Employees Share Scheme
Share of results of associates
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
518,997
433,848
648,437
559,749
(90,058)
27,091
17,853
(9,544)
(34,732)
(306)
2,019
841

(16,831)
(3,568)
(43,050)
(75,141)
34,908
14,014
(2,886)
(17,263)
321
3,261
1
38
(3)
(417)
(1,872)
(94,369)
29,271
18,239
(10,229)

(309)
2,046
841
20
(16,831)
(3,699)
(47,408)
(82,179)
39,516
14,420
(3,705)
329
3,399
1
38
(3)
(417)
(3,509)
149
34,513
(1,572)
(17,063)
(208,528)
(3,798)
56,742
5,436
(16,303)
(344)
1,460
(1,482)
5,955

(220)
36,540
(4,149)
(24,187)
(146,531)
(1,044)
77,524
6,353
(579)
(3,491)

(2,866)
4,852

185
34,513
(1,572)
(22,751)
(253,237)
(3,862)
89,744
5,596
(22,759)
(344)
1,460
(4,210)
6,494
2,003
(256)
36,540
(4,149)
(30,682)
(206,340)
(1,044)
103,804
4,974
(585)
(3,491)
59
5,228
1,467
Operating profit before working capital changes

Other liabilities
Other assets
Amount due from/(to) subsidiaries
Amount due (to)/from holding company
Amount due (to)/from Cagamas Berhad
223,877
331,011
357,269
433,164
3,540,035
(203,601)
(111,009)
71,282
811,149
(152,792)
(2,065,693)
(1,873)

19,148
(353)
(675,950)
(103,732)
(3,161)
2,913,422
(412,521)
(420,229)
(26,201)
48,844
(1,153,072)
(538,246)
(21,747)

(9,003)
218
(17,100)
97,699
(3,051)
3,156,551
208,805
(110,981)
73,194
6,790
460,685
(2,653,628)
2,452
22,085

(353)
(871,975)
(103,732)
(3,558)
4,646,392
(346,208)
(427,191)
3,953
71,354
(1,909,800)
(1,146,201)
(22,445)
5,971
218
(32,602)
97,699
(3,485)

Taxes and zakat paid
1,347,327
(99,456)
790,024
(86,382)
543,604
(121,198)
1,370,819
(119,269)
1,247,871
703,642
422,406
1,251,550
2012 ANNUAL REPORT
193


Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
9,538
26,088
17,063
208,528
3,798
(21,599)
(16,141)
2,842
12,947
24,187
146,531
1,044
(14,347)
(10,222)
10,219

22,751
253,237
3,862
(22,184)
(16,300)
3,657
30,682
206,340
1,044
(14,882)
(10,400)

Dividends from subsidiaries
Interest income from financial assets held-for-trading
Purchase of computer software
Proceeds from redemption and maturity of
financial investments held-to-maturity (net of purchase)
Proceeds from redemption and maturity of
financial investments available-for-sale (net of purchase)
Proceeds from disposal of foreclosed properties
Proceeds from disposal of computer software
Acquisition of investment in an associate
474,065
37,735
218,950
6,640
(942,169)
672
4,200

(2,949,231)
1,718
62
134
(30,000)
319,507
677
4,285

(3,940,354)
1,818
62
155
(30,000)
Net cash (used in)/generated from investing activities
(235,957)
(2,776,600)
795,004
(3,745,238)

Dividends paid to holding company
Dividends paid to non-controlling interests
Proceeds from issuance of subordinated notes
Redemption of subordinated bonds
(32,778)
(204,323)

597,366
(600,000)
(36,540)
(114,846)

(32,778)
(204,323)
(67)
597,366
(600,000)
(36,540)
(114,846)
(239,735)
(151,386)
(239,802)
(151,386)

772,179
958,111
(2,224,344)
3,182,455
977,608
824,226
(2,645,074)
3,469,300
1,730,290
958,111
1,801,834
824,226

Less: Monies held in trust
1,730,290

958,111

1,874,332
(72,498)
911,730
(87,504)
1,730,290
958,111
1,801,834
824,226
194

31 March 2012
1. FINANCIAL ASSETS HELD-FOR-TRADING

Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
At fair value
Bank Negara Malaysia bills
Malaysian Government treasury bills
1,222,003
20,053
100,246

1,096,239

59,951
20,000
1,371,696
20,053
100,246

1,848,299
59,951
30,000
1,342,302
1,176,190
1,491,995
1,938,250
2. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

At fair value





Bankers acceptances

Cagamas bonds
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,894,220
1,132,121
1,344,854
1,532,859
20,137
2,659,093
162,420
1,042,371
956,814
20,213
2,316,772
1,833,967
884,535
1,944,074
35,254
3,244,713
764,371
1,741,201
1,388,637
35,396

Shares
Debt securities
13
4,768
11
7,818
4,212
4,768
3,875
7,818
Shares
Debt securities and medium term notes
94,895
1,396,044
82,607
1,398,647
135,888
1,963,731
117,587
1,956,342
7,419,911
6,329,994
9,123,201
9,259,940
3. FINANCIAL INVESTMENTS HELD-TO-MATURITY

2012
RM000
2011
RM000
2012
RM000
2011
RM000
At amortised cost
227,177

629,057

328,639
439,463
804,820
105,624
At cost
Debt securities
4,902
Debt securities
18,858
61,177
74,283
116,711

Accumulated impairment
246,035
(17,413)
690,234
(56,713)
842,385
(47,129)
1,032,057
(91,331)
228,622
633,521
795,256
940,726
Bank
Group
2012 ANNUAL REPORT
195

31 March 2012
3. FINANCIAL INVESTMENTS HELD-TO-MATURITY (contd)

The table below shows the movements in accumulated impairment during the financial year for the Bank and the Group:
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
56,713
60,204
91,331
94,822
Reclassified to financial investments available-for-sale
due to conversion of bond into equity instrument
Write-back during the year

(39,300)

(3,491)
(4,902)
(39,300)
(3,491)
At end of year
17,413
56,713
47,129
91,331
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Overdrafts
Term loans/financing
- Syndicated term loans/financing
- Other term loans/financing
Bills receivables
Trust receipts
Claims on customers under acceptance credits
Staff loans [included loans to Directors of a subsidiary of
RM92,000 (2011 : RM121,000)]
Credit/charge card receivables
Revolving credits
Other loans
1,688,688
1,603,198
1,853,950
1,753,908
7,759,852
464,662
310,473
5,698,114
308,446
184,050
1,947,273
7,351,039
267,440
385,945
4,311,669
178,851
157,722
1,846,053
9,259,885
472,949
654,336
7,715,570
308,763
207,515
2,337,986
8,325,550
287,171
784,046
6,310,426
179,607
176,527
2,202,863
28,602
623,563
843,909
357,647
32,821
663,059
1,156,101
270,341
54,567
623,563
1,043,680
451,282
60,938
663,059
1,347,748
347,518


Add: Sales commissions and handling fees

Less: Allowance for impaired loans, advances and financing

- Individual assessment allowance

- Collective assessment allowance
20,215,279
38,007
18,224,239
37,722
24,984,046
28,523
22,439,361
24,969
(225,092)
(300,801)
(273,141)
(270,378)
(266,349)
(386,017)
(328,375)
(339,636)
19,727,393
17,718,442
24,360,203
21,796,319
4. LOANS, ADVANCES AND FINANCING

Total net loans, advances and financing
Bank
Group
196

31 March 2012

Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
(i)
By maturity structure:
Within one year

Over five years
6,073,222
548,778
725,846
12,867,433
5,994,251
433,016
1,032,189
10,764,783
7,023,573
822,931
1,253,470
15,884,072
6,868,094
771,372
1,389,244
13,410,651
20,215,279
18,224,239
24,984,046
22,439,361
(ii)
By type of customer:
Domestic non-bank financial institutions

- Stockbroking companies
- Others
Domestic business enterprises
- Small and medium enterprises
- Others
Individuals
Other domestic entities
Foreign entities

136,426
20,002
156,186

207,162
20,002
187,410
4,681,284
4,197,590
12,477
10,382,595
247,403
557,504
4,096,619
3,789,961
15,973
9,633,266
14,311
497,921
5,472,374
4,961,344
12,618
13,457,860
247,679
625,009
4,784,192
4,531,660
18,224
12,349,218
14,671
533,984
20,215,279
18,224,239
24,984,046
22,439,361
(iii)
By interest/profit rate sensitivity:
Fixed rate
- Other fixed rate loans/financing
Variable rate
- Base lending rate plus

- Cost plus
- Other variable rates
20,472
310,474
679,660
24,800
385,945
732,674
90,812
654,337
1,997,225
107,669
784,046
2,207,047
14,429,451
4,493,616
281,606
13,374,171
3,553,060
153,589
16,737,766
5,200,601
303,305
14,989,061
4,120,772
230,766
20,215,279
18,224,239
24,984,046
22,439,361
(iv)
By economic purposes:
362,374
212,046
11,181,060
276,517
296,030
10,133,099
456,010
561,763
13,100,915
354,975
703,969
11,514,820


- Non-residential
8,317,105
2,863,955
7,730,398
2,402,701
9,750,258
3,350,657
8,671,706
2,843,114

Personal use
Credit card
Construction
Mergers and acquisition
Working capital
Others
115,605
865,242
623,563
236,718
207,265
5,499,729
911,677
96,745
728,463
663,059
238,415

5,331,170
460,741
117,110
2,146,045
623,563
249,709
207,265
6,327,613
1,194,053
99,836
2,093,967
663,059
253,621
6,116,583
638,531
20,215,279
18,224,239
24,984,046
22,439,361
2012 ANNUAL REPORT
197

31 March 2012

Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
(v)
By geographical distribution:
Northern region
Central region
Southern region
1,643,285
15,045,510
1,692,052
1,834,432
1,573,741
13,149,993
1,670,614
1,829,891
1,911,286
18,825,748
2,100,061
2,146,951
1,882,761
16,442,221
2,014,167
2,100,212
20,215,279
18,224,239
24,984,046
22,439,361
(vi)
Movements in impaired loans, advances and

financing (impaired loans) are as follows:
Impaired during the year
Reclassified as performing during the year
Recoveries
Amount written off
592,458
344,894
(268,690)
(75,220)
(81,457)
676,315
467,756
(290,824)
(143,048)
(117,741)
741,324
441,439
(361,159)
(106,986)
(113,483)
843,866
564,613
(328,118)
(190,022)
(149,015)
At end of year
511,985
592,458
601,135
741,324
Gross impaired loans as % of gross loans,

advances and financing
2.5%
3.3%
2.4%
3.3%
(vii) Movements in the allowance for

impaired loans are as follows:

Individual assessment allowance

Amount written off
273,141
26,319
(74,368)
321,364
69,518
(117,741)
328,375
43,363
(105,389)
389,578
87,812
(149,015)
At end of year
225,092
273,141
266,349
328,375

270,378
30,423
262,372
8,006
339,636
46,381
323,644
15,992
At end of year
300,801
270,378
386,017
339,636
As % of gross loans, advances and financing

less individual assessment allowance
1.5%
1.5%
1.6%
1.5%
198

31 March 2012

Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
4,081
2,692
221,820
4,586
2,536
265,205
5,432
5,652
251,134
10,268
8,959
283,410


- Non-residential
162,967
58,853
198,490
66,715
180,614
70,520
209,057
74,353

Personal use
Credit card
Construction
Working capital
Others
190
19,111
9,908
11,868
206,438
35,877
182
27,032
12,694
12,777
229,497
37,949
190
29,955
9,908
11,869
245,777
41,218
182
37,151
12,694
12,777
315,987
59,896
Gross impaired loans
511,985
592,458
601,135
741,324
(ix)
Impaired loans by geographical distribution:
Northern region
Central region
Southern region
109,955
299,618
46,629
55,783
84,733
375,912
65,280
66,533
135,319
358,099
50,698
57,019
104,487
500,546
68,965
67,326
Gross impaired loans
511,985
592,458
601,135
741,324
(viii) Impaired loans analysed by

economic purposes are as follows:

2012 ANNUAL REPORT
199

31 March 2012
5. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Bank and the Group make various commitments and incur certain contingent liabilities with legal
recourse to their customers. No material losses are anticipated as a result of these transactions.
The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follows:

Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
354,758
515,510
126,778
354,758
257,755
25,356
354,758
257,755
25,356
3,645,632
4,675,582
2,188,661
1,822,816
935,116
437,732
1,518,664
858,102
340,525
11,506,921
3,833,533
3,355,160
Bank
2012

- one year or less
- over three years
3,147,488
17,730
64,522
38,478
587,000
1,110,000
423,896
130
2,592
3,260
912
14,192
20,055
182
2,838
6,467
5,268,384
23,712
99,681
47,965
16,775,305
23,712
3,933,214
3,403,125
200

31 March 2012

The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follows (contd):

Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
397,029
549,766
153,561
70,122
397,029
274,883
30,712
35,061
397,029
274,883
30,712
35,061
4,320,657
5,793,193
2,188,661
2,160,328
1,158,639
437,732
1,786,192
1,004,648
340,525
13,472,989
4,494,384
3,869,050
Group
2012

- one year or less
- over three years
3,147,488
17,730
64,522
38,478
587,000
1,110,000
423,896
130
2,592
3,260
912
14,192
20,055
182
2,838
6,467
5,268,384
23,712
99,681
47,965
18,741,373
23,712
4,594,065
3,917,015
2012 ANNUAL REPORT
201

31 March 2012


Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
Bank
2011
388,733
484,479
118,582
388,733
242,239
23,716
388,733
242,239
23,716
1,356,908
4,027,184
3,425,831
678,454
805,437
685,166
582,106
737,330
528,386
9,801,717
2,823,745
2,502,510

- one year or less
- over three years
2,844,627
22,568
77,079
40,842
380,000
1,447,000
285,000
257
6,465
2,757
637
29,535
15,957
127
5,907
3,192
4,956,627
32,047
123,208
50,068
14,758,344
32,047
2,946,953
2,552,578
202

31 March 2012


Principal

Amount

RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
423,539
515,311
143,281
423,539
257,655
28,656
423,539
257,655
28,656
1,715,131
4,729,308
3,425,831
857,565
945,862
685,166
727,272
852,441
528,386
10,952,401
3,198,443
2,817,949
Group
2011

- one year or less
- over three years
2,844,627
22,568
77,079
40,842
380,000
1,447,000
285,000
257
6,465
2,757
637
29,535
15,957
127
5,907
3,192
4,956,627
32,047
123,208
50,068
15,909,028
32,047
3,321,651
2,868,017
2012 ANNUAL REPORT
203

31 March 2012
6. CAPITAL ADEQUACY

The capital adequacy ratios of the Bank and the Group are computed in accordance with BNMs revised Risk-Weighted Capital Adequacy
Framework (RWCAF-Basel II). The Bank and the Group have adopted the Standardised Approach for credit risk and market risk, and
the Basic Indicator Approach for operational risk. The minimum regulatory capital adequacy requirement is 8.0% (2011: 8.0%) for the
risk-weighted capital ratio.
(a)
The capital adequacy ratios of the Bank and the Group are as follows:
Bank
Group
2012
2011
2012
2011

Core capital ratio
13.93%
14.37%
14.63%
14.98%
12.00%
15.71%
12.40%
16.54%

Core capital ratio
13.32%
13.76%
14.09%
14.44%
11.52%
15.22%
11.95%
16.09%
(b)
The components of Tier I and Tier II Capital of the Bank and the Group are as follows:
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Tier I Capital (Core Capital)

ICPS
Share premium
Retained profits
Statutory reserves
Other reserves
596,517
4,000
597,517
1,333,979
601,561

596,517
4,000
597,517
1,148,228
601,561

596,517
4,000
597,517
1,420,731
842,167
10,018
4,905
596,517
4,000
597,517
1,194,222
786,406
10,018
4,488


Deferred tax assets
3,133,574
(186,272)

2,947,823
(186,272)
(75,272)
3,475,855
(302,065)
(15,038)
3,193,168
(302,065)
(108,808)
Total Tier I Capital
2,947,302
2,686,279
3,158,752
2,782,295
Tier II Capital
597,829
296,498
600,000
265,588
597,829
381,019
600,000
333,466
Total Tier II Capital
894,327
865,588
978,848
933,466
Total Capital
3,841,629
(801,664)
3,551,867
(801,664)
4,137,600
(3,620)
3,715,761
(3,620)
Total Capital Base
3,039,965
2,750,203
4,133,980
3,712,141
204

31 March 2012
(c)
The breakdown of risk-weighted assets (RWA) by exposures in each major risk category of the Bank and the Group are
as follows:
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Credit Risk
Market risk
Operational risk
19,074,667
157,119
1,925,797
16,437,247
54,919
1,863,398
23,601,495
265,432
2,445,524
20,149,305
71,884
2,222,953
Total RWA and capital requirements
21,157,583
18,355,564
26,312,451
22,444,142
Detailed information on the risk exposures above, as prescribed under BNMs Risk-Weighted Capital Adequacy Framework
(Basel II) Disclosure Requirements (Pillar 3) is presented in the Banks Pillar 3 Report.
2012 ANNUAL REPORT
205

to the member of Alliance Bank Malaysia Berhad (88103-W) (Incorporated in Malaysia)
On 30 May 2012, we reported on the statutory financial statements of Alliance Bank Malaysia Berhad for the financial year ended 31 March 2012.
In that report we stated that:
Report on the financial statements

We have audited the financial statements of Alliance Bank Malaysia Berhad on pages 11 to 135 which comprise the statements of financial position
as at 31 March 2012 of the Bank and of the Group, and the statements of comprehensive income, changes in equity and cash flows of the Bank and
of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 53.
Directors responsibility for the financial statements
The Directors of the Bank are responsible for the preparation of financial statements that give a true and fair view in accordance with the MASB
Approved Accounting Standards in Malaysia for Entities Other than Private Entities, the Companies Act, 1965 and Bank Negara Malaysia Guidelines,
and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
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 Banks preparation of financial statements that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Banks 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 MASB Approved Accounting Standards in Malaysia for
Entities Other than Private Entities, the Companies Act, 1965 and Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial
position of the Bank and of the Group as at 31 March 2012 and of their financial performances and cash flows for the year then ended.
Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its subsidiaries have been
properly kept in accordance with the provisions of the Act.
(b)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Banks financial statements are in
form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received
satisfactory information and explanations required by us for those purposes.
(c)
Our audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
206

to the member of Alliance Bank Malaysia Berhad (88103-W) (Incorporated in Malaysia)
Other matters
This report is made solely to the member 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.
Other than the non-publication of all the notes to the financial statements, excluding those notes for the Bank and the Group pertaining to
financial assets held-for-trading, financial investments available-for-sale, financial investments held-to-maturity, loans, advances and financing,
commitments and contingencies and capital adequacy, the financial statements reproduced herewith are similar in all material respects to those
reported on by us.
Accordingly, for a fuller appreciation of the state of affairs of the Bank and the Group as at 31 March 2012 and of the results and cash flows of the
Bank and the Group for the financial year ended on that date, reference should be made to the statutory financial statements of the Bank for the
financial year ended 31 March 2012 in which context of our report of 30 May 2012 was made.
(No. AF: 1146)
Ong Ching Chuan

(No. 2907/11/13 (J))
Chartered Accountant

30 May 2012
The full version of the financial statements is available at Alliance Banks website at www.alliancebank.com.my
Basel II
Pillar 3 Disclosure
208
209
209
216
250
252
252
254
255
Overview
1.0 Scope of Application
2.0 Capital
2.1 Capital Adequacy Ratios
2.2 Capital Structure
2.3 Risk-Weighted Assets and Capital Requirements
3.0 Credit Risk
3.1 Distribution of Credit Exposures
3.2 Past Due Loans, Advances and Financing Analysis
3.3 Impaired Loans, Advances and Financing Analysis
3.4 Assignment of Risk Weights for Portfolio Under the Standardised Approach
3.5 Credit Risk Mitigation
3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk
4.0 Market Risk
5.0 Operational Risk
6.0 Equity Exposures in Banking Book
7.0 Interest Rate Risk/Rate of Return Risk in the Banking Book
8.0 Shariah Governance Disclosures and Profit Sharing Investment Account (PSIA)
208
Basel II Pillar 3 Disclosure

31 March 2012
Overview
Bank Negara Malaysia (BNM) guidelines on capital adequacy require Alliance Bank Malaysia Berhad and its subsidiaries (the Group) to maintain
an adequate level of capital to withstand potential losses arising from its operations. BNMs capital adequacy guidelines covers 3 main aspects:
(a)
Pillar 1 - covers the calculation of risk-weighted assets for credit risk, market risk and operational risk.
(b)
Pillar 2 - involves assessment of other risks (eg interest rate risk in the banking book, liquidity risk and concentration risk) not covered under
Pillar 1. This promotes adoption of forward-looking approaches to capital management and stress testing/risk simulation techniques.
(c)
Pillar 3 - covers disclosure and external communication of risk and capital information by banks.
The Group maintains a strong capital base to support its current activities and future growth, to meet regulatory capital requirements at all times
and to buffer against potential losses.
To ensure that risks and returns are appropriately balanced, the Group has implemented a Group-wide Integrated Risk Management Framework,
with guidelines for identifying, measuring, and managing risks. This process includes quantifying and aggregating various risks in order to ensure
the Group and each entity has sufficient capital to cushion unexpected losses and remain solvent.
In summary, the capital management process involves the following:
(i)
Monitoring of regulatory capital and ensuring that the minimum regulatory requirements and approved internal ratios are adhered.
(ii)
Estimation of capital requirements based on ongoing forecasting and budgeting process.
(iii)
Regular reporting of regulatory and internal capital ratios to management.
In addition, the Groups capital adequacy under extreme but plausible stress scenarios are periodically assessed via a Group-wide stress test
exercise. The results of the stress tests are reported to senior management, to provide them with an assessment of the financial impact of such
events on the Groups earnings and capital.
The Groups Pillar 3 Disclosure is governed by the Group Disclosure Policy on Basel II Risk-Weighted Capital Adequacy Framework - Pillar 3 which
sets out the minimum disclosure standards, the approach for determining the appropriateness of information disclosed and the internal controls
over the disclosure process which covers the verification and review of the accuracy of information disclosed.
2012 ANNUAL REPORT
209

31 March 2012
1.0 Scope of Application

The Basel II Pillar 3 Disclosure is prepared on a consolidated basis and comprises information on Alliance Bank Malaysia Berhad (the
Bank), its subsidiaries and associate companies. The Group offers Conventional and Islamic banking services. The latter includes the
acceptance of deposits and granting of financing under the Shariah principles via the Banks wholly-owned subsidiary, Alliance Islamic Bank
Berhad. Information on subsidiary and associate companies are available in Note 13 and 14 to the audited financial statements.
The basis of consolidation for the use of regulatory capital purposes is similar to that for financial accounting purposes as prescribed in
Note 2(b) to the audited financial statements, except for the investments in subsidiaries which are engaged in nominees activities and sales
distribution are excluded from the regulatory consolidation and is deducted from regulatory capital.
There are no significant restrictions or other major impediments on transfer of funds or regulatory capital within the Group.
There were no capital deficiencies in any of the subsidiaries of the Group that are not included in the consolidation for regulatory purposes
as at the financial year end.
The capital adequacy information is computed in accordance with Bank Negara Malaysias revised Risk-Weighted Capital Adequacy
Framework (RWCAF-Basel II). The Group has adopted the Standardised Approach for credit risk and market risk, and Basic Indicator
Approach for operational risk.
2.0 Capital

In managing its capital, the Groups objectives are:

(i)
to maintain sufficient capital resources to meet the regulatory capital requirements as set forth by Bank Negara Malaysia,
(ii)
to maintain sufficient capital resources to support the Groups risk appetite and to enable future business growth, and
(iii)
to meet the expectations of key stakeholders, including shareholders, investors, regulators and rating agencies.
In line with this, the Group aims to maintain capital adequacy ratios that are above the regulatory requirements, while balancing shareholders
desire for sustainable returns and high standards of prudence.
The Group carries out stress testing to estimate the potential impact of extreme but plausible events on the Groups earnings, balance sheet
and capital. The results of the stress test are to facilitate the formation of action plan(s) in advance if the stress test reveals that the Groups
capital will be adversely affected. The results of the stress test are tabled to the Group Risk Management Committee for deliberation and to
the Board for approval.
The Groups and the Banks regulatory capital are determined under Bank Negara Malaysias revised Risk-weighted Capital Adequacy
Framework and their capital ratios comply with the prescribed capital adequacy ratios.
2.1
Capital Adequacy Ratios
Under Pillar I, the Group has adopted the Standardised Approach in determining the capital requirements for credit risk and market
risk and applied the Basic Indicator Approach for operational risk. Under the Standardised Approach, risk-weights are used to assess
the capital requirements for exposures in credit risk and market risk, whilst the capital required for operational risk under the Basic
Indicator Approach is computed as a fixed percentage of the Groups average gross income.
210

31 March 2012
2.0 Capital (contd)
2.1
Capital Adequacy Ratios (contd)

(a)
The capital adequacy ratios of the Bank and the Group are as follows:
Bank

(b)
Group
2012
2011
2012
2011

Core capital ratio
13.93%
14.37%
14.63%
14.98%
12.00%
15.71%
12.40%
16.54%

Core capital ratio
13.32%
13.76%
14.09%
14.44%
11.52%
15.22%
11.95%
16.09%
Alliance
Islamic
Bank
Berhad
Alliance
Investment
Bank
Berhad
The capital adequacy ratios of the banking subsidiaries are as follows:
31 March 2012

Core capital ratio
12.35%
14.19%
57.91%
58.39%

Core capital ratio
11.52%
13.36%
56.65%
57.13%
31 March 2011

Core capital ratio
11.65%
13.37%
57.17%
57.33%

Core capital ratio
11.65%
13.37%
55.51%
55.67%
The detailed capital adequacy ratios of the above banking subsidiaries are set out in the Pillar 3 Report of the respective
entity.
2012 ANNUAL REPORT
211

31 March 2012
2.0 Capital (contd)
2.2
Capital Structure
The following table represents the Bank and the Groups capital position. Details on capital resources, including share capital,
irredeemable (non-cumulative) convertible preference shares (ICPS), share premium and reserves are found in Note 25 and 26
of the audited financial statements. Details on the terms and conditions of subordinated obligations are contained in Note 24 of the
audited financial statements.
The following tables present the components of Tier I and Tier II capital and deduction from capital.
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
596,517
4,000
597,517
1,333,979
601,561

596,517
4,000
597,517
1,148,228
601,561

596,517
4,000
597,517
1,440,176
822,722
10,018
4,905
596,517
4,000
597,517
1,194,222
786,406
10,018
4,488


Deferred tax assets
3,133,574
(186,272)

2,947,823
(186,272)
(75,272)
3,475,855
(302,065)
(15,038)
3,193,168
(302,065)
(108,808)
Total Tier I capital
2,947,302
2,686,279
3,158,752
2,782,295
Tier II Capital
597,829
296,498
600,000
265,588
597,829
381,019
600,000
333,466
Total Tier II capital
894,327
865,588
978,848
933,466
Total Capital
3,841,629
(801,664)
3,551,867
(801,664)
4,137,600
(3,620)
3,715,761
(3,620)
Total Capital Base
3,039,965
2,750,203
4,133,980
3,712,141
Tier I capital (Core Capital)

ICPS
Share premium
Retained profits
Statutory reserves
Other reserves
212

31 March 2012
2.0 Capital (contd)
2.3
Risk-Weighted Assets (RWA) and Capital Requirements
Regulatory Capital Requirements
The following table present the minimum regulatory capital requirement of the Bank and the Group:

Bank
Gross
Net
2012
Exposures
Exposures
Exposure Class
RM000
RM000
(i)
Credit Risk
On-balance sheet exposures:
Sovereigns/Central banks
Public sector entities
Banks, Development Financial Institutions (DFIs)
and Multilateral Development Banks(MDBs)
Insurance companies, securities firms and
fund managers
Corporates
Regulatory retail
Residential mortgages
Higher risk assets
Other assets
Equity exposures
Defaulted exposures
5,022,323
50,855
5,022,323
50,855

10,171
814
3,754,235
3,754,235
973,940
77,915
447
7,954,029
6,386,726
6,574,048
7,065
479,264
125,138
142,744
447
7,537,571
5,730,542
6,563,663
7,065
479,264
125,138
135,108
447
6,932,437
4,297,906
2,813,719
10,597
288,026
182,992
161,307
36
554,595
343,832
225,098
848
23,042
14,639
12,905
30,496,874
29,406,211
15,671,542
1,253,724
Off-balance sheet exposures:

Credit-related off-balance sheet exposures
Defaulted exposures
3,827,677
99,681
5,856
3,822,467
99,681
5,854
3,346,379
47,965
8,781
267,710
3,837
703
Total off-balance sheet exposures
3,933,214
3,928,002
3,403,125
272,250
34,430,088
33,334,213
19,074,667
1,525,974
Long
Short
Position Position
Interest rate risk
1,347,746 (3,463)
Foreign currency risk
20,731 (2,619)
1,368,477 (6,082)
136,388
20,731
10,911
1,658
157,119
12,569
Total on-balance sheet exposures
Total on and off-balance sheet exposures

(ii)

RiskWeighted
Capital
Assets Requirements
RM000
RM000
Market Risk (Note 4.0)
Total
(iii)
Operational Risk
1,925,797
154,064
34,430,088
33,334,213
21,157,583
1,692,607
2012 ANNUAL REPORT
213

31 March 2012
2.0 Capital (contd)
2.3
RWA and Capital Requirements (contd)
Regulatory Capital Requirements (contd)
The following table present the minimum regulatory capital requirement of the Bank and the Group (contd):

Group
Gross
Net
2012
Exposures
Exposures
Exposure Class
RM000
RM000
(i)
Credit Risk

Banks, DFIs and MDBs
Insurance companies, securities
firms and fund managers
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposures
Defaulted exposures
RiskWeighted
Capital
Assets Requirements
RM000
RM000
7,143,989
50,855
4,392,711
7,143,989
50,855
4,392,711

10,171
1,105,558
814
88,445
476
9,689,833
8,759,219
7,620,144
7,159
626,605
169,942
225,479
476
9,031,886
8,058,947
7,609,112
7,159
626,605
169,942
217,286
476
8,226,723
6,054,024
3,313,763
10,739
435,436
250,198
277,392
38
658,138
484,322
265,101
859
34,835
20,016
22,191
38,686,412
37,308,968
19,684,480
1,574,759

Defaulted exposures
4,481,607
99,681
12,777
4,462,291
99,681
12,775
3,849,888
47,965
19,162
307,991
3,837
1,533
4,594,065
4,574,747
3,917,015
313,361
43,280,477
41,883,715
23,601,495
1,888,120
Long
Short
Position Position
Interest rate risk
1,497,439 (3,463)
Equity risk
3,419

20,731 (2,619)
70,122
Options risk
138,881
9,402
20,731
96,418
11,110
752
1,658
7,713
Total
265,432
21,233
(iii)
Operational Risk

(ii)
1,591,711
(6,082)
2,445,524
195,642
43,280,477
41,883,715
26,312,451
2,104,995
214

31 March 2012
2.0 Capital (contd)
2.3

Bank
Gross
Net
2011
Exposures
Exposures
Exposure Class
RM000
RM000
(i)
RiskWeighted
Capital
Assets Requirements
RM000
RM000
Credit Risk
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposures
Defaulted exposures
4,080,874
50,115
3,362,759
4,080,874
50,115
3,362,759

10,023
897,984
802
71,839
20,508
6,763,126
5,638,108
6,341,015
15,586
471,964
112,848
286,359
20,508
6,510,754
5,059,901
6,330,391
15,585
471,964
112,848
283,637
20,508
5,644,357
3,794,925
2,715,930
23,378
293,175
164,558
319,831
1,641
451,549
303,594
217,274
1,870
23,454
13,165
25,586
27,143,262
26,299,336
13,884,669
1,110,774

Defaulted exposures
2,797,541
123,208
26,198
2,794,898
123,208
26,183
2,463,236
50,068
39,274
197,059
4,005
3,142
2,946,947
2,944,289
2,552,578
204,206
30,090,209
29,243,625
16,437,247
1,314,980
(ii)
Interest rate risk

1,185,668 (5,004)
14,012 (3,158)
40,907
14,012
3,272
1,121
1,199,680 (8,162)
Total
54,919
4,393
(iii)
Operational Risk
Long
Short
Position Position
1,863,398
149,072
30,090,209
29,243,625
18,355,564
1,468,445
2012 ANNUAL REPORT
215

31 March 2012
2.0 Capital (contd)
2.3

Group
Gross
Net
2011
Exposures
Exposures
Exposure Class
RM000
RM000
(i)
RiskWeighted
Capital
Assets Requirements
RM000
RM000
Credit Risk
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposures
Defaulted exposures
5,693,101
50,115
3,544,007
5,693,101
50,115
3,544,007

10,023
707,997
802
56,640
20,508
8,307,011
7,947,769
7,065,748
15,699
693,557
152,540
366,240
20,508
7,964,488
7,335,513
7,054,380
15,698
693,557
152,540
360,740
20,508
6,802,410
6,629,408
1,925,014
23,548
510,783
224,096
427,503
1,641
544,192
530,352
154,001
1,884
40,863
17,928
34,200
33,856,295
32,884,647
17,281,290
1,382,503

Defaulted exposures
3,171,389
123,208
27,047
3,166,633
123,208
27,015
2,777,424
50,068
40,523
222,194
4,005
3,242
3,321,644
3,316,856
2,868,015
229,441
37,177,939
36,201,503
20,149,305
1,611,944
(ii)
Interest rate risk

1,947,728 (5,004)
Equity risk
3,419

14,012 (3,158)
48,460
9,412
14,012
3,877
753
1,121
1,965,159 (8,162)
Total
71,884
5,751
(iii)
Operational Risk
Long
Short
Position Position
2,222,953
177,836
37,177,939
36,201,503
22,444,142
1,795,531
Note:
Under Islamic Banking, the Group does not use Profit-sharing Investment Account (PSIA) as a risk absorbent mechanism.
The Bank and the Group do not have exposure to any Large Exposure Risk for equity holdings as specified under BNMs Guidelines
on Investment in Shares, Interest-in-Shares and Collective Investment Schemes.
216

31 March 2012
3.0 Credit Risk

Credit risk is the risk of financial loss arising from the failure of a borrower or counterparty to meet its obligations. Credit risk arises mainly
from lending/financing activities and trading/holding of debt securities.
Risk Governance
The Board has overall responsibility for credit risk oversight of the Group through the Group Risk Management Committee (GRMC). The
GRMC, supported by the Credit Risk Working Group (CRWG), reviews and aligns credit risk management framework and policies to
business strategies, ensuring appropriate balancing in risk taking and risk appetite. In addition, the CRWG reviews and assesses asset
quality and risk profile reports/dashboards and direct implementation of prompt corrective measures in the event of any exceptions/
anomalies.
Credit risk management process includes establishing framework, policies and guidelines for activities in the Group which attracts credit
risk. The Credit Risk Management Framework (CRMF) sets the broad based requirement for credit risk taking activities; under which,
comprehensive policies and guidelines are developed for the credit approving hierarchy and discretionary approving authority, development,
application and validation of credit rating tools, acceptable credit and negative list, acceptable collateral and margin, credit review and
monitoring, early warning and rehabilitation, impairment and recovery.
Credit Risk Management
Credit risk management begins with initial underwriting and continues through the borrowers credit cycle. Statistical techniques in
conjunction with experiential judgement are used in portfolio management, covering underwriting guidelines, product pricing, setting credit
limits, operating processes and metrics to quantify and balance risks and returns. In addition, credit facility limits and credit concentration
limits are applied to prevent over-concentration of risks. Concentration risk is managed by limiting exposure to single borrower/group, credit
rating grade and industry segments. These limits are aligned with business strategies of the respective units, taking into consideration the
regulatory constraints.
Credit facilities are reviewed regularly; corporate exposures on group exposure basis and retail exposures on portfolio basis. Problem loans
and loans with early warning signs are subject to early warning reporting framework.
Business Risk and Business Portfolio Management functions ensure that credit risks are being taken and maintained in compliance with
group-wide credit policies and guidelines. These functions ensure proper activation of approved limits, appropriate endorsement of excesses
and policy exceptions, monitor compliance with credit standards and/or credit covenants established by management and/or regulators.
These functions also subject all credit facilities to regular review including the conduct of accounts and rating; facilities with indications of
deterioration in quality are subject to the early warning frameworks. Recovery of problem or impaired loans are managed by specialists who
are independent of the business units.
An independent credit review team conducts regular review of approved credit applications. These reviews provide senior management with
assurance that the Banks credit policies/limits are adhered to.
Stress testing are used to ascertain the size of probable losses under a range of scenarios for the loan portfolio and the impact to bottom
lines and capital. These stress tests are performed using different market and economic assumptions to assess possible vulnerability and
effective mitigating actions when required.
Impaired Loans and Provisions
FRS 139 has been adopted for the treatment of impaired loans and loan loss provision. Please refer to Note 2(i)(i) of the audited financial
statements for accounting policy of impaired loans, advances and financing.
Past due accounts are loan accounts with any payment of principal and/or interest due and not paid, but are not classified as impaired.
Loans are classified as impaired if the judgmental or mandatory triggers are triggered.
Individual assessments are performed on impaired accounts with principal outstanding RM1 million and above. Discounted cashflow
method will be used to determine the recoverable amounts. The remaining loans portfolio are then collectively assessed for impairment
allowance provision. The Group applied transitional arrangement as prescribed in the guideline issued by BNM for collective assessment,
based on 1.5% of total outstanding loans, net of individual assessment allowance.
2012 ANNUAL REPORT
217

31 March 2012
3.0 Credit Risk (contd)
3.1
Distribution of Credit Exposures

(a)
Geographical Distribution
The following tables represent the Bank and the Groups major type of gross credit exposure by geographic distribution.
Exposure are allocated to the region in which the customer is located and are disclosed before taking account of any collateral
held or other credit enhancements and after allowance for impairment where appropriate.
Geographical region

Bank
Northern
Central
Southern
2012
RM000
RM000
RM000
East
Malaysia
RM000
1,539,052

1,581,138
143,461
1,342,302
7,325,003
228,622
23,712
14,912,616

1,672,228
1,824,205

contingencies
1,581,138
48,823
25,514,768
291,800
1,672,228
21,381
1,824,205
32,904
594,161
9,126,214
524,327
867,311
Total credit exposure
2,224,122
34,932,782
2,217,936
2,724,420
1,683,092

13,791

1,839,563
93,438
44,023
1,491,995
8,983,101
795,256
23,712
18,663,157

3,884

2,078,713
2,136,264

contingencies
1,853,354
67,643
31,777,774
332,255
2,082,597
27,880
2,136,264
36,184
659,453
10,363,305
652,725
1,333,544
2,580,450
42,473,334
2,763,202
3,505,992

Group
2012
218

31 March 2012
3.1
Distribution of Credit Exposures (contd)

(a)
Geographical Distribution (contd)
Geographical region

Bank
Northern
Central
Southern
2011
RM000
RM000
RM000
East
Malaysia
RM000
779,323

1,524,762
954,610
1,176,190
6,247,376
633,521
32,047
12,969,040

1,643,642
1,813,654

contingencies
1,524,762
43,640
22,792,107
294,674
1,643,642
23,141
1,813,654
32,409
666,131
7,736,584
343,135
662,003
2,234,533
30,823,365
2,009,918
2,508,066
701,862

20,440

1,825,015
100,228
54,124
1,938,250
9,138,478
940,726
32,047
16,217,604

5,955

1,984,668
2,083,699

contingencies
1,845,455
54,799
29,123,319
333,960
1,990,623
29,450
2,083,699
35,161
720,453
8,524,888
401,562
852,128
2,620,707
37,982,167
2,421,635
2,970,988
Group
2011
3.1
(b)
5,551,202
Total credit risk
1,156,018
8,108,179
1,190,521
34,503
1,445
23,712
2,239,321
227,177

3,874,479
3,077,911
and contingencies
143,461

1,342,302
6,917,658
635,240
903,812
271,330
86,002
66,185
19,817
185,328

100,562
84,766
9,231,512
2,819,388
2,545,111
274,277
6,412,124

6,145,387
266,737
1,462,414
1,226,686
1,197,481
29,205
235,728

214,618
21,110
10,960,122
2,787,915
2,787,615
300
8,172,207

8,172,207
Financial,
Agriculture,
insurance &
Transport, manufacturing,
business
storage & wholesale &
Residential
services communication
retail trade Construction
mortgage
RM000
RM000
RM000
RM000
RM000
5,551,202

available-for-sale
held-to-maturity

Government

and Central
Bank
bank
2012
RM000
142,598
142,593

142,593
Motor
vehicle
financing
RM000
6,371,903
3,396,404
3,359,598
36,806
2,975,499

2,975,499
Other
consumer
loans
RM000
42,099,260
11,506,921
11,112,013
394,908
30,592,339
228,622
23,712
19,990,187
7,325,003
143,461
1,342,302
1,539,052
Total
RM000
The following tables represent the Bank and the Groups major type of gross credit exposure by sector. The analysis are based on the sector in which the customer is engaged.
Industry Distribution
31 March 2012

2012 ANNUAL REPORT
219
3.1
(b)
7,529,646
Total credit risk
1,339,215
8,965,187
1,376,927
37,712
21,949
23,712
2,595,624
768,101

4,237,686
4,202,309
and contingencies
93,438

1,491,995
7,588,260
615,851
1,067,241
359,248
86,872
66,964
19,908
272,376
5,206

130,015
137,155
11,079,307
3,464,770
3,126,409
338,361
7,614,537

7,240,115
374,422
1,578,975
1,256,577
1,225,981
30,596
322,398

290,869
31,529
13,002,831
3,405,065
3,404,765
300
9,597,766

9,597,766
Financial,
Agriculture,
insurance &
business
Residential
mortgage
RM000
RM000
RM000
RM000
RM000
7,529,646

available-for-sale
held-to-maturity

Government

and Central
Group
bank
2012
RM000
439,850
230
230
439,620

439,620
Motor
vehicle
financing
RM000
8,367,934
3,882,548
3,845,463
37,085
4,485,386

4,423,688

61,698

Other
consumer
loans
RM000
51,322,978
13,472,989
13,009,027
463,962
37,849,989
795,256
23,712
24,717,697
8,983,101
93,438
61,698
1,491,995
1,683,092
Total
RM000
The following tables represent the Bank and the Groups major type of gross credit exposure by sector. The analysis are based on the sector in which the customer is engaged
(contd).
Industry Distribution (contd)
31 March 2012

220
3.1
(b)
3,060,617
4,464
30,657
1,735,053
2,872,338
629,057

5,153,382
Total credit risk
663,928
6,779,489
690,562
26,634
6,088,927
954,610

1,176,190
5,153,382
303,526
475,797
303,403
90,486
70,045
20,441
212,917

118,112
94,805
8,205,954
2,401,258
2,106,726
294,532
5,804,696

5,606,218
198,478
1,624,535
1,264,424
1,248,880
15,544
360,111

338,973
21,138
8,512,752
947,023
947,023
7,565,729

7,565,729
Financial,
Agriculture,
insurance &
business
Residential
mortgage
RM000
RM000
RM000
RM000
RM000
and contingencies

available-for-sale
held-to-maturity

Government

and Central
Bank
bank
2011
RM000
210,356
210,351

210,351
Motor
vehicle
financing
RM000
6,786,011
4,407,959
4,371,246
36,713
2,378,052

1,390
2,376,662
Other
consumer
loans
RM000
37,575,882
9,801,717
9,407,853
393,864
27,774,165
633,521
32,047
17,951,098
6,247,376
954,610
1,176,190
779,323
Total
RM000
(contd).
31 March 2012

2012 ANNUAL REPORT
221
3.1
(b)
4,584,626
24,951
30,657
2,029,108
4,059,908
910,444

7,433,272

and contingencies
Total credit risk
7,779,507
832,745
804,322
28,423
6,946,762
100,228

1,938,250
7,433,272
177,192
422,381
98,567
75,937
22,630
323,814
5,236

156,460
162,118
9,643,615
2,784,116
2,442,788
341,328
6,859,499

6,559,284
300,215
1,782,217
1,328,798
1,304,866
23,932
453,419
95

421,713
31,611
9,447,775
948,916
948,916
8,498,859

8,498,859
Financial,
Agriculture,
insurance &
business
Residential
mortgage
RM000
RM000
RM000
RM000
RM000
524,670

available-for-sale
held-to-maturity

Government

and Central
Group
bank
2011
RM000
884,527
327,265
327,265
557,262

557,262
Motor
vehicle
financing
RM000
8,602,203
4,631,994
4,594,937
37,057
3,970,209

1,390
3,888,300

80,519

Other
consumer
loans
RM000
45,995,497
10,952,401
10,499,031
453,370
35,043,096
940,726
32,047
22,110,986
9,138,478
100,228
80,519
1,938,250
701,862
Total
RM000
(contd).
31 March 2012

222
2012 ANNUAL REPORT
223

31 March 2012
3.1

(c)
Residual Contractual Maturity
The following tables represent the residual contractual maturity for major types of gross credit exposures for on-balance sheet
exposures of financial assets of the Bank and the Group:

Bank
2012
Up to
1 month
RM000
>1 3
months
RM000
>3 6
months
RM000
>6 12
months
RM000
>1 year
RM000
Total
RM000
1,730,290
1,730,290

with banks and other
Loans, advances and
financing

649,224
143,461
2,430,032

572,018

37,165

5,302,396
143,461
8,990,835
4,329,030
34,096
1,273,642
14,212
804,274
7,184
394,744
7,763
12,925,703
2,117,622
19,727,393
2,180,877
Total on-balance
sheet exposure
6,742,640
3,861,347
1,383,476
439,672
20,345,721
32,772,856
1,874,332
1,874,332
93,270
168
93,438
Group
2012
and brokers
Loans, advances and
financing
42,207
1,031,877

2,922,378

697,092

97,906
19,491
6,661,199
61,698
11,410,452
4,969,403
36,590
1,549,577
14,213
987,148
7,186
598,935
7,767
16,255,140
1,704,324
24,360,203
1,770,080
Total on-balance
sheet exposure
7,954,409
4,579,438
1,691,594
704,608
24,640,154
39,570,203
224

31 March 2012
3.1

(c)
Residual Contractual Maturity (contd)
The following tables represent the residual contractual maturity for major types of gross credit exposures for on-balance sheet
exposures of financial assets of the Bank and the Group (contd):

Bank
2011
Up to
1 month
RM000
>1 3
months
RM000
>3 6
months
RM000
>6 12
months
RM000
>1 year
RM000
Total
RM000

Loans, advances and
financing
958,111
958,111
21,456
1,446,532
100,065
1,794,212
100,089
395,558

803,688
733,000
3,699,715
954,610
8,139,705
4,328,948
40,544
1,158,824
7,741
758,896
9,201
363,815
2,699
11,107,959
1,549,825
17,718,442
1,610,010
Total on-balance
sheet exposure
6,795,591
3,060,842
1,263,744
1,170,202
17,090,499
29,380,878
911,730
911,730
100,065
163
100,228
Group
2011
and brokers
Loans, advances and
financing
61,441
2,122,429

3,187,345

809,576

932,379
19,078
5,087,187
80,519
12,138,916
4,790,087
26,142
1,471,389
7,741
945,286
9,201
557,078
2,699
14,032,479
966,803
21,796,319
1,012,586
Total on-balance
sheet exposure
7,911,829
4,766,540
1,764,226
1,492,156
20,105,547
36,040,298
2012 ANNUAL REPORT
225

31 March 2012
3.2
Past Due Loans, Advances and Financing Analysis

(a)
Past due but not impaired loans, advances and financing are loans where the customer has failed to make a principal or
interest payment when contractually due, and includes loans which are due one or more days after the contractual due date but
less than 3 months.
Past due loans, advances and financing are analysed as follows:
Bank
Past due up to 1 month

Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
602,109
127,224
15,430
506,042
125,603
13,894
909,157
187,351
30,448
773,027
186,858
27,529
744,763
645,539
1,126,956
987,414
2012
RM000
2011
RM000
2012
RM000
2011
RM000
42,494
1,332
48,189
9,495
459,166
53,242
130,845
21,146
2,895
52,558
3,873
355,794
72,636
136,637
43,478
2,835
55,198
14,924
516,795
139,333
354,393
22,501
5,128
62,001
5,467
395,189
170,745
326,383
744,763
645,539
1,126,956
987,414
Past due loans, advances and financing analysed by sector are as follows:
Bank
Financial, insurance & business services

Transport, storage & communication
Agriculture, manufacturing, wholesale & retail trade
Construction
Residential mortgage
Motor vehicle financing
Other consumer loans
Group
Past due loans, advances and financing analysed by significant geographic areas:
Bank
Northern region
Central region
Southern region
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
53,820
535,488
84,411
71,044
62,787
417,416
97,640
67,696
73,720
835,122
130,463
87,651
89,855
662,773
143,087
91,699
744,763
645,539
1,126,956
987,414
226

31 March 2012
3.3
Impaired Loans, Advances and Financing Analysis

Impaired loans, advances and financing analysed by sectors:
Bank

Construction
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
55,110
11,924
202,433
29,688
161,405
1,811
49,614
80,103
10,680
204,970
30,975
198,918
2,322
64,490
55,181
12,003
247,621
41,193
177,614
4,407
63,116
90,110
16,932
246,266
95,343
209,552
5,677
77,444
511,985
592,458
601,135
741,324
Individual
impairment
net
(write-back)/
charge
for the year
RM000
Individual
impairment
write-off
for the year
RM000
Impairment allowances on impaired loans, advances and financing analysed by sectors:

Individual
Collective

impairment
impairment

allowance
allowance
Bank
RM000
RM000
2012
7,102
10,679
98,658
25,949
52,621
711
29,372
33,682
1,669
94,109
3,711
123,258
2,163
42,209
(1,175)
(36)
13,754
(546)
(11,293)
(499)
26,114
(4,432)
(23,819)
(1,112)
(9,941)
(1,109)
(33,955)
225,092
300,801
26,319
(74,368)

Construction
7,171
10,681
116,409
33,218
54,166
1,388
43,316
34,522
6,614
110,787
4,965
144,656
6,639
77,834
(2,705)
(100)
13,707
(4,880)
(11,447)
(544)
49,332
(8,748)
(18)
(25,083)
(1,128)
(10,357)
(3,742)
(56,313)
266,349
386,017
43,363
(105,389)

Construction

Group
2012
2012 ANNUAL REPORT
227

31 March 2012
3.3
Impaired Loans, Advances and Financing Analysis (contd)

Impairment allowances on impaired loans, advances and financing analysed by sectors (contd):

Individual
Collective

impairment
impairment

allowance
allowance
Bank
RM000
RM000
2011
Individual
impairment
net charge/
(write-back)
for the year
RM000
Individual
impairment
write-off
for the year
RM000

Construction
12,675
10,600
107,481
26,817
74,107
2,318
39,143
25,958
1,786
84,754
4,932
113,371
3,174
36,403
2,610
(752)
23,826
903
5,064
1,378
36,489
(6,848)
(105)
(35,962)
(800)
(21,642)
(6,555)
(45,829)
273,141
270,378
69,518
(117,741)

Construction
18,595
10,677
126,543
38,435
76,222
5,674
52,229
30,363
2,357
99,075
6,165
127,392
8,385
65,899
1,246
(758)
19,527
(1,093)
6,006
4,085
58,799
(6,848)
(284)
(36,164)
(1,464)
(22,576)
(11,326)
(70,353)
328,375
339,636
87,812
(149,015)
Group
2011
228

31 March 2012
3.3

Impaired loans, advances and financing and impairment allowances by geographical areas:

BANK
2012
Impaired
loans, advances
and financing
RM000
Individual
impairment
allowance
RM000
Collective
impairment
allowance
RM000
Northern region
Central region
Southern region
109,955
299,618
46,629
55,783
62,147
132,894
19,824
10,227
23,866
224,414
25,134
27,387
511,985
225,092
300,801
Northern region
Central region
Southern region
135,319
358,099
50,698
57,019
71,723
162,591
21,348
10,687
27,773
294,942
31,234
32,068
601,135
266,349
386,017
Impaired
loans, advances
and financing
RM000
Individual
impairment
allowance
RM000
Collective
impairment
allowance
RM000
Northern region
Central region
Southern region
84,733
375,912
65,280
66,533
48,979
180,953
26,972
16,237
23,082
195,268
24,756
27,272
592,458
273,141
270,378
Northern region
Central region
Southern region
104,487
500,546
68,965
67,326
57,746
224,617
29,499
16,513
27,761
250,673
29,879
31,323
741,324
328,375
339,636
Group
2012

BANK
2011
Group
2011
2012 ANNUAL REPORT
229

31 March 2012
3.3

Movement in loans impairment allowances are analysed as follows:
Bank
Group
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Amount written-off
273,141
26,319
(74,368)
321,364
69,518
(117,741)
328,375
43,363
(105,389)
389,578
87,812
(149,015)
At end of year
225,092
273,141
266,349
328,375
270,378
30,423
262,372
8,006
339,636
46,381
323,644
15,992
At end of year
300,801
270,378
386,017
339,636
Individual impairment allowance:
Collective impairment allowance:
3.4
Exposures after netting and credit risk mitigation
10,171
20%

Average risk-weight
Deduction from Capital base
50,855
5,028,387
Total exposures

50,855

Risk-weighted assets by exposures
5,028,387

0%
20%
35%
50%
75%
100%
150%
26%
998,990
3,826,740

3,047,932

778,808

100%
4,459
4,459

4,459

94%
8,918,908
9,513,311

756,418

166

8,735,100
21,627
75%
5,786,194
7,673,053

2,473
7,624,349
5,301
40,930
43%
2,866,741
6,620,882

3,978,425
2,080,124
512,408
49,925

150%
18,186
12,124

12,124
60%
288,026
479,264
191,239

288,025

146%
182,992
125,138

9,429
115,709

Insurance
companies,

Securities
Bank
Sovereigns/
Public
Banks,
firms and
Higher
2012
Central
sector
DFIs and
Fund Regulatory Residential
risk
Other
Equity
Risk-Weights
banks entities
MDBs
managers Corporates
retail mortgages
assets
assets
exposures

RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
The following tables present the credit exposures by risk-weights and after credit risk mitigation:
Assignment of Risk-Weights for Portfolio Under the Standardised Approach
31 March 2012

57%
19,074,667
33,334,213
5,219,626
3,855,205
3,978,425
2,861,571
8,136,757
9,092,239
190,390
Total
exposures
after
netting and
credit risk
mitigation
RM000
19,074,667
771,041
1,392,449
1,430,785
6,102,567
9,092,239
285,586
Total
RiskWeighted
Assets
RM000
230
3.4
10,171
20%

Average risk-weight
50,855
7,210,053
Total exposures

50,855

7,210,053

0%
20%
35%
50%
75%
100%
150%
25%
1,130,607
4,465,217

3,673,336

791,881

100%
4,488
4,488

4,488

93%
10,591,744
11,353,585

1,006,453

166

10,260,158
86,808
75%
7,785,902
10,316,036

2,812
10,217,245
44,813
51,166
44%
3,374,557
7,674,673

4,439,248
2,480,263
697,896
57,266

150%
18,392
12,261

12,261
69%
435,436
626,605
191,169

435,436

147%
250,198
169,942

9,429
160,513

Insurance
companies,

Securities
Group
Sovereigns/
Public
Banks,
firms and
Higher
2012
Central
sector
DFIs and
risk
Other
Equity
Risk-Weights
banks entities
MDBs
managers Corporates
retail mortgages
assets
assets
exposures

RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
The following tables present the credit exposures by risk-weights and after credit risk mitigation (contd):
Assignment of Risk-Weights for Portfolio Under the Standardised Approach (contd)
31 March 2012

56%
23,601,495
41,883,715
7,401,222
4,730,644
4,439,248
3,275,122
10,915,141
10,811,590
310,748
Total
exposures
after
netting and
credit risk
mitigation
RM000
23,601,495
946,129
1,553,737
1,637,561
8,186,356
10,811,590
466,122
Total
RiskWeighted
Assets
RM000
2012 ANNUAL REPORT
231
3.4
Average risk-weight
20%
10,023
50,115
27%
935,516
3,474,984
100%
20,510
20,510
90%
7,251,866
8,092,961
76%
4,941,488
6,512,601

15,036
6,389,918
39,879
67,768
43%
2,783,879
6,402,614

3,658,493
2,282,794
397,267
64,060

150%
36,232
24,154

24,154
62%
293,175
471,964
178,789

293,175

146%
164,558
112,848

9,429
103,419
56%
16,437,247
29,243,625
4,080,874

1,085,870

578

6,950,732
55,781
Total exposures

20,510

4,259,663
3,809,238
3,658,493
3,100,139
6,787,185
7,377,785
251,122

2,673,253

801,731

4,080,874

0%
20%
35%
50%
75%
100%
150%

50,115

Total
exposures
after
netting and
credit risk
mitigation
RM000

Insurance
companies,

Securities
Bank
Sovereigns/
Public
Banks,
firms and
Higher
2011
Central
sector
DFIs and
risk
Other
Equity
Risk-Weights
banks entities
MDBs
managers Corporates
retail mortgages
assets
assets
exposures

RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
31 March 2012

16,437,247
761,848
1,280,473
1,550,070
5,090,388
7,377,785
376,683
Total
RiskWeighted
Assets
RM000
232
3.4
Average risk-weight
20%
10,023
50,115
20%
745,529
3,656,231
100%
20,510
20,510
89%
8,697,304
9,807,145
76%
6,780,046
8,955,447

15,058
8,823,274
41,220
75,895
44%
3,124,549
7,130,546

3,991,155
2,575,396
496,195
67,800

150%
36,465
24,310

24,310
74%
510,783
693,558
182,775

510,783

147%
224,096
152,540

9,429
143,111
56%
20,149,305
36,201,503
5,711,101

1,456,973

2,475

8,233,748
113,949
Total exposures

20,510

5,893,876
5,115,709
3,991,155
2,640,539
9,319,469
8,883,490
357,265

3,608,621

47,610

5,711,101

0%
20%
35%
50%
75%
100%
150%

50,115

Total
exposures
after
netting and
credit risk
mitigation
RM000

Insurance
companies,

Securities
Group
Sovereigns/
Public
Banks,
firms and
Higher
2011
Central
sector
DFIs and
risk
Other
Equity
Risk-Weights
banks entities
MDBs
managers Corporates
retail mortgages
assets
assets
exposures

RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
RM000
31 March 2012

20,149,305
1,023,142
1,396,904
1,320,269
6,989,602
8,883,490
535,898
Total
RiskWeighted
Assets
RM000
2012 ANNUAL REPORT
233
234

31 March 2012
3.4
For the purpose of determining counterparty risk-weights, the Group uses external credit assessments from Rating Agency Malaysia
(RAM), Malaysian Rating Corporation (MARC), Standard and Poors (S&P), Moodys and Fitch. In the context of the Groups
portfolio, external credit assessments are mainly applicable to banks/financial institutions and rated corporations. The Group follows
the process prescribed under BNM RWCAF-Basel II to map the ratings to the relevant risk-weights. The ratings are monitored and
updated regularly to ensure that the latest and most appropriate risk-weights are applied in the capital computation.
The following tables show the rated exposures according to rating by Eligible Credit Assessment Institutions (ECAIs):
BANK
2012
(a)
Ratings of corporate by approved ECAIs

Ratings of Corporate by Approved ECAIs
Moodys
Aaa to Aa3
A1 to A3 Baa1 to Ba3
B1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RAM
AAA to AA3
A+ to A3
BBB1 to
BB3
B to D
Unrated
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
50,855
4,459
MARC
Exposure Class
On and Off Balance-Sheet Exposures
Credit Exposures (using Corporate
Risk-Weights)
Public Sector Entities (applicable for
entities risk-weighted based on their
external ratings as corporates)
Insurance Cos, Securities Firms &
Fund Managers
Corporates
1,207,981
34,476
8,676,650
Total
1,258,836
34,476
8,681,109
2012 ANNUAL REPORT
235

31 March 2012
3.4
The following tables show the rated exposures according to rating by ECAIs (contd):
BANK
2012
(b)
Short-term ratings of banking institutions and corporate by approved ECAIs

Short-term Ratings of Banking Institutions and Corporate by Approved ECAIs
Moodys
S&P
Fitch
RAM
MARC
Exposure Class
Banks, MDBs and FDIs
Rated Credit Exposures (using
Corporate Risk-Weights)
Fund Managers
Corporates
Total
(c)
P-1
A-1
F1+, F1
P-1
MARC-1
P-2
A-2
F2
P-2
MARC-2
P-3
A-3
F3
P-3
MARC-3
Others
Others
B to D
NP
MARC-4
Unrated
Unrated
Unrated
Unrated
Unrated
RM000
RM000
RM000
RM000
RM000
2,566,211
1,227,345
20,137
2,586,348
1,227,345
Ratings of Sovereigns and Central banks by approved ECAIs

Ratings of Sovereigns and Central Banks by Approved ECAIs
Exposure Class
Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000
On and Off Balance-Sheet

Exposures
Sovereigns and Central Banks
5,028,387
Total
5,028,387
236

31 March 2012
3.4
BANK
2012
(d)
Ratings of banking institutions by approved ECAIs

Ratings of Banking Institutions by Approved ECAIs
Exposure Class
Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
RAM
AAA to AA3
A1 to A3
BBB1 to
BBB3
BB1 to B3
C1 to D
Unrated
MARC
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
C+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
30,848
2,336
Total
30,848
2,336
2012 ANNUAL REPORT
237

31 March 2012
3.4
Group
2012
(a)

Moodys
Aaa to Aa3
B1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RAM
AAA to AA3
A+ to A3
BBB1 to
BB3
B to D
Unrated
MARC
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
50,855
4,488
Exposure Class
(b)

Risk-Weights)
Fund Managers
Corporates
1,713,312
34,476
10.266,362
Total
1,764,167
34,476
10.270,850

Moodys
S&P
Fitch
RAM
MARC
Exposure Class
Fund Managers
Corporates
Total
P-1
A-1
F1+, F1
P-1
MARC-1
P-2
A-2
F2
P-2
MARC-2
P-3
A-3
F3
P-3
MARC-3
Others
Others
B to D
NP
MARC-4
Unrated
Unrated
Unrated
Unrated
Unrated
RM000
RM000
RM000
RM000
RM000
3,068,732
1,358,206
20,137
3,088,869
1,358,206
238

31 March 2012
3.4
Group
2012
(c)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
7,210,053
Total
7,210,053
Exposure Class
(d)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
BB1 to B3
C1 to D
Unrated
Fitch
AAA to AA-
RAM
AAA to AA3
A1 to A3
BBB1 to
BBB3
MARC
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
C+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
35,943
2,336
Total
35,943
2,336
Exposure Class
2012 ANNUAL REPORT
239

31 March 2012
3.4
Bank
2011
(a)

Moodys
Aaa to Aa3
B1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RAM
AAA to AA3
A+ to A3
BBB1 to
BB3
B to D
Unrated
MARC
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
50,115
20,510
Exposure Class
(b)

Risk-Weights)
Fund Managers
Corporates
1,189,323
4,599 7,152,992
Total
1,239,438
4,599 7,173,502

Moodys
S&P
Fitch
RAM
MARC
Exposure Class
Fund Managers
Corporates
Total
P-1
A-1
F1+, F1
P-1
MARC-1
P-2
A-2
F2
P-2
MARC-2
P-3
A-3
F3
P-3
MARC-3
Others
Others
B to D
NP
MARC-4
Unrated
Unrated
Unrated
Unrated
Unrated
RM000
RM000
RM000
RM000
RM000
2,084,358
561,312
2,084,358
561,312
240

31 March 2012
3.4
Bank
2011
(c)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
4,080,874
Total
4,080,874
Exposure Class
(d)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
BB1 to B3
C1 to D
Unrated
Fitch
AAA to AA-
RAM
AAA to AA3
A1 to A3
BBB1 to
BBB3
MARC
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
C+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
76,636
752,678
Total
76,636
752,678
Exposure Class
2012 ANNUAL REPORT
241

31 March 2012
3.4
Group
2011
(a)

Moodys
Aaa to Aa3
B1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RAM
AAA to AA3
A+ to A3
BBB1 to
BB3
B to D
Unrated
MARC
AAA to AA-
A+ to A-
BBB+ to
BB-
B+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
50,115
20,510
Exposure Class
(b)

Risk-Weights)
Fund Managers
Corporates
1,682,772
7,002 8,463,228
Total
1,732,887
7,002 8,483,738

Moodys
S&P
Fitch
RAM
MARC
Exposure Class
Fund Managers
Corporates
Total
P-1
A-1
F1+, F1
P-1
MARC-1
P-2
A-2
F2
P-2
MARC-2
P-3
A-3
F3
P-3
MARC-3
Others
Others
B to D
NP
MARC-4
Unrated
Unrated
Unrated
Unrated
Unrated
RM000
RM000
RM000
RM000
RM000
3,089,183
485,391
3,089,183
485,391
242

31 March 2012
3.4
Group
2011
(c)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
Fitch
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
5,711,101
Total
5,711,101
Exposure Class
(d)

Moodys
Aaa to Aa3
Ba1 to B3
Caa1 to C
Unrated
S&P
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
A+ to A-
BBB+to
BBB-
BB+ to B-
CCC+ to D
Unrated
BB1 to B3
C1 to D
Unrated
Fitch
AAA to AA-
RAM
AAA to AA3
A1 to A3
BBB1 to
BBB3
MARC
AAA to AA-
A+ to A-
BBB+to
BBB-
BB+ to B-
C+ to D
Unrated
RM000
RM000
RM000
RM000
RM000
RM'000

Exposures
81,657
Total
81,657
Exposure Class
Note:
There is no outstanding securitisation contract at the Bank and the Group that required disclosure of ratings and short-term
rating of securitisation by approved ECAIs.
2012 ANNUAL REPORT
243

31 March 2012
3.5
Credit Risk Mitigation (CRM)
The Group uses a wide range of collaterals to mitigate credit risks. For the purpose of computing Basel II capital charge for credit
risk, the process of using guarantees and eligible collaterals as credit risk mitigants are as prescribed in the RWCAF.
In the course of lending, the Group does accept collaterals that are not eligible under the RWCAF. The process of taking collaterals
whether or not eligible under RWCAF, including valuation method and loan to value are defined in the Credit and Product Programmme;
and the Credit Risk Management Framework. Main collaterals acceptable to the Group include cash, guarantees, commercial and
residential real estates, and physical collateral/financial collateral for example motor vehicles or shares. Guarantees on loans are
accepted after the financial viability of the guarantors have been ascertained.
The following tables represent the Bank and the Groups credit exposure including off-balance sheet items under the standardised
approach, the total exposure (after, where applicable, eligible netting benefits) that is covered by eligible guarantees and credit
derivatives; and eligible collateral after haircuts, allowed under the RWCAF.

Bank
Exposure
2012
before CRM
Exposure Class
RM000
Exposures
covered by
guarantees/
credit
derivatives
RM000
Exposures
covered by
eligible
financial
collateral
RM000
Exposures
covered by
other eligible
collateral
RM000
5,022,323
50,855
3,754,235
447
7,954,029
6,386,726
6,574,048
7,065
479,264
125,138
142,744

416,457
656,183
10,385

7,637
30,496,874
1,090,662
Off-balance sheet exposures

Off-balance sheet exposures other than
OTC derivatives or credit derivatives
Defaulted exposures
3,927,358
5,856
5,211
2
3,933,214
5,213
34,430,088
1,095,875
Credit Risk
fund managers
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposure
Defaulted exposures
244

31 March 2012
3.5
Credit Risk Mitigation (CRM) (contd)
derivatives; and eligible collateral after haircuts, allowed under the RWCAF. (contd)

Group
Exposure
2012
before CRM
Exposure Class
RM000
Exposures
covered by
guarantees/
credit
derivatives
RM000
Exposures
covered by
eligible
financial
collateral
RM000
Exposures
covered by
other eligible
collateral
RM000
7,143,989
50,855
4,392,711
476
9,689,833
8,759,219
7,620,144
7,159
626,605
169,942
225,479

657,948
700,271
11,033

8,193
38,686,412
1,377,445
Off-balance sheet exposures

Defaulted exposures
4,581,288
12,777
19,316
2
4,594,065
19,318
43,280,477
1,396,763
Credit Risk
fund managers
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposure
Defaulted exposures
2012 ANNUAL REPORT
245

31 March 2012
3.5

Bank
Exposure
2011
before CRM
Exposure Class
RM000
Exposures
covered by
guarantees/
credit
derivatives
RM000
Exposures
covered by
eligible
financial
collateral
RM000
Exposures
covered by
other eligible
collateral
RM000
4,080,874
50,115
3,362,759
20,508
6,763,126
5,638,108
6,341,015
15,586
471,964
112,848
286,359

253,372
578,209
10,624

2,722
27,143,262
844,927

Defaulted exposures
2,920,749
26,198
2,642
15
2,946,947
2,657
30,090,209
847,584
Credit Risk
fund managers
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposure
Defaulted exposures
246

31 March 2012
3.5

Group
Exposure
2011
before CRM
Exposure Class
RM000
Exposures
covered by
guarantees/
credit
derivatives
RM000
Exposures
covered by
eligible
financial
collateral
RM000
Exposures
covered by
other eligible
collateral
RM000
5,693,101
50,115
3,544,007
20,508
8,307,011
7,947,769
7,065,748
15,699
693,557
152,540
366,240

342,524
612,257
11,367

5,500
33,856,295
971,648

Defaulted exposures
3,294,597
27,047
4,755
32
3,321,644
4,787
37,177,939
976,435
Credit Risk
fund managers
Corporates
Regulatory retail
Higher risk assets
Other assets
Equity exposure
Defaulted exposures
2012 ANNUAL REPORT
247

31 March 2012
3.6
Off-Balance Sheet Exposures and Counterparty Credit Risk
Counterparty Credit Risk (CCR) is the risk that the counterparty to a transaction involving financial instruments such as foreign
exchange and derivatives, could default before the final settlement of the transactions cash flows. Unlike a loan where the credit risk
is unilateral i.e. only the lending bank faces the risk of loss, CCR on derivatives creates bilateral risk of loss. This means either party
of the transaction can incur losses depending on the market value of the derivative, which can vary over time with the movement of
underlying market factors.
For derivatives, the Group is not exposed to credit risk for the full face value of the contracts. The CCR is limited to the potential cost
of replacing the cash-flow if the counterparty defaults. As such, the credit equivalent amount will depend, inter alia, on the maturity
of the contract and on the volatility of the rates underlying that type of instrument.
Derivatives are mainly utilised for hedging purposes with minimal trading exposures. CCR is managed via counterparty limits which
is set based on the counterpartys size and credit rating. These limits are monitored daily by Group Risk Management.
CCR is further mitigated via netting agreements, e.g. under the International Swaps and Derivatives Association (ISDA) master
agreement. The ISDA agreement contractually binds both parties to apply close-out netting across all outstanding transactions
covered by an agreement if either party defaults or other predetermined events occur.
CCR is measured via the current exposure method whereby the credit equivalent exposure for derivatives is the sum of the markto-market exposure plus the potential future exposure (add-on factor multiplied by the notional amount). The add-on factors are as
stipulated by BNM.
248

31 March 2012
3.6
Off-Balance Sheet Exposures and Counterparty Credit Risk (contd)
The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follow:

Principal
Bank
Amount
2012
RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
354,758
515,510
126,778
354,758
257,755
25,356
354,758
257,755
25,356
3,645,632
4,675,582
2,188,661
1,822,816
935,116
437,732
1,518,664
858,102
340,525
11,506,921
3,833,533
3,355,160
3,147,488
17,730
64,522
38,478
587,000
1,110,000
423,896
130
2,592
3,260
912
14,192
20,055
182
2,838
6,467
5,268,384
23,712
99,681
47,965
16,775,305
23,712
3,933,214
3,403,125
397,029
549,766
153,561
70,122
397,029
274,883
30,712
35,061
397,029
274,883
30,712
35,061
4,320,657
5,793,193
2,188,661
2,160,328
1,158,639
437,732
1,786,192
1,004,648
340,525
13,472,989
4,494,384
3,869,050
3,147,488
17,730
64,522
38,478
587,000
1,110,000
423,896
130
2,592
3,260
912
14,192
20,055
182
2,838
6,467
5,268,384
23,712
99,681
47,965
18,741,373
23,712
4,594,065
3,917,015

- one year or less
- over three years
Group
2012

- one year or less
- over three years
2012 ANNUAL REPORT
249

31 March 2012
3.6
Off-Balance Sheet Exposures and Counterparty Credit Risk (contd)
The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follow (contd):

Principal
Bank
Amount
2011
RM000
Positive
Fair Value
of Derivative
Contracts
RM000
Credit
Equivalent
Amount
RM000
RiskWeighted
Assets
RM000
388,733
484,479
118,582
388,733
242,239
23,716
388,733
242,239
23,716
1,356,908
4,027,184
3,425,831
678,454
805,437
685,166
582,106
737,330
528,386
9,801,717
2,823,745
2,502,510
2,844,627
22,568
77,079
40,842
380,000
1,447,000
285,000
257
6,465
2,757
637
29,535
15,957
127
5,907
3,192
4,956,627
32,047
123,208
50,068
14,758,344
32,047
2,946,953
2,552,578
423,539
515,311
143,281
423,539
257,655
28,656
423,539
257,655
28,656
1,715,131
4,729,308
3,425,831
857,565
945,862
685,166
727,272
852,441
528,386
10,952,401
3,198,443
2,817,949
2,844,627
22,568
77,079
40,842
380,000
1,447,000
285,000
257
6,465
2,757
637
29,535
15,957
127
5,907
3,192
4,956,627
32,047
123,208
50,068
15,909,028
32,047
3,321,651
2,868,017

- one year or less
- over three years
Group
2011

- one year or less
- over three years
250

31 March 2012
4.0 Market Risk

Market risk is the risk of losses arising from on and off-balance sheet positions due to movements in market prices. This includes movements
in interest rates, foreign exchange rates, equity prices, commodity prices and their implied volatilities. For the Islamic bank, market risk
refers to fluctuations in values of tradable, marketable or leaseable assets (including sukuk) and in off-balance sheet individual portfolios
such as restricted investment accounts. Rate of return risk and displaced commercial risk are commonly associated with Islamic banking.
Risk Governance
The governance structure for market risk management starts with the Board of Directors which has the overall oversight on market risk
management and defines the risk philosophy, principles and core policies. The Board is in turn assisted by the Group Risk Management
Committee (GRMC) which is principally responsible to oversee management activities in managing risks. Its responsibilities include
reviewing and approving risk management policies, risk exposures and limits whilst ensuring the necessary infrastructure and resources
are in place. At Senior Management level, the Group Assets and Liabilities Management Committee (GALCO) manages the Groups market
risk by reviewing and recommending market risk frameworks and policies; ensuring that market risk limits and parameters are within the
approved thresholds; and aligning market risk management with business strategy and planning.
Organisationally, market risks are managed collectively via the 3 lines of defence concept. Financial Markets as the risk taking unit assumes
ownership of the risk and manages the risk within the approved policies, risk limits and parameters as set by the GRMC or GALCO. The risk
control function is undertaken by Group Risk Management which provides independent monitoring, valuation and reporting of the market
exposures. This is supplemented by periodic audit checking/sampling by Internal Audit.
Market Risk Management
For the Group, market risk is managed on an integrated approach which involves the following processes:
(i)
identification of market risk in new products and changes in risk profiles of existing exposures.
(ii)
assessment of the type and magnitude of market risks which takes into account the activity and market role undertaken.
(iii)
adoption of various market risk measurement tools and techniques to quantify market risk exposures. For example, Value-at-Risk
(VaR), price value of a basis point (PV01) and repricing gap analysis.
(iv)
adoption of 3 Lines of Defense concept for monitoring of market risk; Business Units forming the 1st Line, Group Market Risk
Management as the 2nd Line and Internal Audit functioning as the 3rd Line.
(v)
scheduled and exception reporting on market risk exposures.
Market risk exists in the Groups activities in bonds, foreign exchange and interest rate swaps, which are transacted primarily by Financial
Markets (treasury) department. Trading positions are held intentionally for short-term resale and with the intent of benefiting from actual or
expected short-term price movements while banking book positions are held until maturity or as available-for-sale. Hence, these positions
are susceptible to market movements.
These exposures are governed by approved policies, risk limits and parameters such as notional measures, sensitivity limits, value-at-risk
measures, tenor limits and holding period. The limits and parameters are set vis-a-vis the Groups risk appetite and strategy. Besides that,
treasury activities are monitored and reported independently by Group Market Risk on a daily basis. Any limit breaches or exceptions are
reported to GALCO and GRMC.
Hedging Policies and Strategies
The Group had established a hedging policy which outlines the broad principles and policies governing hedging activities by the Group.
Generally, the Group enters into hedges to manage or reduce risk exposures. All hedging strategies are approved by the GALCO and
monitored independently by Group Market Risk. Further, all hedging strategies are designated upfront and recorded separately under the
hedging portfolios. Hedging positions and effectiveness are monitored and reported monthly to management.
Market risk capital charge
For the Group, the market risk charge is computed on the standardised approach and the capital charges are mainly on the bonds, foreign
exchange and equities portfolios.
2012 ANNUAL REPORT
251

31 March 2012
4.0 Market Risk (contd)

Regulatory capital requirements
The risk-weighted assets and capital requirements for the various categories of risk under Market risk are as follows:

2012
BANK
Risk-
Weighted
Capital
Assets Requirements
RM000
RM000
GROUP
RiskWeighted
Assets
RM000
Capital
Requirements
RM000
Interest rate risk

- General interest rate risk
- Specific interest rate risk
135,911
477
10,873
38
138,404
477
11,072
38
136,388
10,911
138,881
11,110
Equity risk
3,419
5,983
273
479
9,402
752
20,731

1,658

20,731
96,418
1,658
7,713
157,119
12,569
265,432
21,233
Interest rate risk

40,057
850
3,204
68
47,610
850
3,809
68
40,907
3,272
48,460
3,877
Equity risk
3,425
5,987
274
479
9,412
753
14,012
1,121
14,012
1,121
54,919
4,393
71,884
5,751

Options risk

2011
252

31 March 2012
5.0 Operational Risk

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from
external events.
Risk Governance
Management, escalation and reporting of operational risks are instituted through committees such as the Group Operational Risk Management
Committee and the Group Risk Management Committee as well as the Board.
The responsibilities of the Committees and Board include the following:

(i)
Oversight and implementation of the Operational Risk Management (ORM) Framework;
(ii)
Establishment of risk appetite and the provision of strategic and specific directions;
(iii)
Regular review of operational risks initiatives, reports and profiles;
(iv)
Addressing operational risk issues; and
(v)
Ensuring compliance with regulatory and internal requirements including disclosures.

The Group has adopted the following guiding principles for operational risk management:
(i)
Sound risk management practices as outlined in the ORM Framework. This is in accordance with Basel II and regulatory guidelines.
(For Islamic Banking, a separate ORM Framework has been adopted to be in compliance with the Islamic Financial Services Board
(IFSB) and relevant regulatory bodies).
(ii)
Board and Senior Management oversight.
(iii)
Defined responsibilities for all staff.
(iv)
Established operational risk methodologies and processes applied in the identification, assessment, measurement, control and
monitor of risks.
(v)
Regular dashboard reports are submitted to Senior Management and Risk Management Committee.
(vi)
Continuous cultivation of an organisational culture that places great emphasis on effective operational risk management and
adherence to sound operating controls.
The ORM framework is supported by a comprehensive group-wide Integrated Operational Risk Management system which include the
adoption of the following tools:
- Risk Control Self Assessment
- Loss Event Data Collection
- Key Risk Indicator
- Control Self Assessment
The Group actively promotes operational risk awareness by requiring all staff to attend training on the topic. In addition, business continuity
and disaster recovery exercises are regularly conducted to verify the adequacy and reliability of the plans.
Internal audit provides independent assurance of the implementation of the Framework through their regular audit reviews and independent
reporting to the Group Audit Committee.
The Group adopts the Basic Indicator Approach for computation of operational RWA.
6.0 Equity Exposures in Banking Book

The Bank and the Group hold equity positions in banking books as a result of debt to equity conversion, for social-economic purposes,
or to maintain strategic relationships. All equities are held at fair value. For quoted equity, fair value is estimated based on quoted or
observable market price at the end of the reporting period; and for those unquoted equity, the fair value is estimated using certain
valuation technique.
The return of the equity are credited to the statement of comprehensive income and any gain or loss arising from a change in fair value are
recognised directly in other comprehensive income or in equity through the statement of changes in equity.
2012 ANNUAL REPORT
253

31 March 2012
6.0 Equity Exposures in Banking Book (contd)

The following table shows the equity exposures in banking book:

Bank
Group

Risk-
Risk
Gross credit
weighted
Gross credit
weighted

exposures
assets
exposures
assets

RM000
RM000
RM000
RM000
2012
Publicly traded
Holding of equity investments
13
13
4,212
4,212
Privately held
For socio-economic purposes
Not for socio-economic purposes
86,189
8,705
86,189
13,058
127,183
8,705
127,183
13,058
94,907
99,260
140,100
144,453
11
11
3,875
3,875
Privately held
For socio-economic purposes
Not for socio-economic purposes
74,200
8,407
74,200
12,611
109,180
8,407
109,180
12,611
82,618
86,822
121,462
125,666
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Realised gains/(losses) recognised in the

statement of comprehensive income
- Publicly traded equity investments
- Privately held equity investments

300
1,484
(360)
300
1,124
Unrealised gains/(losses) recognised in

revaluation reserve
- Publicly traded equity investments
- Privately held equity investments
2
11,911
(6)
59,949
337
18,926
(43)
92,928
11,913
59,943
19,263
92,885
2011
Publicly traded
Holding of equity investments
Gains and losses on equity exposures in the banking book

The table below present the gains and losses on equity exposures in banking book:

Bank
Group
254

31 March 2012
7.0 Interest rate risk/rate of return risk in the banking book

Interest rate risk/rate of return risk in the banking book (IRR/RORBB) arise from exposure of banking book positions to interest rate/profit
rate movements. Changes in interest rate/profit rate affect the Groups earnings by changing its net interest/profit income and the level
of other interest/profit rate sensitive income and expenses. It also affect the underlying value of banking assets, liabilities and off-balance
sheet instruments as the present value of future cash flows change when interest rate/profit rate change.
Risk Governance
IRR/RORBB is managed collectively by GALCO, Financial Markets, Group Finance and Group Risk Management. Each of the above parties
has clearly defined roles and responsibilities to provide oversight and manage IRR/RORBB within the defined framework and structure as
approved by the Board of Directors/GRMC. GALCO assumes the overall responsibility in managing IRR/RORBB by setting the directions,
strategy and risk limits/parameters for the Bank/Group. On the ground, Financial Markets is tasked to execute the approved strategy by
managing the asset liabilities as well as the funding and liquidity needs of the Bank/Group. Group Finance and Group Risk Management
provide support in respect of risk monitoring and reporting of the banking book exposures; and ensuring regulatory as well as accounting
requirements are met.
IRR/RORBB Management
The guiding principles in managing IRR/RORBB include:

(i)
prudent approach in management of IRR/RORBB that commensurate with the Groups size and business activities. This is achieved
via establishing robust IRR/RORBB policies, measures and strategies which is complemented by regular monitoring and reporting.
(ii)
IRR/RORBB are accurately measured and any mismatches identified and reviewed regularly.
(iii)
setting of proper gapping limits and the limits monitored closely.
(iv)
comprehensive IRR/RORBB reporting and review process which provide aggregate information and sufficient supporting detail to
enable assessment of the Groups sensitivity to changes in market conditions.
The Group uses a range of tools, including the following primary measures to quantify and monitor IRR/RORBB:
(i)
Repricing gap analysis to measure interest rate/profit rate from the earnings perspective i.e. impact of interest rate/profit rate
changes to earnings in the short term.
(ii)
Net interest income/profit income simulation to assess the impact of interest rate/profit rate changes on short term earnings
volatility.
(iii)
Economic value of equity (EVE) simulation which measures long term interest rate/profit rate exposure through deterioration in
capital base based on an adverse interest rate/profit rate movements.
Group Risk Management performs independent monitoring of the interest rate/profit rate benchmarks to ensure compliance. Any exceptions
are reported and appropriate remedial actions are taken, where necessary. Schedule reporting via risk dashboards are provided to
senior management and Board committees monthly. The risk dashboards provide a visual gauge (dashboard view) on the IRR/RORBB of
the Group.
The Group is guided by BNMs guidelines and Basel standards on management of IRR/RORBB.
2012 ANNUAL REPORT
255

31 March 2012
7.0 Interest rate risk/rate of return risk in the banking book (contd)

IRR/RORBB Management (contd)
The following tables present the Banks projected sensitivity to a 100 basis point parallel shock to interest rates across all maturities applied
on the Banks interest sensitivity gap as at reporting date.
Bank
100 bps
+ 100 bps
Increase/(Decrease)
RM000
RM000
Group
100 bps
+ 100 bps
Increase/(Decrease)
RM000
RM000
2012
Impact on net interest income (NII)
Ringgit Malaysia
Impact on Economic Value (EV)
Ringgit Malaysia
(57,392)
57,392
(53,366)
53,366
(245,450)
245,450
(278,116)
278,116
(58,054)
58,054
(44,616)
44,616
(175,675)
175,675
(47,518)
47,518
2011
Impact on net interest income (NII)
Ringgit Malaysia
Impact on Economic Value (EV)
Ringgit Malaysia
8.0 Shariah Governance Disclosures and Profit Sharing Investment Account (PSIA)

The detailed disclosures under this section can be referred to Note 7.0 of Alliance Islamic Bank Berhads Pillar 3 report.
256
List of Properties
as at 31 March 2012
Year of
Purchase
Tenure
Remaining
Lease
Period
(Expiry
Year)
Age of
Property
(Years)
Built-Up
Area
(Sq Ft)
Net Book
Value
(RM000)
Location
Current Use
1, Jalan Tembaga SD5/2A

Bandar Sri Damansara
52100 Kepong, Kuala Lumpur
Alliance Banks
branch/office
premises
1992
Freehold
18
10,099
714
150 152, Jalan Cerdas

Taman Connaught
56000 Kuala Lumpur
Alliance Banks
branch/office
premises
1997
Leasehold
99 years
66 years
2078
33
12,056
2,460
43 & 45, Jalan Bunga Tanjung 6A

Taman Putra
68000 Ampang, Selangor
Alliance Banks
branch/office
premises
1997
Leasehold
99 years
69 years
2081
30
8,400
1,223
1960 E & F, Jalan Stadium

05100 Alor Setar, Kedah
Alliance Banks
branch/office
premises
1979
Leasehold
60 years
27 years
2039
31
5,822
459
Ground & Mezzanine Floor

Wisma Malvest
20 & 20A Jalan Tun Dr Awang
Sungai Nibong Kecil
11900 Bayan Lepas, Pulau Pinang
Alliance Banks
branch/office
premises
1995
Freehold
17
6,103
1,515
70 & 71, Block 10

Jalan Laksamana Cheng Ho
93200 Kuching, Sarawak
Alliance Banks
branch/office
premises
2007
Leasehold
60 years
57 years
2069
10,248
2,220
B-400, Jalan Beserah

25300 Kuantan, Pahang
Alliance Banks
branch/office
premises
1996
Freehold
21
6,967
444
LG134/LG135/G128/F89
Holiday Plaza
Jalan Dato Sulaiman
80250 Johor Bharu, Johor
Alliance Banks
branch/office
premises
1984
Freehold
28
5,414
892
1-01 & 1A-01

Menara MSC Enterprise
Jalan Bukit Meldrum
80300 Johor Bahru, Johor
Vacant
1996
Freehold
14
13,742
4,186
Lot 1 & 3, Jalan Permas Jaya 10/2

Bandar Baru Permas Jaya,
Pelentong, 81750 Masai
Johor Bahru, Johor
Alliance Banks
branch/office
premises
1996
Freehold
19
25,278
1,714
3 & 5, Jalan Bentara 1

Tun Aminah
Alliance Banks
branch/office
premises
1996
Freehold
20
5,720
1,006
Unit 01-G & 01-1, Seremban City

Jalan Tunku Munawir
70000 Seremban, Negeri Sembilan
Alliance Banks
branch/office
premises
1997
Freehold
13
7,277
1,730
Alliance 2012 Additional Info 80612 10.45pm.indd 256
12/6/12 7:00:39 PM
2012 ANNUAL REPORT
257
Tenure
Remaining
Lease
Period
(Expiry
Year)
1995
Leasehold
99 years
82 years
2094
14
8,920
607
Alliance Banks
branch/office
premises
1996
Leasehold
999 years
911 years
2923
18
7,495
948
Lot 4-6, Block K

Sinsuran Complex
88000 Kota Kinabalu, Sabah
Alliance Banks
branch/office
premises
1980
Leasehold
99 years
59 years
2071
34
13,979
623
Lot 1086, Jalan Utara

W.D.T. 127
91000 Tawau, Sabah
Alliance Banks
branch/office
premises
1981
Leasehold
99 years
48 years
2060
39
15,511
631
Lot 8, Block A
Beaufort Jaya Commercial Centre
89808 Beaufort, Sabah
Alliance Banks
branch/office
premises
1984
Leasehold
999 years
889 years
2901
26
4,500
240
Lot 1, Block C
Mile 4 1/2 Jalan Utara
Bandar Kim Fung
90307 Sandakan, Sabah
Alliance Banks
branch/office
premises
1992
Leasehold
99 years
68 years
2080
27
4,800
431
1 & 2, Block A, Jalan Jungkat

Pangie Light Industrial Complex
89909 Tenom, Sabah
Alliance Banks
branch/office
premises
1993
Leasehold
999 years
912 years
2924
18
7,333
322
17, 19 & 21, Jalan USJ 9/5

47620 Subang Jaya, Selangor
Alliance Banks
branch/office
premises
1996
Freehold
16
13,860
2,655
2 & 3 Block A, Phase III

Luyang Commercial Centre
Damai Plaza, Jalan Damai
Alliance Banks
branch/office
premises
1994
Leasehold
99 years
69 years
2081
17.5
9,667
998
59-61, Jalan Tiga

Alliance Banks
branch/office
premises
1963
Leasehold
999 years
877 years
2889
54
9,900
714
Lot B1 & B2, 6th Floor

Block 45, Church Road
Vacant
1985
Leasehold
999 years
883 years
2895
40
1,500
51
MPWPL U 0072 & 0073

Jalan Merdeka
87008 Labuan
Alliance Banks
branch/office
premises
1979
Leasehold
99 years
45,
51 years
2057, 2063
46
46
5,800
706
Location
Current Use
101 & 103, Jalan Melaka Raya 24

Taman Melaka Raya
75000 Melaka
Alliance Banks
branch/office
premises
Lot 7 & 9, Block D

Nountun Industrial Estate
89350 Inanam
Kota Kinabalu, Sabah
Year of
Purchase
Age of
Property
(Years)
Built-Up
Area
(Sq Ft)
Net Book
Value
(RM000)
12/6/12 7:00:39 PM
258
List of Properties
as at 31 March 2012 (contd)
Tenure
Remaining
Lease
Period
(Expiry
Year)
1987
Leasehold
999 years
870 years
2882
54
10,040
1,740
Vacant
1996
Leasehold
999 years
911 years
2923
12
3,749
389
45, Jalan Sungai Besi Indah 1/21

43300 Balakong, Selangor
Alliance Banks
branch/office
premises
2001
Leasehold
99 years
79 years
2091
11
9,958
1,398
3, Jalan SS 15/2A, Wisma Projass

Alliance Banks
branch/office
premises
2005
Freehold
26
51,504
7,266
Lot PT2736-2737
PT2283, 48 & 515 and
GRN 17305-17307
Kuala Pahang, District of Pekan
Pahang
Vacant land
1992
Freehold
1,167
acres
27,748
Location
Current Use
Lot 84, Jalan Gaya

Alliance Banks
branch/office
premises
21, Block E
Jalan Tuaran, 89350 Inanam
Kota Kinabalu, Sabah
Year of
Purchase
Age of
Property
(Years)
Built-Up
Area
(Sq Ft)
Net Book
Value
(RM000)
12/6/12 7:00:39 PM
2012 ANNUAL REPORT
259
Directory
as at 31 May 2012
Nationwide
Coverage
041763 Alliance 2012 Additional Info.indd 259
14/6/12 12:20:42 PM
260
Directory
as at 31 May 2012 (contd)
ALLIANCE BANK
MALAYSIA BERHAD
BRANCHES
Butterworth
4105-4107, Jalan Bagan Luar
12000 Butterworth, Pulau Pinang
Tel : 04-331 4863/64
Fax : 04-331 3904
KEDAH
Alor Setar
1960 E & F, Jalan Stadium
Tel : 04-731 0744
Fax : 04-733 8055
Lunas, Kulim
888 & 889, Jalan Aman
Taman Sejahtera
09600 Lunas, Kulim, Kedah
Tel : 04-484 3275/76/78
Fax : 04-484 3277
Sejati Indah, Sungai Petani
Ground Floor, Wisma Uni-Green
18, Jalan Permatang Gedong
Taman Sejati Indah
08000 Sungai Petani, Kedah
Tel : 04-431 1673/81
04-431 2139
Fax : 04-431 1687
PULAU PINANG
Bandar Baru Air Itam
No. 37, Jalan Angsana
Bandar Baru Air Itam
11500 Pulau Pinang
Tel : 04-827 3288
Fax : 04-827 3688
Beach Street
Ground Floor, Bangunan Barkath
21, Beach Street
10300 Georgetown, Pulau Pinang
Tel : 04-262 8100
Fax : 04-261 3300
Bukit Mertajam
Ground & 1st Floor
Wisma Ng Ah Yan
42, Lebuh Nangka 2
Taman Mutiara
14000 Bukit Mertajam, Pulau Pinang
Tel : 04-530 3130
Fax : 04-530 7433
Sungai Nibong Kecil

Wisma Malvest, 20 & 20A
Jalan Tun Dr Awang
Sungai Nibong Kecil
11900 Bayan Lepas, Pulau Pinang
Tel : 04-642 5918
Fax : 04-642 5924
PERAK
Ipoh
40 & 42, Persiaran Greenhill
30450 Ipoh, Perak
Tel : 05-241 2342/3
05-241 2346/8
Fax : 05-241 2355
Sitiawan
23 & 24, Jalan Raja Omar
Taman Selamat
32000 Sitiawan, Perak
Tel : 05-691 1212
Fax : 05-691 7975
SELANGOR
Aman Suria Damansara
J-G-23 & J-G-25, Block J
Jalan PJU 1/43, PJU1
Aman Suria Damansara
47301 Petaling Jaya, Selangor
Tel : 03-7880 8842
Fax : 03-7880 4299
Ampang Point
65, Jalan Mamanda 9
Ampang Point
Taman Dato Ahmad Razali
Tel : 03-4252 3822
Fax : 03-4252 3877
Balakong
45, Jalan Sungai Besi Indah 1/21
Taman Sungai Besi Indah
43300 Seri Kembangan, Selangor
Tel : 03-8948 6972
Fax : 03-8948 9530
Bandar Bukit Tinggi

56, Lorong Batu Nilam 4B
Bandar Bukit Tinggi
41200 Klang, Selangor
Tel : 03-3324 1122
Fax : 03-3324 3311
Bandar Puteri Puchong
11 & 13, Jalan Puteri 2/1
Bandar Puteri Puchong
47100 Puchong, Selangor
Tel : 03-8063 2833
Fax : 03-8063 2711
CP Tower, Petaling Jaya
Unit 1-2, Right Wing
Level 1, CP Tower
11, Jalan 16/11
Off Jalan Damansara
Tel : 03-7957 3366
Fax : 03-7957 3360
Damansara Uptown
Unit 102 & 103
Level 1, Uptown 2
2, Jalan SS21/37
Damansara Uptown
Tel : 03-7660 9798
Fax : 03-7660 9799
Kajang
Lot 4 & 5, Jalan Jeloh 3
Off Jalan Bukit
43000 Kajang, Selangor
Tel : 03-8733 5966
Fax : 03-8736 4004
Klang
Ground Floor
1, Lorong Kasawari 4B
Taman Eng Ann
41150 Klang, Selangor
Tel : 03-3345 3700
Fax : 03-3345 3733
Kota Damansara
7-G & 9-G, Jalan PJU 5/20
Pusat Perdagangan Kota Damansara
PJU5 Kota Damansara
Tel : 03-6142 8632
Fax : 03-6142 8732
12/6/12 7:00:40 PM
2012 ANNUAL REPORT
SELANGOR
Mutiara Damansara
G19, IKANO Power Centre
2, Jalan PJU 7/2
Mutiara Damansara
Tel : 03-7727 1041
Fax : 03-7727 1478
Puchong Jaya
11, Jalan Kenari 5
Bandar Puchong Jaya
47100 Puchong Jaya, Selangor
Tel : 03-8075 9185
Fax : 03-8075 9200
Rawang
71, Jalan Bandar Rawang 2
Bandar Baru Rawang
48000 Rawang, Selangor
Tel : 03-6091 7622
Fax : 03-6091 7922
Selayang
71 & 73, Jalan 2/3A
Pusat Bandar Utara Selayang
KM 12, Jalan Ipoh
68100 Batu Caves, Selangor
Tel : 03-6135 1800
Fax : 03-6135 1787
Seri Kembangan
31-1 & 31-2
Jalan Serdang Perdana 2/1
Taman Serdang Perdana
43300 Seri Kembangan
Selangor
Tel : 03-8941 6610
Fax : 03-8941 6620
Shah Alam
Ground & 1st Floor
2, Jalan Murni 25/61
Taman Sri Muda, Seksyen 25
40400 Shah Alam, Selangor
Tel : 03-5121 9336
Fax : 03-5121 9373
SS2, Petaling Jaya
53 & 55, Jalan SS2/55
Tel : 03-7875 8255
Fax : 03-7874 0973
Subang Jaya
3 Alliance
3, Jalan SS15/2A
Tel : 03-5634 2870
Fax : 03-5634 1128
Sunway Pyramid
Lot 1.96A, Ground Floor
New Wing, Sunway Pyramid
Bandar Sunway
Tel : 03-5636 0870
Fax : 03-5636 0670
Taman Putra
43-45, Jalan Bunga Tanjung 6A
Taman Putra
Tel : 03-4291 7740
Fax : 03-4296 1250
USJ, Subang Jaya
Ground & 1st Floor
17, 19 & 21, Jalan USJ 9/5N
47620 UEP Subang Jaya, Selangor
Tel : 03-8024 1300
Fax : 03-8023 4379
KUALA LUMPUR
Bangsar
28, Lorong Ara Kiri 2
Lucky Garden, Bangsar
59100 Kuala Lumpur
Tel : 03-2095 3185
Fax : 03-2095 3184
Capital Square
Ground Floor
Menara Multi-Purpose
Capital Square
50100 Kuala Lumpur
Tel : 03-2694 8800
Fax : 03-2694 6867
GTower, Jalan Tun Razak
Lot No G-06, Ground Floor
GTower, No. 199, Jalan Tun Razak
50400 Kuala Lumpur
Tel : 03-2164 8240
Fax : 03-2168 8390
261
Jalan Ipoh
41 & 43, Jalan Ipoh
51200 Kuala Lumpur
Tel : 03-4041 2288
Fax : 03-4041 3868
Jalan Mega Mendung
116, Jalan Mega Mendung
Bandar Park
Off Jalan Klang Lama
58200 Kuala Lumpur
Tel : 03-7983 1177
Fax : 03-7987 3511
Jalan Sultan Ismail
Mezzanine Floor
Menara Prudential
10, Jalan Sultan Ismail
50250 Kuala Lumpur
Tel : 03-2070 4477
Fax : 03-2070 4900
Jalan Tun Tan Cheng Lock
15, Jalan Tun Tan Cheng Lock
50000 Kuala Lumpur
Tel : 03-2072 0978
Fax : 03-2072 0968
Kepong
Ground Floor, 52, Jalan Prima
Vista Magna, Metro Prima Kepong
52100 Kuala Lumpur
Tel : 03-6257 9997
Fax : 03-6257 9996
Kuchai Entrepreneurs Park
1, Jalan 1/116B
Kuchai Entrepreneurs Park
58200 Kuala Lumpur
Tel : 03-7984 8800
Fax : 03-7981 6486
Mid Valley
15-G & 15-1
The Boulevard Offices
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : 03-2283 1849
Fax : 03-2287 8217
MontKiara
Unit A-0G-02, Block A
Plaza MontKiara
2, Jalan Kiara, MontKiara
50480 Kuala Lumpur
Tel : 03-6203 1543
Fax : 03-6201 2607
12/6/12 7:00:40 PM
262
Directory
KUALA LUMPUR
JOHOR
Pandan Indah
11 & 13, Jalan Pandan Indah 4/34
Pandan Indah
55100 Kuala Lumpur
Tel : 03-4295 7300
Fax : 03-4296 4107
Batu Pahat
Ground, 1st & 2nd Floor
2 & 4, Jalan Kundang 3
Taman Bukit Pasir
83000 Batu Pahat, Johor
Tel : 07-431 4088
Fax : 07-434 0033
Segambut
Ground & 1st Floor
22, Wisma Sin Hoh Huat
Persiaran Segambut Tengah
51200 Kuala Lumpur
Tel : 03-6257 2105
Fax : 03-6257 2680
Bukit Bakri, Muar

88, Jalan Tepi Pasar
Bukit Bakri
84200 Muar, Johor
Tel : 06-986 7633
Fax : 06-986 6721
Setapak
86, Jalan 2/23A, Taman Danau Kota
Off Jalan Genting Kelang, Setapak
53300 Kuala Lumpur
Tel : 03-4143 9643
Fax : 03-4143 9568
Sri Damansara
1, Jalan Tembaga SD 5/2A
Bandar Sri Damansara
52100 Kuala Lumpur
Tel : 03-6275 0144/0529/0684
Fax : 03-6275 0457
03-6272 1732
Taman Connaught
150-152, Jalan Cerdas
Taman Connaught
56000 Kuala Lumpur
Tel : 03-9102 3973
Fax : 03-9102 3740
Holiday Plaza, Johor Bahru

Unit G128, Holiday Plaza
Jalan Dato Sulaiman
Century Garden
Tel : 07-331 1200
Fax : 07-331 1207
Jalan Tebrau
396B & 396B-1, Jalan Tebrau
Taman Majidee
Tel : 07-332 2331
Fax : 07-331 1310
Johor Jaya
50 & 52, Jalan Dedap 13
Taman Johor Jaya
Tel : 07-353 5388
Fax : 07-355 7377
Taman Maluri
254 & 254A, Jalan Mahkota
Taman Maluri, Cheras
55100 Kuala Lumpur
Tel : 03-9285 4133
Fax : 03-9283 1397
Kelapa Sawit, Kulai

16 & 17, Jalan Susur Satu
26th Mile, Jalan Air Hitam
Kelapa Sawit
81030 Kulai, Johor
Tel : 07-652 3704/5/7
Fax : 07-652 3706
Taman Tun Dr Ismail

24, Jalan Tun Mohd Fuad 1
Taman Tun Dr Ismail
60000 Kuala Lumpur
Tel : 03-7729 8239
Fax : 03-7729 8237
Permas Jaya
1 & 3, Jalan Permas Jaya 10/2
Bandar Baru Permas Jaya
Tel : 07-386 2480
Fax : 07-386 2482
Segamat
No. 115, Jalan Genuang
85000 Segamat, Johor
Tel : 07-931 1170
Fax : 07-931 2727
Sri Gading, Batu Pahat
1 & 2, Jalan Ria 1
Taman Ria Jaya, Sri Gading
83000 Batu Pahat, Johor
Tel : 07-455 9406
Fax : 07-455 9411
Taman Molek
1 & 1-01, Jalan Molek 1/29
Taman Molek
Tel : 07-355 6577
Fax : 07-355 4677
Taman Nusa Bestari
1-G & 1-01, Jalan Bestari 6/2
Taman Nusa Bestari
81300 Skudai, Johor
Tel : 07-237 8626
Fax : 07-237 8621
Taman Pelangi
Ground Floor, Shoplot Nos. 1 & 3
Jalan Perang, Taman Pelangi
Tel : 07-332 7016
Fax : 07-333 7411
Tesco Desa Tebrau
Lot F09, 1st Floor
Tesco Desa Tebrau
Taman Desa Tebrau
Tel : 07-357 1127
Fax : 07-357 0027
Tun Aminah
3 & 5, Jalan Bentara 1
Taman Ungku Tun Aminah
81300 Skudai, Johor
Tel : 07-554 0031
Fax : 07-554 2494
Ulu Tiram
Ground Floor, Lots 34 & 36,
Jalan Johar 3, Desa Cemerlang
81800 Ulu Tiram, Johor
Tel : 07-861 5143
Fax : 07-861 5157
12/6/12 7:00:40 PM
2012 ANNUAL REPORT
MELAKA
Melaka
99, 101 & 103
Jalan Melaka Raya 24
Taman Melaka Raya
75000 Melaka
Tel : 06-284 9249
Fax : 06-284 9248
Taman Desa Cheng Perdana
G-1, Ground Floor, Bangunan KK
Jalan Cheng Perdana 1/1A
Taman Desa Cheng Perdana 1
75260 Melaka
Tel : 06-336 5111
Fax : 06-336 5110
NEGERI SEMBILAN
Seremban
1G & 1-1, Arab Malaysian Business Centre
Jalan Tuanku Munawir
70000 Seremban, Negeri Sembilan
Tel : 06-762 5610/21
Fax : 06-762 5612
PAHANG
Kuantan
B400, Jalan Beserah
Tel : 09-567 2508
Fax : 09-567 3307
TERENGGANU
Kuala Terengganu
Wisma Kam Choon
101, Jalan Kampong Tiong
20100 Kuala Terengganu, Terengganu
Tel : 09-623 5244
Fax : 09-623 6379
SABAH
Bandar Kim Fung, Sandakan
Lot 1, Block C, Bandar Kim Fung
Mile 41/2, Jalan Utara P.O. Box 163
Post Office, Mile 11/2, Jalan Utara
Tel : 089-275 020/21/22
Fax : 089-275 027
Beaufort
Lot B, Block A, Beaufort Jaya
Commercial Centre, P.O. Box 220
89808 Beaufort, Sabah
Tel : 087-211 721
Fax : 087-212 392
Donggongon
Wisma PPS
Donggongon New Township
W.D.T. No. 56
80509 Penampang, Sabah
Tel : 088-713 411/2
088-718 980
Fax : 088-718 634
Federal House, Kingfishers Park, KK
(Service Centre)
Aras 1, Blok A,
Kompleks Pentadbiran Kerajaan
Persekutuan Sabah, Jalan UMS
Tel : 088-484 718
Fax : 088-484 712
Inanam, Kota Kinabalu
Ground, 1st & 2nd Floor
Lot 7 & 9, Block D
89350 Inanam, Kota Kinabalu, Sabah
Tel : 088-435 761
Fax : 088-435 770
Jalan Gaya
82 & 84, Jalan Gaya
Tel : 088-251 177
Fax : 088-223 629
Keningau
Lot No. 1, Block B-8
Jalan Arusap
89000 Keningau, Sabah
Tel : 087-330 301
Fax : 087-330 294
Kota Marudu
Shoplot No. 8, Block E
Sedco Shophouses
P.O. Box 260
89108 Kota Marudu, Sabah
Tel : 088-661 104
Fax : 088-661 106
263
Kundasang
Shoplot No. 6, Block B
Sedco Shophouses
P.O. Box 152
89308 Ranau, Sabah
Tel : 088-889 679
Fax : 088-889 676
Lahad Datu
Lot 1 MDLD 4709
Jalan Kastam Lama
91100 Lahad Datu, Sabah
Tel : 089-883 911/5
Fax : 089-883 916
Luyang Damai
Ground & 1st Floor, Shoplot No. 2 & 3
Block A, Luyang Commercial Centre
Damai Plaza, Phase III, Jalan Damai
Tel : 088-249 073/084/085/109
Fax : 088-249 064
Sandakan
59-61, Jalan Tiga
P.O. Box 224
Tel : 089-275 193
089-216 771/089-222 693
Fax : 089-271 641
Sinsuran
Lot 4, 5, & 6, Block K
Sinsuran Complex
Tel : 088-237 762
Fax : 088-212 511
Tambunan
Lot 1, Block B
Sedco Shophouses, W.D.T. 55
89659 Tambunan, Sabah
Tel : 087-771 171
Fax : 087-771 157
Tawau
1086, Jalan Utara, W.D.T. 127
91009 Tawau, Sabah
Tel : 089-776 483
Fax : 089-763 287
12/6/12 7:00:40 PM
264
Directory
SABAH
Tenom
Shoplot Nos 1 & 2, Block A
Pangie Light Industrial Complex
Jalan Jungkat, Tenom New Township
P.O. Box 379
89909 Tenom, Sabah
Tel : 087-737 757
Fax : 087-737 762
SARAWAK
Kuching
178, Jalan Chan Chin Ann
Tel : 082-257 129
Fax : 082-257 275
ALLIANCE INVESTMENT
BANK BERHAD
(A participating organisation of
Bursa Malaysia Securities Berhad)
HEAD OFFICE
19th Floor, Menara Multi-Purpose
Capital Square
50100 Kuala Lumpur
Tel : 03-2692 7788
Fax : 03-2692 8787
www.allianceinvestmentbank.com.my
BRANCHES
JOHOR
Kluang
No. 73, Ground Floor & 1st Floor
Jalan Rambutan
86000 Kluang, Johor
Tel : 07-771 7922
Fax : 07-777 1079
PAHANG
Kuantan
A-397, A-399 & A-401
Taman Sri Kuantan III, Jalan Beserah
Tel : 09-566 0800
Fax : 09-566 0801
PERLIS
TERENGGANU
Laksamana
70 & 71, Block 10
Jalan Laksamana Cheng Ho
Tel : 082-230 888
Fax : 082-238 889
Miri
Ground & 1st Floor
Lot 353, Block 7
Miri Concession Land District
(Pelita Commercial Centre)
Jalan Miri Pujut
98000 Miri, Sarawak
Tel : 085-427 535
Fax : 085-425 362
Sibu
Ground Floor, 32
Jalan Bako
Brooke Drive 3
96000 Sibu, Sarawak
Tel : 084-317 628
Fax : 084-317 148
LABUAN
Labuan
MPWPL U 0072 & 0073
Jalan Merdeka, P.O. Box 396
87008 Labuan FT
Tel : 087-412 826
Fax : 087-415 446
Kangar
2nd Floor, Podium Block
Bangunan KWSP
01000 Kangar, Perlis
Tel : 04-976 5200
Fax : 04-977 0868
Kuala Terengganu
No.1D & 1E
Jalan Air Jerneh
20300 Kuala Terengganu, Terengganu
Tel : 09-631 7922
Fax : 09-631 3255
KEDAH
Alor Setar
Lot T-30, 2nd Floor
Wisma PKNK
Jalan Sultan Badlishah
Tel : 04-731 7088
Fax : 04-731 8428
PULAU PINANG
Pulau Pinang
Suite 2.1 & Suite 2.4
Level 2, Wisma Great Eastern
No. 25, Leboh Light
10200 Pulau Pinang
Tel : 04-261 1688
Fax : 04-261 6363
ALLIANCE ISLAMIC
BANK BERHAD
HEAD OFFICE
22nd Floor
Capital Square
50100 Kuala Lumpur
Tel : 03-2694 8800
Fax : 03-2698 4691
www.allianceislamicbank.com.my
ISLAMIC BANKING CENTRES
PULAU PINANG
KUALA LUMPUR
Kuala Lumpur
Capital Square
50100 Kuala Lumpur
Tel : 03-2697 6333
Fax : 03-2697 2929
Beach Street
Ground Floor, Bangunan Barkath
21, Beach Street
10300 Georgetown, Pulau Pinang
Tel : 04-262 8100
Fax : 04-261 3300
12/6/12 7:00:40 PM
2012 ANNUAL REPORT
SELANGOR
SABAH
Kota Damansara
7-G & 9-G, Jalan PJU 5/20
Pusat Perdagangan Kota Damansara
PJU5 Kota Damansara
Tel : 03-6142 8632
Fax : 03-6142 8732
Sinsuran
Lot 4, 5, & 6, Block K
Sinsuran Complex
Tel : 088-237 762
Fax : 088-212 511
Ampang Point
65, Jalan Mamanda 9, Ampang Point
Taman Dato Ahmad Razali
Tel : 03-4252 3822
Fax : 03-4252 3877
ALLIANCE INVESTMENT
MANAGEMENT BERHAD
KUALA LUMPUR
Capital Square
Ground Floor, Menara Multi-Purpose
Capital Square
50100 Kuala Lumpur
Tel : 03-2694 8800
Fax : 03-2694 6867
GTower
Lot No. G-06, Ground Floor
GTower, No. 199
Jalan Tun Razak
50400 Kuala Lumpur
Tel : 03-2164 8240
Fax : 03-2168 8390
265
23.01, 23rd Floor

Capital Square
50100 Kuala Lumpur
Tollfree: 1-800-88-3065
Tel : 03-2698 4299
Fax : 03-2693 0792 (General)
03-2691 9403 (Operations)
www.allianceimb.com.my
ALLIANCE TRUSTEE BERHAD

Capital Square
50100 Kuala Lumpur
Tel : 03-2694 8800
Fax : 03-2730 2456
JOHOR
Taman Pelangi
Ground Floor, Shoplot Nos. 1 & 3
Jalan Perang, Taman Pelangi
P.O. Box 61
Taman Sri Tebrau
Tel : 07-333 2064/2177
Fax : 07-333 7411
MELAKA
Taman Desa Cheng Perdana
G-1, Ground Floor, Bangunan KK
Jalan Cheng Perdana 1/1A
Taman Desa Cheng Perdana 1
75260 Melaka
Tel : 06-336 5111
Fax : 06-336 5110
12/6/12 7:00:40 PM
266
Analysis of Shareholdings
as at 31 May 2012
Class of securities
: Ordinary shares of RM1.00 each
Authorised share capital
: RM2,000,000,000
Issued and paid-up share capital
: RM1,548,105,929
Voting rights
: One vote per ordinary share
Shareholdings Distribution Schedule

Size of Shareholdings
No. of Shareholders
% of Shareholders
No. of Shares Held
% of Issued Shares
1,822
4,235
9,430
2,203
506
2
10.01
23.27
51.82
12.11
2.78
0.01
39,244
3,397,895
40,334,971
65,050,125
846,259,179
593,024,515
0.00
0.22
2.61
4.20
54.66
38.31
18,198
100.00
1,548,105,929
100.00
No. of Shares Held
% of Issued Shares
Maybank Nominees (Tempatan) Sdn Bhd

DBS Bank for Vertical Theme Sdn Bhd
417,831,175
26.99
Citigroup Nominees (Tempatan) Sdn Bhd

Employees Provident Fund Board
175,193,340
11.32
3.
Malaysia Focus Investment Fund Limited
71,228,700
4.60
4.
Medimetro (M) Sdn Bhd
56,000,000
3.62
5.
UOBM Nominees (Asing) Sdn Bhd

Exempt AN for Societe Generale Bank & Trust
40,970,900
2.65
Malaysia Nominees (Tempatan) Sendirian Berhad

Great Eastern Life Assurance (Malaysia) Berhad
34,311,000
2.22
CIMSEC Nominees (Tempatan) Sdn Bhd

CIMB Bank Bhd for Vertical Theme Sdn Bhd
32,026,600
2.07
Public Nominees (Tempatan) Sdn Bhd

PB Trustee Services Berhad (AFG ESS)
29,108,400
1.88
Cartaban Nominees (Asing) Sdn Bhd

Exempt AN for State Street Bank & Trust Company
24,128,800
1.56
Eden Engineering Sdn Bhd
22,295,763
1.44
Less than 100

100 1,000
1,001 10,000
10,001 100,000
100,001 less than 5% of issued shares
5% and above of issued shares
Total
Thirty (30) Largest Shareholders

Name
1.
2.
6.
7.
8.
9.
10.
12/6/12 7:00:40 PM
2012 ANNUAL REPORT
267
Thirty (30) Largest Shareholders (contd)

Name
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
No. of Shares Held
% of Issued Shares
HSBC Nominees (Asing) Sdn Bhd

HSBC-FS for Target Value Fund
20,424,200
1.32

BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund
17,242,517
1.11

BNP Paribas Secs SVS LUX for Aberdeen Global
16,800,000
1.08

BBH (LUX) SCA for Fidelity Funds Asean
16,010,200
1.03
Citigroup Nominees (Asing) Sdn Bhd

CBNY for Dimensional Emerging Markets Value Fund
15,345,200
0.99

Exempt AN for JPMorgan Chase Bank, National Association
14,685,500
0.95
ABB Nominee (Tempatan) Sdn Bhd

Pledged Securities Account for Caizhi Development Sdn Bhd
13,000,076
0.84

State Street London Fund 26AD for Asian Equity Fund
9,248,200
0.60

8,563,900
0.55

Exempt AN for Eastspring Investments Berhad
7,476,400
0.48

7,200,100
0.46

Kumpulan Wang Persaraan (Diperbadankan) (ABERDEEN)
7,068,500
0.46

6,985,000
0.45

6,472,000
0.42

6,250,500
0.40

BBH (LUX) SCA for Fidelity Funds Malaysia
6,109,700
0.39
Citigroup Nominees (Asing) Sdn Bhd

CBLDN for Stichting PGGM Depositary
5,677,400
0.37

BNY Brussels for City of New York Group Trust
5,664,200
0.37

Employees Provident Fund Board (NOMURA)
5,213,100
0.34

Employees Provident Fund Board (ABERDEEN)
5,208,000
0.34
1,103,739,371
71.30
Total
12/6/12 7:00:40 PM
268
Substantial Shareholders
as at 31 May 2012
No. of Ordinary Shares
Name of Substantial Shareholder
Direct Interest
% of
Issued
Shares
Vertical Theme Sdn Bhd

Langkah Bahagia Sdn Bhd
Duxton Investments Pte Ltd
Lutfiah Binti Ismail
Fullerton Financial Holdings Pte Ltd
Fullerton Management Pte Ltd
Temasek Holdings (Private) Limited
Minister for Finance of Singapore
Employees Provident Fund Board
449,857,775
197,474,840
29.06
12.75
Indirect
Interest
% of
Issued
Shares
Total
% of
Issued
Shares
449,857,7751
449,857,7751
449,857,7752
449,857,7753
449,857,7754
449,857,7755
449,857,7756
29.06
29.06
29.06
29.06
29.06
29.06
29.06
449,857,775
449,857,775
449,857,775
449,857,775
449,857,775
449,857,775
449,857,775
449,857,775
197,474,840
29.06
29.06
29.06
29.06
29.06
29.06
29.06
29.06
12.75
Notes:
1
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Vertical Theme Sdn Bhd.
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Langkah Bahagia Sdn Bhd.
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Duxton Investments Pte Ltd.
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Fullerton Financial Holdings Pte Ltd.
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Fullerton Management Pte Ltd.
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 held through Temasek Holdings (Private) Limited.
Directors Shareholdings
as at 31 May 2012
Direct Interest
Shares held in the Company
(held through spouse, Datin Teh Yew Kheng)
Sng Seow Wah
Share Options offered in the Company
Indirect Interest
No. of Shares
% of Issued Shares
No. of Shares
% of Issued Shares
3,000
negligible
35,000
negligible
105,800
0.007
Exercise Price
No. of Share Options offered
Sng Seow Wah
RM3.15
835,300#
Sng Seow Wah
RM3.58
1,279,900#
Date of Grant
No. of Share Grants awarded
Sng Seow Wah
23 September 2010
133,700*
Sng Seow Wah
28 July 2011
174,400*
Subject to the achievement of performance conditions
Share Grants awarded in the Company
* The first 50% of the share grants are to be vested at the end of the second year and the remaining 50% of the share grants are to be vested at
the end of the third year from the date on which an award is made.
Other than as disclosed above, none of the other Directors have any interests in the Company or in any of the Companys related corporation.
12/6/12 7:00:40 PM
2012 ANNUAL REPORT
269
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the 46th Annual General Meeting of Alliance Financial Group Berhad will be
held at Ballroom 1, Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on
Friday, 20 July 2012 at 3.00 p.m. for the following purposes:
AGENDA
1. To receive the Audited Financial Statements for the financial year ended 31 March 2012 together with the Reports of the
Directors and Auditors thereon.
Resolution 1
2. To approve the payment of Directors fees in respect of the financial year ended 31 March 2012.
Resolution 2
3. To re-elect the following Directors who retire by rotation pursuant to Article 82 of the Companys Articles of Association:
(a) Tan Yuen Fah
Resolution 3
(b) Kung Beng Hong
Resolution 4
4. To re-elect Lee Ah Boon, a Director who retires pursuant to Article 89 of the Companys Articles of Association.
Resolution 5
5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and authorise the Directors to fix their
remuneration.
Resolution 6
As Special Business to consider and, if thought fit, to pass the following resolutions:
6. Ordinary Resolution

Re-appointment of Director pursuant to Section 129 of the Companies Act, 1965
THAT Dato Thomas Mun Lung Lee, a Director who retires pursuant to Section 129 of the Companies Act, 1965 be and is
hereby re-appointed as a Director of the Company to hold office until the conclusion of the next Annual General Meeting of
the Company.
7. Special Resolution

Proposed Amendments to the Articles of Association of the Company
THAT the proposed amendments to the Articles of Association of the Company in the form and manner as set out in
Appendix I to this Annual Report, be and are hereby approved;
AND THAT the Directors of the Company be and are hereby authorised to carry out all the necessary formalities and to do all
such things and acts in effecting the aforesaid amendments.
8. Ordinary Resolution

Proposed allocation of additional options and/or award of ordinary shares of RM1.00 each (Shares) to
Sng Seow Wah as Group Chief Executive Officer of Alliance Bank Malaysia Berhad
THAT the Directors of the Company be and are hereby authorised at any time, and from time to time, to offer and to grant
option or options to subscribe for or purchase, and/or to award Shares in the Company up to an additional 1,000,000
Shares, thereby increasing the maximum allocation of up to 2,500,000 Shares in the Company per annum over the period
of the Employees Share Scheme (ESS) of the Company, to Sng Seow Wah, who is the Group Chief Executive Officer of
Alliance Bank Malaysia Berhad and a Director of the Company, subject always to such terms and conditions of the Bye-Laws
of the ESS;
AND THAT the Directors of the Company be and are hereby authorised to allot and issue and/or award from time to time
new Shares to him pursuant to the exercise of such options and/or award of Shares.
9. To transact any other business for which due notice shall have been given in accordance with the Companys Articles
of Association and/or the Companies Act, 1965.
BY ORDER OF THE BOARD
LEE WEI YEN (MAICSA 7001798)
Kuala Lumpur
26 June 2012
Resolution 7
Resolution 8
Resolution 9
270
Notice of Annual General Meeting (contd)

Notes:
1. A Member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead.
2. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
3. To be valid, the Form of Proxy, duly completed must be deposited at the registered office of the Company at 3rd Floor, Menara Multi-Purpose, Capital Square,
No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than 48 hours before the time set for holding the meeting.
4. A Member who is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus
account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.
5. A Member other than an Exempt Authorised Nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting.
6. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by
each proxy.
7. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.
8. A Member whose name appears in the General Meeting Record of Depositors as at 12 July 2012 shall be regarded as a Member entitled to attend, speak and
vote at the meeting or appoint a proxy or proxies to attend and/or vote in his stead.
EXPLANATORY NOTES
(i) Re-appointment of Director pursuant to Section 129 of the Companies Act, 1965

Dato Thomas Mun Lung Lee, a Director over the age of seventy (70) years, shall retire pursuant to Section 129 of the Companies Act, 1965 at the conclusion
of the forthcoming 46th Annual General Meeting. The proposed re-appointment of Dato Thomas Mun Lung Lee will require a resolution passed by a majority of
not less than three-fourth (3/4) of the members of the Company who are entitled to vote at the forthcoming Annual General Meeting. The proposed resolution
will enable Dato Thomas Mun Lung Lee to hold office until the conclusion of the next Annual General Meeting of the Company.
(ii) Proposed Amendments to the Articles of Association of the Company (Proposed Amendments)

The Proposed Amendments is to streamline the Articles of Association of the Company with the recent amendments to the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad.
(iii) Proposed allocation of additional options and/or award of ordinary shares of RM1.00 each (Shares) to Sng Seow Wah as Group Chief Executive
Officer of Alliance Bank Malaysia Berhad (Proposed Additional Allocation)

The shareholders of the Company had, at the Annual General Meeting held on 28 July 2011, approved the resolution to allow the Board of Directors of
the Company, to offer and to grant option or options to subscribe for or purchase, and/or to award Sng Seow Wah, the Group Chief Executive Officer of Alliance
Bank Malaysia Berhad, up to a maximum of 1,500,000 Shares in the Company per annum over the period of the ESS.
The Board of Directors of the Company had on 28 July 2011, awarded 174,400 share grants under the Share Grant Plan and offered up to 1,279,900 share
options under the Share Option Plan of the ESS to Sng Seow Wah.
The first 50% of the share grants awarded under the Share Grant Plan are to be vested at the end of the second year and the remaining 50% of the share
grants are to be vested at the end of the third year from 28 July 2011. The vesting of up to 1,279,900 share options offered under the Share Option Plan is
subject to the achievement of performance conditions set by the Board of Directors.
The proposed resolution will allow the Board of Directors of the Company, to offer and to grant option or options and/or to award Sng Seow Wah up to an
additional 1,000,000 Shares, thereby increasing the maximum allocation of up to 2,500,000 Shares in the Company per annum over the period of the ESS.
The ESS is governed by the Bye-Laws approved by the shareholders of the Company at an Extraordinary General Meeting held on 28 August 2007. It took effect
on 3 December 2007 and is in force for a period of 10 years up to 2 December 2017.
In accordance with the Bye-Laws of the ESS, Sng Seow Wah who is the Group Chief Executive Officer and Director of Alliance Bank Malaysia Berhad, a
wholly-owned subsidiary of the Company, is eligible to participate in the ESS.
2012 ANNUAL REPORT
Rationale of the Proposed Additional Allocation
The rationale of the Proposed Additional Allocation is to:
271
(a) retain and motivate Sng Seow Wah towards better productivity through greater sense of belonging, dedication and loyalty;
(b) reward him for having contributed to the growth of the Group and whose service is vital to the continued growth of the Group; and
(c) allow him who will, upon becoming shareholder of the Company, participate in the profits and future growth of the Group.
Maximum Number and Basis of Allocation of options/shares

In accordance with the Bye-Laws of the ESS, the total number of options/shares which may be available under the ESS shall not exceed in aggregate ten per
cent (10%) of the total issued and paid-up share capital of the Company at any one time during the existence of the ESS provided that:
(a) Not more than fifty per cent (50%) of the options/shares available under the ESS should be allocated, in aggregate, to Directors and senior management;
and
(b) Not more than ten per cent (10%) of the options/shares available under the ESS should be allocated to any individual Eligible Person who, either singly or
collectively through persons connected (as defined in the Listing Requirements) to the Eligible Person, holds 20% or more of the issued and paid-up share
capital of the Company.
Option Price/Share Grant Price
The price for each share under the Share Option Plan, Share Grant Plan and Share Save Plan may be at a discount (as determined by the ESPS Committee or such
other pricing mechanism as may from time to time be permitted by Bursa Malaysia Securities Berhad or such other relevant regulatory authorities), provided that
the discount shall not be more than 10% from the 5-day weighted average market price of the shares of the Company transacted on Bursa Malaysia Securities
Berhad immediately preceding the date on which an offer is made or at par value of the shares, whichever is higher.
Directors and Major Shareholders Interests
Sng Seow Wah is deemed interested in the Proposed Additional Allocation as he would be eligible to participate in the ESS. Accordingly, he has abstained and
will continue to abstain from deliberations and voting on the Proposed Additional Allocation at the relevant Board meetings.
Sng Seow Wah will also undertake to ensure that he and persons connected to him will abstain from voting in respect of their direct and/or indirect shareholdings
in the Company (if any) on the resolution in relation to the Proposed Additional Allocation at the forthcoming Annual General Meeting to be convened.
Save as disclosed above, none of the Directors, major shareholders and persons connected to them has any interest, directly or indirectly, in the Proposed
Additional Allocation.
272
APPENDIX 1

The details of the proposed amendments to the Articles of Association of the Company are as follows:
Reference
Existing Article
Proposed Amendment to Article
Article 2
(Interpretation)
None.
Exempt Authorised Nominee means

an authorised nominee defined under
the Central Depositories Act which is
exempted from compliance with the
provisions of subsection 25A(1) of the
Central Depositories Act.
Article 61
(Notice that proxy is allowed)
In every notice calling a meeting of the

Company there shall appear with reasonable
prominence, a statement that a Member
entitled to attend and vote is entitled to appoint
not more than two (2) proxies to attend and
vote instead of him, and that a proxy need not
also be a Member.
In every notice calling a meeting of the

Company there shall appear with reasonable
prominence, a statement that a Member
entitled to attend and vote is entitled to appoint
not more than two (2) proxies to attend and
vote instead of him, and that a proxy need
not also be a Member at the meeting is
entitled to appoint a proxy or proxies to
attend and vote in his stead. There shall
be no restriction as to the qualification of
the proxy. A proxy appointed to attend and
vote at a meeting of the Company shall
have the same rights as the member to
speak at the meeting.
Article 75
(Instrument appointing proxy to be in writing)
The instrument appointing a proxy shall be

in writing under the hand of the appointor or
of his attorney duly authorised in writing or,
if the appointor is a corporation, either under
the corporations common seal or under the
hand of an officer or attorney duly authorised.
The Directors may but shall not be bound to
require evidence of the authority of any such
attorney or officer. Where a Member is an
Authorised Nominee, it may appoint one (1)
proxy in respect of each Securities Account
it holds with ordinary shares of the Company
standing to the credit of the said Securities
Account. A proxy may but need not be a
Member of the Company and the provisions
of Section 149(1)(b) of the Act shall not apply
to the Company. The instrument appointing a
proxy shall be deemed to confer authority to
demand or join in demanding a poll.
The instrument appointing a proxy shall be in

writing under the hand of the appointor or of
his attorney duly authorised in writing or, if the
appointor is a corporation, either under the
corporations common seal or under the hand
of an officer or attorney duly authorised. The
Directors may but shall not be bound to require
evidence of the authority of any such attorney
or officer. Where a Member is an Authorised
Nominee, it may appoint one (1) proxy in
respect of each Securities Account it holds
with ordinary shares of the Company standing
to the credit of the said Securities Account.
Where a Member is an Exempt Authorised
Nominee which holds ordinary shares in
the Company for multiple beneficial owners
in one securities account (omnibus
account), there is no limit to the number
of proxies which the Exempt Authorised
Nominee may appoint in respect of each
omnibus account it holds. A Member other
than an Exempt Authorised Nominee, is
entitled to appoint not more than two
(2) proxies to attend and vote instead of
him. A proxy may but need not be a Member
of the Company and the provisions of
Section 149(1)(b) of the Act shall not apply
to the Company. The instrument appointing
a proxy shall be deemed to confer authority
to demand or join in demanding a poll.
2012 ANNUAL REPORT
273
APPENDIX 1
Reference
Existing Article
Article 76
(Form of Proxy)

in the following form with such variations as
circumstances may require or the statutes
permit or in such other form as the Exchange
may approve:-

in the following form with such variations as
circumstances may require or the statutes
permit or in such other form as the Exchange
may approve:-
Shareholding represented by Proxy
..............................................................
..............................................................
I/We,
.....................................................................
...... of ...........................................................
being a Member/Members of ALLIANCE
FINANCIAL
GROUP
BERHAD
hereby
appoint .........................................................
of ..................................................................
................................................ or failing him,
.....................................................................
of ..................................................................
..... as my/our proxy to vote for me/us and
on my/our behalf at the Annual/Extraordinary
General Meeting* of the Company to be held on
the ............ day of ........................ 20 ...........
and, at any adjournment thereof for/against*
the resolution(s) to be proposed thereat.
I/We,
.....................................................................
...... of ...........................................................
being a Member/Members of ALLIANCE
FINANCIAL
GROUP
BERHAD
hereby
appoint .........................................................
of ..................................................................
................................................ or failing him,
.....................................................................
of ..................................................................
..... as my/our proxy to vote for me/us and
on my/our behalf at the Annual/Extraordinary
General Meeting* of the Company to be held on
the ............ day of ........................ 20 ...........
and, at any adjournment thereof for/against*
the resolution(s) to be proposed thereat.
As witness my/our hand(s) this .......... day of As witness my/our hand(s) this .......... day of
............. 20 ...........
............. 20 ...........
*Strike out whichever is not desired. (Unless *Strike out whichever is not desired. (Unless
otherwise instructed the proxy may vote as he otherwise instructed the proxy may vote as he
thinks fit).
thinks fit).
Notes:
Notes:
A proxy may but need not be a member

to the Company.
A proxy may but need not be a Member

to the Company.
To be valid, this form, duly completed must

be deposited at the Office of the Company not
less than 48 hours before the time for holding
the meeting.
To be valid, this form, duly completed must

be deposited at the Office of the Company not
less than 48 hours before the time for holding
the meeting.
A member who is an authorised nominee

may appoint one (1) proxy in respect of each
securities account it holds with ordinary
shares of the Company standing to the credit
of the said securities account.
A Member who is an Authorised Nominee

may appoint one (1) proxy in respect of each
securities account it holds with ordinary
shares of the Company standing to the credit
of the said securities account.
274
APPENDIX 1
Proposed Amendments to the Articles of Association of the Company (contd)

Reference
Existing Article
Article 76
(Form of Proxy) (contd)
A member other than an authorised nominee

shall be entitled to appoint not more than two
(2) proxies to attend and vote at the same
meeting.
A Member who is an Exempt Authorised

Nominee which holds ordinary shares in
the Company for multiple beneficial owners
in one securities account (omnibus
account), there is no limit to the number
Where a member appoints more than one (1)
of proxies which the Exempt Authorised
proxy, the appointment shall be invalid unless
Nominee may appoint in respect of each
he specifies the proportions of his holdings to
omnibus account it holds.
be represented by each proxy.
A Member other than an Exempt Authorised
If the appointor is a corporation this form
Nominee shall be entitled to appoint not more
must be executed under its common seal or
than two (2) proxies to attend and vote at the
under the hand of an officer or attorney duly
same meeting.
authorised.
Where a Member appoints more than one (1)
proxy, the appointment shall be invalid unless
he specifies the proportions of his holdings to
be represented by each proxy.
If the appointor is a corporation, this form
must be executed under its common seal or
under the hand of an officer or attorney duly
authorised.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
Form of Proxy
I/We (full name in block capitals) _______________________________________________________________________________________________________

identity card no./company registration no. ______________________________________________________________________________________________
of ___________________________________________________________________________________________________________________________________
being a Member/Members of ALLIANCE FINANCIAL GROUP BERHAD hereby appoint _______________________________________________________
___________________________________________________________________ (NRIC No.) _____________________________________________________
of ___________________________________________________________________________________________________________________________________
or failing him ______________________________________________________ _(NRIC No.) _____________________________________________________
of ___________________________________________________________________________________________________________________________________
as my/our proxy/proxies to vote for me/us on my/our behalf at the 46th Annual General Meeting of the Company to be held at Ballroom 1,
Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Friday, 20 July 2012 at 3.00 p.m. and at any
adjournment thereof.
RESOLUTIONS
*FOR
1.
To receive the Audited Financial Statements for the financial year ended 31 March 2012 together
with the Reports of the Directors and Auditors thereon
Resolution 1
2.
To approve the payment of Directors fees in respect of the financial year ended 31 March 2012
Resolution 2
3.
To re-elect the following Directors who retire by rotation pursuant to Article 82 of the
Companys Articles of Association:
(a) Tan Yuen Fah
(b) Kung Beng Hong
Resolution 3
Resolution 4
4.
To re-elect Lee Ah Boon, a Director who retires pursuant to Article 89 of the Companys Articles
of Association
Resolution 5
5.
To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and authorise the

Directors to fix their remuneration
Resolution 6
6.
To re-appoint Dato Thomas Mun Lung Lee, a Director who retires pursuant to Section 129 of
the Companies Act, 1965
Resolution 7
7.
Resolution 8
8.
Proposed additional allocation of options and/or award of ordinary shares of RM1.00 each to
Sng Seow Wah
Resolution 9
*AGAINST
* Please indicate with an X on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at
his discretion.
As witness my/our hand(s) this ___________ day of ______ ____________________________ 2012.
Seal of Corporation
________________________________________
Signature(s) of Member
Notes:
1. A Member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead.
2. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
3. To be valid, the Form of Proxy, duly completed must be deposited at the registered office of the Company at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, not
less than 48 hours before the time set for holding the meeting.
4. A Member who is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies
which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.
5. A Member other than an Exempt Authorised Nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting.
6. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
7. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.
8. A Member whose name appears in the General Meeting Record of Depositors as at 12 July 2012 shall be regarded as a Member entitled to attend, speak and vote at the meeting or appoint a proxy or proxies to attend
and/or vote in his stead.
fold this flap for sealing
then fold here
Affix Stamp

Capital Square, No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia.
1st fold here
041763 Alliance Bank Annual Report 2012_IBC.indd 1
12/6/12 5:21:02 PM
Alliance Financial Group Berhad (6627-X)

Capital Square
Tel : 03-2694 4888
Fax : 03-2694 6200
www.alliancegroup.com.my

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SERVING YOU BETTER

2012 ANNUAL REPORT

SERVING YOU BETTER

041763 Alliance Bank Annual Report 2012.indd b

041763 Alliance Bank Annual Report 2012.indd 1

Statement on Corporate Governance

Notice and Form

041763 Alliance Bank Annual Report 2012.indd 2

041763 Alliance Bank Annual Report 2012.indd 3

ALLIANCE FINANCIAL GROUP BERHAD (6627-X)

History of Alliance Financial Group

Banque de LIndochine opened

The name of the Bank was

Malaysian French Bank Berhad

The Bank established its first

During this time, 16 branches

By February 1998, the Bank

Multi-Purpose Bank Berhad

041763 Alliance Bank Annual Report 2012.indd 4

2012 ANNUAL REPORT

The Alliance Banking Group was

On 1 January, Alliance Merchant

In August, Alliance Merchant

Alliance Islamic Bank Berhad

In January, Alliance Bank and

In conjunction with the

041763 Alliance Bank Annual Report 2012_Pg5,18,32-45 NEW FA.indd 5

ALLIANCE FINANCIAL GROUP BERHAD (6627-X)

Chairman, Independent Non-Executive Director

Dato Thomas Mun Lung Lee

Senior Independent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

Megat Dziauddin bin Megat Mahmud

Non-Independent Non-Executive Director

Independent Non-Executive Director

Sng Seow Wah

Independent Non-Executive Director

Non-Independent Non-Executive Director

(Appointed on 18 April 2012) Non-Independent Non-Executive Director

Phoon Siew Heng

(Resigned on 18 April 2012) Non-Independent Non-Executive Director

GROUP COMPANY SECRETARY

Lee Wei Yen (MAICSA 7001798)

BURSA MALAYSIA STOCK NAME/CODE

Shareworks Sdn Bhd

041763 Alliance Bank Annual Report 2012.indd 6

2012 ANNUAL REPORT

041763 Alliance Bank Annual Report 2012.indd 7

ALLIANCE FINANCIAL GROUP BERHAD (6627-X)

Products and Services

Savings Account/Basic Savings Account

Wills and Trust Services

Unit Trust Investment

Investment Lending and Share Services

Alliance Motor Insurance

041763 Alliance Bank Annual Report 2012.indd 8

Alliance SaveLink Home Loan