Affin Bank 2012

Banking is
About...
AFFIN BANK BERHAD (25046-T)
Annual Report 2012

Contents
Corporate Information 12
Corporate Structure 13
Board of Directors & MD/CEO 14
Profile of Directors 16
Management Team 20
Management Team Profiles 22
Chairman’s Statement 26
Performance Review 30
Financial Highlights 33
Corporate Diary 34
Statement of Corporate Governance 36
Statement on Internal Control 43
Audit & Examination Committee 46
Network of Branches 48
Notice of Annual General Meeting 54
Financial Statements 56
Banking is About...
At AffinBank, we remove the boundaries within the processes of banking and focus on
customer centricity. We reach out to our customers, improve relationships with them and ensure
that each one of them feels privileged and has the best of service from us. We set ourselves apart
in this industry through a concerted effort to understanding our customers, listening to them, then
delivering the most appropriate financial solutions. Simply put, banking is about you and your
continued satisfied relationship with us.
Our Vision
A Premier Partner for
Financial Growth and
Innovative Services.
Our Mission
To provide innovative financial solutions and services to
target customers in order to generate profits and create
value for our shareholders and other stakeholders.
In so doing, we provide opportunities for employees to

contribute and excel; and be competitive in providing our
solutions and services to our valued customers.
We shall conduct our business with integrity and

professionalism in compliance with good corporate
governance principles and practices.
... Banking Without Barriers™

• Discipline
• Integrity
• Humility
• Caring
• Creativity
Banking is about being
passionate
• Discipline
• Integrity
• Humility
• Caring
• Creativity
We are passionate in all that we do. A passion to

achieve more, be better and to have that focused
discipline to be able to carry forth a service that our
customers deserve and require.
Banking is about adding
values
• Integrity
• Humility
• Caring
• Creativity
It’s not just about numbers, nor a focus on the

bottom line only. Our belief is in delivering a trust
that is self evident in the way we service each of our
customers...a genuine courtesy and respect which
comes from a desire to deliver more.
Banking is about bringing
smiles
• Humility
• Caring
• Creativity
We understand that when we are able to consistently

provide financial solutions for our customers, when
they know they can trust a bank that delivers more for
them – that’s when we are truly satisfied that we have
fulfilled our goals.
thoughtful
• Caring
• Creativity
It’s a genuine care for our customers that truly makes a

difference – listening to them, understanding them and
finally delivering our promises – now that’s a bank that
goes beyond barriers.
imaginative
• Creativity
No two financial challenges are ever the same. It

requires a deep understanding of the situation and
innovative solutions. At AFFINBANK, we look beyond
the standard to provide financial solutions to our many
customers.
CORPORATE
INFORMATION
NAME YM. Dr. Raja Abdul Malek AUTHORISED SHARE CAPITAL

bin Raja Jallaludin
Affin Bank Berhad (25046-T) (Independent Non-Executive Director) No of shares
2,000,000,000
YBhg. Tan Sri Dato’ Sri Abdul Aziz Par value
DATE OF INCORPORATION bin Abdul Rahman RM1.00
(Independent Non-Executive Director) Total
23 October 1975 RM2,000,000,000
Mr. Aubrey Li Kwok-Sing
(Non-Independent Non-Executive Director)
PRINCIPAL ACTIVITIES ISSUED AND PAID-UP SHARE
Mr. Gary Cheng Shui Hee CAPITAL
Affin Bank Berhad is principally involved (Alternate Director to Mr Aubrey Li Kwok-Sing)
in the carrying out of banking and No of shares
finance related services. The Bank has En. Mohd Suffian bin Haji Haron 1,518,336,765
sixteen (16) subsidiary companies and (Independent Non-Executive Director) Par value
three (3) associate companies which RM1.00
are principally engaged in property YBhg. Tan Sri Dato’ Seri Mohamed Total
management, nominee, trustee and Jawhar RM1,518,336,765
factoring services. (Independent Non-Executive Director)
SUBSTANTIAL SHAREHOLDER
BOARD OF DIRECTORS Managing Director/
Chief Executive Officer No of shares
Chairman Affin Holdings Berhad - 1,518,336,765
YBhg. Jen Tan Sri Dato’ Seri Ismail YBhg. Dato’ Zulkiflee Abbas
bin Haji Omar (Bersara) bin Abdul Hamid
(Non-Independent Non-Executive Director) EXTERNAL AUDITORS
Directors SECRETARY PricewaterhouseCoopers (AF 1146)

YBhg. Tan Sri Dato’ Seri Lodin
bin Wok Kamaruddin Nimma Safira binti Khalid
(Non-Independent Non-Executive Director)
REGISTERED OFFICE
17th Floor, Menara AFFIN,

80, Jalan Raja Chulan,
50200 Kuala Lumpur.
Tel.: 03-2055 9000
Fax.: 03-2026 1415
AFFIN BANK BERHAD (25046-T) 12 Annual Report 2012

CORPORATE
structure As at 31 December 2012
Lembaga Tabung Angkatan Tentera
OTHERS
35.19%
Boustead Holdings Berhad Bank of East Asia Limited
60.75% 20.69% 23.52% 20.60%
100%
Affin Holdings berhad
100%
Affin Bank Berhad
100%
Affin Islamic Bank Berhad
Affin Capital Sdn Bhd
50%
100% AFFIN-i Nadayu Sdn Bhd 2

(formerly known as AFFIN-i Goodyear Sdn Bhd)
Affin-ADB Sdn Bhd (jointly owned by AFFIN Islamic Bank Berhad and Jurus Positif Sdn Bhd
with a 50 : 50 ownership)
100% 100% 100%

Affin MoneyBrokers Sdn Bhd ABB Nominee (Tempatan) AFFIN-ACF Nominees
Sdn Bhd (Tempatan) Sdn Bhd 1,3
100% 100%
100%
PAB Properties Sdn Bhd PAB Property Management
Affin-ACF Holdings Sdn Bhd
Services Sdn Bhd 1,3
100% 20% 100%

Affin-ACF Capital Sdn Bhd ABB Trustee Berhad 2 PAB Property Development
Sdn Bhd 1,3
100% 100%
100%
AFFIN Factors Sdn Bhd 1
ABB Venture Capital Sdn Bhd 1,3
Affin Investment Bank Berhad
100% 100% 100%
Affin Fund Management ABB Nominee (Asing) Sdn Bhd 1

ABB Asset Management (M)
Berhad Berhad 1,3
100% 100% 100%

Merchant Nominees (Tempatan) Affin Futures Sdn Bhd 1
BSNC Nominees (Tempatan)
Sdn Bhd Sdn Bhd 1,3
67% 100% 100%

Classic Precision Sdn Bhd ABB IT & Services Sdn Bhd 1
BSN Merchant Nominees (Asing)
Sdn Bhd 1,3
100% 100% 20%

Affin Nominees (Tempatan) BSNCB Nominees (Tempatan) UBB Trustee (Malaysia) Berhad 2
Sdn Bhd Sdn Bhd 1

100% 100%
Affin Nominees (Asing) Affin Recoveries Berhad 1
Sdn Bhd
51%
Axa Affin Life Insurance Berhad
1 Dormant
33.6%
2 Associate
Axa Affin General Insurance Berhad 3 Companies where application to strike-off have been filed by the Bank.
Annual Report 2012 13 AFFIN BANK BERHAD (25046-T)

BOARD OF
DIRECTORS
& MD/CEO
Left to right :
1. YBhg. Jen. Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) 3. YBhg. Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin
Chairman Non-Independent Non-Executive Director
Non-Independent Non-Executive Director
4. YM. Dr. Raja Abdul Malek bin Raja Jallaludin
2. YBhg. Dato’ Zulkiflee Abbas bin Abdul Hamid Independent Non-Executive Director
Managing Director/Chief Executive Officer

BOARD OF DIRECTORS & MD/CEO
Left to right :
5. YBhg. Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman 7. En. Mohd Suffian bin Haji Haron
Independent Non-Executive Director Independent Non-Executive Director
6. Mr. Aubrey Li Kwok-Sing 8. YBhg. Tan Sri Dato’ Seri Mohamed Jawhar
Non-Independent Non-Executive Director Independent Non-Executive Director

Profile OF
DIRECTORS
Ybhg. Jen. Tan Sri Dato’ Seri Ismail YBhg. Tan Sri Dato’ Seri Lodin bin Wok
Bin Haji Omar (bersara) Kamaruddin
Chairman / Non-Independent Non-Executive Director Non-Independent Non-Executive Director
Jen. Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara), aged 71, was Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin, aged 63, was re-
appointed as a Director and Chairman of AFFINBANK on 21 May appointed to the Board of Directors of AFFINBANK on 4 October
2002. 2010. He was appointed as the Managing Director of Affin Holdings
Berhad in February 1991 and redesignated as Deputy Chairman on
He was formerly Chief Defence Forces (CDF) Malaysia from 1995 until 1 July 2008.
his retirement in 1998, after 38 years of military service. He graduated
from Royal Military Academy, Sandhurst, United Kingdom in 1961 and He has extensive experience in managing a provident fund and
subsequently attended professional and management development in the establishment, restructuring and management of various
courses at several institutions including The Land Forces Command business interest ranging from plantation, trading, financial
and Staff College, Canada; the United Nation International Peace services, property development, oil and gas, pharmaceuticals to
Academy, Vienna; the National Defence College, India and INTAN shipbuilding. He is the Chief Executive of LTAT and the Deputy
Malaysia. Chairman / Group Managing Director of Boustead Holdings Berhad.
Prior to joining LTAT, he was the General Manager of Perbadanan
His military service saw Key Command and Staff appointments at all Kemajuan Bukit Fraser for 9 years.
levels of the Armed Forces. As CDF, his responsibilities included key
roles in Malaysia’s Regional and International Defence Relations. He is also the Chairman of Boustead Heavy Industries Corporation
Berhad, Boustead Naval Shipyard Sdn Bhd, Boustead Petroleum
He was the Chairman of Affin Holdings Berhad and Affin-ACF Finance Marketing Sdn Bhd, Boustead REIT Managers Sdn Bhd, Johan
Berhad from 1999 prior to joining AFFINBANK. He currently holds Ceramics Berhad and 1Malaysia Development Berhad and also
directorships in Affin Islamic Bank Berhad, ABB Trustee Berhad, EP sits on the Board of UAC Berhad, The University of Nottingham in
Engineering Sdn Bhd and Global Medical Alliance Sdn Bhd. Malaysia Sdn Bhd, Minority Shareholder Watchdog Group, Atlas
Hall Sdn Bhd, Affin Islamic Bank Berhad, Affin Investment Bank
Jen. Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) attended all 13 Berhad and AXA Affin Life Insurance Berhad.
Board Meetings held during the financial year ended 31 December
2012. He graduated from the University of Toledo, Ohio, USA with a
Bachelor of Business Administration and a Master of Business
Administration Degree. Among the many awards Tan Sri Dato’
Seri Lodin received to-date include the Chevalier De La Legion
D’Honneur from the French Government, the Malaysian Outstanding
Entrepreneurship Award, the Degree of Laws honoris causa from the
University of Nottingham, United Kingdom, the UiTM Alumnus of
the Year 2010 Award and The BrandLaureate Most Eminent Brand
ICON Leadership Award 2012 by Asia Pacific Brands Foundation.
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin attended all 13 Board
Meetings held during the financial year ended 31 December 2012.

profile OF DIRECTORS
Ym. Dr. Raja Abdul Malek Bin Raja Jallaludin YBHG. TAN SRI DATO’ SRI ABDUL AZIZ
BIN ABDUL RAHMAN
Independent Non-Executive Director Independent Non-Executive Director
Dr. Raja Abdul Malek bin Raja Jallaludin, aged 67, was appointed to Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman, aged 66, was appointed
the Board of Directors of AFFINBANK on 29 January 1991. to the Board of Directors of AFFINBANK on 28 January 2003.
He graduated as a doctor from the University of Malaya in 1972 and, He graduated with a Bachelor of Commerce from University of New
early in his career, worked at the General Hospital, Kuala Lumpur South Wales, Sydney, Australia. He is a member of the Malaysian
and the Faculty of Medicine, UKM. In late 1975, he went into private Institute of Certified Public Accountants (MICPA) and the Malaysian
medical practice and became a senior partner of Drs. Catterall, Institute of Accountants (MIA).
Khoo, Raja Malek & Partners until 2003 when he resigned from
the firm. Professionally he is widely experienced and has served in He has served as Chairman and Board member of several government
various peer and academic activities. Amongst others, he had been institutions, agencies and public listed companies, both in Australia
a clinical tutor in the Faculty of Medicine, UMMC; been a member of and Malaysia.
the Ethical Committee of the Malaysian Medical Council, MOH; was
the Chairman of Council Academy of Family Physicians, Malaysia. At the corporate level he was with Price Waterhouse & Co. Sydney,
Malaysia Airlines and Managing Director of Bank Rakyat Bhd before
He also has vast experience in the pharmaceutical world and had venturing into politics and public service as the Pahang State
actively been involved since 1984. He had been the Medical Director Assemblyman, State Executive Councillor and Deputy Chief Minister
(Malaysia-Singapore) for Parke Davis-Warner Lambert from 1984- of Pahang. He was a Senator of Malaysian Parliament for a maximum
2000, and had remained briefly so too with Pfizer Malaysia when period of two (2) terms.
these two Incorporations merged in 2001. In 2003, Dr. Raja Abdul
Malek joined HOE/Pharmaceuticals/HOEPharma Holdings Bhd as Presently he is the Board member of Affin Islamic Bank Berhad, the
the Director of Medical and Scientific Affairs and holds this position International Islamic University Malaysia and University Malaysia
to this day. Pahang.
Presently he is the Board member of ABB Trustee Berhad and also a Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman attended 12 out of 13
member of the Advisory Panel of StemLife Berhad. Board Meetings held during the financial year ended 31 December
2012.
Dr. Raja Abdul Malek bin Raja Jallaludin attended 12 out of 13 Board

MR. AUBREY LI KWOK-SING EN. MOHD SUFFIAN BIN HAJI HARON
Non-Independent Non-Executive Director Independent Non-Executive Director
Mr. Aubrey Li Kwok-Sing, aged 62, was appointed to the Board of En. Mohd Suffian bin Haji Haron, aged 67, was appointed to the
Directors of AFFINBANK on 17 March 2008. He is a Director of The Board of Directors of AFFINBANK on 15 August 2009.
Bank of East Asia, Limited and Chairman of MCL Partners Limited.
He graduated with a Bachelor of Economics from University of
He possesses extensive experience in investment banking, merchant Malaya (1970) and holds a Master of Business Administration from
banking and capital markets. Presently he is the Board member of University of Oregon in the United States (1976).
Café de Coral Holdings Limited, China Everbright International Limited,
Kunlun Energy Limited, Kowloon Development Co. Ltd, Pokfulam Presently he is the Board member of Affin Islamic Bank Berhad, L.K.
Development Company Limited, Tai Ping Carpets International Limited & Associates Sdn Bhd and Pharmaniaga Berhad.
and Dalton Capital (Guernsey) Limited.
En. Mohd Suffian bin Haji Haron attended all 13 Board Meetings
Mr. Aubrey Li Kwok-Sing attended 7 out of the 13 Board Meetings held in the financial year ended 31 December 2012.
held during the financial year ended 31 December 2012.
Mr. Aubrey Li Kwok-Sing’s Alternate Director, Mr. Gary Cheng Shui Hee
was appointed on 18 April 2011. He attended 5 out of the 13 Board

YBHG. TAN SRI DATO’ SERI MOHAMED JAWHAR
Independent Non-Executive Director
Tan Sri Dato’ Seri Mohamed Jawhar, aged 68, was appointed as a
Director of AFFINBANK on 1 November 2011.
His other positions include: Independent Non-Executive Director,

Affin Islamic Bank Berhad; Chairman ISIS Malaysia, Non-Executive
Chairman, New Straits Times Press (Malaysia) Berhad; Member of
Securities Commission Malaysia; Member, Advisory Board, Malaysian
Anti-Corruption Commission; Distinguished Fellow, Institute of
Diplomacy and Foreign Relations (IDFR); Board Member, Institute
of Advanced Islamic Studies (IAIS); Chairman, Malaysian National
Committee of the Council for Security Cooperation in the Asia Pacific
(CSCAP); and Member, International Advisory Board, East West
Center, USA. He is also the Expert and Eminent Person for the ASEAN
Regional Forum (ARF).
He was also Co-Chair, Network of East Asia Think-tanks (NEAT) 2005-

2006; Chairman, Malaysian National Committee, Pacific Economic
Cooperation Council (PECC) 2006-2010; and Co-Chair, Council for
Security Cooperation in the Asia Pacific (CSCSP) 2007-2009.
He served with the government before he joined ISIS Malaysia as

Deputy Director-General in 1990. He was appointed Director-General
in March 1997 and was subsequently appointed Chairman and CEO in
2006. He was appointed Chairman ISIS Malaysia on 9 January 2010.
His positions while in government included Director-General,

Department of National Unity; Under-Secretary, Ministry of Home
Affairs; Director (Analysis) Research Division, Prime Minister’s
Department; and Principal Assistant Secretary, National Security
Council. He also served as Counselor in the Malaysian Embassies in
Indonesia and Thailand.
Tan Sri Dato’ Seri Mohamed Jawhar during his tenure attended 12
out of 13 Board Meetings held during the financial year ended 31
December 2012.

MANAGEMENT
TEAM
YBhg. Dato’ Zulkiflee Abbas En. Kamarul Ariffin Mohd Jamil En. Shariffudin Mohamad
Bin Abdul Hamid Chief Executive Officer, Affin Islamic Bank Executive Director, Operations
Managing Director / Chief Executive Officer
En. Amirudin Abdul Halim En. Idris Abd. Hamid Mr. Tan Kok Toon
Director, Business Banking Director, Consumer Banking Director, Treasury

MANAGEMENT TEAM
Mr. Ee Kok Sin Mr. Kasinathan T.Kasipillai Pn. Khatimah Mahadi

Chief Financial Officer Group Chief Risk Officer Group Chief Internal Auditor
YBhg. Dato’ Mohammad Aslam Pn. Nor Rozita Nordin En. Nazlee Khalifah
Khan Gulam Hassan Chief Human Resource Officer Chief Corporate Strategist
Chief Recovery Specialist
(Resigned w.e.f. 31.10.2012)

MANAGEMENT
TEAM Profiles
YBHG. DATO’ ZULKIFLEE ABBAS En. KAMARUL ARIFFIN MOHD en. SHARIFFUDIN MOHAMAD
BIN ABDUL HAMID JAMIL
Managing Director/ Chief Executive Officer Chief Executive Officer, Affin Islamic Bank Executive Director, Operations
Dato’ Zulkiflee Abbas bin Abdul Hamid is En. Kamarul Ariffin Mohd Jamil joined Affin En. Shariffudin Mohamad joined Affin in 2007
currently Managing Director/ Chief Executive Bank Berhad in 2003 as Head, Corporate as Director of Operations and was appointed
Officer of Affin Bank Berhad, a position held Strategy Division. In 2005, Kamarul was as Executive Director, Operations in 2009.
since April 2009. Dato’ Zulkiflee also holds appointed as Head, Islamic Banking Division.
the mandate to drive Affin Banking Group’s With the establishment of Affin Islamic Bank, Shariffudin has 25 years local and overseas
strategic and development agenda for all Kamarul was appointed as its Chief Executive experience in banking. His hands-on
entities within the group. Officer. experience covers Branch Operations, Trade
Finance, Corporate Banking, Corporate
Dato’ Zulkiflee joined AFFINBANK on 1 March Prior to AFFINBANK, Kamarul held various Relationship Management, Credit Operations,
2005 as Director of Enterprise Banking. positions at Pengurusan Danaharta Nasional Cash Management and Securities Services.
Subsequently in 2008, Dato’ Zulkiflee was Berhad, Trenergy Malaysia Berhad and His last position was Head, Project
appointed as Executive Director of Banking, Shell Malaysia Trading Sdn Bhd in various Management Services (Technology &
which encompassed both Business and capacities including business development, Operations) in a leading foreign bank and its
Consumer Banking. and strategic planning. local outsourcing subsidiary.
Dato’ Zulkiflee carries with him more than Kamarul graduated from the University of Shariffudin graduated from Southern
30 years of banking experience, both locally Cambridge in 1992 with a Bachelor of Arts Illinois University, with a Master in Business
in Malaysia and internationally in London in Economics. Administration (1981) and a Bachelor of
and New York. Dato’ Zulkiflee has assumed Science degree in Finance (1980).
pivotal roles in banking, which include
Regional Manager, Chief Credit Officer, and
Global Head of Enterprise Banking, amongst
others.
Dato’ Zulkiflee holds a Master in Business

Administration (1981) and a Bachelor of
Science degree in Marketing (1979), both
from Southern Illinois University.

MANAGEMENT TEAM Profiles
EN. AMIRUDIN ABDUL HALIM En. IDRIS ABD. HAMID mr. TAN KOK TOON
Director, Business Banking Director, Consumer Banking Director, Treasury
En. Amirudin Abdul Halim joined Affin Bank En. Idris Abd Hamid is currently Director of Mr. Tan Kok Toon joined Affin Bank Berhad
Berhad as Director, Business Banking in July Consumer Banking, a position he has held as its Head of Treasury in October 2004
2009. since May 2009. and is responsible for managing all aspects
of Treasury Division. He is currently the
Prior to AFFINBANK, Amirudin was at Malayan Idris began his career with Affin Bank Berhad Honorary Secretary of Persatuan Pasaran
Banking Group (Maybank) for more than 21 in 1994 as General Manager of Affin Finance Kewangan Malaysia (Association Cambiste
years where he gained extensive banking Berhad. He was appointed as Deputy Chief Internationale) and Chair to the Seminar and
experience in Branch Operations, Credit Executive Officer for AFFIN-ACF Finance Education Committee.
Control, Business Banking, Retail Marketing, Berhad from 2000 to 2005.
Consumer Banking and Corporate Services. Prior to AFFINBANK, Tan was with one
Idris has over 30 years of experience in the of the largest banks in Malaysia. Tan has
He has served in several senior strategic banking industry, which includes exposure more than 20 years banking experience,
roles at Maybank, including Deputy Head of as Branch Manager, and in Corporate and particularly in Treasury operations. He has
Business Banking Division, Head of Mortgage Consumer Loans management. served as Treasury Manager with the New
& Automobile Financing and as the Deputy York branch, and was Treasury Business
Chief Executive Officer of Mayban Fortis Idris graduated with a Master in Business Advisor to turnaround a business project in
Berhad (a member of the Maybank Group of Administration from the University of Northern the Philippines.
Companies). Colorado in 1984.
Tan graduated from University Malaya in 1987
Amirudin graduated with a Bachelor of Arts with a Bachelor of Science degree (honours)
degree in Finance from St. Louis University in Mathematics.
in 1986.

mr. EE KOK SIN mr. KASINATHAN T.KASIPILLAI Pn. KHATIMAH MAHADI
Chief Financial Officer Group Chief Risk Officer Group Chief Internal Auditor
Mr. Ee Kok Sin joined Affin Bank Berhad in Mr. Kasinathan T. Kasipillai joined Affin Bank Pn. Khatimah Mahadi joined Affin Bank Berhad
2005 as the Chief Financial Officer. Prior to Berhad in 2005 as its Chief Risk Officer. as Chief Internal Auditor in 2004. Khatimah
his appointment at AFFINBANK, Ee was the Kasinathan has more than 35 years of local has more than 30 years of experience in
General Manager of Finance & Services at and overseas banking experience particularly Internal Auditing.
Pengurusan Danaharta Nasional Berhad. in the areas of Risk Management. He comes
from a foreign bank background working She has led the Audit and Compliance
Ee began his career in 1982 as a Trainee in the risk function serving in a number of function in a number of financial institutions
Accountant with a firm of Chartered countries including London, Singapore, Hong which include Bank Simpanan Nasional,
Accountants in London. He has extensive Kong, Mumbai and Jakarta. Citibank Berhad, Malaysia Credit Finance,
experience in auditing, treasury functions, UAB/Bank of Commerce.
financial accounting, financial management Kasinathan holds a Masters in Business
and information technology. Administration from the University of Bath, Khatimah graduated with a Diploma in
UK and is a Certified Risk Professional Accountancy from UITM in 1978.
Ee is a Fellow Member of the Association of awarded by Bank Administration Institute,
the Chartered Certified Accountants (ACCA) Chicago, USA.
and a member of The Malaysian Institute of
Certified Public Accountants (MICPA) and Kasinathan is also an Associate Fellow of
Malaysian Institute of Accountants (MIA). Institute of Bankers Malaysia, and continues
to serve as an active member of CCP
Examination Committee.

pn. NOR ROZITA NORDIN en. NAZLEE KHALIFAH
Chief Human Resource Officer Chief Corporate Strategist
Pn. Nor Rozita Nordin was appointed as Chief En. Nazlee Khalifah joined Affin Bank Berhad
Human Resource Officer of Affin Bank Berhad in February 2009 as Head of Business Strategy
in May 2011. Prior to joining AFFINBANK, and Support, Business Banking Division.
Rozita was Executive Vice-President and Subsequently, in April 2011, Nazlee was
Head of Group Human Resources at EON appointed as Chief Corporate Strategist.
Bank Group.
Nazlee has more than 20 years’ experience
Rozita has more than 30 years’ experience in the banking industry. Prior to joining
in Human Resource Development and AFFINBANK, Nazlee was with Maybank
Customer Relations Strategy, in various for 17 years in various capacities, mostly in
industries which include banking, oil and gas, Strategic Management positions.
manufacturing, retail, and shared services.
Rozita has taken on strategic and operational Nazlee graduated from Simon Fraser
roles, both locally and abroad. University in Vancouver in 1991, with a
Bachelor degree in Business Administration,
Rozita graduated from Southern Illinois majoring in Accounting and Finance.
University with a Master of Science degree
in 1984, a Bachelor of Science in Education
and a Bachelor of Arts degree in Linguistics,
both in 1982.

Chairman’s
STATEMENT
Dear Shareholders,
On behalf of the Board of

Directors, I am pleased to
present the Annual Report and
Financial Statements for
Affin Bank Berhad for the
financial year ended
31 December 2012.

CHAIRMAN’S STATEMENT
During the year under review, Affin Bank Berhad (“AFFINBANK” or “the Bank”) registered
+14.7%
another year of strong growth in revenue and earnings. The Bank recorded a profit before
zakat and taxation of RM703.2 million, which is a growth of 14.7% compared to the
previous financial year. The Bank also registered robust growth in loans, advances and
deposits. Profit Before
Zakat & Taxation
Throughout 2012, we continued to diligently focus on growing the Bank’s business and
market presence. We launched new marketing campaigns, expanded our branch network
and further improved on customer service levels by enhancing operational efficiency and
productivity. The Bank also increased its investment in operational capabilities to support
long-term business growth, particularly in Talent Management and Information Technology
(IT).
In line with this improvement, the Board is recommending a final dividend of 6 sen per
share, subject to shareholders’ approval at the Annual General Meeting (AGM). Together
+12.2%
with the interim dividend of 9 sen per share paid, the total dividend payout will amount to Loan Growth
15 sen per share or RM227.8 million, representing a record payment.
Aside from financial performance, AFFINBANK also saw healthy organic growth in its
business operations.
We successfully opened three new branches to bring our network strength to 100
nationwide. Expanding our network is vital for further building our market presence and to
tap growing opportunities, particularly in serving the retail and SME segments in which we
already have a strong positioning.
Our O.M.G marketing campaign, O.M.G The Trilogy, now in its third year, has proven to
be most successful in growing our deposits portfolio. The campaign was one of the key
success factors towards the significant growth in the Bank’s customers and deposits.
Internally, we focused on comprehensive human capital development and talent recruitment

strategies to attract top industry talent and to retain our high performing employees. We
also emphasised on the improvement of our working and organisational culture.

The Bank continued with its implementation of 500 students from 42 secondary schools came
a structured talent and leadership development together to help reduce environmental problems.
program aimed at effective succession planning These students are all participants in “Young Voices
and strengthening the performance of operational for Conservation”, an environment education
teams via further refinement of core functional programme organised by TrEES in partnership with
competencies. AFFINBANK. The TrEES programme is supported by
the Ministry of Education and has been a successful
Information Technology (IT) continues to be a key CSR initiative in educating the community amongst
enabler for the Bank. IT is viewed as a key strategy the younger segment.
in empowering the Bank to deliver its unique
proposition and offerings faster, more conveniently As a further support to schools, AFFINBANK
and with greater customer satisfaction. sponsored the “Step Up” – NiE Pullout for Primary
Schools (organised by The Star Publications) to
Besides ensuring sound financial achievements, the promote English amongst primary students. Under
Bank also measures its success on other initiatives NiE, The Star newspapers will be distributed to
to reinforce the positive image of our brand. 2012 selected schools for students years Four, Five and
was also a year where AFFINBANK made a bigger Six. The objective of this program is to contribute to
contribution to Corporate Social Responsibility the community by helping students explore a more
(CSR) initiatives. creative and innovative way of learning through the
use of newspapers.
For the second consecutive year, the Bank
participated as the main sponsor for the Treat Every Reaching out to the poor, we supported BHPetrol’s
Environment Special (TrEES) programme. Rallying initiative of the production and airing of a TV
to the call to help protect the environment, over programme called ‘Di Celah-Celah Kehidupan’ on
+12.9%
Customer
Deposits Growth

RTM1. The programme depicts real life stories of people who Given the Bank’s sound fundamentals, our growing market
face poverty, who are disabled and old age in need of care presence and the continued improvement in efficiency and
and attention. Besides donating cash to the recipients, the productivity, AFFINBANK is in a solid position to deliver
Bank became the channel where the public can send their another year of growth and progress.
donations.
In 2013, the Bank will be focusing on industries or sectors
As in previous years, the Bank’s Educ-Aid (Scholarship with high growth potentials. As we explore new collaboration
Programme) is in its 9th year, awarding The Examination and market opportunities, we will further tap the retail and
Excellence Award to students of Bank employees who SME segment, where we have already established our brand
excelled in their PMR and SPM examinations. This year, and solutions.
AFFINBANK awarded the Examination Excellence Award
to 70 PMR and SPM achievers. The Bank also continued With more Entry Point Projects expected to be rolled
to provide scholarships to the employees’ children for their out as part of the Economic Transformation Programme
tertiary education, with a value of up to RM15,000 per year (ETP), we look forward to playing a role in the financing of
for each scholarship, up to a maximum of RM75,000 per these projects, particularly in key growth sectors such as
scholar. healthcare, education and construction.
Other CSR activities for the year include our annual On behalf of the Board, I wish to express my sincere
partnership with the National Blood Centre. A blood donation appreciation to our shareholders and business partners for
drive was held in AFFINBANK’s headquarters, where the their continued vote of confidence and support.
Bank’s employees took the time to donate blood in between
their work schedules. We also sent a team of five runners I wish to also take the opportunity to record our thanks
to The Bursa Edge Rat Race and donated to a fund which to the senior management and our employees for their
will benefit 26 charitable organisations around Malaysia. As dedication, commitment and tireless effort during the year
in previous years, we continued to support the annual “Hari under review. Their contribution has been a key driver in our
Pahlawan” or Warriors Day. continued growth and success. Last but not least, I wish to
say thank you to my fellow Board members for their counsel
Going forward, whilst we expect the upcoming financial year and stewardship in what has been a year of progress for
to present many challenges, we also see opportunities ahead. AFFINBANK.
The global economy is expected to remain sluggish and the
domestic environment is also expected to be impacted.
Further market liberalisation, new entrants and competing
products will result in a more competitive environment. Jen. Tan Sri Dato’ Seri Ismail bin Hj. Omar (Bersara)
Chairman
However, we believe that AFFINBANK will continue to
perform well in 2013.

PERFORMANCE
REVIEW
For the year under review, AFFINBANK recorded

a profit before zakat and taxation of RM703.2
million, which is a growth of 14.7% compared to
2011. The Bank has been registering consistent
growth in revenue and earnings for more than 5
years and the profit before zakat and taxation this
year is at an all-time high.
AFFINBANK’s profit after zakat and taxation grew Net interest income was recorded at RM788.7
by 19.4% from RM440.0 million in 2011 to RM525.3 million compared to RM784.9 million in 2011. Islamic
million in 2012. Total Assets reached RM52.1 billion banking income grew by 14.8% to RM216.8 million
in 2012, which is a growth of 5.8% compared to from RM188.8 million in the previous year.
RM49.2 billion in the previous financial year.
The Bank’s growth was tempered with fiscal prudence
The Bank also successfully achieved its target of in ensuring that asset quality was not compromised
double digit loans growth for 2012. During the year, in the pursuit of loans growth. Asset quality remained
gross loans and advances grew by 12.2%. Return- resilient with a lower net impaired loan ratio of 1.1%
on-Equity (ROE) after tax was 14.1% while Cost-to- in 2012 compared to 1.3% in 2011.
Income ratio was recorded at 45.2%. The Bank also
continued to grow its total deposit portfolio by 12.9% Operational Highlights
in 2012 from RM36.5 billion in 2011 to RM41.3 billion
in 2012. In line with growing the Bank’s presence in key
population areas, AFFINBANK opened three new
branches in Selangor – Bangi, Klang and Cyberjaya.
This brings our branch network strength to 100
nationwide.
+19.4% +5.8% The move to launch new branches is aimed to

increase our brand visibility, improve our accessibility
Profit After Total Assets to customers and to establish a credible presence
Zakat & Taxation in key population areas that offer exciting growth
potential. The goal is to provide AFFINBANK
products and services in locations which are within
easy reach and convenient in fast expanding towns
and communities.

PERFORMANCE REVIEW
14.1% 13.65% 45.2%

Return On Risk Weighted Cost To
Equity Capital Ratio Income Ratio
As customers’ financial needs evolve and grow In collaboration with Permodalan Nasional Berhad
in sophistication, they would require new and (PNB), AFFINBANK also launched its 24-hour, online
comprehensive offerings. By being closer to these ASNB Top-Up facility on 31 May 2012. AFFINBANK
target groups, AFFINBANK can offer its financial is one of only four banks in Malaysia to offer online
solutions to them and ultimately tap this market additional ASNB funds subscription and only the
segment effectively. second bank to provide a 24-hour service facility.
The most significant of these new AFFINBANK This is in line with the Bank’s objective of leveraging
branches is the Bandar Bukit Tinggi (Klang) operation. on digital technology to take customer service to a
This is the Bank’s fourth ‘all under one roof’ branch, new level, to make banking as easy as possible for
offering a complete portfolio of financial services and customers, while offering new services and initiatives
solutions, targeting the business community from that provide them with better access to a wider
the busy Port Klang area and a prominent shopping spectrum of online transaction options. AFFINBANK
centre. is also empowering investors to manage their own
investment portfolio.
The Bandar Bukit Tinggi Branch offers financial
services from both AFFINBANK and Affin Investment Through the 24-hour top up service, the Bank is also
Bank Berhad. fulfilling its mandate of encouraging Malaysians to
participate in the corporate sectors and equities
In addition to these new branches, three other market.
branches were relocated to Ara Damansara,
Puchong and Muar while 15 additional off-site ATMs As in previous years, the focus on IT has continued to
were installed for easier accessibility and customer yield results – enabling the Bank to work faster and
convenience. more effectively with improved turnaround time and
security, better customer service levels, facilitation of
Building on the success of the O.M.G. deposit more strategic decision-making and other benefits.
campaigns from previous years (O.M.G and O.M.G
It’s Back!), AFFINBANK launched O.M.G The Trilogy One of the two areas where this was evident in 2012
from July to December 2012. was the launch of a new Loan Origination System
to enable faster turnaround time in processing of
The campaign targeted new and existing loans applications. The other was the enhancement
conventional and Islamic Savings, Current and to the Retail Internet Banking and Corporate
Fixed Deposit Account holders while encouraging Internet Banking systems to improve the functional
customers to save more with the Bank. With the O.M.G capabilities for customers’ convenience during
campaign and other marketing promotions, the Bank online transactions.
recorded a healthy growth in deposits in 2012.
A robust risk management framework is in place
The campaign also created plenty of excitement and to balance the expected competitive market
brand awareness for the Bank. The attractive prizes environment with business growth strategies.
offered proved to be a major enticement in attracting
and retaining customers.

PERFORMANCE REVIEW
Besides stringent loan monitoring processes, a HR and Talent Management

Special Early Alert Committee was formed to track
the loan portfolio of the Bank. There are also credit During the year, AFFINBANK continued to
clinics and other credit related talks to inculcate a focus on the development of its human capital.
risk awareness culture amongst the employees of This was achieved through a structured talent
the Bank. and leadership development program, which
emphasises on succession planning and enhancing
Recognised for Excellence team performance via development of functional
competencies.
2012 also saw AFFINBANK garnering several awards.
These include the Top 30 Most Valuable Brands by The Leadership Development Program (LDP) is
the Association of Accredited Advertising Agents implemented at all levels from junior to senior
(4As) and the Best of Malaysia Service to Care management to inculcate new mindsets and
Champion in the category of Conventional Bank with behavioural capabilities in view of developing
assets less than USD20 billion. potential leaders to undertake greater roles and
responsibilities within the Bank.
The latter was awarded by MarkPlus Insight in
conjunction with the Philip Kotler and the Christopher In nurturing young talent, the Affin Management
Lovelock Centre for Services Marketing. This Award Training Programme (AMP) continued to be an
is given in recognition of best performers and effective tool in developing our human capital pool
companies with best practices in customer service and identifying the future leaders of the Bank.
and customer care in the ASEAN region.
Prospects & Outlook
During the inaugural Service to Care Award in
2011, AFFINBANK was also awarded the Malaysia Moving into 2013, the Bank’s robust financial position
Service To Care Champion for Customer Satisfaction together with new emerging market opportunities
(Category: Conventional Bank with assets below present bright prospects going forward.
USD20 billion).
In growing its business, AFFINBANK will continue to
These recognitions in customer service excellence emphasise key business drivers such as growing its
re-enforces the Bank’s commitment to continuously loans and advances as well as customer deposits.
improve our service levels and our relationships with The Bank waits in much anticipation for its 101st
customers. We wish to thank all our customers for branch opening, which will be a major milestone. In
their endearing support. addition, the success of the O.M.G campaigns will
be built on further to grow AFFINBANK’s presence
in the market. This will be supported by more
innovative product offerings that appeal to the retail
and commercial segments.

FINANCIAL
HIGHLIGHTS
Earnings Per Share (Eps) Profit Before Zakat And Taxation Total Assets
(Sen) (Rm’million) (Rm’billion)
454.6
425.1
521.9
613.1
703.2
23.0
22.1
26.5
30.6
35.0
33.0
35.6
42.1
49.2
52.1
08 09 10 11 12 08 09 10 11 12 08 09 10 11 12
AFFINBANK’s EPS for the financial year AFFINBANK achieved profit before zakat and AFFINBANK’s financial position as at 31
ended 31 December 2012 stood at 35.0 sen taxation of RM703.2 million, a commendable December 2012 continued to remain strong
compared to 30.6 sen the year before. 14.7% rise for the year ended 31 December with total assets of RM52.1 billion, an increase
2012, compared to RM613.1 million in 2011. of 5.8% compared with RM49.2billion as at
AFFINBANK’s profit after zakat and taxation 31 December 2011.
also rose by 19.4% to RM525.3 million for
the year ended 31 December 2012.
Net Loans, Advances & Financing Deposits From Customers Shareholders’ Equity
(Rm’billion) (Rm’billion) (Rm’billion)
19.5
22.0
26.0
29.7
33.5
25.2
26.4
31.0
36.5
41.3
2.7
3.0
3.3
3.6
4.1
08 09 10 11 12 08 09 10 11 12 08 09 10 11 12
AFFINBANK’s net loans, advances and Total deposits increased by 12.9% year-on- Total shareholders’ equity of AFFINBANK
financing grew by 12.77% to RM33.5 billion year to RM41.3 billion as at 31 December increased by 14.36% to RM4.1 billion from
compared with RM29.7 billion in 2011, as 2012, in correspondence to AFFINBANK’s RM3.6 billion the year before.
economic activities and demand for credit loan growth.
gathered momentum during the year under
review.

CORPORATE
DIARY
18 January 2012 16 March 2012 20 March 2012
AFFINBANK holds its OMG It’s Back! prize AFFINBANK sponsors RM70,000 for AFFINBANK hosts ‘An Evening of Splendour’
giving ceremony, where Suzi Zuliana Zalekan Lembaga Tabung Haji’s “Wirid Terpilih untuk as a form of appreciation towards its top
won a Volkswagen Golf GTI and RM300,000 Dhuyufurrahman”, a book to be distributed to valued corporate and consumer clients.
cash deposit. Second prize winner, Mardziiah pilgrims during their stay at the Holy land.
Mansor drove away a Toyota Prius and
RM120,000 whereas third prize winner Liew
Yen Fui took home a Perodua Myvi and
RM60,000.
16 April 2012 24 April 2012 21 May 2012
Partnering with the National Blood Centre, AFFINBANK sponsors RM100,000 to Majlis AFFINBANK and AFFIN INVESTMENT
AFFINBANK holds a blood donation drive Bekas Wakil Rakyat Malaysia (MUBARAK) officially and jointly opens its doors, offering
to encourage a joint effort between its staff to support the launch of the book, “100 an ‘all under one roof’ branch of financial
and customers in meeting their roles as Wira Negara”. It is a form of recognition services and solutions to the growing 80,000
conscious citizens and humanitarians. and appreciation for the heroes and icons in residents of Bandar Baru Bukit Tinggi.
various fields and institutions that had great
impact on national development.

CORPORATE DIARY
31 May 2012 4 June 2012 June – November 2012

In collaboration with Permodalan Nasional In a bid to support deserving youths in Rallying to the call to help protect the
Berhad (PNB), AFFINBANK officially achieving their dreams, AFFINBANK rewards environment, over 500 students from 42
launches its new 24-hour online service – the Examination Excellence Award to a total secondary schools come together to help
Amanah Saham Nasional Berhad (ASNB) of 70 PMR and SPM achievers, as well as reduce environmental problems at their
Funds Additional Top Up via its website award scholarships to deserving students to schools. These students are all participants
affinOnline.com, placing AFFINBank pursue their tertiary education. in “Young Voices for Conservation”, an
amongst the four main banks in Malaysia to environment programme by Treat Every
provide this service to the public. Environment Special (TrEES) in partnership
with AFFINBANK.
10 July 2012 3 August 2012 3 November 2012
AFFINBANK sponsors The Star’s Step-Up 160 orphans and 30 new Muslim converts AFFINBANK holds a colourful come-one-
NiE, a pullout for primary schools, distributed from the Klang Valley area enjoy a hearty and-come-all ‘Jom Karnival’ for its newly
to selected schools and caters specifically ‘buka puasa’ feast at AFFINBANK’s opened 100th branch in Cyberjaya.
for students year Four, Five and Six. The headquarters, Menara Affin. The board of
objective of this program is to contribute to directors, management staff, AFFINBANK
the community by helping students explore a and AFFIN ISLAMIC employees get to know
more creative and innovative way of learning the orphans and newly converts on a more
through the use of newspapers. personal level.

Statement of
Corporate Governance
The Board of Directors of AFFINBANK (“Board”) and Management appreciate the importance of adopting high standards of
Corporate Governance in all areas of its business towards enhancing business prosperity and corporate accountability with
the ultimate objective of safeguarding the interest of shareholder’s value. The Board takes cognizance of the Malaysian Code
on Corporate Governance 2012 (MCCG 2012) issued by the Securities Commission Malaysia. The Board and Management
are fully committed and constantly strive to ensure that the MCCG 2012 and Bank Negara Malaysia (BNM) Guidelines
on Corporate Governance for Licensed Institutions (Revised BNM/GP1) are adopted and practised throughout the group.
This is important so as to ensure that AFFINBANK is managed safely and soundly; where risks and business prudence are
appropriately balanced so as to maximize shareholder’s return and to protect the interests of all stakeholders. Throughout
2012 and to date, AFFINBANK continues to conduct its business with integrity and exercises a high level of transparency
and objectivity.
The Board and Management are fully committed in ensuring employees adhere closely to BNM’s Guidelines (BNM/GP7) on
Code of Ethics (“COE”), which aims at instilling the five values namely discipline, integrity, humility, caring and creativity in
AFFINBANK and its employees. The Board and Management set high ethical business standards and practices for business
conduct and the code of behaviour for employees to adhere to. In addition to the COE, all Directors are also required
to observe the Directors’ COE. The responsibility for implementation of COE policies and guidelines rests primarily with
Management, oversights by the Audit & Examination Committee. Good Corporate Governance is the foundation of the
culture and business practices of AFFINBANK.
The following statements set out the commitment of AFFINBANK in applying good Corporate Governance principles and the
extent of compliance with the recommended best practices.
1. Board of Directors
The Board is committed in establishing and enhancing shareholder’s value in the long term. The Board is pleased to
report that, to its best efforts and knowledge, has complied with the principles and the best practices of the Code
throughout the financial year under review.

The Board of AFFINBANK has a balance composition with a strong independent element. It consists of representatives
from the private sector with suitable qualifications fulfilling the fit and proper criteria, a mixture of different skills,
competencies, experience and personalities. Directors’ profiles which appear on pages 16 to 19 reflect clearly the depth
and diversity in expertise and perspective to lead AFFINBANK as well as to allow for an independent and objective
analysis of major issues.
Board’s Responsibilities
The Board acknowledges its roles and responsibilities for the overall performance of AFFINBANK.
The Board’s responsibilities remain within the framework of BNM Guidelines and AFFINBANK’s Board Policy Manual. The
Board also exercises great care to ensure that high ethical standards are upheld, and that the interests of stakeholders
are not compromised. These include responsibility for determining AFFINBANK’s general policies and strategies for the
short, medium and long term, approving business plans, including targets and budgets, and approving major strategic
decisions.

STATEMENT OF CORPORATE GOVERNANCE
In carrying out its functions, the Board has delegated specific responsibilities to other Board Committees, which operate
under approved terms of reference, to assist the Board in discharging its duties. The Board Committees report on the
outcome of their meetings to the Board and any further deliberation is made at Board level, if required. Reports and
deliberations are incorporated into the Minutes of the Board meetings. The various Committees are listed below:-
Board Remuneration Committee (“BRC”)
The BRC is responsible for providing a formal and transparent procedure for developing the remuneration policy
for Directors, Managing Director/Chief Executive Officer and key senior management personnel. BRC is to ensure
that compensation is competitive and consistent with AFFINBANK’s culture, objectives and strategies. BRC obtains
advice from experts in compensation and benefits, both internally and externally.
Board Nominating Committee (“BNC”)
The BNC is responsible for providing a formal and transparent procedure for the appointment of Directors and
Managing Director/Chief Executive Officer and key senior management personnel. BNC assesses the effectiveness
of individual Director, the Board as a whole and the performance of the Managing Director/Chief Executive Officer
and key senior management personnel.
Board Risk Management Committee (“BRMC”)
The BRMC is responsible for overseeing management’s activities in managing credit, market, liquidity, operational,
legal and other risks and to ensure that the risk management process is in place and functioning.
Board Loan Review and Recovery Committee (“BLRRC”)
The BLRRC is responsible in providing critical review of loans and other credit facilities with higher risk implications,
after due process of checking, analysis, review and recommendation by the Credit Risk Management function, and
if found necessary, exercise the power to veto loan applications that have been approved by the Group Management
Loan Committee.
Audit & Examination Committee (“AEC”)
The AEC is responsible for providing oversight on reviewing the adequacy and integrity of the internal control
systems and oversees the work of the internal and external auditors.
Board Composition and Balance
The Board consist of seven (7) Non-Executive Directors with one (1) Alternate Director; four (4) are Independent Non-
Executive Directors and three (3) are Non-Independent Non-Executive Directors. All Directors met the criteria set by the
BNM guidelines.
Board meetings are presided by a Non-Independent Non-Executive Chairman whose role is clearly separated from the role
of the Managing Director/Chief Executive Officer. The Chairman is responsible for ensuring the effectiveness and smooth
functioning of the Board, the governance structure, independence and inculcate a positive culture in the Board.
The Board comprises Directors who, as a group, provides a mixture of core competencies such as finance, accounting,
business, management, marketing, information technology and investment management, which are essential for the
effective functioning and discharging of responsibilities by the Board.
The Managing Director/Chief Executive Officer is responsible for the overall day-to-day business affairs of AFFINBANK
while providing strong leadership in the implementation of Board decisions.

AFFINBANK’s Board composition possesses a strong element of independence by having majority Independent Directors.
Although all the Directors have an equal responsibility for the Group’s business directions and operations, the role of
these Independent Non-Executive Directors are particularly important in ensuring that the strategies proposed by the
management are fully discussed and evaluated, having considered the long term interests of AFFINBANK’s objectives.
No individual or small group of individuals dominates the Board’s decision making process.
Independence and Conflict of Interest
It is the Directors’ responsibility to declare whether they have a potential or actual interest in any transaction of
AFFINBANK. Where issues involve conflict of interest, the interested Directors abstained from discussing or voting on
the matter.
Appointments and Re-election to the Board

In 2012, BNM approved the re-appointment of two (2) Independent Non-Executive Directors. In accordance with the
Company’s Memorandum and Articles of Association, one-third (1/3) of the Directors, or, if their number is not three (3)
or a multiple of three (3), the number nearest to one-third (1/3), shall retire from office at each Annual General Meeting
and they may offer themselves for re-election.
Directors’ Training
All newly appointed Non-Executive Directors are furnished by AFFINBANK with copies of the BNM Guidelines, the
Banking and Financial Institutions Act 1989 and other relevant legislation governing the banking industry to facilitate
their understanding and requirements of banking business. All Directors have attended various training programmes
organised internally as well as externally by the relevant authorities such as BNM, Securities Commission (“SC”) and
Companies Commission of Malaysia (“CCM”). In addition, the members of the Board keep abreast with the relevant
developments in business, banking and finance industry as well as new regulatory requirements on a continuous basis
via various conferences, seminars and training programmes organised within the Group and by other external organisers.
The development and training programmes attended by the Directors during the financial year ended 31 December 2012
are set out below.
Director Trainer/Organiser Course Title Date
Jen Tan Sri Dato’ Seri 1. INCEIF/IQRA(MARA) Seminar Wakaf : Penjana 14 February 2012
Ismail bin Haji Omar Pembangunan
(Bersara)
2. Asian World Summit Sdn Bhd 4th Annual Corporate Governance 5 March 2012 &
Summit 6 March 2012
3. Fleming Gulf India Ltd 2nd Annual World Islamic Finance 27 March 2012 &
Conference 2012, London UK 28 March 2012
4. Malaysian Institute of Defence Putrajaya Forum 2012 – Enhancing 17 April 2012 to

& Security Multilateralism for Regional 19 April 2012
Defence and Security
5. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012

PricewaterhouseCoopers (a) Basel
III (b) PWC Banking Banana Skin
Survey (c) Accounting and Other
Regulatory Updates (d) Future
Trend in Banking
6. ICLIF ICLIF Leading Voices – Creating 10 May 2012

Cross-Border Champions Program
by Fons Trompenaars

7. FIDE Official Launch of FIDE Forum 2012 12 June 2012

and Talk by Mr Youssef A Nasr
“Corporate Governance…. Should I
Take It Seriously?”
8. Affin Investment Bank Berhad Politics & Business: The Malaysian 28 June 2012
Connection
9. Affin Holdings Berhad Half Day Forum on Islamic Banking 5 September 2012
by Assoc. Prof Dr Asyraf Wajdi and
Assoc. Prof Dr Said Bouhrouea
10. Affin Holdings Berhad Half Day Talk on “Rebuilding Trust 8 October 2012
in the Financial Sector” by John
Zinkin
11. FIDE Breakfast Talk on Global Consumer 9 October 2012

Banking Survey 2012 – “The
Customer Takes Control” by Ernst
& Young
Tan Sri Dato’ Seri Lodin bin 1. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012
Wok Kamaruddin PricewaterhouseCoopers (a) Basel
Trend in Banking
2. FIDE Official Launch of FIDE Forum 2012 12 June 2012

and Talk by Mr Youssef A Nasr
“Corporate Governance…. Should I
Take It Seriously?”
3. Affin Investment Bank Berhad Politics & Business: The Malaysian 28 June 2012
Connection
4. FIDE/ICLIF FIDE Forum – Breakfast Talk on 14 August 2012

“Human Capital Management in the
Boardroom”
Zinkin
7. FELCRA Berhad Delivered Corporate Talk on 19 December 2012

“Diversification for Future
Sustainability: Boustead Holdings
Berhad Experience” Senior
Management and Officers of
FELCRA Berhad

Dr. Raja Abdul Malek bin 1. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012
Raja Jallaludin PricewaterhouseCoopers (a) Basel
Trend in Banking
3. FIDE The Nomination/ Remuneration 13 September 2012 &

Committee Program 14 September 2012
Zinkin
Tan Sri Dato’ Sri Abdul Aziz 1. Fleming Gulf India 2nd Annual World Islamic Finance 27 March 2012 &
bin Abdul Rahman Conference 2012, London UK 28 March 2012
2. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012

PricewaterhouseCoopers (a) Basel
Trend in Banking
3. FIDE/ICLIF ICLIF Leading Voices – Creating 10 May 2012

Cross-Border Champions Program
by Fons Trompenaars
4. FIDE/ICLIF FIDE Elective Program: ICAAP 2 July 2012 &

Program 3 July 2012
Zinkin
Mr. Aubrey Li Kwok-Sing 1. Towers Watson Latest Trends in Executive 3 February 2012
Compensation, Hong Kong
2. PricewaterhouseCoopers Board Effectiveness : What Works 8 February 2012

Best, Hong Kong
3. KPMG What’s around the corner in 2012, 15 March 2012

Hong Kong
4. PricewaterhouseCoopers Board Effectiveness: Factors for 20 June 2012

the Long-term Strategy in the
Financial Services Industry
(also relevant to other industries),
Hong Kong
5. KPMG 1. Corporate Governance 25 June 2012

• The draft revised UK CG Code
• 10 CG Themes for 2012
• Whistleblowing
• Crisis Management
2. Regulatory Changes
3. Audit Committee focus areas
4. Anti-Money laundering and
Fraud Hong Kong

6. HK Institute of Directors/ Update on HK Listing Rules and 19 September 2012

Kowloon Development Corporate Governance Code,
Hong Kong
7. HK Institute of Directors Bank Board effectiveness in light of 22 September 2012

the Financial Crisis, Hong Kong
8. HK Institute of Directors Internal Control, Hong Kong 11 October 2012
9. HK Institute of Directors/ Anti-Money Laundering, 31 October 2012

Kowloon Development Hong Kong
10. Mr. Gavin Nesbitt, Deacon/ New Statutory Regime for 22 November 2012
BEA Disclosure of Inside Information,
Hong Kong
11. Deloitte INED Workshop The regulator’s View of INEDs, 29 November 2012
Hong Kong
12. KPMG INED Forum The Audit Committee agenda; 10 December 2012
Information Governance; Taxation
update; Financial reporting preview;
Legal Developments, Hong Kong
13. PricewaterhouseCoopers / Corporate Governance, Hong Kong 11 December 2012

Café de Coral Holdings
14. Mayer JSM/CdC, Disclosure of Inside Information 11 December 2012

Hong Kong
15. HK Institute of Directors/ How to run effective meetings, 12 December 2012

Kowloon Development Hong Kong
Mr. Gary Cheng Shui Hee 1. FIDE/ICLIF Leadership & FIDE Core Program 2012 Group 1 – 19 March 2012
(Alternate Director Mr. Governance Mr Gary Cheng Shui Hee (Module 1)
Aubrey Li Kwok-Sing) 18 June 2012 to 21
June 2012 (Module 2)
En. Mohd Suffian bin Haji 1. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012
Haron PricewaterhouseCoopers (a) Basel
Trend in Banking
Zinkin
Tan Sri Dato’ Seri 1. Affin Holdings Berhad Half Day Talk by Messrs 2 May 2012
Mohamed Jawhar bin PricewaterhouseCoopers (a) Basel
Hassan III (b) PWC Banking Banana Skin
Trend in Banking
Zinkin

Meeting and Supply of Information to the Board
Board meetings for each financial year are scheduled in advance to enable the Directors to plan their schedules.
The Board meets on a scheduled basis at least eleven (11) times a year. Additional meetings are convened when
necessary to review progress reports on AFFINBANK’s financial performance, approved strategies, business plans and
significant policies as well as to consider business and other proposals which require the Board’s approval. For Financial
year ended 31 December 2012, thirteen (13) Board meetings were held. Meetings are usually held at the Bank’s Board
Room at 19th Floor, Menara Affin, 80, Jalan Raja Chulan, 50200 Kuala Lumpur.
Board meetings are conducted in accordance to a planned agenda. Board Members are provided with the agenda
together with relevant documents and information in a form and of an appropriate quality in advance of each Board
meeting. This is to facilitate the Directors to peruse the Board papers and seek clarifications that may require from the
Management or the Company Secretary well ahead of the meeting date. Urgent papers may be presented for tabling at
the Board meetings under supplemental agenda.
The Board monitors AFFINBANK’s performance by reviewing the monthly Management Report, which provides a
comprehensive review and analysis of AFFINBANK’s operational and financial issues. In addition, the Minutes of the
various Board Committees and Management Committee meetings and other issues are also tabled and considered by
the Board.

Procedures are in place for Directors to seek independent professional advice at AFFINBANK’s expense. AFFINBANK
also provides the Board full access to necessary materials and relevant information including the services of the Company
Secretary in order for the Board to fulfill their duties and specific responsibilities.
2. Directors’ Remuneration
Composition
AFFINBANK acknowledges the importance of attracting and retaining the right calibre of Directors with the necessary
skills, qualifications and experience for effective Board oversight of AFFINBANK’s business activities and affairs.
The make-up of the Managing Director/Chief Executive Officer’s remuneration remained unchanged consisting of salary,
allowances, bonus and other customary benefits as appropriate. Any salary review, takes into account market rates and
the performance of the individual and of AFFINBANK.

Non-executive Directors’ emoluments consist of three components – an annual fee as a Board member, an allowance
for attendance of meetings and a committee fee. The Directors’ fees, allowances and committee fees are those
recommended by the Board and in line with Affin Holdings group of companies.
Directors’ emoluments are disclosed in the relevant note to the financial statements as an aggregate sum, in conformance
to the relevant legislation.
3. Shareholder
AFFINBANK is a wholly owned subsidiary of Affin Holdings Berhad, a company listed on Bursa Malaysia Securities
Berhad.
4. Annual General Meeting (“AGM”)
The Annual Report and financial statements for the year ended 31 December 2011 were tabled at the 36th AGM on 21
March 2012. Likewise the Annual Report and financial statements for the year ended 31 December 2012 will be tabled
at the 37th AGM on Monday, 25 March 2013.

Statement on
INTERNAL CONTROL
INTERNAL CONTROL
AFFINBANK has a well-established and fully operational risk management and internal control system. The Statement on Internal
Control, which is set out in the Annual Report provides an overview on the risk management process/framework as well as on how
the internal control system has been designed to manage risks and avert failures. AFFINBANK continues to enhance its system of
internal control and risk management, in order to better quantify its compliance with the Code.
The Board has overall responsibility for maintaining the proper management and protection of AFFINBANK’s interests by
ensuring effective implementation of the risk management policy and process, as well as adherence to a sound system
of internal control, and by seeking regular assurance on their effectiveness. The Board also recognizes that risks cannot
be eliminated completely. As such, the inherent system of internal control is designed to provide a reasonable though not
absolute assurance against the risk on material errors, fraud or losses occurring.
The Audit & Examination Committee has an oversight responsibility for the adequacy and integrity of the internal control
system. Reliance is placed on the results of independent audits performed primarily by Group internal auditors, the outcome
of statutory audits on financial statements conducted by external auditors and on representations by Management based on
their control self-assessment on all areas of their responsibility.
Minutes of Audit & Examination Committee meetings, which provide a summary of the proceedings, are circulated to Board
members for notation and discussion.
AFFINBANK has an established Group Internal Audit Division which reports functionally to the Audit & Examination Committee
and administratively to the Managing Director/ Chief Executive Officer. The division is responsible for conducting independent
audits in accordance with the approved annual Internal Audit Plan.
RELATIONSHIP WITH AUDITORS
A professional and transparent relationship continues to exist between the Board/Audit & Examination Committee and the
external auditors. The Audit Committee is authorized to communicate directly with both the external and Group internal auditors.
A full Audit Committee report outlining its role in relation to the Auditors is also set out in the Annual Report. In addition, the
external auditors meet with the Board at least once a year when the annual audited financial statements are presented to the
Board.
ASSURANCE
The Board through the Audit & Examination Committee has satisfactorily performed its oversight role in ensuring there
is a sound internal control system and regular review on the adequacy and integrity of the system. Assurance on the
effectiveness of risk management, control and governance process is obtained from the Management and Auditors (internal
and external).
BNM auditors, Group internal auditors and external auditors conduct independent audits on AFFINBANK’s business
operations, support activities and financial records and statements respectively to derive an opinion on the adequacy and
integrity of AFFINBANK’s overall internal control framework.
Finally, with the benefit of the above assurances and the external auditor’s comments incorporated in their audit report to
the financial statements for the financial year ended 31 December 2012, the Board is able to conclude that AFFINBANK
conducts its business prudently and in line with good governance practices.

STATEMENT ON INTERNAL CONTROL
Responsibility
The Board acknowledges overall responsibility for AFFINBANK Group’s system of internal controls and its effectiveness. The
system of internal controls encompasses controls relating to financial, operational, risk management and compliance with
applicable laws, regulations, policies and guidelines.
However, the system of internal controls is designed to manage rather than eliminate the risks of failure to achieve the
goals and objectives of the Group. Therefore, it can only provide a reasonable and not absolute assurance against material
misstatement of management and financial information, or against financial losses or fraud.
The Board has an established process for identifying, evaluating, managing and reporting all significant risks that may impact
the achievement of business goals and objectives of the Group. The system of internal controls is dynamic and updated from
time to time to meet the changes in regulatory guidelines and business environment. This process is regularly reviewed by the
Board through its Board Risk Management Committee (BRMC) and Audit and Examination Committee (AEC).
The Board is of the view that the system of internal controls in place for the year under review is sound and sufficient to
safeguard the investment of the shareholders, the interest of the customers and regulators, and the assets of the Group.
The management assists the Board in implementing the policies approved by the Board, implementing risk and control
procedures, and developing, operating and monitoring internal controls to mitigate and control identified risks.
Key Internal Control Processes
The key processes put in place to assist the Board in reviewing the adequacy and integrity of the system of internal controls
include the following:
• Relevant Board committees are established with specific responsibilities delegated by the Board to deliberate on matters
within the respective scope of responsibility. The committees are guided by written terms of reference and their minutes
of meetings are tabled to the Board.
• The BRMC assists the Board in its supervisory role concerning the overall management of risk in the Bank. It has
responsibility for reviewing and approving all risk management policies and risk management methodologies. BRMC
also reviews guidelines and portfolio management reports including risk exposure information.
• The Board Loan Review and Recovery Committee (BLRRC) critically reviews loans and other credit facilities with higher
risk implications, after due process of checking, analysis, review and recommendation by Group Risk Management and
if found necessary, exercise the power to veto loan applications that have been approved by the Group Management
Loan Committee (GMLC). BLRRC also reviews the non performing loan reports presented by the Management.
• Group Management Committee (GMCM), comprising the senior management team, assists the Board in managing
day-to-day operations and ensure its effectiveness. GMCM formulates tactical plans and business strategies, monitors
the Bank’s overall performance and ensures that the activities are in accordance with corporate objectives, strategies,
policies and annual business plan and budget.
• The Group Management Loan Committee (GMLC) is established within senior management to approve complex
and larger loans and workout recovery proposals beyond the delegated authority of the concerned individual senior
management personnel of the Bank. The other committees comprising senior management include Asset & Liability
Management Committee (ALCO) which manages market and liquidity risks and Group Operational Risk Management
Committee (GORMC) which manages operational risk.

STATEMENT ON INTERNAL CONTROL
• A detailed budgeting process is in place with annual business plans and budgets prepared by the business divisions,
reviewed by the GMCM and approved by the Board. The actual business performances are monitored against the
approved targets and budgets of each business division by GMCM on a monthly basis.
• The business plan is supported by an annual credit plan, prepared by Group Risk Management and approved by
BRMC. The credit plan sets out the prevailing risk appetite and provides credit strategies and lending guidelines for the
development and management of new and existing customer relationships.
• Policies and procedures for key processes are documented and regularly updated to ensure relevance and compliance
with internal controls, directives, laws and regulations. To enhance risk culture and awareness, road shows are undertaken
by Group Risk Management across the Bank.
• Proper guidelines for the hiring and termination of employees, staff training programs and performance appraisals are
established and other relevant procedures in place to ensure staff are adequately trained and equipped to carry out their
responsibilities competently.
• An integrated risk management framework is in place. The risk management function operates in an independent
capacity and is a part of the Bank’s senior management structure which works closely as a team in managing risks to
enhance stakeholders’ value. Its responsibilities extend to cover market, liquidity, credit and operational risks. The risk
management function reports to BRMC.

AUDIT AND
EXAMINATION COMMITTEE
TERMS OF REFERENCE OF THE AUDIT AND EXAMINATION COMMITTEE
Size and Composition
The Committee shall consist of at least three (3) members, appointed by the Board from amongst the independent non-
executive Directors of the Bank.
Meetings
Meetings shall be held at a frequency to be decided by the Audit and Examination Committee. At the request of the Group
Chief Internal Auditor, the Chairman shall convene a meeting to consider any matters that they may wish to bring to the
attention of the Directors or shareholders. A quorum shall consist of at least two (2) members. The Group Chief Internal
Auditor shall be the Secretary to the Audit and Examination Committee.
YBhg. Dato’ Sri Abdul Aziz YM. Dr. Raja Abdul Malek YBhg. Tan Sri Dato’ Seri Associate Professor
bin Abdul Rahman bin Raja Jallaludin Mohamed Jawhar bin Dr. Asyraf Wajdi bin
AEC Chairman Member Hassan Dato’ Dusuki
Member Member

AUDIT AND EXAMINATION COMMITTEE
Authority
The Committee shall have unlimited access to all records, information and documents relevant to its activities, to the Group
Internal Audit and External Auditors and to senior management of the Bank and its subsidiaries. The Group Internal Auditors
and External Auditors shall have free access to the Audit and Examination Committee and be allowed to attend and to be
heard at the Committee meetings. The Committee is authorised by the Board to obtain outside and independent professional
advice as and when it is considered necessary.
Duties and Responsibilities
The duties and responsibilities of the Audit and Examination Committee are:
1. To review AFFINBANK’s financial statements and to ensure compliance with disclosure requirements and any adjustments
as suggested by the External Auditors, prior to submission to the Board.
2. To review the reports of the Group Internal Auditor, the External Auditors, Bank Negara Malaysia examiners or any other
relevant parties and decide on actions to be taken on relevant issues raised in the reports.
3. To review with the External Auditors the scope of their audit plan, the system of internal accounting controls, the audit
reports, the assistance given by the management and its staff to the auditors, and any findings and action to be taken.
4. To make recommendation to the Board on the appointment of External Auditors.
5. To review the effectiveness and performance of the Group Internal Audit functions from time to time.
6. To review and approve the annual audit plan and budget for Group Internal Audit, which sets out the audit objectives,
auditable areas, scope of coverage, frequency of audit and duration of each audit assignment.
7. To ensure that Group Internal Audit has adequate resources and support services to carry out its functions.
8. To review the overall performance of the Group Chief Internal Auditor, including the remuneration package.
9. To review any significant related party transactions that may arise within the Bank’s group or associate companies and
report to the Board any areas of concern.
10. To escalate to the Board via minutes of meetings or special reports on any exception identified.
11. To carry out such other responsibilities as may be delegated by the Board from time to time.

NETWORK OF
BRANCHES
WILAYAH PERSEKUTUAN 7. LTAT 13. Taman Tun Dr. Ismail

Ground Floor, 47 & 49, Jalan Tun Mohd Fuad 3,
1. Bangsar Bangunan LTAT, Taman Tun Dr. Ismail,
No. 4 & 6, Jalan Bukit Bintang, 60000 Kuala Lumpur.
Jalan Telawi 3, 55100 Kuala Lumpur. Tel : 03-7727 9080
Bangsar Baru, Tel : 03-2142 6311 Fax : 03-7727 9543
59100 Kuala Lumpur. Fax : 03-2148 0586
Tel : 03-2283 5025 14. Wangsa Maju
Fax : 03-2283 5028 8. Selayang No. 2 & 4, Jalan 1/27F,
81-85, Jalan 2/3A, Kuala Lumpur Sub-Urban Centre,
2. Bangunan Getah Asli Pusat Bandar Utara, Wangsa Maju,
Tingkat Bawah, KM 12, Jalan Ipoh, 53300 Kuala Lumpur.
148, Jalan Ampang, 68100 Batu Caves, Tel : 03-4143 2814
50450 Kuala Lumpur. Kuala Lumpur. Fax : 03-4143 3095
Tel : 03-2162 8770 Tel : 03-6137 2053
Fax : 03-2162 8587 Fax : 03-6138 7122 15. Wisma Pertahanan
G.05, Tingkat Bawah,
3. Batu Cantonment 9. Seri Petaling Wisma Pertahanan,
No. 840 & 842, 10-12, Jalan Raden Tengah, Kementerian Pertahanan Malaysia,
Batu 4 3/4, Bandar Baru Seri Petaling, Jalan Padang Tembak,
Jalan Ipoh, 57000 Kuala Lumpur. 50634 Kuala Lumpur.
51200 Kuala Lumpur. Tel : 03-9058 5600 Tel : 03-2698 7912
Tel : 03-6258 7370 Fax : 03-9058 8513 Fax : 03-2698 6071
Fax : 03-6251 8214
10. Setapak WILAYAH PERSEKUTUAN
4. Central 159 & 161, Jalan Genting Kelang, PUTRAJAYA
Ground & Mezzanine Floor, P.O.Box 202,
Menara Affin, 53300 Setapak, 1. Putrajaya
80, Jalan Raja Chulan, Kuala Lumpur. Jabatan Akauntan Negara,
P.O.Box 12744, Tel : 03-4023 0455 Kompleks Kementerian Kewangan,
50788 Kuala Lumpur. Fax : 03-4021 3921 No. 1, Persiaran Perdana,
Tel : 03-2055 2222 Presint 2,
Fax : 03-2070 7592 11. Taman Maluri 62594 Putrajaya,
250 & 252, Jalan Mahkota, Wilayah Persekutuan.
5. Jalan Bunus Taman Maluri, Tel : 03-8888 3814
133, Jalan Bunus, 55100 Kuala Lumpur. Fax : 03-8889 2082
Off Jalan Masjid India, Tel : 03-9282 7250
50100 Kuala Lumpur. Fax : 03-9283 4380 WILAYAH PERSEKUTUAN LABUAN
Tel : 03-2693 4686 (OFFSHORE)
Fax : 03-2691 3207 12. Taman Midah
38 & 40, Jalan Midah 1, 1. Labuan Offshore
6. Jalan Ipoh Taman Midah, Cheras, Unit 3 (J), Level 3,
468-11 & 468-11B, 56000 Kuala Lumpur. Main Office Tower,
Batu 3, Jalan Ipoh, Tel : 03-9130 0366 Financial Park Labuan,
51200 Kuala Lumpur. Fax : 03-9131 7024 Jalan Merdeka,
Tel : 03-4042 5554 87000 Federal Territory Labuan.
Fax : 03-4042 4912 Tel : 087-411 931
Fax : 087-411 973

NETWORK OF BRANCHES
SELANGOR 6. Jalan Meru, Klang 11. Kompleks PKNS

No. 40, Pelangi Avenue, Lot G17-20,
1. Ampang Jaya Jalan Kelicap 42A/KU1, Ground Floor,
No. 11 & 11A, Klang Bandar Di Raja, Kompleks PKNS,
Jalan Mamanda 7/1, 41050 Klang, 40000 Shah Alam,
Ampang Point, Selangor. Selangor.
68000 Ampang, Tel : 03-3341 5237 Tel : 03-5510 5200
Selangor. Fax : 03-3341 5427 Fax : 03-5510 8200
Tel : 03-4257 6802
Fax : 03-4257 8636 7. Kajang 12. Kota Warisan
2 & 3, Jalan Saga, No. 48, Jalan Warisan Megah 1/4,
2. Ampang New Village Taman Sri Saga, 43900 Sepang,
No. 21G & 23G Off Jalan Sg. Chua, Selangor.
Jalan Wawasan 2/2 43000 Kajang, Tel : 03-8706 6300
Bandar Baru Ampang Selangor. Fax : 03-8706 6599
68000 Ampang, Tel : 03-8737 7435
Selangor. Fax : 03-8737 7433 13. PJ State
Tel : 03-4296 2311 No. 38 & 40,
Fax : 03-4296 2206 8. Kepong Jalan Yong Shook Lin,
6, Jalan 54, 46050 Petaling Jaya,
3. Ara Damansara Desa Jaya, Selangor.
Unit B-G-07 & B-G-08 52100 Kepong, Tel : 03-7955 0032
Block B, No. 2 Selangor. Fax : 03-7954 0012
Jalan PJU 1A/7A Tel : 03-6276 4942
Ara Damansara Fax : 03-6276 6375 14. Port Klang
47301 Petaling Jaya, Selangor No. 1, Jalan Berangan,
Tel : 03-7847 3177 9. Kinrara 42000 Port Klang,
Fax : 03-7847 2677 No. 1, Jalan TK1/11A, Selangor.
Taman Kinrara, Section 1, Tel : 03-3168 8366
4. Bandar Bukit Tinggi, Klang Batu 7 1/2, Jalan Puchong, Fax : 03-3167 2784
No 77 & 79, Jalan Batu Nilam 5, 47100 Puchong,
Bandar Bukit Tinggi, Selangor. 15. Puchong
41200 Klang, Selangor. Tel : 03-8070 3403 J-03-G, Blok J, Setiawalk
Tel : 03-3323 2822 Fax : 03-8075 8159 Persiaran Wawasan
Fax : 03-3323 2858 Pusat Bandar Puchong
10. Klang Utara 47160 Puchong,
5. Cyberjaya No. 29 & 31, Selangor.
P1-13, Shaftsbury Square Jalan Tiara 3, Tel : 03-5882 2880
Lot No. 2350, Cyber 6 Bandar Baru Klang, Fax : 03-5882 2881
Persiaran Multimedia 41150 Klang,
63000 Cyberjaya, Selangor Selangor. 16. Rawang
Tel : 03-8318 1944 Tel : 03-3342 1585 No. 33G & 35G,
Fax : 03-8318 1934 Fax : 03-3342 1719 Jln 1B, Fortune Avenue,
48000 Rawang,
Selangor.
Tel : 03-6091 3322
Fax : 03-6091 3344


NETWORK OF BRANCHES
17. Sea Park 22. USJ Taipan MELAKA

20-22, Jalan 21/12, 8A & 8B, Jalan USJ 10/1J,
Sea Park, 47610 UEP Subang Jaya, 1. Bukit Baru
46300 Petaling Jaya, Petaling Jaya, No. 7 & 8, Jalan DR1,
Selangor. Selangor. Delima Point,
Tel : 03-7875 6514 Tel : 03-8023 7271 Taman Delima Raya,
Fax : 03-7876 6020 Fax : 03-8023 9161 75150 Melaka.
Tel : 06-232 1386
18. Seri Kembangan NEGERI SEMBILAN Fax : 06-232 1579
36, Jalan PSK 3,
Pusat Perdagangan Seri 1. Gemas 2. Melaka Raya
Kembangan, No. 1 & 2, Ground Floor 200 & 201,
43300 Seri Kembangan, Laman Niaga Pernama Taman Melaka Raya,
Selangor. Kem Syed Sirajuddin Off Jalan Parameswara,
Tel : 03-8945 6429 73400 Gemas 75000 Melaka.
Fax : 03-8945 6442 Negeri Sembilan Tel : 06-283 5500
Tel : 07-948 3622 Fax : 06-284 6618
19. Subang Jaya Fax : 07-948 5022
7 & 9, Jalan SS 15/8A, JOHOR
47500 Petaling Jaya, 2. Nilai
Selangor. 5733 & 5734, Jalan TS 2/1, 1. Ayer Hitam
Tel : 03-5634 8043 Taman Semarak Phase II, No. 765, Jalan Batu Pahat,
Fax : 03-5634 8040 71800 Nilai, 86100 Ayer Hitam,
Negeri Sembilan. Johor.
20. The Curve Tel : 06-799 4114 Tel : 07-758 1100
Lot G32 & 126, Fax : 06-799 5115 Fax : 07-758 1001
Ground & First Floor,
The Curve Shopping Complex, 3. Port Dickson 2. Batu Pahat
Jalan PJU 7/8, 3 & 4, Jalan Mahajaya, No. 3 & 4, Jalan Merah,
Mutiara Damansara, P.D. Centre Point, Taman Bukit Pasir,
47820 Petaling Jaya, 71000 Port Dickson, 83000 Batu Pahat,
Selangor. Negeri Sembilan. Johor.
Tel : 03-7726 7258 Tel : 06-647 3950 Tel : 07-433 4210
Fax : 03-7727 8912 Fax : 06-647 4776 Fax : 07-433 3246
21. UiTM 4. Seremban 3. Johor Bahru

Universiti Teknologi MARA, No. 175, Jalan Dato' No. 24 & 25
Tingkat 2, Bandar Tunggal, Jalan Kebun Teh 1
Menara UiTM, 70000 Seremban, Kebun Teh Commercial City
40450 Shah Alam, Negeri Sembilan. 80250 Johor Bahru
Selangor. Tel : 06-762 9651 Johor
Tel : 03-5519 2377 Fax : 06-763 6125 Tel : 07-221 2403
Fax : 03-5510 5580 Fax : 07-221 2462

NETWORK OF BRANCHES
4. Johor Jaya 10. Segamat 4. Sitiawan

130 & 132, Jalan Ros Merah 2/17, No. 1, Ground Floor, No. 11 & 12, Taman Sitiawan 1,
Taman Johor Jaya, Jalan Nagasari 23, Jalan Lumut,
81100 Johor Bahru, Bandar Segamat Baru, 32000 Sitiawan,
Johor. 85000 Segamat, Johor. Perak.
Tel : 07-351 8602 Tel : 07-943 1378 Tel : 05-692 8401
Fax : 07-351 4122 Fax : 07-943 1373 Fax : 05-691 7339
5. Kluang 11. Tampoi 5. Taiping

503, Jalan Mersing, 49 & 51, Jalan Sri Perkasa 2/1, No. 40 & 42,
86000 Kluang, Taman Tampoi Utara, Jalan Tupai,
Johor. 81200 Tampoi, Johor Bahru, 34000 Taiping,
Tel : 07-772 4736 Johor. Perak.
Fax : 07-772 4486 Tel : 07-241 4946 Tel : 05-806 6816
Fax : 07-241 4953 Fax : 05-808 0432
6. Kulai
13 & 14, Jalan Raya, PERAK 6. Teluk Intan
Taman Sri Kulai Baru, Batu 21, 11, Medan Sri Intan,
81000 Kulai, 1. Ipoh Jalan Sekolah,
Johor. No. 1 & 3, 36000 Teluk Intan,
Tel : 07-663 9799 Ground & First Floor, Perak.
Fax : 07-663 9800 Persiaran Greentown 9, Tel : 05-621 0130
Greentown Business Centre, Fax : 05-621 0128
7. Muar 30450 Ipoh,
No. 30A & 30A-1 Perak. PULAU PINANG
Jalan Arab Tel : 05-255 0980
84000 Muar Fax : 05-255 0976 1. Bayan Baru
Johor 124 & 126, Jalan Mayang Pasir,
Tel : 06-953 2384 2. Ipoh Garden Taman Sri Tunas,
Fax : 06-953 3489 No. 27A-27A1, 11950 Bayan Baru,
Jalan Sultan Azlan Shah Utara, Pulau Pinang.
8. Mutiara Rini 31400 Ipoh, Tel : 04-644 7593
No. 28 & 30 Perak. Fax : 04-645 2709
Jalan Utama 45 Tel : 05-549 7277
Taman Mutiara Rini Fax : 05-549 7299 2. Butterworth
81300, Skudai 55-57, Jalan Selat,
Johor. 3. Lumut Taman Selat,
Tel : 07-557 0900 Tingkat Bawah, P.O.Box 165,
Fax : 07-557 1244 Kompleks Mutiara Armada, Off Jalan Bagan Luar,
Jalan Nakhoda, 12000 Butterworth,
9. Permas Jaya Pengkalan TLDM, Pulau Pinang.
23 & 25, Jalan Permas 10/2, 32100 Lumut, Tel : 04-333 1372
Bandar Baru Permas Jaya, Perak. Fax : 04-332 3299
81750 Johor Bahru, Tel : 05-683 5051
Johor. Fax : 05-683 5579
Tel : 07-386 3703
Fax : 07-386 5061

NETWORK OF BRANCHES
3. Fettes Park KEDAH 2. Kemaman Supply Base

98-G-32, Ground Floor,
Jalan Fettes, 1. Alor Setar Admin Building Block B,
Prima Tanjung Business Centre, No. 147 & 148, Kemaman Supply Base,
Tanjung Tokong, Susuran Sultan Abdul Hamid 8, 24007 Kemaman,
11200 Pulau Pinang. Kompleks Sultan Abdul Hamid, Terengganu.
Tel : 04-899 9069 Fasa 2 Persiaran Sultan Tel : 09-863 1297
Fax : 04-899 0767 Abdul Hamid, Fax : 09-863 1295
05050 Alor Setar,
4. Jalan Macalister Kedah. KELANTAN
No. 104C, 104D & 104E, Tel : 04-772 1477
Jalan Macalister, Fax : 04-771 4796 1. Jeli
10400 Pulau Pinang. No. A1 & A2, Blok A,
Tel : 04-229 1495 2. Kulim Bandar Baru Bukit Bunga,
Fax : 04-226 1530 No. 13 & 14, 11700 Bukit Bunga,
Jalan KLC Satu (1) Tanah Merah,
5. Kepala Batas Kulim Landmark Central, Kelantan.
Lot 1317 & 1318, 09000 Kulim, Tel : 09-946 8955
Lorong Malinja, Kedah Darul Aman Fax : 09-946 8954
Taman Sepakat, Tel : 04-495 5566
Off Jalan Butterworth, Fax : 04-490 4717 2. Kota Bharu
13200 Kepala Batas, 13788H & 3788I,
Seberang Prai Utara, 3. Langkawi Seksyen 13,
Pulau Pinang. 149-151, Jalan Sultan Ibrahim,
Tel : 04-575 1824 Persiaran Bunga Raya, 15050 Kota Bharu,
Fax : 04-575 1975 Langkawi Mall, Kelantan.
07000 Kuah, Tel : 09-744 5688
6. Prai Langkawi, Fax : 09-744 2202
No. 2, Tingkat Kikik 7, Kedah.
Taman Inderawasi, Tel : 04-966 4426 PAHANG
13600 Prai, Fax : 04-966 4717
Pulau Pinang. 1. Jengka
Tel : 04-399 3900 4. Sungai Petani Nadi Kota,
Fax : 04-397 9243 No. 55, Jalan Perdana Heights, 26400 Bandar Jengka,
2/2 Perdana Heights Pahang.
7. Seberang Jaya 08000 Sungai Petani, Kedah Tel : 09-466 2233
No. 10, Jalan Todak Satu, Tel : 04-422 0831 Fax : 09-466 2422
Pusat Bandar Seberang Jaya, Fax : 04-422 6675
13700 Prai, 2. Kuantan
Pulau Pinang. TERENGGANU 1, Jalan Tun Ismail,
Tel : 04-399 5881 P.O.Box 354,
Fax : 04-399 2881 1. Kemaman 25740 Kuantan,
K711-713, Pahang.
8. Wisma Pelaut Wisma IKY Naga, Tel : 09-515 7146
1A, Light Street, Jalan Sulaimani, Fax : 09-513 4027
Wisma Pelaut, 24000 Kemaman,
10200 Pulau Pinang. Terengganu.
Tel : 04-263 6633 Tel : 09-858 1744
Fax : 04-261 9801 Fax : 09-859 1572

NETWORK OF BRANCHES
3. Mentakab 3. Sandakan 4. Prince Commercial Centre

70, Jalan Temerloh, Lot No. 163 & 164, No. 1&2, Jalan Penrissen Batu 7,
28400 Mentakab, Block 18, Prima Square, Kota Sentosa, 93250 Kuching,
Pahang. Batu 4, Jalan Utara, Sarawak.
Tel : 09-278 4487 90000 Sandakan, Sabah. Tel : 082-613 466
Fax : 09-277 6654 Tel : 089-224 577 Fax : 082-629 466
Fax : 089-224 566
4. Temerloh 5. Sibu
9, Ground Floor, 4. Tawau No. 91 & 93,
Jalan Ahmad Shah, TB 281, 282 & 283, Jalan Kampung Nyabor,
28000 Temerloh, Jalan Haji Karim, 96000 Sibu,
Pahang. Town Extension II, Sarawak.
Tel : 09-296 8811 P.O. Box 630, Tel : 084-325 926
Fax : 09-296 8800 91008 Tawau, Fax : 084-325 960
Sabah.
PERLIS Tel : 089-778 197
Fax : 089-762 199
1. Kangar
A2, Taman Pengkalan Asam, SARAWAK
Jalan Alor Setar-Kangar,
01000 Kangar, 1. Bintulu
Perlis. Sub Lot 13,
Tel : 04-977 8669 Off Lot 3299,
Fax : 04-977 8566 Parkcity Commerce Square,
97000 Bintulu,
SABAH Sarawak.
Tel : 086-314 248
1. Jalan Gaya, Kota Kinabalu Fax : 086-314 206
No. 86,
Jalan Gaya, 2. Kuching
88000 Kota Kinabalu, Lot 247 & 248,
Sabah. Section 49, KTLD,
Tel : 088-230 213 Jalan Tuanku Abdul Rahman,
Fax : 088-212 476 93100 Kuching,
Sarawak
2. Kota Kinabalu Tel : 082-422 909
Lot 19 & 20, Block K, Fax : 082-257 366
Sadong Jaya Complex,
Jalan Ikan Juara 3, 3. Miri
Karamunsing, Lot 2387 & 2388,
88300 Kota Kinabalu, Block A4,
Sabah. Jalan Boulevard 1A,
Tel : 088-264 410 Boulevard Commercial Center,
Fax : 088-261 414 KM 3, Jalan Miri-Pujut,
98000 Miri,
Sarawak.
Tel : 085-437 442
Fax : 085-437 297

NOTICE OF
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT THE 37TH ANNUAL GENERAL MEETING OF AFFIN BANK
BERHAD WILL BE HELD AT THE BOARD ROOM, 19TH FLOOR, MENARA AFFIN, 80, JALAN
RAJA CHULAN, 50200 KUALA LUMPUR ON Monday, 25 MARCH 2013 AT 9.30 A.M. FOR
THE TRANSACTION OF THE FOLLOWING BUSINESS:-
Agenda:
1. To receive the Statutory Statements of Accounts for the year ended 31 December 2012 together with the Directors’ and
Auditors’ Reports thereon.

2. To declare a final single tier dividend of 6 Sen amounting to RM91,100,000.00 for the financial year ended 31 December
2012.

3. To re-elect the following Directors who retire pursuant to Article 91(a) of the Articles of Association and who, being eligible,
offer themselves for re-election:-
(a) YBhg. Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin
(b) En. Mohd Suffian bin Haji Haron

4. To consider and if thought fit, to pass the following resolutions in accordance with Section 129(6) of the Companies Act,
1965:-

(a) “That pursuant to Section 129(6) of the Companies Act, 1965, YBhg. Jen Tan Sri Dato’ Seri Ismail bin Haji Omar
(Bersara) be and is hereby re-appointed as Director of the Company to hold office until the next Annual General
Meeting”.

5. To approve Directors’ Fees.

6. To re-appoint Messrs PricewaterhouseCoopers as Auditors for the financial year ending 31 December 2013 and to authorise
the Directors to fix their remuneration.

7. To transact any other ordinary business of the Company.
BY ORDER OF THE BOARD
NIMMA SAFIRA binti KHALID

Secretary
NOTE:
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him and the proxy need not be
a member of the Company.
The instrument appointing a proxy shall be in writing under the hand of the appointor of his attorney duly authorised in writing or, if the appointor
is a corporation, either under the seal or in some other manner approved by Directors.
The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy
of such power or authority shall be deposited at the Company’s registered office at the 17th Floor, Menara Affin, 80, Jalan Raja Chulan, 50200
Kuala Lumpur, at least forty-eight (48) hours before the time appointed for holding the Meeting or adjourned Meeting as the case may be
otherwise the person so named shall not be entitled to vote in respect thereof.

Banking is
About...
Financial Statements
57 Directors’ Report
73 Statements of Financial Position
74 Income Statements
75 Statements of Comprehensive Income
76 Statements of Changes in Equity
78 Statements of Cash Flows
81 Summary of Significant Accounting Policies
100 Notes to the Financial Statements
205 Statement by Directors
205 Statutory Declaration
206 Independent Auditors’ Report
208 Basel II Pillar 3 Disclosures

DIRECTORS’
REPORT
for the financial year ended 31 December 2012
The Directors hereby submit their report together with the audited financial statements of the Group and the Bank for the
financial year ended 31 December 2012.
PRINCIPAL ACTIVITIES
The principal activities of the Bank during the financial year are banking and related financial services. The principal activities of
the subsidiaries are Islamic banking business, property management services, nominee and trustee services. Islamic banking
business refers generally to the acceptance of deposits and granting of financing under the Shariah principles. There were no
significant changes in the nature of these activities during the financial year.
FINANCIAL RESULTS
The Group The Bank

RM'000 RM'000
Profit before zakat and taxation 703,229 595,555
Zakat and taxation (177,963) (145,251)
Net profit for the financial year 525,266 450,304
DIVIDENDS
The dividends on ordinary shares paid or declared by the Bank since 31 December 2011 were as follows:
In respect of the financial year ended 31 December 2011 as shown in the Directors’ report for that financial year:

RM’000
Final tax exempt dividend of 5 sen per share paid on 26 March 2012 71,964
In respect of the financial year ended 31 December 2012 :-
Single-tier interim dividend of 9 sen per share paid on 24 December 2012 136,650
The Directors now recommend the payment of a final single-tier dividend of 6 sen per share amounting to RM91,100,206 which
is subject to the approval of members at the forthcoming Annual General Meeting of the Bank.
RESERVES AND PROVISIONS
All material transfers to or from reserves or provisions during the financial year are shown in the financial statements and notes
to the financial statements.

DIRECTORS’ REPORT
BAD AND DOUBTFUL DEBTS AND FINANCING
Before the financial statements of the Group and the Bank 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 financing and the making of allowance for bad
and doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and
adequate allowances made for doubtful debts and financing.
At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad
debts and financing, or the amount of the allowance for doubtful debts and financing, in the financial statements of the Group
and the Bank inadequate to any substantial extent.
CURRENT ASSETS
Before the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain
that any current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their
values as shown in the accounting records of the Group and the Bank, have been written down to an amount which they might
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 the Bank misleading.
VALUATION METHODS

At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to
the existing methods of valuation of assets or liabilities in the Group’s and the Bank’s financial statements misleading or
inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report there does not exist:
(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the
liabilities of any other person; or
(b) any contingent liability in respect of the Group or the Bank that has arisen since the end of the financial year other than in
the ordinary course of banking business or activities of the Group.
No contingent or other liability of the Group or the Bank has become enforceable, or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect
the ability of the Group or the Bank to meet their obligation 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 the financial
statements of the Group and the Bank that would render any amount stated in the financial statements misleading.

DIRECTORS’ REPORT
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and the Bank during the financial year were not, in the opinion of the Directors,
substantially affected by any item, transaction or event of a material and unusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations
of the Group or the Bank for the current financial year in which this report is made.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

There is no significant event during the financial year.
SUBSEQUENT EVENTS
There were no material events subsequent to the reporting date that require disclosure or adjustments to the financial
statements.
DIRECTORS
The Directors of the Bank who have held office during the period since the date of the last report are:
Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara)
Chairman / Non-Independent Non-Executive

Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin

Dr Raja Abdul Malek bin Raja Jallaludin

Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman

Tan Sri Dato’ Seri Mohamed Jawhar

En. Mohd Suffian bin Haji Haron

Mr Aubrey Li Kwok-Sing

Mr Gary Cheng Shui Hee
Non-Independent Non-Executive Director (Alternate Director to Mr Aubrey Li Kwok-Sing)

DIRECTORS’ REPORT
RESPONSIBILITY STATEMENT BY BOARD OF DIRECTORS
In the course of preparing the annual financial statements of the Group and of the Bank, the Directors are collectively responsible
in ensuring that these financial statements are drawn up in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
It is the responsibility of the Directors to ensure that the financial reporting of the Group and of the Bank present a true and fair
view of the state of affairs of the Group and of the Bank as at 31 December 2012 and of the financial results and cash flows of
the Group and of the Bank for the financial year then ended.
The financial statements are prepared on the going concern basis and the Directors have ensured that proper accounting
records are kept, applied the appropriate accounting policies on a consistent basis and made accounting estimates that are
reasonable and fair so as to enable the preparation of the financial statements of the Group and of the Bank with reasonable
accuracy.
The Directors have also taken the necessary steps to ensure that appropriate systems are in place for the assets of the Group
and of the Bank to be properly safeguarded for the prevention and detection of fraud and other irregularities. The systems, by
their nature, can only provide reasonable and not absolute assurance against material misstatements, whether due to fraud or
error.
The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 205 of the financial
statements.
DIRECTORS’ INTERESTS
According to the register of Directors’ shareholdings, the interest of Directors in office at the end of the financial year in shares,
warrants and options of related companies are as follows:
Ordinary shares of RM1 each

As at As at
1.1.2012 Bought Sold 31.12.2012
AFFIN Holdings Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin * 808,714 - - * 808,714

Boustead Heavy Industries Corporation Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 2,000,000 - - 2,000,000

Boustead Petroleum Sdn Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 5,916,465 - - 5,916,465

Al-Hadharah Boustead REIT
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 250,000 - - 250,000

* Shares held in trust by nominee company

DIRECTORS’ REPORT
DIRECTORS’ INTERESTS
Ordinary shares of RM1 each

As at As at
1.1.2012 Bought Sold 31.12.2012
Pharmaniaga Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 3,184,538 ^ 2,700,266 202,918 5,681,886

^ Part of shares acquired under BHB Divestment 2 on 10 January 2012 - 1,201,649
Bonus issue - 1:10 issued on 20 February 2012 - 438,617
Employee Share Award Scheme (credited on 12 June 2012) - 60,000
Divestment by Boustead Holdings Berhad through connected parties - 1,000,000

Ordinary shares of RM10 each; RM5 uncalled

As at As at
1.1.2012 Bought Transfer 31.12.2012
ABB Trustee Berhad ***
Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) 20,000 - - 20,000
Dr Raja Abdul Malek bin Raja Jallaludin 20,000 - - 20,000

*** Shares held in trust for the Bank

Ordinary shares of 50 sen each
As at As at
1.1.2012 Bought Sold 31.12.2012
Boustead Holdings Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 26,011,599 + 2,601,159 420,000 28,192,758

+ Bonus issue issued on 11 October 2012

Redeemable preference shares of RM1 each
As at As at
1.1.2012 Bought Sold 31.12.2012
Boustead Petroleum Sdn Berhad
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 50 - - 50

Other than the above, the Directors in office at the end of the financial year did not have any other interest in shares, warrants
and options over shares in the Bank or its related corporations during the financial year.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no other arrangements subsisted to which the Bank or any of its subsidiaries is
a party with the object or objects of enabling Directors of the Bank or any of its subsidiaries to acquire benefits by means of
the acquisition of shares in, or debenture of, the Bank or any other body corporate, except for the share options granted to
Directors of the Bank by AFFIN Holdings Berhad, Boustead Holdings Berhad and Lembaga Tabung Angkatan Tentera.
Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive a benefit (other
than the fees and other emoluments shown in the Note 31 to the financial statements) by reason of a contract made by the
Bank or by a related corporation with the Director or with a firm of which he is a member or with a company in which he has a
substantial financial interest.

DIRECTORS’ REPORT
CORPORATE GOVERNANCE
The Board of Directors is committed to ensure the highest standards of corporate governance throughout the organisation
with the objectives of safeguarding the interests of all stakeholders and enhancing the shareholders’ value and financial
performance of the Bank. The Board considers that it has applied the Best Practices as set out in the Malaysian Code of
Corporate Governance throughout the financial year. The Bank is also required to comply with BNM’s Guidelines on Directorship
in the banking institutions (‘BNM/GP1’).
(i) Board of Directors Responsibility and Oversight
The Board of Directors
The direction and control of the Bank rest firmly with the Board as it effectively assumes the overall responsibility for
corporate governance, strategic direction, formulation of policies and overseeing the investments and operations of
the Bank. The Board exercises independent oversight on the management and bears the overall accountability for the
performance of the Bank and compliance with the principle of good governance.
There is a clear division of responsibility between the Chairman and the Managing Director/Chief Executive Officer to
ensure that there is a balance of power and authority. The Board is responsible for reviewing and approving the longer-
term strategic plans of the Bank as well as the business strategies. It is also responsible for identifying the principal risks
and implementation of appropriate systems to manage those risks as well as reviewing the adequacy and integrity of the
Bank’s internal control systems, management information systems, including systems for compliance with applicable laws,
regulations and guidelines.
Whilst, the Management Committee, headed by the Managing Director/Chief Executive Officer, is responsible for the
implementation of the strategies and internal control as well as monitoring performance. The Committee is also a forum
to deliberate issues pertaining to the Bank’s business, strategic initiatives, risk management, manpower development,
supporting technology platform and business processes.
The Board Meetings
The Board meets on a monthly basis, to review the Bank’s financial and business performance, to oversee the conduct of
the Bank’s business as well as to ensure that adequate internal control systems are in place. The Board met 13 times during
the financial year.
Board Balance

The Board of Directors comprises of seven Non-Executive Directors and one alternate Non-Executive Director. There are
four Independent Non-Executive Directors and four Non-Independent Non-Executive Directors. The Board of Directors
meetings are presided by a Non-Independent Non-Executive Chairman whose role is clearly separated from the role of the
Managing Director/Chief Executive Officer.
In 2012, the Bank continues to have a strong and experienced Board, befitting its aspiration to become a mid size Bank
of prominence. It consists of representatives from the private sector with suitable qualifications and experience in relevant
areas particularly in banking.

DIRECTORS’ REPORT
(i) Board of Directors Responsibility and Oversight (continued)
The Board of Directors (continued)
The composition of the Board and the number of meetings attended by each director are as follows:
Total Meetings
Directors Attended

Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) 13 / 13
Chairman / Non-Independent Non-Executive Director

Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 13 / 13

Dr Raja Abdul Malek bin Raja Jallaludin 13 / 14 *
(* Attended AFFIN Islamic Board of Director meeting by invitation on 25 September 2012)

Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman 12 / 13

Tan Sri Dato’ Seri Mohamed Jawhar 12 / 13

En. Mohd Suffian bin Haji Haron 13 / 13

Mr Aubrey Li Kwok-Sing 7 / 13

Mr Gary Cheng Shui Hee 5 / 13
(Alternate Director to Mr Aubrey Li Kwok-Sing)
Board Committees

Nomination Committee
Nomination Committee was established to provide a formal and transparent procedure for the appointment of Directors
and Managing Director/Chief Executive Officer. The committee also assesses the effectiveness of the Board as a whole,
contribution of each Director, contribution of the Board’s various committees and the performance of Managing Director/
Chief Executive Officer and key senior management officers.

DIRECTORS’ REPORT
Board Committees (continued)

Nomination Committee (continued)
During the financial year ended 31 December 2012, a total of 4 meetings were held. The Nomination Committee comprises
the following members and the details of attendance of each member at the Nomination Committee meetings held during
the financial year are as follows:
Total Meetings
Members Attended

En. Mohd Suffian bin Haji Haron 4/4
Chairman/Independent Non-Executive Director

Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 3/3
Member/Non-Independent Non-Executive Director
(Appointed as member w.e.f 13 January 2012)

Dr Raja Abdul Malek bin Raja Jallaludin 3/4
Member/Independent Non-Executive Director

Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman 4/4

Tan Sri Dato’ Seri Mohamed Jawhar 3/3
Remuneration Committee
Remuneration Committee was established to evaluate and recommend a framework of remuneration for Directors, the
Managing Director/ Chief Executive Officer and key senior management officers that is competitive and consistent with the
Bank’s culture, objectives and strategy.
During the financial year ended 31 December 2012, a total of 4 meetings were held. The Remuneration Committee
comprises the following members and the details of attendance of each member at the Remuneration Committee meetings
held during the financial year are as follows:
Total Meetings
Members Attended


Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 3/3


DIRECTORS’ REPORT
Board Committees (continued)

Shariah Committee
AFFIN Islamic Bank Berhad’s business activities are subject to Shariah compliance and conformation by the Shariah
Committee. The Shariah Committee is formed as legislated under Section 3(5)(b) of the Islamic Banking Act, 1983 and as
per Shariah Governance Framework for Islamic Financial Institutions.
The duties and responsibility of the Shariah Committee are as follows:
• To advise the Board on Shariah matters in order to ensure that the business operations of the Bank comply with the
Shariah principles at all times;
• To endorse and validate relevant documentations of the Bank’s products to ensure that the products comply with
Shariah principles; and
• To advise the AFFIN Islamic Bank Berhad on matters to be referred to the Shariah Advisory Council.
The Shariah Committee was established in December 1995. During the year, a total of 12 meetings were held. The Shariah
Committee comprises the following members and the details of attendance of each member at the Shariah Committee
meetings held are as follows:
Total Meetings
Members Attended

Associate Professor Dr. Asyraf Wajdi bin Dato’ Dusuki 12 / 12
Chairman

Associate Professor Dr. Said Bouheraoua 11 / 12
Member

Assistant Professor Dr. Ahmad Azam bin Othman 12 / 12
Member

Dr. Yasmin Hanani binti Mohd Safian 12 / 12
Member

Dr. Zulkifli bin Hasan 11 / 12
Member


DIRECTORS’ REPORT
(ii) Group Risk Management
The Group Risk Management function, operating in an independent capacity, is part of the Bank’s senior management
structure which works closely as a team in managing risks to enhance stakeholders’ value.
The Group Risk Management function provides support to the Board Risk Management Committee (‘BRMC’). Committees
namely Board Loan Review and Recovery Committee (‘BLRRC’), Management Committee (‘MCM’), Group Management
Loan Committee (‘GMLC’), Asset and Liability Management Committee (‘ALCO’), Group Operational Risk Management
Committee (‘GORMC’) and Early Alert Committee (‘EAC’) assist the BRMC in managing credit, market, liquidity and
operational risks respectively.
Responsibilities of these committees include:

• risk identification
• risk assessment and measurement
• risk control and migration
• risk monitoring
Board Risk Management Committee (‘BRMC’)
The main function of Board Risk Management Committee (‘BRMC’) is to assist the Board in its supervisory role in the
management of risk in the Bank. It has responsibility for approving and reviewing all risk management policies and
methodologies of the Bank. BRMC also reviews guidelines and portfolio management reports including risk exposure
information.
BRMC provides oversight and management of all risks in the Bank. The Committee also ensures that the procedures and
framework in relation to identifying, measuring, monitoring and controlling risk are operating effectively. The Bank’s risk
management framework is set out in Note 38 to the financial statements.
The BRMC meeting for the Bank were jointly held with AFFIN Islamic Bank Berhad and during the financial year ended 31
December 2012, a total of 6 meetings were held. The BRMC comprises the following members and details of attendance
of each member at the BRMC meetings held during the financial year are as follows:
Total Meetings
Members Attended

(Appointed as Chairman w.e.f 13 January 2012)



(Represent AFFIN Islamic Bank Berhad)


DIRECTORS’ REPORT
(ii) Group Risk Management (continued)
Board Loan Review and Recovery Committee (‘BLRRC’)
Board Loan Review and Recovery Committee (‘BLRRC’) critically reviews loans and other credit facilities with higher risk
implications, after due process of checking, analysis, review and recommendation by the Credit Risk Management function,
and if found necessary, exercise the power to veto loan applications that have been accepted by the Group Management
Loan Committee (‘GMLC’). The Committee is also responsible to review the impaired loans presented by Management.
The BLRRC meeting for the Bank were jointly held with AFFIN Islamic Bank and during the financial year ended 31 December
2012, a total of 12 meetings were held. The BLRRC comprises the following members and details of attendance of each
member at the BLRRC meetings held during the financial year are as follows:
Total Meetings
Members Attended

Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) 12 / 12
Chairman / Non-Independent Non-Executive Director

Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin 11 / 11

Laksamana Madya Tan Sri Dato’ Seri Ahmad Ramli bin Mohd Nor (Bersara) 12 / 12

En. Mohd Suffian bin Haji Haron 11 / 12
Management Committee (‘MCM’)
MCM comprising the senior management team chaired by the MD/CEO, assists the Board in managing the day-to-day
operations and ensure its effectiveness. MCM formulates tactical plans and business strategies, monitors the Bank’s
overall performance, and ensures that the activities are in accordance with corporate objectives, strategies, policies and
annual business plan and budget.
Group Management Loan Committee (‘GMLC’)
Group Management Loan Committee (‘GMLC’) approves complex and larger loans and workout/recovery proposals beyond
the delegated authority of the concerned individual senior management personnel of the Bank.
Individual approvers
For the delegated authority, a dual sign-off approval system is in place, independent of business imperatives.

DIRECTORS’ REPORT
(ii) Group Risk Management (continued)
Asset and Liability Management Committee (‘ALCO’)

ALCO’s responsibilities include:
• Managing the asset and liability of the Bank through coordination of the Bank’s overall planning process including
strategic planning, budgeting and asset and liability management process;
• Directing the Bank’s overall acquisition and allocation of funds;
• Prudently managing the Bank’s interest rate exposure;
• Determine the overall Balance Sheet strategy and ensuring policy compliance;
• Determined the type and scope of derivative activities, approve individual derivative transactions as well as control
over the level of exposure in derivatives;
• Reviewing market risks in the Bank’s trading portfolios;
• Managing the effective usage of economic and regulatory capital throughout the organisation;
• Reviewing and recommending the capital plan for approval;
• Approving capital management standards and policies, capital raising and repayment transactions;
• Reviewing quarterly capital adequacy monitoring reports; and
• Reviewing and approving key assumptions inherent in economic capital modeling and stress/scenario tests.
Group Operational Risk Management Committee (‘GORMC’)
Responsibilities of these committees include:

• To evaluate operational risks issues on escalating importance/strategic risk exposure;
• To review and recommend on broad operational risks management policies best practices for adoption by the Bank’s
operating units;
• To review the effectiveness of broad internal controls and making recommendation on changes if necessary;
• To review/approve recommendation on operational risk management groups section up to address specific issue;
• To take the lead in inculcating an operational risks awareness culture;
• To approve operational risk management methodologies/measurements tools; and
• To review and approve the strategic operational risk management initiatives/plans and to endorse for BRMC’s approval
if necessary.
Early Alert Committee (‘EAC’)
Early Alert Committee (‘EAC’) is established within senior management chaired by MD/CEO to monitor credit quality through
monthly review of the Early Alert, Watchlist and Exit Accounts and review the actions taken to address the emerging risks
and issues in these accounts.
(iii) Internal Audit and Internal Control Activities
In accordance with Bank Negara Malaysia’s GP10 guidelines, the Group Internal Audit Division (‘GIA’) conducts continuous
reviews on auditable areas within the Bank. The continuous reviews by GIA are focused on areas of significant risks and
effectiveness of internal control in accordance to the audit plan approved by the Audit and Examination Committee (‘AEC’).
The risk highlighted on the respective auditable areas as well as recommendation made by the GIA are addressed at AEC
and Management meetings on bi-monthly basis. The AEC also conduct annual reviews on the adequacy of internal audit
function, scope of work, resources and budget of GIA.

DIRECTORS’ REPORT
(iii) Internal Audit and Internal Control Activities (continued)
At present, GIA consists of Operational Audit, IS Audit, Credit Review, Investigation and Compliance. Audit activities
include these key components:
• Conduct audit on all auditable entities (Head Office, branches and subsidiaries) processes, services, products, system
and provide an independent assessment to the Board of Directors, AEC and Management that appropriate control
environment is maintained with clear authority and responsibility with sufficient staff and resources to carry out control
responsibilities.
• Perform risk assessments to identify risk and evaluate actions taken to provide reasonable assurance that procedures
and controls exist to contain those risks.
• Maintain strong control activities including documented processes and system incorporating adequate controls to
produce accurate financial data and provide for the safeguarding of assets, and a documented review of reported
results.
• Ensure effective information flows and communication, including:

- training and the dissemination of standards and requirements;
- an information system to produce and convey complete, accurate and timely data including financial data;
- the upward communication of trends, developments and emerging issues.
• Monitor controls, including procedures to verify that controls are in place and functioning, follow up on corrective
action on control finding until its full resolution.
Based on GIA’s review, identification and assessment of risk, testing and evaluation of controls, GIA will provide an opinion
on the effectiveness of internal controls maintained by each entity.
The AEC comprises members of the Bank’s Board of Directors whose primary function is to assist the Board of Directors
in its supervision over:
• The reliability and integrity of accounting policies and financial reporting and disclosure practices;
• The provision of advice to the Board with regards to the financial statements and business risks to enable the Board to
fulfill its fiduciary duties and obligations; and
• The establishment and maintenance of processes to ensure that they:

- are in compliance with all applicable laws, regulations and company policies; and
- have adequately addressed the risk relating to internal controls and system, management of inherent and business
risks, and ensuring that the assets are properly managed and safeguarded.
The AEC is made up of at least three but not more than five members appointed by the Board of Directors from among its
non-executive directors.

DIRECTORS’ REPORT
(iii) Internal Audit and Internal Control Activities (continued)
The AEC meeting for the Bank were jointly held with AFFIN Islamic Bank Berhad and during the financial year ended 31
December 2012, a total of 7 meetings were held. The Audit and Examination Committee comprises the following members
and details of attendance of each member at the Audit and Examination Committee meetings held during the financial year
are as follows:
Total Meetings
Members Attended




Associate Professor Dr. Asyraf Wajdi bin Dato’ Dusuki 6/6
(Appointed as member w.e.f 13 January 2012 and representative from AFFIN Islamic Bank Berhad)
(iv) Management Reports
Before each Board meeting, Directors are provided with a complete set of board papers itemised in the agenda for Board’s
review/approval and/or notation.
The Board monitors the Bank’s performance by reviewing the monthly Management Report, which provides a comprehensive
review and analysis of the Bank’s operations and financial issues. In addition, the minutes of the Board Committees and
Management Committees meetings and other issues are also tabled and considered by the Board.
Procedures are in place for Directors to seek both independent professional advice at the Bank’s expense and the advice
and services of the Company Secretary in order to fulfill their duties and specific responsibilities.

DIRECTORS’ REPORT
BUSINESS PLAN AND STRATEGY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
With the softening in China and India market, coupled with the prolonged economic slowdown in Europe and the United States,
the last financial year proved to be another challenging period for the Bank and the country as a whole as domestic economy
remained relatively flat supported by government spending.
Taking into account the economic environment and its impacts, the Bank throughout 2012 continues to strive for business growth
and further strengthen its position in the industry. These objectives were realised through four main strategic measures:
• Focus on preservation of capital by enhancing fee based income and managing asset quality.
• Continuously aiming for sustainable business growth.
• Managing return on assets (‘ROA’) and cost-to-income ratio effectively – to be within the industry standard.
• Enhancing customer reach by opening up new branches in new growth areas, relocations of existing branches, extending
ATM network services as well as ensuring excellent customer service nationwide.
• Despite the challenges faced, the Bank was able to register steady gross loans growth of 12.22%, positive growth of about
12.90% in deposits, while net impaired loans ratio stood at 1.11%, return on equity (‘ROE’) at 14.08%, ROA at 1.04 %, and
cost-to-income ratio at 45.24%. Overall, the Bank’s key financial numbers are very much within the industry standard.
BUSINESS OUTLOOK FOR 2013
The Bank is confident that the domestic economy still holds much opportunity for business growth and intends to pursue
these opportunities prudently. The Bank will continue to ensure that loans portfolio is well managed through proactive account
management.
Moving forward, the Bank will also continue to balance its exposure between business and consumer loans. Within business
banking, focus will be given to SMEs and contract financing loans so as to diversify the risk as well as ensuring better return.
For consumer segment, focus will be on financing of new cars as well as mortgage loans in selected areas.
The Bank will also continue to leverage on Group synergy by exploring potential business opportunities with the Lembaga
Tabung Angkatan Tentera (‘LTAT’) / Boustead Group of Companies

DIRECTORS’ REPORT
RATING BY EXTERNAL AGENCIES

The Bank has been rated by the following external rating agency:

Name of rating agency : RATING AGENCY MALAYSIA BERHAD
Date of rating : 2 July 2012
Rating classifications :
- Long term : A1
- Short term : P1
RAM has reaffirmed the Bank’s long-term and short-term financial institution ratings, at A1 and P1, respectively, with a stable
outlook.
‘A’ rating is defined by RAM as being able to offer adequate safety for timely payment of interest and principal, and has
adequate credit profile but possess one or more problem areas, giving rise to the possibility of future riskiness. Entities rated in
this category have generally performed at industry average and are considered to be more vulnerable to changes in economic
condition than those rated in the higher categories. The subscript 1 in this category indicates as higher end of its generic rating
in the A category. A P1 rating is defined by RAM as obligations which are supported by superior ability with regards to timely
payment of obligations.
ZAKAT
The Bank’s subsidiary, AFFIN Islamic Bank Berhad (‘AFFIN Islamic’) is obliged to pay zakat to comply with the principles of
shariah. AFFIN Islamic does not pay zakat on behalf of its depositors.
HOLDING COMPANY AND ULTIMATE HOLDING CORPORATE BODY
The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the ultimate
holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung Angkatan
Tentera Act, 1973.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with resolution of the Board of Directors dated 28 February 2013.

Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara)
Chairman

Director


STATEMENTS OF

FINANCIAL POSITION as at 31 December 2012
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
ASSETS
Cash and short-term funds 2 7,648,904 9,879,366 8,640,457 3,633,842 5,527,439 6,108,452
Reverse repurchase agreements with
financial institutions 20,057 - - 20,057 - -
Deposits and placements with banks and
other financial institutions 3 596,452 486,694 192,522 1,043,825 1,098,988 564,917
Financial assets held-for-trading 4 165,592 149,832 149,945 165,592 149,832 149,945
Derivative financial assets 5 68,872 49,901 54,981 68,872 49,901 54,981
Financial investments available-for-sale 6 7,640,654 6,698,418 5,804,417 5,658,161 5,214,533 4,455,472
Financial investments held-to-maturity 7 451,670 521,105 432,537 451,670 521,105 432,537
Loans, advances and financing 8 33,482,626 29,692,266 25,974,847 28,339,269 25,318,061 22,419,251
Other assets 9 293,658 166,543 186,461 227,790 116,690 184,582
Amount due from subsidiaries 10 - - - 153,949 356,897 185,271
Amount due from jointly controlled entity 2,745 2,745 2,745 - - -
Tax recoverable 16 3,430 49,930 - - 46,072
Deferred tax assets 11 - - 4,291 - - -
Statutory deposits with
Bank Negara Malaysia 12 1,413,300 1,268,650 245,130 1,211,800 1,108,650 245,130
Investment in subsidiaries 13 - - - 387,389 287,389 287,429
Investment in jointly controlled entity 14 60 290 500 - - -
Property and equipment 15 171,922 172,830 170,722 163,951 164,034 162,760
Intangible assets 16 148,452 156,133 154,436 149,887 156,771 156,868
TOTAL ASSETS 52,104,980 49,248,203 42,063,921 41,676,054 40,070,290 35,453,667

LIABILITIES AND EQUITY
Deposits from customers 17 41,263,536 36,547,444 30,982,407 32,224,817 29,072,424 25,432,075
Deposits and placements of banks and
other financial institutions 18 4,809,323 7,526,912 6,619,735 3,728,263 6,043,837 5,749,003
Derivative financial liabilities 19 59,663 97,399 70,195 59,663 97,399 70,195
Bills and acceptances payable 152,400 82,059 110,161 152,400 82,059 110,161
Recourse obligation on loans sold to
Cagamas Berhad 20 413,549 428,459 288,891 413,549 428,459 288,891
Other liabilities 21 306,481 326,735 353,892 282,144 309,134 317,002
Amount due to subsidiaries 22 - - - 48,528 48,307 47,926
Provision for taxation 63,751 16,242 22 54,177 16,212 -
Deferred tax liabilities 11 13,365 20,118 24,932 13,099 19,211 24,932
Subordinated term loan 23 904,960 601,850 300,682 904,960 601,850 300,682
TOTAL LIABILITIES 47,987,028 45,647,218 38,750,917 37,881,600 36,718,892 32,340,867

Share capital 24 1,518,337 1,439,285 1,439,285 1,518,337 1,439,285 1,439,285
Reserves 25 2,599,615 2,161,700 1,873,719 2,276,117 1,912,113 1,673,515
TOTAL EQUITY 4,117,952 3,600,985 3,313,004 3,794,454 3,351,398 3,112,800
TOTAL LIABILITIES AND EQUITY 52,104,980 49,248,203 42,063,921 41,676,054 40,070,290 35,453,667
COMMITMENTS AND CONTINGENCIES 37 18,981,323 19,919,985 18,844,780 17,411,381 18,030,311 16,821,892
The accounting policies on pages 81 to 99 and the notes on pages 100 to 204 form an integral part of these financial statements.

INCOME
STATEMENTS
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
Note RM’000 RM’000 RM’000 RM’000
Interest income 26 1,984,900 1,795,662 2,012,937 1,816,728

Interest expense 27 (1,196,228) (1,020,847) (1,196,288) (1,020,882)
Net interest income 788,672 774,815 816,649 795,846
Net Islamic banking income 28 216,772 198,933 - -
1,005,444 973,748 816,649 795,846
Other operating income 29 257,063 186,884 255,890 185,407
Net income 1,262,507 1,160,632 1,072,539 981,253
Other operating expense 30 (571,158) (533,713) (473,673) (442,001)
Operating profit before allowances 691,349 626,919 598,866 539,252
Allowances for losses on loans,
advances and financing 32 22,512 (12,699) 7,091 (1,936)
Impairment losses on securities (10,402) (945) (10,402) (945)
703,459 613,275 595,555 536,371
Share of joint venture’s results (230) (210) - -
Profit before zakat and taxation 703,229 613,065 595,555 536,371
Zakat (6,064) (5,492) - -
Taxation 34 (171,899) (167,570) (145,251) (147,875)
Net profit after zakat and taxation 525,266 440,003 450,304 388,496

Attributable to:
Equity holders of the Bank 525,266 440,003 450,304 388,496

Earnings per share (sen):
- Basic/fully diluted 35 35.0 30.6 30.0 27.0

STATEMENTS OF
Comprehensive Income for the financial year ended 31 December 2012
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
Note RM’000 RM’000 RM’000 RM’000
Profit after zakat and taxation 525,266 440,003 450,304 388,496

Other comprehensive income:

Net fair value change in financial investments
available-for-sale 733 27,622 1,822 30,420
Deferred tax on financial investments available-for-sale 11 (418) (6,930) (456) (7,604)
Other comprehensive income for the financial year,
net of tax 315 20,692 1,366 22,816
Total comprehensive income for the financial year 525,581 460,695 451,670 411,312

Attributable to equity holders of the Bank:
- Total comprehensive income 525,581 460,695 451,670 411,312

STATEMENTS OF
Changes in Equity
Attributable to Equity Holders of the Bank

AFS
Share Share Statutory revaluation Retained
capital premium reserves reserves profits Total
The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 2012 1,439,285 408,389 1,011,044 74,941 667,326 3,600,985

Comprehensive income:
Net profit for the financial year - - - - 525,266 525,266

Other comprehensive income (net of tax)
- Financial investments available-for-sale - - - 315 - 315
Total comprehensive income - - - 315 525,266 525,581

Issued during the financial year 79,052 120,948 - - - 200,000
Dividends paid (Note 36) - - - - (208,614) (208,614)
Transfer to statutory reserves - - 149,607 - (149,607) -
At 31 December 2012 1,518,337 529,337 1,160,651 75,256 834,371 4,117,952

At 1 January 2011 1,439,285 408,389 888,910 54,249 522,171 3,313,004


- Financial investments available-for-sale - - - 20,692 - 20,692
Total comprehensive income - - - 20,692 440,003 460,695

At 31 December 2011 1,439,285 408,389 1,011,044 74,941 667,326 3,600,985

Statements of chanGes in equity
Non-distributable Distributable
AFS
Share Share Statutory revaluation Retained
capital premium reserves reserves profits Total
The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 2012 1,439,285 408,389 904,624 68,611 530,489 3,351,398



Issued during the financial year 79,052 120,948 - - - 200,000
At 31 December 2012 1,518,337 529,337 1,017,200 69,977 659,603 3,794,454

At 1 January 2011 1,439,285 408,389 807,500 45,795 411,831 3,112,800



At 31 December 2011 1,439,285 408,389 904,624 68,611 530,489 3,351,398

statements of
cash flows
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before zakat and taxation 703,229 613,065 595,555 536,371
Adjustments for items not involving the movement
of cash and cash equivalents:

Interest income:
- financial assets held-for-trading (789) (50) (789) (50)
- financial investments available-for-sale (183,906) (141,979) (183,758) (141,830)
- financial investments held-to-maturity (23,912) (23,276) (23,912) (23,229)
Dividend income:
- financial investments available-for-sale (3,204) (23) (3,204) (23)
- financial investments held-to-maturity - (9,705) - (9,705)
Amortisation of premium less accretion of discount
- financial investments held-to-maturity (964) (901) (964) (901)
Gain on sale:
- financial assets held-for-trading (697) (546) (697) (546)
- financial investments held-to-maturity (19,011) (2,546) (19,011) (2,378)
Unrealised loss/(gain) on revaluation
- financial assets held-for-trading 188 9 188 9
- derivatives (12,925) 13,230 (12,925) 13,230
- foreign exchange (42,325) 17,878 (42,325) 17,878
Allowance for impairment loss
- financial investments available-for-sale 812 945 812 945
- financial investments held-to-maturity 9,590 - 9,590 -
Depreciation of property and equipment 17,784 18,872 16,579 17,853
Property and equipment written-off 179 423 178 414
Foreclosed properties - diminution in value 2,122 2,542 2,122 2,332
Gain on sale of property and equipment (1,098) (23) (1,093) (23)
Amortisation of intangible assets 8,568 9,366 7,771 8,836
(Gain)/loss on sale of foreclosed properties (10,141) 272 (10,097) 272
Net individual impairment 69,497 103,338 66,845 99,682
Net collective impairment 6,672 67,662 24,242 59,788
Bad debt and financing written-off 7,784 15,956 7,702 15,791
Litigation loss arising from loans - 40,000 - 40,000
Interest expense - subordinated term loan 40,453 19,884 40,453 19,884
Subsidiary - diminution in value - - - 40
Share of joint venture’s results 230 210 - -
Operating profit before changes in working capital 537,633 699,933 443,523 609,970

Statements of cash flows
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
(Increase)/decrease in operating assets:

Reverse repurchase agreements with financial institutions (20,057) - (20,057) -
Deposits and placements with banks and other
financial institutions (109,758) (294,172) 55,163 (534,071)
Financial assets held-for-trading (15,252) 650 (15,252) 650
Interest income from financial assets held-for-trading 789 50 789 50
Foreign exchange transaction (1,463) 35,547 (161) 36,381
Loans, advances and financing (3,874,313) (3,904,375) (3,119,997) (3,074,071)
Other assets (98,483) (132,364) (82,270) (84,208)
Derivative financial instruments (56,707) 32,284 (56,707) 32,284
Statutory deposits with Bank Negara Malaysia (144,650) (1,023,520) (103,150) (863,520)
Amount due from subsidiaries - - 203,169 (171,245)

Increase/(decrease) in operating liabilities:

Deposits from customers 4,716,092 5,565,037 3,152,393 3,640,349
Deposits and placements of banks and other
financial institutions (2,717,589) 907,177 (2,315,574) 294,834
Bills and acceptances payable 70,341 (28,102) 70,341 (28,102)
Recourse obligation on loans sold to Cagamas Berhad (14,910) 139,568 (14,910) 139,568
Other liabilities (21,270) (66,342) (26,869) (46,765)
Cash (used in)/generated from operations (1,749,597) 1,931,371 (1,829,569) (47,896)
Zakat paid (4,919) (5,203) (100) -
Tax paid (128,138) (113,437) (113,845) (100,020)
Net cash (used in)/generated from operating activities (1,882,654) 1,812,731 (1,943,514) (147,916)

Statements of cash flows
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES

Interest received:
- financial investments available-for-sale 183,906 141,979 183,758 141,830
- financial investments held-to-maturity 23,912 23,276 23,912 23,229
Dividend income:
- financial investments available-for-sale 3,204 23 3,204 23
- financial investments held-to-maturity - 9,705 - 9,705
Redemption of financial investments
held-to-maturity net of purchase 79,820 (85,121) 79,820 (85,289)
Net purchase of financial investments available-for-sale (911,810) (822,654) (412,881) (684,914)
Proceeds from disposal of
- property and equipment 4,091 2,166 3,441 2,166
- foreclosed properties 21,611 118,687 21,371 118,687
Purchase of property and equipment (20,616) (32,893) (19,480) (28,828)
Purchase of intangible assets (458) (1,718) (458) (1,599)
Net cash used in investing activities (616,340) (646,550) (117,313) (504,990)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares 200,000 - 200,000 -

Investment in subsidiary - - (100,000) -
Interest payment on subordinated term loan (37,344) (18,716) (37,344) (18,716)
Increase in subordinated term loan 300,000 300,000 300,000 300,000
Payment of dividend (208,614) (172,714) (208,614) (172,714)
Net cash generated from financing activities 254,042 108,570 154,042 108,570

Net (decrease)/increase in cash and cash equivalents (2,244,952) 1,274,751 (1,906,785) (544,336)
Net increase/(decrease) in foreign exchange 14,490 (35,842) 13,188 (36,677)
Cash and cash equivalents at beginning of the financial year 9,879,366 8,640,457 5,527,439 6,108,452
CASH AND CASH EQUIVALENTS AT
END OF THE FINANCIAL YEAR (Note 2) 7,648,904 9,879,366 3,633,842 5,527,439

summary of significant
accounting policies for the financial year ended 31 December 2012
The following accounting policies have been used consistently in dealing with items which are considered material in relation
to the financial statements. These policies have been consistently applied to all the financial years presented, unless otherwise
stated.
(A) BASIS OF PREPARATION
The financial statements of the Group and the Bank have been prepared in accordance with the provisions of the Malaysian
Financial Reporting Standards (‘MFRS’), International Financial Reporting Standards and the requirements of the Companies
Act 1965 in Malaysia. The financial statements incorporate those activities relating to Islamic banking business which have
been undertaken by AFFIN Islamic Bank Berhad, a wholly owned subsidiary of the Bank. Islamic banking business refers
generally to the acceptance of deposits and granting of financing under the Shariah principles.
The financial statements of the Group and the Bank for the financial year ended 31 December 2012 are the first set of
financial statements prepared in accordance with the MFRS, including MFRS 1 “First-time adoption of MFRS”. The Group
and the Bank’s first MFRS financial statements include at least three statements of financial position, two statements of
comprehensive income, two separate income statements, two statements of cash flows and two statements of changes in
equity and related notes, including comparative information. The Group and the Bank have consistently applied the same
accounting policies in its opening MFRS statement of financial position at 1 January 201 1 (transition date) and throughout
all years presented, as if these policies had always been in effect. There is no significant financial impact on the adoption
of MFRS that requires restatement to the comparative figures in the financial statements.
The financial statements of the Group and the Bank have been prepared under the historical cost convention, unless
otherwise indicated in this summary of significant accounting policies.
The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period.
It also requires Directors to exercise their judgment in the process of applying the Group and Bank’s accounting policies.
Although these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual
results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in Note 44.
Standards, amendments to published standards and interpretations to existing standards that are applicable to the
Group but not yet effective
The Group and the Bank will apply the new standards, amendments to standards and interpretations in the following
period:
(i) Financial year beginning on/after 1 January 2013
• 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”.

summary of significant accounting policies
(A) BASIS OF PREPARATION (continued)
Group but not yet effective (continued)
(i) Financial year beginning on/after 1 January 2013 (continued)
• 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.
• 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 entity’s interests
in subsidiaries, associates, joint arrangements and unconsolidated structured entities.
• 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.
• 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.
• 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.
• 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 amendments do not address which items are presented in OCI.
• 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 (continued)
Group but not yet effective (continued)
(ii) Financial year beginning on/after 1 January 2014
• 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.
(iii) Financial year beginning on/after 1 January 2015
• 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 entity’s 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 liability’s 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.
The Group and the Bank will apply these standards when effective. The adoption standards, amendments to
published standards and interpretations to existing standards do not have significant impact on the financial
statements of the Group and the Bank except for enhanced disclosure.

(B) CONSOLIDATION
The consolidated financial statements include the financial statements of the Bank, subsidiaries and a jointly controlled
entity, made up to the end of the financial year.
(i) Subsidiaries
Subsidiaries are all entities over which the Group has the 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 Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
The Group applies predecessor accounting to account for business combinations under common control. Under the
predecessor accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying
amounts from the consolidated financial statements of the ultimate holding company of the Group and adjusted to
ensure uniform accounting policies of the Group. The difference between any consideration given and the aggregate
carrying amounts of the assets and liabilities (as of the date of the transaction) of the acquired entity is recorded as an
adjustment to retained earnings. No additional goodwill is recognised.
The acquired entity’s results, assets and liabilities are consolidated from the date on which the business combination
between entities under common control occurred. Consequently, the consolidated financial statements do not reflect
the results of the acquired entity for the period before the transaction occurred. The corresponding amounts for the
previous year are not restated.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for
within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-
controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than
the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated.
Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.

(B) CONSOLIDATION (continued)
(ii) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions
– that is, as transactions with the owners in their capacity as owners. The difference between fair value of any
consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(iii) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date
when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, 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. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
(iv) Jointly controlled entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed
sharing of control by the Group with one or more parties where the strategic financial and operating decisions relating
to the entities require unanimous consent of the parties sharing control.
The Group’s interest in jointly controlled entities is accounted for in the financial statements by the equity method of
accounting. Equity accounting involves recognising the Group’s share of the post-acquisition results of jointly controlled
entities in profit or loss and its share of post-acquisition changes of the investee’s reserves in other comprehensive
income. The cumulative post-acquisition changes are adjusted against the cost of the investment and include goodwill
on acquisition (net of accumulated impairment loss).
Where necessary, adjustments have been made to the financial statements of jointly controlled entities to ensure
consistency of accounting policies with those of the Group.
(c) INVESTMENTS IN SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIES
In the Bank’s separate financial statements, investments in subsidiaries and jointly controlled entities are carried at cost less
accumulated impairment losses. On disposal of investments in subsidiaries and jointly controlled entities, the difference
between disposal proceeds and carrying amounts of the investments are recognised in profit or loss.
(D) INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net
assets at the date of acquisition.
Goodwill on acquisition of subsidiaries are included in the statement of financial position as intangible assets. Goodwill is
tested for impairment annually or more frequently if events or changes in circumstances indicated that the goodwill may
be impaired. The amount retained in the consolidated financial statements is stated at cost less accumulated impairment
losses. Impairment losses on goodwill (inclusive of impairment losses recognised in a previous interim period) are not
reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(D) INTANGIBLE ASSETS (continued)
Goodwill (continued)
Goodwill is allocated to cash-generating units (‘CGU’) for the purpose of impairment testing. The allocation is made to
those CGUs that are expected to benefit from the synergies of the business combination in which goodwill arose identified
according to operating segment.
Computer software
Acquired computer software are capitalised on the basis of the cost incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful lives (five years). Computer software classified as intangible
asset are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
(E) IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged
to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless it
reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.
(F) RECOGNITION OF INTEREST AND FINANCING INCOME AND EXPENSE
Interest and financing income and expense for all interest/profit-bearing financial instruments measured at amortised
cost and interest/ profit bearing financial assets as held-for-trading and available-for-sale are recognised within “interest
income”, “interest expense” and “net Islamic banking income” respectively in the income statement using the effective
interest/profit method.
The effective interest/profit method is a method of calculating the amortised cost of a financial asset or a financial liability
and of allocating the interest and financing income or expense over the relevant period. The effective interest/profit rate
is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instruments or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest/profit rate, the Group and the Bank take into account all contractual terms of the
financial instrument and includes any fees or incremental costs that are directly attributable to the instrument and are an
integral part of the effective interest rate, but not future credit losses.
Interest or income on impaired financial assets is recognised using the rate of interest/profit used to discount the future
cash flows for the purpose of measuring the impairment loss. A financial asset or a group of financial assets is deemed to
be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

(G) RECOGNITION OF FEES AND OTHER INCOME
Fees and commissions are recognised as income when all conditions precedent are fulfilled. Commitment fees for loans,
advances and financing that are likely to be drawn down are deferred (together with related direct costs) and income which
forms an integral part of the effective interest rate of a financial instrument is recognised as an adjustment to the effective
interest/profit rate on the financial instrument.
Commitment fees and guarantee fees which are material are recognised as income based on a time apportionment
method.
Dividends are recognised when the right to receive payment is established.
(H) FINANCIAL ASSETS
All financial assets which include derivative financial instruments have to be recognised in the statement of financial position
and measured in accordance with their assigned category.
The Group and the Bank allocate financial assets to the following MFRS 139 categories:
Loans, advances and financing; financial assets at fair value through profit or loss, financial investments available-for-sale;
and financial investments held-to-maturity. Management determines the classification of its financial instruments at initial
recognition.
Loans, advances and financing
Loans, advances and financing are non-derivative financial assets with fixed or determinable payments that are not quoted
in 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 judgment of the management, there is no
prospect of recovery.
At each reporting date, the Group and the Bank assess whether there is objective evidence that a loan or group of loans
is impaired. A loan or a group of loans 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 loan (a ‘loss event’) and that
loss event (or events) has an impact on the estimated future cash flows of the loan or group of loans that can be reliably
estimated.
The criteria that the Group and the Bank use to determine that there is objective evidence of an impairment loss include
among others:
• past due contractual payments;
• significant financial difficulties of borrower;
• probability of bankruptcy or other financial re-organisation; and
• default of related borrower.
The estimated period between a loss occurring and its identification for credit cards is six months and for all other loans
are twelve months.

(H) FINANCIAL ASSETS (continued)
Loans, advances and financing (continued)
The Group and the Bank first assess whether objective evidence of impairment exists individually for loans that are
individually significant, and individually or collectively for loans that are not individually significant. If the Group and the
Bank determine that no objective evidence of impairment exists for an individually assessed loan, whether significant
or not, it includes the loan in a group of loans with similar credit risk characteristics and collectively assesses them for
impairment. Loans that are individually assessed for impairment and for which an impairment loss is or continues to be
recognised are not included in a collective assessment of impairment. Loans that are individually assessed for impairment
and for which no impairment loss is required (over collateralised loans) are collectively assessed as a separate segment.
The amount of the loss is measured as the difference between the loan’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the loan’s original effective
interest rate. The carrying amount of the loan is reduced through the use of an allowance account and the amount of
the loss is recognised in the income statement. If a loan has a variable interest rate, the discount rate for measuring any
impairment loss 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 loan reflects the cash flows that
may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
For the purposes of a collective evaluation of impairment, loans are grouped on the basis of similar credit risk characteristics.
Those characteristics are relevant to the estimation of future cash flows for groups of such loans by being indicative of the
borrowers’ ability to pay all amounts due according to the contractual terms of the loans being evaluated.
Future cash flows in a group of loans that are collectively evaluated for impairment are estimated on the basis of the
contractual cash flows of the loans in the Bank and historical loss experience for loans with credit risk characteristics
similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the
effects of current conditions that did not affect the period on which the historical loss experience is based and to remove
the effects of conditions in the historical period that do not currently exist.
Estimates of changes in future cash flows for groups of loans should reflect and be directionally consistent with changes
in related observable data from period to period (for example, changes in unemployment rates, property prices, payment
status, or other factors indicative of changes in the probability of losses in the Group and the Bank and their magnitude).
The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group and the Bank
to reduce any differences between loss estimates and actual loss experience.
Change in accounting policy
Previously, the Group and the Bank applied the Amendment to FRS 139 “Financial instruments: recognition and
measurement”, which included an additional transitional arrangement for financial sectors, whereby BNM may prescribed
the use of an alternative basis for collective assessment of impairments on loans, advances and financing. This transitional
arrangement is prescribed in BNM’s Guidelines on Classification and Impairment Provisions for Loans/Financing, whereby
banking institutions are required to maintain collective allowances of at least 1.5% of total outstanding loans/financing, net
of individual impairment allowances under the transitional provisions in the guidelines.
With effect from 1 January 2012, BNM has removed the transitional provision for banking institutions on collective
evaluation of loan impairment assessment and loan loss provisioning to comply with MFRS 139 requirements. Exposures
not individually known to be impaired are placed into pools of similar assets with similar risk characteristics to be collectively
assessed for losses that have been incurred but not identified yet. The required loan loss allowance is estimated on the
basis of historical loss experience for assets with credit risk characteristics similar to those in the collective pool. The
historical loss experience is adjusted based on current observable data.
There is no significant financial impact on the changes in accounting policy above.

Rescheduled and restructured loans
Where a loan shows evidence of credit weaknesses, the Group and the Bank may seek to renegotiate the loan rather
than to take possession of collateral. This may involve an extension of the payment arrangements via rescheduling or the
renegotiation of new loan terms and conditions via restructuring. Management monitors the renegotiated loan to ensure
that all the revised terms are met and that the repayments are made promptly for a continuous period. Where an impaired
loan is renegotiated, the borrower must adhere to the revised and/or restructured repayment terms for a continuous period
of six months before the loan is classified as non-impaired. These loans continue to be subjected to individual or collective
impairment assessment.
Financial assets at fair value through profit or loss

This category comprises two sub-categories: financial assets classified as held-for-trading and financial assets designated
by the Group and the Bank as at fair value through profit or loss upon initial recognition.
A financial asset is classified as held-for-trading if it is acquired or incurred principally for the purpose of selling or
repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and
for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held-
for-trading unless they are designated and effective as hedging instruments. Derivatives are recognised in the statement of
financial position as ‘Derivative financial assets’ when their fair values are positive. Financial assets held-for-trading consist
of debt instruments, including money-market paper, traded corporate and bank loans, and equity instruments, as well as
financial assets with embedded derivatives. They are recognised in the statement of financial position as ‘Financial assets
held-for-trading’.
Financial instruments included in this category are recognised initially at fair value; transaction costs are taken directly to
the income statement. Financial assets at fair value through profit or loss are subsequently carried at fair value. Changes
in fair values including the effects of currency translation, interest and dividend income are recognised in the income
statement in the period in which the changes arise.
The Group and the Bank may designate certain financial assets upon initial recognition as at fair value through profit or
loss (fair value option). This designation cannot subsequently be changed. The fair value option is only applied when the
following conditions are met:
• the application of the fair value option reduces or eliminates an accounting mismatch that would otherwise arise; or
• the financial assets are part of a portfolio of financial instruments which is risk managed and reported to senior
management on a fair value basis; or
• the financial assets consists of debt host and an embedded derivatives that must be separated.
Financial assets for which the fair value option is applied are recognised in the statement of financial position as ‘Financial
assets designated at fair value’. Fair value changes relating to financial assets designated at fair value through profit or loss
are recognised in the income statement.
The Group and the Bank may choose to reclassify a non-derivative financial assets held-for-trading out of this category
where:
• in rare circumstances, it is no longer held for the purpose of selling or repurchasing in the near term; or
• it is no longer held for purpose of trading, it would have met the definition of a loan and receivable on initial classification
and the Group and the Bank have the intention and ability to hold it for the foreseeable future or until maturity.

Financial investments available-for-sale
Financial investments available-for-sale are non-derivative financial assets that are either designated in this category or not
classified as loans and receivables, held-for-trading or held-to-maturity investments.
Financial instruments available-for-sale are initially recognised at fair value plus transaction costs and subsequently
measured at fair value.
Investments in equity instruments where there is no quoted market price in an active market and whose fair value cannot
be reliably measured, will be stated at cost.
Any gains or losses arising from the change in fair value adjustments are recognised directly in statement of comprehensive
income except for impairment losses and foreign exchange gains or losses. When the financial asset is derecognised, the
cumulative gains or loss previously recognised in statement of comprehensive income shall be transferred to the income
statement.
A financial investments available-for-sale that would have met the definition of loans and receivables may only be transferred
from the available-for-sale classification where the Group and the Bank have the intention and the ability to hold the asset
for the foreseeable future or until maturity.
Impairment of financial investments available-for-sale is assessed when there is an objective evidence of impairment.
Cumulative unrealised losses that had been recognised directly in equity shall be removed and recognised in income
statement even though the securities have not been de-recognised. Impairment loss in addition to the above unrealised
losses is also recognised in the income statement. Subsequent reversal of impairment on debt instrument in the income
statement is allowed when the decrease in impairment can be related objectively to an event occurring after the impairment
was recognised.
In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. Impairment
losses recognised in the income statement on equity instruments shall not be reversed.
Financial investments held-to-maturity
Financial investments held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed
maturity that the Group and the Bank have the positive intention and ability to hold to maturity.
Financial investments held-to-maturity are initially recognised at fair value plus transaction costs, and subsequently
measured at amortised cost using the effective interest method.
Financial investments held-to-maturity are measured at amortised cost using the effective interest method. Gains or
losses are recognised in income statement when the securities are derecognised or impaired and through the amortisation
process.
If, as a result of a change in intention or ability, it is no longer appropriate to classify a financial investment as held-to-
maturity, the Group and the Bank shall reclassify the investment as available-for-sale and remeasured at fair value, and
the difference between its carrying amount and fair value shall be recognised in other comprehensive income, except for
impairment losses and foreign exchange gains and losses.

Financial investments held-to-maturity (continued)
Any sale or reclassification of a significant amount of financial investments held-to-maturity before maturity during the
current financial year or last two preceding financial years will “taint” the entire category and result in the remaining financial
investments held-to-maturity being reclassified to available-for-sale except for sales or reclassification that:
• are so close to maturity or call date that changes in the market rate of interest would not have significant effect on the
financial asset’s fair value; or
• occur after the Group and the Bank have collected substantially all of the financial asset’s original principal; or
• are attributable to an isolated event that is beyond the Group and the Bank’s control are non-recurring and could not
have been reasonably anticipated by the Group and the Bank.
Impairment of financial investments held-to-maturity is assessed when there is an objective evidence of impairment. The
impairment loss is measured as the difference between the financial investments’ carrying amount and the present value
of estimated future cash flows discounted at the financial investments’ original effective interest rate. Subsequent reversal
of impairment is allowed in the event of an objective decrease in impairment. Recognition of impairment losses and its
reversal is made through the income statement.
Recognition
The Group and the Bank use settlement date accounting for regular way contracts when recording financial asset
transactions. Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the
statement of financial position as ‘Assets pledged as collateral’, if the transferee has the right to sell or repledge them.
De-recognition
Financial assets are de-recognised when the contractual rights to receive the cash flows from these assets have ceased
to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also
transferred (that is, if substantially all the risks and rewards have not been transferred, the Group and the Bank tests control
to ensure that continuing involvement on the basis of any retained powers of control does not prevent de-recognition).
(I) FINANCIAL LIABILITIES
All financial liabilities which include derivative financial instruments have to be recognised in the statement of financial
position and measured in accordance with their assigned category.
The Group and the Bank’s holding in financial liabilities are in financial liabilities at fair value through profit or loss (including
financial liabilities held-for-trading and those that designated at fair value) and financial liabilities at amortised cost. Financial
liabilities are de-recognised when extinguished.
Financial liabilities at fair value through profit or loss
This category comprises two sub-categories: financial liabilities classified as held-for-trading, and financial liabilities
designated by the Group and the Bank as at fair value through profit or loss upon initial recognition.

(I) FINANCIAL LIABILITIES (continued)
Financial liabilities at fair value through profit or loss (continued)
A financial liability is classified as held-for-trading if it is acquired or incurred principally for the purpose of selling or
repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and
for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held-
for-trading unless they are designated and effective as hedging instruments. Derivatives are recognised in the statement of
financial position as ‘Derivative financial liabilities’ when their fair values are negative.
Gains and losses arising from changes in fair value of financial liabilities classified held-for-trading are included in the
income statement.
Other liabilities measured at amortised cost
Financial liabilities that are not classified as at fair value through profit or loss fall into this category and are measured at
amortised cost. All the financial liabilities except for derivative financial liabilities of the Group and the Bank are measured
at amortised cost.
De-recognition
Financial liabilities are de-recognised when they have been redeemed or otherwise extinguished.
(J) OFFSETTING FINANCIAL INSTRUMENTS
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is
a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the
assets and settle the liability simultaneously.
(K) PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s 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 de-recognised. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred.
Freehold land is not depreciated as it has an infinite life. Other property and equipment are depreciated on the straight-line
basis to write off the cost of the assets or their revalued amounts, to their residual values over their estimated useful lives,
summarised as follows:
Buildings 50 years
Leasehold buildings 50 years or over the remaining lease period, whichever is shorter
Renovation and leasehold premises 5 years or the period of the lease, whichever is greater
Office equipment and furniture 10 years
Computer equipment and software 5 years
Motor vehicles 5 years
Depreciation on capital work in progress commences when the assets are ready for their intended use.

(K) PROPERTY AND EQUIPMENT AND DEPRECIATION (continued)
Residual value and useful lives of assets are reviewed, and adjusted if appropriate, at each reporting date.
At each reporting date, the Group assesses whether there is any indication of impairment. If such indications exist, an
analysis is performed to assess whether the carrying amount of the asset is recoverable. A write down is made if the
carrying amount exceeds the recoverable amount. Any subsequent increase in the recoverable amount is recognised in the
income statement (refer to accounting policy E on impairment of non-financial assets).
Gains and losses on disposal are determined by comparing proceeds with carrying amount and are recognised within other
operating income in the income statement.
(L) LEASES
Accounting by lessee
Finance leases
Leases of property and equipment where the Group assumes substantially all the benefits and risks of ownership are
classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the
leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate on the
finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The
interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. Property and equipment acquired under
finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of the
leased assets and recognised as an expense in income statement over the lease term on the same basis as the lease expense.
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to
the income statement on the straight-line basis over the lease period.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in income statement
when incurred.
Accounting by lessor
Finance leases
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable.
The difference between the gross receivable and the present value of the receivable is recognised as unearned finance
income. Lease income is recognised over the term of the lease using the net investment method so as to reflect a constant
periodic rate of return.
Operating leases
When assets are leased out under an operating lease, the asset is included in the statement of financial position based on
the nature of the asset. Lease income is recognised over the term of the lease on a straight-line basis.

(M) FOREIGN CURRENCY TRANSLATIONS
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Ringgit Malaysia, which is the Group and the Bank’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchanges rate prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges.
Changes in the fair value of monetary financial assets denominated in foreign currency classified as available-for-sale are
analysed between translation differences resulting from changes in the amortised cost of the financial asset and other
changes in the carrying amount of the financial asset. Translation differences related to changes in the amortised cost
are recognised in income statement, and other changes in the carrying amount are recognised in other comprehensive
income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and
loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as
equities classified as available-for-sale are included in the fair value reserve in other comprehensive income.
(N) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Derivatives are initially recognised at fair values on the date on which derivative contracts are entered into and are
subsequently remeasured at their fair values. Fair values are obtained from quoted market prices in active markets,
including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing
models, as appropriate. All derivatives are carried as assets when fair values are positive and as liabilities when fair values
are negative.
The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e the fair value of the consideration
given or received) unless fair value of the instrument is evidenced by comparison with other observable current market
transactions in the same instrument (i.e without modification or repackaging) or based on a valuation technique whose
variables include only data from observable markets.
The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either: (1)
hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge); or (2) hedges of highly
probable future cash flows attributable to a recognised asset or liability, or a forecasted transaction (cash flow hedge).
Hedge accounting is used for designated derivatives in this way provided certain criterias are met.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and an on-going 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.

(N) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (continued)

Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged assets or liabilities 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 income statement over the period to maturity. The adjustment
to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in other comprehensive income. The gain and loss relating to the ineffective portion is recognised immediately
in the income statement.
Amounts accumulated in other comprehensive income are recycled to the income statement in the periods in which the
hedged item will affect income statement (for example, when the forecast sale that is hedged take place).
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 at that time remains in other comprehensive income and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the income
statement.
Derivatives that do not qualify for hedge accounting
Certain derivative 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 income statement.
Gains and losses on interest rate swaps, futures, forward and option contracts that qualify as hedges are deferred and
amortised over the life of hedged assets or liabilities as adjustments to interest income or interest expense. Gains and
losses on interest rate swaps, futures, forward and option contracts that do not qualify as hedges are recognised in the
current financial year using the mark-to-market method and are included in the income statement.
(O) CURRENT AND DEFERRED INCOME TAXES
Current tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period where the Group’s subsidiaries and branch operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities. This liability is measured using the single best estimate of the most likely outcome.

(O) CURRENT AND DEFERRED INCOME TAXES (continued)

Deferred tax
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed
to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences or unused tax losses can be utilised.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the end of
the reporting date and are expected to apply when the related deferred tax assets is realised or the deferred tax liability is
settled.
Deferred tax is recognised on temporary differences arising on investment in subsidiaries and jointly controlled entity
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is possible that
the temporary difference will not reverse in the foreseeable future.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same
taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances
on net basis.
(P) ZAKAT
Zakat represents business zakat payable by the Group to comply with the principles of Shariah and as approved by the
Shariah Committee. The Bank’s subsidiary, AFFIN Islamic Bank Berhad only pays zakat on its business and does not pay
zakat on behalf of depositors. Zakat provision is calculated based on 2.5775% of the net asset method.
(Q) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash in hand, bank balances and deposits and placements maturing within one
month which are held for the purpose of meeting short term commitments and are readily convertible to cash without
significant risk of changes in value.
(R) FORECLOSED PROPERTIES
Foreclosed properties are stated at the lower of cost and net realisable value.
(S) CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The Group and the Bank do not recognise a contingent liability but disclose its existence in the financial statements. A
contingent liability is 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 and the Bank 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. However, contingent liabilities do not include financial guarantee contracts.

(S) CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
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 and the Bank. The Group and the
Bank does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable,
but not virtually certain.
(T) BILLS AND ACCEPTANCES PAYABLE
Bills and acceptances payable represent the Bank’s own bills and acceptances rediscounted and outstanding in the
market.
(U) OTHER PROVISIONS
Provisions are recognised by the Group and the Bank when all of the following conditions have been met:
• the Group and the Bank has a present legal or constructive obligation as a result of past events;
• it is probable that an outflow of resources to settle the obligation will be required; and
• a reliable estimate of the amount of obligation can be made.
Where the Group and the Bank expect 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. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may be small.
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.
(V) EMPLOYEE BENEFITS
Short-term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which
the associated services are rendered by employees of the Group.
Defined contribution plan
The defined contribution plan is a pension plan under which the Group pays fixed contributions to the National Pension
Scheme, the Employees’ Provident Fund (‘EPF’) and will have no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior
periods.
The Group’s contribution to defined contribution plans are charged to the income statement in the period to which they
relate. Once the contributions have been paid, the Group has no further payment obligations.

(V) EMPLOYEE BENEFITS (continued)
Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminate the employment of current employees according to a
detailed formal plan without any possibility of withdrawal or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy.
(W) FINANCIAL GUARANTEE CONTRACTS
Financial guarantee contracts are contracts that require the Group or Bank 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 financial institutions and other bodies on behalf of customers to
secure loans, overdrafts and other banking facilities.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The fair value of a
financial guarantee at the time of signature is zero because all guarantees are agreed on arm’s 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.
The liability is subsequently recognised at the higher of the amount determined in accordance with MFRS 137 “Provisions,
contingent liabilities and contingent assets” and the amount initially recognised less cumulative amortisation, where
appropriate.
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the guarantee, or the
estimated amount that would be payable to a third party for assuming the obligations.
Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Group for no compensation,
the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.
(X) SALE AND REPURCHASE AGREEMENTS
Securities purchased under resale agreements are securities which the Group and the Bank have purchased with a
commitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the statements of
financial position.
Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank have
sold from its portfolio, with a commitment to repurchase at future dates. Such financing and the obligation to repurchase
the securities is reflected as a liability on the statement of financial position.
The difference between sale and repurchase price as well as purchase and resale price are amortised as interest income
and interest expense respectively on an effective yield method.

(Y) Profit equalisation reserve (‘PER’)
Bank Negara Malaysia has issued its revised Guidelines on Profit Equalisation Reserve (‘PER’) and the implementation date
of the guidelines take effect for financial year beginning 1 July 2011.
Beginning of the financial period, Affin Islamic Bank Berhad (‘AFFIN Islamic’) a wholly owned subsidiary of the Bank has
adopted the revised Guidelines on PER and has apply in managing the Displaced Commercial Risk (‘DCR’) in accordance
with Shariah principles. The PER is for Mudharabah accounts.
With these revised PER Guidelines, the release of PER shall be appropriated from both Investment Account Holder (‘IAH’)
and AFFIN Islamic’s portion based on the contractual profit sharing ratio at the point of utilisation. The amount of PER shall
be limited to the maximum of the either PER of the IAH or AFFIN Islamic depending on prevailing profit sharing ratio.
The IAH portion of the existing PER shall be classified as a liability and is recognised at cost. Subsequent apportionments
will be recognised in the income statement. The eventual distribution of PER as profit distributable to the IAH will be treated
as an outflow of funds due to the settlement of the obligation to the IAH.
The PER of the AFFIN Islamic shall be classified as a separate reserve in equity and subsequent apportionments from and
distributions to retained earnings will be treated as a transfer between reserves.
The change in accounting policy is accounted for prospectively and there is no financial impact to the result of the Group.

Notes to the
financial statements
1 GENERAL INFORMATION
The Bank is principally engaged in all aspects of banking and related financial services. The principal activities of the Bank’s
subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been
no significant changes in these principal activities during the financial year.
The number of employees in the Group and the Bank as at 31 December 2012 was 3,342 (31.12.2011: 3,293, 1.1.2011:
3,113) and 3,122 (31.12.2011: 3,095, 1.1.2011: 2,933) employees respectively.
The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the
ultimate holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung
Angkatan Tentera Act, 1973.
The Bank is a limited liability company, incorporated and domiciled in Malaysia.
2 CASH AND SHORT-TERM FUNDS
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cash and bank balances with banks

and other financial institutions 215,228 172,014 172,530 210,501 168,388 169,157
Money at call and deposit placements
maturing within one month 7,433,676 9,707,352 8,467,927 3,423,341 5,359,051 5,939,295
7,648,904 9,879,366 8,640,457 3,633,842 5,527,439 6,108,452
3 DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Licensed banks 286,920 156,235 15,681 834,301 768,529 388,076

Licensed investment banks 209,524 330,459 176,841 209,524 330,459 176,841
Bank Negara Malaysia 100,008 - - - - -
596,452 486,694 192,522 1,043,825 1,098,988 564,917
4 FINANCIAL ASSETS HELD-FOR-TRADING
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At fair value
Bank Negara Malaysia Monetary Notes - 149,832 99,853 - 149,832 99,853
Negotiable Instruments of Deposit 150,276 - 50,092 150,276 - 50,092
Private debt securities in Malaysia 15,316 - - 15,316 - -
165,592 149,832 149,945 165,592 149,832 149,945

notes to the financial statements
5 DERIVATIVE FINANCIAL ASSETS
The Group and The Group and The Group and

The Bank The Bank The Bank
31.12.2012 31.12.2011 1.1.2011
Contract/ Contract/ Contract/
notional notional notional
amount Assets amount Assets amount Assets
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At fair value
Foreign exchange derivatives:
Currency forwards 601,636 9,504 246,307 2,433 240,549 2,381
Cross currency swaps 1,871,775 37,661 879,504 16,097 1,347,158 35,206

Interest rate derivatives:
Interest rate swap 788,622 21,707 444,560 31,371 576,120 17,394
3,262,033 68,872 1,570,371 49,901 2,163,827 54,981
6 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At fair value
Malaysian Government treasury bills - 39,421 166,566 - 39,421 137,730
Malaysian Government securities 5,070 430,728 763,701 5,070 430,728 763,701
Malaysian Government investment issues 1,879,076 2,611,724 1,410,778 1,004,366 1,915,445 674,170
BNM Sukuk - - 32,017 - - -
Sukuk Perumahan Kerajaan 120,550 - - 120,550 - -
Bank Negara Malaysia Monetary Notes 884,069 174,620 1,006,592 517,015 24,949 849,557
Negotiable Instruments of Deposit and
Islamic Debt Certificates 752,059 802,322 141,072 752,059 802,322 141,072
Bankers’ acceptances and Islamic
accepted bills 163,751 - 556,994 163,751 - 556,994
Khazanah Bonds/Sukuk 193,746 14,262 13,250 157,556 - -
3,998,321 4,073,077 4,090,970 2,720,367 3,212,865 3,123,224

Quoted securities:
Shares in Malaysia 17,736 33,585 51,375 12,806 23,230 40,920
Private debt securities in Malaysia 4,173 2,167 2,167 4,173 2,167 2,167

Unquoted securities:
Shares in Malaysia 135,595 105,902 93,173 135,526 105,833 93,101
Private debt securities
- in Malaysia 3,067,124 1,935,129 1,266,117 2,365,334 1,315,135 899,797
- outside Malaysia 465,736 576,894 340,620 465,736 576,894 329,523
7,688,685 6,726,754 5,844,422 5,703,942 5,236,124 4,488,732

Allowance for impairment of securities (48,031) (28,336) (40,005) (45,781) (21,591) (33,260)
7,640,654 6,698,418 5,804,417 5,658,161 5,214,533 4,455,472

7 FINANCIAL INVESTMENTS HELD-TO-MATURITY
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At amortised cost
Quoted securities:

Unquoted securities:
513,818 608,689 520,289 513,818 608,689 520,121
Allowance for impairment of securities (62,148) (87,584) (87,752) (62,148) (87,584) (87,584)
451,670 521,105 432,537 451,670 521,105 432,537
8 loans, advances and financing
The Group The Bank

(i) By type 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Overdrafts 1,834,204 1,856,907 1,971,364 1,647,184 1,649,343 1,747,438
Term loans/financing
- Housing loans/financing 5,176,283 4,544,089 3,885,327 3,664,322 3,273,275 2,831,771
- Hire purchase receivables 9,595,286 8,869,439 7,835,986 8,157,056 7,637,022 6,774,821
- Syndicated financing 1,410,697 1,409,858 1,371,964 1,150,704 1,265,396 1,254,969
- Business term loans/financing 11,198,302 9,980,935 7,784,898 9,740,164 8,633,582 6,850,106
Bills receivables 452,075 42,928 39,077 451,685 42,534 37,688
Trust receipts 435,425 374,449 266,050 406,979 340,869 222,092
Claims on customers under
acceptances credits 1,040,695 694,365 659,074 907,118 602,521 601,137
Staff loans/financing (of which
RM Nil to Directors) 143,138 147,691 151,146 132,239 138,821 143,110
Credit/charge cards 85,258 93,116 101,682 85,258 93,116 101,682
Revolving credits 2,640,078 2,286,027 2,476,644 2,455,344 2,153,483 2,334,181
Factoring 4,186 12,318 3,185 4,186 12,318 3,185
Gross loans, advances and
financing 34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180
Less:
Allowance for impairment
- Individual (210,372) (168,257) (175,849) (175,277) (133,329) (139,709)
- Collective (322,629) (451,599) (395,701) (287,693) (390,890) (343,220)
Total net loans, advances and
financing 33,482,626 29,692,266 25,974,847 28,339,269 25,318,061 22,419,251
- Included in term loans are housing loans sold to Cagamas Berhad with recourse amounting to RM413,549,000 (31.12.2011:
RM428,459,000, 1.1.2011: RM288,891,000).
- Included in Group’s business term loans/financing as at reporting date is RM35.2 million (31.12.2011: RM23.3 million,
1.1.2011: RM13.5 million) of term financing disbursed by AFFIN Islamic Bank Bhd to jointly controlled entity, AFFIN-i
Nadayu Sdn Bhd (fka AFFIN-i Goodyear Sdn Bhd).

8 loans, advances and financing (continued)
The Group The Bank

(ii) By maturity structure 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Maturing within one year 7,094,994 5,745,936 6,552,073 6,529,283 5,128,886 5,989,754
One year to three years 3,776,830 3,738,038 2,748,818 3,422,247 3,511,510 2,581,046
Three years to five years 7,027,289 5,386,223 4,411,920 6,256,576 4,689,710 3,906,606
Over five years 16,116,514 15,441,925 12,833,586 12,594,133 12,512,174 10,424,774
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180
The Group The Bank

(iii) By type of customer 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Domestic banking institutions 1,335 949 - 1,335 949 -
Domestic non-banking institutions
- Stockbroking companies 253 - 270 253 - 270
- Others 1,702,223 2,078,889 2,146,330 1,392,164 1,771,630 1,724,629
Domestic business enterprises
- Small medium enterprises 5,159,162 7,573,762 6,789,502 4,731,171 6,989,064 6,311,415
- Others 12,236,170 7,257,740 5,785,703 10,909,570 6,409,423 5,265,662
Government and statutory bodies 117,523 65,487 75,394 95,861 49,642 75,394
Individuals 13,980,454 12,908,539 11,473,630 11,064,103 10,438,005 9,369,378
Other domestic entities 128,982 164,857 45,584 43,256 47,337 43,749
Foreign entities 689,525 261,899 229,984 564,526 136,230 111,683
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180

The Group The Bank
(iv) By interest/profit rate sensitivity 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Fixed rate
- Housing loans/financing 306,969 283,990 286,138 223,958 191,221 183,375
- Hire purchase receivables 9,595,286 8,869,438 7,834,034 8,157,056 7,637,022 6,773,029
- Other fixed rate loans/financing 4,238,013 4,482,642 3,934,311 3,575,916 3,887,802 3,400,299
Variable rate
- BLR plus 13,680,021 11,271,790 10,210,602 11,284,216 9,225,843 8,596,943
- Cost plus 6,195,338 5,404,262 4,281,312 5,561,093 4,900,392 3,948,534
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180

The Group The Bank

(v) By economic sectors 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Primary agriculture 541,309 489,126 482,204 456,231 402,511 385,200
Mining and quarrying 473,549 431,334 373,899 472,737 431,167 373,664
Manufacturing 2,652,586 2,272,033 1,790,610 2,431,936 2,051,720 1,660,682
Electricity, gas and water supply 465,812 160,641 194,137 442,841 159,825 193,273
Construction 2,996,080 2,433,031 2,367,389 2,565,423 2,108,657 2,027,689
Real estate 3,710,269 3,000,445 2,328,423 3,300,797 2,557,560 2,283,744
Wholesale & retail trade and
restaurants & hotels 1,772,302 1,436,865 1,213,751 1,635,026 1,392,540 1,164,859
Transport, storage and communication 1,684,162 1,582,862 921,590 1,667,015 1,572,087 915,146
Finance, insurance and business
services 4,198,676 4,266,707 4,396,591 3,711,166 3,833,101 3,809,129
Education, health and others 1,326,793 1,146,839 855,655 866,577 734,469 584,559
Household 14,123,648 13,039,953 11,579,272 11,183,065 10,549,125 9,461,991
Others 70,441 52,286 42,876 69,425 49,518 42,244
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180

The Group The Bank
(vi) By economic purpose 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Purchase of securities 111,002 131,246 268,145 110,968 131,165 254,706
Purchase of transport vehicles 10,032,763 9,112,854 7,869,187 8,594,582 7,880,728 6,807,263
Purchase of landed property of
which:
- Residential 5,170,831 4,632,718 3,982,258 3,569,346 3,258,417 2,913,043
- Non-residential 4,738,255 3,791,366 2,637,636 3,872,481 3,042,970 2,211,785
Fixed assets other than land and
building 330,383 326,549 339,184 264,500 276,513 329,088
Personal use 956,755 819,498 721,877 916,901 780,772 689,560
Credit card 85,258 93,116 101,682 85,258 93,116 101,682
Consumer durable 860 958 1,067 843 932 1,033
Construction 2,068,031 1,594,137 772,577 1,853,956 1,444,217 648,490
Merger and acquisition 419,051 98,651 4,867 419,051 98,651 4,867
Working capital 9,537,743 9,489,000 9,635,096 8,556,715 8,618,767 8,739,309
Others 564,695 222,029 212,821 557,638 216,032 201,354
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180

The Group The Bank

(vii) By geographical distribution 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Perlis 84,463 56,604 27,648 75,126 53,590 25,762
Kedah 1,051,167 942,274 902,980 775,217 728,495 691,342
Pulau Pinang 1,665,271 1,525,797 1,271,331 1,574,914 1,424,482 1,176,306
Perak 1,037,353 917,610 853,633 787,392 719,023 689,294
Selangor 10,829,556 9,330,844 7,602,382 8,975,233 7,858,891 6,423,997
Wilayah Persekutuan 9,614,422 8,886,609 8,720,586 8,196,935 7,675,315 7,876,473
Negeri Sembilan 754,375 753,916 721,564 656,033 683,030 660,393
Melaka 767,272 696,178 663,856 711,588 656,132 623,077
Johor 2,815,016 2,631,232 2,027,324 2,633,855 2,456,572 1,889,371
Pahang 679,379 633,914 623,000 429,283 378,967 368,284
Terengganu 844,224 580,189 567,382 490,010 252,758 277,903
Kelantan 243,555 268,161 256,176 47,809 58,223 58,335
Sarawak 995,737 1,011,152 732,788 968,982 985,563 707,464
Sabah 1,533,859 1,272,938 1,173,362 1,480,515 1,211,948 1,137,077
Labuan 187,347 262,731 277,901 187,340 262,722 277,889
Outside Malaysia 912,631 541,973 124,484 812,007 436,569 19,213
34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180

The Group The Bank
(viii) Movements of impaired loans 31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

At beginning of the financial year 865,662 971,123 693,318 818,522
Classified as impaired 535,712 535,462 468,672 422,487
Reclassified as non-impaired (375,518) (343,790) (295,513) (273,189)
Amount recovered (123,546) (185,271) (102,162) (165,246)
Amount written-off (149,116) (111,862) (140,912) (109,256)
At end of the financial year 753,194 865,662 623,403 693,318

Ratio of gross impaired loans, advances and financing
to gross loans, advances and financing 2.21% 2.85% 2.16% 2.68%

The Group The Bank

(ix) Movements in allowance for impairment 31.12.2012 31.12.2011 31.12.2012 31.12.2011
on loans, advances and financing RM’000 RM’000 RM’000 RM’000
Individual impairment

Provision for loan impairment 72,213 116,909 69,391 111,880
Amount recovered (2,716) (13,571) (2,546) (12,198)
Unwinding of discount of allowance (14,020) (14,706) (11,535) (12,173)

Collective impairment

Provision for loan impairment 6,672 67,662 24,242 59,788
Exchange differences - 354 - -
The Group The Bank

(x) Impaired loans by economic 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
sectors RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Primary agriculture 7,482 7,855 11,937 7,482 7,810 11,874
Mining and quarrying 62 - 50 - - -
Manufacturing 50,795 48,663 99,831 29,916 28,197 78,707
Electricity, gas and water supply 1,641 1,928 2,360 1,641 1,662 2,066
Construction 180,667 189,515 252,660 114,475 121,609 175,208
Real estate 3,797 4,159 8,263 3,797 4,159 8,263
restaurants & hotels 27,246 34,519 48,103 23,746 32,299 45,555
Transport, storage and communication 7,212 5,086 4,633 7,155 5,086 4,633
services 63,880 51,926 15,108 63,114 23,537 14,469
Education, health and others 4,107 8,547 8,301 4,107 8,510 8,301
Household 399,019 509,810 519,877 360,787 456,892 469,446
Others 7,286 3,654 - 7,183 3,557 -
753,194 865,662 971,123 623,403 693,318 818,522

The Group The Bank

(xi) Impaired loans by economic 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
purpose RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Purchase of securities 13,678 2,721 2,741 13,678 2,721 2,741
Purchase of transport vehicles 54,781 106,606 81,586 48,702 95,291 73,743
Purchase of landed property of which:
- Residential 329,360 382,814 407,763 297,245 340,922 365,321
- Non-residential 26,575 34,354 44,744 26,015 33,850 44,119
Fixed assets other than land and
building 5,063 17,758 3,633 5,063 17,758 3,185
Personal use 6,738 12,699 16,373 6,738 8,611 16,170
Credit card 508 499 636 508 499 636
Consumer durable 29 33 34 29 33 34
Construction 61,437 63,547 63,407 141 57 1,694
Working capital 243,861 243,112 349,989 214,224 192,157 310,666
Others 11,164 1,519 217 11,060 1,419 213
753,194 865,662 971,123 623,403 693,318 818,522
The Group The Bank

(xii) Impaired loans by geographical 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
distribution RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Perlis 138 332 840 138 332 840
Kedah 24,622 24,835 40,612 23,397 23,834 39,228
Pulau Pinang 18,684 25,585 30,120 17,342 23,774 27,892
Perak 20,754 23,884 16,202 19,270 21,332 14,559
Selangor 344,927 407,273 426,852 300,176 360,343 382,454
Wilayah Persekutuan 142,238 122,787 185,642 136,283 110,570 173,975
Negeri Sembilan 31,248 39,790 37,483 28,873 37,609 35,466
Melaka 7,452 16,229 15,854 7,215 16,033 15,356
Johor 52,426 65,744 88,097 50,310 62,945 85,252
Pahang 10,058 11,840 17,013 7,097 8,122 13,368
Terengganu 3,681 5,776 8,009 1,994 3,156 6,529
Kelantan 4,153 7,193 6,171 1,778 2,707 3,011
Sarawak 5,741 7,694 6,614 5,154 7,456 6,387
Sabah 10,460 15,533 14,387 9,060 15,090 14,160
Labuan 21 15 45 21 15 45
Outside Malaysia 76,591 91,152 77,182 15,295 - -
753,194 865,662 971,123 623,403 693,318 818,522

9 OTHER ASSETS
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Other debtors, deposits and

prepayments 33,532 21,421 21,623 32,057 20,923 20,222
Cheque clearing accounts 233,351 104,755 4,160 170,137 56,775 4,077
Foreclosed properties (a) 26,745 40,337 160,648 25,566 38,962 160,253
Others 30 30 30 30 30 30
293,658 166,543 186,461 227,790 116,690 184,582

(a) Foreclosed properties
The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Amount arising during the financial
year - 1,190 - -
Disposal during the financial year (11,470) (118,959) (11,274) (118,959)
28,867 42,879 27,688 41,294

Foreclosed properties - diminution
in value (2,122) (2,542) (2,122) (2,332)
10 AMOUNT DUE FROM SUBSIDIARIES
The Bank
31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000
Advances to a subsidiary 153,296 355,535 183,541

Other receivables 653 1,362 1,730
153,949 356,897 185,271
The advances of RM153,296,000 (31.12.2011 : RM355,535,000, 1.1.2011 : RM183,541,000) to subsidiary are unsecured, bear
interest at 3.08% per annum (31.12.2011 : 3.02%, 1.1.2011 : 2.62%) and have no fixed terms of repayment.

11 DEFERRED TAX ASSETS / (LIABILITIES)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts determined after
appropriate offsetting, are shown in the statement of financial position:
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Deferred tax assets:

- to be recovered after more than
12 months - - 5,221 - - -
- to be recovered within 12 months - - (930) - - -
- - 4,291 - - -
Deferred tax liabilities:

- to be recovered after more than
12 months (5,278) (6,099) (2,876) (4,468) (5,263) (2,876)
- to be recovered within 12 months (8,087) (14,019) (22,056) (8,631) (13,948) (22,056)
(13,365) (20,118) (24,932) (13,099) (19,211) (24,932)
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
At beginning of the financial year (20,118) (20,641) (19,211) (24,932)

(Charged)/credited to income statement (Note 34) 7,171 7,453 6,568 13,325
- property and equipment 185 (73) 112 (36)

- intangible assets 1,920 (424) 1,721 24
- collective allowances (transitional
provision) for bad and doubtful financing - (6,785) - (267)
- provision for other liabilities 5,066 14,735 4,735 13,604
Charged to equity (418) (6,930) (456) (7,604)
At end of the financial year (13,365) (20,118) (13,099) (19,211)

11 DEFERRED TAX ASSETS / (LIABILITIES) (continued)
The movements in deferred tax assets and liabilities during the financial year are as follows:

The Group The Bank
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Subject to income tax

Deferred tax assets (before offsetting)
Collective allowances (transitional
provision) for bad and doubtful financing - - 6,785 - - 267
Provision for other liabilities 19,813 14,747 12 18,351 13,616 12
19,813 14,747 6,797 18,351 13,616 279

Offsetting (19,813) (14,747) (2,506) (18,351) (13,616) (279)
Deferred tax assets (after offsetting) - - 4,291 - - -

Deferred tax liabilities (before offsetting)
Property and equipment (5,228) (5,413) (5,340) (4,983) (5,095) (5,059)
Intangible assets (3,756) (5,676) (5,252) (3,141) (4,862) (4,886)
AFS revaluation reserves (24,194) (23,776) (16,846) (23,326) (22,870) (15,266)
(33,178) (34,865) (27,438) (31,450) (32,827) (25,211)

Offsetting 19,813 14,747 2,506 18,351 13,616 279
Deferred tax liabilities (after offsetting) (13,365) (20,118) (24,932) (13,099) (19,211) (24,932)
The amount of unused tax losses for which no deferred tax asset is recognised in the statement of financial position are as
follows:
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Tax losses 102,898 103,871 105,260 - - -
12 STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA
A non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance with requirements of Section
26(2)(c) of the Central Bank of Malaysia Act 2009, the amounts of which is determined at a set percentages of total eligible
liabilities.


13 INVESTMENT IN SUBSIDIARIES
The Bank
31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000
Unquoted shares, at cost 419,557 319,557 319,557

Less: Allowance for impairment losses (32,168) (32,168) (32,128)
387,389 287,389 287,429
The subsidiaries of the Bank, all of which are incorporated in Malaysia, are as follows:
Percentage of equity held

Name Principal Activities 31.12.2012 31.12.2011 1.1.2011
% % %

AFFIN Islamic Bank Bhd Islamic banking business 100 100 100
PAB Properties Sdn Bhd Property management services 100 100 100
ABB Nominee (Tempatan) Sdn Bhd Share nominee services 100 100 100
ABB Nominee (Asing) Sdn Bhd Share nominee services 100 100 100
ABB Trustee Berhad * Trustee management services 100 100 100
AFFIN Factors Sdn Bhd Dormant 100 100 100
AFFIN Futures Sdn Bhd Dormant 100 100 100
PAB Property Management Services Sdn Bhd Dormant 100 100 100
PAB Property Development Sdn Bhd Dormant 100 100 100
ABB Venture Capital Sdn Bhd Dormant 100 100 100
ABB IT & Services Sdn Bhd Dormant 100 100 100
BSNCB Nominees (Tempatan) Sdn Bhd Dormant 100 100 100
BSNC Nominees (Tempatan) Sdn Bhd Dormant 100 100 100
ABB Asset Management (M) Bhd Dormant 100 100 100
AFFIN Recoveries Bhd Dormant 100 100 100
BSN Merchant Nominees (Tempatan) Sdn Bhd Dormant 100 100 100
BSN Merchant Nominees (Asing) Sdn Bhd Dormant 100 100 100
AFFIN-ACF Nominees (Tempatan) Sdn Bhd Dormant 100 100 100
* 80% held by Directors of the Bank, in trust for the Bank.

14 INVESTMENT IN JOINTLY CONTROLLED ENTITY
The Group
31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000
Unquoted shares, at cost 500 500 500

Group’s share of post acquisition retained losses (440) (210) -
60 290 500
The summarised financial information of jointly controlled entity are as follows:
Revenue 8 10 2
Loss after tax (460) (420) (89)
Total assets 46,516 31,711 21,518
Total liabilities 46,396 31,132 20,619
Capital commitment for property and equipment - - -
The jointly controlled entity was incorporated on 1 April 2008 and the details are as follows:
Issued and
paip up Percentage of equity held
Name Principal Activities Share capital 31.12.2012 31.12.2011 1.1.2011
RM’000 % % %

AFFIN-i Nadayu Sdn Bhd Land development project 1,000 50 50 50
On 1 April 2008, AFFIN Islamic Bank Berhad and Jurus Positif Sdn Bhd, a subsidiary of Mutiara Goodyear Development Berhad,
entered into a joint venture agreement under the Shariah principles (‘Musharakah Agreement’) to develop a land into a housing
scheme at Bukit Gambir, Pulau Pinang.
The agreement also includes an arrangement where Jurus Positif Sdn Bhd may acquire the Bank’s shares upon the completion of
the project at a mutually agreed price, unless if both shareholders decide to continue the joint venture for subsequent projects.
Major strategic operation and financial decisions relating to the activities of AFFIN-i Nadayu (fka AFFIN-i Goodyear Sdn Bhd)
requires unanimous consent by both joint venture parties. The Group’s interest in AFFIN-i Nadayu Sdn Bhd has been treated as
investment in jointly controlled entity, which has been accounted for in the consolidated financial statements using the equity
method of accounting.

Annual Report 2012

15 PROPERTY AND EQUIPMENT
Buildings Buildings Office Computer

<--Leasehold land--> on on equipment equipment Capital
Freehold 50 years Less than freehold leasehold and and Motor work in
The Group land or more 50 years land land Renovation furniture software vehicles progress Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost
At 1 January 2012 22,811 12,862 5,380 32,013 89,069 105,357 54,448 67,617 3,963 1,865 395,385
Additions - - - - - 6,936 3,915 3,337 25 6,403 20,616
Disposals (1,685) - - (2,063) - (637) (189) - (379) - (4,953)
Write-off - - - - - (814) (613) (2,179) - - (3,606)
Reclassification - - - - - - - - - (429) (429)
At 31 December 2012 21,126 12,862 5,380 29,950 89,069 110,842 57,561 68,775 3,609 7,839 407,013

Accumulated depreciation and
impairment losses
113
At 1 January 2012 - 1,923 1,452 13,266 21,582 88,056 35,667 57,509 3,100 - 222,555
Charge for the financial year - 111 120 498 1,789 7,417 3,192 4,293 364 - 17,784
Disposal - - - (802) - (607) (172) - (379) - (1,960)
Write-off - - - - - (801) (455) (2,172) - - (3,428)
Impairment 140 - - - - - - - - - 140
At 31 December 2012 140 2,034 1,572 12,962 23,371 94,065 38,232 59,630 3,085 - 235,091

Net book value as at
31 December 2012 20,986 10,828 3,808 16,988 65,698 16,777 19,329 9,145 524 7,839 171,922

15 PROPERTY AND EQUIPMENT (continued)


The Group land or more 50 years land land Renovation furniture software vehicles progress Total
Cost
At 1 January 2011 24,287 12,862 5,380 33,211 89,069 96,040 49,991 64,425 3,563 1,617 380,445
Additions - - - - - 11,252 4,882 4,889 412 11,458 32,893
Disposals (1,476) - - (1,198) - (805) (188) - (12) - (3,679)
Write-off - - - - - (1,347) (1,276) (2,304) - - (4,927)
Reclassification - - - - - 217 1,039 607 - (11,210) (9,347)
At 31 December 2011 22,811 12,862 5,380 32,013 89,069 105,357 54,448 67,617 3,963 1,865 395,385

impairment losses
At 1 January 2011 - 1,811 1,332 13,273 19,793 83,152 33,904 53,693 2,765 - 209,723
114
Disposal - - - (542) - (799) (183) - (12) - (1,536)
Write-off - - - - - (1,181) (1,113) (2,210) - - (4,504)
At 31 December 2011 - 1,923 1,452 13,266 21,582 88,056 35,667 57,509 3,100 - 222,555

31 December 2011 22,811 10,939 3,928 18,747 67,487 17,301 18,781 10,108 863 1,865 172,830
Annual Report 2012

Annual Report 2012


The Bank land or more 50 years land land Renovation furniture software vehicles progress Total
Cost
At 1 January 2012 19,814 10,972 5,380 30,377 88,161 102,094 52,800 65,324 3,501 1,865 380,288
Additions - - - - - 6,447 3,482 3,123 25 6,403 19,480
Disposals (1,196) - - (1,726) - (638) (188) - (378) - (4,126)
Write-off - - - - - (814) (613) (2,039) - - (3,466)
Reclassification - - - - - - 1 (44) - (429) (472)
At 31 December 2012 18,618 10,972 5,380 28,651 88,161 107,089 55,482 66,364 3,148 7,839 391,704

impairment losses
115
At 1 January 2012 - 1,696 1,452 12,344 21,080 85,834 35,069 56,034 2,745 - 216,254
Disposal - - - (620) - (607) (172) - (379) - (1,778)
Write-off - - - - - (801) (455) (2,032) - - (3,288)
Reclassification - - - - - - 1 (15) - - (14)
At 31 December 2012 - 1,800 1,572 12,196 22,850 91,329 37,456 57,911 2,639 - 227,753

31 December 2012 18,618 9,172 3,808 16,455 65,311 15,760 18,026 8,453 509 7,839 163,951



The Bank land or more 50 years land land Renovation furniture software vehicles progress Total
Cost
At 1 January 2011 21,290 10,972 5,380 31,575 88,161 93,648 48,830 62,595 3,101 1,617 367,169
Additions - - - - - 10,391 4,396 4,386 412 9,243 28,828
Disposals (1,476) - - (1,198) - (805) (188) - (12) - (3,679)
Write-off - - - - - (1,347) (1,273) (2,264) - - (4,884)
Reclassification - - - - - 207 1,035 607 - (8,995) (7,146)
At 31 December 2011 19,814 10,972 5,380 30,377 88,161 102,094 52,800 65,324 3,501 1,865 380,288

impairment losses
At 1 January 2011 - 1,593 1,332 12,384 19,309 81,328 33,457 52,505 2,501 - 204,409
116
Disposal - - - (542) - (799) (183) - (12) - (1,536)
Write-off - - - - - (1,181) (1,110) (2,179) - - (4,470)
Reclassification - - - - - - (2) - - - (2)
At 31 December 2011 - 1,696 1,452 12,344 21,080 85,834 35,069 56,034 2,745 - 216,254

31 December 2011 19,814 9,276 3,928 18,033 67,081 16,260 17,731 9,290 756 1,865 164,034
Annual Report 2012

16 INTANGIBLE ASSETS
Computer
The Group Goodwill Software Total
RM’000 RM’000 RM’000
Cost
At 1 January 2012 133,430 120,072 253,502
Additions - 458 458
Reclassification from property and equipment (Note 15) - 429 429
At 31 December 2012 133,430 120,959 254,389

Less: Accumulated amortisation
At 1 January 2012 - (97,369) (97,369)
Amortised during the financial year - (8,568) (8,568)
At 31 December 2012 - (105,937) (105,937)

Net book value as at 31 December 2012 133,430 15,022 148,452

Cost
At 1 January 2011 133,430 109,015 242,445
Additions - 1,718 1,718
Disposal - (4) (4)
Write-off - (4) (4)
Reclassification from property and equipment (Note 15) - 9,347 9,347
At 31 December 2011 133,430 120,072 253,502

At 1 January 2011 - (88,009) (88,009)
Disposal - 3 3
Write-off - 3 3
At 31 December 2011 - (97,369) (97,369)


16 INTANGIBLE ASSETS (continued)
Computer
The Bank Goodwill Software Total
RM’000 RM’000 RM’000
Cost
At 1 January 2012 137,323 113,670 250,993
Additions - 458 458
Reclassification from property and equipment (Note 15) - 429 429
At 31 December 2012 137,323 114,557 251,880

At 1 January 2012 - (94,222) (94,222)
At 31 December 2012 - (101,993) (101,993)


Cost
At 1 January 2011 137,323 104,937 242,260
Additions - 1,599 1,599
Disposal - (4) (4)
Write-off - (4) (4)
Reclassification from property and equipment (Note 15) - 7,142 7,142
At 31 December 2011 137,323 113,670 250,993

At 1 January 2011 - (85,392) (85,392)
Disposal - 3 3
Write-off - 3 3
At 31 December 2011 - (94,222) (94,222)


16 INTANGIBLE ASSETS (continued)
Goodwill
The carrying amount of the Bank’s goodwill has been allocated to the following business segments, which represent the Bank’s
cash-generating units (‘CGUs’):
31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000
Enterprise banking 123,591 123,591 123,591

Consumer banking 13,732 13,732 13,732
137,323 137,323 137,323
Goodwill is allocated to the Bank’s CGU which are expected to benefit from the synergies of the acquisitions. For annual impairment
testing purposes, the recoverable amount of the CGUs are determined based on value-in-use calculations using the cash flow
projections based on the 2013 financial budgets approved by the Directors, covering a period of 5 years based on the historical
Gross Domestic Product (‘GDP’) growth rate of Malaysia, revised for current economic conditions. The cash flow beyond the fifth
year are projected based on the assumption that the Year 5 operating cash flow will be generated by the respective CGUs at a
growth rate of 5% (2011: 5%, 2010: 5%) on perpetual basis.
The cash flow projections are derived based on a number of key factors including past performance and management’s
expectations of the market developments. The discount rates used are based on the pre-tax weighted average cost of capital plus
an appropriate risk premium where applicable (‘WACC’), at the date of assessment of the CGUs.
31.12.2012 31.12.2012 31.12.2011 31.12.2011 1.1.2011 1.1.2011

Enterprise Consumer Enterprise Consumer Enterprise Consumer
banking banking banking banking banking banking
% % % % % %
Pre-tax discount rate 13.39 13.35 14.80 14.74 14.29 14.21
No impairment charge was required for goodwill arising from all the business segments. Management views that any reasonable
possible change to the assumptions applied is not likely to cause the recoverable amount of all the business segments to be lower
than its carrying amount.

17 DEPOSITS FROM CUSTOMERS
The Group The Bank

(i) By type of deposit 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Demand deposits 7,350,021 6,166,579 5,063,155 4,716,583 4,229,705 3,565,188

Savings deposits 1,710,748 1,526,891 1,400,535 1,377,258 1,223,359 1,142,332
Fixed deposits 25,204,503 22,313,675 20,037,784 19,965,844 18,021,753 16,885,793
Special investment deposits 833,132 822,914 642,171 - - -
Money market deposits 859,141 528,435 707,411 859,141 528,435 707,411
Negotiable instruments of
deposit (‘NID’) 5,305,991 5,188,950 3,131,351 5,305,991 5,069,172 3,131,351
41,263,536 36,547,444 30,982,407 32,224,817 29,072,424 25,432,075

The Group The Bank
(ii) Maturity structure of fixed 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
deposit and NID RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Due within six months 23,936,263 22,187,250 19,988,828 19,583,709 18,647,951 17,233,254
Six months to one year 6,318,076 5,018,157 3,133,020 5,443,400 4,208,729 2,740,853
One year to three years 54,835 95,977 24,167 43,608 33,205 20,856
Three years to five years 201,320 201,241 23,120 201,118 201,040 22,181
30,510,494 27,502,625 23,169,135 25,271,835 23,090,925 20,017,144

The Group The Bank
(iii) By type of customer 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Government and statutory bodies 7,226,690 6,793,344 4,769,914 4,285,101 3,600,922 2,969,799
Business enterprise 12,837,106 10,961,534 9,789,744 9,534,502 8,603,523 8,197,090
Individuals 8,974,563 6,763,627 5,027,100 8,129,294 6,157,670 4,591,770
Others 12,225,177 12,028,939 11,395,649 10,275,920 10,710,309 9,673,416
41,263,536 36,547,444 30,982,407 32,224,817 29,072,424 25,432,075
18 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Licensed banks 3,212,031 3,724,682 5,024,966 2,391,811 2,752,720 4,308,897

Licensed investment banks 549,029 1,754,811 439,546 490,508 1,704,745 423,868
Bank Negara Malaysia 612,055 794,523 308,497 612,055 794,427 308,497
Other financial institutions 436,208 1,252,896 846,726 233,889 791,945 707,741
4,809,323 7,526,912 6,619,735 3,728,263 6,043,837 5,749,003

Maturity structure of deposits
Due within six months 4,806,995 7,524,234 6,550,733 3,725,935 6,041,159 5,680,001
Six months to one year 2,328 2,678 69,002 2,328 2,678 69,002
4,809,323 7,526,912 6,619,735 3,728,263 6,043,837 5,749,003

19 DERIVATIVE FINANCIAL LIABILITIES

31.12.2012 31.12.2011 1.1.2011
Contract/ Contract/ Contract/
notional notional notional
amount Liabilities amount Liabilities amount Liabilities
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At fair value
Currency forwards 340,155 2,870 466,576 6,313 487,922 19,025
Cross currency swaps 1,188,783 23,725 1,465,194 33,904 340,850 22,715

Interest rate derivatives:
Interest rate swaps 1,695,980 33,068 1,950,455 57,182 919,193 28,455
3,224,918 59,663 3,882,225 97,399 1,747,965 70,195
20 RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD
In the normal course of banking operations, the Bank sells loans to Cagamas Berhad with recourse at values equivalent to
the unpaid principal balances of loans and advances due from the borrowers.
The Bank is liable in respect of housing loans and hire purchase portfolio sold directly and indirectly to Cagamas Berhad,
under the condition that the Bank undertakes to administer these loans on behalf of Cagamas Berhad and to buy back
any loans which are regarded as defective based on an agreed prudential criteria. Such financing transactions and the
obligations to buy back the loans are reflected as a liability on the statement of financial position.
21 OTHER LIABILITIES
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Bank Negara Malaysia and Credit

Guarantee Corporation Funding
programmes 28,644 36,071 43,009 28,644 36,071 43,009
Margin and collateral deposits 82,131 72,793 65,191 79,099 72,133 62,552
Other creditors and accruals 181,884 206,888 188,983 161,318 190,513 172,182
Cheque clearing accounts - - 44,616 - - 27,706
Defined contribution plan (a) 13,593 10,754 11,968 12,877 10,211 11,448
Accrued employee benefits (b) 229 229 125 206 206 105
306,481 326,735 353,892 282,144 309,134 317,002
(a) The Group and the Bank contributes to the Employee Provident Fund (‘EPF’), the national defined contribution plan. Once the
contributions have been paid, the Group and the Bank has no further payment obligations.
(b) This refers to the accruals for short-term employee benefits for leave entitlement. Under employment contract, employees
earn their leave entitlement which they are entitled to carry forward and will lapse if not utilised in the following accounting
period. Accruals are made for the estimated liability for unutilised annual leave.

22 AMOUNT DUE TO SUBSIDIARIES
The amount due to subsidiaries is unsecured, interest-free and have no fixed terms of repayment.
23 SUBORDINATED TERM LOAN
On 10 March 2009, the Bank has taken the first 10 year subordinated loan amounting to RM300 million. The first subordinated
loan was constituted by agreement date 6 March 2009 and were issued on 10 March 2009.
On 26 May 2011, the Bank has taken the second 10 year subordinated loan amounting to RM300 million. The second
subordinated loan was constituted by agreement date 20 May 2011 and were issued on 26 May 2011.
On 16 January 2012, the Bank has taken the third 10 year subordinated loan amounting to RM300 million. The third
subordinated loan was constituted by agreement date 3 January 2012 and were issued on 16 January 2012.
All the subordinated loans were taken with the Bank’s Holding Company.
The subordinated loans have a prepayment option on the first prepayment date or any interest payment date subsequent
to the first prepayment date, giving the Bank the right, subject to Bank Negara Malaysia (‘BNM’) approval, to prepay the
loans in whole or in part.
Interest on subordinated loans payable by quarterly.
Subordinated loan I
Value : RM300 million

Interest rate : Cost of Fund (‘COF’) plus 0.75% per annum for period of thirty six months from the issue date, COF plus
1.75% per annum for the next twenty four months and thereafter COF plus 2.00% for the next 5 years.
Subordinated loan II and Subordinated loan III
Value : RM300 million each

Interest rate : Cost of Fund (‘COF’) plus 1.00% per annum for the 10 years.
COF refers to rate determined by the lender on an interest determination date falling within the interest duration.

24 share capital
Number of ordinary The Group and

shares of RM1 each The Bank
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
’000 ’000 ’000 RM’000 RM’000 RM’000
Authorised
At beginning/end of the financial year 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paid
At beginning of the financial year 1,439,285 1,439,285 1,439,285 1,439,285 1,439,285 1,439,285
Issued during the financial year 79,052 - - 79,052 - -
At end of the financial year 1,518,337 1,439,285 1,439,285 1,518,337 1,439,285 1,439,285
25 reserves
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Retained profits 834,371 667,326 522,171 659,603 530,489 411,831

Share premium 529,337 408,389 408,389 529,337 408,389 408,389
AFS revaluation reserves 75,256 74,941 54,249 69,977 68,611 45,795
Statutory reserves 1,160,651 1,011,044 888,910 1,017,200 904,624 807,500
2,599,615 2,161,700 1,873,719 2,276,117 1,912,113 1,673,515

Statutory reserves
At beginning of the financial year 1,011,044 888,910 789,221 904,624 807,500 720,824
Transfer from retained profits 149,607 122,134 99,689 112,576 97,124 86,676
At end of the financial year 1,160,651 1,011,044 888,910 1,017,200 904,624 807,500
(a) A single tier company tax was introduced effective 1 January 2008. Under this single tier system, tax on a company’s profits
is a final tax, and dividends distributed to shareholders will be exempted from tax. Companies with Section 108 tax credit
balance are given an option to elect to move to a single tier system immediately or allowed to use the Section 108 credit
balance for the purpose of dividend distribution during a transitional period of 6 years until 31 December 2013.
The Bank has elected to use its Section 108 credit balance for the purpose of dividend distribution during a transitional period
of 6 years until 31 December 2013. The Section 108 balance of the Bank as at 31 December 2007 will be frozen and can only
be adjusted downwards for any tax discharged, remitted or refunded during the 6 years period.
As at 31 December 2012, the Bank has a tax credit balance of RM2,533,928 under Section 108 of the Income Tax Act, 1967
and tax exempt account balance of RM83,016,257 under Section 12 of the Income Tax (Amendment) Act 1999, subject to
agreement by the Inland Revenue Board.
(b) The statutory reserves of the Group and the Bank are maintained in compliance with the provisions of the Banking and
Financial Institutions Act, 1989 and are not distributable as cash dividends.
(c) AFS revaluation reserves represent the unrealised gains or losses arising from the change in fair value of investments classified
as financial investment available-for-sale. The gains or losses are transferred in the income statement upon disposal or when
the securities become impaired.

26 INTEREST INCOME
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Loans, advances and financing 1,523,683 1,388,531 1,523,683 1,388,531

Money at call and deposit placements with financial institutions 154,737 148,478 179,411 165,052
Reverse repurchase agreements with financial institutions 117 - 117 -
Financial assets/investments
- Held-for-trading 789 50 789 50
- Available-for-sale 183,906 141,979 183,758 141,830
- Held-to-maturity 23,912 23,276 23,912 23,229
Interest rate derivatives 86,923 71,879 86,923 71,879
Others - - 3,511 4,688
1,974,067 1,774,193 2,002,104 1,795,259

Amortisation of premium less accretion of discount 10,833 21,469 10,833 21,469
1,984,900 1,795,662 2,012,937 1,816,728

of which:
Interest income earned on impaired loans, advances and financing 6,838 11,555 6,838 11,555

27 INTEREST EXPENSE

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Deposits and placements of banks and other financial institutions 145,722 114,418 145,748 114,419
Deposits from customers 894,694 788,840 894,728 788,874
Subordinated term loan 40,453 19,884 40,453 19,884
Loan sold to Cagamas Berhad 19,891 14,913 19,891 14,913
Interest rate derivatives 93,208 81,302 93,208 81,302
Others 2,260 1,490 2,260 1,490
1,196,228 1,020,847 1,196,288 1,020,882

28 NET ISLAMIC BANKING INCOME

The Group
31.12.2012 31.12.2011
RM’000 RM’000
Income derived from investment of depositors’ funds and others 459,994 368,911
Income derived from investment of shareholders’ funds 23,650 20,852
Total distributable income 483,644 389,763

Income attributable to depositors (266,872) (190,830)
216,772 198,933

29 Other operating INCOME
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Fee income
Commission 13,918 13,329 13,918 13,329
Service charges and fees 63,999 51,987 63,999 51,987
Guarantee fees 22,567 25,017 22,567 25,017
100,484 90,333 100,484 90,333

Income from financial instruments
Gain arising on financial assets held-for-trading:
- net gain on disposal 697 546 697 546
- unrealised losses (188) (9) (188) (9)
509 537 509 537

Gains/(losses) on derivatives:
- realised 2,711 2,600 2,711 2,600
- unrealised 12,925 (13,230) 12,925 (13,230)
15,636 (10,630) 15,636 (10,630)

Gain arising on financial investments available-for-sale:
- net gain on disposal 20,634 24,102 19,870 24,102
- gross dividend income 3,204 23 3,204 23
23,838 24,125 23,074 24,125

Gain arising on financial investments held-to-maturity:
- net gain on redemption 19,011 2,546 19,011 2,378
- gross dividend income - 9,705 - 9,705
19,011 12,251 19,011 12,083

Other income
Foreign exchange gains/(losses):
- realised 29,901 74,386 29,901 74,386
- unrealised 42,325 (17,878) 42,325 (17,878)
Rental income 1,692 2,211 1,649 2,161
Gain on sale of property and equipment 1,098 23 1,093 23
Gain/(loss) on disposal of foreclosed properties 10,141 (272) 10,097 (272)
Other non-operating income 12,428 11,798 12,111 10,539
97,585 70,268 97,176 68,959
257,063 186,884 255,890 185,407

30 Other operating expenses
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Personnel costs (a) 328,427 290,791 267,089 235,592

Establishment costs (b) 176,504 166,781 149,770 142,477
Marketing expenses (c) 16,392 17,266 14,145 14,555
Administrative and general expenses (d) 49,835 58,875 42,669 49,377
571,158 533,713 473,673 442,001

(a) Personnel costs

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Wages, salaries and bonuses 254,006 220,817 206,376 178,539

Defined contribution plan (‘EPF’) 41,433 36,003 33,675 29,352
Other personnel costs 32,988 33,971 27,038 27,701
328,427 290,791 267,089 235,592

(b) Establishment costs

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Rental of premises 20,750 20,222 17,249 16,995

Equipment rental 931 905 893 877
Repair and maintenance 32,068 27,757 27,318 23,540
Depreciation 17,784 18,872 16,579 17,853
IT Consultancy fees 60,972 57,272 52,931 49,799
Dataline rental 4,324 3,477 3,759 3,022
Security services 12,109 10,461 9,836 8,625
Electricity, water and sewerage 9,187 8,491 7,688 7,220
Insurance and indemnities 4,789 4,690 4,668 4,642
Other establishment costs 5,022 5,268 1,078 1,068
176,504 166,781 149,770 142,477

30 Other operating expenses (continued)
(c) Marketing expenses

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Business promotion and advertisement 7,837 9,348 7,406 8,346

Entertainment 3,510 2,463 3,067 2,057
Traveling and accommodation 3,632 3,899 2,595 2,956
Other marketing expenses 1,413 1,556 1,077 1,196
16,392 17,266 14,145 14,555

(d) Administration and general expenses

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Telecommunication expenses 5,118 4,901 4,325 4,157

Auditors’ remuneration 1,327 1,479 981 1,025
Professional fees 5,265 13,954 4,146 10,262
Mail and courier charges 4,135 3,834 3,507 3,295
Stationery and consumables 8,975 9,423 6,820 7,224
Commissions expenses 4,204 4,451 3,984 4,190
Brokerage expenses 1,233 1,248 1,133 1,121
Directors’ fee and allowances 1,675 1,579 1,332 1,257
Donations 1,880 1,560 1,748 1,460
Settlement, clearing and bank charges 5,739 5,599 5,421 5,306
Stamp duties 3,102 3,085 3,098 3,083
Operational and litigation write-off expenses 2,995 648 2,950 648
Other administration and general expenses 4,008 6,691 3,046 5,935
49,835 58,875 42,669 49,377

The expenditure includes the following statutory disclosure:

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Directors’ remuneration (Note 31) 7,715 6,331 7,372 6,009

Rental of premises 20,750 20,222 17,249 16,995
Equipment rental 931 905 893 877
Auditors’ remuneration
- statutory audit fees 847 787 669 619
- under provision prior year - 14 - 10
- audit related fees 352 264 228 168
- non audit fees 128 414 84 228
Depreciation of property and equipment 17,784 18,872 16,579 17,853

31 CEO AND DIRECTORS’ REMUNERATION
The Directors of the Bank who have held office during the financial year are as follows:


Dato’ Zulkiflee Abbas bin Abdul Hamid

Non-Executive Directors

Jen Tan Sri Dato’ Seri Ismail bin Haji Omar (Bersara) (Chairman)
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin
Dr Raja Abdul Malek bin Raja Jallaludin
Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman
Tan Sri Dato’ Seri Mohamed Jawhar
Mr Aubrey Li Kwok-Sing
Mr Gary Cheng Shui Hee (Alternate Director to Mr Aubrey Li Kwok-Sing)
The aggregate amount of remuneration for the Directors of the Bank for the financial year were as follows:

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Salaries 1,825 1,431 1,825 1,431
Bonuses 3,150 2,471 3,150 2,471
Defined contribution plan (‘EPF’) 811 638 811 638
Other employee benefits 99 90 99 90
Benefits-in-kind 155 122 155 122

Non-Executive Directors
Fees 1,648 1,554 1,305 1,232
Directors’ remuneration (Note 30) 7,715 6,331 7,372 6,009

31 CEO AND DIRECTORS’ REMUNERATION (continued)
A summary of the total remuneration of the Directors, distinguishing between Executive and Non-Executive Directors.
Directors’ * Other Benefits-

The Bank Salaries Bonuses Fees emoluments in-kind Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Managing Director/
Chief Executive Officer
Dato’ Zulkiflee Abbas bin Abdul Hamid 1,825 3,150 - 910 155 6,040
Total 1,825 3,150 - 910 155 6,040

Non-executive Directors
Jen Tan Sri Dato’ Seri Ismail
bin Haji Omar (Bersara) - - 149 116 27 292
Tan Sri Dato’ Seri Lodin bin Wok
Kamaruddin - - 164 - - 164
Dr. Raja Abdul Malek bin Raja Jallaludin - - 204 - - 204
Tan Sri Dato’ Sri Abdul Aziz bin Abdul
Rahman - - 191 - - 191
Tan Sri Dato’ Seri Mohamed Jawhar - - 187 - - 187
En. Mohd Suffian bin Haji Haron - - 192 - - 192
Mr Aubrey Li Kwok-Sing - - 97 - - 97
Mr Gary Cheng Shui Hee (Alternate
Director to Mr Aubrey Li Kwok-Sing) - - 5 - - 5
Total - - 1,189 116 27 1,332

Grand total 1,825 3,150 1,189 1,026 182 7,372

31 CEO AND DIRECTORS’ REMUNERATION (continued)
A summary of the total remuneration of the Directors, distinguishing between Executive and Non-Executive Directors.
Directors’ * Other Benefits-

The Bank Salaries Bonuses Fees emoluments in-kind Total
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Managing Director/
Chief Executive Officer
Dato’ Zulkiflee Abbas bin Abdul Hamid 1,431 2,471 - 728 122 4,752
Total 1,431 2,471 - 728 122 4,752

Non-executive Directors
Jen Tan Sri Dato’ Seri Ismail
bin Haji Omar (Bersara) - - 168 96 25 289
Tan Sri Dato’ Seri Lodin bin Wok
Kamaruddin - - 97 - - 97
Dr. Raja Abdul Malek bin Raja Jallaludin - - 202 - - 202
Laksamana Madya Tan Sri Dato’ Seri
Ahmad Ramli bin Mohd Nor (Bersara) - - 125 - - 125
Tan Sri Dato’ Sri Abdul Aziz bin Abdul
Rahman - - 190 - - 190
Mr Aubrey Li Kwok-Sing - - 86 - - 86
Mr Gary Cheng Shui Hee (Alternate
Director to Mr Aubrey Li Kwok-Sing) - - 5 - - 5
Mr Stephen Charles Li - - 59 - - 59
Mr Lee Chor Kee (Alternate Director
to Mr Stephen Charles Li) - - 1 - - 1
En. Mohd Suffian bin Haji Haron - - 189 - - 189
Tan Sri Dato’ Seri Mohamed Jawhar - - 14 - - 14
Total - - 1,136 96 25 1,257

Grand total 1,431 2,471 1,136 824 147 6,009

* Executive Director’s other emoluments include allowance and EPF

32 ALLOWANCES FOR LOSSES ON LOANS, ADVANCES AND FINANCING
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
- made in the financial year 72,213 116,909 69,391 111,880
- written-back (2,716) (13,571) (2,546) (12,198)
- made 6,672 67,662 24,242 59,788
Bad debts and financing
- recovered (106,465) (214,257) (105,880) (213,325)
- written-off 7,784 15,956 7,702 15,791
Litigation losses arising from loans - 40,000 - 40,000
(22,512) 12,699 (7,091) 1,936
33 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES
Related parties that have transactions and their relationship with the Bank are as follows:

Related parties Relationship

Lembaga Tabung Angkatan Tentera (‘LTAT’) Ultimate holding corporate body, which is Government-Link
Investment Company (‘GLIC’) of the Government of Malaysia

AFFIN Holdings Berhad (‘AHB’) Holding company

Subsidiaries and associates of LTAT Subsidiary and associate companies of the ultimate holding
corporate body

Subsidiaries and associates of AHB as disclosed in its Subsidiary and associate companies of the holding company
financial statements

Subsidiaries of AFFIN Bank Berhad as disclosed in Note 13 Subsidiaries

Joint controlled entity as disclosed in Note 14 Joint controlled entity of subsidiary

Voting shares in body corporate not less than 15% of votes Other related companies

Key management personnel The key management personnel of the Bank consist of:
- Chief Executive Officer
- Members of Senior Management team and the company
secretary

Related parties of key management personnel (deemed as - Close family members and dependents of key management
related to the Bank) personnel
- Entities that are controlled, jointly controlled or for which
significant voting power in such entity resides with, directly
or indirectly by key management personnel or its close family
members
Key management personnel includes the Chief Executive Officer of the Bank in office during the financial year and his remuneration
for the financial year are disclosed in Note 33(b).

33 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (continued)
The Group and the Bank do not have any individually or collectively significant transactions outside the ordinary course of business with the Government of
Malaysia and government related entities. In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other

significant related party transactions and balances.
(a) Related parties transactions and balances
Companies in which certain

Ultimate holding Holding Other related Directors have Key Management
corporate body company companies substantial interest Personnel
31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Income
Interest on private debt securities - - - - 25,217 3,145 - - - -
Interest on advances - - - - 42,567 28,627 - - 55 37
Interest on deposits and
placements with banks and
other financial institutions - - - - 12,254 6,696 - - - -
132
Other income - - - - 7,003 5,769 - - - -
- - - - 87,041 44,237 - - 55 37

Expenditure
Interest on fixed deposits 3,873 6,585 6,143 8,677 10,532 7,309 - - 166 55
Interest on Negotiable Instruments
of Deposit - - - - 13 2,515 - - - -
Interest on deposits and placements
of banks and other financial
institutions - - - - 15,839 190 - - - -
Interest on special investment account - - - - 1,759 418 - - - -
Interest on money market deposits 7,620 2,633 61 230 2,901 2,523 - - - -
Interest on repurchase agreements - - - - - - - - - -
Brokerage fees - - - - 532 46 - - - -
Rental 301 613 - - 11,467 11,564 - - - -
Others 5 - 40,453 19,884 4,875 1,609 - - - -
11,799 9,831 46,657 28,791 47,918 26,174 - - 166 55
Annual Report 2012

Annual Report 2012

(a) Related parties transactions and balances (continued)
Ultimate holding Holding Other related

corporate body company companies
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from
Private debt securities - - - - - - 712,519 749,884 67,203
Advances - - - - - - 1,493,059 759,035 519,617
Deposits and placement with banks and
other financial institutions - - - 3,791 3,600 3,600 501,932 586,449 203,754
Intercompany balances - - - - - - 2,745 2,745 2,745
Security deposits - 98 98 - 130 74 2,992 2,990 2,983
- 98 98 3,791 3,730 3,674 2,713,247 2,101,103 796,302
133

Amount due to
Demand and fixed deposits 643,575 435,514 528,215 133,987 285,060 300,382 738,807 456,222 335,769
Negotiable Instruments of Deposit - - - - - - - 50,301 -
Deposits and placement of banks and other
financial institutions - - - 904,960 601,850 300,682 409,437 704,465 4,157
Special investment account - - - - - - 9,366 10,181 17,394
Money market deposits 162,269 57,416 - 400 300 - 75,000 115,767 153,008
Intercompany balances - - - - - - - 33 -
Other payables - - - - - 76 - 35 97
805,844 492,930 528,215 1,039,347 887,210 601,140 1,232,610 1,337,004 510,425

Commitment - - - - - - 1,473,476 1,718,550 1,861,329


Directors have Key Management
substantial interest Personnel
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from
Private debt securities - - - - - -
Advances - - - 2,771 1,075 653
Deposits and placement with banks and other financial institutions - - - - - -
Intercompany balances - - - - - -
Security deposits - - - - - -
- - - 2,771 1,075 653
134

Amount due to
Demand and fixed deposits 13 38 6 15,061 14,477 8,028
Negotiable Instruments of Deposit - - - - - -
Deposits and placement of banks and other financial institutions - - - - - -
Special investment account - - - - - -
Money market deposits - - - - - -
Intercompany balances - - - - - -
Other payables - - - - - -
13 38 6 15,061 14,477 8,028

Commitment - - - - - -
Annual Report 2012

Annual Report 2012


Ultimate holding Holding Other related Directors have Key Management
corporate body company Subsidiaries companies substantial interest Personnel
31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Income
Interest on special
investment account - - - - 24,175 15,913 - - - - - -
Interest on private debt
securities - - - - - - 25,217 3,146 - - - -
Interest on advances - - - - - - 40,764 27,515 - - 55 37
Interest on deposits and
placements with banks and
other financial institutions - - - - 525 661 8,441 6,696 - - - -
135
Other income - - - - 68,020 64,917 7,003 5,753 - - - -
- - - - 92,720 81,491 81,425 43,110 - - 55 37

Expenditure
Interest on short term
advances - - - - - - 15,839 190 - - - -
Interest on fixed deposits 3,873 6,585 6,143 8,677 34 34 9,286 7,149 - - 151 50
Interest on Negotiable
Instruments of Deposit - - - - - - 13 2,516 - - - -
Interest on money market
deposits 7,620 2,633 61 230 - - 2,901 2,523 - - - -
Brokerage fees - - - - - - 532 44 - - - -
Rental 301 613 - - 386 384 11,467 11,564 - - - -
Others 5 - 40,453 19,884 - - 4,637 1,460 - - - -
11,799 9,831 46,657 28,791 420 418 44,675 25,446 - - 151 50


Ultimate holding Holding
corporate body company Subsidiaries
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from
Special investment account - - - - - - 656,230 570,266 330,197
Private debt securities - - - - - - - - 5,202
Advances - - - - - - - - -
Deposits and placements with banks
and other financial institutions - - - 3,791 3,600 3,600 102,434 145,802 144,964
Security deposits - 98 98 - 130 74 - - -
- 98 98 3,791 3,730 3,674 912,566 1,072,965 665,101

136
Amount due to
Demand and fixed deposits 642,838 434,798 527,149 133,987 285,060 300,382 3,542 820 1,606
Negotiable Instruments of Deposit - - - - - - - - -
Deposits and placement of banks
and other financial institutions - - - 904,960 601,850 300,682 - - -
Money market deposits 162,269 57,417 - 400 300 - - - -
Other payables - - - - - 74 - - -
805,107 492,215 527,149 1,039,347 887,210 601,138 52,023 49,127 49,560

Commitment - - - - - - 350 1,800 2,200
Annual Report 2012

Annual Report 2012

Companies which
Other related certain Directors have Key Management
company substantial interest Personnel
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from
Special investment account - - - - - - - - -
Private debt securities 712,519 749,884 67,202 - - - - - -
Advances 1,456,936 735,705 506,113 - - - 2,221 1,075 653
and other financial institutions 301,439 436,306 203,754 - - - - - -
Intercompany balances - - - - - - - - -
Security deposits 2,992 2,990 2,981 - - - - - -
137
2,473,886 1,924,885 780,050 - - - 2,221 1,075 653

Amount due to
Demand and fixed deposits 655,405 430,505 316,701 - - 5 12,760 12,947 7,173
Negotiable Instruments of Deposit - 50,301 - - - - - - -
and other financial institutions 409,437 704,473 4,157 - - - - - -
Money market deposits 75,000 115,767 153,008 - - - - - -
Intercompany balances - 33 - - - - - - -
Other payables - 35 91 - - - - - -
1,139,842 1,301,114 473,957 - - 5 12,760 12,947 7,173

Commitment 1,393,076 1,628,322 1,861,329 - - - - - -

(b) Key management personnel compensation
The remuneration of key management personnel of the Group and the Bank during the year are as follows:
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Short-term employment benefits

Salaries 7,748 7,009 7,166 6,427
Bonuses 10,768 10,182 10,013 9,154
Defined contribution plan (‘EPF’) 3,127 2,905 2,906 2,640
Other employee benefits 1,208 1,119 1,165 1,067
23,261 21,595 21,618 19,599

Included in the above table are Directors’ remuneration as disclosed in Note 31.

34 TAXATION
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
The taxation charge arising in Malaysia for the financial year

Current tax 179,738 152,316 152,556 135,373
(Over)/under provision in prior year (668) 22,707 (737) 25,827
Deferred tax (Note 11) (7,171) (7,453) (6,568) (13,325)
Tax expense for the year 171,899 167,570 145,251 147,875

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
% % % %
Statutory tax rate in Malaysia 25.00 25.00 25.00 25.00

Tax effect in respect of:
Non allowable expenses 0.25 2.04 0.28 2.29
Non taxable income (0.15) (0.44) (0.18) (0.46)
Utilisation of previously unrecognised tax losses (0.03) (0.02) - -
Effect of different tax rate (0.50) (0.94) (0.59) (1.08)
Tax savings arising from income exempt from tax for
International Currency Business Unit (‘ICBU’) (0.04) (0.18) - -
Under accrual in prior years (0.10) 3.70 (0.12) 4.81
Recognition of deferred tax previously not recognised - (2.87) - (3.04)
Zakat contribution - (0.07) - -
Reversal of deferred taxation due to changes in tax treatment - 1.11 - 0.05
Average effective tax rate 24.43 27.33 24.39 27.57
Tax savings of the Group as a result of utilisation of tax losses brought forward from previous years from which the related credit
is recognised during the financial year amounted to RM61,226 (31.12.2011: RM102,000).

35 EARNINGS PER SHARE
The basic and fully diluted earnings per ordinary share for the Group and the Bank have been calculated based on the net profit
attributable to equity holders of the Group and the Bank of RM525,266,000 (31.12.2011: RM440,003,000) and RM450,304,000
(31.12.2011: RM388,496,000) respectively. The weighted average number of shares in issue during the financial year of
1,499,330,000 (31.12.2011: 1,439,285,000) is used for the computation.
36 DIVIDENDS
Dividends declared or proposed for the financial year are as follows:

The Group and The Bank The Group and The Bank
31.12.2012 31.12.2011
Amount Amount
Dividend of Dividend of
per share dividend per share dividend
sen RM’000 sen RM’000
Ordinary shares
Interim dividend paid 9.00 136,650 7.00 100,750
Proposed final dividend 6.00 91,100 5.00 71,964
Dividends in respect of the financial year 15.00 227,750 12.00 172,714
At the forthcoming Annual General Meeting, a single-tier final dividend in respect of the current financial year of 6 sen per share
amounting to RM91,100,000 will be proposed for shareholder’s approval. These financial statements do not reflect this final
dividend which will be accounted for in the shareholder’s equity as an appropriation of retained profits in the financial year ending
31 December 2013 when approved by the shareholder.
Dividends recognised as distribution to ordinary equity holders of the Bank:
The Group and The Bank The Group and The Bank
31.12.2012 31.12.2011
Amount Amount
Dividend of Dividend of
per share dividend per share dividend
sen RM’000 sen RM’000
Ordinary shares
Interim dividend 9.00 136,650 7.00 100,750
Final dividend 5.00 71,964 5.00 71,964
14.00 208,614 12.00 172,714

37 COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group and the Bank make various commitments and incurs certain contingent liabilities with legal recourse to their customers. No
material losses are anticipated as a result of these transactions.
The commitments and contingencies consist of:
The Group The Group The Group

31.12.2012 31.12.2011 1.1.2011
Positive Positive Positive
fair value Credit Risk- fair value Credit Risk- fair value Credit Risk-
Principal of derivative equivalent weighted Principal of derivative equivalent weighted Principal of derivative equivalent weighted
amount contracts amount * amount * amount contracts amount * amount * amount contracts amount * amount *
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Direct credit substitutes 445,529 - 445,529 430,042 386,900 - 386,900 373,254 408,608 - 408,608 299,520
Transaction-related
contingent items 2,147,100 - 1,073,550 924,690 2,375,506 - 1,187,753 1,129,992 2,387,456 - 1,193,728 1,022,073
Short-term self-liquidating
140
trade-related contingencies 453,772 - 90,754 54,644 973,727 - 194,745 159,463 1,232,752 - 246,551 140,554
Irrevocable commitments
to extend credit: 9,236,929 - 2,709,195 2,407,626 10,541,754 - 2,108,351 1,758,003 10,310,068 - - -
- maturity less than one year 6,364,231 - 1,272,846 1,065,707 7,015,300 - 1,403,060 1,113,217 6,062,519 - - -
- maturity more than one year 2,872,698 - 1,436,349 1,341,919 3,526,454 - 705,291 644,786 4,247,549 - - -
Lending of banks’ securities or
the posting of securities as
collateral by banks, including
instances where these arise
out of repo-style transactions
(i.e. repurchase / reverse
repurchase and securities
lending / borrowing transactions) 19,939 - 19,939 - - - - - - - - -
Foreign exchange related
contracts (#): 4,002,348 47,165 115,075 35,869 3,057,581 18,529 54,798 19,610 2,416,479 37,587 70,499 28,169
- less than one year 3,750,554 42,781 97,948 29,439 2,987,581 15,941 49,028 17,625 2,215,359 25,842 50,821 19,952
- one year to less than five years 251,794 4,384 17,127 6,430 70,000 2,588 5,770 1,985 201,120 11,745 19,678 8,217
Interest rate related
contracts (#): 2,484,603 21,707 90,826 33,144 2,395,015 31,372 91,110 22,789 1,495,313 17,394 71,106 16,781
- less than one year 107,156 563 122 49 133,140 331 156 67 93,784 642 14 3
- one year to less than five years 1,834,299 12,892 39,217 11,073 1,787,852 14,063 47,055 12,427 956,256 7,102 32,602 7,936
- more than five years 543,148 8,252 51,487 22,022 474,023 16,978 43,899 10,295 445,273 9,650 38,490 8,842
Annual Report 2012

Unutilised credit card lines 191,103 - 38,221 28,693 189,502 - 37,900 28,463 594,104 - 118,821 89,026
18,981,323 68,872 4,583,089 3,914,708 19,919,985 49,901 4,061,557 3,491,574 18,844,780 54,981 2,109,313 1,596,123
Annual Report 2012

37 COMMITMENTS AND CONTINGENCIES (continued)

31.12.2012 31.12.2011 1.1.2011
Positive Positive Positive
fair value Credit Risk- fair value Credit Risk- fair value Credit Risk-
Principal of derivative equivalent weighted Principal of derivative equivalent weighted Principal of derivative equivalent weighted
amount contracts amount * amount * amount contracts amount * amount * amount contracts amount * amount *
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Direct credit substitutes 436,156 - 436,156 422,310 378,797 - 378,797 366,784 382,080 - 382,080 280,656
Transaction-related
contingent items 2,017,033 - 1,008,516 861,316 2,226,050 - 1,113,025 1,060,529 2,189,031 - 1,094,516 928,260
Short-term self-liquidating
trade-related contingencies 216,573 - 43,315 43,109 627,826 - 125,564 131,304 546,276 - 109,255 109,027
Irrevocable commitments
to extend credit: 8,043,626 - 2,355,961 2,092,567 9,155,540 - 1,831,108 1,522,025 9,198,609 - - -
- maturity less than one year 5,552,840 - 1,110,568 925,939 6,057,224 - 1,211,445 956,882 5,360,954 - - -
- maturity more than one year 2,490,786 - 1,245,393 1,166,628 3,098,316 - 619,663 565,143 3,837,655 - - -
141
Lending of banks’ securities or
the posting of securities as
collateral by banks, including
instances where these arise
out of repo-style transactions
(i.e. repurchase / reverse
repurchase and securities
lending / borrowing transactions) 19,939 - 19,939 - - - - - - - - -
Foreign exchange related
contracts (#): 4,002,348 47,165 115,075 35,869 3,057,581 18,529 54,798 19,610 2,416,479 37,587 70,499 28,169
- less than one year 3,750,554 42,781 97,948 29,439 2,987,581 15,941 49,028 17,625 2,215,359 25,842 50,821 19,952
- one year to less than five years 251,794 4,384 17,127 6,430 70,000 2,588 5,770 1,985 201,120 11,745 19,678 8,217
Interest rate related
contracts (#): 2,484,603 21,707 90,826 33,144 2,395,015 31,372 91,110 22,789 1,495,313 17,394 71,106 16,781
- less than one year 107,156 563 122 49 133,140 331 156 67 93,784 642 14 3
- one year to less than five years 1,834,299 12,892 39,217 11,073 1,787,852 14,063 47,055 12,427 956,256 7,102 32,602 7,936
- more than five years 543,148 8,252 51,487 22,022 474,023 16,978 43,899 10,295 445,273 9,650 38,490 8,842
Unutilised credit card lines 191,103 - 38,221 28,693 189,502 - 37,900 28,463 594,104 - 118,821 89,026
17,411,381 68,872 4,108,009 3,517,008 18,030,311 49,901 3,632,302 3,151,504 16,821,892 54,981 1,846,277 1,451,919
* The credit equivalent amount and risk-weighted amount is arrived at using the credit conversion factors as per Bank Negara Malaysia’s revised Risk Weighted Capital Adequacy Framework
(“RWCAF”) and Capital Adequacy for Islamic Banks (“CAFIB”) guidelines.
# The fair value of these derivatives have been recognised as “derivative financial assets” and “derivative financial liabilities” in the statement of financial position and disclosed in Note 5 and
19 to the financial statements.

37 COMMITMENTS AND CONTINGENCIES (continued)
The table below analyses the contractual or underlying principal amounts of derivative financial instruments held or issued.
In addition, they also set out the corresponding gross positive credit equivalent of the derivative financial instruments.

31.12.2012 31.12.2011 1.1.2011
Credit Credit Credit
Principal equivalent Principal equivalent Principal equivalent
amount amount amount amount amount amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Foreign exchange contracts

Forward contracts 941,791 19,016 712,883 7,108 728,471 15,115
Swaps 3,060,558 96,059 2,344,698 47,690 1,688,008 55,384

Interest rate contracts
Swaps 2,484,602 90,826 2,395,015 91,110 1,495,313 71,106
Foreign exchange related contracts and interest rate related contracts are subject to market risk and credit risk.
38 FINANCIAL RISK MANAGEMENT
(i) Credit risk

Credit risk is the potential financial loss resulting from the failure of the customer or counterparty to settle the financial and
contractual obligations to the Bank. Credit risk emanates mainly from loans, advances and financing, loan commitments
arising from such lending activities, as well as through financial transactions with counterparties including interbank money
market activities, derivative instruments used for hedging and debt securities.
The management of credit risk in the Bank is governed by a set of approved credit policies, guidelines and procedures.
Approval authorities are delegated to Senior Management and Group Management Loan Committee (‘GMLC’) to implement
the credit policies and ensure sound credit granting standards.
An independent Group Risk Management (‘GRM’) function, headed by Group Chief Risk Officer (‘GCRO’), with direct reporting
line to Board Risk Management Committee (‘BRMC’) is in place to ensure adherence to risk standards and discipline. Portfolio
management risk reports are submitted regularly to BRMC.
Lending guidelines and credit strategies are formulated and incorporated in the Annual Credit Plan. New businesses are
governed by the risk acceptance criteria and customer qualifying criteria/fitness standards prescribed in the Annual Credit
Plan. The Annual Credit Plan is reviewed at least annually and approved by the BRMC.

38 FINANCIAL RISK MANAGEMENT (continued)
(i) Credit risk (continued)

Credit risk measurement
Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the Bank’s underwriting
criteria and the ability of the Bank to make a return commensurate to the level of risk undertaken. A critical element in the
evaluation process is the assignment of a credit risk grade to the counterparty. This assists in the risk assessment and
decision making process. The Bank has developed internal rating models to support the assessment and quantification of
credit risk.
For consumer mass market products, statistically developed application scorecards are used by the Business to assess the
risks associated with the credit application. The scorecards are used as a decision support tool at loan origination.
Over-the-Counter (‘OTC’) Derivatives
The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure method,
computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived from the summation
of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and the potential future exposure
of outstanding contracts (Add On charges depending on the specific remaining tenor to maturity).
Risk limit control and mitigation policies
The Bank employs various policies and practices to control and mitigate credit risk.
Lending limits
The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue concentration
of credit risk in its credit portfolio. The limits include single customer groupings, connected parties, and geographical and
industry segments. These risks are monitored regularly and the limits reviewed annually or sooner depending on changing
market and economic conditions.
The credit risk exposure for derivative and loan books is managed as part of the overall lending limits with customers together
with potential exposure from market movements.
Collateral
Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral may be
taken to mitigate credit risk. The main collateral types accepted and given value by the Bank are:
- mortgage over residential properties;

- charges over commercial real estate or vehicles financed;
- charges over business assets such as business premises, inventory and accounts receivable; and
- charges over financial instruments such as marketable equities.
Documentary and commercial letters of credit are collateralised by the underlying shipments of goods to which they relate
and therefore carry less risk than a direct loan.


Risk limit control and mitigation policies (continued)
Credit related commitments
Commitment to extend credit represents unutilised portion of approved credit in the form of loans, guarantees or letters of
credit. In terms of credit risk, the Bank is potentially exposed to loss in an amount equal to the total unutilised commitments.
However, the potential amount of loss is less than the total unutilised commitments, as most commitments to extend credit
are contingent upon customers maintaining specific minimum credit standards.
The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater
degree of credit risk than short-term commitments.
Credit risk monitoring
Retail credits are actively monitored and managed on a portfolio basis by product type. A new collection management system
has been implemented with a dedicated team in place to promptly identify, monitor and manage delinquent accounts at early
stages of delinquency.
Corporate credits and large individual accounts are reviewed by the Business Units at least once a year against updated
information. This is to ensure that the credit grades remain appropriate and detect any signs of weaknesses or deterioration
in the credit quality. Remedial action is taken where evidence of deterioration exists.
Early Alert Process is in place as part of a means to pro-actively identify, report and manage deteriorating credit quality.
Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning
impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.
Credit risk culture

The Bank recognises that learning is a continuous journey and is committed to enhance the knowledge and required skills set
of its staff. It places strong emphasis in creating and enhancing risk awareness in the organisation.
For effective and efficient staff learning, the Bank has implemented an E–Learning Program with an online Learning Management
System (‘LMS’). The LMS provides staff with a progressive self-learning alternative at own pace.
Group Risk Management implements an Internal Credit Certification (‘ICC’) Programme for both Business Banking and
Consumer Credit.
The aim of the ICCs is to assist the core credit related group of personnel in the Bank achieve a minimum level of knowledge
and analytical skills required to make sound corporate and commercial loans to customers.
Maximum exposure to credit risk
For financial assets recognised on the statement of financial position, the exposure to credit risk equals their carrying amount.
For financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group and the
Bank would have to pay if guarantee were to be called upon. For loan commitments and other commitments, the maximum
exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.
All financial assets of the Group and the Bank are subject to credit risk except for cash in hand, equity securities held as
financial assets held-for-trading or financial investments available-for-sale, as well as non-financial assets.


Maximum exposure to credit risk (continued)
The exposure to credit risk of the Group and the Bank equals their carrying amount in the statement of financial position as at
reporting date, except for the followings:
The Group The Bank

31.12.2012 31.12.2012 31.12.2012 31.12.2012
Maximum Maximum
Carrying Credit Carrying Credit
Value Exposure Value Exposure
RM’000 RM’000 RM’000 RM’000
Credit risk exposures of on-balance sheet assets:

Cash and short-term funds 7,648,904 * 7,477,429 3,633,842 * 3,462,366
Financial investments available-for-sale 7,640,654 # 7,531,197 5,658,161 # 5,551,454
Other assets 293,658 @ 257,706 227,790 @ 192,354

Credit risk exposure of off-balance sheet items:
Financial guarantees 2,592,629 ^ 1,519,079 2,453,189 ^ 1,444,672
Loan commitments and other credit related commitments 16,388,694 ^ 3,064,010 14,958,192 ^ 2,663,337
Total maximum credit risk exposure 34,564,539 19,849,421 26,931,174 13,314,183

The Group The Bank
31.12.2011 31.12.2011 31.12.2011 31.12.2011
Maximum Maximum
RM’000 RM’000 RM’000 RM’000

Other assets 166,543 @ 108,207 116,690 @ 59,056

Loan commitments and other credit related commitments 17,157,578 ^ 2,486,904 15,425,464 ^ 2,140,480


Maximum exposure to credit risk (continued)
The Group The Bank

1.1.2011 1.1.2011 1.1.2011 1.1.2011
Maximum Maximum
RM’000 RM’000 RM’000 RM’000

Other assets 186,461 @ 8,607 184,582 @ 7,384

Loan commitments and other credit related commitments 16,048,716 ^ 506,978 14,250,781 ^ 369,681

The following have been excluded for the purpose of maximum credit risk exposure calculation:
* cash in hand
# investment in quoted and unquoted shares
@ prepayment
^ amount stated at notional value
Whilst the Group and the Bank’s maximum exposure to credit risk is the carrying value of the assets, or in the case of off-
balance sheet items, the amount guaranteed, committed or accepted, in most cases the likely exposure is far less due to
collateral, credit enhancements and other actions taken to mitigate the credit exposure.
The financial effect of collateral held for loans, advances and financing of the Group and the Bank are 68% (31.12.2011:
63%, 1.1.2011: 59%) and 66% (31.12.2011: 62%, 1.1.2011: 58%) respectively. The financial effects of collateral for the other
financial assets are insignificant.

Annual Report 2012


Credit risk concentrations
Credit risk is the risk of financial loss from the failure of customers to meet their obligations. Exposure to credit risk is managed through portfolio management. The
credit portfolio’s risk profiles and exposures are reviewed and monitored regularly to ensure that an acceptable level of risk diversification is maintained. Exposure
to credit risk is also managed in part by obtaining collateral security and corporate and personal guarantees.
The credit risk concentrations of the Group and the Bank, by industry concentration, are set out in the following tables:
Reverse Deposits and

Repurchase placements
agreements with banks Financial Financial Financial On
Cash and with and other assets Derivative investments investments Loans, balance Commitments
short-term financial financial held-for- financial available- held-to- advances and Other sheet and
147
The Group funds institutions institutions trading assets for-sale maturity financing (*) assets total contingencies
Agriculture - - - - 13 - - 539,616 - 539,629 74,359

Mining and quarrying - - - - 481 - - 473,549 - 474,030 30,460
Manufacturing - - - - 770 14,538 157,579 2,635,371 - 2,808,258 628,604
Electricity, gas and
water supply - - - - 28 149,613 - 464,233 - 613,874 18,763
Construction - - - - - 66,039 200,410 2,876,413 - 3,142,862 1,264,474
Real estate - - - - - 9,982 - 3,707,749 - 3,717,731 592,892
Transport, storage and
communication - - - - - 55,178 73,641 1,680,704 - 1,809,523 229,966
Finance, insurance and
business services 759,536 - 496,444 165,592 67,425 4,236,881 - 4,160,207 520 9,886,605 842,624
Government and
government agencies 6,717,893 20,057 100,008 - - 2,904,092 - 117,523 - 9,859,573 137,225
Wholesale & retail trade
and restaurants &
hotels - - - - 155 94,874 20,040 1,765,174 - 1,880,243 280,869
Others - - - - - - - 15,384,716 257,186 15,641,902 482,853
Total assets 7,477,429 20,057 596,452 165,592 68,872 7,531,197 451,670 33,805,255 257,706 50,374,230 4,583,089
* Not inclusive of collective allowance amounting to RM323 million.
Risk concentrations for commitments and contingencies are based on the credit equivalent balances in Note 37.



Credit risk concentrations (continued)
Deposits and
placements Financial
with banks assets Financial Financial On
Cash and and other held- Derivative investments investments Loans, balance Commitments
short-term financial for- financial available- held-to- advances and Other sheet and
The Group funds institutions trading assets for-sale maturity financing (*) assets total contingencies
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Agriculture - - - 462 - - 486,776 - 487,238 42,645

Mining and quarrying - - - - - - 431,334 - 431,334 37,417
Manufacturing - - - 1,232 - 179,282 2,261,321 - 2,441,835 654,642
Electricity, gas and water supply - - - - 145,796 - 159,611 - 305,407 289
Construction - - - 10 - 204,721 2,306,998 - 2,511,729 989,050
Real estate - - - - - - 2,998,575 - 2,998,575 369,397
148
communication - - - 238 55,514 72,687 1,582,862 - 1,711,301 154,944
services 718,522 486,694 149,832 47,643 3,117,024 27,362 4,244,103 570 8,791,750 687,259
Government and government
agencies 9,019,361 - - - 3,256,493 16,186 61,386 - 12,353,426 119,731
restaurants & hotels - - - 316 10,273 20,537 1,435,434 - 1,466,560 509,842
Others - - - - - 330 14,175,465 114,262 14,290,057 496,341
Total assets 9,737,883 486,694 149,832 49,901 6,585,100 521,105 30,143,865 114,832 47,789,212 4,061,557
Annual Report 2012

Annual Report 2012


Deposits and
The Group funds institutions trading assets for-sale maturity financing (*) assets total contingencies
Agriculture - - - 3 - - 476,425 - 476,428 31,535

Mining and quarrying - - - 244 - - 373,899 - 374,143 1,053
Manufacturing - - - 838 20,530 157,515 1,743,308 - 1,922,191 207,361
Electricity, gas and water supply - - - 13 93,733 - 192,953 - 286,699 57
149
Construction - - - 154 - 207,108 2,274,981 - 2,482,243 652,610
Real estate - - - - - - 2,323,155 - 2,323,155 185,829
communication - - - 107 30,222 - 921,590 - 951,919 26,231
services 247,132 192,522 149,945 52,634 2,173,568 27,361 4,346,670 - 7,189,832 241,832
agencies 8,287,747 - - - 3,379,655 16,186 75,394 - 11,758,982 135,825
restaurants& hotels - - - 836 - 24,037 1,198,629 - 1,223,502 140,172
Others - - - 152 - 330 12,443,544 14,751 12,458,777 486,808
Total assets 8,534,879 192,522 149,945 54,981 5,697,708 432,537 26,370,548 14,751 41,447,871 2,109,313



Reverse Deposits and

Repurchase placements
agreements with banks Financial Financial Financial On
Cash and with and other assets Derivative investments investments Loans, balance Commitments
short-term financial financial held-for- financial available- held-to- advances and Other sheet and
The Bank funds institutions institutions trading assets for-sale maturity financing (*) assets total contingencies
Agriculture - - - - 13 - - 454,538 - 454,551 71,742

Mining and quarrying - - - - 481 - - 472,737 - 473,218 30,460
Manufacturing - - - - 770 14,538 157,579 2,421,160 - 2,594,047 592,157
Electricity, gas and
water supply - - - - 28 149,613 - 441,262 - 590,903 18,763
Construction - - - - - 50,642 200,410 2,472,518 - 2,723,570 1,082,510
150
Real estate - - - - - 9,982 - 3,298,277 - 3,308,259 580,265
communication - - - - - 55,178 73,641 1,663,557 - 1,792,376 223,856
Finance, insurance and
business services 435,596 - 1,043,825 165,592 67,425 3,524,648 - 3,672,697 - 8,909,783 792,322
Government and
government agencies 3,026,770 20,057 - - - 1,662,329 - 95,861 - 4,805,017 54,670
Wholesale & retail trade
and restaurants &
hotels - - - - 155 84,524 20,040 1,629,756 - 1,734,475 260,197
Others - - - - - - - 12,004,599 192,354 12,196,953 401,067
Total assets 3,462,366 20,057 1,043,825 165,592 68,872 5,551,454 451,670 28,626,962 192,354 39,583,152 4,108,009
Annual Report 2012

Annual Report 2012


Deposits and
The Bank funds institutions trading assets for-sale maturity financing (*) assets total contingencies
Agriculture - - - 462 - - 400,161 - 400,623 40,030

Mining and quarrying - - - - - - 431,167 - 431,167 37,417
Manufacturing - - - 1,232 - 179,282 2,047,851 - 2,228,365 620,567
Electricity, gas and water supply - - - - 145,796 - 158,795 - 304,591 289
151
Construction - - - 10 - 204,721 2,009,056 - 2,213,787 868,661
Real estate - - - - - - 2,555,690 - 2,555,690 345,384
communication - - - 238 4,890 72,687 1,572,087 - 1,649,902 138,196
services 668,863 1,098,988 149,832 47,643 2,543,665 27,362 3,810,888 - 8,347,241 608,711
agencies 4,717,093 - - - 2,410,543 16,186 55,802 - 7,199,624 39,651
restaurants & hotels - - - 316 - 20,537 1,392,298 - 1,413,151 482,819
Others - - - - - 330 11,275,156 65,479 11,340,965 450,577
Total assets 5,385,956 1,098,988 149,832 49,901 5,104,894 521,105 25,708,951 65,479 38,085,106 3,632,302




Deposits and
The Bank funds institutions trading assets for-sale maturity financing (*) assets total contingencies
Agriculture - - - 3 - - 379,421 - 379,424 6,267

Mining and quarrying - - - 244 - - 373,664 - 373,908 1,032
Manufacturing - - - 838 20,530 157,515 1,620,577 - 1,799,460 203,874
Electricity, gas and water supply - - - 13 93,733 - 192,089 - 285,835 57
Construction - - - 154 - 207,108 1,962,667 - 2,169,929 590,495
Real estate - - - - - - 2,278,476 - 2,278,476 185,829
152
communication - - - 107 5,062 - 915,146 - 920,315 26,231
services 321,806 564,917 149,945 52,634 1,808,060 27,361 3,759,208 - 6,683,931 209,594
agencies 5,681,068 - - - 2,425,159 16,186 75,394 - 8,197,807 3,859
restaurants & hotels - - - 836 - 24,037 1,150,259 - 1,175,132 136,037
Others - - - 152 - 330 10,055,570 13,370 10,069,422 483,002
Total assets 6,002,874 564,917 149,945 54,981 4,352,544 432,537 22,762,471 13,370 34,333,639 1,846,277
Annual Report 2012


Collaterals
The main types of collateral obtained by the Group and the Bank 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, charges over business assets such as premises, inventories, trade receivables or deposits.
Total loans, advances and financing - credit quality
All loans, advances and financing are categorised into “neither past due nor impaired”, “past due but not impaired” and
“impaired”. Past due loans refer to loans that are overdue by one day or more. Impaired loans are loans with months-in-arrears
more than 90 days or with impairment allowances.
Distribution of loans, advances and financing by credit quality
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Neither past due nor impaired (a) 30,688,227 26,803,010 22,362,063 26,047,661 22,916,350 19,340,931
Past due but not impaired (b) 2,574,206 2,643,450 3,213,211 2,131,175 2,232,612 2,742,727
Impaired (c) 753,194 865,662 971,123 623,403 693,318 818,522
Gross loans, advances and financing 34,015,627 30,312,122 26,546,397 28,802,239 25,842,280 22,902,180
less: Allowance for impairment
-Individual (210,372) (168,257) (175,849) (175,277) (133,329) (139,709)
-Collective (322,629) (451,599) (395,701) (287,693) (390,890) (343,220)
Net loans, advances and financing 33,482,626 29,692,266 25,974,847 28,339,269 25,318,061 22,419,251
Past due but not impaired includes accounts within grace period of the Group and the Bank amounting to RM1.0 billion
(31.12.2011: RM0.9 billion, 1.1.2011: RM1.2 billion) and RM0.9 billion (31.12.2011: RM0.8 billion, 1.1.2011: RM1.1 billion)
respectively.


Total loans, advances and financing - credit quality (continued)
(a) Loans neither past due nor impaired
Analysis of loans, advances and financing that are neither past due nor impaired analysed based on the Group and the
Bank’s internal credit grading system is as follows:
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Quality classification

Satisfactory 25,511,726 22,345,076 18,598,272 21,390,139 18,817,505 15,964,665
Special mention 5,176,501 4,457,934 3,763,791 4,657,522 4,098,845 3,376,266
30,688,227 26,803,010 22,362,063 26,047,661 22,916,350 19,340,931
Quality classification definitions
Satisfactory: Exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability
of default and/or levels of expected loss.
Special mention: Exposures require varying degrees of special attention and default risk is of greater concern.
(b) Loans past due but not impaired
Certain loans, advances and financing are past due but not impaired as the collateral values of these loans are in excess
of the principal and profit outstanding. Allowances for these loans may have been set aside on a portfolio basis. The
Bank’s loans, advances and financing which are past due but not impaired are as follows:
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Past due up to 30 days 1,390,570 1,338,561 1,730,084 1,188,938 1,190,391 1,542,944
Past due 30-60 days 813,727 900,300 996,340 653,476 716,992 849,976
Past due 60-90 days 369,909 404,589 486,787 288,761 325,229 349,807
2,574,206 2,643,450 3,213,211 2,131,175 2,232,612 2,742,727


Total loans, advances and financing - credit quality (continued)
(c) Loans impaired
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Analysis of impaired assets:

Gross impaired loans 753,194 865,662 971,123 623,403 693,318 818,522

Individually impaired loans 127,376 114,330 439,997 56,521 38,938 329,510
Collateral and other credit enhancements obtained
During the year, the Bank obtained assets by taking possession of collateral held as security or calling upon other credit
enhancements as follows:
The Group and The Bank

31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000
Carrying Carrying Carrying
amount amount amount
Nature of assets:

Condominium - 1,190 -
Vacant industrial land - - 1,370
Foreclosed properties are sold as soon as practicable, with the proceeds used to reduce the outstanding indebtedness. The
carrying amount of foreclosed properties held by the Group and the Bank as at reporting date has been classified as Other
assets as disclosed in Note 9.
Private debt securities, treasury bills and derivatives
Private debt securities, treasury bills and other eligible bills included in 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.
Most listed and some unlisted securities are rated by external rating agencies. The Group and the Bank mainly uses external
credit ratings provided by RAM, MARC, Standard & Poors’ or Moody’s.
The table below presents an analysis of debt securities, treasury bills and other eligible bills by rating agency.


Private debt securities, treasury bills and derivatives (continued)
Lower
The Group AAA AA- to AA+ A- to A+ than A- Unrated * Impaired Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Financial assets held-for-

trading
Private debt securities - - - 15,316 150,276 - 165,592
Financial investments
available-for-sale
Malaysian Government
securities - - - - 5,070 - 5,070
investment issues - - - - 1,879,076 - 1,879,076
Bank Negara Malaysia
Monetary Notes - - - - 884,069 - 884,069
Others 120,550 - - - 1,109,556 - 1,230,106
Quoted and unquoted
Shares in Malaysia - - - 2,239 99,740 7,477 109,456
Private debt securities 2,648,049 483,237 302,619 65,426 33,530 16 3,532,877
held-to-maturity
Private debt securities - - - - 366,120 85,550 451,670
2,768,599 483,237 302,619 82,981 4,527,437 93,043 8,257,916

Lower
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

trading
Monetary Notes - - - - 149,832 - 149,832
available-for-sale
treasury bills - - - - 39,421 - 39,421
securities - - - - 430,728 - 430,728
Monetary Notes - - - - 174,620 - 174,620
Others - - - - 816,584 - 816,584
Quoted and unquoted
Private debt securities 1,652,387 314,696 284,915 178,545 81,480 - 2,512,023
held-to-maturity
Private debt securities - - 27,361 - 393,991 99,753 521,105
1,652,387 314,696 312,276 181,477 4,804,440 104,079 7,369,355
* Net of allowance for impairment.

Collateral is not generally obtained directly from the issuers of debt securities. Certain debt securities may be collateralised by
specifically identified assets that would be obtainable in the event of default.


Lower
1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

trading
Monetary Notes - - - - 99,853 - 99,853
Negotiable Instruments
of Deposit - - - - 50,092 - 50,092
available-for-sale
treasury bills - - - - 166,566 - 166,566
securities - - - - 763,701 - 763,701
BNM Sukuk - - - - 32,017 - 32,017
Monetary Notes - - - - 1,006,592 - 1,006,592
Others - - - - 711,316 - 711,316
Quoted and unquoted
Private debt securities 721,113 290,820 460,107 104,526 30,172 - 1,606,738
held-to-maturity
721,113 290,820 487,468 107,192 4,659,968 120,338 6,386,899



Lower
The Bank AAA AA- to AA+ A- to A+ than A- Unrated * Impaired Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

trading
Private debt securities - - - 15,316 150,276 - 165,592
available-for-sale
securities - - - - 5,070 - 5,070
Monetary Notes - - - - 517,015 - 517,015
Others 120,550 - - - 1,073,366 - 1,193,916
Quoted and unquoted
Shares in Malaysia - - - - 99,672 7,036 106,708
Private debt securities 1,956,609 472,886 302,619 65,426 33,530 16 2,831,086
held-to-maturity
Private debt securities - - - - 366,120 85,550 451,670
2,077,159 472,886 302,619 80,742 3,249,415 92,602 6,275,423

Lower
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Financial assets held-

for-trading
Monetary Notes - - - - 149,832 - 149,832
available-for-sale
treasury bills - - - - 39,421 - 39,421
securities - - - - 430,728 - 430,728
Monetary Notes - - - - 24,949 - 24,949
Others - - - - 802,322 - 802,322
Quoted and unquoted
Private debt securities 1,057,484 289,605 284,915 178,545 81,480 - 1,892,029
held-to-maturity
1,057,484 289,605 312,276 178,545 3,944,159 103,401 5,885,470



Lower
1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

trading
Monetary Notes - - - - 99,853 - 99,853
Negotiable Instruments
of Deposit - - - - 50,092 - 50,092
available-for-sale
treasury bills - - - - 137,730 - 137,730
securities - - - - 763,701 - 763,701
investment issues - - - - 674,170 - 674,170
Monetary Notes - - - - 849,557 - 849,557
Others - - - - 698,066 - 698,066
Quoted and unquoted
Private debt securities 398,527 247,086 460,107 93,428 30,172 - 1,229,320
held-to-maturity
398,527 247,086 487,468 93,428 3,692,150 119,295 5,037,954


(ii) Market risk

Market risk is defined as the risk of losses to the Bank’s portfolio positions arising from movements in market factors such
as interest rates, foreign exchange rates and changes in volatility. The Bank is exposed to market risks from its trading and
investment activities. The Bank’s market risk management objective is to ensure that market risk is appropriately identified,
measured, controlled, managed and reported.
The Bank’s exposure to market risk stems primarily from interest rate risk and foreign exchange rate risk. Interest rate risk
arises mainly from differences in timing between the maturities or repricing of assets, liabilities and derivatives. The Bank is
also exposed to basis risk when there is a mismatch between the change in price of a hedge and the change in price of the
assets it hedges. Foreign exchange rate risk arises from unhedged positions of customers’ requirements and proprietary
positions.
The Bank’s market risk management control strategy is established based on its risk appetite, market liquidity and business
strategies as well as macroeconomic conditions. These limits are reviewed at least on an annual basis.
Market risk arising from the Bank’s trading book is primarily controlled through the imposition of Cut-loss and Value-at-Risk
(‘VaR’) Limits.
The Bank quantifies interest rate risk by analysing the repricing mismatch between the rate sensitive assets and rate sensitive
liabilities. It also conducts Net Interest Income simulations to assess the variation in earnings under various rates scenarios.
The potential long term effects of the Bank’s overall exposure is also tracked by assessing the impact on economic value of
equity (‘EVE’).
The Bank’s interest rate risk is managed through Earnings-at-Risk (‘EaR’) and Economic Value-at-Risk (‘EVaR’) limits.
In addition, the Bank conducts periodic stress test of its respective business portfolios to ascertain market risk under abnormal
market conditions.
The Bank’s Management, ALCO and BRMC are regularly kept informed of its risk profile and positions.

(ii) Market risk (continued)

Value at risk (‘VaR’)
Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of a trading
portfolio. It measures the risk of losses arising from potential adverse movements in interest rates and foreign exchange rates
that could affect values of financial instruments.
The Variance-Covariance Parametric methodology is adopted to compute the potential loss amount. This is a statistically
defined, probability-based approach that uses volatilities and correlations to quantify price risks. Under this methodology,
a matrix of historical volatilities and correlations is computed from the past 100 business days’ market data. VaR is then
computed by applying these volatilities and correlations to the outstanding trading portfolio.
The table below sets out a summary of the Bank’s VaR profile by financial instrument types for the trading portfolio:
Average
for the
The Group and The Bank Balance financial year Minimum Maximum
31.12.2012 RM’000 RM’000 RM’000 RM’000
Instruments
FX swap 634 906 604 1,468
FX spot (Metro Desk) 34 144 9 672
Government securities - - - 4
Private debt securities 60 48 - 329

Average
for the
31.12.2011 RM’000 RM’000 RM’000 RM’000
Instruments
FX swap 773 261 73 938
Government securities 4 - - 7

Average
for the
1.1.2011 RM’000 RM’000 RM’000 RM’000
Instruments
FX swap 201 241 134 437
Government securities - 1 - 11
Private debt securities - 1 - 18


Other risk measures
• Mark-to-market
Mark-to-market valuation tracks the current market value of the outstanding financial instruments.
• Stress testing
Stress tests are conducted to attempt to quantify market risk arising from low probability, abnormal market movements.
Stress tests measure the changes in values arising from extreme movements in interest rates and foreign exchange rates
based on past experience and simulated stress scenarios.
• Sensitivity/Dollar Duration
Sensitivity/Dollar Duration measures the change in value of a portfolio resulting from a 0.01% increase in interest rates.
This measure identifies the Bank’s interest rate exposures that are most vulnerable to interest rate changes and facilitates
the implementation of hedging strategies.
Net interest income sensitivity
The table below shows the pre-tax net interest income sensitivity for the financial assets and financial liabilities held at
reporting date. The sensitivity has been measured using the Repricing Gap Simulation methodology based on 100 basis
points parallel shifts in the interest rate.
The Group The Bank

31.12.2012 31.12.2012 31.12.2012 31.12.2012
+100 -100 +100 -100
basis point basis point basis point basis point
RM million RM million RM million RM million
Impact on net interest income (3.8) 3.8 (16.8) 16.8

As percentage of net interest income -0.4% 0.4% -2.1% 2.1%

The Group The Bank
31.12.2011 31.12.2011 31.12.2011 31.12.2011
+100 -100 +100 -100


The Group The Bank
1.1.2011 1.1.2011 1.1.2011 1.1.2011
+100 -100 +100 -100



Foreign exchange risk sensitivity analysis
Open position
Ringgit Impact of
Malaysia 1% fall in
US Ringgit equivalent US
Dollar Malaysia amount for Dollar
equivalent equivalent 1 % fall in exchange
The Group amount amount US Dollar rate
31.12.2012 ‘000 ‘000 ‘000 ‘000
US Dollar 769 2,352 2,329 (24)

Others (4,384) (13,409) (13,275) 134
The impact on the outstanding foreign exchange position as at 31 December 2012 for a one percent change in USD exchange
rate from 3.0590 to 3.0284 was an increase of RM111,000.
Open position
Ringgit Impact of
Malaysia 1% fall in
31.12.2011 ‘000 ‘000 ‘000 ‘000
US Dollar (79) (250) (247) 3

Others (2,024) (6,432) (6,367) 65
rate from 3.1770 to 3.1452 was an increase of RM68,000.
Open position
Ringgit Impact of
Malaysia 1% fall in
1.1.2011 ‘000 ‘000 ‘000 ‘000
US Dollar (4,453) (13,730) (13,592) 138

Others (1,290) (3,977) (3,936) 41
rate from 3.0835 to 3.0527 was a decrease of about RM179,000.


Foreign exchange risk sensitivity analysis (continued)
Open position
Ringgit Impact of
Malaysia 1% fall in
The Bank amount amount US Dollar rate
31.12.2012 ‘000 ‘000 ‘000 ‘000
US Dollar 186 570 564 (6)

Others (3,967) (12,134) (12,013) 121
rate from 3.0590 to 3.0284 was a decrease of RM116,000.
Open position
Ringgit Impact of
Malaysia 1% fall in
31.12.2011 ‘000 ‘000 ‘000 ‘000
US Dollar 9,166 29,120 28,829 (291)

Others (1,656) (5,260) (5,208) 52
rate from 3.1770 to 3.1452 was a decrease of RM239,000.
Open position
Ringgit Impact of
Malaysia 1% fall in
1.1.2011 ‘000 ‘000 ‘000 ‘000
US Dollar (5,944) (18,329) (18,145) 184

Others (984) (3,034) (3,003) 31
rate from 3.0835 to 3.0527 was a decrease of about RM215,000.


Foreign exchange risk
The Bank is exposed to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and
cash flows. Limits are set on the level of exposure by currency and in aggregate for both overnight and intra-day positions,
which are monitored daily. The table summarises the Bank’s exposure to foreign currency exchange rate risk at reporting date.
Included in the table are the Bank’s financial instruments at carrying amounts, categorised by currency.
United Great
States Britain Australian Japanese
The Group Euro Dollar Pound Dollar Yen Others Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 6,724 132,764 2,170 229 972 25,761 168,620
Deposits and placements
with banks and other
financial institutions - 129,692 - 79,833 - - 209,525
trading - 15,316 - - - - 15,316
Derivative financial assets - 1,811 - 1,155 - 231 3,197
available-for-sale - 220,664 - 144,654 - 100,418 465,736
Loans, advances and
financing 185 1,598,937 98,514 - 1,114 1,871 1,700,621
Other assets - 487 - - - - 487
Total financial assets 6,909 2,099,671 100,684 225,871 2,086 128,281 2,563,502

Liabilities
Deposits from customers 110,212 173,009 7,337 8,996 170 6,153 305,877
of banks and other
Derivative financial liabilities - 6,940 - 596 - 2,457 9,993
Other liabilities - 6,583 - 265 - - 6,848
Total financial liabilities 110,212 798,587 7,337 18,730 170 8,610 943,646

Net on-balance sheet
financial position (103,303) 1,301,084 93,347 207,141 1,916 119,671 1,619,856
Off balance sheet credit
commitments 540,691 520,180 1,107 29,513 1,933 17,375 1,110,799


Foreign exchange risk (continued)
United Great
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 87,801 382,752 2,692 32,630 982 22,997 529,854
financial institutions - 292,241 - 81,085 32,085 - 405,411
Derivative financial assets - 2,166 25 1,098 - 183 3,472
available-for-sale - 162,885 49,736 251,818 32,584 79,872 576,895
Loans, advances and
financing 338 1,035,041 97,872 - 473 1,619 1,135,343
Other assets - 48 - - - - 48

Liabilities
of banks and other
financial institutions - 1,100,023 - 5,670 - - 1,105,693
Derivative financial liabilities - 9,036 1,315 947 - 1,213 12,511
Total financial liabilities 149,869 1,237,066 10,958 22,938 96 4,482 1,425,409

financial position (61,730) 638,067 139,367 343,693 66,028 100,189 1,225,614
commitments 633,166 1,380,515 31,477 - 287,601 23,668 2,356,427


Foreign exchange risk
United Great
1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 3,205 163,867 2,058 2,049 3,114 33,399 207,692
financial institutions - 147,276 - 15,685 29,604 7 192,572
Derivative financial assets - 1,988 20 96 - 1,522 3,626
Loans, advances and
financing 271 747,822 113 - 356 1,147 749,709

Liabilities
Deposits from customers 7,660 208,383 8,488 9,973 25,619 4,155 264,278
of banks and other
Derivative financial liabilities - 8,478 3,410 98 - 374 12,360
Other liabilities - 3,748 - 34 - 67 3,849
Total financial liabilities 7,660 726,496 11,898 14,271 25,619 4,596 790,540

financial position (4,184) 528,557 37,186 43,382 37,088 61,663 703,692
commitments 1,093,230 2,051,238 65,866 25,235 328,457 68,370 3,632,396


United Great
The Bank Euro Dollar Pound Dollar Yen Others Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 5,365 191,827 1,791 17 742 25,492 225,234
trading - 15,316 - - - - 15,316
Derivative financial assets - 1,811 - 1,155 - 231 3,197
available-for-sale - 220,664 - 144,654 - 100,418 465,736
Loans, advances and
financing 185 1,434,581 98,514 - 1,114 1,871 1,536,265
Other assets - 487 - - - - 487

Liabilities
of banks and other
Derivative financial liabilities - 6,940 - 596 - 2,457 9,993
Total financial liabilities 109,047 798,421 7,330 18,730 167 8,610 942,305

financial position (103,497) 1,237,186 92,975 206,929 1,689 119,402 1,554,684
commitments 376,929 462,694 26,842 1,107 1,933 7,839 877,344


United Great
31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 87,316 444,788 2,049 31,233 902 22,639 588,927
Derivative financial assets - 2,166 25 1,098 - 183 3,472
Loans, advances and
financing 338 875,511 97,872 - 473 1,619 975,813
Other assets - 48 - - - - 48

Liabilities
of banks and other
financial institutions - 1,065,071 - 4,491 - - 1,069,562
Derivative financial liabilities - 9,036 1,315 947 - 1,213 12,511
Total financial liabilities 149,264 1,202,047 10,951 21,759 96 4,482 1,388,599

financial position (61,610) 617,619 138,731 343,475 65,948 99,831 1,203,994
commitments 417,394 363,709 26,965 - 287,601 7,067 1,102,736


United Great
1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 2,988 239,581 1,899 1,765 2,969 33,163 282,365
Derivative financial assets - 1,988 20 96 - 1,543 3,647
Loans, advances and
financing 271 589,867 113 - 356 1,147 591,754

Liabilities
Deposits from customers 7,564 208,324 8,485 9,973 25,619 4,155 264,120
of banks and other
Derivative financial liabilities - 8,478 3,410 98 - 374 12,360
Other liabilities - 3,748 - 34 - 67 3,849
Total financial liabilities 7,564 726,412 11,895 14,271 25,619 4,596 790,357

financial position (4,305) 472,301 37,030 43,098 36,943 61,427 646,494
commitments 1,093,230 2,051,238 65,866 25,235 328,457 68,370 3,632,396
Interest/profit rate risk
Sensitivity to interest rates arises from mismatches in the interest rate characteristics of the assets and their corresponding
liability funding. One of the major causes of these mismatches is timing differences in the repricing of the assets and liabilities.
These mismatches are actively managed as part of the overall interest rate risk management process which is conducted in
accordance with Group policy guidelines.
The following table represents the Group’s and the Bank’s assets and liabilities at carrying amounts, categorised by the earlier
of contractual repricing or maturity dates as at reporting date.

Annual Report 2012


Sensitivity to interest rates arises from mismatches in the interest rate characteristics of the assets and their corresponding liability funding. One of the major
causes of these mismatches is timing differences in the repricing of the assets and liabilities. These mismatches are actively managed as part of the overall interest
rate risk management process which is conducted in accordance with Group policy guidelines.
The following table represents the Group’s and the Bank’s assets and liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity
dates as at reporting date.
Interest/profit rate risk (continued)
Non-trading book
Non-
interest / Effective
Up to 1 >1-3 >3-12 >1-5 Over 5 profit Trading interest
171
The Group month months months years years sensitive book Total rate
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %
Assets
Cash and short-term funds 7,427,433 - - - - 221,471 - 7,648,904 2.95
financial institutions - - 19,939 - - 118 - 20,057 3.07
and other financial institutions 80,000 513,931 - - - 2,521 - 596,452 3.76
Financial assets held-for-trading - - - - - - 165,592 165,592 3.09
Derivative financial assets - - - - - 47,165 21,707 68,872
Financial investments available-for-sale 485,983 794,694 701,194 3,206,109 2,294,827 157,847 - 7,640,654 3.61
Financial investment held-to-maturity 197,337 92,000 - 72,634 - 89,699 - 451,670 4.27
- non-impaired 17,571,338 2,625,107 2,746,329 8,123,871 2,195,788 (322,629) * - 32,939,804 5.48
- impaired - - - - - 542,822 # - 542,822
Others (1) - - - - - 2,030,153 - 2,030,153
Total assets 25,762,091 4,025,732 3,467,462 11,402,614 4,490,615 2,769,167 187,299 52,104,980
* The negative balance represents collective allowance for loans, advances and financing.
# Net of individual allowance.
(1) Others include property and equipment, intangible assets, statutory deposits with BNM, tax recoverable, deferred tax assets, other assets, investment in jointly

controlled entity and amount due from jointly controlled entity.



Non-trading book
Non-
Liabilities
Deposits from customers 16,137,700 10,080,985 11,870,486 255,720 - 2,918,645 - 41,263,536 3.16
Deposits and placements of banks
and other financial institutions 2,318,559 2,466,046 11,489 - - 13,229 - 4,809,323 2.74
Derivative financial liabilities - - - - - 26,595 33,068 59,663
172
Bills and acceptances payable - - - - - 152,400 - 152,400
Recourse obligation on loans sold
to Cagamas Berhad - - - 410,345 - 3,204 - 413,549 4.77
Subordinated term loan 900,000 - - - - 4,960 - 904,960 4.52
Other liabilities (2) - - - - - 383,597 - 383,597
Total liabilities 19,356,259 12,547,031 11,881,975 666,065 - 3,502,630 33,068 47,987,028
Equity - - - - - 4,117,952 - 4,117,952
Total liabilities and equity 19,356,259 12,547,031 11,881,975 666,065 - 7,620,582 33,068 52,104,980

On-balance sheet interest sensitivity gap 6,405,832 (8,521,299) (8,414,513) 10,736,549 4,490,615 (4,851,415) 154,231
Off-balance sheet interest sensitivity gap (3) 502,354 602,790 (91,805) (1,148,313) 134,974 - -
Total interest sensitivity gap 6,908,186 (7,918,509) (8,506,318) 9,588,236 4,625,589 (4,851,415) 154,231
(2) Other liabilities include provision for taxation, deferred tax liabilities and other liabilities.
(3) The off-balance sheet gap represents the net notional amounts of all interest rate sensitive derivative financial instruments.
Annual Report 2012

Annual Report 2012


Non-trading book
Non-
Assets
173
and other financial institutions 95,609 282,599 15,032 90,000 - 3,454 - 486,694 3.55
Financial investments available-for-sale 29,952 253,398 376,728 5,159,961 714,721 163,658 - 6,698,418 4.11
Financial investment held-to-maturity 204,721 - 51,186 163,670 - 101,528 - 521,105 5.16
- non-impaired 16,940,591 1,275,642 2,285,786 6,923,472 2,020,969 (451,599) * - 28,994,861 4.94
- impaired - - - - - 697,405 # - 697,405
Others (1) - - - - - 1,770,621 - 1,770,621
Total assets 26,966,073 1,811,639 2,728,732 12,337,103 2,735,690 2,487,763 181,203 49,248,203



Non-trading book
Non-
Liabilities
174
Equity - - - - - 3,600,985 - 3,600,985

Off-balance sheet interest sensitivity gap (3) 605,163 764,268 34,550 (1,392,942) (11,039) - -


Annual Report 2012

Annual Report 2012


Non-trading book
Non-
Assets
175
and other financial institutions 29,597 132,468 30,270 - - 187 - 192,522 2.62
Financial assets held-for-trading - - - - - 92 149,853 149,945 2.81
- non-impaired 12,062,771 1,031,672 2,466,714 7,527,074 2,487,043 (395,701) * - 25,179,573 4.94
- impaired - - - - - 795,274 # - 795,274
Others (1) - - - - - 814,215 - 814,215
Total assets 20,968,705 2,301,851 3,167,757 10,901,575 2,889,197 1,675,240 159,596 42,063,921




Non-trading book
Non-
Liabilities
and other financial institutions 3,099,547 3,437,614 - 68,186 - 14,388 - 6,619,735 2.86
176
Subordinated term loan 300,000 - - - - 682 - 300,682 3.52
Equity - - - - - 3,313,004 - 3,313,004

Off-balance sheet interest sensitivity gap (3) 299,637 455,305 (5,193) (704,458) (45,291) - -


Annual Report 2012

Annual Report 2012


Non-trading book
Non-
The Bank month months months years years sensitive book Total rate
Assets
177
financial institutions - - 19,939 - - 118 - 20,057 3.07
and other financial institutions 80,000 646,200 49,037 197,210 46,627 24,751 - 1,043,825 3.76
Financial investments available-for-sale 353,932 585,506 320,505 2,346,475 1,911,552 140,191 - 5,658,161 3.67
- non-impaired 14,782,179 2,466,733 2,334,730 7,016,986 1,578,208 (287,693) * - 27,891,143 5.50
- impaired - - - - - 448,126 # - 448,126
Others (1) - - - - - 2,140,817 - 2,140,817
Amount due from subsidiaries 153,296 - - - - 653 - 153,949 3.08
Total assets 18,987,359 3,790,439 2,724,211 9,633,305 3,536,387 2,817,054 187,299 41,676,054

(1) Others include property and equipment, intangible assets, statutory deposits with Bank Negara Malaysia, investment in subsidiaries and other assets.




Non-trading book
Non-
Liabilities
178
Amount due to subsidiaries - - - - - 48,528 - 48,528
Equity - - - - - 3,794,454 - 3,794,454

Off-balance sheet interest sensitivity gap (3) 502,354 602,790 (91,805) (1,148,313) 134,974 - -

Annual Report 2012

Annual Report 2012


Non-trading book
Non-
Assets
179
and other financial institutions 95,609 652,010 24,804 287,210 25,000 14,355 - 1,098,988 3.55
Financial investment held-to-maturity 204,721 - 51,186 163,670 - 101,528 - 521,105 5.16
- non-impaired 14,692,338 1,143,711 1,924,100 5,924,372 1,464,441 (390,890) * - 24,758,072 4.95
- impaired - - - - - 559,989 # - 559,989
Others (1) - - - - - 1,833,534 - 1,833,534
Amount due from subsidiaries 355,535 - - - - 1,362 - 356,897 3.02
Total assets 20,730,212 1,999,479 2,207,033 10,527,928 1,962,212 2,462,223 181,203 40,070,290

(1) Others include property and equipment, intangible assets, statutory deposits with Bank Negara Malaysia, investment in subsidiaries and other assets.



Non-trading book
Non-
Liabilities
180
Bills and acceptances payable - - - - - 82,059 - 82,059 -
Equity - - - - - 3,351,398 - 3,351,398

Off-balance sheet interest sensitivity gap (3) 605,163 764,268 34,550 (1,392,942) (11,039) - -

(2) Other liabilities include provision for taxation, other liabilities and deferred tax liabilities.
Annual Report 2012

Annual Report 2012


Non-trading book
Non-
Assets
181
and other financial institutions 29,597 462,664 67,272 - - 5,384 - 564,917 2.76
Financial assets held-for-trading - - - - - 92 149,853 149,945 2.81
- non-impaired 10,293,638 914,913 2,136,368 6,715,183 2,023,556 (343,220) * - 21,740,438 4.95
- impaired - - - - - 678,813 # - 678,813
Others (1) - - - - - 1,082,841 - 1,082,841
Amount due from subsidiaries 183,541 - - - - 1,730 - 185,271 2.62
Total assets 16,797,613 2,319,312 2,864,508 9,076,119 2,372,762 1,863,757 159,596 35,453,667

(1) Others include property and equipment, intangible assets, statutory deposits with Bank Negara Malaysia, tax recoverable, investment in subsidiaries, amount due
from subsidiaries and other assets.



Non-trading book
Non-
Liabilities
182
Subordinated term loan 300,000 - - - - 682 - 300,682 3.52
Equity - - - - - 3,112,800 - 3,112,800

Off-balance sheet interest sensitivity gap (3) 299,637 455,305 (5,193) (704,458) (45,291) - -

(2) Other liabilities include other liabilities and deferred tax liabilities.
Annual Report 2012

(iii) Liquidity risk

Liquidity risk is the current and prospective risk to earnings or capital arising from a bank’s inability to meet its obligations
when they fall due. Liquidity risk includes the inability to manage sudden decreases or changes in funding sources. Liquidity
risk also arises from the failure to recognise changes in market conditions that affect the ability to liquidate assets quickly and
with minimal loss in value.
To measure and manage net funding requirements, the Bank adopts BNM’s New Liquidity Framework (‘NLF’). The NLF
ascertains the liquidity condition based on the contractual and behavioral cash-flow of assets, liabilities and off-balance sheet
commitments, taking into consideration the realisable cash value of the eligible liquefiable assets. The NLF is also supported
by indicative ratios on the Bank’s funding structure to monitor the reliance on particular funding sources.
The Bank employs liquidity risk indicators as an early alert of any structural change for liquidity risk management. Liquidity risk
is tracked using internal and external qualitative and quantitative indicators. The Bank also conducts liquidity stress tests to
gauge the Bank’s resilience in the event of a liquidity crisis. In addition, the Bank has in place the Contingency Funding Plan,
which provides a systematic approach in handling liquidity disruption. The document encompasses strategies, decision-
making authorities, and courses of action to be taken in the event of liquidity crisis and emergencies.
The BRMC is responsible for the Bank’s liquidity policy although the strategic management of liquidity has been delegated to
the ALCO. The BRMC is informed regularly of the liquidity situation in the Bank.

(iii) Liquidity risk (continued)

Liquidity risk disclosure table which is based on contractual undiscounted cash flow
The table below provides analysis of cash flow payables for financial liabilities based on remaining contractual maturities
on undiscounted basis. The balances in the table below do not agree directly to the balances reported in the statement of
financial position as the table incorporates all contractual cash flows, on an undiscounted basis, relating to both principal and
interest payments.
Up to 1 >1-3 >3-12 >1-5 Over 5

The Group month months months years years Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Deposits from customers 18,859,710 10,235,637 12,239,649 281,525 - 41,616,521

and other financial institutions 2,325,773 2,483,628 11,972 - - 4,821,373
Bills and acceptances payable 152,400 - - - - 152,400
Cagamas Berhad 3,165 5,525 26,109 422,077 - 456,876
Other liabilities 306,481 - - - - 306,481
Subordinated term loan 3,509 6,678 31,124 168,215 1,016,039 1,225,565
21,651,038 12,731,468 12,308,854 871,817 1,016,039 48,579,216

31.12.2011
Cagamas Berhad 3,172 5,545 26,189 456,743 - 491,649
Subordinated term loan 2,148 4,338 21,314 115,350 692,392 835,542
23,008,057 13,025,106 8,485,746 873,932 692,392 46,085,233
1.1.2011
Cagamas Berhad 3,226 3,106 19,021 310,879 - 336,232
Subordinated term loan 961 1,828 8,521 58,072 348,068 417,450
21,493,135 11,424,342 5,448,443 422,338 348,068 39,136,326


Liquidity risk disclosure table which is based on contractual undiscounted cash flow: (continued)
Up to 1 >1-3 >3-12 >1-5 Over 5

The Bank month months months years years Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cagamas Berhad 3,165 5,525 26,109 422,077 - 456,876
Amount due to subsidiaries 48,528 - - - - 48,528
Subordinated term loan 3,509 6,678 31,124 168,215 1,016,039 1,225,565
15,338,035 10,949,389 10,268,522 859,884 1,016,039 38,431,869
31.12.2011
Cagamas Berhad 3,172 5,545 26,189 456,743 - 491,649
Subordinated term loan 2,148 4,338 21,314 115,350 692,392 835,542
17,704,494 10,838,690 7,068,948 810,972 692,392 37,115,496
1.1.2011
Cagamas Berhad 3,226 3,106 19,021 310,879 - 336,232
Subordinated term loan 961 1,828 8,521 58,072 348,068 417,450
17,356,314 9,836,810 4,594,863 417,629 348,068 32,553,684


Derivative financial liabilities
Derivative financial liabilities based on contractual undiscounted cash flow:
Up to 1 >1-3 >3-12 >1-5 Over 5

The Group and The Bank month months months years years Total
31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Derivatives settled on net basis

Interest rate derivatives (1,374) (1,986) (5,662) (13,565) 2,062 (20,525)

Derivatives settled on gross basis
Outflow (523,356) (648,351) (352,435) (126,927) - (1,651,069)
Inflow 522,534 643,932 347,851 124,546 - 1,638,863
(822) (4,419) (4,584) (2,381) - (12,206)

31.12.2011
Interest rate derivatives (1,232) (2,249) (11,130) (36,067) (9,918) (60,596)

Outflow (769,225) (414,998) (769,504) (102,284) - (2,056,011)
Inflow 768,365 411,915 766,701 99,207 - 2,046,188
(860) (3,083) (2,803) (3,077) - (9,823)
1.1.2011
Interest rate derivatives (1,098) (1,353) (9,658) (33,596) (12,799) (58,504)

Outflow (278,479) (207,640) (229,901) (237,332) - (953,352)
Inflow 278,466 205,907 229,397 226,938 - 940,708
(13) (1,733) (504) (10,394) - (12,644)
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 and the Bank. The table below provides
analysis of assets and liabilities into relevant maturity tenures based on remaining contractual maturities.


Liquidity risk for assets and liabilities based on remaining contractual maturities (continued)
Maturities of assets and liabilities of the Group and the Bank by remaining contractual maturities profile are as follows:
Up to 1 >1-3 >3-12 >1-5 Over 5

31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Cash and short-term funds 7,648,904 - - - - 7,648,904
financial institutions - - 20,057 - - 20,057
and other financial institutions - 440,905 18,705 61,186 75,656 596,452
Financial assets held-for-trading 165,592 - - - - 165,592
Derivative financial assets 11,209 26,370 18,534 6,693 6,066 68,872
Financial investments available-for-sale 461,116 711,629 796,643 3,350,026 2,321,240 7,640,654
Financial investments held-to-maturity 88,623 1,076 16,000 148,634 197,337 451,670
Loans, advances and financing 1,872,459 1,673,483 1,586,057 10,804,209 17,546,418 33,482,626
Other assets 251,776 - 9,622 5,215 27,045 293,658
Amount due from jointly controlled entity 2,745 - - - - 2,745
Other non-financial assets (1) 1,413,300 - 16 - 320,434 1,733,750
11,915,724 2,853,463 2,465,634 14,375,963 20,494,196 52,104,980

Liabilities
Derivative financial liabilities 9,769 19,817 8,655 17,247 4,175 59,663
to Cagamas Berhad 1,364 1,840 - 410,345 - 413,549
Subordinated term loan 2,755 2,205 - - 900,000 904,960
Other non-financial liabilities (2) - - 63,751 - 13,365 77,116
21,643,438 12,672,582 12,069,827 683,641 917,540 47,987,028

On balance sheet gap (9,727,714) (9,819,119) (9,604,193) 13,692,322 19,576,656 4,117,952
Off balance sheet credit commitments - - (12,020,705) - - (12,020,705)
Derivatives 143,621 331,915 1,041,996 126,594 - 1,644,126
Net maturity mismatch (9,584,093) (9,487,204) (20,582,902) 13,818,916 19,576,656 (6,258,627)

(1) Other non-financial assets include amount due from jointly controlled entity, tax recoverable, statutory deposits with BNM,
investment in jointly controlled entity, property and equipment and intangible assets.
(2) Other non-financial liabilities include provision for taxation and deferred tax liabilities.


Up to 1 >1-3 >3-12 >1-5 Over 5

31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
and other financial institutions - 295,957 15,055 175,682 - 486,694
Financial investments available-for-sale 43,077 285,947 494,712 5,159,961 714,721 6,698,418
Loans, advances and financing 1,716,500 754,064 1,101,768 9,032,933 17,087,001 29,692,266
Other assets 109,808 - 10,757 5,530 40,448 166,543
Other non-financial assets (1) 1,268,650 - 3,430 - 329,253 1,601,333
13,284,933 1,347,954 1,684,466 14,543,540 18,387,310 49,248,203

Liabilities
Subordinated term loan - 1,850 - - 600,000 601,850
22,990,204 12,974,818 8,294,480 751,287 636,429 45,647,218

Derivatives 573,777 195,782 490,331 (30,000) - 1,229,890

(1) Other non-financial assets include amount due from jointly controlled entity, tax recoverable, statutory deposits with
BNM, investment in jointly controlled entity, property and equipment and intangible assets.



Up to 1 >1-3 >3-12 >1-5 Over 5

1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Financial investments held-to-maturity 1,310 111,113 361 113,955 205,798 432,537
Other assets 8,740 - 10,930 5,127 161,664 186,461
Other non-financial assets (1) 245,130 - 49,930 - 329,949 625,009
11,940,007 1,993,757 2,318,173 10,894,436 14,917,548 42,063,921

Liabilities
Cagamas Berhad 1,488 1,033 - 286,370 - 288,891
Subordinated term loan - 682 - - 300,000 300,682
Other non-financial liabilities (2) - - 22 - 24,932 24,954
21,324,764 11,382,702 5,352,777 358,821 331,853 38,750,917

Derivatives 318,479 67,119 195,759 (30,000) - 551,357

(1) Other non-financial assets include tax recoverable, statutory deposits with BNM, deferred tax assets, investment in jointly
controlled entity, property and equipment and intangible assets.


Up to 1 >1-3 >3-12 >1-5 Over 5

31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
financial institutions - - 20,057 - - 20,057
and other financial institutions - 579,475 67,851 272,166 124,333 1,043,825
Financial investments available-for-sale 328,225 490,350 411,229 2,490,392 1,937,965 5,658,161
Loans, advances and financing 1,784,693 1,581,005 1,397,768 9,756,008 13,819,795 28,339,269
Other assets 186,437 - 9,514 5,215 26,624 227,790
Amount due from subsidiaries 153,949 - - - - 153,949
Other non-financial assets (1) 1,211,800 - - - 701,227 1,913,027
7,564,370 2,678,276 1,940,953 12,679,108 16,813,347 41,676,054
Liabilities
Subordinated term loan 2,755 2,205 - - 900,000 904,960
15,333,838 10,901,721 10,056,555 672,212 917,274 37,881,600

Derivatives 143,621 331,915 1,041,996 126,594 - 1,644,126

(1) Other non-financial assets include statutory deposits with BNM, investment in subsidiaries, property and equipment and
intangible assets.


Up to 1 >1-3 >3-12 >1-5 Over 5

31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
and other financial institutions - 671,105 24,879 377,735 25,269 1,098,988
Loans, advances and financing 1,706,446 665,560 893,175 8,147,363 13,905,517 25,318,061
Other assets 60,727 - 10,578 5,351 40,034 116,690
Other non-financial assets (1) 1,108,650 - - - 608,194 1,716,844
9,067,053 1,576,723 1,306,283 12,852,559 15,267,672 40,070,290

Liabilities
Subordinated term loan - 1,850 - - 600,000 601,850
17,706,944 10,790,026 6,898,085 688,315 635,522 36,718,892

Derivatives 573,777 195,782 490,331 (30,000) - 1,229,890

(1) Other non-financial assets include amount due from subsidiaries, statutory deposits with BNM, investment in subsidiaries,
property and equipment and intangible assets.


Up to 1 >1-3 >3-12 >1-5 Over 5

1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Financial investments held-to-maturity 1,310 111,113 361 113,955 205,798 432,537
Other assets 7,514 - 10,830 4,983 161,255 184,582
Other non-financial assets (1) 245,130 - 46,072 - 607,057 898,259
9,411,404 2,003,520 2,161,508 9,233,905 12,643,330 35,453,667
Liabilities
Subordinated term loan - 682 - - 300,000 300,682
Deferred tax liabilities - - - - 24,932 24,932
17,329,540 9,805,572 4,519,331 354,571 331,853 32,340,867

Derivatives 318,479 67,119 195,759 (30,000) - 551,357
(1) Other non-financial assets include amount due from subsidiaries, statutory deposits with BNM, investment in subsidiaries,
property and equipment and intangible assets.

(iv) Operational risk management

Operational risk is the risk of loss arising from inadequate or failed internal processes, action on or by people, infrastructure
or technology or events which are beyond the bank’s immediate control which have an operational impact, including natural
disaster, fraudulent activities and money laundering/financing of terrorism.
The Bank manages operational risk through a control based environment in which policies and procedures are formulated after
taking into account individual unit’s business activities, the market in which it is operating and regulatory requirement in force.
The Bank adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational risk. The
capital requirement is calculated by taking 15% of Bank’s average annual gross income over the previous three years.
Risk is identified through the use of assessment tools and measured using threshold/limits mapped against risk matrix. Monitoring
and control procedures include the use of key control standards, independent tracking of risk, back-up procedures and
contingency plans, including disaster recovery and business continuity plans. This is supported by periodic reviews undertaken
by Group Internal Audit to ensure adequacy and effectiveness of the Group Operational Risk Management process.
The Bank gathers, analyses and reports operational risk loss and ‘near miss’ events to Group Operational Risk Management
Committee and Board Risk Management Committee. Appropriate remedial actions are reviewed for effectiveness and
implemented to minimize the recurrence of such events.
As a matter of requirement, all Operational Risk Coordinators must satisfy an internal operational risk (including anti-money
laundering/counter financing of terrorism and business continuity management) Certification Program. These coordinators will
first go through an on-line self learning exercise before attempting on-line assessments to measure their skills and knowledge level.
This will enable Group Risk Management to prescribe appropriate training and development activities for the coordinators.
(v) Fair value of financial instruments
Financial instruments comprise financial assets, financial liabilities and also off balance sheet financial instruments. The fair value
of a financial instrument is the amount at which the instruments could be exchanged or settled between knowledgeable and
willing parties in an arm’s length transaction. The information presented herein represents estimates of fair values as at reporting
date.
Quoted market prices, when available, are used as the measure of fair values. For financial instruments, without quoted market
prices, fair values are estimated using net present value or other valuation techniques. These techniques involve a certain degree
of uncertainty depending on the assumptions used and judgments made regarding risk characteristics of various financial
instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors. Changes in these
assumptions could materially affect these estimates and the resulting fair value.
Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of MFRS 132 which
requires fair values to be disclosed. This includes property and equipment, statutory deposits with Bank Negara Malaysia,
investment in subsidiaries, other assets, tax recoverable, deferred tax and intangible assets.

(v) Fair value of financial instruments (continued)
The fair values of the financial assets and financial liabilities of the Group and the Bank approximated to their respective carrying
value as at reporting date, except for the following:
The Group The Bank

31.12.2012 31.12.2012
Carrying Fair Carrying Fair
value value value value
RM’000 RM’000 RM’000 RM’000
Financial assets
Financial investments held-to-maturity 451,670 441,716 451,670 441,716
33,934,296 33,627,330 28,790,939 28,529,284

Financial liabilities
Recourse obligation on loans sold to Cagamas Berhad 413,549 426,331 413,549 426,331
41,677,085 41,684,532 32,638,366 32,646,861
The Group The Bank

31.12.2011 31.12.2011
RM’000 RM’000 RM’000 RM’000
Financial assets
30,213,371 29,910,638 25,839,166 25,593,803

36,975,903 36,995,219 29,500,883 29,520,995

The Group The Bank
1.1.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000
Financial assets
26,407,384 26,156,425 22,851,788 22,665,620

31,271,298 31,275,016 25,720,966 25,727,791


The fair values of derivative financial instruments at the reporting date are as follows:
The Group and the Bank The Group and the Bank The Group and the Bank
31.12.2012 31.12.2011 1.1.2011
Underlying Underlying Underlying
Notional Asset Liability Notional Asset Liability Notional Asset Liability
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Foreign exchange
contracts
- forward contracts 941,791 9,504 2,870 712,883 2,433 6,313 728,471 2,381 19,025
- swaps 3,060,558 37,661 23,725 2,344,698 16,097 33,904 1,688,008 35,206 22,715

Interest rate
contracts
- swaps 2,484,602 21,707 33,068 2,395,015 31,371 57,182 1,495,313 17,394 28,455
The derivative financial instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuation in market
interest rates or foreign exchange rates relative to their terms. The extent to which instruments are favorable or unfavorable and
the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly from time to time.
The fair value estimates were determined by application of the methodologies and assumptions described below.
Short-term funds and placements with banks and other financial institutions
For short-term funds and placements with banks and other financial institutions with maturity of less than six months, the
carrying amount is a reasonable estimate of fair value.
For amounts with maturities of six months or more, fair values have been estimated by reference to current rates at which similar
deposits and placements would be made to banks with similar credit ratings and maturities.
Financial assets held-for-trading, financial investments available-for-sale and held-to-maturity
The fair values of financial assets held-for-trading, financial investments available-for-sale and financial investments held-to-
maturity are reasonable estimates based on quoted market prices. In the absence of such quoted prices, the fair values are
based on the expected cash flows of the instruments discounted by indicative market yields for the similar instruments as at
reporting date or the audited net tangible asset of the invested company.
Loans, advances and financing of the Group comprise of floating rate loans and fixed rate loans. For performing floating rate
loans, the carrying amount is a reasonable estimate of their fair values.
The fair values of performing fixed rate loans are arrived at using the discounted cash flows based on the prevailing market rates
of loans and advances with similar credit ratings and maturities.
The fair values of impaired loans and advances, whether fixed or floating are represented by their carrying values, net of individual
and collective allowances, being the reasonable estimate of recoverable amount.
Other assets and liabilities
The carrying value less any estimated allowance for financial assets and liabilities included in other assets and other liabilities are
assumed to approximate their fair values as these items are not materially sensitive to the shift in market interest rates.


Deposits from customers, banks and other financial institutions, bills and acceptances payable
The carrying values of deposits and liabilities with maturities of six months or less are assumed to be reasonable estimates of
their fair values. Where the remaining maturities of deposits and liabilities are above six months, their estimated fair values are
arrived at using the discounted cash flows based on prevailing market rates currently offered for similar remaining maturities.
The estimated fair value of deposits with no stated maturity, which include non-interest bearing deposits, approximates carrying
amount which represents the amount repayable on demand.
Recourse obligation on loans sold to Cagamas Berhad
For floating rate loans sold to Cagamas Berhad, the carrying value is generally a reasonable estimate of their fair values.
The fair values of fixed rate loans sold to Cagamas Berhad are arrived at using the discounted cash flow methodology at
prevailing market rates of similarly profiled loans.
Subordinated term loan
For fixed rate borrowings, the estimate of fair value is based on discounted cash flow model using prevailing lending rates for
borrowings with similar risks and remaining term to maturity.
For floating rate borrowings, the carrying value is generally a reasonable estimate of their fair values.
Derivative financial instruments
The fair value of exchange rate and interest rate contracts is the estimated amount the Group would receive or pay to terminate
the contracts at the reporting date.
Fair value measurements
The following table presents assets and liabilities measured at fair value and classified by level of the following fair value
measurement hierarchy:
(a) Level 1 - quoted price (unadjusted) in active markets for identical assets and liabilities;
(b) Level 2 - inputs other than quoted price included within level 1 that are observable for the assets or liability, either directly
(i.e. as prices) or indirectly (i.e.derived from prices); and
(c) Level 3 - inputs for the asset and liability that are not based on observable market data (unobservable inputs).

Fair value measurements (continued)

The Group Level 1 Level 2 Level 3 Total
31.12.2012 RM’000 RM’000 RM’000 RM’000
Assets
Financial assets held-for-trading - 165,592 - 165,592
Financial investments available-for-sale *
- Private debt securities - 3,532,861 - 3,532,861
- Equity securities 3,030 - 106,444 109,474
- Other financial assets - 3,998,319 - 3,998,319
Derivative financial assets - 68,872 - 68,872

Liabilities
Derivative financial liabilities - 59,663 - 59,663

31.12.2011 RM’000 RM’000 RM’000 RM’000
Assets

Liabilities

1.1.2011 RM’000 RM’000 RM’000 RM’000
Assets

Liabilities


The Bank Level 1 Level 2 Level 3 Total
31.12.2012 RM’000 RM’000 RM’000 RM’000
Assets
- Equity securities 349 - 106,375 106,724

Liabilities

31.12.2011 RM’000 RM’000 RM’000 RM’000
Assets

Liabilities

1.1.2011 RM’000 RM’000 RM’000 RM’000
Assets

Liabilities




Financial instruments that are valued using quoted prices in active market are classified as Level 1 of the valuation hierarchy.
These would include listed equities 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 and the Bank
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 corporate private debt securities, corporate notes
and most of the Group’s OTC derivatives.
The Group and the Bank classify 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 Group and the Bank may also use valuation models or discounted cash flow technique to determine the fair value.
Most of the OTC derivatives are priced using valuation models. Where derivative products have been established in the markets
for some time, the Group and the Bank use models that are widely accepted by the industry.
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. OTC derivatives which are valued using unobservable inputs that are supported by little or no
market activity which are significant to the fair value of the assets or liabilities are classified as Level 3.
The following table present the changes in Level 3 instruments for the financial year ended:
The Group The Bank

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Opening 105,864 93,173 25,279 105,795 93,101 24,704

New 527 - - 527 - -
Profit/(loss) - 200 - - 200 -
Sales - (300) - - (300) -
AFS revaluation reserves 53 12,829 67,894 53 12,832 68,397
Allowance for impairment - (38) - - (38) -
Closing 106,444 105,864 93,173 106,375 105,795 93,101
Effect of changes in significant unobservable assumptions to reasonably possible alternatives
As at reporting date, financial instruments measured with valuation techniques using significant unobservable inputs (Level 3)
mainly include unquoted shares held for socio economic purposes.
In estimating its significance, the Group and the Bank used an approach that is currently based on methodologies used for fair
value adjustments. These adjustments reflects the values that the Group and the Bank estimate are appropriate to adjust from
the valuations produced to reflect for uncertainties in the inputs used. The methodologies used can be a statistical or other
relevant approved techniques.

39 LEASE COMMITMENTS
The Bank has lease commitments in respect of rented premises and hired equipment, all of which are classified as operating leases.
A summary of the non-cancelable long-term commitments, net of sub-leases are as follows:
The Group
and The Bank
31.12.2012 31.12.2011
RM’000 RM’000
Within one year 19,931 19,573

One year to five years 8,310 20,487

40 CAPITAL AND OPERATING COMMITMENTS
Capital commitments
Capital expenditure approved by the Directors but not provided for in the financial statements amounted to approximately:
The Group
and The Bank
31.12.2012 31.12.2011
RM’000 RM’000
Authorised and contracted for 2,864 12,261
2,864 12,261
Analysed as follows:
Property and equipment 2,864 12,261
Operating commitments
Operating expenditure approved by the Directors but not provided for in the financial statements amounted to approximately:
The Group
and The Bank
31.12.2012 31.12.2011
RM’000 RM’000
Authorised and contracted for 266,106 266,202

41 CAPITAL MANAGEMENT
The Group and the Bank’s objectives when managing capital are:
• To comply with the capital requirements set by the regulators of the banking markets where the entities within the Group and the
Bank operates;
• To safeguard the Group and the Bank’s ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
• To maintain a strong capital base to support the development of its business.
The Group and the Bank maintain a ratio of total regulatory capital to its risk-weighted assets above a minimum level agreed with the
management which takes into account the risk profile of the Group and the Bank.
The table in Note 42 below summarises the composition of regulatory capital and the ratios of the Group and the Bank for the
financial year ended 31 December 2012.
42 CAPITAL ADEQUACY
The capital adequacy ratios are as follows:
The Group # The Bank

Basel II Basel II Basel II Basel II
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Tier I capital
Paid-up share capital 1,518,337 1,439,285 1,518,337 1,439,285
Share premium 529,337 408,389 529,337 408,389
Retained profits 808,553 642,638 659,603 530,489
Statutory reserves 1,160,651 1,011,044 1,017,200 904,624
4,016,878 3,501,356 3,724,477 3,282,787

Less:
Goodwill (137,323) (137,323) (137,323) (137,323)
Deferred tax assets * (10,827) (3,658) (10,227) (3,659)
Total Tier I capital 3,868,728 3,360,375 3,576,927 3,141,805

42 CAPITAL ADEQUACY (continued)
The Group # The Bank

Basel II Basel II Basel II Basel II
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Tier II capital
Collective impairment @ 152,350 182,269 128,568 138,227
Total Tier II capital 1,052,350 782,269 1,028,568 738,227
Total capital 4,921,078 4,142,644 4,605,495 3,880,032
Less:
Investment in capital instruments of other banking institutions (10,034) (40,257) (10,034) (40,257)
Investment in subsidiaries (27,389) (27,389) (387,389) (287,389)
Capital base 4,883,655 4,074,998 4,208,072 3,552,386

Core capital ratio 11.02% 10.00% 11.59% 10.64%
Risk-weighted capital ratio 13.91% 12.12% 13.64% 12.03%
Core capital ratio (net of proposed dividends) 10.76% 9.78% 11.30% 10.39%
Risk-weighted capital ratio (net of proposed dividends)^ 13.65% 11.91% 13.34% 11.78%

Risk-weighted assets for:
Credit risk 32,659,779 31,344,231 28,731,138 27,608,268
Market risk 260,620 133,160 258,838 102,489
Operational risk 2,187,846 2,135,976 1,864,563 1,828,940
Total risk-weighted assets 35,108,245 33,613,367 30,854,539 29,539,697
* Deferred tax assets exclude deferred tax arising from AFS revaluation reserves.
# The Group comprises the Bank and the Bank’s subsidiary, AFFIN Islamic Bank Berhad.
@ Qualifying collective impairment is restricted to allowances on unimpaired portion of the loans, advances and financing.
^ Net proposed dividends of RM91,100,000 (31.12.2011: RM71,964,000).
The Group and the Bank implemented the Basel II - Risk-Weighted Assets Computation under the Risk-Weighted Capital Adequacy
Framework with effect from 1 January 2008. The Group and the Bank have adopted the Standardised Approach for credit risk and
market risk and Basic Indicator Approach for operational risk computation.
Pursuant to Bank Negara Malaysia’s circular, ‘Recognition of Deferred Tax Asset (‘DTA’) and Treatment of DTA for RWCR Purposes’
dated 8 August 2003, deferred tax income/(expenses) is excluded from the calculation of Tier I capital and DTA is excluded from the
calculation of risk-weighted assets.

43 LITIGATIONS AGAINST THE BANK
(a) A syndicate of lenders, including AFFIN Bank Berhad (the ‘Bank’), had granted facilities of RM62.5 million (the ‘Facilities’) to
a borrower to, inter alia, finance a development project. At borrower’s request, the Facilities were restructured in 1999 but in
July 2000, continued drawdown under the restructured Facilities was refused as borrower had failed to comply with conditions
precedent for such drawdown. The lenders and borrower negotiated to resolve the default and the Facilities were restructured
again in 2003. Further financing was also granted in 2004 and the Project was completed with certificate of fitness in January
2005.
Subsequent to the completion of the project, borrower brought a claim against the lead banker, as the agent of the syndicate
lenders, for loss and damage arising from alleged breach of duty and obligations owed by the lead banker to the borrower in
relation to various actions taken or omitted to be taken in disbursements and transactions under the Facilities. The lead banker
filed an action against the borrower and its guarantor of the Facilities, for recovery of the amounts outstanding under the
Facilities.
The 2 actions were consolidated and heard together at full trial. On 6 May 2009, the High Court granted judgment in favour of
borrower against the lead banker, as an agent of the lenders, and dismissed the lenders’ action for recovery of the Facilities.
The judgment against the lead banker included a sum of RM115.5 million to be paid, as well as further damages to be assessed
and an immediate release of all security granted by the borrower and its guarantors for the Facilities. The award of damages of
RM115.5 million was made despite parties’ agreement that the trial proceed only on issue of liability and no evidence of damage/
loss was produced. If the judgment of 6 May 2009 is maintained, lead banker will seek contribution from the lenders, including
the Bank. The Bank’s share is about RM34.65 million.
The lead banker and agent appealed to the Court of Appeal against the High Court decision. An effort at mediation on 9 March
2012 failed as the parties could not come to a settlement. Hearing dates were then fixed for the appeal. The appeal has been
argued twice before the Court of Appeal i.e. on 3 August 2012 and 9 November 2012. The hearing was continued on 23 January
2013 and 31 January 2013 and the Court of Appeal reserved its decision to a date to be fixed later.
The solicitors for the lead banker and the lenders have expressed the view that the lead banker and the lenders have a more than
even chance of success in their appeal against the Judgment.
(b) Other than above, there are various legal suits against the Bank in respect of claims and counter claims of approximately RM73.8
million (31.12.2011: RM42.8 million). Based on legal advice, the Directors are of the opinion that no provision for damages need
to be made in the financial statements, as the probability of adverse adjudication against the Bank is remote.
44 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Group and the Bank make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. To enhance the information content of the estimates, certain variables that are anticipated to
have material impact to the Group’s and the Bank’s results and financial position are tested for sensitivity to changes in the underlying
parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of
assets and liabilities within the next financial year are discussed below.
Allowance for losses on loans, advances and financing
The accounting estimates and judgments related to the impairment of loans and provision for off-balance sheet positions is a critical
accounting estimate for because the underlying assumptions used for both the individually and collectively assessed impairment can
change from period to period and may significantly affect the Group and the Bank’s results of operations.

44 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Allowance for losses on loans, advances and financing (continued)
In assessing assets for impairment, management judgment is required. The determination of the impairment allowance required
for loans which are deemed to be individually significant often requires the use of considerable management judgment concerning
such matters as local economic conditions, the financial performance of the counterparty and the value of any collateral held, for
which there may not be a readily accessible market. The actual amount of the future cash flows and their timing may differ from the
estimates used by management and consequently may cause actual losses to differ from the reported allowances.
The impairment allowance for portfolios of smaller-balance homogenous loans, such as those to individuals and small business
customers of the private and retail business, and for those loans which are individually significant but for which no objective evidence
of impairment exists, is determined on a collective basis. The collective impairment allowance is calculated on a portfolio basis using
statistical models which incorporate numerous estimates and judgments, and therefore is subject to estimation uncertainty. The
Group and the Bank perform a regular review of the models and underlying data and assumptions as far as possible to reflect the
current economic circumstances. The probability of default, loss given defaults, and loss identification period, amongst other things,
are all taken into account during this review.
Estimated impairment of goodwill
The Group performs an impairment review on an annual basis to ensure that the carrying value of the goodwill does not exceed its
recoverable amounts from cash generating units to which the goodwill is allocated. The recoverable amount represents the present
value of the estimated future cash flows expected to arise from continuing operations. Therefore, in arriving at the recoverable
amount, management exercise judgment in estimating the future cash flows, growth rate and discount rate.
45 CREDIT EXPOSURES ARISING FROM TRANSACTIONS WITH CONNECTED PARTIES
The following credit exposures are based on Bank Negara Malaysia’s revised Guidelines on Credit Transaction and Exposures with
Connected Parties, which are effective 1 January 2008.
(i) The aggregate value of outstanding credit exposures with connected parties (RM’000) 3,414,505
(ii) The percentage of outstanding credit exposures to connected parties as a proportion of total credit exposures 8%
(iii) The percentage of outstanding credit exposures with connected parties which is impaired or in default Nil
46 APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 28 February
2013.

STATEMENT BY
DIRECTORS
PURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965
We, JEN TAN SRI DATO' SERI ISMAIL BIN HAJI OMAR (BERSARA) and EN. MOHD SUFFIAN BIN HAJI HARON, two of the
Directors of AFFIN BANK BERHAD, state that, in the opinion of the Directors, the accompanying financial statements set
out on pages 73 to 204 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Bank as at
31 December 2012 and of the results and cash flows of the Group and the Bank for the financial year ended on the date in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
of the Companies Act, 1965 in Malaysia.
In accordance with a resolution of the Board of Directors dated 28 February 2013.
JEN TAN SRI DATO’ SERI ISMAIL BIN HAJI OMAR (BERSARA)
Chairman
EN. MOHD SUFFIAN BIN HAJI HARON

Director
STATUTORY
DECLARATION
PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965
I, EE KOK SIN, the officer of AFFIN BANK BERHAD primarily responsible for the financial management of the Group and the
Bank, do solemnly and sincerely declare that, in my opinion, the accompanying financial statements set out on pages 73 to
204, are correct and I make this solemn declaration conscientiously believing the same to be true, by virtue of the provisions of
the Statutory Declarations Act, 1960.
EE KOK SIN
Subscribed and solemnly declared by the abovenamed EE KOK SIN at Kuala Lumpur in Malaysia on 28 February 2013, before
me.
Commissioner for Oaths

INDEPENDENT
AUDITORS’ REPORT
TO THE MEMBERS OF AFFIN BANK BERHAD
(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of AFFIN Bank Berhad on pages 73 to 204 which comprise the statements of financial
position as at 31 December 2012 of the Group and of the Bank, and the statements of income, comprehensive income, changes
in equity and cash flows of the Group and of the Bank for the year then ended, and a summary of significant accounting policies
and other explanatory notes, as set out on Notes 1 to 45.
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 Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965, 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 entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting
Standards, International Financial Reporting Standards and the Companies Act, 1965 so as to give a true and fair view of the
financial position of the Group and of the Bank as of 31 December 2012 and of their financial performance and cash flows for
the year then ended.

INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF AFFIN BANK BERHAD
(Incorporated in Malaysia)
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 Bank’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements
of the Group and we have received satisfactory information and explanations required by us for those purposes.
c) The 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.
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.
PRICEWATERHOUSECOOPERS SOO HOO KHOON YEAN

(No. AF : 1146) (No. 2682/10/13 (J))
Chartered Accountants Chartered Accountant
Kuala Lumpur, Malaysia

28 February 2013

BASEL II Pillar 3 Disclosures
1. Introduction
209 1.1 Background
209 1.2 Scope of Application
2. Risk Governance Structure

209 2.1 Overview
210 2.2 Board Committees
211 2.3 Management Committees
213 2.4 Group Risk Management Function
213 2.5 Internal Audit and Internal Control Activities
3. Capital
214 3.1 Capital Structure
215 3.2 Capital Adequacy
215 4. Risk Management Objectives and Policies
5. Credit Risk
215 5.1 Credit Risk Management Objectives and Policies
216 5.2 Application of Standardised Approach for Credit Risk
216 5.3 Credit Risk Measurement
217 5.4 Risk Limit Control and Mitigation Policies
218 5.5 Credit Risk Monitoring
218 5.6 Impairment Provisioning
224 5.7 Credit Risk Culture
6. Market Risk
224 6.1 Market Risk Management Objectives and Policies
224 6.2 Application of Standardised Approach for Credit Risk
224 6.3 Market Risk Measurement, Control and Monitoring
225 6.4 Value-at-Risk (‘VaR’)
225 6.5 Foreign Exchange Risk
7. Liquidity Risk
225 7.1 Liquidity Risk Management Objectives and Policies
225 7.2 Liquidity Risk Measurement, Control and Monitoring
8. Operational Risk
226 8.1 Operational Risk Management Objectives and Policies
226 8.2 Application of Basic Indicator Approach for Operational Risk
226 8.3 Operational Risk Measurement, Control and Monitoring
226 8.4 Operational Risk Culture
227 9. Shariah Compliance
228 Appendices

BASEL II
PILLAR 3 DISCLOSURES for the financial year ended 31 December 2012
1 Introduction
1.1 Background
AFFIN Bank Berhad ('ABB') adopted Basel II in January 2008 in line with the directive from Bank Negara Malaysia
('BNM'). The Basel II framework is structured around three fundamental Pillars.
- Pillar 1 defines the minimum capital requirement to ensure that financial institutions hold sufficient capital to cover
their exposure to credit, market and operational risks.
- Pillar 2 requires financial institutions to have a process for assessing their overall capital adequacy in relation to
their risk profile and a strategy for maintaining their capital levels.
- Pillar 3 requires financial institutions to establish and implement an appropriate disclosure policy that promotes
transparency regarding their risk management practices and capital adequacy positions.
ABB elected to adopt the following approaches under Pillar 1 requirements:
- Standardised Approach for Credit Risk

- Basic Indicator Approach for Operational Risk
- Standardised Approach for Market Risk
1.2 Scope of Application
This document contains the disclosure requirements under Pillar 3 for ABB for the year ended 31 December 2012.
The disclosures are made in line with the Pillar 3 disclosure requirements under the Basel II framework as laid out by
BNM.
The disclosures should be read in conjunction with ABB’s 2012 Annual Report for the year ended 31 December 2012.
The Group’s capital requirements are generally based on the principles of consolidation adopted in the preparation
of its financial statements. The Group’s consolidated entities comprises the Bank and the Bank’s subsidiary, AFFIN
Islamic Bank Berhad.
2 Risk Governance Structure
2.1 Overview
The Board of Directors of ABB is ultimately responsible for the overall performance of ABB. The Board’s responsibilities
remain within the framework of BNM Guidelines. The Board also exercises great care to ensure that high ethical
standards are upheld, and that the interests of stakeholders are not compromised. These include responsibility for
determining ABB’s general policies and strategies for the short, medium and long term, approving business plans,
including targets and budgets, and approving major strategic decisions.
The Board has overall responsibility for maintaining the proper management and protection of ABB’s interests by
ensuring effective implementation of the risk management policy and process, as well as adherence to a sound system
of internal control, and by seeking regular assurance on their effectiveness. The Board also recognises that risks
cannot be eliminated completely. As such, the inherent system of internal control is designed to provide a reasonable
though not absolute assurance against the risk of material errors, fraud or losses occurring. The system of internal
controls encompasses controls relating to financial, operational, risk management and compliance with applicable
laws, regulations, policies and guidelines.

2.1 Overview (continued)
The terms of reference of the Board Committees as disclosed in the Annual Report provide an outline of its role and
functions. In carrying out its functions, the Board has delegated specific responsibilities to other Board Committees,
which operated under approved terms of reference, to assist the Board in discharging their duties. The Chairmen of
the various Committees report on the outcome of their Committee meetings to the Board and any further deliberation
is made at Board level, if required. These reports and deliberations are incorporated into the Minutes of the Board
meetings. The Board meets on a monthly basis.
The Board of ABB has a balance composition with a strong independent element. It consists of representatives from
the private sector with suitable qualifications fulfilling the fit and proper criteria as required by BNM/GP1, a mixture of
different skills, competencies, experience and personalities.
2.2 Board Committees
Board Remuneration Committee (‘BRC’)
The BRC is responsible for providing a formal and transparent procedure for developing the remuneration policy
for Directors, Managing Director/Chief Executive Officer and key senior management officers and ensuring that
compensation is competitive and consistent with ABB’s culture, objectives and strategy.
The Committee obtains advice from experts in compensation and benefits, both internally and externally.
Board Nominating Committee (‘BNC’)
The BNC is responsible for providing a formal and transparent procedure for the appointment of Directors and Managing
Director/Chief Executive Officer, assessing the effectiveness of individual Directors, the Board as a whole and the
performance of the Managing Director/Chief Executive Officer and key senior management personnel.
Board Risk Management Committee (‘BRMC’)
The BRMC is responsible for overseeing management’s activities in managing credit, market, liquidity, operational,
legal and other risks and to ensure that the risk management process is in place and functioning.
It has responsibility for reviewing and approving all risk management policies and risk management methodologies.
BRMC also reviews guidelines and portfolio management reports including risk exposure information.
The Committee also ensures that the procedures and framework in relation to identifying, measuring, monitoring and
controlling risk are operating effectively.
Board Loan Review and Recovery Committee (‘BLRRC’)
The BLRRC is responsible in providing critical review of loans and other credit facilities with higher risk implications,
after due process of checking, analysis, review and recommendation by the Credit Risk Management function, and if
found necessary, exercise the power to veto loan applications that have been approved by the Group Management
Loan Committee. BLRRC also reviews the impaired loans reports presented by the Management.

2.2 Board Committees (continued)
Audit and Examination Committee (‘AEC’)
The AEC is responsible for providing oversight on reviewing the adequacy and integrity of the internal control systems
and oversees the work of the internal and external auditors.
Reliance is placed on the results of independent audits performed primarily by internal auditors, the outcome of
statutory audits on financial statements conducted by external auditors and on representations by Management based
on their control self-assessment of all areas of their responsibility.
Minutes of Audit & Examination Committee meetings, which provide a summary of the proceedings, are circulated to
Board members for notation and discussion. ABB has an established Group Internal Audit Division (GIA) which reports
functionally to the Audit Committee and administratively to the Managing Director/Chief Executive Officer.
Shariah Committee
ABB’s business activities are subject to Shariah compliance and conformation by the Shariah Committee. The Shariah
Committee is formed as legislated under Section 3(5)(b) of the Islamic Banking Act, 1983 and as per Shariah Governance
Framework for Islamic Financial Institutions.
The duties and responsibility of the Shariah Committee are as follows:

(i) To advise the Board on Shariah matters in order to ensure that the business operations of ABB comply with the
Shariah principles at all times;
(ii) To endorse and validate relevant documentations of ABB’s products to ensure that the product comply with
Shariah principles; and
(iii) To advise ABB on matters to be referred to the Shariah Advisory Council.
2.3 Management Committees
Management Committee (‘MCM’)
MCM comprising the senior management team chaired by the MD/CEO, assists the Board in managing the day-to-
day operations and ensure its effectiveness. MCM formulates tactical plans and business strategies, monitors ABB’s
overall performance, and ensures that the activities are in accordance with corporate objectives, strategies, policies
and annual business plan and budget.
Group Management Loan Committee (‘GMLC’)
GMLC is established within senior management chaired by the MD/CEO to approve complex and larger loans and
workout/recovery proposals beyond the delegated authority of the concerned individual senior management personnel
of ABB.

2.3 Management Committees (continued)
Asset and Liability Management Committee (‘ALCO’)
ALCO’s responsibilities include:
(i) Managing the asset liability of ABB through coordination of the overall planning process including strategic
planning, budgeting and asset liability management process;
(ii) Directing ABB’s overall acquisition and allocation of funds;
(iii) Prudently managing ABB’s interest rate exposure;
(iv) Determine the overall Balance Sheet strategy and ensuring policy compliance;
(v) Determined the type and scope of derivative activities, approve individual derivative transactions as well as control
over the level of exposure in derivative;
(vi) Reviewing of market risks in ABB’s trading portfolios;
(vii) Managing the effective usage of economic and regulatory capital throughout the organisation;
(viii) Reviewing and recommending the capital plan for approval;
(ix) Approving capital management standards and policies, capital raising and repayment transactions;
(x) Reviewing quarterly capital adequacy monitoring reports; and
(xi) Reviewing and approving key assumptions inherent in economic capital modeling and stress/scenario tests.
Group Operational Risk Management Committee (‘GORMC’)
GORMC is established within senior management by MD/CEO to deliberate and to manage operational risks. Its
responsibilities include:
(i) To evaluate operational risks issues on escalating importance/strategic risk exposure;
(ii) To review and recommend on broad operational risks management policies best practices for adoption by ABB’s
operating units;
(iii) To review the effectiveness of broad internal controls and making recommendation on changes if necessary;
(iv) To review/approve recommendation on operational risk management groups section up to address specific
issue;
(v) To take the lead in inculcating an operational risks awareness culture;
(vi) To approve operational risk management methodologies/measurements tools; and
(vii) To review and approve the strategic operational risk management initiatives/plans and to endorse for BRMC’s
approval if necessary.

2.3 Management Committees (continued)
Early Alert Committee (‘EAC’)
EAC is established within senior management chaired by the MD/CEO to monitor credit quality through monthly review
of the Early Alert, Watchlist and Exit Accounts and review the actions taken to address the emerging risks and issues
in these accounts.
2.4 Group Risk Management Function
An integrated risk management framework is in place. The Group Risk Management (‘GRM’) function, headed by
Group Chief Risk Officer (‘GCRO’) and operating in an independent capacity, is part of ABB’s senior management
structure which works closely as a team in managing risks to enhance stakeholders’ value.
GRM reports to BRMC. Committees namely BLRRC, MCM, GMLC, ALCO, GORMC and EAC assist BRMC in managing
credit, market, liquidity and operational risks. The responsibilities of these Committees include risk identification, risk
assessment and measurement, risk control and mitigation; and risk monitoring.
2.5 Internal Audit and Internal Control Activities
In accordance with BNM’s GP10 guidelines, GIA conducts continuous reviews on auditable areas within ABB. The
continuous reviews by GIA are focused on areas of significant risks and effectiveness of internal control in accordance
to the audit plan approved by the AEC.
Based on GIA’s review, identification and assessment of risk, testing and evaluation of controls, GIA will provide an
opinion on the effectiveness of internal controls maintained by each entity. The risks highlighted on the respective
auditable areas as well as recommendation made by the GIA are addressed at AEC and Management meetings on
bi-monthly basis. The AEC also conduct annual reviews on the adequacy of internal audit function, scope of work,
resources and budget of GIA.

3 Capital
3.1 Capital Structure
The following table sets forth details on the capital resources and capital adequacy ratios for the Group as at 31
December 2012. The Group’s Core capital ratio (‘CCR’) and Risk-weighted capital ratio (‘RWCR’) as at 31 December
2012 were above the BNM minimum requirements of 4.0% and 8.0% respectively.
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Tier I capital
Paid-up share capital 1,518,337 1,439,285 1,518,337 1,439,285
Share premium 529,337 408,389 529,337 408,389
Retained profits 808,553 642,638 659,603 530,489
Statutory reserves 1,160,651 1,011,044 1,017,200 904,624
4,016,878 3,501,356 3,724,477 3,282,787
Less:
Goodwill (137,323) (137,323) (137,323) (137,323)
Deferred tax assets (10,827) (3,658) (10,227) (3,659)
Total Tier I capital 3,868,728 3,360,375 3,576,927 3,141,805
Tier II capital
Collective impairment 152,350 182,269 128,568 138,227
Total Tier II capital 1,052,350 782,269 1,028,568 738,227

Less:
Investment in capital instruments
of other banking institutions (10,034) (40,257) (10,034) (40,257)
Investment in subsidiaries (27,389) (27,389) (387,389) (287,389)
Capital base 4,883,655 4,074,998 4,208,072 3,552,386

Core capital ratio 11.02% 10.00% 11.59% 10.64%
Risk-weighted capital ratio 13.91% 12.12% 13.64% 12.03%
Core capital ratio (net of proposed dividends) 10.76% 9.78% 11.30% 10.39%
Risk-weighted capital ratio (net
of proposed dividends) 13.65% 11.91% 13.34% 11.78%

Risk-weighted assets for:
Credit risk 32,659,779 31,344,231 28,731,138 27,608,268
Market risk 260,620 133,160 258,838 102,489
Operational risk 2,187,846 2,135,976 1,864,563 1,828,940
Total risk-weighted assets 35,108,245 33,613,367 30,854,539 29,539,697

3 Capital
3.2 Capital Adequacy
The Group’s has in place an internal limit for its CCR and RWCR, which is guided by the need to maintain a prudent
relationship between available capital and the risks of its underlying businesses. The capital management process is
monitored by managements through periodic reviews.
Refer to Appendix I.
4 Risk Management Objectives and Policies
ABB is principally engaged in all aspects of banking and related financial services. The principal activities of ABB’s
subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been
no significant changes in these principal activities during the financial year.
ABB’s business activities involve the analysis, measurement, acceptance, and management of risks but it operates within
well defined risk acceptance criteria covering customer segments, industries and products. ABB does not enter into risk it
cannot administer, book, monitor or value, or deal with persons of questionable integrity.
ABB’s risk management policies are established to identify all the key risks, assess and measure these risks, control and
mitigate these risks, and manage and monitor the risk positions.
ABB regularly reviews its risk management policies and systems to reflect changes in markets, products and best practice
in risk management processes. ABB’s aim is to achieve an appropriate balance between risk and return and minimise any
potential adverse effects.
The key business risks to which ABB is exposed are credit risk, liquidity risk, market risk and operational risk.
5 Credit Risk
5.1 Credit Risk Management Objectives and Policies
Credit risk is the potential financial loss resulting from the failure of the customer or counterparty to settle the financial
and contractual obligations to ABB. Credit risk emanates mainly from loans and advances, loan commitments arising
from such lending activities, as well as through financial transactions with counterparties including interbank money
market activities, derivative instruments used for hedging and debt securities.
The management of credit risk in ABB is governed by a set of approved credit policies, guidelines and procedures.
Approval authorities are delegated to Senior Management and GMLC to implement the credit policies and ensure
sound credit granting standards.
An independent GRM function, headed by Group Chief Risk Officer (‘GCRO’) with direct reporting line to BRMC is in
place to ensure adherence to risk standards and discipline.
Lending guidelines and credit strategies are formulated and incorporated in the Annual Credit Plan. New businesses
are governed by the risk acceptance criteria and customer qualifying criteria/fitness standards prescribed in the Annual
Credit Plan. The Annual Credit Plan is reviewed at least annually and approved by the BRMC.

5 Credit Risk
5.2 Application of Standardised Approach to Credit Risk
ABB uses the following ECAIs to determine the risk weights for the rated credit exposures:-
• RAM Rating Services Berhad

• Malaysian Rating Corporation Berhad
• Standard & Poor’s Rating Services
• Moody’s Investors Service
• Fitch Ratings
The external ratings of the ECAIs are used to determine the risk weights of the following types of exposure: sovereigns,
banks, public sector entities and corporates.
The mapping of the rating categories of different ECAIs to the risk weights is in accordance with the guidelines provided
by BNM. In cases where there is no issuer or issue rating, the exposures are treated as unrated and accorded a risk
weight appropriate for unrated exposure in the respective category.
The external ratings are updated in the core banking system, and extracted and matched by the risk system according
to the above rules to determine the appropriate risk weights.
Refer to Appendix II and Appendices III (i) to III (ii).
5.3 Credit Risk Measurement
Credit evaluation is the process of analysing the creditworthiness of the prospective customer against ABB’s
underwriting criteria and the ability of ABB to make a return commensurate to the level of risk undertaken. A critical
element in the evaluation process is the assignment of a credit risk grade to the counterparty. This assists in the risk
assessment and decision making process. ABB has developed internal rating models to support the assessment and
quantification of credit risk.
For consumer mass market products, statistically developed application scorecards are used by the Business to
assess the risks associated with the credit application. The scorecards are used as a decision support tool at loan
origination.
Over-the-Counter (‘OTC’) Derivatives
The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure
Method, computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived
from the summation of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and
the potential future exposure of outstanding contracts (Add On charges depending on the specific remaining tenor to
maturity).

5 Credit Risk
5.4 Risk Limit Control and Mitigation Policies
ABB employs various policies and practices to control and mitigate credit risk.
Lending limits
ABB establishes internal limits and related lending guidelines to manage large exposures and avoid undue concentration
of credit risk in its credit portfolio. The limits include single customer groupings, connected parties, and geographical
and industry segments. These risks are monitored regularly and the limits reviewed annually or sooner depending on
changing market and economic conditions.
The credit risk exposure for derivative and loan books is managed as part of the overall lending limits with customers
together with potential exposure from market movements.
Collateral
Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral may
be taken to mitigate credit risk. The main collateral types accepted and given value by ABB are:
• Mortgages over residential properties;

• Charges over commercial real estate or vehicles financed;
• Charges over business assets such as business premises, inventory and account receivables; and
• Charges over financial instruments such as marketable securities
In order to be recognised as security, all items pledged must have value and ABB must have physical control and/
or legal title thereto, together with the necessary documentation to enable ABB to realise the asset without the co-
operation of the asset owner. Other items, such as personal or corporate guarantees, may be taken for comfort but will
not be treated as security for approval purposes. Valuations are updated on a regular basis.
Prior to acceptance of any item as security, verification must be done to ensure that the security exists and an accurate
and up-to-date valuation can be placed upon it. A pre-facility disbursement site visit must be undertaken in respect of
landed security of significant value. Where third parties are used to undertake a valuation they must be taken from a
list of approved valuers.
All assets which provide security to ABB must be adequately insured with an insurer from the list of approved
insurers.
The security documentation process is centralised in an independent Security Documentation Section at Head Office.
ABB adopts standardised Letter of Offer and Legal Documents. Variations/amendments require the approval from the
relevant approving authority in the Bank.
Documentary and commercial letters of credit are collateralised by the underlying shipments of goods to which they
relate and therefore carry less risk than a direct loan.

5 Credit Risk
5.4 Risk Limit Control and Mitigation Policies (continued)
Credit related commitments
Commitment to extend credit represents unutilised portion of approved credit in the form of loans, guarantees or letters
of credit. In terms of credit risk, ABB is potentially exposed to loss in an amount equal to the total unutilised commitments.
However, the potential amount of loss is less than the total unutilised commitments, as most commitments to extend
credit are contingent upon customers maintaining specific minimum credit standards.
ABB monitors the term to maturity of credit commitments because longer-term commitments generally have a greater
degree of credit risk than short-term commitments.
Refer to Appendix IV (a) to (b).
5.5 Credit Risk Monitoring
Retail credits are actively monitored and managed on a portfolio basis by product type. A new collection management
system has been implemented with a dedicated team in place to promptly identify, monitor and manage delinquent
accounts at early stages of delinquency.
Corporate credits and large individual accounts are reviewed by the Business Units at least once a year against
updated information. This is to ensure that the credit grades remain appropriate and detect any signs of weaknesses
or deterioration in the credit quality. Remedial action is taken where evidence of deterioration exists.
Early Alert Process is in place as part of a means to pro-actively identify, report and manage deteriorating credit quality.
Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning
impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.
Portfolio management risk reports are submitted regularly to EAC and BRMC.
5.6 Impairment Provisioning
Individual impairment provisioning
Significant loans, with or without past due status, are subject to individual assessment for impairment when an evidence
of impairment surfaces or at the very least once annually during the annual review process.

If impaired, the amount of loss is measured as the difference between the asset’s carrying value and the present value
of estimated future cash flows discounted at the financial assets original effective interest rate. The level of impairment
allowance on significant loans is reviewed regularly, at least quarterly or more often when circumstances require.
Significant loans that are deemed not impaired after individual assessment are included in a group of loans with similar
characteristics and collectively assessed for impairment.

5 Credit Risk
5.6 Impairment Provisioning (continued)
Collective impairment provisioning
All loans are grouped in respective business segments according to similar credit risk characteristics and is generally
based on industry, asset or collateral type, credit grade and past due status grouped based on business segments.
Portfolio provisioning is determined for each segment based on its respective loss probabilities and other information
relevant to estimation of the future cash flows of each segment.
Collective provisioning is applicable to all loans not covered under individual assessment as well as significant loans
that are deemed not impaired after individual assessment.
Total loans, advances and financing - credit quality
All loans, advances and financing are categorised into “neither past due nor impaired”, “past due but not impaired” and
“impaired”. Past due loans refer to loans that are overdue by one day or more. Impaired loans are loans with months-
in-arrears more than 90 days or with impaired allowances.

5 Credit Risk
Analysed by economic sectors
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Past due loans

Primary agriculture 17,525 15,363 16,932 15,022
Mining and quarrying 1,467 1,063 1,380 1,000
Manufacturing 38,863 34,755 36,083 33,733
Electricity, gas and water supply 1,094 1,253 814 1,190
Construction 180,112 148,750 171,863 116,430
Real estate 48,489 31,084 48,152 31,084
Wholesale & retail trade and restaurants & hotels 109,314 74,168 105,261 71,508
Transport, storage and communication 36,623 39,594 33,732 37,872
Finance, insurance and business services 113,557 65,535 54,880 63,957
Education, health and others 14,714 107,549 13,702 106,456
Household 2,012,448 2,115,554 1,648,376 1,745,578
2,574,206 2,634,668 2,131,175 2,223,830

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Manufacturing 17,215 10,712 10,776 3,869
Electricity, gas and water supply 1,579 1,030 1,579 1,030
Construction 119,668 126,033 92,906 99,601
Real estate 2,520 1,870 2,520 1,870
Wholesale & retail trade and restaurants & hotels 7,128 1,431 5,270 242
Transport, storage and communication 3,458 - 3,458 -
Education, health and others 1,961 45 1,961 45
Household 16,681 2,182 16,645 2,110
210,372 168,257 175,277 133,329

5 Credit Risk
Analysed by economic sectors (continued)
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Individual impairment charged

Primary agriculture 148 665 148 665
Manufacturing 9,834 4,793 9,080 3,377
Electricity, gas and water supply 566 48 566 48
Construction 14,852 82,192 14,548 80,311
Real estate 1,184 926 1,184 926
Transport, storage and communication 3,459 - 3,459 -
Education, health and others 1,934 55 1,934 55
Household 20,531 1,363 20,217 853
72,213 116,909 69,391 111,880

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Individual impairment written-off
Primary agriculture - 3,666 - 3,666

Manufacturing 1,267 34,778 1,267 34,330
Construction 11,708 45,115 11,708 43,228
Real estate - 13 - 13
Wholesale & retail trade and restaurants & hotels - 10,049 - 10,049
Finance, insurance and business services - 2,368 - 2,368
Household 387 235 387 235
13,362 96,224 13,362 93,889

5 Credit Risk
Analysed by economic sectors (continued)
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Mining and quarrying 1,212 801 1,145 797
Manufacturing 20,703 19,175 19,199 17,093
Electricity, gas and water supply 1,079 561 989 521
Construction 26,823 22,194 22,067 18,148
Real estate 13,642 12,271 12,956 10,456
Transport, storage and communication 7,752 8,413 7,635 8,312
Education, health and others 6,512 6,611 4,882 4,376
Household 209,803 349,056 186,354 301,884
322,629 451,599 287,693 390,890

Analysed by geographical area

The Group The Bank
31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000
Past due loans
Perlis 2,796 2,136 2,444 1,876

Kedah 92,913 121,774 80,764 85,200
Pulau Pinang 95,871 101,470 86,512 92,451
Perak 123,800 131,475 80,204 91,731
Selangor 763,976 715,453 626,238 597,053
Wilayah Persekutuan 412,547 392,363 327,428 354,355
Negeri Sembilan 101,629 110,914 90,454 101,609
Melaka 108,788 136,583 105,254 132,924
Johor 298,352 271,243 278,385 251,586
Pahang 66,331 111,174 43,867 85,555
Terengganu 58,771 68,159 8,890 14,527
Kelantan 46,197 53,775 4,898 5,571
Sarawak 142,183 149,629 139,396 146,454
Sabah 260,000 268,520 256,395 262,938
Labuan 52 - 46 -
2,574,206 2,634,668 2,131,175 2,223,830

5 Credit Risk
Analysed by geographical area (continued)
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Kedah 7,048 1,283 7,048 1,283
Pulau Pinang 138 858 138 858
Perak 3,466 2,404 3,466 2,404
Selangor 103,321 95,843 102,058 95,842
Negeri Sembilan 1,693 2,349 1,693 2,349
Johor 8,014 930 8,014 930
Pahang 9,602 6,843 3,163 -
Kelantan 18 66 18 66
Sabah 279 - - -
Outside Malaysia 34,162 26,823 7,730 -
210,372 168,257 175,277 133,329
The Group The Bank

31.12.2012 31.12.2011 31.12.2012 31.12.2011
RM’000 RM’000 RM’000 RM’000

Perlis 570 438 532 418
Kedah 12,605 20,780 11,577 17,603
Pulau Pinang 14,554 19,788 13,868 18,211
Perak 10,935 16,412 9,168 12,870
Selangor 132,888 179,768 119,064 155,598
Negeri Sembilan 14,804 25,262 13,715 23,530
Melaka 7,163 12,629 6,851 12,156
Johor 29,309 44,068 27,847 41,487
Pahang 5,442 10,711 4,213 7,699
Terengganu 5,564 6,757 3,514 2,992
Kelantan 3,298 7,655 844 1,129
Sarawak 7,167 10,683 6,753 10,253
Sabah 12,631 16,434 12,302 15,518
Labuan 725 - 725 -
322,629 451,599 287,693 390,890

5 Credit Risk
5.7 Credit Risk Culture
ABB recognises that learning is a continuous journey and is committed to enhance the knowledge and required skills
set of its staff. It places strong emphasis in creating and enhancing risk awareness in the organisation.
For effective and efficient staff learning, ABB has implemented an E–Learning Program with an online Learning
Management System (‘LMS’). The LMS provides staff with a progressive self-learning alternative at own pace.
GRM implements an Internal Credit Certification (‘ICC’) Programme for both Business Banking and Consumer Credit.
The aim of the ICCs is to assist the core credit related group of personnel in ABB achieve a minimum level of knowledge
and analytical skills required to make sound corporate and commercial loans to customers.
6 Market Risk
6.1 Market Risk Management Objectives and Policies
Market risk is defined as the risk of losses to ABB’s portfolio positions arising from movements in market factors such
as interest rates, foreign exchange rates and changes in volatility. The Bank is exposed to market risks from its trading
and investment activities. ABB’s market risk management objective is to ensure that market risk is appropriately
identified, measured, controlled, managed and reported.
ABB’s exposure to market risk stems primarily from interest rate risk and foreign exchange rate risk. Interest rate risk
arises mainly from differences in timing between the maturities or repricing of assets, liabilities and derivatives. ABB is
also exposed to basis risk when there is a mismatch between the change in price of a hedge and the change in price
of the assets it hedges. Foreign exchange rate risk arises from unhedged positions of customers’ requirements and
proprietary positions.
6.2 Application of Standardised Approach for Market Risk
ABB adopts the Standardised Approach for the purpose of calculating the capital requirement for market risk.
Refer to Appendix I.
6.3 Market Risk Measurement, Control and Monitoring
The Bank’s market risk management control strategy is established based on its risk appetite, market liquidity and
business strategies as well as macroeconomic conditions. These limits are reviewed at least on an annual basis.
Market risk arising from ABB’s trading book is primarily controlled through the imposition of Cut-loss and Value-at-Risk
(‘VaR’) Limits.
ABB quantifies interest rate risk by analysing the repricing mismatch between the rate sensitive assets and rate
sensitive liabilities. It also conducts Net Interest Income simulations to assess the variation in earnings under various
rates scenarios. The potential long term effects of the Bank’s overall exposure is also tracked by assessing the impact
on economic value of equity (‘EVE’).
The Bank’s interest rate risk is managed through Earnings-at-Risk (‘EaR’) and Economic Value-at-Risk (‘EVaR’) limits.
In addition, ABB conducts periodic stress test of its respective business portfolios to ascertain market risk under
abnormal market conditions.
ABB’s Management, ALCO and BRMC are regularly kept informed of its risk profile and positions.

6 Market Risk
6.4 Value-at-Risk (‘VaR’)
Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of a
Trading portfolio. It measures the risk of losses arising from potential adverse movements in interest rates and foreign
exchange rates that could affect values of financial instruments.
The Variance-Covariance Parametric methodology is adopted to compute the potential loss amount. This is a
statistically defined, probability-based approach that uses volatilities and correlations to quantify price risks. Under this
methodology, a matrix of historical volatilities and correlations is computed from the past 100 business days’ market
data. VaR is then computed by applying these volatilities and correlations to the outstanding trading portfolio.
Other risk measures include the following:
(i) Mark-to-Market valuation tracks the current market value of the outstanding financial instruments.
(ii) Stress tests are conducted to attempt to quantify market risk arising from low probability, abnormal market
movements. Stress tests measure the changes in values arising from extreme movements in interest rates and
foreign exchange rates based on past experience and simulated stress scenarios.
(iii) Sensitivity/Dollar Duration is an additional measure of interest rate risk that is computed on a daily basis. It
measures the change in value of a portfolio resulting from a 0.01% increase in interest rates. This measure identifies
ABB interest rate exposures that are most vulnerable to interest rate changes and it facilitates the implementation
of hedging strategies.
6.5 Foreign Exchange Risk
ABB takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both overnight
and intra-day positions, which are monitored daily.
7 Liquidity Risk
7.1 Liquidity Risk Management Objectives and Policies
Liquidity risk is the current and prospective risk to earnings or capital arising from a bank’s inability to meet its obligations
when they fall due. Liquidity risk includes the inability to manage sudden decreases or changes in funding sources.
Liquidity risk also arises from the failure to recognise changes in market conditions that affect the ability to liquidate
assets quickly and with minimal loss in value.
7.2 Liquidity Risk Measurement, Control and Monitoring
To measure and manage net funding requirements, ABB adopts BNM’s New Liquidity Framework (‘NLF’). The NLF
ascertains the liquidity condition based on the contractual and behavioural cash-flow of assets, liabilities and off-
balance sheet commitments, taking into consideration the realisable cash value of the eligible liquefiable assets. The
NLF is also supported by indicative ratios on the Bank’s funding structure to monitor the reliance on particular funding
sources.

7 Liquidity Risk
7.2 Liquidity Risk Measurement, Control and Monitoring (continued)
ABB employs liquidity risk indicators as an early alert of any structural change for liquidity risk management. The risk is
measured monthly using internal and external qualitative and quantitative liquidity risk indicators. ABB also conducts
liquidity stress tests to gauge ABB’s resilience in the event of a funding crisis. In addition, the Bank has in place the
Contingency Funding Plan, which provides a systematic approach in handling liquidity disruption. The document
encompasses strategies, decision-making authorities, and courses of action to be taken in the event of liquidity crisis
and emergencies.
BRMC is responsible for ABB’s liquidity policy although the strategic management of liquidity has been delegated to
ALCO. The BRMC is informed regularly of the liquidity situation in the ABB.
8 Operational Risk
8.1 Operational Risk Management Objectives and Policies
Operational risk is the risk of loss arising from inadequate or failed internal processes, action on or by people,
infrastructure or technology or events which are beyond the bank’s immediate control which have an operational
impact, including natural disaster, fraudulent activities and money laundering/financing of terrorism.
ABB manages operational risk through a control based environment in which policies and procedures are formulated
after taking into account individual unit’s business activities, the market in which it is operating and regulatory
requirement in force.
8.2 Application of Basic Indicator Approach for Operational Risk
ABB adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational risk.
The capital requirement is calculated by taking 15% of ABB’s average annual gross income over the previous three
years.
8.3 Operational Risk Measurement, Control and Monitoring
Risk is identified through the use of assessment tools and measured using threshold/limits mapped against risk matrix.
Monitoring and control procedures include the use of key control standards, independent tracking of risk, back-up
procedures and contingency plans, including disaster recovery and business continuity plans. This is supported by
periodic reviews undertaken by Group Internal Audit to ensure adequacy and effectiveness of the Group Operational
Risk Management process.
ABB gathers, analyses and reports operational risk loss and ‘near miss’ events to Group Operational Risk Management
Committee and Board Risk Management Committee. Appropriate preventive and remedial actions are reviewed for
effectiveness and implemented to minimize the recurrence of such events.
8.4 Operational Risk Culture
As a matter of requirement, all Operational Risk Coordinators must satisfy an internal operational risk (including
anti-money laundering/counter financing of terrorism and business continuity management) Certification Program.
These coordinators will first go through an on-line self learning exercise before attempting on-line assessments to
measure their skills and knowledge level. This will enable Group Risk Management to prescribe appropriate training
and development activities for the coordinators.

9 Shariah Compliance
Shariah compliance is the fundamental of Islamic banking and finance. It gives legitimacy to the practices and business
operations of the Islamic financial institutions (‘IFIs’) concerned. Comprehensive compliance with Shariah principles would
also boosts confidence of shareholders and public that all the practices and activities by the IFIs are in compliance with the
Shariah principles at all times.
Shariah Governance Framework for Islamic Financial Institutions (the ‘Framework’) issued by Bank Negara Malaysia
becomes the main reference to oversee the Shariah governance process within AFFIN Islamic Bank Berhad. In order to
comply with all the requirements in the Framework, Board of Directors of the Bank are very committed to ensure among
others all the required Shariah compliance and research functions include Shariah Risk Management, Shariah Review,
Shariah Research and Shariah Audit are properly established to effectively perform its respective functions.
Continuous training programs are provided to Shariah Committee members to equip them with better understanding and
exposure on banking operations and to Board of Directors, management members and staff for fundamental and advanced
knowledge on Shariah and Islamic commercial law matters.

BASEL II Pillar 3 Disclosures Appendix I
The Group and the Bank have adopted Basel II - Risk Weighted Assets computation under the BNM's Risk-Weighted Capital
Adequacy Framework with effect from 1 January 2008. The Group and the Bank have adopted the Standardised Approach for
credit risk and market risk, and Basic Indicator Approach for operation risk computation.
The following information concerning the Group and the Bank's risk exposures are disclosed as accompanying information to
the annual report, and does not form part of the audited accounts.
Disclosure on Capital Adequacy under the Standardised Approach (RM’000)
Group
31.12.2012
Gross Net Total Risk Minimum
Exposures/ Exposures/ Weighted Capital
EAD before EAD after Risk Weighted Assets after Requirements
Exposure Class CRM CRM Assets Effects of PSIA at 8%
1 CREDIT RISK
On Balance Sheet Exposures
Corporates 19,752,745 17,713,218 15,286,599 15,286,599 1,222,928
Regulatory Retail 11,063,690 10,967,217 8,230,560 8,230,560 658,445
Other Assets 2,116,942 2,116,942 224,483 224,483 17,958
Sovereigns/Central Banks 9,718,232 9,718,232 - - -
Banks, Development Financial Institutions & 3,986,505 3,850,682 1,311,600 1,311,600 104,928
MDBs
Insurance Companies, Securities Firms & 474,785 459,648 459,648 459,648 36,772
Fund Managers
Residential Real Estate (RRE) Financing 3,772,100 3,764,366 1,567,219 1,567,219 125,378
Higher Risk Assets 399,250 398,479 597,718 597,718 47,817
Equity Exposure 20,388 20,388 20,388 20,388 1,631
Defaulted Exposures 830,776 818,768 1,046,864 1,046,864 83,749
Total for On-Balance Sheet Exposures 52,135,413 49,827,940 28,745,079 28,745,079 2,299,606
Off Balance Sheet Exposures

Off Balance Sheet Exposures other than OTC 4,500,860 4,326,152 3,792,166 3,792,166 303,373
derivatives or credit derivatives
Defaulted Exposures 82,230 81,763 122,534 122,534 9,803
Total for Off-Balance Sheet Exposures 4,583,090 4,407,915 3,914,700 3,914,700 313,176
Total for On and Off-Balance Sheet

Exposures 56,718,503 54,235,855 32,659,779 32,659,779 2,612,782
2 MARKET RISK Long Position Short Position

Interest Rate Risk 4,321,601 4,169,823 151,778 246,086 - 19,687
Foreign Currency Risk 14,534 12,098 2,436 14,534 - 1,163
3 OPERATIONAL RISK
Operational Risk 2,187,846 175,028
Total RWA and Capital Requirements 35,108,245 32,659,779 2,808,660
PSIA “Profit Sharing Investment Account”

OTC “Over The Counter”

Appendix I
Disclosure on Capital Adequacy under the Standardised Approach (RM’000) (continued)
Group
31.12.2011
Total Risk Minimum

Gross Weighted Capital
Exposures/EAD Net Exposures/ Risk Weighted Assets after Requirements
Exposure Class before CRM EAD after CRM Assets Effects of PSIA at 8%
1 CREDIT RISK
Corporates 15,705,514 14,866,815 13,032,517 13,032,517 1,042,601
Other Assets 2,017,818 2,017,818 250,702 250,702 20,056
MDBs
Fund Managers
Equity Exposure 21,286 21,286 21,286 21,286 1,703
Defaulted Exposures 2,265,022 2,232,566 3,034,793 3,034,793 242,783

Total for On and Off-Balance Sheet Exposures 54,182,644 53,041,242 31,344,231 31,344,231 2,507,538

Foreign Currency Risk 31,367 31,651 (283) 60,746 - 4,860
3 OPERATIONAL RISK


BASEL II Pillar 3 Disclosures Appendix I
Bank
31.12.2012
Gross Net Total Risk Minimum

Exposures/ Exposures/ Weighted Capital
EAD before EAD after Risk Weighted Assets after Requirements
Exposure Class CRM CRM Assets Effects of PSIA at 8%
1 CREDIT RISK
Corporates 17,509,673 15,769,100 13,750,174 13,750,174 1,100,014
Other Assets 2,148,363 2,148,363 401,300 401,300 32,104
MDBs
Fund Managers
Equity Exposure 20,388 20,388 20,388 20,388 1,631

Total for On and Off-Balance Sheet

Exposures 45,284,263 43,154,904 28,731,138 28,731,138 2,298,491

Foreign Currency Risk 12,752 12,098 654 12,752 - 1,020
3 OPERATIONAL RISK


Appendix I
Bank
31.12.2011
Total Risk Minimum

Gross Weighted Capital
Exposures/EAD Net Exposures/ Risk Weighted Assets after Requirements
Exposure Class before CRM EAD after CRM Assets Effects of PSIA at 8%
1 CREDIT RISK
Corporates 13,814,948 13,051,434 11,685,047 11,685,047 934,804
Other Assets 2,278,319 2,278,319 468,235 468,235 37,459
Banks, Development Financial Institutions &
MDBs 3,135,881 3,135,881 1,122,880 1,122,880 89,830
Insurance Companies, Securities Firms &
Fund Managers 369,693 369,693 369,693 369,693 29,575
Equity Exposure 21,286 21,286 21,286 21,286 1,703
Defaulted Exposures 2,049,518 2,017,076 2,754,759 2,754,759 220,381
Off Balance Sheet Exposures other than OTC
derivatives or credit derivatives 3,321,998 3,174,387 2,697,711 2,697,711 215,817
Total for On and Off-Balance Sheet Exposures 44,031,517 42,979,087 27,608,268 27,608,268 2,208,661

Foreign Currency Risk 30,075 979 29,096 30,075 - 2,406
3 OPERATIONAL RISK

Market risk is defined as the risk of losses in on and off-balance sheet positions arising from movements in market prices. The Bank’s
Capital-at-Risk (‘CaR’) is defined as the amount of the Bank’s capital that is exposed to the risk of unexpected losses arising particularly
from movements in interest and foreign exchange rates. A CaR Limit is set as a management trigger to ensure that the Bank’s exposure to
such movements do not compromise the Bank’s capital adequacy. The Bank is currently adopting BNM’s Standardised Approach for the
computation of market risk capital charges. The market risk capital charges addresses among others, capital requirement for market risk
which includes the interest rate risk pertaining to the Bank’s exposure in the trading book as well as foreign exchange risk in the trading
and banking books.
The computation of market risk capital charge covers the following outstanding financial instruments:
a) Foreign Exchange
b) Interest Rate Swap (‘IRS’)
c) Cross Currency Swap (‘CCS’)
d) Fixed Income Instruments (i.e. Private Debt and Government Securities)

Appendix II
Disclosure on Credit Risk: Disclosures on Risk Weights under the Standardised Approach (RM’000)
Group
31.12.2012

Exposures after Netting and Credit Risk Mitigation
Insurance Total
Companies, Exposure
Securities after
Sovereigns Banks, Firms Higher Specialised Netting & Total Risk
Risk & Central MDBs and & Fund Regulatory Residential Risk Other Financing / Credit Risk Weighted
Weights Banks PSEs FDIs Managers Corporates Retail Mortgages Assets Assets Investment Securitisation Equity Mitigation Assets
0% 9,769,753 - - - - - - - 1,833,914 - - - 11,603,667 -

10% - - - - - - - - - - - - - -
20% 44,881 1,600 2,332,100 - 2,455,663 1,961 - - 75,210 - - - 4,911,415 982,283
35% - - - - - - 2,880,566 - - - - - 2,880,566 1,008,198
50% - - 1,943,852 - 1,005,918 1,482 631,643 - - - - - 3,582,895 1,791,448
75% - - - - - 11,431,934 45,277 - - - - - 11,477,211 8,607,908
232
90% - - - - - - - - - - - - - -
100% - - 1,262 524,232 17,559,379 44,563 442,946 3,078 204,574 - - 20,388 18,800,422 18,800,422
110% - - - - - - - - - - - - - -
125% - - - - - - - - - - - - - -
135% - - - - - - - - - - - - - -
150% - 32,547 - - 239,701 208,830 72,699 422,658 3,245 - - - 979,680 1,469,520
270% - - - - - - - - - - - - - -
350% - - - - - - - - - - - - - -
400% - - - - - - - - - - - - - -
625% - - - - - - - - - - - - - -
938% - - - - - - - - - - - - - -
1250% - - - - - - - - - - - - - -
Average - - -
Risk
Weight
Deduction
from
Capital
Base - - 10,034 - - - - - - - - - -
PSE “Public Sector Entities”

MDB “Multilateral Development Banks”
Annual Report 2012

FDI “Financial Development Institutions”
Appendix II
Annual Report 2012

Disclosure on Credit Risk: Disclosures on Risk Weights under the Standardised Approach (RM’000) (continued)
Group
31.12.2011
Insurance Total
Companies, Exposure
Securities after
0% 12,407,931 - - - - - - - 1,740,442 - - - 14,148,373 -

10% - - - - - - - - - - - - - -
20% 51,243 1,600 2,053,153 15,084 1,869,989 1,668 - - 35,371 - - - 4,028,108 805,622
35% - - - - - - 1,719,914 - - - - - 1,719,914 601,970
50% - - 1,790,162 - 775,822 797 626,070 - - - - - 3,192,851 1,596,426
233
75% - - - - - 10,147,345 954,581 - - - - - 11,101,926 8,326,444
90% - - - - - - - - - - - - - -
100% - - 20,389 523,929 15,142,052 7,952 531,245 37,058 238,760 - - 21,286 16,522,671 16,522,671
110% - - - - - - - - - - - - - -
125% - - - - - - - - - - - - - -
135% - - - - - - - - - - - - - -
150% - 36,001 - - 1,252,732 407,616 174,089 453,716 3,245 - - - 2,327,399 3,491,099
270% - - - - - - - - - - - - - -
350% - - - - - - - - - - - - - -
400% - - - - - - - - - - - - - -
625% - - - - - - - - - - - - - -
938% - - - - - - - - - - - - - -
1250% - - - - - - - - - - - - - -
Average - - -
Risk
Weight
Deduction
from
Capital
Base - - 40,257 - - - - - - - - - -


Appendix II
Bank
31.12.2012

Insurance Total
Companies, Exposure
Securities after
0% 4,745,271 - - - - - - - 1,567,931 - - - 6,313,202 -

10% - - - - - - - - - - - - - -
20% - 1,600 1,773,982 - 1,979,904 1,961 - - 223,915 - - - 3,981,362 796,272
35% - - - - - - 2,040,579 - - - - - 2,040,579 714,203
50% - - 1,943,852 - 930,185 1,482 416,596 - - - - - 3,292,115 1,646,057
75% - - - - - 9,579,546 33,810 - - - - - 9,613,356 7,210,017
234
90% - - - - - - - - - - - - - -
100% - - 1,262 390,150 15,841,237 39,046 362,220 2,874 356,517 - - 20,388 17,013,694 17,013,694
110% - - - - - - - - - - - - - -
125% - - - - - - - - - - - - - -
135% - - - - - - - - - - - - - -
150% - 32,547 - - 239,134 188,171 62,522 378,223 - - - - 900,597 1,350,895
270% - - - - - - - - - - - - - -
350% - - - - - - - - - - - - - -
400% - - - - - - - - - - - - - -
625% - - - - - - - - - - - - - -
938% - - - - - - - - - - - - - -
1250% - - - - - - - - - - - - - -
Average - - -
Risk
Weight
Deduction
from
Capital
Base - - 10,034 - - - - - - - - - -

Annual Report 2012

Appendix II
Annual Report 2012

Bank
31.12.2011
Insurance Total
Companies, Exposure
Securities after
0% 7,261,956 - - - - - - - 1,498,735 - - - 8,760,691 -

10% - - - - - - - - - - - - - -
20% - 1,600 1,864,977 - 1,289,793 1,668 - - 389,185 - - - 3,547,223 709,445
35% - - - - - - 1,626,373 - - - - - 1,626,373 569,231
50% - - 1,790,162 - 730,822 (125) 561,873 - - - - - 3,082,732 1,541,366
235
75% - - - - - 8,819,511 163,917 - - - - - 8,983,428 6,737,571
90% - - - - - - - - - - - - - -
100% - - 20,389 388,879 13,650,277 7,952 355,427 - 390,398 - - 21,286 14,834,608 14,834,608
110% - - - - - - - - - - - - - -
125% - - - - - - - - - - - - - -
135% - - - - - - - - - - - - - -
150% - 36,001 - - 1,223,311 375,830 125,687 383,203 - - - - 2,144,032 3,216,048
270% - - - - - - - - - - - - - -
350% - - - - - - - - - - - - - -
400% - - - - - - - - - - - - - -
625% - - - - - - - - - - - - - -
938% - - - - - - - - - - - - - -
1250% - - - - - - - - - - - - - -
Average - - -
Risk
Weight
Deduction
from
Capital
Base - - 40,257 - - - - - - - - - -


Appendix III
(i) Disclosures on Rated Exposures according to Ratings by ECAIs (RM’000)
Group
31.12.2012

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
Exposure Class
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
Rating & AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated
Investment Inc
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) - - - - 39,656
Insurance Cos, Securities Firms & Fund Managers - - - - 540,221
236
Corporates 566,555 835,800 - - 22,048,962
Total 566,555 835,800 - - 22,628,839
Annual Report 2012

Appendix III
Annual Report 2012

(i) Disclosures on Rated Exposures according to Ratings by ECAIs (RM’000) (continued)
Group
31.12.2011

Exposure Class
Investment Inc
237
Corporates 461,499 907,646 - - 18,667,009
Total 461,499 907,646 - - 19,251,967

Appendix III
Bank
31.12.2012

Exposure Class
Investment Inc

238
Corporates 544,539 794,811 - - 19,535,243
Total 544,539 794,811 - - 19,965,236
Annual Report 2012

Appendix III
Annual Report 2012

Bank
31.12.2011

Exposure Class
Investment Inc
239
Corporates 458,514 837,671 - - 16,512,286
Total 458,514 837,671 - - 16,944,111

Appendix III
(ii) Disclosures on Rated Exposures according to Ratings by ECAIs (RM’000) (continued)
Group
31.12.2012

Ratings of Sovereigns and Central Banks by Approved ECAIs
Moodys Aaa to Aa3 A1 to A3 Baa1 to Baa3 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
Exposure Class
Fitch AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- CCC+ to D Unrated
Rating & AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- CCC+ to C Unrated
Investment Inc
Sovereigns and Central Banks - 9,814,633 - - - -
Total - 9,814,633 - - - -
Ratings of Banking Institutions by Approved ECAIs
240
Exposure Class RAM AAA to AA3- A1 to A3 BBB1+ to BB1 to B3 C1+ to D Unrated
BBB3
MARC AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- C+ to D Unrated
Investment Inc
Banks, MDBs and FDIs 856,257 146,818 23,125 16,428 - 3,370,408
Total 856,257 146,818 23,125 16,428 - 3,370,408
Annual Report 2012

Appendix III
Annual Report 2012

Group
31.12.2011

Exposure Class
Investment Inc
Total - 12,459,175 - - - -
241
Exposure Class
RAM AAA to AA3- A1 to A3 BBB1+ to BBB3 BB1 to B3 C1+ to D Unrated
Investment Inc
Total 534,983 106,461 106,345 20,389 - 3,095,526

Appendix III
Bank
31.12.2012

Exposure Class
Investment Inc
Total - 4,745,271 - - - -
242
Exposure Class RAM AAA to AA3- A1 to A3 BBB1+ to BB1 to B3 C1+ to D Unrated
BBB3
Investment Inc
Total 853,143 146,818 23,125 16,428 - 2,795,688
Annual Report 2012

Appendix III
Annual Report 2012

Bank
31.12.2011

Exposure Class
Investment Inc
Total - 7,261,956 - - - -
243
Exposure Class
RAM AAA to AA3- A1 to A3 BBB1+ to BBB3 BB1 to B3 C1+ to D Unrated
Investment Inc
Total 521,800 106,461 106,345 20,389 - 2,920,532

Appendix IV
(a) Disclosures on Credit Risk Mitigation (RM’000)
Group
31.12.2012

Exposures Exposures Exposures Exposures
before Covered by Covered by Covered by
Exposure Class CRM Guarantees Eligible Other
/Credit Financial Eligible
Derivatives Collateral Collateral
Credit Risk
On-Balance Sheet Exposures
Sovereigns/Central Banks 9,718,232 - - -
Banks, Development Financial Institutions & MDBs 3,986,505 - - -
Insurance Cos, Securities Firms & Fund Managers 474,785 - 859 -
Corporates 19,752,745 236,800 1,088,080 -
Regulatory Retail 11,063,690 1,454 125,480 -
244
Residential Mortgages 3,772,100 - 7,734 -
Higher Risk Assets 399,250 - 774 -
Other Assets 2,116,942 - - -
Equity Exposure 20,388 - - -
Defaulted Exposures 830,776 574 12,475 -
Total for On-Balance Sheet Exposures 52,135,413 238,828 1,235,402 -
Off-Balance Sheet Exposures

Off-Balance Sheet exposures other than OTC derivatives or credit derivatives 4,500,860 - - -
Defaulted Exposures 82,230 - - -
Total for Off-Balance Sheet Exposures 4,583,090 - - -
Total On and Off-Balance Sheet Exposures 56,718,503 238,828 1,235,402 -
Annual Report 2012

Appendix IV
Annual Report 2012

(a) Disclosures on Credit Risk Mitigation (RM’000) (continued)
Group
31.12.2011

Credit Risk
Insurance Cos, Securities Firms & Fund Managers 480,308 - - -
Corporates 15,705,514 240,138 961,640 -
245
Other Assets 2,017,818 - - -
Defaulted Exposures 2,265,022 587 40,349 -


Appendix IV
Bank
31.12.2012

Credit Risk
Insurance Cos, Securities Firms & Fund Managers 364,499 - 186 -
Corporates 17,509,673 233,600 993,861 -
246
Other Assets 2,148,363 - - -
Defaulted Exposures 735,747 574 12,457 -

Annual Report 2012

Appendix IV
Annual Report 2012

Bank
31.12.2011

Credit Risk
Insurance Cos, Securities Firms & Fund Managers 369,693 - - -
Corporates 13,814,948 236,938 880,469 -
247
Other Assets 2,278,319 - - -
Defaulted Exposures 2,049,518 587 40,214 -


Appendix IV
(b) Disclosure on Off-Balance Sheet and Counterparty Credit Risk (RM’000)
Counterparty Credit Risk is the risk that the counterparty to a transaction could default before the final settlement of the transaction’s cashflows. An economic
loss could occur if the transactions with the counterparty has a positive economic value for the Bank at the time of default.

In contrast to the exposure to credit risk through a loan, where the exposure to credit risk is unilateral and only the lending bank faces the risk of loss, Counterparty
Credit Risk creates a bilateral risk of loss where the market value for many types of transactions can be positive or negative to either counterparty.
In respect of off-balance sheet items, the credit risk inherent in each off-balance sheet instrument is translated in to an on-balance sheet exposure equivalent
(credit equivalent) by multiplying the nominal principal amount with a credit conversion factor (‘CCF’) as prescribed by the Standardised Approach under the
Risk Weighted Capital Adequacy Framework. The resulting amount is then weighted against the risk weight of the counterparty. In addition, counterparty risk
weights for over-the-counter (‘OTC’) derivative transactions will be determined based on the external rating of the counterparty and will not be subject to any
specific ceiling.
Group
31.12.2012
Principal Amount Positive Fair Value Credit Equivalent Risk Weighted
Description of Derivative Amount Amount
Contracts
Direct Credit Substitutes 445,529 445,529 430,042
248
Transaction related contingent Items 2,147,100 1,073,550 924,690
Short Term Self Liquidating trade related contingencies 453,772 90,754 54,644
Lending of banks’ securities or the posting of securities as collateral by banks,
including instances where these arise out of repo-style transactions.
(i.e. repurchase / reverse repurchase and securities lending / borrowing
transactions. 19,939 - 19,939 -
Foreign exchange related contracts
One year or less 3,750,554 42,781 97,948 29,439
Over one year to five years 251,794 4,384 17,127 6,430
Interest/Profit rate related contracts
One year or less 107,156 563 122 49
Over one year to five years 1,834,299 12,892 39,217 11,073
Over five years 543,148 8,252 51,487 22,022
Other commitments, such as formal standby facilities and credit lines, with an
original maturity of over one year 2,872,698 1,436,349 1,341,919
original maturity of up to one year 6,364,231 1,272,846 1,065,707
Unutilised credit card lines 191,103 38,221 28,693
Total 18,981,323 68,872 4,583,089 3,914,708
Annual Report 2012

Appendix IV
Annual Report 2012

(b) Disclosure on Off-Balance Sheet and Counterparty Credit Risk (RM’000) (continued)
Group
31.12.2011

Contracts
Transaction related contingent Items 2,375,506 1,187,753 1,129,992
One year or less 2,987,581 15,941 49,028 17,625
249
One year or less 133,140 331 156 67
Over five years 474,023 16,978 43,899 10,295
Other commitments, such as formal standby facilities and credit lines, with an 3,526,454 705,291 644,786
original maturity of over one year
Other commitments, such as formal standby facilities and credit lines, with an 7,015,300 1,403,060 1,113,217
original maturity of up to one year
Total 19,919,985 49,901 4,061,557 3,491,574

Appendix IV
Bank
31.12.2012

Contracts
Transaction related contingent Items 2,017,033 1,008,516 861,316
Lending of banks’ securities or the posting of securities as collateral by banks,
including instances where these arise out of repo-style transactions. (i.e.
repurchase / reverse repurchase and securities lending / borrowing transactions.) 19,939 - 19,939 -
One year or less 3,750,554 42,781 97,948 29,439
250
One year or less 107,156 563 122 49
Over five years 543,148 8,252 51,487 22,022
original maturity of over one year 2,490,786 1,245,393 1,166,628
original maturity of up to one year 5,552,840 1,110,568 925,939
Total 17,411,381 68,872 4,108,009 3,517,008
Annual Report 2012

Appendix IV
Annual Report 2012

Bank
31.12.2011

Contracts
Transaction related contingent Items 2,226,050 1,113,025 1,060,529
One year or less 2,987,581 15,941 49,028 17,625
251
One year or less 133,140 331 156 67
Over five years 474,023 16,978 43,899 10,295
original maturity of over one year 3,098,316 619,663 565,143
original maturity of up to one year 6,057,224 1,211,445 956,882
Total 18,030,311 49,901 3,632,302 3,151,504

BASEL II Pillar 3 Disclosures Appendix IV
(c) Disclosures on Market Risk - Interest Rate Risk/Rate of Return Risk in the Banking Book
Interest rate risk is the current and prospective impact to the Bank’s financial condition due to adverse changes in the
interest rates to which the balance sheet is exposed. The objective is to manage interest rate risk to achieve stable and
sustainable net interest income in the long term which impact can be viewed from the perspectives of (1) earnings in the
next 12 months, and (2) economic value.
(1) Next 12 months’ Earnings - Interest rate risk from the earnings perspective is the impact based on changes to the net
interest income over the next 12 months. This risk is measured monthly through sensitivity analysis including the application
of an instantaneous 100 basis point parallel shock in interest rates across the yield curve. The prospective change to the
net interest income is measured using an Asset Liability Management simulation model which incorporates the assessment
of both existing and new business.
(2) Economic Value - Measuring the change in the economic value of equity is an assessment of the long term impact to the
earnings potential. This is assessed through the application of relevant duration factors to capture the net economic value
impact over the long term or total life of all balance sheet assets and liabilities to adverse changes in interest rates.
The above calculations do not take into account loan prepayments.
31.12.2012
Group Bank
Impact on Positions Impact on Positions

Type of Currency (RM million) (100 basis points) Parallel Shift (100 basis points) Parallel Shift
Increase/(Decline) Increase/(Decline) Increase/(Decline) Increase/(Decline)

in Earnings in Economic Value in Earnings in Economic Value
Ringgit Malaysia (14.9) 439.4 (28.4) 352.6
US Dollar 8.8 6.4 9.3 6.5
Euro (1.0) - (1.1) -
Great Britain Pound 0.8 0.1 0.8 0.1
Australian Dollar 1.8 0.3 1.8 0.3
Singapore Dollar 0.7 0.6 0.7 0.7
Others (*) - - 0.1 -
Total (3.8) 446.8 (16.8) 360.2
* Others comprise of NZD, HKD and AED currencies where the amount of each currency is relatively small.

Appendix IV
(c) Disclosures on Market Risk - Interest Rate Risk/Rate of Return Risk in the Banking Book (continued)
31.12.2011
Group Bank
Impact on Positions Impact on Positions

Type of Currency (RM million) (100 basis points) Parallel Shift (100 basis points) Parallel Shift
Increase/(Decline) Increase/(Decline) Increase/(Decline) Increase/(Decline)

in Earnings in Economic Value in Earnings in Economic Value
Ringgit Malaysia (20.0) 214.9 (28.0) 263.7
US Dollar 3.8 1.9 5.0 2.0
Great Britain Pound 0.8 0.1 0.8 0.1
Australian Dollar 1.1 7.6 1.1 7.6
Singapore Dollar 0.5 0.9 0.5 0.9
Japanese Yen 0.4 0.2 0.4 0.2
Others (*) (0.7) - (0.7) -
Total (14.1) 225.6 (20.9) 274.5
* Others comprise of NZD, EUR, HKD and AED currencies where the amount of each currency is relatively small.

17th Floor, Menara AFFIN, 80, Jalan Raja Chulan, 50200 Kuala Lumpur
T : 03 2055 9000
F : 03 2026 1415
W : www.affinbank.com.my

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Banking is

AFFIN BANK BERHAD (25046-T)

Annual Report 2012

In so doing, we provide opportunities for employees to

We shall conduct our business with integrity and

... Banking Without Barriers™

We are passionate in all that we do. A passion to

It’s not just about numbers, nor a focus on the

We understand that when we are able to consistently

It’s a genuine care for our customers that truly makes a

No two financial challenges are ever the same. It

NAME YM. Dr. Raja Abdul Malek AUTHORISED SHARE CAPITAL

Directors SECRETARY PricewaterhouseCoopers (AF 1146)

17th Floor, Menara AFFIN,

AFFIN BANK BERHAD (25046-T) 12 Annual Report 2012

Lembaga Tabung Angkatan Tentera

60.75% 20.69% 23.52% 20.60%

100% AFFIN-i Nadayu Sdn Bhd 2

100% 100% 100%

100% 20% 100%

Affin Investment Bank Berhad

100% 100% 100%

Affin Fund Management ABB Nominee (Asing) Sdn Bhd 1

100% 100% 100%

67% 100% 100%

100% 100% 20%

Sdn Bhd Sdn Bhd 1

Annual Report 2012 13 AFFIN BANK BERHAD (25046-T)

AFFIN BANK BERHAD (25046-T) 14 Annual Report 2012

Annual Report 2012 15 AFFIN BANK BERHAD (25046-T)

Chairman / Non-Independent Non-Executive Director Non-Independent Non-Executive Director

AFFIN BANK BERHAD (25046-T) 16 Annual Report 2012

Independent Non-Executive Director Independent Non-Executive Director

Annual Report 2012 17 AFFIN BANK BERHAD (25046-T)

MR. AUBREY LI KWOK-SING EN. MOHD SUFFIAN BIN HAJI HARON

Non-Independent Non-Executive Director Independent Non-Executive Director

AFFIN BANK BERHAD (25046-T) 18 Annual Report 2012

YBHG. TAN SRI DATO’ SERI MOHAMED JAWHAR

Independent Non-Executive Director

His other positions include: Independent Non-Executive Director,

He was also Co-Chair, Network of East Asia Think-tanks (NEAT) 2005-

He served with the government before he joined ISIS Malaysia as

His positions while in government included Director-General,

Annual Report 2012 19 AFFIN BANK BERHAD (25046-T)

AFFIN BANK BERHAD (25046-T) 20 Annual Report 2012

Mr. Ee Kok Sin Mr. Kasinathan T.Kasipillai Pn. Khatimah Mahadi

Annual Report 2012 21 AFFIN BANK BERHAD (25046-T)

Dato’ Zulkiflee holds a Master in Business

AFFIN BANK BERHAD (25046-T) 22 Annual Report 2012

Director, Business Banking Director, Consumer Banking Director, Treasury

Annual Report 2012 23 AFFIN BANK BERHAD (25046-T)

mr. EE KOK SIN mr. KASINATHAN T.KASIPILLAI Pn. KHATIMAH MAHADI

AFFIN BANK BERHAD (25046-T) 24 Annual Report 2012

pn. NOR ROZITA NORDIN en. NAZLEE KHALIFAH

Chief Human Resource Officer Chief Corporate Strategist

Annual Report 2012 25 AFFIN BANK BERHAD (25046-T)

On behalf of the Board of

AFFIN BANK BERHAD (25046-T) 26 Annual Report 2012

Internally, we focused on comprehensive human capital development and talent recruitment