Bumiputra-Commerce Holdings Berhad - MalaysiaStock.Biz...2009/04/16 · Bumiputra-Commerce Holdings Berhad (50841-W) 00 Annual Report 2008 Directors’ Report For the financial year

Financial Statements

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Bumiputra-Commerce Holdings Berhad (50841-W)

Annual Report 2008

Bum

iputra-Com

merce H

oldings Berhad

(50841-W)

Annual R

eport 2008 Financial Statem

ents

THURSDAY, 21 FEBRUARY 2008Announcement of audited consolidated financial results for the fourth quarter and financial year ended 31 December 2007 and Press/Analyst briefing on the financial year 2007 results.

MONDAY, 14 APRIL 2008Issue of Notice of 51st Annual General Meeting, Notice of Books Closure and Annual Report for the financial year ended 31 December 2007.

TUESDAY, 5 MAY 200851st Annual General Meeting

FRIDAY, 9 MAY 2008Announcement of the unaudited consolidated financial results for the first quarter ended 31 March 2008.

TUESDAY, 20 MAY 2008Date of entitlement to the first and final dividend of 25.0 sen less income tax of 26% for the financial year ended 31 December 2007.

FRIDAY, 30 May 2008Date of payment of the first and final dividend of 25.0 sen less income tax of 26% for the financial year ended 31 December 2007.

THURSDAY, 14 August 2008Announcement of the unaudited consolidated financial results for the second quarter and half year ended 30 June 2008 and Press/Analyst briefing on the half year results.

THURSDAY, 13 November 2008Announcement of the unaudited consolidated financial results for the third quarter ended 30 September 2008.

Financial Calendar 2008


00Annual Report 2008

002 Statement of Directors’ Responsibilities

003 Directors’ Report

012 Statement by Directors

012 Statutory Declaration

013 Independent Auditors’ Report

015 Consolidated Balance Sheets

017 Consolidated Income Statements

018 Company Balance Sheets

019 Company Income Statements

020 Consolidated Statements of Changes in Equity

024 Company Statements of Changes in Equity

026 Consolidated Cash Flow Statements

029 Company Cash Flow Statements

031 Summary of Significant Group Accounting Policies

052 Notes to the Financial Statements

Contents


Annual Report 200800

The Directors are responsible for the preparation of the annual audited financial statements for each financial year so as to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for the financial year then ended.

In preparing the financial statements, the Directors have:

• Considered the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board, and as modified by Bank Negara Malaysia Guidelines, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhad

• Adopted and consistently applied appropriate and relevant accounting policies

• Made judgements and estimates that are prudent and reasonable; and

• Prepared the annual audited financial statements on a going concern basis

The Directors are also responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965, applicable and approved accounting standards in Malaysia, Bank Negara Malaysia guidelines, and the requirements of other relevant authorities.

The Directors have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities.

Statement of Directors’ Responsibilities(in respect of the Annual Audited Financial Statements)



Directors’ ReportFor the financial year ended 31 December 2008

The Directors have pleasure in submitting their Report and the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2008.

PrinciPal activitiesThe principal activities of the Company during the financial year are those of investment holding, management company, property management and provision of consultancy services. The principal activities of the significant subsidiaries as set out in Note 12 to the Financial Statements, consist of commercial banking, investment banking, Islamic banking, off-shore banking, management of unit trust funds and fund management business, stock and sharebroking and the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

Financial results

the Group the company rM’000 rM’000

Net profit after taxation and zakat - Equity holders of the Company 1,952,038 1,247,438 - Minority interests 60,508 -

2,012,546 1,247,438

DiviDenDsThe dividends on ordinary shares paid or declared by the Company since 31 December 2007 were as follows:

rM’000

In respect of the financial year ended 31 December 2007:Final gross dividend of 25 sen per ordinary share, less income tax of 26%, paid on 30 May 2008 - as shown in Directors’ report of that year, dividend on 3,370,902,646 ordinary shares 623,617 - dividend on additional 4,259 shares due to exercise of Redeemable Convertible Unsecured Loan Stocks (“RCULS”) 1Less: 23,439,600 treasury shares due to share buy-back (4,336)

619,282

The Directors declared an interim gross dividend of 25 sen per ordinary share, comprising 20.7 sen gross per ordinary share less income tax of 25% and 4.3 sen tax exempt on 3,527,468,718 ordinary shares amounting to RM699,389,214 in respect of the financial year ended 31 December 2008. The interim divided was approved by the Board of Directors in a resolution dated 20 February 2009.




reserves, Provisions anD allowancesThere were no material transfers to or from reserves or provisions or allowances during the financial year other than those disclosed in the Financial Statements and Notes to the Financial Statements.

issuance oF sharesDuring the financial year, the issued and fully paid ordinary share capital increased from 3,374,181,446 to 3,578,077,818 ordinary shares of RM1.00 each, net of share buy-back of 50,609,100 ordinary shares, as shown below:

(a) number Purpose of issue class of issue terms of issue of shares (‘000)

79 Pursuant to full conversion Ordinary At premium of RM6.28 per share of RCULS 2006/2008 into ordinary shares

207,096 Pursuant to the merger between PT Bank Niaga Tbk and PT Bank Lippo Tbk Ordinary At premium of RM4.85 per share 207,175

The newly issued shares rank pari passu in all respects with the existing issued shares.

(b) On 3 January 2008, the Company cancelled 3,278,800 ordinary shares previously held as treasury shares.

share buy-backThe shareholders of the Company, via an ordinary resolution passed at the Annual General Meeting held on 5 May 2008, approved the Company’s plan and mandate to authorise the Directors of the Company to buy back up to 10% of its existing paid-up share capital. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the share buyback can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company bought back 50,609,100 shares, as stated in Note 32(b) to the Financial Statements, at an average price of RM9.12 per share from the open market using internally generated funds. On 3 January 2008, the Company cancelled 3,278,800 ordinary shares and as at the balance sheet date, there were 50,609,100 ordinary shares held as treasury shares. Accordingly, the adjusted issued and paid-up share capital of the Company with voting rights as at 31 December 2008 was 3,527,468,718 shares.

The shares purchased are held as treasury shares in accordance with the provisions of Section 67A of the Companies Act, 1965.



share-baseD eMPloyee beneFit PlansThe various share-based employee benefit plans within the Group and the Company are as follows:

• Modified CIMBB Executive Employee Share Option Scheme (“EESOS”)• Management Equity Scheme (“MES”)• Management Option Programme (“MOP”)• Employee Stock Option Programme (“ESOP”)

The above employee benefit schemes have been further explained in Note 44 to the Financial Statements.

baD anD DoubtFul Debts, anD FinancinGBefore the Financial Statements of the Group and Company were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and financing and the making of allowance for doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and that adequate allowance had been made for doubtful debts and financing.

At the date of this Report, the Directors are not aware of any circumstances which would render the amounts written off for bad debts and financing, or the amount of the allowance for doubtful debts and financing in the Financial Statements of the Group and Company, inadequate to any substantial extent.

current assetsBefore the Financial Statements of the Group and Company 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 Company had been written down to an amount which they might be expected so to realise.

At the date of this Report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the Financial Statements of the Group and Company misleading.

valuation MethoDsAt the date of this Report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company misleading or inappropriate.

continGent anD other liabilitiesAt the date of this Report, there does not exist:

(a) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group or the Company which has arisen since the end of the financial year other than in the ordinary course of business.




continGent anD other liabilities (continueD)No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Company and its subsidiaries to meet their obligations when they fall due.

chanGe oF circuMstancesAt the date of this Report, the Directors are not aware of any circumstances not otherwise dealt with in this Report or the Financial Statements of the Group and of the Company, that would render any amount stated in the Financial Statements misleading.

iteMs oF an unusual natureIn opinion of the Directors:

(a) the results of the Group’s and the Company’s operations for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in Notes 4, 48 and 51 to the Financial Statements; and

(b) except as disclosed in Note 49 to the Financial Statements, there has not arisen in the interval between the end of the financial year and the date of this Report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this Report is made.

DirectorsThe Directors of the Company who have held office since the date of the last report and at the date of this report are as follows:

Tan Sri Dato’ Md Nor bin Md YusofDato’ Sri Mohamed Nazir bin Abdul RazakTan Sri Dato’ Seri Haidar bin Mohamed NorDato’ Zainal Abidin bin PutihDato’ Hamzah bin BakarDatuk Dr Syed Muhamad bin Syed Abdul KadirDato’ Mohd Shukri bin HussinDato’ Robert Cheim Dau MengCezar Peralta ConsingHiroyuki Kudo

In accordance with Article 76 of the Articles of Association, the following Directors retire from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election:

Tan Sri Dato’ Seri Haidar bin Mohamed NorDato’ Hamzah bin BakarDato’ Zainal Abidin bin Putih




Directors’ interests in shares anD share oPtionsAccording to the Register of Directors’ Shareholdings, the beneficial interests of Directors who held office at the end of the financial year in the shares and share options of the Company during the financial year are as follows:

no. of ordinary shares of rM1 each as at as at 1 January acquired Disposed 31 December

bumiputra-commerce holdings berhadDirect interestTan Sri Dato’ Md Nor bin Md Yusof 600,000 - - 600,000

* Dato’ Sri Mohamed Nazir bin Abdul Razak 28,053,261 350,000 (450,000) 27,953,261^ Dato’ Zainal Abidin bin Putih 15,000 40,000 - 55,000 Dato’ Mohd Shukri bin Hussin 300,112 - - 300,112 Dato’ Robert Cheim Dau Meng 150,000 - - 150,000

Note: Includes shareholding of spouse/child, details of which are as follows:

no. of ordinary shares of rM1 each as at transferred as at 1 January from spouse acquired Disposed 31 December

* Datin Sri Azlina binti Abdul Aziz 4,450,000 - - (450,000) 4,000,000^ Datin Jasmine binti Abdullah Heng 10,000 - - - 10,000^ Mohamad Ari Zulkarnain bin Zainal Abidin 5,000 - - - 5,000

None of the other Directors in office at the end of the financial year held any interest in the shares and share options of the Company and its related companies.

Directors’ beneFitsSince the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than Directors’ remuneration disclosed in Note 39 to the Financial Statements) by reason of a contract made by the Company or 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.

Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the Modified CIMBB EESOS and Management Equity Scheme (see Note 44 to the Financial Statements) as disclosed in this report.




2008 business Plan anD strateGyIn 2008, our aim was to advance the BCHB Group by focusing on 3 core themes namely, regionalisation, optimisation and innovation in line with our long term aspirations of becoming a leading ASEAN regional universal bank.

Optimisation continued to be a focus area of the universal bank in Malaysia as we strived to exploit synergies between our consumer banking, investment banking and treasury franchises. Innovation has been a key instrument for our consumer banking transformation as new innovative core products for various customer segments such as long-term structured deposits for retailers became key franchise differentiators. In 2008 our multi-year consumer bank transformation translated into an impressive earnings transformation story. 2008 was also a year of transformation for the Group’s insurance business in Malaysia following our joint venture with Aviva – we reengineered the business to leverage on both CIMB’s distribution and Aviva’s infrastructure.

In expanding the Group’s regional platform, we made 2 major acquisitions in 2008. The first was the merger of PT Bank Niaga and PT Bank Lippo (“Lippo-Niaga Merger”) in compliance with Bank Indonesia’s Single Presence Policy which has resulted in the formation of the 5th largest bank in Indonesia with BCHB Group as the 78.2% majority shareholder. Following the completion of the legal requirements of the Lippo-Niaga merger, the merged entity was rebranded as “CIMB Niaga” on 3 November 2008. The second acquisition was that of a controlling stake in BankThai Public Company Limited (“BankThai”). We completed the first leg of the acquisition in early November, buying an initial 42.1% and triggering a general offer that stretched into 2009. The results of financial year ended 31 December 2008 include 2 months of ex-Bank Lippo financials and 2 months of equity-accounted BankThai results. For the year though, as is the norm in mergers and acquisitions, we incurred about RM112 million in non-recurring merger costs. In contrast for 2007, the Group earned RM709 million in gains from the sale of shareholdings in its insurance and asset management businesses. To better assess the relative performance in 2008, we have extracted these non-recurring items.

The advent of the global financial crisis created turmoil in capital markets globally. While we had predicted less favourable operating conditions for 2008, the ferocity and fallout from the global economic crisis was nevertheless shocking. As we experienced a sharp drop in Treasury and Investment Banking, our Malaysian consumer bank’s earnings turnaround was indeed timely. The Group’s Malaysian consumer bank profit before tax (“PBT”) surged from a RM7 million loss in 2007 to a PBT of RM706 million in 2008 and its share of Group profit improved to 25%. This offset the decline in our wholesale segments; Corporate and Investment Banking and Treasury and Investments saw year-on-year PBT declining by 31.4% and 26.3% respectively. CIMB Niaga’s share of PBT, even after excluding merger and acquisition related charges, only rose from 13% to 14%. This was because the turmoil in the Indonesian financial markets impacted contribution from the ex-Bank Lippo franchise, and the following strategic decision to prudently lift loan coverage ratios. The contribution of asset management and insurance dropped sharply from 4% to -2% due to unfavorable capital market conditions and the internal restructuring exercise in our insurance business.

The Group undertook various capital management initiatives to ensure that our capital position remained strong despite 2 major acquisitions. We raised CIMB Bank capital hybrids and the company’s equity to fund the acquisitions and strengthen our capital ratios. CIMB Bank’s Tier 1 ratio and Risk Weighted Capital-adequacy Ratio (“RWCR”) improved from 9.4% and 12.5% as of end 2007 to 10.8% and 13.9% respectively. BCHB’s double leverage ratio remained at 118.9% at the end of 2008.

The Group’s focus on asset quality and management of the Non-Performing Loan (“NPL”) portfolio resulted in continued improvements in asset quality indicators with a significantly lower net NPL ratio of 2.3% from 3.8% as at 31 December 2007. Loan loss coverage took a big leap to 88.1% as at 31 December 2008, up from 69.3% a year ago. The Group’s loan loss allowances fell by 29.5% to RM794.7 million from RM1.13 billion previously. Specific allowances were 47.5% lower while general allowances rose by 174% in line with the higher loan book.




2008 business Plan anD strateGy (continueD)In terms of market share, while investment banking and treasury saw sharp reductions in earnings this year, the Group continued to retain its leading position in the Malaysian capital market, as well as in key overseas markets. In Islamic investment banking, the Group maintained its leadership in global and domestic sukuk issuance. Malaysian consumer and corporate loans grew by 12.2% and 19.7%, respectively. Mortgages, credit cards and the Group’s micro credit lending grew by 26.3%, 18.8% and 82.9%, respectively over the year while business banking and hire purchase loans contracted by 1.2% and 5.0% respectively. Bank CIMB Niaga’s loans grew by 23.0% year-on-year and if ex-Bank Lippo was excluded, total loan growth in Indonesia was 20.0%. Total Group deposits grew 21.0% and 12.9% excluding ex-Bank Lippo, with domestic retail deposits growing 18.4% from a year ago. The Group’s total gross loans grew by 21.3% over the last 12 months. Excluding ex-Bank Lippo, total gross loans was higher by 13.7% compared to our 12% target.

outlook For 2009For 2009, we are bracing ourselves for a very difficult operating environment as the global financial crisis morphs into a full-blown global economic crisis. Nevertheless, the Group has prudently strengthened its capital and asset quality ratios and reduced market risk positions significantly. These moves will reduce our potential earnings drag from financial market volatility while enabling us to focus on managing credit risk exposure in this economic downturn. In 2009, it is also opportune and imperative that we focus on integrating our regional franchise to capitalise on internal synergies and take advantage of the “retreat” of global banks to develop new and expand existing customer relationships.

ratinGs by external ratinG aGenciesDetails of the rating of the Company and its debt securities are as follows:

rating agency Date accorded rating classification

Malaysian Rating Corporation Berhad June 2008 AA/MARC-1 and AAID/MARC-1ID

Rating classification description:

MARC has upgraded the long-term senior debt rating of the Company’s RM6.0 billion Conventional and Islamic Commercial Papers/Medium Term Notes Programme to AA and AAID from AA- and AA-ID whilst affirming its short term senior debt rating of MARC-1 and MARC-1ID. The upgrade recognises the continued earnings strength and robust internal capital generation of its banking operations, in particular that of its universal bank, which provides a very substantial part of the consolidated recurring earnings of the Company.

rating agency Date accorded rating classification

Rating Agency Malaysia Berhad July 2008 Long Term Rating: A1


Rating Agency Malaysia (“RAM”) has reaffirmed the long term rating of the Company’s RM14 million Redeemable Convertible Unsecured Loan Stocks (“RCULS”) at A1, with a stable outlook. Upon maturity of the RCULS on 16 July 2008, the rating on the RCULS has been withdrawn.




ratinGs by external ratinG aGencies (continueD)rating agency Date accorded rating classification

Standard & Poor’s September 2008 Counterparty Credit Rating: BBB- /Stable/A-3


Standard & Poor’s has reaffirmed its BBB-/Stable/A-3 credit ratings on the Company. The ratings reflect the shared and well diversified financial profile of the Group’s operating entities, its strong market position and established franchise in Malaysia. The Group has also reasonable geographic diversity with financial operations in the region, particularly in Indonesia and Singapore. The ratings also reflect the application of Standard & Poor’s group methodology for holding companies and the individual credit profiles of the holding company’s core operating subsidiaries, in particular CIMB Bank Berhad and CIMB Investment Bank Berhad.

shariah coMMitteeAll the Islamic banking businesses of CIMB Group come under the purview of the CIMB Islamic Shariah Committee, which resides at CIMB Islamic Bank Berhad (“CIMB Islamic”).

The Shariah Committee is formed as legislated under Section 3(5)(b) of the Islamic Banking Act, 1983 and as per BNM Guidelines on the Governance of Shariah Committee for Islamic Financial Institutions to advise the Group on the operation of its Islamic banking business and operations to ensure that the Group is not involved in any elements/activities which are not approved under Shariah. In advising CIMB Islamic on such matters, the Shariah Committee also considers the views of the Shariah Council/Committees of relevant authorities such as Bank Negara Malaysia and the Securities Commission on issues relating to the activities and operations of Islamic banking and finance.

The members of the Shariah Committee are as follows:

1. Sheikh Professor Dr. Mohammad Hashim Kamali (Chairman)2. Sheikh Nedham Muhammad Seleh Yaqooby 3. Sheikh Dr. Haji Mohd Nai’m bin Haji Mokhtar 4. Sheikh Associate Professor Dr. Shafaai Bin Musa5. Sheikh Dr. Haji Zainudin bin Jaffar 6. Sheikh Dr. Yousef Abdullah AlShubaily (appointed on 28 October 2008)



0Annual Report 2008

Zakat obliGationsA subsidiary bank, CIMB Islamic, is obliged to pay business zakat to comply with the principles of Shariah. CIMB Islamic does not pay zakat on behalf of the shareholders or depositors.

siGniFicant events DurinG the Financial yearSignificant events during the financial year are disclosed in Note 48 to the Financial Statements.

subsequent events aFter the Financial yearSubsequent events after the financial year end are disclosed in Note 49 to the Financial Statements.

auDitorsThe auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution.

tan sri Dato’ Md nor bin Md yusofChairman

Dato’ sri Mohamed nazir bin abdul razakManaging Director

Kuala Lumpur7 April 2009



Annual Report 20080

We, Tan Sri Dato’ Md Nor bin Md Yusof and Dato’ Sri Mohamed Nazir bin Abdul Razak, being two of the Directors of Bumiputra-Commerce Holdings Berhad, hereby state that, in the opinion of the Directors, the Financial Statements set out on pages 015 to 235 are drawn up so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2008 and of the results and cash flows of the Group and Company for the financial year ended on that date, in accordance with the provisions of the Companies Act, 1965, the MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines.

Signed on behalf of the Board of Directors in accordance with their resolution.

tan sri Dato’ Md nor bin Md yusofChairman

Dato’ sri Mohamed nazir bin abdul razakManaging Director


I, Kim Kenny, being the officer primarily responsible for the financial management of Bumiputra-Commerce Holdings Berhad, do solemnly and sincerely declare that the Financial Statements set out on pages 015 to 235 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

kim kenny

Subscribed and solemnly declared by the abovenamed Kim Kenny at Kuala Lumpur before me, on 7 April 2009.

Commissioner for Oaths

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965


0Annual Report 2008

Independent Auditors’ ReportTo the members of Bumiputra-Commerce Holdings BerhadCompany No: 50841-W (Incorporated in Malaysia)

rePort on the Financial stateMentsWe have audited the Financial Statements of Bumiputra-Commerce Holdings Berhad, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 015 to 235.

Directors’ resPonsibility For the Financial stateMentsThe Directors of the Company are responsible for the preparation and fair presentation of these Financial Statements in accordance with the Companies Act, 1965, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and Bank Negara Malaysia Guidelines. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

auDitors’ resPonsibilityOur responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 Company’s preparation and fair presentation of the Financial Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

oPinionIn our opinion, the Financial Statements have been properly drawn up in accordance with the Companies Act, 1965, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and the Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2008 and of their financial performance and cash flows for the year then ended.


Annual Report 20080

rePort on other leGal anD reGulatory requireMentsIn accordance with the requirements of the Companies Act 1965, in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the Financial Statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 12 to the Financial Statements.

(c) We are satisfied that the Financial Statements of the subsidiaries that have been consolidated with the Company’s Financial Statements are in form and content appropriate and proper for the purposes of the preparation of the Financial Statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the Financial Statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

other MattersThis report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Pricewaterhousecoopers Dato’ ahmad Johan bin Mohammad raslan(No. AF: 1146) (No. 1867/09/10 (J))Chartered Accountants Chartered Accountant


Independent Auditors’ ReportTo the members of Bumiputra-Commerce Holdings BerhadCompany No: 50841-W (Incorporated in Malaysia)


0Annual Report 2008

Consolidated Balance SheetsAs at 31 December 2008

2008 2007 note rM’000 rM’000

assetsCash and short-term funds 2 24,408,711 30,525,460 Securities purchased under resale agreements 3,311,243 4,371,313 Deposits and placements with banks and other financial institutions 3 4,063,276 6,485,564 Securities held for trading 4 10,423,239 14,652,312 Available-for-sale securities 5 11,608,213 10,259,560 Held-to-maturity securities 6 11,921,430 3,529,444 Derivative financial instruments 7 5,739,936 1,783,013 Loans, advances and financing 8 117,382,074 95,904,058 Other assets 9 4,237,926 4,172,391 Deferred tax assets 10 543,139 482,835 Tax recoverable 388,756 122,487 Statutory deposits with central banks 11 2,736,345 3,048,612 Investment in associates 13 786,066 150,128 Investment in jointly controlled entity 14 127,701 124,448 Property, plant and equipment 15 1,669,036 1,298,580 Investment properties 16 100,175 97,421 Prepaid lease payments 17 50,386 53,740 Goodwill 18 6,696,245 4,474,119 Intangible assets 19 459,361 503,660

206,653,258 182,039,145 Non-current assets held for sale 53 82,452 762,094

total assets 206,735,710 182,801,239

liabilities Deposits from customers 20 153,424,976 126,866,791 Deposits and placements of banks and other financial institutions 21 7,118,518 12,884,467 Obligations on securities sold under repurchase agreements 62,924 605,780 Derivative financial instruments 7 5,168,280 1,658,434 Bills and acceptances payable 3,333,266 4,668,033 Other liabilities 22 7,498,706 8,168,197 Deferred tax liabilities 10 14,895 23,523 Current tax liabilities 152,498 217,887 Amount due to Cagamas Berhad 993,818 2,004,707 Bonds 24 24,374 304,693 Irredeemable convertible unsecured loan stocks – detachable coupons 25 - 9,282 Redeemable convertible unsecured loan stocks 26 - 1,803 Other borrowings 27 4,004,836 4,827,433 Subordinated notes 28 5,598,335 2,333,476 Non-cumulative guaranteed and redeemable preference shares 30(a), 30(b) 948,336 816,033

188,343,762 165,390,539 Liabilities directly associated with non-current assets classified as held for sale 53 29,499 556,090

total liabilities 188,373,261 165,946,629


Annual Report 20080

2008 2007 note rM’000 rM’000

equity

capital and reserves attributable to equity holders of the companyOrdinary share capital 29 3,578,078 3,374,181 Reserves 31 14,021,765 12,477,470 Less: Shares held under trust 32 (a) (74,190) (107,166) Treasury shares, at cost 32 (b) (461,702) (34,434) 17,063,951 15,710,051 Perpetual preference shares 30 (c) 200,000 200,000Minority interests 1,098,498 944,559

total equity 18,362,449 16,854,610

total equity and liabilities 206,735,710 182,801,239

commitments and contingencies 7 321,678,842 267,168,733

net assets per share attributable to ordinary equity holders of the company (rM) 4.84 4.66

Some comparative figures have been restated as shown in Note 54.

Consolidated Balance SheetsAs at 31 December 2008


0Annual Report 2008

Consolidated Income StatementsFor the financial year ended 31 December 2008

2008 2007 note rM’000 rM’000

Interest income 33 9,590,423 9,058,223 Interest expense 34 (4,929,827) (4,662,293)

Net interest income 4,660,596 4,395,930 Income from Islamic banking operations 57 437,790 343,357 Non-interest income 35 2,642,126 4,271,374

7,740,512 9,010,661 Overheads 36 (4,121,805) (4,227,114)

Profit before allowances 3,618,707 4,783,547 Allowance for losses on loans, advances and financing 37 (794,715) (1,127,431)Allowance for other receivables (94,768) (37,375)Provision for commitments and contingencies 22 (708) (1,439)Allowance written back for impairment losses 38 29,483 57,407

2,757,999 3,674,709 Share of results of jointly controlled entity 14 3,253 3,410 Share of results of associates 13 (45,593) 7,684

Profit before taxation and zakat 2,715,659 3,685,803 Taxation - Company and subsidiaries 40 (703,111) (771,484)Zakat (2) (144)

Net profit after taxation and zakat 2,012,546 2,914,175

Attributable to:Equity holders of the Company 1,952,038 2,793,273 Minority interests 60,508 120,902

2,012,546 2,914,175

earnings per share attributable to ordinary equity holders of the company (sen) - Basic 41 57.8 83.9 - Fully diluted 41 57.8 83.8

Dividends per ordinary share of 20.7 sen less 42 19.8 29.2 income tax of 25% and tax exempt dividend of 4.3 sen (2007: 40.0 sen less income tax of 26%)



Annual Report 20080

Company Balance SheetsAs at 31 December 2008

2008 2007 note rM’000 rM’000

assetsCash and short-term funds 2 403,068 374,428Available-for-sale securities 5 37,750 888Held-to-maturity securities 6 137,106 1,471,544Derivative financial instruments 7 13,142 - Loans, advances and financing 8 2,232 2,610Other assets 9 69,305 104,422Tax recoverable 207,853 105,988Investment in subsidiaries 12 7,335,108 7,325,118Amount owing by subsidiaries net of allowance for doubtful debts of RM510,000 (2007: RM852,820) 43 5,687,933 3,817,845Investment in associates 13 3,834 3,834Property, plant and equipment 15 381,420 291,058Investment properties 16 4,590 4,715Prepaid lease payments 17 4,516 4,674

total assets 14,287,857 13,507,124

liabilities Derivative financial instruments 7 16,854 18,711Other liabilities 22 256,800 108,274Amount owing to subsidiaries 43 268,062 264,838Deferred tax liabilities 10 103,399 13,293 Bonds 24 - 250,000 Redeemable convertible unsecured loan stocks (“RCULS”) 26 - 1,803 Other borrowings 27 2,426,450 2,998,911


equity Ordinary share capital 29 3,578,078 3,374,181 Reserves 31 8,099,916 6,511,547 Less: Treasury shares, at cost 32(b) (461,702) (34,434)

total equity 11,216,292 9,851,294

total equity and liabilities 14,287,857 13,507,124

commitments and contingencies 7 500,000 350,000



0Annual Report 2008

Company Income StatementsFor the financial year ended 31 December 2008

2008 2007 note rM’000 rM’000

Interest income 33 62,040 89,796 Interest expense 34 (128,124) (217,543)

Net interest expense (66,084) (127,747)Non-interest income 35 1,701,081 2,332,104

Net income 1,634,997 2,204,357 Overheads 36 (14,900) (29,585)

Profit before allowances 1,620,097 2,174,772 Allowance for impairment losses 38 (888) -

Profit before taxation 1,619,209 2,174,772 Taxation 40 (371,771) (521,846)

Net profit after taxation 1,247,438 1,652,926

Dividends per ordinary share of 20.7 sen less income tax 42 19.8 29.2 of 25% and tax exempt dividend of 4.3 sen (2007: 40.0 sen less income tax of 26%)




Consolidated Statements of Changes in EquityFor the financial year ended 31 December 2008

At

trib

utab

leto

equ

ityh

olde

rso

fthe

Com

pany

R

eval

uatio

n

Shar

e

Shar

es

re

serv

e-

prem

ium

-

Ex

chan

ge

held

avai

labl

e-

Pe

rpet

ual

Sh

are

ordi

nary

St

atut

ory

Capi

tal

fluct

uatio

nun

der

Trea

sury

fo

r-sal

eOt

her

Reta

ined

p

refe

renc

eM

inor

ity

The

Grou

p

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

trust

sh

ares

se

curit

ies

rese

rves

ea

rnin

gs

Tota

lsh

ares

in

tere

sts

Tota

l

Note

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

At 1

Jan

uary

200

8

3,37

4,18

1

5,17

4,17

2

2,23

8,73

8

108,

122

(4

05,6

25)

(107

,166

) (3

4,43

4)

640

,024

4

5,90

8

4,67

6,13

1 1

5,71

0,05

1

200

,000

9

44,5

59

16,8

54,6

10

Curre

ncy t

rans

lation

diff

eren

ce

-

-

-

-

(2

1,97

4)

-

-

18,

039

-

-

(3

,935

) -

(4

5,49

9)

(49,

434)

Net g

ain/(l

oss)

from

chan

ge

in

fair

value

-

-

-

-

-

-

-

(57,

982)

-

-

(5

7,98

2)

-

(51,

788)

(1

09,7

70)

Net l

oss

tranf

erre

d to

inc

ome

stat

emen

t on

dis

posa

l and

impa

irmen

t

-

-

-

-

-

-

-

(322

,959

) -

-

(3

22,9

59)

-

5,1

79

(317

,780

)

Tran

sfer

from

def

erre

d ta

x ass

ets

10

-

-

-

-

-

-

-

9

2,82

9 4,

512

-

(97,

341)

-

(1

2,30

6)

85,

035

Net i

nves

tmen

t hed

ge

-

- -

- -

- -

- (1

33,0

56)

- (1

33,0

56)

- 61

0 (1

32,4

46)

Hedg

ing re

serv

e -

Ca

sh fl

ow h

edge

-

-

-

-

-

-

-

-

(18,

012)

-

(1

8,01

2)

-

-

(18,

012)

Incom

e an

d ex

pens

e re

cogn

ised

dir

ectly

in e

quity

-

-

-

-

(21,

974)

-

-

(2

70,0

73)

(146

,556

) -

(4

38,6

03)

-

(103

,804

) (5

42,4

07)

Profi

t for

the

finan

cial y

ear

-

-

-

-

-

-

-

-

-

1,

952,

038

1

,952

,038

-

6

0,50

8

2,0

12,5

46

Tota

l rec

ognis

ed

inc

ome

and

expe

nse

fo

r the

fina

ncial

year

- -

- -

(21,

974)

-

- (2

70,0

73)

(146

,556

) 1,

952,

038

1,51

3,43

5 -

(43,

296)

1,

470,

139

Divid

end

for t

he fi

nanc

ial ye

ar

en

ded

31 D

ecem

ber 2

007

42

-

-

-

-

-

-

-

-

-

(6

19,2

82)

(619

,282

) -

(2

2,72

6)

(642

,008

)


0Annual Report 2008

Consolidated Statements of Changes in Equity For the financial year ended 31 December 2008

At

trib

utab

leto

equ

ityh

olde

rso

fthe

Com

pany

R

eval

uatio

n

Shar

e

Shar

es

re

serv

e-

prem

ium

-

Ex

chan

ge

held

avai

labl

e-

Pe

rpet

ual

Sh

are

ordi

nary

St

atut

ory

Capi

tal

fluct

uatio

nun

der

Trea

sury

fo

r-sal

eOt

her

Reta

ined

p

refe

renc

eM

inor

ity

The

Grou

p

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

trust

sh

ares

se

curit

ies

rese

rves

ea

rnin

gs

Tota

lsh

ares

in

tere

sts

Tota

l

Note

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Tran

sfer

to s

tatu

tory

rese

rves

-

-

610

,260

-

-

-

-

-

-

(6

10,2

60)

-

-

-

-

Issue

of s

hare

cap

ital a

rising

from

: 29

- con

vers

ion o

f Red

eem

able

Co

nver

tible

Unse

cure

d

Lo

an S

tock

s (“R

CULS

”) 2

6

79

496

-

-

-

-

-

-

(4

4)

-

531

-

-

531

- sha

re e

xcha

nge

for a

cquis

ition

of s

ubsid

iary

2

07,0

96

1,0

04,4

17

-

-

-

-

-

-

-

-

1,2

11,5

13

-

-

1,2

11,5

13

Optio

n re

serv

es a

rising

from

sh

are

optio

n sc

hem

es o

f

su

bsidi

aries

-

-

-

-

-

-

-

-

(7,0

95)

-

(7,0

95)

-

(2,1

10)

(9,2

05)

Net r

ever

sal o

f sha

res

held

un

der t

rust

3

2(a)

-

-

-

-

-

3

2,97

6

-

-

-

-

32,

976

-

-

3

2,97

6

Arisi

ng fr

om a

ccre

tion/

dilut

ion o

f

eq

uity i

nter

ests

in s

ubsid

iary

-

-

(7,4

58)

(22,

013)

-

-

-

-

(5

,795

) (2

81,2

10)

(316

,476

) -

2

22,0

71

(94,

405)

Tran

sfer

to re

taine

d ea

rning

s

- (1

16,7

87)

- -

- -

- -

- 11

6,78

7 -

- -

-

Purc

hase

of t

reas

ury s

hare

s 3

2(b)

-

-

-

-

-

-

(46

1,70

2)

-

-

-

(461

,702

) -

-

(4

61,7

02)

Canc

ellat

ion o

f tre

asur

y sha

res

32(

b)

(3,2

78)

(34,

434)

-

3

,278

-

-

3

4,43

4

-

-

-

-

-

-

-

At 3

1 De

cem

ber 2

008

3,

578,

078

6,

027,

864

2,

841,

540

8

9,38

7

(427

,599

) (7

4,19

0) (

461,

702)

3

69,9

51

(113

,582

) 5

,234

,204

17

,063

,951

2

00,0

00 1

,098

,498

18

,362

,449


Annual Report 20080


At

trib

utab

leto

equ

ityh

olde

rso

fthe

Com

pany

R

eval

uatio

n

Shar

e

Shar

es

re

serv

e-

prem

ium

-

Ex

chan

ge

held

avai

labl

e-

Pe

rpet

ual

Sh

are

ordi

nary

St

atut

ory

Capi

tal

fluct

uatio

nun

der

Trea

sury

fo

r-sal

eOt

her

Reta

ined

p

refe

renc

eM

inor

ity

The

Grou

p

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

trust

sh

ares

se

curit

ies

rese

rves

ea

rnin

gs

Tota

lsh

ares

in

tere

sts

Tota

l

Note

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

At 1

Jan

uary

200

7

3,18

4,42

9

3,64

2,04

3

1,90

9,04

4

113,

855

(1

49,3

47)

(261

,574

) -

1

45,5

93

4,7

47

3,19

5,74

0 1

1,78

4,53

0

200,

000

60

4,79

0 1

2,58

9,32

0

Curre

ncy t

rans

lation

diff

eren

ce

-

-

-

-

(2

56,2

78)

-

-

-

-

-

(256

,278

) -

(6

5,62

2)

(321

,900

)

Net g

ain/(l

oss)

from

cha

nge

in

fair

value

-

-

-

-

-

-

-

662

,585

-

-

6

62,5

85

-

(5,0

10)

657

,575

Net l

oss

trans

ferre

d to

inc

ome

stat

emen

t on

dis

poal

and

impa

irmen

t

- -

- -

- -

- (1

70,9

47)

- -

(170

,947

) -

- (1

70,9

47)

Tran

sfer

from

def

erre

d ta

x ass

ets

10

-

-

-

-

-

-

-

2

,793

-

-

2

,793

-

(1

,303

) 1

,490

Hedg

ing re

serv

e

- C

ash

flow

hedg

e

-

-

-

-

-

-

-

-

1,7

23

-

1,7

23

-

-

1,7

23

Incom

e an

d ex

pens

e re

cogn

ised

dir

ectly

in e

quity

-

-

-

-

(256

,278

) -

-

4

94,4

31

1,7

23

-

239

,876

-

(7

1,93

5)

167

,941

Profi

t for

the

finan

cial y

ear

-

-

-

-

-

-

-

-

-

2,7

93,2

73

2,79

3,27

3

-

120,

902

2

,914

,175

Tota

l rec

ognis

ed in

com

e an

d

ex

pens

e fo

r the

fina

ncial

year

-

-

-

-

(256

,278

) -

-

4

94,4

31

1,7

23

2,79

3,27

3 3

,033

,149

-

4

8,96

7

3,0

82,1

16

Divid

end

for t

he fi

nanc

ial ye

ar

en

ded

31 D

ecem

ber 2

006

42

-

-

-

-

-

-

-

-

-

(3

68,1

68)

(368

,168

) -

(2

1,00

8)

(389

,176

)

Spec

ial d

ivide

nd fo

r the

fina

ncial

ye

ar en

ded

31 D

ecem

ber 2

007

42

-

-

-

-

-

-

-

-

-

(6

15,0

20)

(615

,020

) -

(4

5,50

3)

(660

,523

)


0Annual Report 2008


At

trib

utab

leto

equ

ityh

olde

rso

fthe

Com

pany

R

eval

uatio

n

Shar

e

Shar

es

re

serv

e-

prem

ium

-

Ex

chan

ge

held

avai

labl

e-

Pe

rpet

ual

Sh

are

ordi

nary

St

atut

ory

Capi

tal

fluct

uatio

nun

der

Trea

sury

fo

r-sal

eOt

her

Reta

ined

p

refe

renc

eM

inor

ity

The

Grou

p

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

trust

sh

ares

se

curit

ies

rese

rves

ea

rnin

gs

Tota

lsh

ares

in

tere

sts

Tota

l

Note

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Tran

sfer

to s

tatu

tory

rese

rves

-

-

329

,694

-

-

-

-

-

-

(3

29,6

94)

-

-

-

-

Issue

of s

hare

cap

ital a

rising

from

: 29

- exe

rcise

of E

mplo

yee

Shar

e

Op

tion

Sche

me

1

3,50

1

32,

844

-

-

-

-

-

-

-

-

4

6,34

5

-

-

46,

345

- con

vers

ion o

f USD

Zer

o

Co

upon

gua

rant

eed

co

nver

tible

bo

nds

2004

/200

9 2

4(b)

5

9,52

0

290

,460

-

-

-

-

-

-

-

-

3

49,9

80

-

-

349

,980

- con

vers

ion o

f RCU

LS

26

1

,806

1

1,34

4

-

-

-

-

-

-

(410

) -

1

2,74

0

-

-

12,

740

- priv

ate

place

men

t

of

new

sha

res

1

17,0

00

1,2

17,9

70

-

-

-

-

-

-

-

- 1

,334

,970

-

-

1

,334

,970

Optio

n re

serv

es a

rising

from

sh

are

optio

n sc

hem

es o

f

su

bsidi

aries

-

-

-

-

-

-

-

-

39,

848

-

3

9,84

8

-

-

39,

848

Net r

ever

sal o

f sha

res

held

un

der t

rust

3

2(a)

-

-

-

-

-

1

54,4

08

-

-

-

-

154

,408

-

-

1

54,4

08

Arisi

ng fr

om a

ccre

tion/

dilut

ion

of

equ

ity in

tere

sts

in

subs

idiar

y

-

-

-

(7,8

08)

-

-

-

-

-

-

(7,8

08)

-

359,

513

3

51,7

05

Capit

al re

paym

ent o

f a s

ubsid

iary

-

-

-

-

-

-

-

-

-

-

-

-

(2

,200

) (2

,200

)

Purc

hase

of t

reas

ury s

hare

s 3

2(b)

-

-

-

-

-

-

(5

4,92

3)

-

-

- (5

4,92

3)

-

-

(54,

923)

Canc

ellat

ion o

f tre

asur

y sha

res

32(

b)

(2,0

75)

(20,

489)

-

2

,075

-

-

2

0,48

9

-

-

-

-

-

-

-

At 3

1 De

cem

ber 2

007

3,

374,

181

5,

174,

172

2,

238,

738

10

8,12

2

(405

,625

) (1

07,1

66)

(34,

434)

6

40,0

24

45,

908

4,6

76,1

31 1

5,71

0,05

1

200,

000

94

4,55

9 1

6,85

4,61

0


Annual Report 20080

Company Statements of Changes in Equity For the financial year ended 31 December 2008

non-distributable Distributable

compound

financial

instrument capital

the company share share (equity redemption treasury hedging retained

note capital premium component) reserve shares reserve earnings total

rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 January 2008 3,374,181 5,174,172 44 2,075 (34,434) - 1,335,256 9,851,294

Hedging reserve -

cash flow hedge - - - - - (18,012) - (18,021)

Transfer from deferred tax assets 10 - - - - - 4,512 - 4,512

Income and expenses

recognised directly in equity - - - - - (13,500) - (13,500)

Profit for the financial year - - - - - - 1,247,438 1,247,438

Total recognised income

and expense

for the financial year - - - - - - 1,247,438 1,247,438

Dividend for the financial

year ended

31 December 2007 42 - - - - - - (619,282) (619,282)

Issue of share

capital arising from: 29

- conversion of RCULS 26 79 496 (44) - - - - 531

- share exchange

for acquistion of subsidiary 207,096 1,004,417 - - - - - 1,211,513

Transfer to retained earnings - (116,787) - - - - 116,787 -

Purchase of

treasury shares 32(b) - - - - (461,702) - - (461,702)

Cancellation of

treasury shares 32(b) (3,278) (34,434) - 3,278 34,434 - - -

At 31 December 2008 3,578,078 6,027,864 - 5,353 (461,702) (13,500) 2,080,199 11,216,292


0Annual Report 2008

Company Statements of Changes in EquityFor the financial year ended 31 December 2008

non-distributable Distributable

compound

financial

instrument capital

the company share share (equity redemption treasury retained

note capital premium component) reserve shares earnings total

rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At 1 January 2007 3,184,429 3,642,043 454 - - 665,518 7,492,444

Profit for the financial year - - - - - 1,652,926 1,652,926

Total recognised income and expense

for the financial year - - - - - 1,652,926 1,652,926

Dividend for the financial year ended

31 December 2006 42 - - - - - (368,168) (368,168)

Special dividend for the financial year

ended 31 December 2007 42 - - - - - (615,020) (615,020)

Issue of share capital arising from: 29

- exercise of Employee

Share Option Scheme 13,501 32,844 - - - - 46,345

- conversion of USD Zero Coupon

guaranteed convertible bonds

2004/2009 24(b) 59,520 290,460 - - - - 349,980

- conversion of RCULS 26 1,806 11,344 (410) - - - 12,740

- private placement of new shares 117,000 1,217,970 - - - - 1,334,970

Purchase of treasury shares 32(b) - - - - (54,923) - (54,923)

Cancellation of treasury shares 32(b) (2,075) (20,489) - 2,075 20,489 - -

At 31 December 2007 3,374,181 5,174,172 44 2,075 (34,434) 1,335,256 9,851,294


Annual Report 20080

Consolidated Cash Flow StatementsFor the financial year ended 31 December 2008

2008 2007 note rM’000 rM’000

operating activities Profit before taxation and zakat 2,715,659 3,685,803 Adjustments for: Depreciation of property, plant and equipment 214,335 193,263 Amortisation of prepaid lease payments 1,588 2,242 Gain on disposal of property, plant and equipment (9,586) (3,106)Gain on disposal of leased assets (253) (126)Property, plant and equipment written off 775 55 Unrealised gain on foreign exchange (328,809) (52,875)Dividends from securities held for trading (31,873) (57,009)Dividends from available-for-sale securities (37,679) (19,911)Dividends from held-to-maturity securities (58) (76)Allowance for losses on loans, advances and financing 1,176,914 1,421,682 Net interest suspended 194,648 217,392 Gain on sale of available-for-sale securities (322,959) (170,947)Gain on sale of securities held for trading and derivative financial instruments (46,500) (615,999)Net loss arising from hedging derivatives 5,891 (16,650)Gain on maturity of held-to-maturity securities (4,089) (133)Write-back of impairment losses (29,483) (57,407)Accretion of discounts less amortisation of premiums (138,540) (211,876)Accretion of redeemable convertible unsecured loan stocks (“RCULS”) 12 190 Amortisation of intangible assets 122,945 97,476 Impairment of intangible assets - 363 Interest income on USD bonds - (17,151)Loss/(gain) on disposal of interest in subsidiary 2,007 (708,739)Gain on disposal of interest in associate (2,088) - Share of results of associates 45,593 (7,684)Unrealised loss on revaluation of securities held for trading 190,187 128,484 Unrealised gain on revaluation of derivative financial instruments (139,479) (347,386)Allowance for other receivables 94,768 37,375 Provision for commitments and contingencies 708 1,439 Share of results of jointly controlled entities (3,253) (3,410)

955,722 (190,524)

3,671,381 3,495,279


0Annual Report 2008

2008 2007 note rM’000 rM’000

(increase)/decrease in operating assets Securities purchased under resale agreements 1,060,070 (1,888,660)Deposits and placements with banks and other financial institutions 2,790,653 (2,164,870)Securities held for trading (1,874,968) (544,722)Loans, advances and financing (18,326,055) (7,203,857)Other assets (63,382) (328) Statutory deposits with central banks 312,267 (799,265)

(16,101,415) (12,601,702)increase/(decrease) in operating liabilities Deposits from customers 21,098,646 22,647,151 Deposits and placements of banks and other financial institutions (5,779,031) 5,862,688 Obligations on securities sold under repurchase agreements (542,856) (5,056,749)Amount due to Cagamas Berhad (1,010,889) (1,661,117)Bills and acceptances payable (1,370,116) 172,471 Other liabilities (992,099) 3,831,778

11,403,655 25,796,222

Cash flows generated from operations (1,026,379) 16,689,799Taxation paid (1,059,696) (507,541)

Net cash flows generated from operating activities (2,086,075) 16,182,258

investing activitiesProceeds from disposal of property, plant and equipment 35,284 70,718 Proceeds from disposal of intangible assets - 29,391 Dividends received from securities held for trading 31,873 57,009 Dividends received from available-for-sale securities 37,679 19,911 Dividends received from held-to-maturity securities 58 76 Proceeds from disposal of subsidiary shares - 971,666 Net purchase of available-for-sale securities (780,612) (1,674,039)Net purchase of held-to-maturity securities (2,228,386) (1,299,072)Net cash outflow from acquisition of subsidiary (1,306,296) (29,297)Purchase of property, plant and equipment (396,517) (497,153)Purchase of prepaid lease payment - (542)Purchase of intangible assets (69,737) (91,188)Cash and short term funds reclassified to non-current assets held for sales - (78,341)

Net cash flows used in investing activities (4,676,654) (2,520,861)



Annual Report 20080

2008 2007 note rM’000 rM’000

Financing activitiesDividends paid to shareholders (642,008) (983,188)Redemption of Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) (9,282) (23,700)Redemption of RCULS (1,283) - Proceeds from issuance of ordinary shares of the Company - 1,381,315 Proceeds from issuance of preference shares of a subsidiary - 17,305 Net repayment of other borrowings (123,330) (4,514,043)Proceeds from/(repayment of) Subordinated notes 2,788,776 (300,000)Net proceeds from syndicated term loan - 350,000 Redemption of loan stocks - (41,610)Repayment of bridging loan - (1,000,000)Proceeds from term loan facility - 1,380,000 Repayment of floating rate certificates of deposits - (211,800)Repayment of redeemable unsecured RM bonds 2001/2008 (250,000) - Net (repayment of)/proceeds from commercial papers and medium term notes (600,000) 1,288,211 Purchase of treasury shares (461,702) (54,923)Repayment of redeemable asset-backed bonds (31,772) (112,703)

Net cash flows generated from/(used in) financing activities 669,399 (2,825,136)

net increase in cash and cash equivalents during the financial year (6,093,330) 10,836,261Effects of exchange rate changes (23,419) (232,742)cash and cash equivalents at beginning of the financial year 30,525,460 19,921,941

cash and cash equivalents at end of the financial year 2 24,408,711 30,525,460



0Annual Report 2008

Company Cash Flow StatementsFor the financial year ended 31 December 2008

2008 2007 note rM’000 rM’000

operating activities Profit before taxation 1,619,209 2,174,772 Adjustments for:Depreciation of property, plant and equipment 1,994 1,878 Depreciation of investment properties 125 125 Amortisation of prepaid lease payments 158 158 Write off of property, plant and equipment 411 -(Gain)/loss on disposal of property, plant and equipment (69) 25 Gain on disposal of interest in subsidiary - (198,532)Allowance for impairment losses 888 - Unrealised foreign exchange loss/(gain) 19,217 (6,041)Unrealised gain on revaluation of derivative financial instruments (33,351) (7,836)Dividends from subsidiaries (1,643,399) (2,081,637)Loss/(gain) from sale of securities held for trading and derivative financial instruments 2,639 (28,523) Interest expense on bonds 8,121 23,396 Accretion of investment gain (41,305) (38,125)Accretion of discounts less amortisation of premiums (10,587) (12,095)Amortisation of premium on commercial papers 26,891 11,311 Accretion of redeemable convertible unsecured loan stocks (“RCULS”) 12 190

(1,668,255) (2,335,706)

(49,046) (160,934) (increase)/decrease in operating assetsLoans, advances and financing 379 33 Other assets 35,116 54,296

35,495 54,329Decrease in operating liabilities Other liabilities 130,340 76,480 130,340 76,480

Cash flows generated from/(used in) operations 116,789 (30,125)Net taxation refund/(paid) 19,662 (6,281)

Net cash flows generated from/(used in) operating activities 136,451 (36,406) investing activities Proceeds from disposal of property, plant and equipment 85 60 Proceeds from disposal of subsidiaries 10 -Proceeds from capital repayment of available-for-sale securities - 827 Proceeds from disposal of held-to-maturity securities 1,345,024 - Purchase of property, plant and equipment (92,784) (184,229)Advances to subsidiaries (345,270) (3,989,598)Dividends from subsidiaries 934,993 1,335,159 Acquisition of additional interest in subsidiary (10,000) (12,619)

Net cash flows generated from/(used in) investing activities 1,832,058 (2,850,400)



Company Cash Flow StatementsFor the financial year ended 31 December 2008

2008 2007 note rM’000 rM’000

Financing activities Dividends paid to shareholders (619,282) (983,188)Interest paid to bondholders (8,121) (20,875)Interest paid to RCULS holders (151) (288)Proceeds from issuance of shares of the Company - 1,381,315 Repayment of bridging loan - (1,000,000)Net proceeds from syndicated term loan - 350,000 Proceeds from fixed rate term loan - 1,380,000 Net proceeds from commercial papers and medium term notes 1,334,898 1,276,900 Purchase of treasury shares (461,702) (54,923)Redemption of redeemable unsecured RM 2001/2008 bonds (250,000) - Repayment of commercial papers (1,950,000) - Redemption of RCULS (1,263) -

Net cash flows (used in)/generated from financing activities (1,955,621) 2,328,941 net increase/(decrease) in cash and cash equivalents during the financial year 12,888 (557,865)effects of exchange rate changes 15,752 (19,300)cash and cash equivalents at beginning of the financial year 374,428 951,593

cash and cash equivalents at end of the financial year 2 403,068 374,428


0Annual Report 2008

The following accounting policies have been used consistently in dealing with items that are considered material in relation to the Financial Statements.

a basis oF PreParationThe Financial Statements of the Group and the Company have been prepared under the historical cost convention, and modified by the revaluation of available-for-sale securities, securities held for trading, all derivative contracts, investment properties and non-current assets/disposal groups held for sale.

The Financial Statements of the Group and the Company have been prepared in accordance with the Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities, Bank Negara Malaysia (“BNM”) Guidelines, Shariah requirements and the provisions of the Companies Act, 1965.

The Financial Statements incorporate those activities relating to Islamic banking which have been undertaken by the Group. Islamic banking refers generally to the acceptance of deposits, granting of financing and dealing in Islamic Securities under the Shariah principles.

BNM has granted indulgence to the banking subsidiaries of the Company and other local banks in Malaysia from complying with the requirements on the impairment of loans under the revised ‘Guideline on Financial Reporting for Licensed Institutions’ (“BNM/GP8”). Paragraph 4, Appendix A of the revised BNM/GP8 requires impaired loans to be measured at their estimated recoverable amount. This requirement is principally similar to the requirements under FRS 139 – Financial Instruments: Recognition and Measurement. During the financial year, BNM issued a revised circular on BNM/GP3 which requires impaired credit facilities to be measured at their recoverable amount. This requirement supersedes paragraph 4, Appendix A of the revised BNM/GP8. In view of the deferment of the implementation of FRS 139 in Malaysia, the banking subsidiaries of the Company and other local banks in Malaysia will be deemed to be in compliance with the requirement on the impairment of loans under the revised BNM/GP8 if the allowance for non-performing loans, advances and financing is computed based on BNM’s guidelines on the ‘Classification of Non-Performing Loans and Provision for Substandard, Bad and Doubtful Debts’ (“BNM/GP3”) requirements.

The preparation of Financial Statements in conformity with the provisions of the Companies Act, 1965, Financial Reporting Standards and Bank Negara Malaysia Guidelines requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of income and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Group and Company’s accounting policies. Although these estimates and assumptions are based on the Directors’ best knowledge of current events and actions, actual results may differ from those estimates.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 52.

Summary of Significant Group Accounting PoliciesFor the financial year ended 31 December 2008


Annual Report 20080

a basis oF PreParation (continueD)(a) standards, amendments to published standards and interpretations that are applicable to the Group and

company and are effectiveThe new accounting standards, amendments to published standards and interpretations to existing standards that are effective for the Group and the Company for the financial year ended 31 December 2008 are as follows:

• Amendment to FRS 121 - The Effect of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operations

• IC Interpretation 8 Scope of FRS 2 - Share-Based Payment

All changes in accounting policies have been made in accordance with the transitional provisions in the respective standards, amendments to published standards and interpretations. All standards, amendments and interpretations adopted by the Group and the Company require retrospective application except for IC Interpretation 8 which requires retrospective application subject to the transition/provision of FRS 2. FRS 2 requires retrospective application for all equity instruments granted after 31 December 2004 and not vested at 1 January 2006.

The adoption of the new accounting standards, amendments to published standards and interpretations did not have a material impact on the Financial Statements of the Group and Company.

(b) standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effectiveThe new standards and IC Interpretations that are applicable to the Group but which the Group and the Company have not early adopted, are as follows:

• FRS 8 - Operating Segments (effective for accounting periods beginning on or after 1 July 2009). This new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group and the Company will apply this standard when effective.

• IC Interpretation 9 Reassessment of Embedded Derivatives (effective for accounting periods beginning on or after 1 January 2010). IC Interpretation 9 requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. Subsequent reassessment is disallowed unless there is a change in the terms of contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. The Group and the Company will apply this standard when effective.



0Annual Report 2008

a basis oF PreParation (continueD)(b) standards, amendments to published standards and interpretations to existing standards that are applicable

to the Group but not yet effective (continued)• IC Interpretation 10 Interim Financial Reporting and Impairment (effective for accounting periods beginning on or after

1 January 2010). IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be revised at a subsequent balance sheet date. The Group and the Company will apply this standard when effective.

• The following standards will be effective for annual periods beginning on or after 1 January 2010. The Group will apply these standards from financial periods beginning on 1 January 2010. The Group has applied transitional provisions in the respective standards which exempts entities from disclosing the possible impact arising from the initial application of the standard in the financial statements of the Group and the Company.

(i) FRS 139 Financial Instruments: Recognition and Measurement. This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. Hedge accounting is permitted only under strict circumstances. However, with effect from 1 January 2005, the revised BNM/GP8 has adopted certain FRS 139 principles in recognising and measuring financial assets, financial liabilities, derivative financial instruments and hedge accounting. The relevant accounting policies are set out in Notes G, N and W to the Financial Statements.

(ii) FRS 4 Insurance Contracts: This new standard establishes principles for recognising and measuring insurance contracts including reinsurance contracts.

(iii) FRS 7 Financial Instruments: Disclosures

The adoption of the above new standards and IC Interpretations is expected not to have a material impact on the Group’s and the Company’s Financial Statements for the financial year ending 31 December 2009.

b econoMic entities in the GrouP(a) subsidiaries

The Company treats as subsidiaries, those corporations, partnerships or other entities (including special purpose entities) in which the Company has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than 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 Company controls another entity.

Investment in subsidiaries is stated at cost less accumulated impairment losses. Where there is an indication of impairment, the carrying amount of the investment is assessed. A write down is made if the carrying amount exceeds its recoverable amount.

External costs directly attributable to an acquisition, other than the costs of issuing shares and other capital instruments, are included as part of the cost of acquisition.



Annual Report 20080

b econoMic entities in the GrouP (continueD)(a) subsidiaries (continued)

The consolidated Financial Statements include the Financial Statements of the Company and all its subsidiaries made up to the end of the financial year.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control ceases. Subsidiaries are consolidated using the purchase method of accounting, except for business combinations involving entities or businesses under common control with agreement dates on/after 1 January 2006, which are accounted for using the pooling-of-interests method.

Under the purchase method of accounting, the results of subsidiaries acquired or disposed of during the year are included from the date of acquisition up to the date of disposal. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since that date.

The Directors note that business combinations involving entities or businesses under common control are outside the scope of FRS 3 (“Business Combinations”) and that there is no guidance elsewhere in FRS covering such transactions. FRS contain specific guidance to be followed where a transaction falls outside the scope of FRS. This guidance is included in paragraphs 10 to 12 of FRS 108 (“Accounting Policies, Changes in Accounting Estimates and Errors”). This requires, inter alia, that where FRS does not include guidance for a particular issue, the Directors may also consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards. In this regard, it is noted that the United States Financial Accounting Standards Board (“FASB”) has issued an accounting standard covering business combinations (“FAS 141”) that is similar in a number of respects to FRS 3.

In contrast to FRS 3, FAS 141 does include, as an Appendix, limited accounting guidance for transactions under common control which, as with FRS 3, are outside that scope of that accounting standard. The guidance contained in FAS 141 indicates that a form of accounting that is similar to pooling-of-interests method may be used when accounting for transactions under common control.

Having considered the requirements of FRS 108 and the guidance included within FAS 141, the Directors consider appropriate to use a form of accounting which is similar to pooling-of-interests when dealing with business combinations involving entities or businesses under common control.



0Annual Report 2008

b econoMic entities in the GrouP (continueD)(a) subsidiaries (continued)

Under the pooling-of-interests method of accounting, the results of entities or businesses under common control are presented as if the merger had been effected throughout the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting credit difference is classified as equity and regarded as a non-distributable reserve. Any resulting debit difference is adjusted against any suitable reserve. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the merged enterprises, to the extent that they have not been reduced by a debit difference, are reclassified and presented as movement in other capital reserve.

All material transactions and balances between group companies are eliminated and the consolidated Financial Statements reflect external transactions only. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiary’s identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the subsidiary, and is recognised in the consolidated income statement.

(b) investment in jointly controlled entityThe Group treats as a jointly controlled entity, 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.

Investment in a jointly controlled entity is stated at cost less accumulated impairment losses. Where there is an indication of impairment, the carrying amount of the investment is assessed. A write down is made if the carrying amount exceeds its recoverable amount.

The Group’s interest in jointly controlled entities is accounted for in the consolidated Financial Statements by the equity method of accounting.

Equity accounting involves recognising the Group’s share of the post acquisition results of the joint venture in the income statement and its share of post acquisition movements within reserves in reserves. The cumulative post acquisition movements are adjusted against the cost of the investment and include goodwill on acquisition, net of accumulated impairment loss (if any).



Annual Report 20080

b econoMic entities in the GrouP (continueD)(c) investment in associates

The Group treats as associates, corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Investments in associates are accounted for in the consolidated Financial Statements by the equity method of accounting. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down to its recoverable amount.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its shares of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

c recoGnition oF ProFit incoMe anD interest incoMeInterest income on financial assets is recognised on an accrual basis. Interest earned on hire purchase, leasing and block discounting agreements is spread over the terms of the loans, using the “Sum-of-Digit” method so as to produce a constant periodic rate of interest. Accretion of discount and amortisation of premium for securities are recognised on an effective yield basis.

Where an account is classified as non-performing, interest accrued and recognised as income prior to the date the loans are classified as non-performing are reversed out of income and set off against the earned interest receivable account in the balance sheet. Subsequently, the interest earned on the non-performing loans is recognised as income on a cash basis instead of being accrued and suspended at the same time as prescribed previously. Customers’ accounts are classified as non-performing where repayments are in arrears for 3 months or more from first day of default for loans and overdrafts, and after 3 months from maturity date for trade bills, bankers’ acceptances and trust receipts.

The Group’s policy on recognition of interest income on loans, advances and financing is in conformity with BNM/GP3 and the Revised BNM/GP8 for Malaysian banking entities, while foreign banking entities are in conformity with the requirements of their respective central banks.

Income from Islamic Banking is recognised on an accrual basis in accordance with the principles of Shariah.



0Annual Report 2008

D recoGnition oF Fees anD other incoMeLoans, advances and financing arrangement fees and commissions are recognised as income when all conditions precedent are fulfilled.

Commitment fees, guarantee fees, portfolio management fees and income from asset management and securities services which are material are recognised as income based on a time apportionment method.

Brokerage fees are recognised as income based on inception of such transactions.

Fees from advisory and corporate finance activities are recognised as income on completion of each stage of the engagement.

Dividends are recognised when the right to receive payment is established.

e allowances For baD anD DoubtFul Debts anD FinancinGSpecific allowances are made for doubtful debts and financing which have been individually reviewed and specifically identified as bad or doubtful.

A general allowance based on a percentage of the loans portfolio is also made to cover possible losses which are not specifically identified.

Any uncollectible loans or portion of loans classified as bad are written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the management, there is no prospect of recovery.

The policy on allowances for non-performing debts and financing of Malaysian subsidiary banks is in conformity with the minimum requirements of BNM/GP3.

F sale anD rePurchase aGreeMentsSecurities purchased under resale agreements are securities which the Group had purchased with a commitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the balance sheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group had sold from its portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligation to repurchase the securities are reflected as a liability on the balance sheet.

The difference between sale and repurchase price as well as purchase and resale price is treated as interest and accrued over the life of the resale/repurchase agreement using the effective yield method.



Annual Report 20080

G securitiesThe Group and the Company classify their securities portfolio into the following categories: securities held for trading, available-for-sale securities and held-to-maturity securities. Management determines the classification of securities at initial recognition.

(a) securities held for tradingThis category comprises securities held for trading and those designated at fair value through profit or loss at inception. Securities are classified into this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges.

Pursuant to the amendments to Revised BNM/GP8 guidelines, the Malaysia banking subsidiaries of the Company are now permitted by BNM for the period from 1 July 2008 to 31 December 2009 to reclassify non-derivatives held for trading securities into held-to-maturity securities or available-for-sale securities. In the 4th quarter of 2008, the banking subsidiaries of the Company reclassified a portion of their securities in the held-for-trading category to held-to-maturity category based on current market prices at the relevant dates of the reclassifications. Further details of the reclassification are set out in Note 4 to these Financial Statements.

Reclassifications are made at the fair value at the date of the reclassification. The fair value of the securities become the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before the reclassification date are subsequently made. The effective interest rates for the securities reclassified to held-to-maturity category is determined at the reclassification date. Further changes in estimates of future cash flows are recognised as an adjustment effective interest rates.

(b) available-for-sale securitiesAvailable-for-sale securities are those intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.

(c) held-to-maturity securitiesHeld-to-maturity securities are non-derivative instruments with fixed or determinable payments and fixed maturities that the Group’s and the Company’s management have the positive intent and ability to hold to maturity. If the Group or the Company sell other than an insignificant amount of held-to-maturity securities, the entire category will be tainted and reclassified as available-for-sale securities.

Securities are initially recognised at fair value plus transaction costs for all securities not carried at fair value through profit or loss and securities not held for trading. Securities are derecognised when the rights to receive cash flows from the securities have expired or where the Group or the Company have transferred substantially all risks and rewards of ownership.

Securities held for trading and available-for-sale securities are subsequently carried at fair value, except for investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured in which case the investments are stated at cost. Gains and losses arising from changes in the fair value of the securities held for trading category are included in the income statement in the period in which they arise. Gains and losses arising from changes in fair value of available-for-sale securities are recognised directly in equity, until the securities are derecognised or impaired at which time the cumulative gains or losses previously recognised in equity are recognised in the income statement.



0Annual Report 2008

G securities (continueD)(c) held-to-maturity securities (continued)

Held-to-maturity securities are subsequently measured at amortised cost using the effective interest method. Gains or losses arising from the de-recognition or impairment of the securities are recognised in the income statement.

Interest from securities held for trading, available-for-sale securities and held-to-maturity securities is calculated using the effective interest method and is recognised in the income statement. Dividends from available-for-sale equity instruments are recognised in the income statement when the entity’s right to receive payment is established.

The fair values of quoted securities are based on quoted prices in active markets. If the market for an instrument is not active and for unquoted securities, the Group and the Company establish fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

h ProPerty, Plant anD equiPMentProperty, plant 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 Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.

Freehold land and capital work-in-progress are not depreciated. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of the assets to their residual values over their estimated useful lives, summarised as follows:

Buildings on freehold land 50 yearsBuildings on leasehold land less than 50 years 40 years or over the remaining period of the lease, whichever is shorterBuildings on leasehold land more than 50 years 50 years or over the remaining period of the lease, whichever is shorterOffice equipment, furniture and fixtures - office equipment 5 years - furniture and fixtures 10 yearsComputer equipment and software - servers and hardware 5 years - ATM machine 10 yearsComputer equipment and software under lease 3 years or over the period of the lease, whichever is shorterMotor vehicles 5 yearsRenovations to rented premises 5 years or over the period of the tenancy, whichever is shorterGeneral plant and machinery 8 years




h ProPerty, Plant anD equiPMent (continueD)Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each balance sheet date.

Property, plant and equipment are reviewed for impairment at each balance sheet date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in non-interest income.

i investMent ProPertiesInvestment properties, comprising principally land and office buildings, are held for long term rental yields or for capital appreciation or both, and are not occupied by the Group and the Company.

Investment property of the Company is stated at cost less accumulated depreciation and accumulated impairment loss. At the Group level, investment properties of the Company are classified as property, plant and equipment as the properties are rented out to an entity within the Group.

Investment properties of the Group are stated at fair value, representing the open-market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of other income.

On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised (eliminated from the balance sheet). The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period of the retirement or disposal.

J intanGible assets(a) Goodwill

Goodwill arises on business combinations when the cost of acquisition exceeds the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units (“CGU”) for the purpose of impairment testing. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Impairment testing is performed annually by comparing the present value of the CGU’s projected cash flows against the carrying amount of its net assets which include the allocated goodwill. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business unit (Note 18).



0Annual Report 2008

J intanGible assets (continueD)(a) Goodwill (continued)

Goodwill on acquisitions of associates and jointly controlled entities respectively are included in investments in associates and jointly controlled entities. Such goodwill is tested for impairment as part of the overall balance.

Under the current applicable approved accounting standards for business combinations, FRS 3 – Business Combinations which apply to the accounting for business combinations for which the agreement date is on or after 1 January 2006, the provisions of the standard are applied prospectively and no retrospective changes in respect of accounting for business combinations prior to 1 January 2006 have been made. Under FRS 3, previously recognised negative goodwill (if any) has been derecognised with a corresponding adjustment to the opening balances of retained earnings.

Goodwill arising from investments in foreign subsidiaries is translated using the prevailing foreign exchange rates as at balance sheet date.

(b) other intangible assetsOther intangible assets include credit card relationships, core deposits and computer software. Other intangible assets are initially recognised when they are separable or arise from contractual or other legal rights, the cost can be measured reliably and, in the case of intangible assets not acquired in a business combination, where it is probable that future economic benefits attributable to the assets will flow from their use. The value of intangible assets which are acquired in a business combination is generally determined using income approach methodologies and replacement cost. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Intangible assets that have an indefinite useful life, or are not yet ready for use, are tested for impairment annually. This impairment test may be performed at any time during the year, provided it is performed at the same time every year. An intangible asset recognised during the current period is tested before the end of the current year.

Intangible assets that have a finite useful life are stated at cost less accumulated amortisation and accumulated impairment losses, and are amortised over their estimated useful lives.

Intangible assets are amortised over their finite useful lives as follows:

Credit card relationships 12 yearsCore deposits 8 yearsComputer software - Core and front-end systems 5 years - Others 3 years

k assets PurchaseD unDer lease(a) Finance lease

Assets purchased under lease which in substance transfers the risks and benefits of ownership of the assets to the Group or the Company are capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets at the beginning of the lease term. Such leased assets are subject to depreciation on the same basis as other property, plant and equipment.

Leases which do not meet such criteria are classified as operating lease and the related rentals are charged to income statement as incurred.



Annual Report 20080

k assets PurchaseD unDer lease (continueD)(b) operating lease

leasehold landLeasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided.

othersLeases of assets under which all the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

l assets solD unDer lease(a) Finance lease

When assets are sold under a finance lease, the present value of the lease payments is recognised as a debtor. The difference between the gross debtor and the present value of the debtor is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.

(b) operating leaseAssets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar property, plant and equipment. Rental income is recognised on a straight line basis over the lease term.

M bills anD accePtances PayableBills and acceptances payable represent the Group’s own bills and acceptances rediscounted and outstanding in the market.

n Derivative Financial instruMents anD heDGe accountinGDerivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. 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 value is positive and as liabilities when fair value is negative. Changes in the fair value of any derivatives that do not qualify for hedge accounting are recognised immediately in the income statement.

The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of the instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group and the Company recognise profits immediately.



0Annual Report 2008

n Derivative Financial instruMents anD heDGe accountinG (continueD)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) or (3) hedges of a net investment in a foreign operation (net investment hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

At the inception of the transaction, the Group and the Company document the relationship between hedging instruments and hedged items, as well as their risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

(a) Fair value hedgeChanges 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/profit method is used is amortised to the income statement over the period to maturity. The adjustment to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.

(b) cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain and loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged item will affect the income statement.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

(c) net investment hedgeHedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Gains and losses accumulated in the equity are included in the income statement when the foreign operation is partially disposed or sold.

(d) Derivatives that do not qualify for hedge accountingCertain 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.



Annual Report 20080

o bonDsBonds issued by the Company are stated at the issue price. When convertible Bonds are converted, the amount recognised in the shareholders’ funds in respect of the shares issued is the amount at which the liability for the Bonds is stated as at the date of conversion. No gain or loss is recognised on conversion.

The premium over the principal amount arising from the put option of the Bonds not previously redeemed, purchased and cancelled, or converted, is provided over the period from the date of initial issue to the date of option to redeem, and is set aside to a non-distributable reserve.

Gains or losses on the redemption or purchase of Bonds by the Company are taken to the income statement in the financial year they arise.

P borrowinGsBorrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective yield method; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in the income statement as interest expense.

q hire Purchase receivables securitisation ProGraMMeThe Group through its Hire Purchase Receivables Securitisation Programme, sells undivided share of hire purchase receivables to a special purpose vehicle (“SPV”). The SPV will in turn issue bonds to raise funds for the purchase of assets.

The Group receives fee income for various services provided to the SPV. These fees are determined on an arms length basis and are recognised on an accrual basis. Deferred consideration/balance of hire purchase receivables obtained under this programme is held at cost and an allowance is made for any impairment loss based on the position of the SPV and its underlying assets.

r currency translations(a) Functional and presentation currency

Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated Financial Statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.



0Annual Report 2008

r currency translations (continueD)(b) Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates 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 securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount are recognised in equity.

Translation differences on non-monetary financial assets and liabilities, such as equity instruments held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

(c) Group companiesThe results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;

• income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity beginning on or after 1 January 2006 are treated as assets and liabilities of the foreign entity and translated at the closing rate.



Annual Report 20080

s incoMe anD DeFerreD taxesCurrent tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits.

Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax related to the fair value re-measurement of available-for-sale securities, which is charged or credited directly to equity, is also credited or charged directly to equity and is subsequently recognised in the income statement together with deferred gain or loss.

Deferred income tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

t share caPital(a) classification

Ordinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity.

(b) share issue costsIncremental external costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(c) DividendsDividends on ordinary shares are recognised as a liability when the shareholders’ right to receive the dividend is established.



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u eMPloyee beneFits(a) short term employee benefits

The Group and Company recognise a liability and an expense for bonuses. The Group and Company recognise a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and Company.

(b) Post employment benefitsThe Group and Company have various post-employment benefit schemes. These benefits plans are either defined contribution or defined benefit plans.

Defined contribution planA defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity (a fund) 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 and the Company’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group and the Company have no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Defined benefit plansA defined benefit plan is a pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of services or compensation.

The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets, together with adjustments for actuarial gains/losses and past service cost.

The Group and Company determine the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the Financial Statements do not differ materially from the amounts that would be determined at the balance sheet date.

The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at balance sheet date of government securities which have currency and terms to maturity that approximate the terms of the related liability.

Plan assets in excess of the defined obligation are subject to the asset limitation specified in FRS 119 – Employee Benefits.



Annual Report 20080

u eMPloyee beneFits (continueD)(b) Post employment benefits (continued)

Defined benefit plans (continued)Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. The amount of net actuarial gains and losses recognised in the income statement is determined by the corridor method in accordance with FRS 119 and is charged or credited to income over the average remaining service lives of the related employees participating in the defined benefit plan.

Past-service costs are recognised immediately in income, unless the changes to the plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

(c) other long term employee benefitsThe cost of long term employee benefits (for example, long term service leave) is accrued to match the rendering of the services by the employees concerned using a basis similar to that for defined benefit plans.

(d) termination benefitsTermination 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 and Company recognise termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.

(e) share-based compensation benefits The share options granted to Directors and employees of the Group are disclosed in the notes to the Financial Statements. The Group makes a charge to the income statement in connection with expenses relating to share-based payments from grant date to vesting date. For those share-based compensation which were granted before 31 December 2004 and had not yet vested at 1 January 2006, the Group has elected not to apply FRS 2 (“Share-Based Payment”) as allowed in the transition provisions of FRS 2. Share-based payments under ESOS, Modified CIMBB EESOS, Modified CIMBB CEO Option, Management Option Programme and Employee Stock Option Programme are treated as equity settled. Employee services received in exchange for the grant of the share options are recognised as an expense in the income statement over the vesting periods of the grant with a corresponding increase in equity. Reserves are made for equity settled share-based compensation in the Financial Statements for the financial year end according to the requirements of FRS 2. FRS 2 only applies to transactions involving a transfer of equity instruments between shareholders and option holders, hence entitlements based on ordinary shares of the company granted under the Management Equity Scheme (“MES”) have not been accounted for by the Group as they are not within the scope of FRS 2.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted, excluding the impact of any non-market vesting conditions for example, profitability and sales growth targets. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the Group revises its estimates of the number of share options that are expected to vest. It recognises the impact to the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity and liability.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.



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v iMPairMent oF assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the 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. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.

w iMPairMent oF securities PortFolioThe Group and Company assess at each balance sheet date whether there is objective evidence that the securities are impaired. A security or a group of securities is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the securities (a “loss event”) and that loss event has an impact on the estimated future cash flows of the securities that can be reliably estimated.

(a) securities carried at amortised costIf there is an objective evidence that an impairment loss on held-to-maturity securities held at amortised cost has been incurred, the amount of loss is measured as the difference between the securities’ carrying amount and the present value of estimated future cash flows discounted at the securities’ original effective interest rate. The carrying amount of the securities is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement.

(b) securities carried at fair valueIn the case of equity instruments classified as available-for-sale securities, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If there is objective evidence that an impairment loss on available-for-sale securities has been incurred, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on the securities previously recognised in income statement is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale securities increases and the increase can be related objectively to an event occurring after the impairment was recognised in the income statement, the impairment loss is reversed through the income statement.




x ForecloseD ProPertiesForeclosed properties are stated at the lower of cost and net realisable value. When an indication of impairment exists, the carrying amount of the asset is assessed and written-down to its recoverable amount.

y ProvisionsProvisions are recognised by the Group and the Company when all of the following conditions have been met:

(i) the Group and the Company have a present legal or constructive obligation as a result of past events;(ii) it is probable that an outflow of resources to settle the obligation will be required; and(iii) a reliable estimate of the amount of obligation can be made.

Where the Group and the Company expect a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present values of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

Z Dealers’ hanDlinG charGesHandling charges paid to hire purchase dealers are expensed off to the income statement.

aa ZakatThis represents business zakat which is an obligating amount payable by the Group to comply with the principles of Shariah. Zakat provision is calculated based on the “Adjusted Growth” method, at 2.5% for individual Bumiputra shareholders of the operating Islamic entities.

ab cash anD cash equivalentsCash and cash equivalents consist of cash in hand, bank balances and deposit placements maturing less than one month.

ac coMPounD Financial instruMentsCompound financial instruments contain both a liability and equity element. The Group’s compound financial instruments comprise its Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) and Redeemable Convertible Unsecured Loan Stocks (“RCULS”). Pursuant to the transition provisions of FRS 132 – Financial Instruments: Disclosure and Presentation, the classification of compound instruments into equity and liability components need to be applied only to financial instruments that are issued for reporting periods beginning on or after 1 January 2003. Accordingly, the ICULS continue to be classified according to their legal form i.e. liability instruments.

On issue of a financial instrument that contains both a liability and an equity component, the fair value of the liability portion is determined using a market interest rate for an equivalent financial instrument; this amount is carried as liability on the amortised cost basis until extinguished on conversion or maturity of the instrument. The remainder of the proceeds is allocated to the conversion option which is recognised and included in shareholders’ equity; the value of the conversion option is not changed in subsequent periods.



0Annual Report 2008

aD seGMent rePortinGSegment reporting is presented for enhanced assessment of the Group’s risks and returns. A business segment is a group of assets and operations engaged in providing products or services that are subject to risk and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those components.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group enterprises within a single segment.

ae General anD FaMily takaFulThe General Takaful underwriting results are determined after taking into account retakaful contributions, wakalah fee expenses, unearned contributions and claims incurred. The Family Takaful fund surplus/deficit is determined by an annual actuarial valuation by the appointed actuary.

Contribution income is recognised in a year in respect of risks assumed during that particular year and as soon as the contribution can be reliably measured. Retakaful contributions are recognised in the same accounting period as the original certificate which the retakaful relates.

Unearned contribution reserves of the General Takaful fund are calculated in accordance with the time apportionment method or the 1/365th method,where applicable.

Wakalah fee expenses, which comprises acquisition costs, commission expenses and management expenses are borne by the respective funds based on the principles of Wakalah as approved by the Company’s Shariah Commitee and agreed between the participants and the Company.

Provision is made for outstanding claims based on the estimated cost of claims, less retakaful recoveries in respect of claims notified, and include claims incurred but not reported (“IBNR”) at the balance sheet date. Provision for IBNR claims is computed based on an actuarial valuation carried out by a qualified actuary.

aF non-current assets/DisPosal GrouPs helD For saleNon-current assets/disposal groups are classified as assets held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use.



Annual Report 20080

Notes to the Financial StatementsFor the financial year ended 31 December 2008

1 General inForMationThe principal activities of the Company are those of investment holding, management company, property management and provision of consultancy services. The principal activities of the significant subsidiaries as set out in Note 12 to the Financial Statements, consist of commercial banking, investment banking, Islamic banking, off-shore banking, management of unit trust fund and fund management business, stock and sharebroking and the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Bursa Malaysia Securities Berhad.

The address of the registered office of the Company is 5th Floor, Bangunan CIMB, Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

2 cash anD short-terM FunDs the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Cash and balances with banks and other financial institutions 5,927,173 3,382,982 3,368 23,898Money at call and deposit placements maturing within one month 18,481,538 27,142,478 399,700 350,530

24,408,711 30,525,460 403,068 374,428

Included in the Group’s cash and short-term funds are RM236,891 (2007: RM236,891) of money at call and deposit placements relating to a jointly controlled entity, Proton Commerce Sdn Bhd (“PCSB”).

Included in the Group’s cash and short term funds are the following monies held in trust in relation to the Group’s stockbroking business:

the Group

2008 2007 rM’000 rM’000

Client’s trust balances and dealers’ representatives’ balances 193,698 247,044Remisiers’ trust balances 13,339 13,680

207,037 260,724


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3 DePosits anD PlaceMents with banks anD other Financial institutions the Group

2008 2007 rM’000 rM’000

Licensed banks 3,511,322 4,651,412Licensed investment banks 50,000 473,096Bank Negara Malaysia 210,300 1,296,100Other financial institutions 291,654 64,956

4,063,276 6,485,564

4 securities helD For traDinG the Group

2008 2007 rM’000 rM’000

Money market instruments:unquotedMalaysian Government securities 1,342,488 416,150Cagamas bonds 205,323 279,354Khazanah bonds 9,791 96,918Malaysian Government treasury bills 38,262 119,294Bank Negara Malaysia bills 552,598 97,736Bank Negara Malaysia negotiable notes 46,892 409,900Negotiable instruments of deposit 4,150,073 1,149,588Bankers’ acceptances 1,174,286 800,764Credit-linked notes 172,884 353,247Other Government’s securities - 630,359Commercial papers 332,605 45,099Government investment issues 81,376 56,075

8,106,578 4,454,484


Annual Report 20080


4 securities helD For traDinG (continueD) the Group

2008 2007 rM’000 rM’000

quoted securities:In MalaysiaWarrants 5 35Shares 143,820 751,856Loan stocks 1,272 5,838

Outside MalaysiaShares 11,959 78,492Private and Islamic debt securities 6,127 3,614Other Government bonds 212,781 211,696

375,964 1,051,531unquoted securities: In Malaysia Private and Islamic debt securities 1,418,725 6,844,516 Outside Malaysia Private and Islamic debt securities 516,971 2,301,781Shares 5,001 -

1,940,697 9,146,297

Total securities held-for-trading 10,423,239 14,652,312

Included in the securities held for trading by the Group and the Company are:

(a) Securities amounting to RMNil (2007: RM11,823,000) invested by asset management companies on behalf of the Group.

(b) Securities held for trading of RMNil (2007: RM995,000) have been pledged by the Group to third parties in relation to securities sold under repurchase agreements.

In the 4th quarter of 2008, the Malaysia banking subsidiaries of the Company reclassified a portion of their securities in held for trading securities to the held- to-maturity category based on current market prices at the relevant dates of the reclassification. The reclassification has been accounted for in accordance with the BNM circular on ‘Reclassification of Securities under Specific Circumstances’ dated 17 October 2008, which is effective from 1 July 2008 until 31 December 2009.

The fair value of the securities reclassified from the held for trading category to the held-to-maturity category, as of the respective dates of reclassification is RM5,984,996,000.


0Annual Report 2008


4 securities helD For traDinG (continueD)Included in the non-interest income (Note 35) is the net gains/(losses) arising from the change in fair value recognised in the income statement in respect of the reclassified securities: the Group

2008 2007 rM’000 rM’000

Net fair value loss (110,641) (15,261)

As of date of reclassification, the effective interest rates on the reclassified held for trading securities, based on the new cost is an average of 6.65% per annum for the Group, with expected recoverable cash flows of approximately RM6,143,696,000, including any coupons receivable on the securities.

5 available-For-sale securities the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Money market instruments:unquotedMalaysian Government securities 239,797 177,504 - - Cagamas bonds 296,925 397,330 - - Khazanah bonds 85,331 379,044 - - Malaysian Government treasury bills - 163,093 - - Other Government treasury bills 309 50,003 - - Bank Negara Malaysia bills - 23,322 - - Government investment issues 450,776 35,224 - - Commercial papers 134,040 34,630 - - Bank Negara Malaysia Negotiable Notes - 130,393 - -

1,207,178 1,390,543 - -

quoted securities:In MalaysiaShares 267,448 939,102 - - Unit trusts 712,283 713,391 - -

Outside MalaysiaShares 465 2,223 - - Private and Islamic debt securities 128,050 19,711 - - Other Government bonds 2,238,805 777,962 - -

3,347,051 2,452,389 - -


Annual Report 20080


5 available-For-sale securities (continueD) the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

unquoted securities:in MalaysiaPrivate and Islamic debt securities 6,524,704 5,949,471 - - Shares 521,030 556,010 888 888 Loan stocks 30,715 18,183 - - Property funds 116 113 - - Investment-linked funds 19,016 9,404 - - Credit-linked notes - 25,108 - - Redeemable preference shares - - 37,750 - outside MalaysiaShares 60,268 74,135 - - Mutual funds 7,542 17,013 - - Private equity and unit trust funds 102,025 149,825 - - Private and Islamic debt securities 118,506 29,866 - - Loan stocks 485 1,194 - -

7,384,407 6,830,322 38,638 888

11,938,636 10,673,254 38,638 888 allowance for impairment loss:Private debt securities (279,387) (367,672) - - Quoted shares (11,527) (8,099) - - Quoted bonds (1,138) (197) - - Unquoted shares (38,320) (37,671) (888) - Mutual funds (51) (55) - -

(330,423) (413,694) (888) -

11,608,213 10,259,560 37,750 888

Included in the available-for-sale securities by the Group are securities in the form of unit trusts managed by CIMB – Principal Asset Management Berhad on behalf of the Group amounting to RM519,924,000 (2007: RM512,321,000).


0Annual Report 2008


6 helD-to-Maturity securities the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Money market instruments:unquotedMalaysian Government securities 149,967 - - - Cagamas bonds 294,817 290,000 - - Bank Negara Malaysia Negotiable Notes - 98,057 - - quoted securitiesOutside MalaysiaBonds 189,997 21,443 - - Islamic bonds 31,530 21,821 - - Medium term notes – Islamic 7,883 3,520 - - Other Government bonds 154,655 - - - unquoted securitiesIn MalaysiaShares 462 270 - - Private debt securities 7,658,366 1,737,931 - - Detachable coupons - - 55,772 84,158Redeemable Preference Shares - - - 1,300,000Redeemable Convertible Unsecured Loan Stock - - 34,345 34,345Loan stocks 32,478 32,478 - - Danaharta Urus Sdn Bhd (“DUSB”) bonds 929,639 1,151,932 - - Outside MalaysiaPrivate debt securities 2,324,724 - - -

11,774,518 3,357,452 90,117 1,418,503Accretion of discount net of amortisation of premium 224,864 197,423 46,989 53,041Less: Allowance for impairment losses (77,952) (25,431) - -

11,921,430 3,529,444 137,106 1,471,544

Included in the held-to-maturity securities are securities transferred from the held for trading category during the last quarter of the year, with the following carrying value and fair value as at 31 December 2008 (2007: no such reclassification permitted): the Group

2008 2007 rM’000 rM’000

Carrying value 6,006,742 -Fair value 5,977,580 -


Annual Report 20080


7 Derivative Financial instruMents, coMMitMents anD continGencies(i) Derivative financial instruments

The following tables summarise the contractual or underlying principal amounts of derivative financial instruments held at fair value through income statement. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at balance sheet date, and do not represent amounts at risk.

Trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Derivative Financial Instruments” Assets and Liabilities respectively.

the Group the company

Principal Fair values Principal Fair values amount assets liabilities amount assets liabilities rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 31 December 2008Foreign exchange derivativesCurrency forwards 8,478,262 125,522 (89,167) - - - Currency swaps 17,073,269 270,194 (301,779) - - - Currency spot 426,064 5,237 (4,345)Currency options 4,346,964 164,470 (250,692) - - - Cross currency interest

rate swaps 13,007,098 409,686 (415,500) - - -

43,331,657 975,109 (1,061,483) - - -

Interest rate derivativesInterest rate swaps 157,826,911 3,260,712 (2,582,749) 150,000 13,142 - Interest rate futures 28,174,595 82,820 (45,444) - - - Interest rate options 3,648,918 15,463 (13,926) - - -

189,650,424 3,358,995 (2,642,119) 150,000 13,142 -

Equity derivativesEquity futures 13,009 1 (420) - - - Commodity options 971,404 986,367 (982,057) - - -Equity options 12,385,319 194,711 (201,303) - - -

13,369,732 1,181,079 (1,183,780) - - -

Credit related contractCredit default swaps 1,010,413 4,207 (58,927) - - -

Held for hedging purposeInterest rate swaps 5,325,688 219,190 (205,117) - - -Cross currency interest

rate swaps 638,300 1,356 (16,854) 350,000 - (16,854)

5,963,988 220,546 (221,971) 350,000 - (16,854)

Total derivative assets/(liabilities) 253,326,214 5,739,936 (5,168,280) 500,000 13,142 (16,854)


0Annual Report 2008


7 Derivative Financial instruMents, coMMitMents anD continGencies (continueD)(i) Derivative financial instruments (continued) the Group the company

Principal Fair values Principal Fair values amount assets liabilities amount assets liabilities rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 31 December 2007Foreign exchange derivativesCurrency forwards 6,352,356 30,538 (69,507) - - - Currency swaps 15,443,596 201,549 (135,046) - - - Currency spots 101,474 127 (85) - - - Currency options 815,123 14,009 (12,541) - - - Cross currency interest rate swaps 8,059,361 246,504 (227,688) 350,000 - (18,711)

30,771,910 492,727 (444,867) 350,000 - (18,711)

Interest rate derivativesInterest rate swaps 127,005,214 1,118,402 (796,239) - - - Interest rate futures 29,816,022 23,897 (12,900) - - - Interest rate options 5,980,000 8,826 (13,055) - - -

162,801,236 1,151,125 (822,194) - - -

Equity derivativesEquity futures 179,525 213 - - - - Equity options 5,237,319 89,997 (235,246) - - - Index futures 44,032 - (1,254) - -

5,460,876 90,210 (236,500) - - -

Credit related contractCredit default swaps 100,000 121 (78) - - -

Held for hedging purposeInterest rate swaps 2,481,600 48,830 (41,091) - - - Cross currency interest rate swaps 1,031,800 - (113,704) - - -

3,513,400 48,830 (154,795) - - -

Total derivative assets/(liabilities) 202,647,422 1,783,013 (1,658,434) 350,000 - (18,711)




7 Derivative Financial instruMents, coMMitMents anD continGencies (continueD)(ii) commitments and contingencies

In the normal course of business, the Group and the Company enter into various commitments and incur certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions and hence, they are not provided for in the Financial Statements.

These commitments and contingencies are not secured over the assets of the Group and the Company, except for certain securities held for trading being pledged as credit support assets for certain over-the-counter derivative contracts.

The commitments and contingencies constitute the following:

2008 2007 risk risk credit weighted credit weighted Principal equivalent * amount Principal equivalent * amount rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

the GroupCredit-relatedDirect credit substitutes 4,651,831 4,620,651 1,881,467 3,615,378 3,615,378 1,907,552 Certain transaction-related contingent items 5,347,027 3,157,433 1,948,393 4,944,127 2,669,273 2,019,119 Short-term self-liquidating trade-related contingencies 3,700,924 737,396 511,436 3,217,282 643,455 383,464 Islamic financing sold directly and indirectly to Cagamas with recourse 294,946 294,946 294,946 575,918 575,918 575,918 Obligations under underwriting agreement 65,000 32,500 32,500 199,798 99,899 58,260 Irrevocable commitments to extend credit:- Maturity not exceeding one year 40,668,836 - - 38,526,957 - - - Maturity exceeding one year 8,754,634 4,377,317 3,722,448 10,058,716 5,029,268 4,396,959 Forward assets purchases 129,052 16 11 5,000 24 12 Miscellaneous commitments and contingencies 5,750,791 321,819 65,012 3,478,135 6,925 2,189

Total credit-related commitments and contingencies 69,363,041 13,542,078 8,456,213 64,621,311 12,640,140 9,343,473


0Annual Report 2008


7 Derivative Financial instruMents, coMMitMents anD continGencies (continueD)(ii) commitments and contingencies (continued)


the Group (continued)Treasury-relatedForeign exchange related contracts:- less than one year 39,809,643 662,249 113,902 22,243,611 623,464 150,696- one year to less than five years 2,119,837 888,286 222,066 6,350,160 695,291 179,014- five years and above 2,040,477 733,002 283,815 3,209,939 562,478 242,587

43,969,957 2,283,537 619,783 31,803,710 1,881,233 572,297

Interest rate related contracts:- less than one year 114,353,287 13,008 2,623 94,113,253 136,220 27,227- one year to less than five years 72,998,755 2,362,599 509,362 63,527,170 2,355,955 479,986- five years and above 7,634,070 2,059,072 442,869 7,642,413 1,208,505 260,744

194,976,112 4,434,679 954,854 165,282,836 3,700,680 767,957

Equity related contracts:- less than one year 4,155,670 117,653 25,823 5,416,844 - - - one year to less than five years 9,156,434 695,202 197,319 44,032 - - - five years and above 57,628 4,365 873 - - -

13,369,732 817,220 224,015 5,460,876 - -

Total treasury-related commitments and contingencies 252,315,801 7,535,436 1,798,652 202,547,422 5,581,913 1,340,254

321,678,842 21,077,514 10,254,865 267,168,733 18,222,053 10,683,727


Annual Report 20080


7 Derivative Financial instruMents, coMMitMents anD continGencies (continueD)(ii) commitments and contingencies (continued)


the companyForeign exchange related contracts:- one year to less than five years 350,000 21,000 10,500 350,000 31,500 15,750

Interest rate related contracts:- one year to less than five years 150,000 19,142 9,571 - - -

500,000 40,142 20,071 350,000 31,500 15,750

* Other than the credit equivalent of RM1,824,499,000 (2007: RM648,029,000) arising from a subsidiary, PT Bank CIMB Niaga Tbk,

which is computed based on Bank Indonesia requirements, the other credit equivalent amounts are arrived at using the credit conversion

factors as per Bank Negara Malaysia guidelines.

Effective 1 October 2008, the following approaches have been adopted for the computation of the credit equivalent and risk weighted assets:

- adoption of bilateral netting as provided under the Standardised Approach Framework which involves the weighting of net claims rather than gross claims with the same counterparties arising out of the full range of forwards, swaps, options and similar derivative contracts.

- Irrevocable commitments to extend credit (undrawn loans) have been revised to include only those undrawn loans whereby all conditions precedent have been met.

Included in the Group’s commitments and contingencies is RM30,840,000 (2007: RM9,502,000) of irrevocable commitments to extend credit with maturity less than one year relating to a jointly controlled entity.

Not included in the above is a performance guarantee given by CIMB Group to Hang Seng Index/Hang Seng Data Services in respect of a breach of licensing agreement by a subsidiary, CIMB Aviva Assurance Berhad. The Directors are of the view that the likelihood of the performance guarantee to be called on is remote.

The Company has confirmed that it will provide continuing financial support to certain of its wholly-owned subsidiaries to meet their liabilities and financial obligations as and when they fall due and to carry on their businesses without significant restriction on their operations.


0Annual Report 2008


8 loans, aDvances anD FinancinG(i) By type the Group the company

2008 2007 2008 2007

rM’000 rM’000 rM’000 rM’000

Overdrafts 7,239,009 6,496,728 - -

Term loans/financing

- Housing loans/financing 29,344,329 22,303,104 - -

- Syndicated term loans 7,342,689 7,983,834 - -

- Hire purchase receivables 13,663,402 14,332,824 - -

- Lease receivables 123,850 177,235 - -

- Factoring receivables 86,888 62,019 - -

- Other term loans/financing 40,006,121 27,659,176 - -

Bills receivable 178,213 257,743 - -

Trust receipts 822,721 963,531 - -

Claims on customers under acceptance credits 5,908,166 6,147,874 - -

Staff loans [of which RM859,684

(2007: RM1,473,000) are to Directors] 765,073 631,118 2,232 2,610

Credit card receivables 3,087,405 2,581,883 - -

Revolving credits 17,791,176 13,974,866 - -

Share margin financing 577,808 1,090,957 - -

Other loans 774,004 9,752 - -

127,710,854 104,672,644 2,232 2,610

Less: Unearned interest (4,878,552) (3,116,760) - -

122,832,302 101,555,884 2,232 2,610

Less: Islamic financing sold to Cagamas (294,946) (575,918) - -

Gross loans, advances and financing 122,537,356 100,979,966 2,232 2,610

Fair value changes arising from fair value hedge 177,618 - - -

Less: Specific allowance (3,524,361) (3,551,988) - -

119,190,613 97,427,978 2,232 2,610

Less: General allowance (1,808,539) (1,523,920) - -

Total net loans, advances and financing 117,382,074 95,904,058 2,232 2,610

(a) Included in the Group’s loans, advances and financing balances are RM2,061,944,000 (2007: RM2,064,458,000) of net loans relating to that of a jointly controlled entity, Proton Commerce Sdn Bhd (“PCSB”). The revenue and risks of these loan accounts are shared equally between CIMB Bank Berhad and the joint venture partner, Proton Edar Sdn Bhd, pursuant to the terms of a Joint Venture Agreement.

(b) Included in other term loans is RM3,021,205,464 (2007:Nil) provided on normal commercial terms which is exempted from general allowance by Bank Negara Malaysia.

(c) During the financial year, the Group has undertaken a fair value hedge on the interest rate risk of the RM2 billion loans using interest rate swaps.


Annual Report 20080


8 loans, aDvances anD FinancinG (continueD)(i) By type (Continued) the Group

2008 2007 rM’000 rM’000

Gross loans hedged 2,000,000 -Fair value changes arising from fair value hedges 177,618 -

2,177,618 -

The fair values of interest rate swaps as at 31 December 2008 were RM202,404,724 (2007: RMNil).

(d) The maturity structure of loans, advances and financing is as follows: the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Within one year 30,397,263 29,016,788 11 36 One year to less than three years 28,092,741 21,853,191 53 92 Three years to less than five years 12,589,732 8,750,813 159 115 Five years and more 51,752,566 41,935,092 2,009 2,367

122,832,302 101,555,884 2,232 2,610Less: Islamic financing sold to Cagamas (294,946) (575,918) - -

122,537,356 100,979,966 2,232 2,610

(ii) By type of customer the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Domestic banking financial institutions 149,356 160,452 - - Domestic non-bank financial institutions- stockbroking companies 42,442 996 - - - others 2,994,551 1,582,798 - - Domestic business enterprises- small medium enterprises 20,766,537 18,072,733 - - - others 30,379,125 25,068,778 - - Government and statutory bodies 3,098,571 69,614 - - Individuals 55,756,328 47,240,371 2,232 2,610 Other domestic entities 3,942,677 4,244,178 - - Foreign entities 5,702,715 5,115,964 - -

122,832,302 101,555,884 2,232 2,610 Less: Islamic financing sold to Cagamas (294,946) (575,918) - -



0Annual Report 2008


8 loans, aDvances anD FinancinG (continueD)(iii) By interest/profit rate sensitivity the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Fixed rate - Housing loans 5,572,131 3,860,958 - - - Hire-purchase receivables 11,422,258 11,995,596 - - - Other fixed rate loans 23,839,813 17,578,063 2,232 2,610 Variable rate- BLR plus 63,528,871 54,932,102 - - - Cost plus 10,056,076 11,817,063 - - - Other variable rates 8,413,153 1,372,102 - -



(iv) Loans, advances and financing analysed by their economic purposes are as follows: the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Personal use 3,200,541 2,731,380 87 148 Credit card 3,087,406 2,581,883 - - Purchase of consumer durables 19,111 21,761 - - Construction 3,277,838 3,245,654 - - Residential property (Housing) 28,933,603 22,473,992 1,828 2,154 Non-residential property 8,726,826 6,067,633 - - Purchase of fixed assets other than land and building 2,843,897 2,741,448 - - Mergers and acquisitions 1,563,682 604,907 - - Purchase of securities 12,161,500 9,075,045 - - Purchase of transport vehicles 13,302,548 13,009,119 317 308 Working capital 38,071,904 35,428,323 - - Other purpose 7,643,446 3,574,739 - -


122,537,356 100,979,966 2,232 2,610


Annual Report 20080


8 loans, aDvances anD FinancinG (continueD)(v) Non-performing loans, advances and financing by economic purpose: the Group

2008 2007 rM’000 rM’000

Personal use 257,288 269,954Credit card 73,565 70,119Purchase of consumer durables 950 1,005Construction 337,397 446,458Residential property (Housing) 1,672,770 1,837,358Non-residential property 438,087 558,248Purchase of fixed assets other than land and building 116,226 130,813Purchase of securities 69,980 119,446Purchase of transport vehicles 375,828 603,421Working capital 2,584,750 3,184,867Other purpose 129,620 103,059

6,056,461 7,324,748

(vi) Movements in the non-performing loans, advances and financing are as follows: the Group

2008 2007 rM’000 rM’000

Balance as at 1 January 7,324,748 8,483,214 Classified as non-performing during the financial year 3,707,932 4,393,349 Reclassified as performing during the financial year (2,618,513) (2,813,118)Amount written back in respect of recoveries (1,162,022) (1,489,787)Arising from acquisition of a subsidiary 67,149 - Amount written off (826,075) (1,178,783)Reclassified to non-current assets held for sale - (9,101)Loans/financing converted to securities - (1,849)Sale of non-performing loans (385,389) - Exchange fluctuation (51,369) (59,177)

Balance as at 31 December 6,056,461 7,324,748 Specific allowance ^ (3,325,574) (3,551,988)

Net non-performing loans, advances and financing 2,730,887 3,772,760

Ratio of net non-performing loans, advances and financing to total loans, advances and financing (including Islamic financing sold to Cagamas) less specific allowances ^ 2.29% 3.85%

^ Excludes specific allowances on performing loans amounting to RM198,787,000 (2007:RM Nil).


0Annual Report 2008


8 loans, aDvances anD FinancinG (continueD)(vii) Movements in the allowance for bad and doubtful debts and financing are as follows: the Group

2008 2007 rM’000 rM’000

specific allowanceBalance as at 1 January 3,551,988 3,399,836 Allowance made during the financial year 1,679,440 2,145,797 Amount written back in respect of recoveries (693,323) (816,349)Amount written back from sale of non-performing loans (61,099) -Amount written off (814,807) (1,162,210)Arising from acquisition of subsidiary 45,670 - Amount transferred in respect of loan converted to securities - (1,849)Reclassified to non-current assets held for sale - (1,090)Allowance made and charged to deferred assets 878 5,062 Sale of non-performing loans (194,711) - Write back in relation to jointly controlled entity (4,329) (9,132)Exchange fluctuation 14,654 (8,077)

Balance as at 31 December 3,524,361 3,551,988

General allowanceBalance as at 1 January 1,523,920 1,479,277 Net allowance made during the financial year 250,711 91,471 Write back in relation to jointly controlled entity - (658)Allowance for loans arising from acquisition of subsidiaries 80,094 - Reclassified to non-current assets held for sale - (465)Exchange fluctuation (46,186) (45,705)

Balance as at 31 December 1,808,539 1,523,920

General allowance as % of gross loans, advances and financing 1.56% 1.55% (including Islamic financing sold to Cagamas) less loans exempted from general allowance by BNM and specific allowance


Annual Report 20080


9 other assets the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Interest receivable 468,114 398,665 - 7,821 Due from brokers and clients net of allowance for doubtful debts of RM6,204,000 (2007: RM8,903,000) 512,972 2,020,387 - - Other debtors, deposits and prepayments net of allowance for doubtful debts of RM86,603,000 (2007: RM24,953,000) 1,831,690 1,006,080 69,305 96,601 Due from insurers, brokers and reinsurers 18,679 1,774 - - Option financing 301,995 293,676 - - Deferred assets (a) 216,292 226,311 - - Foreclosed properties net of allowance for impairment losses of RM90,103,000 (2007: RM26,519,000) 257,490 69,941 - - Credit Support Annex for derivative transactions 464,823 155,557 - -Amounts receivable from sale of non-performing loans 165,871 - - -

4,237,926 4,172,391 69,305 104,422

(a) Deferred assets comprise mainly the carrying value of the excess of liabilities over assets of Common Forge Berhad taken over by SBB Berhad in 2000 and will be reduced progressively by a scheme of arrangement which has been agreed by Bank Negara Malaysia. Movements in deferred assets during the financial year are as follows: the Group

2008 2007 rM’000 rM’000

At 1 January 226,311 247,474 Amortisation for the financial year (10,897) (26,225)Specific allowance made 878 5,062

At 31 December 216,292 226,311


0Annual Report 2008


10 DeFerreD taxationDeferred 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 are shown in the balance sheet, after offsetting: the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Deferred tax assets 543,139 482,835 - - Deferred tax liabilities (14,895) (23,523) (103,399) (13,293)

528,244 459,312 (103,399) (13,293)

The gross movement on the deferred income tax account is as follows: the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

At 1 January 459,312 430,977 (13,293) 12,250 Credited/(charged) to income statement (Note 40)- loans, advances and financing 32,063 88,352 - (230)- unutilised tax losses (7,877) (2,298) - - - excess of capital allowance over depreciation (12,569) (17,352) 49 316 - intangible assets 14,686 19,351 - - - available-for-sale securities 145 (4,227) - - - over-accrual in prior years (163,431) (69,159) 8 - - other temporary differences (88,358) 13,963 (94,698) (25,783) (225,341) 28,630 (94,641) (25,697)Acquisition/(disposal) of subsidiaries 196,909 (3,857) - - Transferred to equity- revaluation reserve – available-for-sale securities 92,829 2,793 - - - hedging reserve – cash flow hedge 4,512 - 4,512 -RCULS 23 154 23 154 Reclassified to non-current assets held for sale - 615 - -

At 31 December 528,244 459,312 (103,399) (13,293)




10 DeFerreD taxation (continueD) the Group the company

2008 2007 2008 2007 rM’000 rM’000 rM’000 rM’000

Deferred tax assets (before offsetting)Loans, advances and financing 409,110 497,695 - - Available-for-sale securities 75,582 641 - - Property, plant and equipment - 1,794 - - Unutilised tax losses 15,720 61,257 - - Other temporary differences 207,508 91,802 4,512 535

707,920 653,189 4,512 535 Offsetting (164,781) (170,354) (4,512) (535)

Deferred tax assets (after offsetting) 543,139 482,835 - -

Deferred tax liabilities (before offsetting)Property, plant and equipment (53,786) (55,191) (164) (213)Available-for-sale securities (27,009) (27,425) - - RCULS - (23) - (23)Intangible assets (79,602) (94,671) - - Other temporary differences (19,279) (16,567) (107,747) (13,592)

(179,676) (193,877) (107,911) (13,828)Offsetting 164,781 170,354 4,512 535

Deferred tax liabilities (after offsetting) (14,895) (23,523) (103,399) (13,293)

11 statutory DePosits with central banksThe non-interest bearing statutory deposits are maintained by certain subsidiaries with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994), the amounts of which are determined at set percentages of total eligible liabilities. The non-interest bearing statutory deposits of a foreign subsidiary and foreign branches of the bank subsidiary are maintained with respective central banks in compliance with the applicable legislation.

12 investMent in subsiDiaries the company

2008 2007 rM’000 rM’000

Shares at cost: Unquoted 7,336,383 7,326,393 Allowance for impairment loss of a subsidiary (1,275) (1,275)

7,335,108 7,325,118


0Annual Report 2008


12 investMent in subsiDiaries (continueD)The direct subsidiaries of the Company are: Percentage of equity held

name of subsidiary Principal activities 2008 2007 % %

CIMB Berhad Dormant 100 100

CIMB Group Sdn Bhd Investment holding 100 100

Commerce MGI Sdn Bhd Dormant 51 51

Commerce Asset Realty Sdn Bhd Holding of properties for letting to a related company 100 100

Commerce Asset Nominees Sdn Bhd ^ Nominee services - 100

Commerce Volantia Sdn Bhd ^ Dormant - 100

Commerce Capital (Labuan) Ltd (Incorporated in the Federal Territory of Labuan) Special purpose vehicle 100 100

iCIMB (MSC) Sdn Bhd Provision of management services and outsourcing 100 100

SBB Berhad* Dormant 100 100

Modified CIMBB Options Holding of accelerated CIMBB’s Modified Trust (unincorporated) EESOS and CEO options - -

^ Company has been voluntarily liquidated during the financial year * Company will be liquidated in 2009 Percentage of equity held Directly by indirectly by ciMb berhad bchb Group

name of subsidiary Principal activities 2008 2007 2008 2007 % % % %

CIMB Trustee Berhad Trustee services 20 - 100 100

The subsidiaries held through CIMB Group (“CIMBG”) are: Percentage of equity held Directly by through ciMbG’s ciMbG subsidiary company


CIMB Bank Berhad (“CIMB Bank”) Commercial banking and related 99.9 99.9 - - financial services

CIMB Investment Bank Berhad Investment banking and the 100 100 - - (“CIMB Investment Bank”) provision of related financial services


Annual Report 20080


12 investMent in subsiDiaries (continueD)The subsidiaries held through CIMB Group (“CIMBG”) are: (Continued) Percentage of equity held Directly by through ciMbG’s ciMbG subsidiary company


PT Bank CIMB Niaga Tbk+ Commercial banking and related 78.3 62.9 - - (formerly known as PT Bank Niaga TBK) (Incorporated in the Republic financial services of Indonesia)

PT Commerce Kapital # Investment holding 99 99 - - (Incorporated in the Republic of Indonesia)

CIMB SI Sdn Bhd Trading in securities and direct 100 100 - - principal investments

CIMB SI I Sdn Bhd Investment holding - - 100 100

CIMB SI II Sdn Bhd Investment holding 100 100 - -

CIMB Private Equity Sdn Bhd Investment holding 100 100 - -

Maju-Uni Concept Sdn Bhd Investment holding - - 100 82.5

Mutiara Makmur Ventures Sdn Bhd Investment holding - - 100 100

Hasrat Eramas Sdn Bhd Investment holding - - 60 60

Semantan Investment Holdings Ltd Investment holding - - 100 100

Platinum Merge Sdn Bhd Investment holding - - 100 100

CIMB-GK Pte Ltd Investment holding 100 100 - - (Incorporated in Singapore)+

CIMB-GK Securities Pte Ltd + Stock and sharebroking - - 100 100

CIMB-GK Research Pte Ltd + Investment research - - 100 100

CIMB-GK Securities (UK) Ltd (Incorporated in United Kingdom) + Securities related business - - 100 100

CIMB-GK Securities (USA), Inc (Incoporated in USA) # Dormant - - 100 100

CIMB-GK Securities (HK) Ltd Securities broking, (Incorporated in Hong Kong) + dealing and trading - - 100 100

CIMB-GK Securities (HK) Nominees Ltd Nominee services - - 100 100 (Incorporated in Hong Kong) +

PT CIMB-GK Securities Indonesia Stockbroking - - 100 100 (Incorporated in the Republic of Indonesia) +


0Annual Report 2008




KL Damansara Sdn Bhd Dormant - - 100 100

CIMB-GK Securities (Thailand) Ltd Securities broking, - - 100 100 (Incorporated in Thailand) + dealing and trading

CIMB Real Estate Sdn Bhd Real estate investment 100 100 - -

CIMB-Mapletree Management Sdn Bhd Real estate fund management - - 60 60

CIMB-Principal Asset Management Establishment and management 60 60 - - Berhad of unit trust fund and fund management business

CIMB-Principal Islamic Asset Management Establishment and management - - 100 100 (formerly known as SBB Asset of unit trust fund and fund Management Sdn Bhd) management business in accordance with shariah principles

CIMB-Principal Asset Management Pte Ltd+ Provision of management and - - 100 100 investment analysis services

PT CIMB-Principal Asset Management + Establishment and management - - 99 99 (formerly known as PT Niaga of unit trust fund and fund Aset Manajamen)(Incorporated in management business the Republic of Indonesia)

CIMB Wealth Advisors Berhad Distribution of unit trust funds - - 100 100

SBBAM Nominees (Tempatan) Sdn Bhd^ Dormant - - - 100

SBBAM Nominees (Asing) Sdn Bhd^ Dormant - - - 100

BAM Nominees (Tempatan) Sdn Bhd^ Dormant - - - 100

BAM Nominees (Asing) Sdn Bhd^ Dormant - - - 100

i-Wealth Advisors Sdn Bhd Provision of management services and distribution of products and services 60 60 - -


Annual Report 20080




CIMB Strategic Assets Sdn Bhd Investment holding 100 100 - -

CIMB Standard Strategic Asset Advisors Sdn Bhd Investment advisory services - - 60 60

CIMB Standard Strategic Asset Advisors Pte Ltd Investment advisory services - - 100 100

South East Asian Strategic Asset (General Partner) Ltd Investment advisory services - - 60 60

SEASAF Sdn Bhd Investment holding - - 100 100

CIMB Strategic Assets (Cayman) Limited Investment holding 100 100 - -

CIMB Private Equity Advisors Sdn Bhd Investment advisory and private equity management 100 100 - -

Commerce International Group Berhad Insurance holding company 100 100 - -

CIMB Aviva Assurance Berhad Life assurance business - - 51 51

CIMB Aviva Takaful Berhad Takaful business - - 51 51

CIMB Insurance Brokers Sdn Bhd Insurance broking - - 100 - (formerly known as Affin Insurance Brokers Sdn Bhd)

PT Commerce International+ Dormant - - 100 - (formerly known as PT Asuransi Jiwa John Hancock Indonesia) (Incorporated in Indonesia)

Commerce Asset Ventures Provision of management 100 100 - - Sdn Bhd (“CAV”) services

Kibaru Manufacturing Sdn Bhd & Manufacturing of rubber - - 71.9 39.2 components

CAV Private Equity Management Sdn Bhd Providing management and - - 100 100 advisory services


0Annual Report 2008




Commerce Technology Ventures Sdn Bhd Investment holding company - - 100 100

Commerce Agro Ventures Sdn Bhd Investment holding company - - 100 100

CAV BAT Sdn Bhd Investment holding company - - 100 -

Commerce Growth Sdn Bhd Investment holding company - - 100 -

Top Sigma Sdn Bhd Investment holding company - - 100 -

Prima Special Sdn Bhd Investment holding company - - 100 -

Edufuture Sdn Bhd Investment holding company - - 100 -

Metro Bumimas Sdn Bhd Investment holding company - - 100 -

Sedia Fajar Sdn Bhd Investment holding company - - 100 -

Tetap Fajar Sdn Bhd Investment holding company - - 100 -

Vital Remarks Sdn Bhd Manufacturing and distribution - - 51 51 of halal meat based products

Ekspedisi Yakin Sdn Bhd # Dormant - - 100 100

Titan Setup Sdn Bhd # Investment holding company - - 100 100

Commerce-KPF Ventures Sdn Bhd Investment holding company - - 51 51

Qualitas Healthcare Corporation Investment holding with - - 21.4 42.1 Sdn Bhd Ω subsidiaries providing primarily healthcare services

Radiant Direction Sdn Bhd # Dormant - - 100 100

Quantum Epic Sdn Bhd # Dormant - - 100 100

Goodmaid Chemical Corporation Manufacturing of household - - 99.6 99.6 Sdn Bhd # care products

Goodmaid Marketing Sdn Bhd # Trading and marketing of household care products - - 100 100


Annual Report 20080




Goodmaid Industrial Supplies Sdn Bhd# Trading of industrial chemical products - - 100 100

EQ Industry Supplies Sdn Bhd # Trading and marketing of industrial chemicals - - 100 100

Itopia Sdn Bhd # Provision of telephony infrastructure, products and services - - 53.2 53.2

CIMB Islamic Investment House BSCI &+ Islamic investment 50 50 - -

^ Company has been voluntarily liquidated during the financial year * Company will be liquidated in 2009 & Deemed a subsidiary by virtue of board control over the company’s financial and operating policiesΩ Deemed a subsidiary in 2007 by virtue of board control over the company’s financial and operating policies and deemed

an associate in 2008 by virtue of board significant influence over the company’s financial and operating policies# Audited by a firm other than member firms of PricewaterhouseCoopers International Limited+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal

entity from PricewaterhouseCoopers, Malaysia

All the above subsidiaries, unless otherwise stated, are incorporated in Malaysia.

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Investment Bank are: Percentage of equity held Directly by ciMb through ciMb investment bank investment bank’s subsidiary company


CIMB Holdings Sdn Bhd Investment holding 100 100 - -

CIMB Securities (Hong Kong) Ltd + Dormant - - 100 100 (Incorporated in Hong Kong)

CIMBS Sdn Bhd Dormant - - 100 100

CIMSEC Nominees (Tempatan) Sdn Bhd Nominee services 100 100 - -

CIMSEC Nominees (Asing) Sdn Bhd Nominee services 100 100 - -


0Annual Report 2008


12 investMent in subsiDiaries (continueD)The subsidiaries held through CIMBG’s direct subsidiary, CIMB Investment Bank are: (Continued) Percentage of equity held Directly by ciMb through ciMb investment bank’s subsidiary company


CIMSEC Nominees Sdn Bhd Nominee services 100 100 - -

CIMB Futures Sdn Bhd Futures broking 100 100 - -

CIMB Nominees (Tempatan) Sdn Bhd Nominee services 100 100 - -

CIMB Nominees (Asing) Sdn Bhd Nominee services 100 100 - -

CIMB Discount House Berhad Dormant 100 100 - -

CIMB Trustee Berhad Trustee services - - 20 -

+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers, Malaysia.

The subsidiaries held through CIMBG’s direct subsidiary, CIMB Bank are: Percentage of equity held Directly by through ciMb ciMb bank bank’s subsidiary


Bumiputra-Commerce Factoring Berhad * Dormant 100 100 - -

CIMB FactorLease Berhad Leasing, hire purchase 100 100 - - financing, debt factoring, loan management and property management

CIMB Trustee Berhad Trustee services 20 20 40 80

BBMB Unit Trust Management Berhad* Dormant 100 100 - -

CIMB Bank (L) Limited Offshore banking 100 100 - - (Incorporated in the Federal Territory of Labuan)

Bumiputra-Commerce Finance Berhad Dormant 100 100 - -

CIMB Islamic Funds DCC Ltd Fund Company - - 100 100 (Incorporated in Brunei)

iCIMB (Malaysia) Sdn Bhd Provision of management 100 100 - - services and outsourcing

Bumiputra-Commerce Properties Sdn Bhd* Dormant 100 100 - -

CIMB Group Nominees Sdn Bhd Nominee services 100 100 - -

CIMB Group Nominees (Tempatan) Nominee services 100 100 - - Sdn Bhd

CIMB Group Nominees (Asing) Sdn Bhd Nominee services 100 100 - -


Annual Report 20080


12 investMent in subsiDiaries (continueD)The subsidiaries held through CIMBG’s direct subsidiary, CIMB Bank are: (Continued) Percentage of equity held Directly by through ciMb ciMb bank bank’s subsidiary


BBMB Securities (Holdings) Sdn Bhd* Investment holding company 100 100 - -

BBMB Futures Sdn Bhd* Dormant - - 100 100

Semerak Services Sdn Bhd Service company 100 100 - -

BOC Nominees Sdn Bhd* Dormant 100 100 - -

BOC Nominees (Tempatan) Sdn Bhd* Dormant 100 100 - -

BOC Nominees (Asing) Sdn Bhd* Dormant 100 100 - -

BBMB Finance (Hong Kong) Ltd Dormant 100 100 - - (Incorporated in Hong Kong)

BBMB Finance Nominee Dormant - - - 100 (Hong Kong) Ltd ^

(Incorporated in Hong Kong)

Bumiputra Nominee Ltd Dormant - 100 - - (Incorporated in the United Kingdom)

South East Asian Bank Ltd Commercial banking and (Incorporated in the Republic related financial services - 60 - - of Mauritius)+

CIMB Islamic Bank Berhad Islamic banking 100 100 - -

CIMB Trust Ltd (Incorporated in the Federal Trustee services 100 100 - - Territory of Labuan)

Bumiputra-Commerce Corporate Nominee services - - 100 100 Services Ltd (Incorporated in the Federal Territory of Labuan)

BC Management Services Sdn Bhd Nominee services - - 100 100 (Incorporated in the Federal Territory of Labuan)


0Annual Report 2008




CIMB (L) Ltd (Incorporated in the Federal Offshore banking 100 100 - - Territory of Labuan)

Halyconia Asia Fund Limited Open-ended investment fund - - 100 100 (Incorporated in British Virgin Islands)

CIMB Private Equity General Fund management - - 100 100 Partner Limited (Incorporated in the Federal Territory of Labuan)

CIMB Mezzanine General Partner Limited Fund management - - 100 100 (Incorporated in the Federal Territory of Labuan)

I-Prestige Sdn Bhd Special purpose vehicle 100 100 - -

Southern Nominees (Tempatan) Sdn Bhd Nominee services 100 100 - -

Southern Nominees (Asing) Sdn Bhd Nominee services 100 100 - -

S.B. Venture Capital Corporation Sdn Bhd Investment holding and 100 100 - - provision of management services

SBB Futures Sdn Bhd* Investment holding 100 100 - -

BHLB Properties Sdn Bhd Property ownership and 100 100 - - management

SBB Nominees (Tempatan) Sdn Bhd Nominee services 100 100 - -

SBB Nominees (Asing) Sdn Bhd Nominee services 100 100 - -

CIMB Bank Nominees (S) Sdn Bhd + Nominee services 100 100 - -

SBB Capital Corporation Special purpose vehicle 100 100 - -






SFB Auto Berhad Dormant 100 100 - -

Common Forge Berhad Dormant 100 100 - -

Premier Fidelity Berhad Dormant 100 100 - -

Southern Finance Company Berhad ^ Dormant - 100 - -

Perdana Visi Hartanah Sdn Bhd Property investment 100 100 - -

SFB Nominees (Tempatan) Sdn Bhd* Nominee services 100 100 - -

SFB Nominees (Asing) Sdn Bhd^ Nominee services - 100 - -

SBB Capital Markets Sdn Bhd* Investment holding 100 100 - -

SBB Securities Sdn Bhd Stock and share broking - - - 100

Mohaiyani Sdn Bhd Investment holding - - 100 100

Mohaiyani Nominees Sdn Bhd* Dormant - - 100 100

Mohaiyani Nominees (Tempatan) Sdn Bhd* Dormant - - 100 100

Mohaiyani Nominees (Asing) Sdn Bhd* Dormant - - 100 100

Cempaka Nominees (Tempatan) Sdn Bhd^ Dormant - 100 - -

BHLB Trustee Berhad Trustee services - - 73 73

RC Nominees (Tempatan) Sdn Bhd^ Nominee services - - - 100

RC Nominees (Asing) Sdn Bhd^ Nominee services - - - 100

SBB Sec Research Sdn Bhd^ Providing research and - - - 100 management services


0Annual Report 2008




BHL Venture Berhad* Investment holding 100 100 - -

BHLB Asset Management Sdn Bhd* Investment holding - - 100 100

SBB Unit Trust Management Bhd* Dormant - - 100 100

S.B. Properties Sdn Bhd Property ownership and 100 100 - - management

Elite Constant Development Sdn Bhd Construction of building - - 100 100

SFB Development Sdn Bhd Property investment 100 100 - -

Seal Line Trading Sdn Bhd Property investment - - 100 100

Southern Investment Bank Berhad Merchant banking business 80 80 - -

Perdana Nominees (Tempatan) Sdn Bhd Nominee services - - 80 80

Perdana Nominees (Asing) Sdn Bhd * Nominee services - - 80 80

Perdana Mutual Fund Berhad * Dormant - - 80 80

Auto ABS One Berhad ∞ Special purpose vehicle - - - -

Commerce Returns Bhd ∞ Special purpose vehicle - - - -


Annual Report 20080


12 investMent in subsiDiaries (continueD)The subsidiaries held through PT Bank CIMB Niaga Tbk are: Percentage of equity held

name of subsidiary Principal activities 2008 2007 % %

PT Saseka Gelora Finance Financing services 95.9 95.9 (Incorporated in the Republic of Indonesia)

PT Kencana Internusa Finance Financing Services 51 - (formerly known as PT Primus Financial Services) (Incorporated in the Republic of Indonesia)

* Company will be liquidated in 2009^ Company has been voluntarily liquidated during the financial year# Not audited by any member firm of PricewaterhouseCoopers International+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers Malaysia∞ In accordance with IC 112-Consolidation : “Special Purpose Entities”, Auto ABS One Berhad (“Auto ABS”) and Commerce Returns Bhd are consolidated in the Group as the substance of the relationship between CIMB Bank and the two special purpose entities indicate that both are controlled by CIMB Bank

All the subsidiaries, unless otherwise stated, are incorporated in Malaysia.

13 investMent in associates the Group

2008 2007 rM’000 rM’000 Share of net assets other than premium of associates 366,344 101,814 Premium on acquisition 419,722 48,314

786,066 150,128

the company

2008 2007 rM’000 rM’000

Unquoted shares, at cost 3,834 3,834

Included in premium on acquisition is RM379,003,000 (2007:Nil) relating to the acquisition of 42.13% equity interest in BankThai Public Company Limited during the financial year which is a provisional amount.


0Annual Report 2008


13 investMent in associates (continueD)The Group’s share of income and expenses of associates are as follows:

2008 2007 rM’000 rM’000

Income 126,869 56,302 Expenses (126,220) (47,597)Allowance for losses on loans and advances (24,911) - Allowance for impairment losses (19,044) -

(Loss)/profit before taxation (43,306) 8,705 Taxation (2,287) (1,021)

(Loss)/profit for the financial year (45,593) 7,684

The Group’s share of the assets and liabilities of the associates are as follows:

2008 2007 rM’000 rM’000

Total assets 9,186,856 266,651Total liabilities (8,820,512) (164,837)

Net assets 366,344 101,814

The direct associate is: Percentage of equity held

name of associate Principal activities 2008 2007 % %

Rangkaian Segar Sdn Bhd Establishment, operation and management 20 20 of an electronic collection system for toll and transport operators


Annual Report 20080


13 investMent in associates (continueD)The associates held through CAV are: Percentage of equity held


IHS Innovations Sdn Bhd Provider and consultant specialising in 20 20 reliability testing systems, vision and imaging systems

Meru Utama Sdn Bhd General traders and rental of media space on airport 20 20 baggage trolleys

Evermal Resources Sdn Bhd Investment holding company 23 38.2 In-fusion Solutions Sdn Bhd Provision of educational and training related solutions 20.3 20.3 and services to various government bodies and private institutions

Fortlab Holdings Sdn Bhd Investment holding company 40 40

Qualitas Healthcare Corporation Sdn Bhd Provision of healthcare sevices 16 31

The associate held through CAV’s subsidiary, Ekspedisi Yakin Sdn Bhd is: Percentage of equity held


Opera Café Sdn Bhd Leisure and entertainment services 49 49

The associate held through CAV’s subsidiary, Commerce-KPF is: Percentage of equity held


Qualitas Healthcare Corporation Sdn Bhd Provision of healthcare services 5.4 11

The associate held through CAV’s indirect subsidiary, Commerce Agro Ventures Sdn Bhd is: Percentage of equity held


Landas Bina Aquaventures Sdn Bhd Aquaculture 40 40


0Annual Report 2008


13 investMent in associates (continueD)The associates held through CAV’s subsidiary, Commerce Technology Ventures Sdn Bhd are: Percentage of equity held


Dbix Systems Sdn Bhd Provision of IT and internet solutions for enterprises 34.9 34.9

Sesama Equilab Sdn Bhd Dormant 29 29 Consolidated Liquid Eggs Sdn Bhd Dormant 30 30 Explorium (M) Sdn Bhd Provider for customer and marketing management 30 30 services, e-learning, brand experience

In-fusion Solutions Sdn Bhd Provision of educational and training related solutions 20.3 20.3 and services to various government bodies and private institutions

The associate held through CIMB Bank’s subsidiary, CIMB Bank (L) Limited is: Percentage of equity held


Navis-CIMB General Partner Ltd Fund management - 25

CIMB Bank (L) Limited has disposed its entire equity interest in Navis-CIMB General Partner Ltd in September 2008.

The associate held through CIMB Bank is: Percentage of equity held


BankThai Public Company Limited Banking 42 -

As set out in Note 51(a) (i) of these Financial Statements, on 13 January 2009, BankThai Public Company Limited became a 92.04% owned subsidiary.

The associate held through CIMB Group’s subsidiary, CIMB SI I Sdn Bhd is: Percentage of equity held


Engage Media Sdn Bhd Operates out of home digital media network 35 35


Annual Report 20080


13 investMent in associates (continueD) The associate held through CIMB Group’s subsidiary, CIMB SI II Sdn Bhd is: Percentage of equity held


Tune Money Sdn Bhd Online financial services 25 25

The associates held through CIMB Group’s subsidiary, CIMB Private Equity Sdn Bhd is: Percentage of equity held


CIMB Mezzanine 1 Sdn Bhd Investment holding 18.5 -CIMB Private Equity 1 Sdn Bhd Investment holding 28.2 -Ekuiti Erasama Sdn Bhd Investment holding 19.7 -Bigbite Ventures Sdn Bhd Investment holding 20.0 -Big Ship Sdn Bhd Investment management company 20.3 -Eagle Eye Sdn Bhd Investment holding 14.1 -Silverbell Capital Sdn Bhd Investment holding 28.2 -Silverbell Investment Sdn Bhd Investment holding 28.2 -

The associate held through PT Bank CIMB Niaga is: Percentage of equity held


PT Asuransi Cigna Life insurance activities 20 20

14 investMent in Jointly controlleD entity the Group

2008 2007 rM’000 rM’000

Share of net assets of joint venture 127,701 124,448

Unquoted shares, at cost 125,000 125,000Less: Writeback of/(allowance for) impairment loss 2,701 (552)

127,701 124,448


0Annual Report 2008


14 investMent in Jointly controlleD entity (continueD)The joint venture held under CIMB Group is as follows: Percentage of equity held through subsidiary

name Principal activities 2008 2007 % %

Proton Commerce Sdn Bhd Financing of vehicles 50 50

On 22 October 2003, Bumiputra-Commerce Finance Berhad (“BCF”) entered into a joint venture agreement with Proton Edar Sdn Bhd (“PESB”) for the purposes of building and operating a competitive vehicle financing business in Malaysia for vehicles distributed by PESB. Subsequently, a joint venture company was incorporated under the name of Proton Commerce Sdn Bhd (“PCSB”) which is 50%:50% owned by BCF and PESB respectively. PCSB is primarily responsible for developing, managing and marketing hire purchase loans for vehicles sold to the customers of PESB. Pursuant to the joint venture, BCF issued RM200 million Perpetual Preference Shares (“PPS”) which were fully subscribed by PCSB. Pursuant to the vesting of the finance company business and the related assets and liabilities of BCF to CIMB Bank and the subsequent capital reduction exercise undertaken by BCF, the BCF PPS were cancelled, and CIMB Bank issued RM200 million PPS to PCSB.

Under the joint venture, the assets and liabilities of PCSB are recorded and accounted for by CIMB Bank in a Special Project Account (“SPA”) for and on behalf of PCSB. The respective balances in this SPA as at balance sheet date are consolidated and reported as the assets and liabilities of CIMB Bank Group.

All income and expenses arising from PCSB’s activities are recorded in the books of PCSB. At CIMB Bank Group, the 50% share of profit and loss from the operations of PCSB is shown as a line item in the income statement. For the 12 months period ended 2008, PCSB recorded a profit after taxation of RM6,506,098 (2007: RM6,820,000) and CIMB Bank Group’s share of this profit is RM3,253,049 (2007: RM3,410,000).

The assets and liabilities in the SPA as at 31 December are as follows:

2008 2007 rM’000 rM’000

assetsCash and short-term funds 237 237Loans and advances 2,061,944 2,064,458Other assets 4,423 4,647Held-to-maturity securities 90,000 90,000

total assets 2,156,604 2,159,342

liabilities and equityDeposits and placements of banks and other financial institutions 1,030,504 741,833Amount due to Cagamas Berhad 68,158 291,884Other liabilities 452,539 442,579Amount due to related company (Note 22) 405,403 483,046


Perpetual preference shares 200,000 200,000

total liabilities and equity 2,156,604 2,159,342

commitments and contingencies 30,840 17,360


Annual Report 20080


14 investMent in Jointly controlleD entity (continueD)The Group’s share of income and expenses of the joint venture is as follows:

2008 2007 rM’000 rM’000

Income 57,224 27,139Expenses (53,175) (23,314)

Profit before taxation 4,049 3,825 Taxation (796) (415)

Net profit for the financial year 3,253 3,410

The Group’s share of the assets and liabilities of the joint venture other than those that are held in trust by CIMB Bank is as follows:

2008 2007 rM’000 rM’000

Non-current assets 301,371 339,062Current assets 59,368 69,537Current liabilities (35,283) (35,796)Long term liabilities (197,755) (248,355)

Net assets 127,701 124,448


0Annual Report 2008


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-

-

-

-

(8

,289

) -

-

-

-

(8

,289

)

Re

class

ified

to n

on-c

urre

nt

asse

ts h

eld fo

r sale

5

3 (i)

-

-

-

-

(45)

3

13

-

-

-

-

268

Ex

chan

ge fl

uctu

ation

(11,

020)

(2

,936

) -

(8

,290

) (1

7,11

7)

844

(6

72)

(765

) (5

,204

) 1

85

(44,

975)

At3

1De

cem

ber

2

31,7

22

367

,398

1

58,2

19

42,

565

9

91,5

44

663

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6

0,09

4

103

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2

27,0

86

360

,188

3

,205

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mul

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dep

reci

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n

At

1 J

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-

8

2,32

1

60,

315

2

5,43

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481

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3

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29,

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4

4,12

7

9,6

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-

1,0

97,8

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Char

ge fo

r the

fina

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year

-

6,3

49

3,5

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2,6

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109

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6

5,56

0

9,5

39

13,

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3

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-

2

14,3

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Arisi

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of s

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-

61,

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-

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7

6,01

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2,3

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558

1

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284

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ssific

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s

-

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1,5

19

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Re

class

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(to)/f

rom

inta

ngibl

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sets

1

9

-

-

-

-

-

(1,8

86)

-

-

-

-

(1,8

86)

Recla

ssifie

d to

non

-cur

rent

as

sets

held

for s

ale

53

(i) -

-

-

-

(4

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2

19

Exch

ange

fluc

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ion

-

(1

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39

(10,

734)

(9

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8)

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) (1

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(2

1,33

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008

-

1

46,4

88

65,

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15,

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46,8

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424

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8,99

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48,

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1

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Netb

ook

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31

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231

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2

20,9

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92,

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26,

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3

44,6

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239

,179

2

1,10

2

55,

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7

6,51

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1,6

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15

Pr

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Co

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RM

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RM

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RM

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RM

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RM

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RM

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At 1

Jan

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206,

736

194,

211

188,

721

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55

756,

194

450,

231

47,7

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dition

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1

49,8

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146

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8

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osals

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ten

off

-

(1

0,77

5)

(161

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(5

8,98

8)

(65,

027)

(1

,015

) (1

6,12

6)

(3,9

84)

-

(156

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)

Tr

ansf

er/re

class

ificat

ions

(4

8,79

6)

71,

117

(3

00)

(10,

675)

(3

3,87

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28,

655

(1

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) (1

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) 5

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-

Recla

ssifie

d fro

m p

repa

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se p

aym

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1

7

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2,7

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-

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1

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(to)/f

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ent p

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1

6

16,

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0,62

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(42,

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-

-

-

-

-

1

5,64

9

Re

class

ified

to n

on-c

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nt

asse

ts h

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r sale

5

3 (i)(

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(750

) (5

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) (2

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) (9

77)

(19,

744)

(1

9,42

9)

-

(1,3

20)

-

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(49,

861)

Exch

ange

fluc

tuat

ion

(1

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) 4

15

(251

) (3

43)

(646

) (1

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) 1

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-

-

(2,0

82)

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1De

cem

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1

71,6

81

247

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1

54,6

08

54,

466

7

92,8

13

540

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5

4,59

7

96,

236

1

4,74

7

269

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2

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Accu

mul

ated

dep

reci

atio

n

At

1 J

anua

ry

-

7

9,39

2

64,

396

2

5,70

5

444

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3

78,4

46

21,

366

4

7,43

1

7,9

16

-

1,06

8,94

2

Ch

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for t

he fi

nanc

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ar

-

5,

108

3,47

8 57

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65

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9,

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8,06

8 1,

724

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193

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spos

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f

-

(2,1

95)

(161

) -

(4

1,87

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(65,

027)

(8

61)

(13,

651)

(2

,263

) -

(1

26,0

32)

Tran

sfer

/recla

ssific

ation

s

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(3,3

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(4

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77

(635

) 3

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2

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-

-

Recla

ssifie

d fro

m p

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se p

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ents

1

7

-

-

40

-

-

-

-

-

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-

4

0

Re

class

ified

(to)/f

rom

inve

stm

ent p

rope

rties

1

6

-

3,6

86

(9,1

41)

-

-

-

-

-

-

-

(5,4

55)

Recla

ssifie

d to

non

-cur

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as

sets

held

for s

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53

(i)(ii)(

iii)(v)

-

(3

60)

(969

) (7

59)

(15,

055)

(1

4,85

1)

-

(1,0

15)

-

-

(33,

009)

Exch

ange

fluc

tuat

ion

-

1

3

(74)

(1

23)

-

(348

) 6

89

(39)

-

-

1

18

At3

1De

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-

8

2,32

1

60,

315

2

5,43

0

481

,938

3

64,1

43

29,

952

4

4,12

7

9,6

41

-

1,0

97,8

67

Netb

ook

valu

eat

31

Dece

mbe

r200

7

171

,681

1

65,4

47

94,

293

2

9,03

6

310

,875

1

76,0

28

24,

645

5

2,10

9

5,1

06

269

,360

1

,298

,580


0Annual Report 2008


15 ProPerty, Plant anD equiPMent (continueD)

Renovations, Buildings Buildings office Computer on on equipment, equipment Capital freehold leasehold furniture and Motor workin TheCompany land land andfixtures software vehicles progress Total 2008 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 31 45,687 3,196 1,113 1,907 259,125 311,059 Additions - - 12 59 761 91,952 92,784 Disposals/written off - - - (518) (596) - (1,114)

At31December 31 45,687 3,208 654 2,072 351,077 402,729

Accumulateddepreciation At 1 January 31 16,712 1,097 645 1,516 - 20,001 Charge for the financial year - 1,369 236 47 342 - 1,994 Disposals/written off - - - (102) (584) - (686)

At31December 31 18,081 1,333 590 1,274 - 21,309

Netbookvalueat31December2008 - 27,606 1,875 64 798 351,077 381,420

Renovations, Buildings Buildings office Computer on on equipment, equipment Capital freehold leasehold furniture and Motor workin TheCompany land land andfixtures software vehicles progress Total 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost At 1 January 31 45,687 3,096 1,110 2,340 75,000 127,264 Additions - - 101 3 - 184,125 184,229 Disposals/written off - - (1) - (433) - (434)

At31December 31 45,687 3,196 1,113 1,907 259,125 311,059

Accumulateddepreciation At 1 January 31 15,340 943 577 1,579 - 18,470 Charge for the financial year - 1,372 155 68 283 - 1,878 Disposals/written off - - (1) - (346) - (347)

At31December 31 16,712 1,097 645 1,516 - 20,001

Netbookvalueat31December2007 - 28,975 2,099 468 391 259,125 291,058


Annual Report 20080


16 investMent ProPerties

buildings buildings on buildings on on leasehold leasehold Freehold freehold land less land 50 land land than 50 years years or more totalthe Group rM’000 rM’000 rM’000 rM’000 rM’000

2008 At 1 January - - 44,519 52,902 97,421 Fair value adjustments - - (2,141) - (2,141)Exchange fluctuation - - 2,321 2,574 4,895

at 31 December - - 44,699 55,476 100,175

2007at 1 January 16,044 46,938 - - 62,982 Reclassified (to)/from property, plant and equipment (Note 15) (16,044) (46,938) 8,709 33,169 (21,104)Fair value adjustments - - 36,384 19,774 56,158 Exchange fluctuation - - (574) (41) (615)

at 31 December - - 44,519 52,902 97,421

buildings on Freehold freehold land land totalthe company rM’000 rM’000 rM’000

2008cost at 1 January/31 December 1,708 4,149 5,857

accumulated depreciationAt 1 January - 1,142 1,142 Charge for the financial year - 125 125

at 31 December - 1,267 1,267

net book value at 31 December 2008 1,708 2,882 4,590

2007 cost at 1 January/31 December 1,708 4,149 5,857

accumulated depreciationAt 1 January - 1,017 1,017 Charge for the financial year - 125 125

at 31 December - 1,142 1,142



0Annual Report 2008


16 investMent ProPerties (continueD)The investment properties are valued annually at fair value based on market values determined by independent qualified valuers. The following amounts have been reflected in the income statement: the Group

2008 2007 rM’000 rM’000

Rental income 3,287 3,024Operating expenses arising from investment properties that generated the rental income (426) (357)

17 PrePaiD lease PayMents

leasehold leasehold land 50 land less years or than 50 more years totalthe Group rM’000 rM’000 rM’000

2008 cost At 1 January 68,063 2,675 70,738 Disposals (3,426) - (3,426)Transfer/reclassifications (2,934) 2,934 - Exchange fluctuation 17 213 230

At 31 December 61,720 5,822 67,542

amortisation At 1 January 15,739 1,259 16,998 Amortisation during the financial year 1,453 135 1,588 Disposals (1,555) - (1,555)Transfer/reclassifications (2,059) 2,059 - Exchange fluctuation 6 119 125

At 31 December 13,584 3,572 17,156



Annual Report 20080


17 PrePaiD lease PayMents (continueD)

leasehold leasehold land 50 land less years or than 50 more years totalthe Group note rM’000 rM’000 rM’000

2007costAt 1 January 75,169 2,719 77,888 Additions 532 10 542 Disposals (2,410) - (2,410)Reclassified to property, plant and equipment 15 (1,960) - (1,960)Reclassified to non-current assets held for sale 53 (ii) (v) (1,176) - (1,176)Exchange fluctuation (2,092) (54) (2,146)

At 31 December 68,063 2,675 70,738

amortisation At 1 January 15,853 1,292 17,145 Amortisation during the financial year 2,021 221 2,242 Disposals (16) - (16)Reclassified to property, plant and equipment 15 (40) - (40)Reclassified to non-current assets held for sale 53 (ii) (v) (179) - (179)Exchange fluctuation (1,900) (254) (2,154)

At 31 December 15,739 1,259 16,998


leasehold land 50 years or more totalthe company rM’000 rM’000

2008cost At 1 January/31 December 6,792 6,792

amortisation At 1 January 2,118 2,118 Amortisation during the financial year 158 158

At 31 December 2,276 2,276

net book value at 31 December 2008 4,516 4,516


0Annual Report 2008


17 PrePaiD lease PayMents (continueD) leasehold land 50 years or more totalthe company rM’000 rM’000

2007 cost At 1 January/31 December 6,792 6,792

amortisation At 1 January 1,960 1,960 Amortisation during the financial year 158 158

At 31 December 2,118 2,118

net book value at 31 December 2007 4,674 4,674

18 GooDwill the Group

2008 2007 rM’000 rM’000

cost At 1 January 4,480,858 4,503,692 Goodwill arising from business combinations (Note 51): 2,062,388 102,349 - Kibaru Manufacturing Sdn Bhd - 13,007 - Vital Remarks Sdn Bhd - 2,570 - CIMB Wealth Advisors Berhad and SBB Assets Management Sdn. Bhd. - 86,772 - Acquisition and merger of PT Bank Lippo Tbk and PT Bank Niaga Tbk 2,060,888 - - Affin Insurance Brokers 1,500 -

Goodwill arising from additional acquisition of additional interest in subsidiary 191,827 2,025 Disposal of interest in insurance subsidiaries (Note 51 (d) (ii), (iii)) - (50,634)Diposal of Qualitas 15,396 -Disposal of Vital Remarks 2,570 -Reclassified to non-current assets held for sale (Note 53) - (76,574)Exchange fluctuation (50,055) -

At 31 December 6,702,984 4,480,858

impairmentAt 1 January (6,739) - Impairment charge during the financial year - (9,739)Reclassified to non-current assets held for sale (Note 53 (iv)) - 3,000

At 31 December (6,739) (6,739)

net book value at 31 December 6,696,245 4,474,119


Annual Report 20080


18 GooDwill (continueD)allocation of goodwill to cash-generating-unitsGoodwill has been allocated to the following cash-generating-units (“CGUs”). These CGUs do not carry any intangible assets with indefinite useful lives:

2008 2007acquisition cGu rM’000 rM’000 CIMB Investment Bank Berhad Corporate and Investment Banking 21,547 21,547CIMB-GK Pte Ltd Corporate and Investment Banking 153,081 153,081CIMB SI Berhad Corporate and Investment Banking 19,246 19,246Commerce Asset Ventures Berhad Asset Management 40,184 50,210Insurance entities Insurance 28,049 26,549PT Bank CIMB Niaga Tbk Foreign Banking Operations 2,507,346 226,639SBB Berhad Retail Banking 1,101,075 1,101,075 Business Banking 911,000 911,000 Corporate and Investment Banking 419,000 419,000 Islamic Banking 136,000 136,000 Direct Banking Group 587,000 587,000 Treasury 537,000 537,000 Others - arising from acquisition of SBB Group in 2006 39,000 76,000CIMB-Principal Asset Asset Management 281,772 281,772 Management BerhadOthers Others - arising from business combinations prior to 2007 - 1,574 Less: - reclassification to non-current assets held for sale (Note 53) (35,000) (73,574)Exchange fluctuation (50,055) -

6,696,245 4,474,119


0Annual Report 2008


18 GooDwill (continueD)impairment test for goodwillValue-in-useThe recoverable amount of CGUs which are not classified as held for sale is determined based on the value-in-use calculations. These calculations use pre-tax cash flow projections based on the 2009 financial budgets approved by the Board of Directors, projected for 5 years based on the average historical Gross Domestic Product (“GDP”) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the five-year period are extrapolated using the estimated growth rates and discounted using pre-tax discount rates which reflect the specific risks relating to the CGU. The cash flow projections are derived based on a number of key factors including the past performance and management’s expectation of market developments.

The estimated growth rates and discount rates used value-in-use calculations are as follows:

Growth Discount rate rate

Corporate and Investment Banking 0.00% - 5.00% 8.00% - 17.10%Asset Management 3.50% - 5.00% 9.80%Foreign Banking Operation 1.49% 13.10%Consumer Banking 5.00% 9.80%Treasury and Investment 5.00% 9.80%Others 1.50% - 5.00% 9.80% - 10.50%

Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any CGU to exceed its recoverable amount.

Fair value less costs to sellFor the CGUs which are associated with the proposed disposals as disclosed in Note 53, the recoverable amount is determined based on the estimated disposal price less any costs to sell. The disposal price is determined based on the net tangible assets of the affected business as at 31 December 2008, plus a premium of RM20 million which has been agreed by both CIMB Bank and the acquirer of the business.

For the CGUs not held for sale, the recoverable amount determined using fair value less costs to sell, is based on observable quoted market prices.

impairment chargeThe impairment charge of RMNil (2007: RM6,739,000) during the year arises from the Insurance CGU.




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361




19 IntangIbleassets(ContInueD)

Creditcard securities customer Core stockbroking Computer relationship deposits license* software totalthegroup RM’000 RM’000 RM’000 RM’000 RM’000

2007 Costorvaluation At 1 January 153,091 263,612 28,982 236,225 681,910 Additions during the financial year - - - 91,188 91,188 Disposals during the financial year - - - (41,365) (41,365)Exchange fluctuation - - 583 (163) 420

At 31 December 153,091 263,612 29,565 285,885 732,153

amortisationandimpairment At 1 January 6,833 17,125 - 130,670 154,628 Amortisation during the financial year 12,301 32,303 - 52,872 97,476 Disposals during the financial year - - - (11,974) (11,974)Impaired during the financial year - - - 363 363 Exchange fluctuation - - - (12,000) (12,000)

At 31 December 19,134 49,428 - 159,931 228,493

netbookvalueat 31December2007 133,957 214,184 29,565 125,954 503,660

* Securities stockbroking license is not amortised as it has an infinite life. It is assessed for impairment on an annual basis.

The valuation of credit card customer relationship was determined through the sum of the discounted future excess earnings attributable to existing credit card customers over the remaining life span of the customer relationships. Income from existing credit card base was projected, adjusted for expected attrition and taking into account applicable costs to determine future excess earnings. The discount rate used in the valuation of credit card customer relationship was 11.7%, which is arrived at using the weighted average cost of capital adjusted for the risk premium after taking into consideration the average market cost of equity.

The valuation of core deposits was derived by discounting the anticipated future benefits in the form of net interest savings from core deposits. The discount rate used was 9.6%, which was derived from the average of the weighted average cost of capital and the cost of equity, reflecting the lower risk premium for core deposit intangibles compared with equity returns.

The remaining amortisation period of credit card customer relationship and core deposits range from 5 to 9 years, respectively.




20 DeposItsfRoMCustoMeRs (i) By type of deposit

thegroup

2008 2007 RM’000 RM’000

Demand deposits 31,076,404 25,774,351 Savings deposits 14,929,572 10,465,848 Fixed deposits 72,576,926 65,403,991 Negotiable instruments of deposit 9,240,410 6,829,767 Others 25,601,664 18,392,834

153,424,976 126,866,791

During the financial year, the Group has undertaken a fair value hedge on the interest rate risk of the negotiable instruments of deposit amounting to RM1,104,900,000 (2007: RM930,000,000) using interest rate swaps.

thegroup

2008 2007 RM’000 RM’000

Negotiable instruments of deposit 1,104,900 930,000 Fair value changes arising from fair value hedges 13,420 4,765

1,118,320 934,765

The fair value of the interest rate swaps as at 31 December 2008 was RM44,861,369 (2007: RM17,892,000). The maturity structure of fixed deposits and negotiable instruments of deposit is as follows:

thegroup

2008 2007 RM’000 RM’000

Due within six months 66,988,600 50,547,423 Six months to one year 8,455,046 15,625,574 One year to three years 4,642,006 2,770,605 Three years to five years 1,458,204 3,289,728 More than five years 273,480 428

81,817,336 72,233,758




20 DeposItsfRoMCustoMeRs(ContInueD) (ii) By type of customer

thegroup

2008 2007 RM’000 RM’000

Government and statutory bodies 10,825,601 11,169,600Business enterprises 73,442,172 65,381,723Individuals 47,116,235 35,528,579Others 22,040,968 14,786,889

153,424,976 126,866,791

21 DeposItsanDplaCeMentsofbanksanDotheRfInanCIalInstItutIons thegroup

2008 2007 RM’000 RM’000

Licensed banks 2,689,611 8,375,660Licensed finance companies 14,140 18,235Licensed investment banks 2,342,569 1,332,565Bank Negara Malaysia 365,000 1,952,360Other financial institutions 1,707,198 1,205,647

7,118,518 12,884,467

22 otheRlIabIlItIes

thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Interest payable 634,286 615,909 25,441 26,962 Due to brokers and clients 741,345 2,208,599 - - Amount due to special purpose vehicle of jointly controlled entity (Note 14) 405,403 483,046 - - Expenditure payable 472,641 657,741 - - Provision for legal claims 314,173 267,230 - - Sundry creditors 541,410 186,811 - - Deferred gain on disposal of Menara Commerce 231,330 - 231,330 -Insurance fund – life and takaful insurance business 1,890,635 1,971,650 - - Provision for commitments and contingencies (a) 32,749 4,035 - - Post employment benefit obligations (Note 23) 135,562 71,290 29 110 Others 2,099,172 1,701,886 - 81,202

7,498,706 8,168,197 256,800 108,274




22 otheRlIabIlItIes(ContInueD) (a) The movements in provision for commitments and contingencies are as follows:

thegroup

2008 2007 RM’000 RM’000

At 1 January 4,035 3,184 Provision made during the financial year 708 1,439 Provision arising from acquisition of subsidiary 29,004 - Amount written back in respect of recoveries - (588)Exchange fluctuation (998) -

At 31 December 32,749 4,035

23 posteMployMentbenefItoblIgatIons thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Defined contribution plan – EPF (a) 9,422 10,654 29 110Defined benefit plans (b) 126,140 60,636 - -

135,562 71,290 29 110

(a) Definedcontributionplan

Group companies incorporated in Malaysia contribute to the Employees Provident Fund (“EPF”), the national defined contribution plan. Once the contributions have been paid, the Group and the Company have no further payment obligations.

(b) DefinedbenefitplansThe Group operates final salary defined benefit plans for its employees in Malaysia and Indonesia, the assets of which are held in separate trustee-administered funds. The latest actuarial valuations of the plans in Indonesia and Malaysia were carried out as at 14 December 2007 and 31 December 2008 respectively.




23 posteMployMentbenefItoblIgatIons(ContInueD) (b) Definedbenefitplans(Continued)

The amount recognised in the balance sheet in respect of defined benefit plans is as follows: thegroup

2008 2007 RM’000 RM’000

Present value of funded obligations 406,821 318,032Fair value of plan assets (247,806) (288,677)

Status of funded plan 159,015 29,355 Present value of unfunded obligations 14,522 - Unrecognised actuarial (losses)/gains (47,272) 8,141 Unrecognised past service costs (927) - Unrecognised transition liability 802 23,140

Liability 126,140 60,636

The amount recognised in the income statement in respect of defined benefit plans is as follows:

thegroup

2008 2007 RM’000 RM’000

Current service costs 24,276 14,556 Interest costs 32,799 24,603 Expected return on plan assets (25,076) (24,544)Net actuarial losses/(gains) recognised during the year 45,305 (3,342)Past service costs 404 - Amortisation of transition liability 2,116 11,253Change in disallowed assets (20,448) -Termination 9,180 -Curtailment/settlement costs (16,598) -

Total included in personnel costs (Note 36) 51,958 22,526

The actual return on plan assets of the Group was RM21,490,000 (2007: RM33,001,054).




23 posteMployMentbenefItoblIgatIons(ContInueD) (b) Definedbenefitplans(Continued) The movements in the defined benefit obligation over the financial year are as follows:

thegroup

2008 2007 RM’000 RM’000

At 1 January 318,032 299,399 Current service costs 24,276 14,556 Interest costs 32,799 24,603 Actuarial losses 23,187 19,190 Benefits paid (14,263) (7,913)Arising from acquisition of PT Bank Lippo Tbk 63,356 -Liabilities reclassified as non-current assets held for sale - (1,860)Past service costs-vested benefits - (7,570)Settlements (20,123) - Exchange fluctuation (20,443) (22,373)

At 31 December 406,821 318,032

The movements in the fair value of plan assets for the financial year are as follows: thegroup

2008 2007 RM’000 RM’000

At 1 January 288,677 244,865 Expected return on plan assets 25,076 24,544 Actuarial (losses)/gains (61,236) 23,323 Employer contributions 22,566 20,652 Contribution by plan participant 3,367 3,396 Assets reclassified as non-current assets held for sale - (1,481)Benefits paid (9,896) (5,676)Exchange fluctuation (20,748) (20,946)

At 31 December 247,806 288,677

To develop the expected long-term rate of return on assets assumption, the Group considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.




23 posteMployMentbenefItoblIgatIons(ContInueD) (b) Definedbenefitplans(Continued) The principal actuarial assumptions used in respect of the Group’s defined benefit plans are as follows:

thegroup

2008 2007 % %

Discount rates 7.00 6.00 Expected return on plan assets 5.00 6.25 Future salary increases 7.00 5.00

The expected contribution to post employment benefits plan for the financial year ending 31 December 2009 is RM91,896,000 (2008: RM18,471,000) to the Group.

2008 2007 2006 2005 2004 RM’000 RM’000 RM’000 RM’000 RM’000

thegroupasat31December Present value of defined benefit obligation 406,821 318,032 299,399 307,568 272,318 Fair value of plan assets (247,806) (288,677) (244,865) (240,563) (209,415)

Deficit 159,015 29,355 54,534 67,005 62,903

experienceadjustments onplanliabilities 23,187 19,190 (2,061) 1,686 (2)experienceadjustments onplanassets (61,236) 23,323 6,682 - -

24 bonDs thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

8.35% Redeemable unsecured RM bonds 2001/2008 (a) - 250,000 - 250,000 USD zero coupon guaranteed convertible bonds 2004/2009 (b) 24,374 22,921 - - Redeemable asset-backed bonds (c) - 31,772 - -

24,374 304,693 - 250,000




24 bonDs(ContInueD) (a) 8.35%RedeemableunsecuredRMbonds2001/2008 The main features of the 8.35% RM250 million nominal value redeemable unsecured RM bonds are as follows:

(i) Nominal value of the RM bonds is RM250 million.

(ii) The RM bonds are represented by a Global Certificate deposited with BNM and is exchangeable for definitive bearer only in certain limited circumstances.

(iii) The RM bonds are in denominations or multiples of RM1,000.

(iv) The RM bonds are constituted by a Trust Deed dated 4 May 2001 made between the Company and the Trustees to act for the benefit of the bondholders.

(v) The RM bonds bear interest at 8.35% per annum on the nominal value of the outstanding bonds, payable semi annually.

(vi) The RM bonds will be redeemed by the Company at their nominal value together with interest accrued to the date of redemption.

(vii) The bonds shall constitute direct, unconditional, subordinated and unsecured obligations of the Company.

The bonds had matured on 22 May 2008. (b) usDzerocouponguaranteedconvertiblebonds2004/2009(“usDConvertiblebonds”) The main features of the USD convertible bonds are as follows:

(i) The USD convertible bonds are issued by a special purpose vehicle, a subsidiary, Commerce Capital (Labuan) Ltd, and are guaranteed by the Company.

(ii) The nominal value of the USD convertible bonds is USD125 million.

(iii) The USD convertible bonds will mature on 22 September 2009.

(iv) The USD convertible bonds are convertible by holders into ordinary shares, with par value of RM1.00 per share, of the Company at any time on or after 22 October 2004 but prior to 8 September 2009. The conversion price was initially RM6.03 per share upon issuance. Effective from 31 May 2008, the conversion price was revised to RM5.81 per share pursuant to a capital distribution by the Company.

(v) The USD convertible bonds are listed on Labuan International Financial Exchange Inc. and Singapore Exchange Securities Trading Limited.

(vi) Unless the USD convertible bonds have been previously redeemed, repurchased and cancelled or converted, the issuer will redeem the USD convertible bonds on the maturity date at 107.8% of the principal amount.




24 bonDs(ContInueD) (b) usDzerocouponguaranteedconvertiblebonds2004/2009(“usDConvertiblebonds”)(Continued) The USD convertible bonds are recognised in the balance sheet as follows:

thegroup

2008 2007 RM’000 RM’000

Face value 475,000 475,000 Conversion of bond to ordinary shares of the Company (449,920) (449,920)

25,080 25,080 Realisation of foreign exchange loss on translation/conversion (2,215) (3,254)Interest expense 1,509 1,095

Balance at 31 December 24,374 22,921

Current 24,374 1,095 Non-current - 21,826

24,374 22,921

(c) Redeemableasset-backedbonds thegroup

2008 2007 RM’000 RM’000

Nominal value of bonds - 4.50% Redeemable asset-backed bonds 2003/2007 - - - 5.00% Redeemable asset-backed bonds 2003/2009 - 32,059

- 32,059 Less: Unaccreted discounts - (287)

- 31,772

Discount upon issuance - 712 Less: Accumulated accretion - (425)

Unaccreted discounts as at 31 December - 287

The Group’s Hire Purchase Receivables Securitisation Programme is funded through the issuance of bonds by a special purpose vehicle, Auto ABS One Berhad, and deferred consideration owing by I-Prestige Sdn Bhd to CIMB Bank. The scheme and the issuance of Bonds are in compliance with the Securities Commission’s “Guidelines on the Offering of Asset-Backed Debt Securities”.

The bonds were fully redeemed on 28 February 2008.




25 IRReDeeMableConveRtIbleunseCuReDloanstoCks(“ICuls”)–DetaChableCoupons thegroup

2008 2007 RM’000 RM’000

Detachable coupons from 7.5% ICULS 2001/2011 - 9,282

The 7.5% ICULS 2001/2011 were issued by CIMB Bank Berhad (“CIMB Bank”).

The Company with CIMB Investment Bank Berhad (“CIMB Investment Bank”) as the arranger purchased the ICULS from CIMB Bank and CIMB Investment Bank restructured the ICULS, where the Coupons were detached from the ICULS and placed out to investors.

Nominal value of the ICULS are RM667,000,000 in denomination or multiples of RM1,000 with detachable coupons.

The main features of the Detachable Coupons (“the Coupons”) are as follows:

(i) Nominal value of the Coupons are RM500,250,000 and are issued in bearer form in multiples of RM1,000 and constituted by the Trust Deed.

(ii) The Coupons mature over ten tranches with tenures ranging from one to ten years from the date of issue of the ICULS.

(iii) The Coupons represent the interest of the ICULS and as such, bear no further interest.

(iv) Each Coupon entitles the Coupon holder to redeem the Coupon at their respective nominal values.

(v) The Coupons shall constitute direct, unconditional, subordinated and unsecured obligations of CIMB Bank.

There were no detachable coupons outstanding which were payable to external parties as at 31 December 2008. 26 ReDeeMableConveRtIbleunseCuReDloanstoCks(“RCuls”)2006/2008

thegroupandtheCompany

2008 2007 RM’000 RM’000

Redeemable convertible unsecured loan stocks (“RCULS”) 2006/2008 - 1,803

The RCULS were issued by the Company as integral part of the settlement on the acquisition of SBB Group. The main features of the RCULS are as follows:

(i) The RCULS were issued on 17 July 2006 with issue size of 14,122,185 RCULS with coupon.

(ii) The issue price and nominal value of the RCULS is RM1.04 per RCULS.




26 ReDeeMableConveRtIbleunseCuReDloanstoCks(“RCuls”)2006/2008(ContInueD) (iii) The coupon bears interest of 2.5% per annum in arrears on the anniversary of the Issue Date during the tenure of the

RCULS.

(iv) The RCULS are convertible into new share of the Company during the Conversion Period based on the following formula:

No. of new Shares of the Company = Issue Price/ Conversion Price (“Conversion Formula”).

(v) The RCULS are convertible into new shares of the Company at anytime, from the Issue Date up to the Maturity Date, at the option of the RCULS holder.

(vi) The RCULS are redeemable at the Issue Price at anytime from the Issue Date up to the Maturity Date, at the option of the RCULS holders, and unless previously converted or redeemed, the RCULS which are not converted into the new Shares of the Company during the Conversion Period shall automatically be redeemable at the Nominal Value on the Maturity Date.

(vii) The RCULS are governed by the laws of Malaysia.

The RCULS had matured on 16 July 2008.

In accordance with FRS 132 - Financial Instruments : Disclosure and Presentation, the fair values of the liability component and the equity conversion component were determined upon the issuance of the RCULS. The fair value of the liability component, included in non-current borrowings, was calculated using a market interest rate for an equivalent non-convertible loan stock. The residual amount, representing the value of the equity conversion component, net of deferred tax liability, is included in shareholders’ equity in reserves, as detailed in Note 31 to the Financial Statements.

The RCULS are recognised in the balance sheet as follows: thegroupandtheCompany

2008 2007 RM’000 RM’000

Face value - 14,687 Conversion of RCULS to ordinary shares of the Company - (13,150)Equity conversion component (Note 31) - 44 Deferred tax liability - (23)

Liability component - 1,558 Interest expense - 245

Liability component at 31 December - 1,803

Current - 1,803 Non-current - -

- 1,803

Interest expense on the RCULS is calculated on the effective yield basis by applying the effective interest rate of 4.8% for an

equivalent non-convertible loan stock to the liability component of the RCULS.




27 otheRboRRowIngs thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Syndicated term loan – USD300 million (a) 1,039,350 992,100 - - Syndicated term loan – USD100 million (b) 346,450 330,700 346,450 330,700 Commercial Papers/Medium Term Notes (c) 540,000 1,288,211 700,000 1,288,211 Term loan (d) 1,380,000 1,380,000 1,380,000 1,380,000 Others 699,036 836,422 - -

4,004,836 4,827,433 2,426,450 2,998,911

(a) In 2006, a subsidiary, CIMB Bank (L) Limited secured a term loan which will mature on 22 June 2011. It bears floating interest rates of LIBOR + 0.19% per annum.

(b) In 2007, the Company secured a syndicated term loan amounting to USD100 million which will mature on 4 September 2010. It bears floating interest rate of LIBOR + 0.16% per annum.

(c) In 2007, the Company issued Conventional Commercial Papers (“CP”) and Conventional Medium Term Notes (“MTN”) amounting to RM950,000,000 and RM350,000,000 respectively. In 2008, Islamic Commercial Papers (“iCP”) and Islamic Medium Term Notes (“iMTN”) amounting to RM1,000,000,000 (2007: Nil) and RM350,000,000 (2007: Nil) respectively were issued, as follows:

(i) The CPs and the iCPs were issued at discount on zero coupon basis. The discount rate for the CPs ranges from 3.62% to 3.70%. The profit rate for the iCPs ranges from 3.61% to 3.64%. The tenure ranges from 3 months to 6 months and the CPs and iCPs had matured during the financial year;

(ii) The MTN and iMTN were issued at par. The MTN carries a fixed interest rate of 3.93% per annum. The iMTN carries a fixed dividend rate of 5.05% per annum. The MTN and iMTN will mature on 4 March 2009 and 30 May 2013 respectively.

(d) In 2007, the Company secured a term loan amounting to RM1.38 billion which is divided into two tranches:

(i) RM690 million term loan which will mature on 4 September 2010. It bears fixed interest rate of 4.05% per annum; and

(ii) RM690 million term loan which will mature on 4 September 2012. It bears fixed interest rate of 4.25% per annum.




28 suboRDInateDnotes thegroup

2008 2007 RM’000 RM’000

Subordinated Notes 2003/2013 (USD300 million) (a) - 1,024,264Subordinated Notes 2004/2014 (USD200 million) (b) 674,250 640,727Subordinated Notes 2005/2015 (USD100 million) (c) 341,863 328,620Subordinated Notes 2006/2011 (USD200 million) (d) 683,248 - Subordinated Notes 2006/2014 (USD100 million) (e) 363,498 339,865Subordinated bonds RM1.5 billion (f) 1,535,476 - Subordinated bonds RM1.0 billion (g) 1,000,000 - Subordinated bonds RM1.0 billion (h) 1,000,000 -

5,598,335 2,333,476

(a) subordinatednotes2003/2013 The Group has undertaken a fair value hedge on the foreign exchange risk and interest rate risk of the USD300 million

subordinated note using cross currency interest rate swaps and interest rate swaps.

thegroup

2008 2007 RM’000 RM’000

Subordinated notes, at par - 1,140,000 Fair value changes arising from fair value hedges - 32,164 Foreign exchange translations - (147,900)

- 1,024,264

The fair values of outstanding cross currency interest rate swaps and interest rate swaps at 31 December 2008 were RMNil (2007: RM106,801,000) and RMNil (2007: RM3,558,000) respectively. The fair value hedge has been discontinued as the subordinated notes have been fully redeemed during the financial year.

The main features of the USD300 million Subordinated Notes due 2013 Callable with Step-Up in 2008 issued in 2003 (“The Notes”) are as follows:

(i) The Notes are in bearer form, serially numbered and in denominations of USD1,000, USD10,000 and USD100,000.

(ii) The Notes bear interest at the rate of 5.125% per annum from and including 16 October 2003 to, but excluding, 16 October 2008 and, thereafter, at a rate per annum equal to the US Treasury Rate plus 3.55%. Interest will be payable semi-annually in arrears on 16 April and 16 October, in each year, commencing 16 April 2004.

(iii) The Notes and Coupons constitute direct and unsecured obligations of the Issuer and are subordinated in the manner described in the Conditions of the Notes and, for the avoidance of doubt, rank pari passu with the Issuer’s 7.5% RM667 million ICULS with detachable coupons 2001/2011. The Notes and the Coupons rank and will rank pari passu without any preference among themselves.




28 suboRDInateDnotes(ContInueD) (a) subordinatednotes2003/2013(Continued) (iv) The principal of, and interest and any additional amounts payable on, the Notes will be subordinated in right of

payment upon occurrence of any Winding Up Proceeding to the prior payment in full of all deposit liabilities and all other liabilities of the Issuer, except in each case to those liabilities which by their terms rank equally in right of payment with or subordinated to the Notes.

(v) The Issuer may at its option, but subject to the prior written approval of Bank Negara Malaysia (“BNM”), redeem the Notes on 16 October 2008 at their principal amount plus accrued interest.

The Group has fully redeemed the Notes on 16 October 2008 upon obtaining approval from BNM.

(b) subordinatednotes2004/2014 The USD200 million 10-year subordinated notes (“the USD200 million Notes”) were issued on 30 June 2004. The USD200

million Notes were issued at a price of 99.028% of the principal amount and are callable with step-up in 2009. The USD200 million Notes bear an interest rate of 6.125% per annum payable semi-annually in arrears for the first 5 years, after which interest rate will be reset at a rate per annum equal to the 5-year US Treasury Rate plus 3.925%.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the USD200 million Notes in whole but not in part, on 30 June 2009 at their principal amount plus accrued interest.

The USD200 million Notes were listed on the Luxembourg Stock Exchange on 30 June 2004 and qualify as Tier-2 Capital for the purpose of the risk weighted capital ratio (“RWCR”) computation.

(c) subordinatednotes2005/2015 The Subordinated Notes Callable with Step-Up in 2010 Coupon 2005/2015 were issued by a subsidiary bank, PT

Bank CIMB Niaga.

The main features of the Subordinated Notes are as follows:

(i) The USD100,000,000 Notes are issued in registered form and are represented by the Global Certificate and in denominations of USD1,000.

(ii) The Notes will bear interest at the rate of 7.75% per annum from and including 14 July 2005 to, but excluding, 14 July 2010 and, thereafter, at a rate per annum equal to the US Treasury Rate plus 6.1875%. Interest will be payable semi-annually in arrears on 14 January and 14 July, in each year, commencing 14 January 2006.

(iii) The Notes and Coupons constitute direct and unsecured obligations of the Issuer and are subordinated in the manner described in the Conditions of the Notes and will rank pari passu without any preference among themselves. The instrument is listed on the Singapore Exchange.

(iv) The principal of, and interest and any additional amounts payable on, the Notes will be subordinated in right of payment upon occurrence of any Winding Up Proceeding (as defined in the Condition of the Notes) to the prior payment in full of all deposit liabilities and all other liabilities of the Issuer except, in each case, to those liabilities which by their terms rank equally in right of payment with or are subordinate to the Notes.

(v) PT Bank CIMB Niaga may at its option, but subject to the prior written approval of Bank Indonesia, redeem the Notes on 14 July 2010 at their principal amount plus accrued interest.




28 suboRDInateDnotes(ContInueD) (d) subordinatednotes2006/2011 On 22 November 2006, PT Bank CIMB Niaga through its Cayman Islands Branch has issued USD200 million Subordinated

Notes (“the Note”) for a period of 10 (ten) years with call option after the fifth year, on 22 November 2011.

The main features of the Notes are as follows:

(i) The Notes are in registered form in the denomination of USD100,000 each and integral multiples of USD1,000 in excess thereof.

(ii) The Notes bear interest at the rate of 7.375% per annum from and including 22 November 2006 to but excluding 22 November 2011 and interest will be payable semi-annually in arrears on 22 May and 22 November of each year, commencing on 22 May 2007. Unless the Notes are previously redeemed, interest from and including 22 November 2011 to but excluding 22 November 2016 will be reset at the US Treasury Rate plus 4.16% per annum and interest will be payable semi-annually in arrears on 22 May and 22 November of each year, commencing on 22 May 2012.

(iii) The indebtedness evidenced by the Notes constitutes unsecured and subordinated obligations of the Issuer and

upon any distribution to creditors of the Issuer in a Winding Up Proceedings (as defined in the Terms and Conditions of the Notes), the Notes shall be subordinated in right of payment, to the extent and in the manner provided in the Terms and Conditions of the Notes, to the prior payment in full of all liabilities of the Issuer, except those subordinated liabilities which by their terms rank equally in right of payment with or junior to the Notes. Claims in respect of the Notes will rank pari passu without any preference among themselves, but in priority to the rights and claims of holders of all classes of equity securities of the Issuer, including holders of preference shares, if any.

(iv) The instrument is listed on the Singapore Stock Exchange.

(v) PT Bank CIMB Niaga may at its option, but subject to the prior consent of Bank Indonesia, redeem the Notes on 22 November 2011 at a price equal to 100 per cent of the principal amount of the Notes together with accrued and unpaid interest to such date.

(e) subordinatednotes2006/2014 On 12 June 2006, the CIMB Bank Berhad obtained a USD100 million subordinated loan due on 2014 callable with step-

up in 2009 from CIMB Investment Bank Berhad. The loan bears interest at the rate of 5% per annum from, and including 12 June 2006 to, but excluding 15 October 2008 and, thereafter, at a rate per annum equal to the US Treasury Rate plus 3.7%. The interest rate is payable semi-annually in arrears on 15 April and 15 October in each year, commencing on 12 June 2006. The USD100 million subordinated loan qualify as Tier-2 Capital for the purpose of the risk-weighted capital ratio (“RWCR”) computation.

CIMB Bank Berhad has undertaken fair value hedge on the foreign exchange risk and interest rate risk of the USD100 million subordinated loan using interest rate swaps and net investment hedge of CIMB Bank (L) Limited.

thegroup

2008 2007 RM’000 RM’000

Subordinated loans, at cost 367,850 367,850Fair value changes arising from fair value hedges 17,806 12,947Foreign exchange translations (22,158) (40,932)

363,498 339,865

The fair values of interest rate swaps at 31 December 2008 were (RM2,165,621) (2007: RM5,304,000).




28 suboRDInateDnotes(ContInueD) (f) subordinatedbondsRM1.5billion The RM1.5 billion 10-year subordinated bonds (“the RM1.5 billion Bonds”) were issued by CIMB Bank on 28 March 2008.

The Bonds were issued at par and are callable with step-up in 2013. The Bonds bear an interest rate of 4.9% per annum payable semi-annually in arrears for the first 5 years, after which interest rate will be reset to 5.9% per annum until maturity date.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the RM1.5 billion Bonds in part or in whole, on 28 March 2013 at their principal amount.

The RM1.5 billion Bonds qualify as Tier-2 Capital for the purpose of the RWCR computation.

During the financial year, CIMB Bank has undertaken fair value hedge on the interest rate risk amounting to RM600 million of the RM1.5 billion Bonds using interest rate swaps.

thegroup

2008 2007 RM’000 RM’000

Subordinated bonds, at cost 600,000 -Fair value changes arising from fair value hedges 35,476 -

635,476 -

The fair value of interest rate swaps as at 31 December 2008 were RM46,890,284 (2007:RMNil) (g) subordinatedbondsRM1.0billion The RM1.0 billion subordinated bonds (“the RM1.0 billion Bonds”) were issued by CIMB Bank at par on 7 October 2008

under the Innovative Tier-1 Capital Securities Programme (“IT-1 Issue”) which was approved by the Securities Commission on 24 September 2008. The RM1.0 billion Bonds are due on 7 October 2038 callable with step-up on 7 October 2018. The RM1.0 billion Bonds bear an interest rate of 6.7% per annum payable semi-annually in arrears for the first ten years, after which the interest rate will be reset at a rate per annum equal to the 3-month KLIBOR plus 2.98%.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the RM1.0 billion subordinated bonds in whole but not in part, on 7 October 2018 or any interest payment date thereafter, at their principal amount plus accrued interest.

The RM1.0 billion Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.

(h) subordinatedbondsRM1.0billionThe RM1.0 billion subordinated bonds (“the Bonds”) is part of the Non-Innovative Tier 1 Stapled Securities Issuance Programme (“the programme”) which was approved by the Securities Commission on 17 December 2008. Under the programme, CIMB Bank is allowed to raise Non-Innovative Tier 1 Capital of up to RM4.0 billion in nominal value outstanding at any one time comprising:

(i) Non-Cumulative Perpetual Capital Securities issued by CIMB Bank(ii) Subordinated Notes issued by Commerce Returns Berhad, a wholly-owned subsidiary of CIMB Bank




28 suboRDInateDnotes(ContInueD) (h) subordinatedbondsRM1.0billion(Continued)

The Bonds under the first issuance were issued at par on 26 December 2008 and are due on 26 December 2058, with optional redemption on 26 December 2018 or any distribution payment date thereafter. The Bonds bear an interest rate of 7.2% per annum payable semi-annually in arrears.

Subject to the prior approval of BNM, CIMB Bank shall redeem the RM1.0 billion subordinated bonds in whole but not in part, on 26 December 2018 or any distribution payment date thereafter, at their principal amount plus accrued interest.

The Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation.

29 shaReCapItal thegroupandtheCompany

2008 2007 RM’000 RM’000

ordinarysharesofRM1.00each:authorised: At 1 January/31 December 5,000,000 5,000,000

IssuedandfullypaidsharesofRM1.00each:At 1 January 3,374,181 3,184,429 Issued during the year: - exercise of Employee Share Option Scheme - 13,501 - conversion of USD Zero Coupon guaranteed convertible bonds 2004/2009 - 59,520 - conversion of Redeemable Convertible Unsecured Loan stocks 79 1,806 - private placement of new shares - 117,000 - cancellation of treasury shares (Note 32(b)) (3,278) (2,075) - pursuant to the merger between PT Bank Niaga Tbk and PT Bank Lippo Tbk 207,096 -

At 31 December 3,578,078 3,374,181

The issued and paid-up share capital of the Company increased upon the issuance of the new ordinary shares of the Company pursuant to the conversion of RCULS, the merger between PT Bank Niaga Tbk and PT Bank Lippo Tbk and reduction of share capital pursuant to cancellation of treasury shares.

The main features of the conversion of USD Zero Coupon guaranteed convertible bonds and the conversion of RCULS are described in Note 24 (b) and Note 26 respectively to the Financial Statements.




30 pRefeRenCeshaRes (a) non-cumulativeguaranteedpreferenceshares

thegroup

2008 2007 RM’000 RM’000

authorisedRedeemablepreferencesharesofusD0.01each At 1 January/31 December 8 8 IssuedandfullypaidRedeemablepreferencesharesofusD0.01each Non-cumulative guaranteed preference shares 813,336 681,033

thegroup

2008 2007 RM’000 RM’000

Non-cumulative guaranteed preference shares, at cost 728,250 728,250Fair value changes arising from fair value hedges 129,846 25,853Foreign exchange translations (44,760) (73,070)

813,336 681,033

The USD200 million 6.62% Non-cumulative Guaranteed Preference Shares of USD0.01 each at a premium of USD999.99 per share were issued on 2 November 2005 by SBB Capital Corporation (“SCC”), a wholly owned subsidiary company of CIMB Bank incorporated in Labuan. In accordance with FRS 132 (“Financial Instruments: Disclosure and Presentation”), the SCC Preference Shares are recognised as financial liability in the Financial Statements. The main features of the SCC Preference Shares are as follows:

(i) The SCC Preference Shares are entitled to dividends which are payable in arrears on 2 May and 2 November up to and including 2 November 2015 at a fixed rate of 6.62% per annum.

(ii) On 2 November 2015 (First Optional Redemption Date) and on each dividend date thereafter, SCC may at its option, subject to the prior approval of BNM, redeem the SCC Preference Shares in whole but not in part, at their principal amount plus accrued but unpaid dividends. If the SCC Preference Shares are not called on 2 November 2015, dividends will be reset at a floating rate per annum equal to three-month LIBOR plus 2.53%, payable quarterly on 2 February, 2 May, 2 August and 2 November.

(iii) The SCC Preference Shares will not be convertible into ordinary shares.

(iv) The SCC Preference Shares are guaranteed by CIMB Bank on a subordinated basis. If the SCC Preference shares have not been redeemed in full on or prior to 2 November 2055, CIMB Bank shall cause the substitution of the SCC Preference Shares with Preference Shares issued by CIMB Bank (Substitute Preference Shares) and the SCC Preference Shares shall be mandatory exchanged for such Substitute Preference Shares having economic terms which are in all material aspects equivalent to those of the SCC Preference Share.




30 pRefeRenCeshaRes(ContInueD) (a) non-cumulativeguaranteedpreferenceshares(Continued) The SCC Preference Shares were admitted to the Official List of the Singapore Exchange Securities Trading Limited and

Labuan International Financial Exchange Inc on 4 November 2005 and 24 November 2005 respectively, and qualify as Tier-1 Capital for the purpose of the RWCR computation, subject to the limit as prescribed in the “Guidelines on Innovative Tier 1 Capital Instruments” issued by Bank Negara Malaysia on 24 December 2004.

(b) Redeemablepreferenceshares thegroup

2008 2007 RM’000 RM’000

authorisedRedeemablepreferencesharesofRM0.01each (i) 1,000 1,000 RedeemablepreferencesharesofRM0.01each (ii) 350 350

IssuedandfullypaidRedeemablepreferencesharesofRM0.01each (i) 100,000 100,000 RedeemablepreferencesharesofRM0.01each (ii) 35,000 35,000

(i) On 2 October 2006, a subsidiary, Commerce Agro Ventures Sdn Bhd (“CAgV”), has allotted and issued redeemable preference shares (“RPS”) to an external party amounting to RM100,000,000, comprising RM1,000,000 at nominal value and RM99,000,000 at premium.

The main features of the RPS are as follows:

• The RPS do not carry any fixed dividends.

• In the event of winding-up of CAgV or other repayment of capital, the RPS carry the right to have the surplus assets applied first in paying off the RPS holders.

• The RPS rank pari passu in all aspects among themselves.

(ii) On 20 February 2006, a subsidiary, Commerce-KPF Ventures Sdn Bhd (“CKPF”), has allotted and issued redeemable preference shares (“RPS”) to an external party amounting to RM35,000,000, comprising RM350,000 at nominal value and RM34,650,000 at premium.

The main features of the RPS are as follows:

• The RPS carry a fixed cumulative dividend of 5% per annum.

• The RPS may be redeemed at the option of the holders any time after the issuance of the share until and including the maturity date of 20 February 2011 or 20 February 2013 or such other date as approved by the Board of Directors of CKPF shall resolve.




30 pRefeRenCeshaRes(ContInueD) (c) perpetualpreferenceshares

thegroup

2008 2007 RM’000 RM’000

authorisedperpetualpreferencesharesofRM1.00each 500,000 500,000

IssuedandfullypaidperpetualpreferencesharesofRM1.00each 200,000 200,000

The main features of the perpetual preference shares (“PPS”) are as follows:

(i) The PPS has no right to dividends.

(ii) In the event of liquidation, dissolution or winding-up of CIMB Bank, PCSB as holder of the PPS will be entitled to receive full repayment of the capital paid up on the PPS in priority to any payments to be made to the ordinary shareholders of CIMB Bank.

(iii) The PPS rank pari passu in all aspects among themselves.

(iv) CIMB Bank must not redeem or buy back any portion of the PPS and the PPS will be perpetual except for any capital reduction exercise permitted by the Companies Act, 1965 and as approved by Bank Negara Malaysia.

31 ReseRves thegroup theCompany

2008 2007 2008 2007 note RM’000 RM’000 RM’000 RM’000

Share premium - ordinary shares 6,027,864 5,174,172 6,027,864 5,174,172 Statutory reserve (a) 2,841,540 2,238,738 - - Capital reserve 89,387 108,122 5,353 2,075 Exchange fluctuation reserve (b) (427,599) (405,625) - - Revaluation reserve – available-for-sale securities 369,951 640,024 - - Retained profits (c) 5,234,204 4,676,131 2,080,199 1,335,256 Other reserves - compound financial instruments (equity component) (Note 26) - 44 - 44 - hedging reserve – net investment hedge (135,861) (2,804) - - - hedging reserve – cash flow hedge (13,500) - (13,500) - - options reserve (d) 35,779 48,668 - -

14,021,765 12,477,470 8,099,916 6,511,547

(a) The statutory reserves of the Group are maintained in compliance with the provisions of the Banking and Financial Institutions Act, 1989 and include a reserve maintained by a subsidiary in compliance with the Bursa Malaysia Securities Berhad Rules and Regulations. These reserves are not distributable by way of cash dividends.

(b) Exchange translation differences have arisen from translation of net assets of Labuan Offshore subsidiaries, foreign subsidiary banks and foreign branches. These translation differences are shown under exchange fluctuation reserve.




31 ReseRves(ContInueD) (c) Pursuant to the Finance Act, 2007 which was gazetted on 28 December 2007, dividends paid, credited or distributed

to shareholders are not tax deductible by the Company, but are exempted from tax in the hands of the shareholders (“single tier system”). During the year, the Company has utilised the credit in the Section 108 balance to distribute dividend payments to its shareholders as allowed by the transitional provision under the Finance Act, 2007. As at 31 December 2008, the Company has sufficient credit in the Section 108 balance to pay franked dividends and sufficient tax exempt account balances to pay tax exempt dividends out of its entire retained earnings.

(d) The option reserve arose from the employee share option schemes granted to Directors and employees of the Group, which are deemed equity-settled payment under FRS 2. See Note 44 for the terms of the share options and movements in the number of share options.

32 shaReshelDunDeRtRustanDtReasuRyshaRes (a) sharesheldundertrust

thegroup

2008 2007 RM’000 RM’000

At 1 January 107,166 261,574 Utilised during the financial year (32,976) (154,408)

At 31 December 74,190 107,166

As an integral part of the CIMBB’s restructuring exercise, the then existing CIMBB’s ESOS and Employee Equity Scheme (“EES”) ceased to have any value pursuant to the delisting from Bursa Malaysia Securities Berhad. Accordingly, consistent with the fair treatment to all Executive Employees and the spirit of continuity of the scheme in existence, the schemes were modified with terms and conditions remaining and subsequently called the Modified EESOS. For the EES, the remaining options were accelerated and exercised prior to the completion of the CIMBB’s restructuring.

The CIMBB restructuring exercise and the schemes were approved by the shareholders of the Company during the Extraordinary General Meeting held on 8 September 2005. The modified schemes entailed the following:

(i) The setting up of a trust to subscribe for all the remaining CIMBB shares under the unexercisable tranches under the CIMBB ESOS (“ESOS Trust”) prior to the implementation of the CIMBB restructuring. The subscription was facilitated through an accelerated vesting of the unexercisable options. The funding for the subscription for the CIMBB shares by the trustee for both Trusts was provided by the Company by way of a loan.

(ii) Under the CIMBB restructuring exercise, both trustees have opted for new shares of the Company at the ratio of approximately 1.146 of the Company’s shares for one CIMBB share. The Executive Employees or the CEO are entitled to instruct the trustee as to the sale, subject to a minimum market price that is higher than a price to be determined by dividing the existing adjusted exercise price by the ratio of approximately 1.146, plus transaction costs and any income tax liability, if applicable, of such shares of the Company in the manner as previously provided under the CIMBB ESOS.




32 shaReshelDunDeRtRustanDtReasuRyshaRes(ContInueD) (a) sharesheldundertrust(Continued) (iii) The number of the Company’s shares subject to such instruction per annum will be in the same proportion as per the

adjusted total outstanding number under the previous CIMBB ESOS multiplied by the ratio approximately 1.146.

(iv) If the Executive Employee or CEO opt to instruct the trustee to transfer or sell in the market, upon such instruction under the Modified EESOS and Modified CEO Option, a proportion of the proceeds received by the Trustee, plus any income tax, if applicable, will be retained by the Trustee and used to offset the Loan and the excess (net of transaction costs) will be payable to the Executive Employee or CEO.

Set out below are details of options over the ordinary shares of the Company granted under the Modified EESOS option as described in Note 44(A) to the Financial Statements. The Company’s shares were issued and placed under Trust:

grantDate expiry exercise atstart atendof Date price ofyear granted exercised forfeited year RM/share ‘000 ‘000 ‘000 ‘000 ‘000 yearended31.12.2008Modifiedeesos 30 December 2004 29 December 2009 3.85 6,843 - (3,018) (4) 3,821 30 December 2004 29 December 2009 4.19 706 - (45) - 661 30 December 2005 29 December 2009 4.61 14,234 - (1400) (148) 12,686

21,783 - (4,463) (152) 17,168

yearended31.12.2007Modifiedeesos 30 December 2003 29 December 2007 1.33 2,954 - (2,954) - - 30 December 2004 29 December 2008 3.67 12,872 130 (5,280) (879) 6,843 30 December 2004 29 December 2008 3.99 1,052 - (346) - 706 30 December 2005 29 December 2009 4.39 17,394 647 (2,575) (1,232) 14,234

34,272 777 (11,155) (2,111) 21,783

ModifiedCeooption 08 January 2003 07 January 2008 1.39 9,822 - (9,822) - - 08 January 2003 07 January 2008 1.46 9,822 - (9,822) - -

19,644 - (19,644) - -

The share prices of the share options exercised during the year range from RM5.51 to RM12.10 (2007: RM7.85 to RM12.40).

thegroup

2008 2007 ‘000 ‘000

Number of share options vested at balance sheet date 17,168 21,783




32 shaReshelDunDeRtRustanDtReasuRyshaRes(ContInueD) (b) treasuryshares,atcost

thegroupandtheCompany 2008 2007

units units ‘000 RM’000 ‘000 RM’000

At 1 January 3,278 34,434 - - Purchased during the year 50,609 461,702 5,353 54,923 Cancelled during the year (3,278) (34,434) (2,075) (20,489)

At 31 December 50,609 461,702 3,278 34,434

The shareholders of the Company, via an ordinary resolution passed at the Annual General Meeting held on 5 May 2008, approved the Company’s plan and mandate to authorise the Directors of the Company to buy back its own shares up to 10% of existing total paid-up share capital. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the share buyback can be applied in the best interests of the Company and its shareholders.

During the financial year, the Company bought back 50,609,100 (2007: 5,353,300) of its issued share capital at an average price of RM9.12 per share (2007: RM10.26 per share), from the open market. As at balance sheet date, 50,609,100 (2007: 3,278,000) ordinary shares were held as treasury shares. The total consideration paid for the share buyback during the year, including transaction costs is RM461,701,519 (2007: RM54,922,595) and was financed by internally generated funds. Treasury shares have no rights to vote, dividends and participation in other distribution.

33 InteRestInCoMe thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Loans, advances and financing - interest income other than recoveries 7,116,860 6,594,578 74 85 - recoveries from non-performing loans 377,567 450,114 - - - recoveries from NPL sale 5,541 - - -Money at call and deposits with financial institutions 824,056 940,702 6,638 22,930 Securities purchased under resale agreement 132,914 123,384 - - Securities held for trading 538,426 512,721 - - Available-for-sale securities 382,692 359,985 - - Held-to-maturity securities 209,442 33,903 - - Others 59,033 48,352 44,741 54,686

9,646,531 9,063,739 51,453 77,701 Accretion of discounts less amortisation of premiums 138,540 211,876 10,587 12,095 Net interest suspended (194,648) (217,392) - -

9,590,423 9,058,223 62,040 89,796




34 InteRestexpense thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Deposits and placements of banks and other financial institutions 314,386 448,946 - - Deposits from other customers 3,805,320 3,255,895 - - Obligation on securities sold under repurchase agreements 9,269 107,202 - - Bonds 8,121 26,962 8,121 23,396 Loan stocks/ICULS 1,452 2,846 - - Subordinated notes 206,933 157,060 - - Loans sold to Cagamas 60,376 111,861 - - Negotiable certificates of deposits 227,534 193,273 - - Other borrowings 156,537 209,311 119,970 193,651 Others 139,899 148,937 33 496

4,929,827 4,662,293 128,124 217,543

35 non-InteRestInCoMe thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

feeincome: Commissions 231,112 267,590 - - Fee on loans, advances and financing 427,453 405,885 - - Portfolio management fees 25,398 6,363 - - Service charges and fees 244,544 210,734 - - Corporate advisory fees 133,459 92,362 - - Guarantee fees 55,093 61,719 - - Other fee income 235,041 204,995 - 339 Placement fees 18,841 20,342 - - Underwriting commission 9,555 154,074 - - Al-Wakalah fee 34,089 36,045 - -

1,414,585 1,460,109 - 339

grossdividendincomefrom:In Malaysia - Subsidiaries - - 1,643,399 2,056,103 - Securities held for trading 30,142 51,392 - - - Available-for-sale securities 35,974 19,911 - - - Held-to-maturity securities 58 76 - - Outside Malaysia - Subsidiaries - - - 25,534 - Securities held for trading 1,731 5,617 - - - Available-for-sale securities 1,705 - - -

69,610 76,996 1,643,399 2,081,637




35 non-InteRestInCoMe(ContInueD) thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

net(loss)/gainarisingfrom securitiesheldfortrading - realised (11,117) 664,332 - - - unrealised (190,187) (128,484) - -

(201,304) 535,848 - -

netgain/(loss)arisingfrom derivativefinancialinstruments - realised 57,617 (48,333) (2,639) 28,523 - unrealised 139,479 347,386 33,351 7,836

197,096 299,053 30,712 36,359

netlossarisingfromhedgingderivatives (5,891) 16,650 - -

netgainfromsaleofavailable-for-sale securities 322,959 170,947 - -

netgainfromheld-to-maturitysecurities 4,089 133 - -

Incomefromassetsmanagementand securitiesservices 145,889 134,012 - -

brokerageincome 253,025 400,017 - -

othernon-interestincome: Foreign exchange gain/(loss) - realised 63,302 116,457 - (22,804) - unrealised 328,809 52,875 (19,217) 6,041Accretion of investment gain - - 41,305 38,125 (Loss)/gain on disposal of interest in subsidiary (2,007) 708,739 - 198,532 Rental income 17,220 15,966 4,059 4,037 Gain/(loss) on disposal of property, plant and equipment 9,586 3,106 69 (25)Gain on disposal of leased assets 253 126 - - Net (loss)/gain from insurance business (86,525) 2,916 - - Underwriting surplus before management expenses (Note (a)) - 36,399 - - Other non-operating income/(expense) 111,711 241,013 754 (10,137)(Loss)/gain on disposal of foreclosed properties (281) 12 - -

442,068 1,177,609 26,970 213,769

2,642,126 4,271,374 1,701,081 2,332,104




35 non-InteRestInCoMe(ContInueD) (a) underwritingsurplusbeforemanagementexpensesisasfollows:

thegroup

2008 2007 RM’000 RM’000

Insurance premium earned - 152,525 Net claims incurred - (103,626)Net commissions - (12,500)

- 36,399

36 oveRheaDs thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

personnelcosts - Salaries, allowances and bonus 1,453,064 1,693,477 2,581 3,133- Pension costs (defined contribution plan) 131,725 111,411 283 490- Pension costs (defined benefit plans (Note 23(b)) 51,958 22,526 - -- Others 332,750 333,472 99 844establishmentcosts - Depreciation of property, plant and equipment 214,335 193,263 1,994 1,878- Depreciation of investment properties - - 125 125- Amortisation of prepaid lease payments 1,588 2,242 158 158- Rental 160,558 135,793 90 163- Insurance 19,843 19,653 134 216- Others 476,223 438,011 1,448 1,526Marketingexpenses - Sales commission 42,591 34,209 - -- Advertisement 191,445 149,161 191 140- Others 72,183 103,739 - -administrationandgeneralexpenses - Impairment of intangible assets - 363 - -- Amortisation of intangible assets 122,945 97,476 - -- Legal and professional fees 149,838 115,217 2,017 13,329- Stationery 88,809 52,523 1,102 870- Merchant expenses 96,469 71,121 - -- Communication 67,012 95,624 111 -- Others 448,469 557,833 4,567 6,713

4,121,805 4,227,114 14,900 29,585




36 oveRheaDs(ContInueD) The above expenditure includes the following statutory disclosures:

thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Directors’ remuneration (Note 39) 10,538 17,366 1,858 1,836 Rental of premises 125,987 104,017 - - Hire of equipment 7,392 5,206 - - Lease rental 4,476 7,413 - - Auditors’ remuneration - Statutory audit (PricewaterhouseCoopers Malaysia*) 2,840 2,667 216 150- Statutory audit (other member firms of PricewaterhouseCoopers International Limited*) 3,047 2,272 - - - Non-audit services (PricewaterhouseCoopers Malaysia*) 3,393 2,525 442 418 - Non-audit services (other member firms of PricewaterhouseCoopers International Limited*) 4,644 890 - - Property, plant and equipment written off 775 55 411 -

* PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate and independent legal entities.

37 allowanCefoRlossesonloans,aDvanCesanDfInanCIng thegroup

2008 2007 RM’000 RM’000

Allowance for bad and doubtful debts on loans and financing(a) Specific allowance

- made during the financial year 1,679,440 2,145,797 - written back (693,323) (816,349)- written back from NPL sale (61,099) -

(754,422) (816,349) (b) General allowance

- made during the financial year 250,711 91,471

Bad debts on loans and financing- recovered (355,923) (294,251)- recovered from NPL sale (26,276) - - written off 1,185 763

794,715 1,127,431




37 allowanCefoRlossesonloans,aDvanCesanDfInanCIng(ContInueD) During the financial year, the Malaysian banking subsidiaries have evaluated their portfolio of non-performing loans, advances

and financing that have been in default and that remained uncollected for more than 7 years and also those non-performing loans, advances and financing in default for more than 5 but less than 7 years. For loans, advances and financing in default for more than 7 years, no value is assigned as the realisable value of collateral. For loans, advances and financing which are in default for more than 5 but less than 7 years, 50% of the realisable value of assets held has been assigned as the value of collateral. The effect of this exercise resulted in specific allowance of RM186,537,987 (2007: RM303,981,333) made by the Group during the financial year.

38 allowanCe(wRIttenbaCk)/MaDefoRIMpaIRMentlosses thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Available-for-sale securities - net allowance (written back)/ made during the financial year (60,446) (70,324) 888 - Held-to-maturity securities - net allowance made during the financial year 30,963 3,178 - - Goodwill - made during the financial year - 9,739 - -

(29,483) (57,407) 888 -




39 DIReCtoRs’ReMuneRatIon The Directors of the Company in office during the year are as follows:

executiveDirectors Dato’ Sri Mohamed Nazir bin Abdul Razak Dato’ Mohd Shukri bin Hussin non-executiveDirectors Tan Sri Dato’ Md Nor bin Md Yusof Tan Sri Dato’ Seri Haidar bin Mohamed Nor Dato’ Zainal Abidin bin Putih Dato’ Hamzah bin Bakar Datuk Dr Syed Muhamad bin Syed Abdul Kadir Dato’ Robert Cheim Dau Meng Cezar Peralta Consing Hiroyuki Kudo

thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Executive Directors - Salary and other remuneration 6,168 12,321 660 600 - Benefits-in-kind 145 108 48 43

6,313 12,429 708 643

Non-Executive Directors - Fees 1,106 1,159 708 724 - Other remuneration 2,960 3,643 442 469 - Benefits-in-kind 159 135 - -

4,225 4,937 1,150 1,193

10,538 17,366 1,858 1,836

Consistent with the practice for certain key personnel, the bonus for 2008 will be paid in tranches, spread over 2009. In addition, the final tranche will only be paid out in the third quarter of 2009, after certain key financial performance indicators for the Group has been met. A similar condition is also imposed on the 2008 bonus of certain key personnel.




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40 taxatIon thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Taxation based on the profit for the financial year:- Malaysian income tax 555,481 701,828 277,122 496,149 - Foreign tax 92,674 167,119 - -

648,155 868,947 277,122 496,149 Deferred tax (Note 10) 61,910 (97,789) 94,649 25,697 Over-accrual in prior years (6,954) 326 - -

703,111 771,484 371,771 521,846

Reconciliation between tax charge and the Malaysian tax rate: thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Profit before tax 2,715,659 3,685,803 1,619,209 2,174,772

Tax calculated at a rate of 26% (2007: 27%) 706,072 995,167 420,994 587,188 Income not subject to tax (161,060) (401,884) (51,823) (111,460)Effects of different tax rates in other countries 27,009 (60,436) - - Effects of change in tax rates 7,758 15,083 (4,324) (519)Expenses not deductible for tax purposes 166,708 232,281 6,924 46,637 Utilisation of previously unrecognised tax losses (36,422) (9,053) - - (Over)/under provision in prior years (6,954) 326 - -

Tax charge of current year 703,111 771,484 371,771 521,846




41 eaRnIngspeRshaRe (a) basicearningspershare Basic earnings per share of the Group are calculated by dividing the net profit for the financial year by the weighted

average number of ordinary shares in issue during the financial year.

2008 2007

Net profit for the financial year (RM’000) 1,952,038 2,793,273Weighted average number of ordinary shares in issue (‘000) 3,375,898 3,330,288Basic earnings per share (expressed in sen per share) 57.8 83.9

(b) Dilutedearningspershare For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to

assume conversion of all dilutive potential ordinary shares. As at 31 December 2008, the Company’s dilutive potential ordinary shares comprises the USD Zero Coupon Guaranteed Convertible Bonds (2007 : USD Zero Coupon Guaranteed Convertible Bonds, Redeemable Convertible Unsecured Loan Stock (“RCULS”) and ESOS). The USD Zero Coupon Guaranteed Convertible Bonds and RCULS are assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the applicable interest expense.

2008 2007 RM’000 RM’000

Net profit for the financial year 1,952,038 2,793,273Elimination of interest expense on USD Zero Coupon Guaranteed Convertible Bonds 331 341 Elimination of interest expense on RCULS (net of tax effect) - 53

Net profit used to determine diluted earnings per share 1,952,369 2,793,667

2008 2007 unit’000 unit’000

Weighted average number of ordinary shares in issue 3,375,898 3,330,288 Adjustments for - Conversion of USD Zero Coupon Guaranteed Convertible Bonds 4,317 4,287 - RCULS - 211

Weighted average number of ordinary shares for diluted earnings per share 3,380,215 3,334,786

Diluted earnings per share (expressed in sen per share) 57.8 83.8




42 DIvIDenDspeRoRDInaRyshaRe Dividends recognised as distributions to equity holders: thegroupandtheCompany

2008 2007 amountof amountof gross dividendnet gross dividendnet pershare oftax pershare oftax sen RM’000 sen RM’000

Final dividend 25.0 619,282 15.0 368,168Special dividend - - 25.0 615,020

25.0 619,282 40.0 983,188

The proposed dividends for the previous financial year were approved by the shareholders and paid in the current financial year. This is shown as a deduction from the retained profits in the statement of changes in equity in the current financial year.

The Directors have declared an interim gross dividend of 25 sen per ordinary share, comprising 20.7 sen per ordinary share less income tax of 25% and 4.3 sen tax exempt on 3,527,468,718 ordinary shares amounting to RM699,387,214 in respect of the financial year ended 31 December 2008. The interim dividend was approved by the Board of Directors in a resolution dated 20 February 2009.

43 sIgnIfICantRelateDpaRtytRansaCtIonsanDbalanCes (a) therelatedpartiesof,andtheirrelationshipwiththeCompany,areasfollows:

Relatedparties Relationship Subsidiaries of the Company as disclosed in Note 12 Subsidiaries Associates of the Company as disclosed in Note 13 Associates Proton Commerce Sdn Bhd Joint venture company Key management personnel See below

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group and the Company either directly or indirectly. The key management personnel of the Group and the Company include all the Directors of the Company and employees of the Group who make certain critical decisions in relation to the strategic direction of the Group.

(b) Relatedpartytransactions In addition to related party disclosures mentioned elsewhere in the Financial Statements, set out below are other significant

related party transactions. The related party transactions described below were carried out on terms and conditions obtainable in transactions with unrelated parties unless otherwise stated. Interest rates on fixed and short term deposits were at normal commercial rates.




43 sIgnIfICantRelateDpaRtytRansaCtIonsanDbalanCes(ContInueD) (b) Relatedpartytransactions(Continued) keymanagement subsidiaries associates personnel

2008 2007 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Relatedpartytransactions

thegroupIncomeearnedInterest on loans, advances and financing - - - - 31 152Brokerage income - - - - 38 480 expenditureincurredInterest on deposits from customers and securities sold under repurchase agreements - - - - 723 3,429

theCompanyIncomeearnedInterest on fixed deposits and money market 6,364 19,605 - - - - Interest on preference shares 42,875 54,621 - - - - Accretion on held-to-maturity securities 10,587 12,095 - - - - Accretion of investment gain 41,305 38,125 - - - - Interest on savings account 273 550 - - - - Interest income on interest rate swap - 66 - - - - Dividend income 1,643,399 2,081,637 - - - - Rental income 4,059 4,037 - - - - expenditureincurredInterest expense on interest rate swap - (50) - - - -




43 sIgnIfICantRelateDpaRtytRansaCtIonsanDbalanCes(ContInueD) (c) Relatedpartybalances keymanagement subsidiaries associates personnel

2008 2007 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Relatedpartybalances

thegroupamountduefromLoans, advances and financing - - - - 837 2,855 amountdueto Deposits from customers and securities sold under repurchase agreements - - - - 72,813 119,439Others - - - - 1,183 1,260 theCompanyamountduefrom Demand deposits, savings and fixed deposits 403,068 374,428 - - - - Amount due from unincorporated trust, BC Trustee 66,571 94,966 - - - -Commerce International Group RCULS 34,345 34,345 - - - - ICULS 2001/2011 553,974 512,669 - - - - Advance to Commerce Asset Realty - 350 - - - - Advance to Commerce MGI 510 510 - - - - CIMB Bank ICULS Detachable coupons 55,772 84,158 - - - - Redeemable preference shares 37,750 1,300,000 - - - - Others 4,895,332 3,065,862 - - - -

amountduetoAmount due to Commerce Capital Labuan (29,515) (25,536) - - - -

Other inter-company balances are unsecured, non-interest bearing and has no fixed repayment terms.




43 sIgnIfICantRelateDpaRtytRansaCtIonsanDbalanCes(ContInueD) (d) keymanagementpersonnel Key management compensation

thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Salaries and other short term employee benefits 52,635 84,169 2,285 2,066 Other long term benefits - 2,142 - -

52,635 86,311 2,285 2,066 Share options of the Company (units) 24,511,424 21,860,000 6,750,000 8,250,000

Included in the above table is the Executive Directors’ compensation which is disclosed in Note 39. The share options granted are on the same terms and conditions as those offered to other employees of the Group and the Company as disclosed in Note 44 to the Financial Statements.

Loans made to other key management personnel of the Group and the Company are on similar terms and conditions generally available to other employees within the Group. No specific allowance has been required in 2008 and 2007 for the loans, advances and financing made to the key management personnel.

(e) Credittransactionsandexposureswithconnectedparties Credit exposures with connected parties as per BNM’s revised “Guidelines on Credit Transactions and Exposures with

Connected Parties” which became effective on 1 January 2008 are as follows: thegroup

2008 RM’000

Outstanding credit exposures with connected parties 6,293,236Percentage of outstanding credit exposures to connected parties as a proportion of total credit exposures 4.77%Percentage of outstanding credit exposures to connected parties which is non-performing or in default 0.00%




44 eMployeebenefIts (a) ModifiedCIMbbexecutiveemployeeshareoptionscheme(“Modifiedeesos”) The share options granted to Directors and employees of the Group are that of the Company. The Employee Share Option

Scheme was granted on 11 March 2006 and is governed by the by-laws approved by the Company’s shareholders on 8 September 2006.

Prior to the CIMBB Restructuring and consistent with the fair treatment to all Executive Employees and continuance of the CIMBB EESOS, a trust was set up to subscribe for all the remaining CIMBB shares through an accelerated vesting of the unexercisable tranches under the CIMBB EESOS in 2006. The EESOS Trustee opted for new shares in the Company at the ratio approximately 1.146 of the Company’s shares for one CIMBB share held pursuant to the CIMBB scheme.

The main features of the Modified EESOS are as follows:

(a) An entitlement is personal to the Eligible Executive and is non-assignable and non-transferable by the Eligible Executive except with prior written consent of the Employee Share Scheme (“ESS”) Committee.

(b) The reference strike price of the entitlement is determined by reference to the amount of the ESS Loan utilised by the Trustee to procure the ESS shares and shall be calculated on a step-up basis from the first anniversary of the effective date of ESS.

(c) The Eligible Executive shall be entitled to the voting rights of the ESS shares which are in his Employee CDS Account and over which he has entitlements until the termination or lapse of the entitlements in accordance with the terms and conditions.

(d) The Eligible Executive shall be entitled to the distribution rights of the ESS shares upon acceptance of the entitlements and until the lapse or earlier termination of the entitlements in accordance with the terms and conditions.

(e) A total of 41,014,009 share options with adjusted option price were offered to the Eligible Executives. The total share

options are categorised as follows:

(i) Modified EESOS 1 4,675,000 share options were offered at an initial option price of RM1.27 per share option which has expired on

29 December 2007;

(ii) Modified EESOS 2 16,021,459 share options were offered at an initial option price of RM3.49 per share option with expiry date on

29 December 2008. The expiry date was subsequently extended to 29 December 2009;

(iii) Modified EESOS 3 1,051,875 share options were offered at an initial option price of RM3.80 per share option with expiry date on 29

December 2008. The expiry date was subsequently extended to 29 December 2009; and

(iv) Modified EESOS 4 19,265,675 share options were offered at an initial option price of RM4.18 per share option with expiry date on

29 December 2009.




44 eMployeebenefIts(ContInueD) (a) ModifiedCIMbbexecutiveemployeeshareoptionscheme(“Modifiedeesos”)(Continued) On 26 September 2008, the Board of Directors had approved the extension of the expiry date from 29 December 2008

to 29 December 2009 for Modified EESOS 2 and Modified EESOS 3. The extension of the expiry date of these options is deemed as a modification to the terms and conditions on the share option scheme and therefore FRS 2 is applicable for Modified EESOS 2 and Modified EESOS 3, which were previously out of the scope of FRS 2.

Movements in the number of share options outstanding and their related weighted average exercise prices for share options captured under FRS 2, are as follows:

2008 2007

weighted weighted average average exercise exercise price options price options RM/share (units‘000) RM/share (units‘000)

At start of financial year 4.23 13,640 4.39 14,200 Arising from modification of Modified EESOS 2 & 3 4.22 8,143 - -Granted - - 4.27 777 Forfeited 4.59 (152) 3.75 (996)Exercised 4.10 (4,463) 4.39 (341)

At end of financial year 4.65 17,168 4.23 13,640

Out of the outstanding options, all 17,167,865 units (2007: 9,137,699 units) of options were exercisable. The weighted average share price during the period, should the options have been exercised on a regular basis throughout the period was RM9.56 (2007: RM10.72) per share.

The options outstanding at year end had exercise prices ranging from RM4.05 to RM4.84 (2007: RM3.86 to RM4.84), and a weighted average remaining contractual life of 1 year (2007: 2 years).

The weighted average fair value of options granted under EESOS 2, EESOS 3 and Tranche 4 of EESOS 4, which are deemed as an equity-settled payment under FRS 2- Share-based Payment, determined using the Trinomial valuation model was RM3.84, RM3.53 and RM1.50 per option respectively.

The significant inputs into the model were as follows:

eesos2 eesos3 eesos4

valuationassumptions:- expected volatility 41.00% 41.00% 28.45%- expected dividend yield 3.23% 3.23% 2.04%- expected option life 1 year 1 year 1 yearWeighted average share price at grant date RM7.75 RM7.75 RM4.40Weighted average risk-free interest rate 3.55% 3.55% 3.49% The volatility measured at the standard deviation on daily share price returns is based on statistical analysis of daily prices over the last 1 year from grant date.




44 eMployeebenefIts(ContInueD) (a) ModifiedCIMbbexecutiveemployeeshareoptionscheme(“Modifiedeesos”)(Continued) The movements in the number of share options outstanding and their related weighted average exercise prices for share

options not captured under FRS 2 are as follows:

2008 2007

average average exercise exercise price options price options RM/share (units‘000) RM/share (units‘000)

At start of financial year 4.22 8,143 3.33 20,072 Arising from modification of Modified EESOS 2 & 3 4.22 (8,143) - - Forfeited - - 4.39 (1,115)Exercised - - 3.30 (10,814)

At end of financial year - - 4.22 8,143

The weighted average share price during the period, should the options have been exercised on a regular basis throughout the period was RM Nil (2007: RM10.72) per share.

The options outstanding at year end had exercise prices ranging from RM Nil (2007: RM3.86 to RM4.61), and a weighted average remaining contractual life of 1 year (2007: 2 years).

(b) Managementequityscheme(“Mes”) This scheme was initiated as part of a performance linked compensation scheme by a substantial shareholder of the

Company. The scheme was initially launched on 1 March 2004 and the scheme will continue to be in force until 28 February 2012.

The eligibility for participation in the scheme shall be at the discretion of the Nomination and Remuneration Committee of the Company. Entitlements of eligible members of senior management are non-assignable and non-transferable whereby the Nomination and Remuneration Committee of the Company administers the scheme on behalf of the substantial shareholder. The entitlements granted vest in proportions across various exercised periods.

On 22 December 2008, the substantial shareholder of BCHB had approved the extension of the MES Scheme from 28 February 2009 to 28 February 2012. The MES will continue to be in force until 28 February 2012, after which the voting rights of unexercised balances will remain with the substantial shareholder of BCHB.

The number of entitlements granted during the financial year is 4,450,000 units (2007: 15,405,000 units) and number of entitlements outstanding as at year end is 18,623,000 units (2007: 26,286,000 units).

All entitlements have the same reference price of RM3.48 each. The weighted average remaining contractual life is 3.2 years (2007: 1.2 years).




44 eMployeebenefIts(ContInueD) (C) Managementoptionprogramme(“Mop”) A similar scheme to the MES above was implemented for the Executive Directors of a subsidiary, Bank CIMB Niaga. An

allocation of shares was purchased by the Company from the Indonesian Banking Restructuring Agency, which was tendered for sale and used for the sole purpose of the implementation of the MOP as an incentive scheme for the Executive Directors of Bank CIMB Niaga to increase productivity.

The implementation of the MOP was made in 2006 and the period for the MOP is effective from the date of acceptance

of the grant until 31 October 2008. The eligible persons are Executive Directors who had been appointed to the Board of Executive Directors of Bank CIMB

Niaga as at 1 November 2003 and when an offer is made in writing to the Executive Directors to participate in the scheme. The eligibility for participation in the scheme shall be at the discretion of the Nomination and Remuneration Committee of Bank CIMB Niaga. An entitlement is personal to the eligible person and is non-assignable and non-transferable by the eligible person. The Nomination and Remuneration Committee at Bank CIMB Niaga administers the scheme on behalf of the Company as the major shareholder.

The voting rights of the unexercised balance remain with the shareholder. The Company had set aside Bank Niaga’s shares to be offered to Bank Niaga’s Executive Directors under the Management

Option Programme (MOP) which came into effect on 30 June 2006 for a period of 2 ½ years. The Company, via its letter dated 22 June 2006, offered to Executive Directors an entitlement to participate in the programme.

The movements in the number of share options outstanding and their related weighted average exercise prices for share

options captured under FRS 2, are as follows:

2008 2007


At start of financial year 0.13 30,970 0.13 58,133 Exercised 0.13 (30,970) 0.13 (27,163)

At end of financial year 0.00 - 0.13 30,970

The weighted average share price at the time of exercise was RM0.28 (2007: RM0.36) per share. There is no transaction costs deducted against share premium account.

Share options outstanding at the end of the year have the following expiry dates and exercise prices:

unitofshares

expirydate exerciseprice 2008 2007 RM/share ‘000 ‘000

31 December 2007 0.14 - 13,734 31 December 2008 0.15 - 17,236

- 30,970




44 eMployeebenefIts(ContInueD) (C) Managementoptionprogramme(“Mop”)(Continued) The weighted average fair value of options granted which is deemed as an equity-settled payment under FRS 2: Share-

based Payment, determined using the Binomial valuation model was RM0.24 per option (2007: RM0.24). The significant inputs into the model were as follows:

valuationassumptions: - expected volatility 40.63% - expected dividend yield 1.55% - expected option life 1½ years Share prices at grant date Range from RM0.22 to RM0.37 Risk-free interest rate (per annum) 12.40%

The volatility measured at the standard deviation on daily share price returns is based on statistical analysis of daily prices over the last 1 year.

No additional units of share options were granted subsequent to year end.

(D) employeestockoptionprogramme(“esop”) On 1 September 2004, a subsidiary, Bank CIMB Niaga, implemented an Employee Stock Option Programme (“ESOP”).

The ESOP is governed by the by-laws which were approved by the shareholders on 17 December 2003.

The main features of the ESOP are:

(a) A total share options of 391,230,320 new Series B shares of Bank CIMB Niaga was granted to Bank CIMB Niaga’s employees. This amount represents 5% of Series B ordinary shares which amounts to 7,752,752,784 shares. The exercise price set was RM0.13. The grant was approved by the shareholders on 17 December 2003.

(b) Subsequently, as a result of the increase of share capital and additional paid in capital arising from Rights Issue IV, 25 August 2005 the terms and conditions on ESOP was amended and the exercise price was reduced from RM0.13 to RM0.12 and the number of options was increased by 29,383,795 shares.

(c) Employees who meet certain criteria are eligible to options under the plan and include:

(i) Employees who have worked for 3 years at Bank CIMB Niaga; (ii) Employees who are non clerk or above; and (iii) New “special hire” employees who have passed the probation period and are not required to pass the 3-year

working period.

(d) Options which are not exercised in a particular period can be carried forward to the next exercise period.

(e) Under the plan, new shares are granted from the authorised capital, and not from issued or repurchased capital stock.




44 eMployeebenefIts(ContInueD) (D) employeestockoptionprogramme(“esop”)(Continued) (f) Movements in the number of share options outstanding and their related weighted average exercise prices are as

follows:

2008 2007


At start of financial year 0.12 34,862 0.12 53,176 Granted 0.12 50,647 0.12 23,292 Exercised 0.12 (85,120) 0.12 (41,606)Forfeited 0.12 (389) - -

At end of financial year - - 0.12 34,862

All options outstanding are exercisable immediately. Options exercised during the period resulted in 85,120,000 units

of shares (2007: 41,605,500) being issued at RM0.12 each (2007: RM0.12). The weighted average share price at the time of exercise was RM0.26 (2007: RM0.32) per share.

The options outstanding at year end had exercise prices of RMNil (2007: RM0.11), and remaining contractual life of 0 years (2007: ¼ years).

The weighted average fair value of options granted which is deemed as an equity-settled payment under FRS 2, determined using the Binomial valuation model was RM0.13 per option. The significant inputs into the model were as follows:

valuationassumptions: - expected volatility 43.55% - expected dividend yield 2.38% - expected option life ¼ years Share prices at grant date Range from RM0.16 to RM0.37 Risk-free interest rate (per annum) 7.70%

The volatility measured at the standard deviation on daily share price returns is based on statistical analysis of daily prices over the last 1 year.




45 CapItalCoMMItMents Capital expenditure approved by Directors but not provided for in the Financial Statements are as follows:

thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Capital expenditure: Authorised and contracted for 311,133 342,162 - 115,875 Authorised but not contracted for 682,073 1,056,201 - -

993,206 1,398,363 - 115,875

Analysed as follows: thegroup theCompany

2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 661,313 1,002,393 - 115,875 Subscription for investments 57,610 62,750 - - Bank guarantee 121,381 89,755 - - Software development 3,929 15,081 - - Computer software 132,568 228,384 - - Projects 16,405 - - -

993,206 1,398,363 - 115,875

46 leaseCoMMItMents The lease commitments are in respect of rented premises and hired equipment, all of which are classified as operating leases.

A summary of the non-cancellable long-term commitments net of sub-leases is as follows: thegroup

2008 2007 RM’000 RM’000

Within one year 112,879 107,640One year to less than five years 89,271 111,856Five years and more 4,979 11,595




47 segMentRepoRtIng (a) primaryreportingformat–businesssegments

Definition of segments For management purposes, the Group is organised into seven major operating divisions. The divisions form the basis on

which the Group reports its primary segment information.

Consumer Banking Consumer Banking comprises of Retail Banking, Business Banking, Direct Banking and Cards and CIMB Express.

Retail Banking focuses on introducing innovative products and services to individual customers. It offers products such as credit facilities (residential mortgages, personal loans, shares financing and hire purchase financing), private client services, remittance services and deposit acceptance.

Business Banking is responsible for the development of products and services for customer segments comprising micro-enterprises, small and medium-scale enterprises (SMEs) and mid-sized corporation, as well as the management of business loan portfolios of these customer segments.

Direct Banking and Cards focuses on mass affluent customers and credit card business while CIMB Express caters to lower income customers offering product such as microcredit loan.

Corporate and Investment Banking Corporate and Investment Banking comprise investment banking, corporate finance, corporate banking, international

banking and transactional services, equity capital markets, retail and institutional equities, equity derivatives and equity investment and trading.

Investment Banking and Corporate Finance offers financial advisory services to corporations, advising issuance of equity and equity-linked products, debt restructuring, mergers and acquisitions, initial public offerings, secondary offerings and general corporate advisory. Corporate Banking provides a broad spectrum of financial and Ringgit lending services for domestic and multinational corporations as well as institutional and public sector clients. International Banking and Transactional Services oversees the activities of the Group’s overseas branches in London, Singapore and Hong Kong and provides conventional and customised financial packages in order to meet customers’ needs, with products including non-Ringgit corporate lending, nominee services and cash management services.

Equity Capital Markets provides services including acting as underwriter, global co-ordinator, book runner or lead manager for equity and equity-linked transactions, originating, structuring, pricing and executing equity and equity-linked issues and executing programme trades, block trades and market making. Equity Derivatives Group develops and issues new equity derivatives instruments such as structured warrants and over-the-counter options to provide investors with alternative investment avenues. Equity Investment and Trading is the Group’s Proprietary Equity Trading Unit. Retail and institutional equities provide stock broking services to retail and corporate clients.




47 segMentRepoRtIng(ContInueD) (a) primaryreportingformat–businesssegments(Continued)

Treasury and Investment Treasury focuses on treasury activities and services which include foreign exchange, money market, derivatives and

trading of capital market instruments. It also invests the Group’s proprietary capital.

Asset Management Asset Management comprises wholesale fund management, unit trust, private equity and venture capital activities.

Insurance Insurance comprises the general, life and takaful activities. The entire general insurance business was disposed on 28

August 2007, while 49% of the life and takaful business was disposed on 2 July 2007.

Foreign Banking Operations Foreign Banking Operations comprises of PT Bank CIMB Niaga Tbk and BankThai Public Company Limited, which is

involved in the provision in the commercial banking and related services.

Support and others Support services comprise all middle and back-office processes, cost centres and non-profit generating divisions of

companies in the Group. Other business segments in the Group include investment holding, property management and other related services, whose results are not material to the Group.




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fit/(l

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s 1,

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s (2

80)

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visi

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d co

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- -

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- (7

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es

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men

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253

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taxa

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741,

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546




47

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of in

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asse

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47

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- 86

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17

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831

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685,

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44)

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fit

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rta

xati

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2,

914,

175




47

se

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tIn

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on

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619,

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4,44

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4,57

6

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8 2,

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408,

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632,

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asse

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- -

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3,16

9,02

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169,

028

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lass

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69

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20

68,3

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8 2,

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2,80

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9

Seg

men

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45,2

58,2

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58

77,6

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s -

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465,

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tota

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93,2

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paid

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(2,2

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sets

(4

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of d

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rem

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22

1 (3

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113

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tity

124,

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124,

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-

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14,2

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appl

ied.




47 segMentRepoRtIng(ContInueD) (b) secondaryreportingformat–geographicalsegments The Group’s business segments are managed on a worldwide basis and they operate mainly in three main geographical

areas:

- Malaysia, the home country of the Group, which includes all the areas of operations in the primary business segments.

- Indonesia, the areas of operation in this country include all the primary business segments of its subsidiary bank, PT Bank CIMB Niaga.

- Other countries include branch and subsidiary operations in Singapore, United Kingdom, United States of America, Hong Kong and Thailand. The overseas operations are involved mainly in corporate lending and borrowing, and stockbroking activities. With the exception of Malaysia and Indonesia, no other individual country contributed more than 10% of the consolidated net interest income or assets.

netinterest total total Capital income assets liabilities expenditure thegroup RM’000 RM’000 RM’000 RM’000

2008Malaysia 3,709,832 172,241,503 157,447,420 428,634Indonesia 907,247 33,219,499 30,247,061 30,413Other countries 43,517 1,274,708 678,780 7,207

4,660,596 206,735,710 188,373,261 466,254

2007Malaysia 3,581,086 160,861,904 146,431,379 539,910 Indonesia 789,734 19,303,799 17,487,088 26,365 Other countries 25,110 2,635,536 2,028,162 22,608

4,395,930 182,801,239 165,946,629 588,883

48 sIgnIfICanteventsDuRIngthefInanCIalyeaR (a) CIMbbankberhadalliancewithInternationalCurrencyexchange(“ICe”) On 18 January 2008, CIMB Bank Berhad (“CIMB Bank”) signed a Participation Agreement with ICE Commercial Services

Sdn Bhd and Lenlyn UK Limited to manage CIMB Bank Berhad’s retail foreign exchange business.

(b) IssuanceofuptoRM1.5billionsubordinatedbondsbyCIMbbankberhad On 17 March 2008, CIMB Bank obtained approval from the Securities Commission for the proposed issuance of up to

RM1.5 billion subordinated bonds. The proceeds from the issue will be used for its working capital purposes which include refinancing some of its debts obligations. The bonds were issued on 28 March 2008.




48 sIgnIfICanteventsDuRIngthefInanCIalyeaR(ContInueD) (c) CIMbgroup’sproposedacquisitionof19.99%equitystakeinbankofyingkouCo.ltd(“bankofyingkou”),

China On 17 March 2008, CIMBG entered into a Share Subscription Agreement with Bank of Yingkou for the subscription of

141.2 million new ordinary shares of RMB1.00 each, representing approximately 19.99% of the enlarged issued and paid up capital of Bank of Yingkou for a total cash subscription amount of RMB348.8 million (equivalent to approximately RM156.2 million). As an integral part of the proposed acquisition, on the same day, CIMBG also entered into an Investor’s Rights Agreement and a Cooperation and Technical Assistance Agreement with Bank of Yingkou. On 20 May 2008, BNM approved this proposed acquisition. The China Banking Regulatory Commission had vide its letter dated 22 December 2008 to the Bank of Yingkou (of which the translated copy of the same was received by the Company on 5 January 2009), approved the Proposed Acquisition. The transaction is pending completion.

(d) Disposalofsoutheastasianbanklimited(“seabank”) On 1 April 2008, the CIMB Bank disposed its 60% equity interest in SEA Bank to British American Investment Co (Mauritius)

Ltd. for a cash consideration of RM40 million based on willing buyer-willing seller basis.

See Note 51(c)(i) for the effects of the disposal on the Financial Statements of the Group.

(e) acquisitionofptasuransiJiwaJohnhancockIndonesia On 9 September 2008, Commerce International Group Berhad and PT Bank CIMB Niaga Tbk, both indirect subsidiaries

of BCHB, completed the acquisition of the entire equity interest in PT Asuransi Jiwa John Hancock Indonesia (“JHI”) from John Hancock Life Insurance Company and PT Indras Insan Jaya Utama for a total cash consideration of approximately 76,472 million Indonesian Rupiah (“Rp”) (equivalent to approximately RM28 million). The purchase consideration is based on the net asset value of JHI plus premium of Rp4,500 million (equivalent to approximately RM1.7 million). Accordingly, JHI is now an indirect subsidiary of BCHB.

(f) Disposalofentireequityinterestinnavis-CIMbgeneralpartnerltd(“navis-CIMb”) On 18 September 2008, CIMB(L) Limited, a wholly owned subsidiary of CIMB Bank, had disposed its entire 25% equity

interest in Navis-CIMB to Navis Capital Partners Ltd.

See Note 51(c)(iii) for the effects of the disposal on the Financial Statements of the Group.

(g) IssuanceofInnovativetier-1Capital On 24 September 2008, the Securities Commission had approved issuance of up to RM1.0 billion Innovative Tier-1 Capital

Securities (“IT-1 Issue”) by CIMB Bank. The IT-1 Issue was completed on 7 October 2008.

(h) DisposalbysbbCapitalMarketssdnbhd(“sCMsb”),awhollyownedsubsidiaryofCIMbbank,ofits100%equityinterestinsbbsecuritiessdnbhd(“sssb”)tohlgCreditsdnbhd(“hlgC”)(“sssbDisposal”)

SCMSB and CIMB Bank had on 19 October 2007 entered into a conditional share sale agreement with HLGC and HLG Capital Berhad for the proposed disposal by SCMSB of its 100% equity interest in SSSB to HLGC for a total consideration to be determined at a later date. The transaction was completed on 22 October 2008 for a total cash consideration of RM75.2 million based on a willing buyer-willing seller basis.

See Note 51(c)(ii) for the effects of the disposal on the Financial Statements of the Group.




48 sIgnIfICanteventsDuRIngthefInanCIalyeaR(ContInueD) (i) Mergerbetweenptbankniagatbk(“bankniaga”),anindirectsubsidiaryofbumiputra-Commerceholdings

berhad(“bChb”),andptbanklippotbk(“banklippo”),anindirectsubsidiaryofkhazanahnasionalberhad(“khazanah”)(“proposedMerger”)

On 2 June 2008, the Company announced a proposed merger between Bank Niaga, an indirect subsidiary of BCHB and Bank Lippo, an indirect subsidiary of Khazanah, pursuant to Bank Indonesia Regulation on Single Presence in Indonesia Banks. Under the proposed merger, Bank Lippo shall be merged into Bank Niaga and the shareholders of Bank Lippo shall become the shareholders of Bank Niaga by the operation of law. As an integral part of the proposed merger, BCHB and CIMBG have entered into a Share Sale and Purchase Agreement (“SSPA”) with Khazanah and its wholly owned subsidiary, Santubong Investments B.V. (“Santubong”), for the proposed acquisition of 1,997,023,850 Class B ordinary shares with par value of IDR100 each in Bank Lippo representing 51% of the total issued shares of Bank Lippo by CIMBG from Santubong for a total purchase consideration of approximately IDR5,929,164 million (equivalent to approximately RM2,070.96 million). The purchase consideration will be satisfied by BCHB for and on behalf of CIMBG through the issuance of 207,096,186 new BCHB shares to Khazanah at an issue price of RM10.00 per BCHB share. This acquisition from Santubong has been completed on 28 October 2008. With the completion of the 51% Lippo acquisition, Bank Niaga and Bank Lippo were merged on 1 November 2008. The 207,096,186 new BCHB shares were listed on 6 November 2008 and the merged entity is known as Bank CIMB Niaga. See Note 51(a)(ii) for the effects of the acquisition on the Financial Statements of the Group.

(j) saleofnon-performingloans On 13 August 2008, the CIMB Bank entered into a conditional sale and purchase agreement to sell RM1.1 billion worth of

non-performing loans (“NPLs”) to Sinesinga Sdn Bhd, a special purpose vehicle created by Standard Merchant Bank (Asia) Limited, which is part of the Standard Bank Group of South Africa. Approval was obtained from Bank Negara Malaysia on 30 October 2008 which is conditional on change in the 51% ownership of Sinesinga Sdn Bhd within six months from completion date of the NPL sale. The transaction was completed on 1 November 2008. The Group has recognised a gain of RM92,900,000 from the sale of the NPLs, of which RM87,375,000 is treated as a reduction of allowances for losses on loans, advances and financing and the balance of RM5,541,000 as interest recovered.

(k) proposedissuancebyCIMbbank(l)limited(“CIMbl”),anapproximately99.999%ownedindirectsubsidiaryofbChb,ofuptousD150millionseniorunsecuredguaranteedbonds,andproposedissuancebybChboffive(5)yearwarrants(collectively,the“proposedIssuance”)

On 3 November 2008, the Company had announced that BCHB and CIMBL had entered into a subscription agreement with TPG Malaysia Finance, L. P. (“TPG”) for the Proposed Issuance. The Proposed Issuance is pending the approvals from the relevant authorities.

(l) acquisitionof42.14%equitystakeinbankthaipublicCompanylimited(“bankthai”) On 20 June 2008, a subsidiary, CIMBG Sdn Bhd, entered into a Share Purchase Agreement (“SPA”) with Financial Institutions

Development Fund (“FIDF”) to purchase or to procure CIMB Bank to purchase 2,811,862,559 fully paid ordinary shares of Baht 3.75 par value each in the share capital of BankThai, representing approximately 42.13% of the total issued shares in BankThai, from FIDF for a total cash consideration of approximately Baht 5,904.9 million (equivalent to approximately RM595.8 million) or a cash consideration of Baht 2.10 per BankThai share. The acquisition was completed on 5 November 2008.

See Note 51(a)(i) for the effects of the acquisition on the Financial Statements of the Group.

Subsequently, on 13 January 2009, CIMB Bank acquired a further 49.91% equity stake in BankThai as disclosed in Note 49(a).




48 sIgnIfICanteventsDuRIngthefInanCIalyeaR(ContInueD) (m)proposedacquisitionsofequityinterestinaffinInsurancebrokerssdnbhd(“aIb”) On 5 October 2007, CIMB Group Sdn Bhd received approval from Bank Negara Malaysia (“BNM”) to enter into discussions

with AFFIN Holdings Berhad (“AHB”) for the proposed acquisition of the entire equity interest in AIB, a wholly-owned subsidiary of AHB. The proposed acquisition has been approved by the Foreign Investment Committee (“FIC”) and BNM on 2 May 2008 and 8 October 2008 respectively. The proposed acquisition was completed on 10 November 2008.

(n) Issuanceofnon-Innovativetier1stapledsecuritiesIssuanceprogramme(“theprogramme”) On 17 December 2008, the Securities Commission approved the issuance of up to RM4.0 billion in nominal value

outstanding at any one time comprising:

(i) Non-Cumulative Perpetual Capital Securities issued by CIMB Bank; and (ii) Subordinated Notes issued by Commerce Returns Berhad, a wholly-owned subsidiary of CIMB Bank

The first issuance under the programme amounting to RM1.0 billion was completed on 26 December 2008.

49 sIgnIfICanteventssubsequenttothefInanCIalyeaRenD (a) acquisitionofadditional49.91%equitystakeinbankthaipublicCompanylimited(“bankthai”) Subsequent to the completion of the 42.14% equity stake in BankThai, CIMB Bank extended a tender offer under the laws

of Thailand to acquire all the remaining BankThai shares not already owned by CIMB Bank (“Tender Offer”). The Tender Offer was completed on 13 January 2009 with a total of approximately 3.33 billion BankThai shares representing approximately 49.91% of the total issued and paid-up share capital of BankThai accepting the Tender Offer and consequently, the Bank’s total equity holding in BankThai is approximately 92.04%, making it a subsidiary of CIMB Bank.

(b) DisposalbyCIMbbankofcertainassets, liabilitiesandtheasset/fundmanagementbusinessofsouthernInvestmentbankberhad(“sIbb”)tohlgCreditsdnbhd(“hlgC”),a75%indirectsubsidiaryofhongleongfinancialgroupberhad(“sIbbDisposal”)

The proposed SIBB Disposal has been approved by the Minister of Finance II on 20 May 2008 and the vesting of the certain assets and liabilities to HLGC was completed on 31 January 2009.

(c) proposedsaleandleasebackofMenarabumiputra-Commerce

On 3 December 2007, CIMB Bank and the Company entered into a Sale and Purchase Agreement (“SPA”) and Lease Agreement (“LA”) with Pelaburan Hartanah Bumiputra Berhad (“PHBB”) for the proposed sale and leaseback of Menara Bumiputra-Commerce.

Pursuant to the SPA and LA, the Company shall dispose Menara Bumiputra-Commerce to PHBB for a total cash consideration of RM460 million. CIMB Bank will then lease Menara Bumiputra-Commerce for an initial lease tenure of ten years with renewal options for two additional periods of five years each. The proposed sale and leaseback of Menara Bumiputra-Commerce was completed on 16 February 2009.




49 sIgnIfICanteventssubsequenttothefInanCIalyeaRenD(ContInueD) (d) Disposalofequity interest inCIMb-principal IslamicassetManagementsdnbhd(formerlyknownassbb

assetManagementsdnbhd)(“CpIaM”)toCIMbgroupsdnbhd(“CIMbg”)andprincipalglobalInvestorsholdingCo.Inc.(“pgIh”)(“CpIaMtransfers”)

On 30 January 2009, CIMB-Principal Asset Management Berhad (“CIMB-Principal”), a 60%-owned subsidiary of CIMBG which in turn is a wholly-owned subsidiary of BCHB, had disposed its 100% equity interest in CPIAM as follows:

(i) 50% equity interest in CPIAM to CIMBG; and(ii) 50% equity interest in CPIAM to PGIH (a wholly-owned subsidiary of Principal Financial Group, Inc.)

at a cash consideration of RM8 million each.

(e) proposeddisposalbytheCompanyofits49%equityinterestinptCommerceInternational

On 16 March 2009, Commerce International Group Berhad (“CIGB”) entered into a Share Purchase Agreement (“SPA”) with PT Parahiyangan Griyanusa (“PTPG”), a 99.0% owned subsidiary of Sun Life Assurance Company of Canada, for the disposal by CIGB of its 49% equity interest in PT Commerce International (“PTCI”) (formerly known as PT Asuransi Jiwa John Hancock Indonesia) to PTPG for a total estimated consideration of 22.7 million United States Dollars (“USD”) (equivalent to approximately RM84.1 million) (“Proposed Disposal”). The purchase consideration is subject to adjustments in accordance with the SPA, if any. The net asset value of PTCI as at September 2008 is 72.7 billion Indonesian Rupiah (equivalent to approximately RM22.5 million).

In conjunction with the Proposed Disposal, PTCI will enter into a bancassurance agreement with PT Bank CIMB Niaga Tbk (“CIMB Niaga”) for the distribution of life insurance products through the distribution network of CIMB Niaga.

50 CapItalaDequaCy (a) The capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited and CIMB (L) Limited), CIMB

Investment Bank, CIMB Islamic Bank and Bank CIMB Niaga for the financial year ended 31 December 2008 are as follows:

CIMb CIMb bank CIMb Investment Islamic CIMb bank bank bank niaga 31December2008 RM’000 RM’000 RM’000 RM’000

Tier I capital 11,662,347 629,641 590,060 3,021,172 Eligible Tier II capital 4,752,839 1,105 75,613 952,519

16,415,186 630,746 665,673 3,973,691 Less: Investment in subsidiaries and holding of other banking institutions’ capital (1,376,978) (19,420) - (65,448)

Capital base before proposed dividend 15,038,208 611,326 665,673 3,908,243

beforedeductingproposeddividendsCore capital ratio 10.89% 40.15% 10.36% 12.05%Risk-weighted capital ratio 14.04% 40.15% 11.69% 15.59% afterdeductingproposeddividends Core capital ratio 10.75% 35.56% 10.36% 11.62%Risk-weighted capital ratio 13.90% 35.56% 11.69% 15.16%




50 CapItalaDequaCy(ContInueD) (b) Components of Tier I and Tier II capital for the financial year ended 31 December 2008 are as follows:


tierIcapitalPaid-up capital 2,974,009 219,242 550,000 489,478 Perpetual preference shares 200,000 - 70,000 - Non-innovative Tier I Capital 1,000,000 - - - Innovative Tier I Capital 1,692,900 - - - Share premium 4,157,074 33,489 - 2,116,445 Other reserves 5,461,432 382,445 127,122 415,249 Less: Deferred tax assets (263,993) (5,535) (21,062) - Goodwill (3,559,075) - (136,000) -

Total Tier I capital 11,662,347 629,641 590,060 3,021,172

tierIIcapitalICULS issued 667,000 - - - Redeemable preference shares 29,740 10 - - Subordinated notes issued 2,539,350 - - - Subordinated loans - - - 653,361 General allowance for bad and doubtful debts and financing 1,516,749 1,095 75,613 299,158

Total eligible Tier II capital 4,752,839 1,105 75,613 952,519 Less: Investment in subsidiaries and holding of other banking institutions’ capital (729,600) (19,420) - (65,448)Investment in joint venture ^ (51,564) - - - Investment in associates (595,814) - - -

Total Capital base 15,038,208 611,326 665,673 3,908,243 Less: Proposed 2008 final dividend (150,000) (70,000) - (106,917)

Total Capital base (net of proposed dividend) 14,888,208 541,326 665,673 3,801,326

^ In accordance with a circular by Bank Negara Malaysia dated 25 April 2006, CIMB Bank is required to deduct 50% of its investment in joint venture company, PCSB from the capital base for the purposes of computing capital adequacy ratio.




50

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50 CapItalaDequaCy(ContInueD) (c) The capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited), CIMB Investment Bank,

CIMB Islamic Bank and Bank CIMB Niaga for the financial year ended 31 December 2007 are as follows:


Tier I capital 9,705,107 748,040 520,952 1,552,760Eligible Tier II capital 3,977,779 6,019 44,987 552,641

13,682,886 754,059 565,939 2,105,401 Less: Investment in subsidiaries and holding of other banking institutions’ capital (861,187) (19,420) - (42,814)

Capital base before proposed dividend 12,821,699 734,639 565,939 2,062,587

beforedeductingproposeddividends Core capital ratio 9.66% 30.09% 15.11% 11.23%Risk-weighted capital ratio 12.76% 30.09% 16.41% 14.92%afterdeductingproposeddividends Core capital ratio 9.36% 23.95% 15.11% 10.25%Risk-weighted capital ratio 12.46% 23.95% 16.41% 13.94%




50 CapItalaDequaCy(ContInueD) (d) Components of Tier I and Tier II capital for the financial year ended 31 December 2007 are as follows:


tierIcapital Paid-up capital 2,974,009 219,242 550,000 400,067 Non-cumulative guaranteed preference shares 1,500,000 - - - Innovative Tier I Capital 661,400 - - - Share premium 4,157,074 33,489 - 735,009 Other reserves 4,342,222 494,971 123,803 417,684 Less: Deferred tax (assets)/liabilities (370,523) 338 (16,851) - Goodwill (3,559,075) - (136,000) -

Total Tier I capital 9,705,107 748,040 520,952 1,552,760 tierIIcapital ICULS issued 667,000 - - - Subordinated notes issued 1,984,200 - - - Subordinated loans - - - 337,160 General allowance for bad and doubtful debts and financing 1,326,579 6,019 44,987 163,659 Others - - - 51,822Total eligible Tier II capital 3,977,779 6,019 44,987 552,641 Less: Investment in subsidiaries and holding of other banking institutions’ capital (809,623) (19,420) - (42,814)Investment in joint venture ^ (51,564) - - -

Total Capital base 12,821,699 734,639 565,939 2,062,587 Less: Proposed 2007 final dividend (300,000) (150,000) - (135,605)

Total Capital base (net of proposed dividend) 12,521,699 584,639 565,939 1,926,982

^ In accordance with a circular by Bank Negara Malaysia dated 25 April 2006, CIMB Bank is required to deduct 50% of its investment in joint venture company, PCSB from the capital base for the purposes of computing capital adequacy ratio.




50

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51 Acquisition/disposAlofsubsidiAries(a) Acquisitionsduringthefinancialyearareasfollows:

(i) Acquisitionofbankthaipubliccompanylimited On 5 November 2008, CIMB Bank Berhad had acquired approximately 42.13% of the total issued share capital of

BankThai Public Company Limited. The share of net assets arising from the acquisition are as follows:

fairvalue provisional carryingvalue adjustments fairvalue rM’000 rM’000 rM’000

Cash and short term funds 411,306 - 411,306 Deposits and placements with bank and other financial institutions 4,272,528 - 4,272,528 Investments 4,488,772 - 4,488,772 Loans, advances and financing 8,149,980 (6,739) 8,143,241 Properties foreclosed 259,075 - 259,075 Property, plant and equipment 386,607 - 386,607 Intangible assets 50,221 - 50,221 Other assets 1,757,763 32,111 1,789,874 Deposits from customers (15,791,580) - (15,791,580) Deposits and placements of bank and other financial institutions (661,791) - (661,791) Bills and acceptances payable (18,087) - (18,087) Borrowings (758,002) - (758,002) Other liabilities (2,034,710) (22,795) (2,057,505)

Net assets 512,082 2,577 514,659 Share of net assets acquired 216,811 Premium on acquisition 379,003

Purchase consideration satisfied via cash 595,814

The premium on acquisition represents the value of synergies arising from the acquisition. The adjustments to other assets, loans, advances and financing and other liabilities relate to valuation adjustments and are provisional, based on management’s best estimates. The fair value adjustments in respect of intangible assets are in progress. As disclosed in Note 49(a), CIMB Bank acquired a further 49.91% of the total issued and paid-up share capital of BankThai, thus making BankThai a subsidiary of CIMB Bank. The fair value adjustments will be finalised in the 2009 Financial Statements.

The acquisition contributed to a share of loss of associate of RM40,701,460 to the Group for the period from 5 November 2008 to 31 December 2008. If the acquisition had occurred on 1 January 2008, the associate would have contributed revenue (comprising net income and non-interest income) and net loss of RM299,670,532 and RM62,175,105 respectively, to the Group.




51 Acquisition/disposAlofsubsidiAries(continued)(a) Acquisitionsduringthefinancialyearareasfollows:(continued)

(ii) Acquisitionofptbanklippotbk(“banklippo”)andmergerofbanklippoandptbankniagatbk(“bankniaga”)On 28 October 2008, BCHB had via its direct subsidiary, CIMB Group Sdn Bhd acquired 51% equity interest in Bank Lippo from Khazanah Nasional Berhad (“Khazanah”) and approximately 4.7% equity interest in Bank Lippo from other minority shareholders. The acquisition was satisfied by issuance of 207,096,186 new BCHB ordinary shares and cash consideration amounting to RM198.9 million respectively.

The assets and liabilities arising from the acquisition of Bank Lippo on 28 October 2008 based on its provisional fair values are as follows:

Acquiree’s provisional fairvalues rM’000

Cash and short term funds 723,060 Deposits and placements with banks and other financial institutions 348,764 Securities held for trading 46,423 Available-for-sale securities 589,681 Held-to-maturity securities 102,773 Derivative financial instruments 132,096 Loans, advances and financing 4,440,622 Other assets 297,860 Deferred tax assets 110,621 Investment in associates 530 Property, plant and equipment 136,235 Deposits from customers (5,459,539) Deposits and placements of bank and other financial institutions (13,082) Derivative financial instruments (196,294) Bills and acceptances payable (35,348) Provision for taxation (24,840) Subordinated notes (393,891) Borrowings (14,159) Other liabilities (268,152)

Net assets 523,360 Less: Minority interest (9,799)

Net assets acquired 513,561 Provisional goodwill on acquisition 896,889

Purchase consideration 1,410,450

Purchase consideration satisfied via issuance of new BCHB shares 1,211,513 Purchase consideration satisfied via cash 198,937

1,410,450 Less: cash and cash equivalents acquired (723,060)

Cash outflow on acquisition 687,390





(ii) Acquisitionofptbanklippotbk(“banklippo”)andmergerofbanklippoandptbankniagatbk(“bankniaga”)(continued)The provisional fair values of the assets and liabilities are based on Bank Lippo’s carrying amount as at 28 October 2008. The goodwill on acquisition, which was determined provisionally, represents the value of synergies arising from the acquisition. Fair value adjustments and values attributed to the identified intangible assets and other assets and liabilities will be finalised in the 2009 Financial Statements.

As part of the proposed merger scheme, a cash offer facility was also offered to the minority shareholders of Bank Niaga. Approximately 36.26% of minority shareholders participated in the cash offer facility. The total cash consideration from the Bank Niaga cash offer facility was RM1.78 billion, resulting in additional goodwill amounting to RM1.16 billion.

The acquisition contributed to revenue (comprising net income, Islamic banking operations and non-interest income) of RM186,967,968 and net profit of RM22,217,101 to the Group for the period from 28 October 2008 to 31 December 2008. If the acquisition had occurred on 1 January 2008, the subsidiary would have contributed revenue and net profit of RM899,060,807 and RM59,816,072 respectively, to the Group.

(iii) AcquisitionofAffininsurancebrokerssdnbhd(“Aib”)On 10 November 2008, the Group acquired the entire equity interest in AIB for a cash consideration of RM2,500,000.

The assets and liabilities arising from the acquisition of AIB are as follows:

Atfairvalue rM’000

Cash and short term funds 209 Deposits and placements with bank and other financial institutions 609 Other assets 117 Property, plant and equipment 236 Deferred tax liability (39) Provision for taxation (85) Other liabilities (47)

Net assets acquired 1,000 Goodwill on acquisition 1,500


Less: cash and cash equivalents acquired (209)


The premium on acquisition represents the value of synergies arising from the acquisition.

The acquisition contributed to revenue (comprising net income and non-interest income) of RM2,359,490 and net profit of RM1,191,552 to the Group for the period from 10 November 2008 to 31 December 2008. If the acquisition had occurred on 1 January 2008, the subsidiary would have contributed revenue and net profit of RM5,651,825 and RM1,095,410 respectively, to the Group.





(iv)AcquisitionofptAsuransiJiwaJohnHancockindonesiaOn 9 September 2008, Commerce International Group Berhad and PT Bank CIMB Niaga Tbk, both indirect subsidiaries of BCHB, completed the acquisition of the entire equity interest in PT Asuransi Jiwa John Hancock Indonesia (“JHI”) from John Hancock Life Insurance Company and PT Indras Insan Jaya Utama for a total cash consideration of approximately 76,472 million Indonesian Rupiah (“Rp”) (equivalent to approximately RM28 million). The purchase consideration is based on the net asset value of JHI plus premium of Rp4,500 million (equivalent to approximately RM1.7 million).

The assets and liabilities arising from the acquisition of PT Asuransi Jiwa John Hancock Indonesia are as follows:

Atfairvalue rM’000

Cash and short term funds 7,829 Deposits and placements with bank and other financial institutions 18,992 Other assets 124

Net assets acquired 26,945 Intangible assets identified upon acquisition 1,725


Less: cash and cash equivalents acquired (7,829)


The premium on acquisition represents the value of the insurance license acquired.

The acquisition contributed to revenue (comprising net income and non-interest income) of RM2,522,826 and net profit of RM2,492,257 to the Group for the period from 9 September 2008 to 31 December 2008. If the acquisition had occurred on 1 January 2008, the subsidiary would have contributed revenue and net profit of RM2,508,691 and RM2,490,150 respectively, to the Group.




51 Acquisition/disposAlofsubsidiAries(continued)(b) Acquisitionsduringthepriorfinancialyearareasfollows:

(i) AcquisitionofKibaruManufacturingsdnbhd On 3 January 2007, a subsidiary company of Commerce Asset Ventures Sdn Bhd, acquired 39.2% of the issued

share capital of Kibaru Manufacturing Sdn Bhd for a purchase consideration of RM17,640,000 satisfied by cash.

The assets and liabilities arising from the acquisition of Kibaru Manufacturing Sdn Bhd are as follows:

Atfairvalue rM’000 Cash and short-term funds 710 Deposits and placements with banks and other financial institutions 3,687 Inventories 1,951 Other assets 4,623 Property, plant and equipment 3,059

14,030 Creditors (2,188) Deferred tax liabilities (24) Minority interest (7,185)

4,633 Goodwill 13,007




The goodwill is attributable to rubber precision technology and customer base which is expected to benefit the Group after the acquisition of Kibaru Manufacturing Sdn Bhd.

The acquisition had contributed revenue of RM12,299,000 and net profit of RM2,857,000 during the prior financial year.




51 Acquisition/disposAlofsubsidiAries(continued)(b) Acquisitionsduringthepriorfinancialyearareasfollows:

(ii) AcquisitionofVitalremarkssdnbhd On 26 February 2007, a subsidiary company of Commerce Asset Ventures Sdn Bhd, acquired 51% of the issued

share capital of Vital Remarks Sdn Bhd for a purchase consideration of RM12,386,000 satisfied by cash.

The assets and liabilities arising from the acquisition of Vital Remarks Sdn Bhd are as follows:

Atfair value rM’000 Cash and short-term funds 19 Deposits and placements with banks and other financial institutions 125 Inventories 3,331 Other assets 28,773 Property, plant and equipment 26,036

58,284 Creditors (38,692) Deferred tax liabilities (344) Minority interest (9,432)

9,816 Goodwill 2,570




The goodwill is attributable to the branding, recipe and customer base which is expected to benefit the Group after the acquisition of Vital Remarks Sdn Bhd.

The acquisition had contributed revenue of RM6,817,000 and net profit of RM241,000 during the prior financial year. If the acquisition had occurred on 1 January 2007, the acquired business would have contributed revenue of RM6,703,040 and net profit of RM929,071 respectively, to the Group.




51 Acquisition/disposAlofsubsidiAries(continued)(c) disposalsduringthefinancialyearareasfollows:

(i) disposalofsoutheastAsianbanklimited(“seAbank”) On 1 April 2008, CIMB Bank disposed its entire 60% equity interest in SEA Bank to British American Investment Co

(Mauritius) Ltd, for a total cash consideration of 339 million Mauritius Rupees (or approximately RM40 million).

The effects of the disposal on the financial position of the Group as at 31 December 2008 are as follows:

2008 rM’000

Cash and short-term funds (13,262) Deposits and placements with banks and other financial institutions (125,144) Securities and other investments (36,500) Derivative financial instruments (11) Loans, advances and financing (108,797) Other assets (4,232) Intangible assets (1,205) Property, plant and equipment (8,413) Deposits from customers 268,825 Deposits and placements of banks and other financial institutions 153 Deferred tax liabilities 434 Provision for taxation 214 Other liabilities 7,268

Identifiable net assets disposed (20,670) Less : Goodwill (1,574)

(22,244) Net disposal proceeds 40,002

Gain on disposal before and after tax 17,758

The net cash flow on disposal was determined as follows: Total proceeds from disposal - cash consideration 40,002 Expenses directly attributable to the disposal, paid in cash -

Net disposal proceeds 40,002 Cash and cash equivalents of subsidiaries disposed (13,262)

Net cash inflow on disposal 26,740




51 Acquisition/disposAlofsubsidiAries(continued)(c) disposalsduringthefinancialyearareasfollows:(continued)

(ii) disposalofsbbsecuritiessdnbhd(“sssb”) On 22 October 2008, SBB Capital Markets Sdn Bhd (“SCMSB”), a wholly owned subsidiary of CIMB Bank, had disposed

its 100% equity interest in SSSB to HLG Credit Sdn Bhd (“HLGC”) for a cash consideration of RM75.2 million.


2008 rM’000

Property, plant and equipment (2,288) Deferred tax assets (1,588) Clients and brokers balances (assets) (29,746) Other receivables, deposits and prepayments (1,085) Tax recoverable (4,936) Cash and bank balances (43,610) Clients and brokers balances (liabilities) 17,132 Other payables and accruals 8,179



Loss on disposal before and after tax (19,765) The net cash flow on disposal was determined as follows: Total proceeds from disposal - cash consideration 75,177 Expenses directly attributable to the disposal, paid in cash -

Net disposal proceeds 75,177 Cash and cash equivalents of subsidiaries disposed (43,610)





51 Acquisition/disposAlofsubsidiAries(continued)(c) disposalsduringthefinancialyearareasfollows:(continued)

(iii) disposalofnavis-ciMbGeneralpartnerltd(“navis-ciMb”) On 18 September 2008, CIMB(L) Limited, a wholly owned subsidiary of CIMB Bank, had disposed its entire 25%

equity interest in Navis-CIMB to Navis Capital Partners Ltd.


2008 rM’000

Non-current assets (229) Current assets (741) Current liabilities 375

Net assets (595) Net disposal proceeds 3,499

Gain on disposal before and after tax 2,904

(d) disposalsduringthepriorfinancialyearareasfollows:(i) disposal of ciMb Wealth Advisors berhad (“ciMb WA”) and sbb Assets Management sdn bhd

(“sbbAM”) On 7 February 2007, the Group, through its wholly-owned subsidiaries, BHL Venture Berhad and BHLB Assets

Management Sdn Bhd, disposed of its 100% equity interest in CIMB WA and SBBAM respectively, to CIMB-Principal Assets Management Berhad, for a total cash consideration of RM481 million. The purchase consideration was based on willing buyer-willing seller basis, after taking into consideration the assets under management of CIMB WA and SBBAM as well as the agency distribution network of CIMB WA.

The gain on disposal amounted to RM86,725,000.

The additional goodwill resulting from the disposal to CIMB-Principal Assets Management Berhad at the new consideration amounted to RM86,772,000.

(ii) disposalsof49%equityinterestsinciMbAvivaAssuranceberhad(“cAAb”)(formerlyknownascommercelifeAssuranceberhad)andciMbAvivatakafulberhad(“cAtb”)(formerlyknownascommercetakafulberhad)

On 2 July 2007, the disposals of 49% equity interest in both CAAB and CATB to Aviva International Holdings Limited were completed for a total cash consideration of RM500 million.




51 Acquisition/disposAlofsubsidiAries(continued)(d) disposalsduringthepriorfinancialyearareasfollows:(continued)

(ii) disposalsof49%equityinterestsinciMbAvivaAssuranceberhad(“cAAb”)(formerlyknownascommercelifeAssuranceberhad)andciMbAvivatakafulberhad(“cAtb”)(formerlyknownascommercetakafulberhad)(continued)

The effects of the disposals on the financial position of the Group as at 31 December 2007 are as follows:

2007 rM’000

Cash and short-term funds (385,141) Deposits and placements with banks and other financial institutions (2,652) Available-for-sale securities (1,362,856) Held-to-maturity securities (37,797) Loans, advances and financing (8,351) Other assets (96,313) Deferred tax assets (116) Property, plant and equipment (4,810) Investment property (49,362) Intangible assets (2,771) Other liabilities 1,675,219 Redeemable convertible unsecured loan stocks 38,389


(294,724)

Identifiable net assets less goodwill to be disposed at 49% equity interest (144,415) Net disposal proceeds 500,000

Gain on disposal before and after tax 355,585 The net cash flow on disposal was determined as follows: Total proceeds from disposal - cash consideration 500,000 Expenses directly attributable to the disposal, paid in cash -

Net disposal proceeds 500,000 Cash and cash equivalents of subsidiaries disposed of (188,719)





51 Acquisition/disposAlofsubsidiAries(continued)(d) disposalsduringthepriorfinancialyearareasfollows:(continued)

(iii) disposalof100%equityinterestsincommerceAssuranceberhad(“cAb”) On 28 August 2007, the disposal of 100% equity interest in CAB was completed for a total cash consideration of

RM486 million.


2007 rM’000

Cash and short-term funds 1,421 Investments (531,657) Other assets (130,499) Property, plant and equipment (34,888) Investment properties (999) Insurance funds 109,963 Other liabilities 391,545



Gain on disposal before and after tax 269,026 The net cash flow on disposal was determined as follows: Total proceeds from disposal - cash consideration 486,274 Expenses directly attributable to the disposal, paid in cash -

Net disposal proceeds 486,274 Cash and cash equivalents of subsidiaries disposed of 1,421





52 criticAlAccountinGestiMAtesAndJudGeMentsinApplyinGAccountinGpolicies The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will,

by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s and the Company’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 outlined below:

(a) impairmentofavailable-for-salesecuritiesandheld-to-maturitysecurities The Group and the Company follow the guidance of revised BNM/GP8 on determining when an investment is other than

temporarily impaired. This determination requires significant judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of the investment is less than cost; and the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financial cash flow.

(b) Allowanceonloans,advancesandfinancing The Group and the Company make allowance for losses on loans, advances and financing based on assessment of

recoverability. Whilst management is guided by the relevant BNM guidelines, management makes judgement on the future and other key factors in respect of the recovery of loans, advances and financing. Among the factors considered are the Group’s aggregate exposure to the borrowers, the net realisable value of the underlying collateral value, the viability of the customer’s business model, the capacity to generate sufficient cash flow to service debt obligations and the aggregate amount and ranking of all other creditor claims.

(c) Goodwillimpairment The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated

in Note J of the Summary of Significant Group Accounting Policies.

The first step of the impairment review process requires the identification of independent operating units, dividing the Group’s business into the various business segments. The goodwill is then allocated to these various business segments. The first element of this allocation is based on the areas of the business expected to benefit from the synergies derived from the acquisition. The second element reflects the allocation of the net assets acquired and the difference between the consideration paid for those net assets and their fair value. This allocation is reviewed following business reorganisation. The carrying value of the business segment, including the allocated goodwill, is compared to its fair value to determine whether any impairment exists. Detailed calculations may need to be carried out taking into consideration changes in market in which a business operates. In the absence of readily available market price data, this calculation is usually based upon discounting expected pre-tax cash flows at the Group’s cost of capital, which requires exercise of judgement.

Changes to the assumptions used by management, particularly the discount rate and the terminal growth rate, may significantly affect the results of the impairment.

(d) intangibleassets The Group’s intangible assets that derive their value from contractual customer relationships and core deposits or that can

be separated and sold and have a finite useful life are amortised over their estimated useful life.




52 criticAlAccountinGestiMAtesAndJudGeMentsinApplyinGAccountinGpolicies(d) intangibleassets(continued) Determining the estimated useful life of these intangible assets requires an analysis of circumstances and judgement by

the Group’s management. At each balance sheet date, or more frequently when events or changes in circumstances dictate, intangible assets are assessed for indications of impairment. If indications are present, these assets are subject to an impairment review. The impairment review comprises a comparison of the carrying amount of the assets with its recoverable amount: the higher of the assets’ selling price and its value in use. Net selling price is calculated by reference to the amount at which the asset could be disposed in a binding agreement in an arms length transaction evidenced by an active market or recent transactions for similar assets.

Value in use is calculated by discounting the expected future cash flows obtainable as a result of the assets’ continued use, including those resulting from its ultimate disposal, at a market-based discount rate on pre-tax basis.

53 non-currentAssets/disposAlGroupsHeldforsAle theGroup

2008 2007 note rM’000 rM’000

non-currentassetsheldforsale: - disposal of certain assets of Southern Investment Bank Berhad (i) 39,740 55,328 - assets relating to disposal of 100% equity interest in SBB Securities Sdn Bhd (ii) - 114,159 - assets relating to disposal of 60% equity interest in South East Asian Bank Ltd (iii) - 491,234 - goodwill (iv) 35,000 73,574 - property, plant and equipment (v) 120 2,520 - prepaid lease payments (v) - 209

- foreclosed properties (v) 7,592 25,070

Total non-current assets held for sale 82,452 762,094

liabilitiesdirectlyassociatedwithnon-currentassets classifiedasheldforsale: - disposal of certain liabilities of Southern Investment Bank Berhad (i) 29,499 54,267 - liabilities relating to disposal of 100% equity interest in SBB Securities Sdn Bhd (ii) - 41,414 - liabilities relating to disposal of 60% equity interest in

South East Asian Bank Ltd (iii) - 460,409

Total liabilities directly associated with non-current assets classified as held for sale 29,499 556,090




53 non-currentAssets/disposAlGroupsHeldforsAle(continued)(i) disposal of certain assets, liabilities and asset/fund management business of southern investment bank

berhad(“sibb”) Certain assets and liabilities of SIBB have been presented as held for sale following the proposed sale to HLG Credit Sdn

Bhd (“HLGC”). The disposal was completed on 31 January 2009.

The assets and liabilities identified for disposal as at 31 December 2008 are as follows: theGroup

2008 2007 rM’000 rM’000 Assets Loans, advances and financing 39,636 55,076 Intangible assets 83 182

Property, plant and equipment 21 70

Non-current assets held for sale 39,740 55,328

liabilities Deposits from customers 3,507 12,448 Deposits and placements of banks and other financial institutions 25,296 41,614

Other liabilities 696 205

Liabilities directly associated with non-current assets classified as held for sale 29,499 54,267

(ii) disposalof100%equityinterestinsbbsecuritiessdnbhd(“sbbsecurities”) The assets and liabilities of SBB Securities have been presented as held for sale as at 31 December 2007 following the

conditional share sale agreement entered with HLGC on 19 October 2007. The disposal was completed on 22 October 2008.

(iii) disposalof60%equityinterestinsoutheastAsianbankltd(“seAbank”) On 4 December 2007, CIMB Bank agreed to dispose its 60% equity interest in SEA Bank to British American Investment

Co (Mauritius) Ltd. The disposal was completed on 9 April 2008.

(iv) Goodwill Arising from items (i) above, the goodwill arising from the acquisition of SIBB is classified as non-current assets held for

sale as at 31 December 2008. theGroup

2008 2007 rM’000 rM’000

SIBB 35,000 35,000 SBB Securities - 37,000 SEA Bank - 1,574

35,000 73,574




53 non-currentAssets/disposAlGroupsHeldforsAle(continued)(v) foreclosedproperties,property,plantandequipmentandprepaidleasepayments Foreclosed properties, property, plant and equipment and prepaid lease payments of the Group where deposits have been

received from buyers of the properties, and where a definitive buyer has been identified have been classified as held for sale. The disposals are expected to be completed in 2009.

54 coMpArAtiVes(a) restatementofcomparatives Certain comparatives were restated to conform with the current financial year’s presentation. There was no impact to

the financial performance and ratios in relation to the financial year ended 31 December 2007. The restatements are as follows:

Aspreviously reported reclassification Asrestated note rM’000 rM’000 rM’000 Group

Balance sheet Other assets 4,202,794 (30,403) 4,172,391 - Interest receivable (i) 400,053 (1,388) 398,665 - Other debtors, deposits and prepayments net of allowance for doubtful debts (ii), (iii) 1,484,328 (322,691) 1,161,637 - Option financing (ii) - 293,676 293,676 Derivative financial instruments (liabilities) (i) 1,658,775 (341) 1,658,434 Other liabilities 8,273,525 (105,328) 8,168,197 - Interest payable (i) 616,956 (1,047) 615,909 - Short-term borrowings (iv) 75,266 (75,266) - - Others (iii) 1,730,901 (29,015) 1,701,886 Other borrowings (iv) 4,752,167 75,266 4,827,433 Income statement Interest income (i),(v),(vi) 9,226,794 (168,571) 9,058,223 Interest expense (i),(v) (4,791,635) 129,342 (4,662,293) Income from Islamic banking operations (v) 315,856 27,501 343,357 Non-interest income (i),(v),(vi) 4,260,494 10,880 4,271,374 Overheads (v) (4,227,676) 562 (4,227,114) Share of results of associates (v) 7,398 286 7,684

company Balance sheet Other assets 105,810 (1,388) 104,422 - Interest receivable (i) 9,209 (1,388) 7,821 Derivative financial instruments (liabilities) (i) 19,052 (341) 18,711 Other liabilities 109,321 (1,047) 108,274 - Interest payable (i) 28,009 (1,047) 26,962

Income statement Interest income (i) 237,556 (147,760) 89,796 Interest expense (i) (329,030) 111,487 (217,543) Non-interest income (i) 2,295,831 36,273 2,332,104




54 coMpArAtiVes(continued)(a) restatementofcomparatives(continued)

(i) This reclassification is to reclassify the mark-to-market of cross currency interest rate swaps from interest receivable and interest payable to derivative financial instruments in order to conform with Group presentation.

(ii) This reclassification is to present balances arising from option financing separately from other debtors, deposits and prepayments.

(iii) The reclassification amount shown is the net effect of the grossing and off-setting of certain account balances as allowed under FRS132, comprising clearing items of credit RM131,181,000 and CSA margin of deficit RM102,166,000.

(iv) This reclassification is to reclassify short-term borrowings from other liabilities to other borrowings in order to conform with Group presentation.

(v) The restatement is in relation to the Islamic business activities of Bank CIMB Niaga, which was not included in the prior year income statement and balance sheet as the amounts were immaterial. As the operations had increased in volume during the financial year, prior year comparatives have been restated to include the Islamic banking business of Bank CIMB Niaga for comparability.

(vi) The reclassification is in relation to the following:- option premium paid of RM25,101,000 which was previously classified as amortisation of premium but should be

treated as realised loss from sale of derivatives. - write-back of impairment in subsidiaries of RM1,413,000 previously classified as other income, now classified as

write-back of impairment losses.

55 finAnciAlinstruMentsA financialriskmanagementobjectivesandpolicies The Group’s financial risk management policy is adopted from the Company and the main operating subsidiaries risk

management policies. Various initiatives and developments have been formed at the Company and operating subsidiaries in order to identify, measure, control and monitor all identifiable risks.

The Group operates within a clearly defined set of principles and guidelines that are approved by the Board. Various working committees were formed at the operating subsidiaries in carrying out the process to ensure that all identifiable risks are addressed and managed adequately.

The main areas of financial risks faced by the Group and the policies to address these financial risks in respect of the Company and the major areas of banking activities represented by the commercial banks, namely CIMB Group and Bank CIMB Niaga are set out as follows:

thecompany

Marketrisk The Company’s market risk exposures arise mainly from placement of cash at banking subsidiaries such as CIMB Bank

and Bank CIMB Niaga. For these placements, market risk is mitigated by risk management framework and regulated investment policies and procedures that exist at the respective subsidiaries. The performance of respective placements is monitored via the monthly statements and acknowledged by the management.

creditrisk Credit risk is the risk of loss due to the failure of a counterparty to meet its financial obligations due to the Company.

Except for intercompany balances, the Company is not exposed to any other significant credit risk.




55 finAnciAlinstruMents(continued)A financialriskmanagementobjectivesandpolicies(continued)

thecompany(continued)

liquidityrisk Liquidity risk is the risk where the Company is unable to meet its obligations when they fall due.

The Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the operations of the Company and any potential strategic investments.

operationalrisk Operational risk arises from inadequacies or failure in internal processes and controls due to fraud, errors, inefficiencies,

systems failures or external events.

In order to reduce or mitigate these risks, the Company established and maintained an internal control environment, which incorporates various control mechanisms at different levels throughout the organisation. These control mechanisms ensure that operational policies and procedures are being adhered to. The responsibilities to oversee compliance with internal control has been delegated to Group Internal Audit Division.

ciMbGroup Risk management is integral to CIMB Group’s activities and is an important feature in all its business, operations, delivery

channels and decision-making processes. The extent to which the Group is able to identify, assess, monitor, and manage each of the various types of risk is critical to its safety, soundness, and profitability. CIMB Group has been involved in a series of mergers and integration, transforming itself from an investment banking entity to a well diversified universal banking group. In this regard, CIMB Group has reviewed its entire risk management process and rationalised the overlaps between risk management roles assumed by individual business units and the centralised risk oversight function. The Group’s risk management is independent of the Group’s operating units and reports to the Board on a regular basis. The Group does not embark on new businesses, introduce new products, engage in new activities or enter into new markets, unless approved by the Group Risk Committee.

Generally, the objectives of the Group’s integrated risk management framework are to:

• identify the various exposures and operational requirements;

• establish the policies and procedures to measure, monitor, manage and report these exposures, and to ensure that they are within the Group’s risk profile as approved by the Board of the Group; and

• set out the appropriate responsibilities, internal controls, as well as supporting structures required in the risk management process.

enterpriseriskManagementandcontrolframework CIMB Group employs an Enterprise-Wide Risk Management Framework (“EWRM”). The integrated and holistic risk

framework is a structured approach towards assessing, measuring and managing risks on an enterprise-wide basis in a consistent manner across the Group. The on-going process of identifying, managing and reporting significant risks provides the Board and Management with a comprehensive process to anticipate and manage both existing and potential risks, taking into consideration changes in the risk profile experienced in the industry and within the Group.





ciMbGroup(continued)

enterpriseriskManagementandcontrolframework(continued) Capital-at-Risk (“CaR”) framework is used as the common measure of risk across CIMB Group. The CaR framework

provides the basis of allocating economic capital within CIMB Group, to cushion against unexpected losses. CaR can be aggregated, thus allowing measurement of CIMB Group’s total risk. It also provides a yardstick for evaluating risk-return relationship in different lines of business. The CaR framework also enables measurement of return of risk-adjusted-capital, to compare profitability across different businesses and for performance measurement in CIMB Group.

A group wide stress test is performed on a biannual basis to evaluate the financial impact on CIMB Group in the event of projected adverse economic and financial situations. This process enables CIMB Group to assess the sufficiency of its liquidity surplus and reserves, and whether it could continue to meet its minimum capital requirement under such scenario. Such group wide stress test allows management to gain a better understanding of how portfolios and investments are likely to react to changing economic conditions and how CIMB Group can best prepare for and react to them. In addition, CIMB Group performs ad-hoc stress tests on selected portfolio to evaluate its performance under a given stress scenario.

riskManagementorganisation In line with best practice standards in corporate governance, the Board Risk Committee (“BRC”) determines the risk policy

objectives for CIMB Group and assumes ultimate responsibility for the risk management function within the CIMB Group, reporting directly to the Board. The BRC also decides the yearly allocation of risk capital to support all risks taken by CIMB Group.

Board delegated authority is vested in the Group Risk Committee (“GRC”) for managing risk on a group wide basis. The GRC, comprising of senior management of the Group, undertakes the oversight function for capital allocation and overall risk limits, in line with the risk appetite determined by the Board of Directors. The GRC is supported by four specialised sub-committees, namely the Market and International Risk Committee, the Credit Risk Committee, the Liquidity Risk Committee and the Operational Risk Committee, each addressing one of the following:

• Market risk, arising from changes in market prices from exposure to interest rates, currency exchange rate, credit

spreads, equity and commodities prices;

• Credit risk, arising from losses due to obligor, counterparty or issuer failing to perform its contractual obligations to the Group;

• Liquidity risk, arising from a bank’s inability to meet its present and future funding needs on a timely basis, from mismatches between the size of assets and liabilities or their maturities; and

• Operational risk, arising from internal processes which may result from inadequacies or failures in processes, controls or projects due to fraud, unauthorised activities, error, omission, inefficiency, systems failures or from external events.




• Reviewandrecommendriskpoliciesandstrategiesforapproval

• OverseeentireEWRMandprovidestrategicguidancetovariousriskcommittees

BOARD RISK COMMITTEE

• Reviewandadviseonriskpoliciesandstrategies

• Overseemanagementofrisk,capitalallocationandassetliabilitymanagement

processacrosstheGroup

GROUP RISK COMMITTEE

Market and International Risk Committee (“MIRC”)

• Overseeexposurestomarketrisks

• Evaluateandapproveproposalsforprimaryandsecondarymarketdealsfordebtandequityinstruments

Credit Risk Committee (“CRC”)

• Creditapprovalauthority

• AssignandreviewtheInter-bankLimits,SectorialExposures,GlobalCounterpartyCreditLimitsandGlobalCountryLimits

Liquidity Risk Committee (“LRC”)

• OverseetheGroup’soverallliquiditymanagement

• EnsureGroupisabletomeetitscashflowobligationsinatimelyandcosteffectivemanner

Operational Risk Committee (“ORC”)

• Overseeissuesrelatingtotheoperationalriskandinternalcontrolenvironment

• ReviewandevaluateallBusinessContinuityManagement(BCM)/DisasterRecovery(DR)activities

BOARD OF DIRECTORS



riskManagementorganisation(continued) The roles and responsibilities of the committees and sub-committees are set out in the chart below:

Groupriskdivision(“Grd”) The primary oversight body is the Group Risk Division, comprising of Group Risk Management (“GRM”) and Group Credit

(“GC”), which are independent of business units and assist the Management and the various risk committees in monitoring and controlling the Group’s risk exposures.

The key responsibilities of GRD are to identify, analyse, monitor, review and report the principal risks to which CIMB Group is exposed. It also helps to create shareholder value through proper allocation of risk capital, development of risk-based pricing framework and facilitate development of new business and products.






GroupriskManagement(“GrM”) GRM monitors risk-taking activities, initiates and proposes risk policies, risk measurement methodologies, risk limits

and risk capital allocation, performs independent review of loan assets quality and loan recovery plan, coordinates new products deployment and develops the risk-based product pricing framework for loan portfolios.

In propagating and ensuring compliance to the Market Risk Framework, GRM reviews and analyses treasury trading strategy, positions and activities vis-à-vis changes in the financial market and performs mark-to-market as part of financial valuation. Further, GRM also conducts validation on the risk pricing parameters and models used.

GRM is also tasked with the co-ordination of the Group’s effort towards implementation of the Basel II framework in compliance with the International Convergence of Capital Measurement and Capital Standards prescribed by the Bank of International Settlements and as adopted by BNM. In this regard, GRM develops, implements and validates all internal rating and scoring models and closely monitors the usage of the rating and scoring systems to ensure relevance to current market conditions and integrity of the ratings.

On an annual basis, GRM proposes the global CaR limit to the GRC and BRC for approval. This limit is allocated by the

GRC to the various businesses of the Group through MIRC and CRC. The appropriate market and credit allocations are given by the various business units to execute their business plans each year. GRC also ensures that the aggregate risk exposure does not exceed the global CaR limit approved by the BRC.

Groupcredit(“Gc”) GC is authorised to approve applications for credit facilities of up to RM10 million extended to small and medium

enterprises. Otherwise, GC carries out independent assessments of all credit risk related proposals originating from the various business units such as loans and advances, fixed income, derivatives, sales and trading, prior to submission to the CRC, the EXCO or Board for approval. GC also reviews CIMB Group’s holdings of all fixed income assets and recommends the internal ratings for CRC’s approval. GC is also responsible for tracking and analysing loans which turn NPL within 1 year of approval.

KeyAreasofriskManagement1. creditrisk Credit and counterparty risk is defined as the possibility of losses due to an obligor or market counterparty or issuer

of securities failing to perform its contractual obligations to CIMB Group.

Credit risk arises primarily from lending activities through loans as well as commitments to support clients’ obligations to third parties, i.e. guarantees. In sales and trading activities, credit risk arises from the possibility that counterparties will not be able or willing to fulfil their obligation on transactions on or before settlement date. In derivatives activities, credit risk arises when counterparties to derivative contracts, such as interest rate swaps, are not able to or willing to fulfil their obligation to pay CIMB Group the positive fair value or receivable resulting from the execution of contract terms. Credit risk may also arise where the downgrading of an entity’s rating causes the fair value of CIMB Group’s investment in that entity’s financial instruments to fall.






KeyAreasofriskManagement(continued)1. creditrisk(continued) Credit risk remains the most significant risk to which CIMB Group is exposed. The purpose of credit risk management

is to keep credit risk exposure to an acceptable level vis-à-vis the capital, and to ensure the returns commensurate with risk.

All credit exposures are subjected to an internal rating, based on a combination of quantitative and qualitative criteria. Adherence to set credit limits is monitored daily by GRM, which combines all exposures for each counterparty, including off balance sheet items and potential exposure. Compliance to CIMB Group-wide credit policy limits the exposure to any one counterparty or group, industry sector and rating classification.

Credit exposures are evaluated by CRC and are monitored against approved limits on a regular basis. Adherence to and compliance with single customer limit as well as assessing the quality of collateral are approaches adopted to address concentration risk to any large sector/industry, or to a particular counterparty group or individual.

The result of severe disruption of the US sub-prime mortgage market were felt across the global financial market in 2008, and were reflected in wider credit spread, higher volatility, tighter liquidity and ultimately, the collapse of several large global investment banks. At the onset of the financial crisis, GC has conducted numerous reviews to scale down the Group’s exposure in several industries/sectors, countries and counterparties that are affected by the sub-prime and global financial crisis.

2. Marketrisk Market risk is defined as any fluctuation in the value of the portfolio resulting from changes in market prices, such as

interest rates, currency exchange rates, credit spreads, equity prices and commodities prices.

Market risk results from trading activities that can arise from customer-related businesses or from proprietary positions. The Group hedges the exposures to market risk by employing varied strategies, including the use of derivative instruments.

CIMB adopts various measures in its risk management process to manage market risk. An accurate and timely valuation of positions is critical to providing the Group with its current market exposure. GRM values the exposure using market price or a pricing model where appropriate.

The Group also adopts a value-at-risk (“VaR”) approach in the measurement of market risk. Backtesting is performed to validate and reassess the accuracy of the existing VaR model. VaR is a statistical measure of the potential losses that could occur as a result of movements in market rates and prices over a specified time horizon within a given confidence level. Backtesting involves the comparison of the daily model-generated VaR forecast against the actual or hypothetical profit or loss data over the corresponding period.






KeyAreasofriskManagement(continued)2. Marketrisk(continued) Stress testing is conducted to capture the potential market risk exposures from an unexpected market movement. In

formulating stress scenario, consideration is given to various aspects of the market; for example identification of areas where unexpected losses can occur and areas where historical correlation may no longer hold true.

Policies and procedures governing risk-taking translates limits and management triggers which complements the global CaR limit. Limits constitute the key mechanism to control allowable risk taking, and are regularly reviewed in the face of changing business needs, market conditions, and regulatory changes.

Risk Middle Office (“RMO”) within GRM undertakes monitoring and oversight process at Group Treasury and Equity Market and Derivatives trading floor, which includes reviewing and analysing treasury trading strategy, positions and activities vis-à-vis changes in the financial market, monitoring limit usage, assessing limit adequacy, and verifying transaction prices.

Exposures to several of the Group’s global investment banking counterparties were reduced and further mitigated, hence containing losses due to the global financial crisis.

3. liquidityrisk Liquidity risk is defined as the risk to earnings or shareholders fund from the Group’s inability to meet its present and

future (both anticipated and unanticipated) funding needs on a timely basis, arising from mismatches between the size or maturities of assets and liabilities.

CIMB Group’s liquidity risk management policy is to maintain high quality and well diversified portfolios of liquid assets and sources of funds. Management action triggers have been established to alert management to potential and emerging liquidity pressures. The Group’s early warning system and contingency funding plans are in place to alert and enable management to act effectively and efficiently during a liquidity crisis and under adverse market conditions.

The Group’s liquidity risk management organisation and its strong liquidity position helped the Group manage through the credit and liquidity turmoil that affected global financial markets in 2008. The Liquidity Risk Committee meets at least once a month to discuss the liquidity risk and funding profile and is chaired by the Head of Group Risk Division. The Asset Liability Management function, which is responsible for the independent monitoring of CIMB’s liquidity risk profile, worked closely with Group Treasury in intensifying its surveillance on market conditions and performed frequent stress testing on liquidity positions. Liquidity positions are monitored on a daily basis and complied with regulatory requirements for liquidity risk. The Group maintained large buffers of liquidity throughout 2008. As result, contingency funding plans were not required to be executed as there was sufficient liquidity to ensure safe and sound operations from a strategic, structural and tactical perspective.






KeyAreasofriskManagement(continued)4. operationalrisk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from

external events.

The existing Operational Risk Management Framework, which is revised periodically to cater for changing business conditions, is designed objectively to monitor and control operational risk effectively leading to a sound and stable operational environment within the CIMB group. All operational risks, both inherent and anticipated, are properly identified, captured, mitigated, monitored, and reported in a systematic and consistent manner. The Operational Risk Committee (ORC) has oversight responsibility for all Group operational activities conducted on a day-to-day basis.

The adoption of the Control Risk Self Assessment (CRSA) and the Self Assessment Review Project (ShARP) are part of CIMB’s initiatives to ensure that operational risks within the processes in each business unit are properly identified, analysed and mitigated on a periodic basis. Relevant Key Risk Indicators (KRI) is in use to track changes that may highlight new risk concerns and potential areas of weaknesses in operational control.

Each new or varied product and changes to the process flow are subjected to a rigorous risk review through sign-offs

from the relevant support units where all critical risks are being identified and assessed independently from the risk takers or product owners.

CIMB Group continued to stress the importance of adhering to internal controls and established procedures to deter fraud and to minimise losses due to staff negligence. In order to demonstrate the seriousness of such offences, strict disciplinary actions are instituted against staff concerned.

5. baseliiimplementation BNM has announced a two-phased approach for implementing the standards recommended by the Bank of

International Settlement set out in “International Convergence of Capital Measurement and Capital Standards: A Revised Framework” (Basel II) in Malaysia. In the first phase, banking institutions will be required to adopt the Standardised Approach for credit risk by the end of 2008. In the second phase, qualified banking institutions will be allowed to migrate directly to the Internal Rating-Based Approach (IRB Approach) by January 2010.

BNM has approved the Group’s application for direct migration to IRB. The approach for credit risk will be Advance IRB for retail exposure and Foundation IRB for corporate exposure. Operational risk will be based on Basic Indicator Approach and working towards Standardised Approach in 2010. Regular meetings are held with BNM to ensure implementation initiatives are in line with their expectations.

A Basel II Steering Committee chaired by the Group CEO has been set up to oversee the implementation initiatives across the Group with assistance of various sub-committees. Significant progress has been achieved in various workstreams, primarily, in rating models calibration and risk datamart.






KeyAreasofriskManagement(continued)5. baseliiimplementation(continued) The Group employs an economic capital allocation framework, whereby capital is allocated to all business units.

All major categories of risk are measured. This is in line with the Second Pillar of Basel II Framework – Supervisory Review Process and also BNM’s Internal Capital Adequacy Assessment Process, which requires banks adopting IRB approach to develop a robust risk management framework (methodologies and process) to assess the adequacy of its internal economic capital in relation to the risk profile.

Ongoing efforts are in place to enhance the operational risk loss event reporting and data collection for the enlarged Group. Initiatives are being made to promote a web based application to ensure loss event incidents are being reported and captured on a timely basis and in an accurate manner. The integrated loss event database is crucial to prepare the Group to adopt a more advanced operational measurement model.

ptbankciMbniaga(“bankciMbniaga”)

Marketrisk Market risk involves the possibility of losses incurred from changes in interest rate and foreign exchange rate due to market

volatility. Bank CIMB Niaga monitors these changes and their impact on its portfolios as well as net open positions as part of its market risk management, through the Market Risk Committee (“Marco”).

Marco defines acceptable limits on trading exposures, including daily net open position limits and potential losses on current positions. Factors considered in setting these position limits include risk and return levels acceptable by management. Position limits are reviewed at least once a year, although in periods of extreme volatility they are scrutinised more often or suspended altogether momentarily.

Trading limits are monitored daily on a mark-to-market basis and by applying the VaR concept. Thus, by keeping track of its daily VaR, Bank CIMB Niaga is in a position to liquidate its gap, which indicates a potential loss greater than the allowable limits.

Bank CIMB Niaga is recently implementing Treasury and Risk Management System Automation. The system which covers front, middle and back office enables Bank CIMB Niaga to have more efficient and effective treasury and market risk management.





ptbankciMbniaga(“bankciMbniaga”)(continued)

creditrisk Bank CIMB Niaga’s credit policy is used as the main guidance in granting loan. All personnel concerned with credit,

including Board of Commissioners and Directors are required to understand these policies and have the discipline to implement these policies in their daily activities. Credit risk is managed based on the review of:

(1) The diversification of credit risk and portfolio (business segment/industry sector/largest borrowers composition).(2) Credit policy and procedure (including target market and risk acceptance criteria).(3) Adequacy of allowances for loan losses.(4) Other major risk indicators and methods of credit risk measurement.

The credit strategy and goal setting are planned and established by the Credit Risk and Policy Committee who is also responsible for managing credit portfolio and credit risk. The Credit Risk and Policy Committee meets at least 6 times a year and is chaired by Director of Compliance and Risk Management and attended by the President Director and the other Board of Senior Executive members.

The main factor that can control and reduce credit risk is the ability and maturity level of the credit units to analyse the credit, which will eventually result in a balance between credit risk and business development considerations.

liquidityrisk The Asset and Liability Committee (“ALCO”) is responsible for directing liquidity and asset-liability management position.

The committee meets with business, treasury, credit and other relevant units on a monthly basis to ensure that Bank CIMB Niaga’s liquidity objectives are met.

Bank CIMB Niaga sets the interest rate through interest sensitivity gap simulation and adjustment between the interest rate of asset and liability and source of fund composition.

Bank CIMB Niaga manages its liquidity by focusing on cash inflow and cash outflow. The gap in cash flow is anticipated

through its first tier assets such as reserve requirements and highly liquid short-term marketable securities. Second-tier assets are managed through short-term placements with other banks and available-for-sale long term marketable securities. Liquidity is also achieved through prudent structuring of Bank CIMB Niaga’s funding. This includes maintaining proper check and balances in the concentration of the depositors, as well as the amount and maturity of deposits. In addition, Bank CIMB Niaga assures liquidity by maintaining its ability to access the financial market, which in large is dependent upon its credibility and market standing.





ptbankciMbniaga(“bankciMbniaga”)(continued)

operationalrisk Bank CIMB Niaga’s Operational and Information Risk Committee (“OIRC”) which meets at least four times a year and is

chaired by the Director of IT and System with participation by the Board of Senior Executives and selected Group Heads. OIRC’s function includes, amongst others, defining the roles and responsibilities for managing and reporting operational risks. In keeping with governance structure, the Risk Taking Units (“RTU”) are responsible for all the operational risks within the business. Such risks are managed through bank-wide or business segment specific policies and procedures, operational risk limits, controls and monitoring tools. To manage operational risks, Bank CIMB Niaga maintains a specialised Control Unit to assist the RTUs to monitor all operational risk exposures from transactions on daily basis, and to ensure that the execution of transactions complies with the policies, procedures and limits established by senior management and adhere to Accounting Principle and Standards applied. Operational Risk Management unit, working in conjunction with senior business segment executives developing key tools to help manage, monitor and summarise operational risks. Internal Audit unit attests internal control systems effectiveness, including those of operational risks.

Bank CIMB Niaga has implemented Key Risk Indicators as well as Control Risk Self Assessment (“CRSA”) as a tool to identify a specific operational risk profile (high risk potential) for business lines. Bank CIMB Niaga’s CRSA is also used for identifying emerging operational risk issues and determining how they should be managed. Focus is on business efficiency and improvement of control. Bank CIMB Niaga continuously reviews Risk Library and if necessary, revises its policies, procedures and risk limits to mitigate operational risks arising from data reconciliation process, money-laundering activities, transaction processing, systems interruptions, fraud management and new product introduction processes. Bank CIMB Niaga continues its efforts to minimise operational risk associated with communication, security, data and processing systems through the development of back-up systems, emergency plans and enhanced information techonology (“IT”) capability. To strengthen its operational risk management capability, Bank CIMB Niaga always places great importance in its personnel management practices and employee development specially on the implementation and enforcing good ethics and integrity as stated in Bank CIMB Niaga’s code of conduct. Bank CIMB Niaga engages in regular employee training to help limit the operational defects or mistakes. Where appropriate, Bank CIMB Niaga purchases insurance against operational risks.

Going forward, Bank CIMB Niaga is in the process of enhancing operational risk management practices through development of additional operational risk management tools, including Loss Event Database and Risk Dashboard.

b interestraterisk The tables below summarise the Group’s and the Company’s exposure to interest rate risks. Included in the tables are the

Group’s and the Company’s assets and liabilities at their full carrying amounts, categorised by the earlier of contractual repricing or maturity dates. The off-balance sheet gap represents the net notional amounts of all interest rate sensitive derivative financial instruments. As interest rates and yield curves change over time, the Group and the Company may be exposed to a loss in earnings due to the effects of interest rates on the structure of the balance sheets. Sensitivity to interest rates arises from mismatches in the repricing dates, cash flows and other characteristics of the assets and their corresponding liabilities funding.




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55 finAnciAlinstruMents(continued) b interestraterisk(continued) thecompany

2008 non-tradingbook non- upto >1-3 >3-12 >1-5 over5 interest trading 1month months months years years sensitive book total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Assets Cashandshort-termfunds 400,750 - - - - 2,318 - 403,068 Available-for-salesecurities - - - - - 37,750 - 37,750 Held-to-maturitysecurities - - 29,074 61,043 - 46,989 - 137,106 Derivativefinancialinstruments - - - - - - 13,142 13,142 Loans,advancesandfinancing - - 11 212 2,009 - - 2,232 Otherassets - - - - - 69,305 - 69,305 Taxrecoverable - - - - - 207,853 - 207,853 Investmentinsubsidiaries - - - - - 7,335,108 - 7,335,108 Investmentinassociate - - - - - 3,834 - 3,834 Property,plantandequipment - - - - - 381,420 - 381,420 Investmentproperties - - - - - 4,590 - 4,590 Prepaidleasepayments - - - - - 4,516 - 4,516 Amountowingbysubsidiaries - - - - - 5,687,933 - 5,687,933

totalassets 400,750 - 29,085 61,255 2,00913,781,616 13,14214,287,857 liabilities Derivativefinancialinstruments - - - - - - 16,854 16,854 Otherliabilities - - - - - 256,799 - 256,799 Deferredtaxliabilities - - - - - 103,399 - 103,399 Otherborrowings - 346,450 350,0001,730,000 - - - 2,426,450 Amountowingtosubsidiaries - - - - - 268,062 - 268,062

totalliabilities - 346,450 350,0001,730,000 - 628,260 16,854 3,071,564

totalinterestratesensitivitygap 400,750(346,450)(320,915)(1,668,745) 2,009 (3,712)




55 finAnciAlinstruMents(continued) b interestraterisk(continued) thecompany

2007 non-tradingbook non- upto >1-3 >3-12 >1-5 over5 interest 1month months months years years sensitive total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Assets Cashandshort-termfunds 349,479 - - - - 24,949 374,428 Available-for-salesecurities - - - - - 888 888 Held-to-maturitysecurities - - 28,386 90,1171,300,000 53,041 1,471,544 Loans,advancesandfinancing - - 22 221 2,367 - 2,610 Otherassets - - - - - 104,422 104,422 Taxrecoverable - - - - - 105,988 105,988 Investmentinsubsidiaries - - - - - 7,325,118 7,325,118 Amountowingbysubsidiaries - - - - - 3,817,845 3,817,845 Investmentinassociate - - - - - 3,834 3,834 Property,plantandequipment - - - - - 291,058 291,058 Investmentproperties - - - - - 4,715 4,715 Prepaidleasepayments - - - - - 4,674 4,674

totalassets 349,479 - 28,408 90,3381,302,36711,736,53213,507,124 liabilities Derivativefinancialinstruments 18,711 - - - - - 18,711 Otherliabilities - - - - - 108,274 108,274 Deferredtaxliabilities - - - - - 13,293 13,293 Amountowingtosubsidiaries - - - - - 264,838 264,838 Bonds - - - 250,000 - - 250,000 RCULS - - - 1,803 - - 1,803 Otherborrowings - - 938,211 2,060,700 - - 2,998,911

Total liabilities 18,711 - 938,211 2,312,503 - 386,405 3,655,830

Total interest rate sensitivity gap 330,768 - (909,803)(2,222,165)1,302,367




55 finAnciAlinstruMents(continued) b interestraterisk(continued) Thetablebelowsummarisestheeffectiveaverageinterestratebymajorcurrenciesforeachclassoffinancialassetand

financialliability: theGroup theGroup

2008 2007 rM idr usd rM idr usd % % % % % % financialassets Cashandshort-termfunds 3.11 2.94 1.09 2.74 3.99 4.95 Securitiespurchasedunderresaleagreements 2.83 - - 3.51 - - Depositsandplacementswithbanksandother financialinstitutions 2.97 4.86 1.93 3.50 7.81 4.78 Securitiesheldfortrading 3.63 10.20 5.46 5.07 9.91 5.30 Available-for-salesecurities 4.94 9.96 - 4.95 9.46 - Held-to-maturitysecurities 5.66 6.97 6.89 4.90 9.92 5.00 Loans,advancesandfinancing 5.72 11.94 4.07 6.58 12.09 6.22 Otherassets 5.93 - - 5.51 - - financialliabilities Depositsfromcustomers 3.22 5.60 0.56 2.99 6.33 4.95 Depositsandplacementsofbanksandother financialinstitutions 3.22 1.69 1.36 3.20 5.65 6.12 Obligationsonsecuritiessoldunder repurchaseagreements - - - 3.45 - - Billsandacceptancespayable 3.72 - - 3.67 - - AmountduetoCagamasBerhad 4.74 - - 4.39 - - Bonds - - 4.80 8.35 - 4.80 ICULS 7.50 - - 7.50 - - RCULS - - - 4.80 - - Otherborrowings 3.42 13.49 2.19 4.49 - 4.94 Redeemablepreferenceshares - - 6.62 - - - Subordinatednotes 6.07 7.38 5.52 - - 4.05




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55 finAnciAlinstruMents(continued) c creditrisk thecompany

2008 short-term treasury fundsand loans, related placements Available- Held-to- derivative advances commitments withfinancial for-sale maturity financial and on-balance and institutions securities securities instruments financing sheettotal contingencies rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Finance,insurance andbusiness services 403,068 - 137,106 13,142 - 553,316 40,142 Others - 37,750 - - 2,232 39,982 -

403,068 37,750 137,106 13,142 2,232 593,298 40,142

thecompany

2007 short-term treasury fundsand loans, related placements Available- Held-to- advances commitments withfinancial for-sale maturity and on-balance and institutions securities securities financing sheettotal contingencies rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Finance,insuranceandbusiness services 374,428 - 1,471,544 - 1,845,972 31,500 Others - 888 - 2,610 3,498 -

374,428 888 1,471,544 2,610 1,849,470 31,500

56 fAirVAlueoffinAnciAlinstruMents Financialinstrumentscomprisefinancialassets,financialliabilitiesandoff-balancesheetfinancialinstruments.Fairvalueis

theamountatwhichafinancialassetcouldbeexchangedorafinancialliabilitysettled,betweenknowledgeableandwillingparties inanarm’s lengthtransaction.The informationpresentedhereinrepresentstheestimatesof fairvaluesasatthebalancesheetdate.

Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted andobservablemarketpricesarenotavailable,fairvaluesareestimatedbasedonarangeofmethodologiesandassumptionsregardingriskcharacteristicsofvariousfinancialinstruments,discountrates,estimatesoffuturecashflowsandotherfactors.Changesintheuncertaintiesandassumptionscouldmateriallyaffecttheseestimatesandtheresultingfairvalueestimates.

Inaddition,fairvalueinformationfornon-financialassetsandliabilitiesareexcludedastheydonotfallwithinthescopeofFRS132-FinancialInstruments:DisclosureandPresentationwhichrequiresthefairvalueinformationtobedisclosed.




56 fAirVAlueoffinAnciAlinstruMents(continued) A range of methodologies and assumptions have been used in deriving the fair values of the Group’s and the Company’s

financial instruments at balance sheet date. The total fair values by each financial instrument approximates the total carrying value, except for the following: theGroup

2008 2007 carrying fairvalue carrying fairvalue amount amount rM’000 rM’000 rM’000 rM’000

financialassets Deposits and placements with banks and other financial institutions 4,063,276 4,063,407 6,485,564 6,485,812 Held-to-maturity securities 11,921,430 11,951,386 3,529,444 3,419,403 Loans, advances and financing 117,382,074 115,500,209 95,904,058 95,221,434

financialliabilities Deposits from customers 153,424,976 153,530,211 126,866,791 126,862,849 Deposits and placements of banks and other financial institutions 7,118,518 7,111,657 12,884,467 12,926,224 Amount due to Cagamas Berhad 993,818 994,453 2,004,707 2,008,653 Bonds 24,374 24,374 304,693 304,693 Subordinated notes 5,598,335 5,569,043 2,333,476 2,312,207 Other borrowings 4,004,836 3,941,353 4,872,433 4,748,715

2008 2007 carrying fairvalue carrying fairvalue amount amount rM’000 rM’000 rM’000 rM’000 financialassets Held-to-maturity securities 137,106 141,559 1,471,544 1,476,793

financialliabilities Bonds - - 250,000 250,000Other borrowings 2,426,450 2,362,967 2,998,911 2,995,459

The carrying amount of financial assets at the balance sheet date were not reduced to their estimated fair values as the Directors are of the opinion that the amounts will be recoverable in full on the maturity date.




56 fAirVAlueoffinAnciAlinstruMents(continued) The fair values are based on the following methodologies and assumptions:

short-termfundsandplacementswithfinancialinstitutions For short-term funds and placements with financial institutions with maturities of less than six months, the carrying value is a

reasonable estimate of fair value. For deposits and placements with maturities of six months and above, the estimated fair value is based on discounted cash flows using prevailing money market interest/profit rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity.

securitiesheldfortrading,available-for-saleandheld-to-maturitysecurities The estimated fair value is generally based on quoted and observable market prices. Where there is no ready market in

certain securities, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

loans,advancesandfinancing For floating rate loans, the carrying value is generally a reasonable estimate of fair value.

For fixed rate loans, the fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of loans with similar credit risks and maturity.

The fair values of impaired floating and fixed rate loans are represented by their carrying value, net of specific allowance, being the expected recoverable amount.

otherassets The estimated fair values of other assets identified as financial instruments approximate the carrying values as these assets

constitute receivables due from government related agencies and based on the Directors’ estimate, the realisable value of the final consideration as at balance sheet date is similar to that of the carrying value.

Amountowingby/tosubsidiaries The estimated fair values of the amount owing by/to subsidiaries approximate the carrying values as the balances are either

recallable on demand or are based on the current rates for such similar loans.

depositsfromcustomers For deposits from customers with maturities of less than six months, the carrying amounts are a reasonable estimate of their

fair value. For deposit with maturities of six months or more, fair values are estimated using discounted cash flows based on prevailing market rates for similar deposits from customers.

depositsandplacementsofbanksandotherfinancialinstitutions The estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six

months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates for deposits and placements with similar remaining period to maturities.




56 fAirVAlueoffinAnciAlinstruMents(continued) obligationsonsecuritiessoldunderrepurchaseagreements The estimated fair values of obligations on securities sold under repurchase agreements with maturities of less than six months

approximate the carrying values. For obligations on securities sold under repurchase agreements with maturities of more than six months, the fair values are estimated based on discounted cash flows using prevailing money market interest rates with similar remaining period to maturities.

floatingratecertificatesofdeposits For floating rate certificates of deposits, values are estimated based on discounted cash flow using prevailing market interest

rates for floating rate certificates of deposits.

billsandacceptancespayable The estimated fair values of bills and acceptances payable with maturities of less than six months approximate the carrying

values. For bills and acceptances payable with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates for bills and acceptances payable with similar remaining period to maturities.

Amountduetocagamasberhad The estimated fair values of the amount due to Cagamas Berhad with maturities of less than six months approximate the

carrying values. For amount due to Cagamas Berhad with maturities of six months or more, the fair values are estimated based on discounted cash flows using prevailing interest rates for loans sold to Cagamas Berhad with similar remaining period to maturities.

otherliabilities The fair value of other liabilities approximates the carrying value at the balance sheet date.

bonds For bonds with maturities of six months or more, the fair values are estimated based on discounted cash flows using indicative

yields taking into consideration the credit rating of the Bonds.

iculs The estimated fair value of ICULS approximates the carrying value as based on the Directors’ estimate, the effective interest

rate of the ICULS is a fair reflection of the current rates for such similar long term borrowings.

loanstocks Loan stocks comprise negotiable certificates of deposits issued by a subsidiary bank. The estimated fair values are estimated

based on discounted cash flows using prevailing market rates for similar negotiable certificates of deposits. Where market rates are not readily available, fair values are estimated by reference to corporate bond indicative yields taking into consideration the credit rating of the subsidiary bank.

otherborrowings The estimated fair values of other borrowings with maturities of less than six months approximate the carrying values. For other

borrowings with maturities six months or more, the fair values are estimated based on discounted cash flows using prevailing market rates for borrowings with similar risk profile.




56 fAirVAlueoffinAnciAlinstruMents(continued) subordinatednotes The fair values for the quoted subordinated notes are obtained from quoted market prices while the fair values for unquoted

Subordinated notes are estimated based on discounted cash flow models.

redeemablepreferenceshares The estimated fair value of redeemable preference shares (“RPS”) approximates the carrying value based on Directors’ estimate

as the effective interest rate of the RPS is a reflection of the current rate for such similar instrument.

derivativefinancialinstruments The fair values of derivative financial instruments 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.

creditrelatedcommitmentandcontingencies The net fair value of these items was not calculated as estimated fair values are not readily ascertainable. These financial

instruments generally relate to credit risks and attract fees in line with market prices for similar arrangements. They are not presently sold nor traded. The fair value may be represented by the present value of fees expected to be received, less associated costs.

57 tHeoperAtionsofislAMicbAnKinG balancesheetsasat31december2008

2008 2007 note rM’000 rM’000

Assets Cash and short-term funds (a) 6,762,644 4,908,176 Deposits and placements with banks and other financial institutions (b) 929,001 1,197,646 Securities held for trading (c) 3,502,420 668,874 Available-for-sale securities (d) 612,378 654,874 Held-to-maturity securities (e) 1,234,040 120,236 Derivative financial instruments (f) 388,279 156,091 Financing, advances and other loans (g) 6,561,253 2,497,959 Deferred tax assets (h) 21,369 16,851 Amount due from related companies 4,801 12,134 Amount due from holding company 110,118 607 Statutory deposits with Bank Negara Malaysia (i) 269,224 101,144 Property, plant and equipment (j) 7,106 7,125 Other assets (k) 110,596 108,868 Goodwill (l) 136,000 136,000 Intangible assets (m) 5,962 9,556

totalassets 20,655,191 10,596,141




57 tHeoperAtionsofislAMicbAnKinG(continued) balancesheetsasat31december2008(continued)

2008 2007 note rM’000 rM’000

liabilities Deposits from customers (n) 15,371,280 8,467,547 Deposits and placements of banks and other financial institutions (o) 3,668,949 700,560 Derivative financial instruments (f) 52,253 4,949 Bills and acceptances payable 5,258 968 Amount due to holding company - 201,869 Amount due to related companies 4,871 141,354 Provision for taxation and zakat (p) 40,486 31,269 Other liabilities (q) 461,535 160,266

totalliabilities 19,604,632 9,708,782

equity Islamic banking funds 91,693 91,693 Ordinary share capital (r) 550,000 550,000 Perpetual preference shares (r) 70,000 70,000 Reserves (s) 302,891 140,876 1,014,584 852,569 Minority interests 35,975 34,790

Total equity 1,050,559 887,359

totalequityandliabilities 20,655,191 10,596,141

commitmentsandcontingencies (f) 15,558,024 5,517,681

The comparative figures have been restated to include the Islamic banking business of Bank CIMB Niaga as shown in Note 57(ad).




57 tHeoperAtionsofislAMicbAnKinG(continued) incomestatementsforthefinancialyearended31december2008

2008 2007 note rM’000 rM’000

Income derived from investment of depositors’ funds and others (u) 705,220 414,534 Income derived from investment of shareholders’ funds (v) 210,945 182,970 Allowances for losses on financing, advances and other loans (w) (85,739) (68,083)Allowance for impairment losses (199) (120)Allowance for other receivables (209) - Transfer to profit equalisation reserve (t) 2,200 562 Other expenses directly attributable to the investment of the depositors and shareholders’ funds (11,031) (4)

Total distributable income 821,187 529,859 Income attributable to depositors (x) (467,135) (254,143)

totalnetincome 354,052 275,716 Personnel expenses (y) (55,684) (37,462)Other overheads and expenditures (z) (94,293) (58,990)

profitbeforetaxationandzakat 204,075 179,264 Taxation (aa) (35,833) (42,905)Zakat (234) (70)

profitaftertaxationandzakat 168,008 136,289

Attributable to: Equity holders of the Bank 165,501 134,607 Minority interests 2,507 1,682

168,008 136,289

The comparative figures have been restated to include the Islamic banking business of Bank CIMB Niaga as shown in Note 57(ad).




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57 tHeoperAtionsofislAMicbAnKinG(continued) cashflowstatementsforthefinancialyearended31december2008

2008 2007 rM’000 rM’000 operatingactivities Profit before taxation and zakat 204,075 179,264 Add/(less) adjustments: Transfer from profit equalisation reserve (2,200) (562)Depreciation of property, plant and equipment 2,122 2,115 Property, plant and equipment written-off - 143 Amortisation of intangible assets 3,829 1,808 Net unrealised loss/(gain) on revaluation of securities held for trading (197) 443 Net unrealised gain on derivatives 149,725 151,141 Accretion of discount less amortisation of premium (31,966) (16,094)Net gain from sale of available-for-sale securities (105) (143)Net gain from sale of securities held for trading (8,638) (366)Dividend from held-to-maturity securities (21,905) (10,291)Dividend from available-for-sale securities (24,433) (17,674)Dividend from held for trading securities (19,812) (3,394)Impairment loss on securities 164 -Allowance for losses on financing, advances and other loans 93,061 71,445 343,720 357,835 (increase)/decreaseinoperatingassetsDeposits and placements with banks and other financial institutions 268,545 (796,646)Securities held for trading (2,793,815) (435,213)Derivative financial instruments (334,609) (302,283)Financing, advances and other loans (4,156,355) (866,506)Statutory deposits with Bank Negara Malaysia (168,080) (26,752)Other assets (4,503) 239,964 Tax recoverable - 894 Amount due from related company 7,333 68,040 Amount due from holding company (109,511) (607) (7,290,995) (2,119,109)increase/(decrease)inoperatingliabilitiesDeposits from customers 6,903,733 5,997,455 Bills and acceptances payable 4,290 968 Deposits and placements of banks and other financial institutions 2,968,389 (630,440)Other liabilities 304,654 102,873 Amount due to ultimate holding company (201,869) 62,306 Amount due to related companies (136,483) (107,121) 9,842,714 5,640,283

Cash flows generated from operations 2,895,439 3,879,009 Taxation paid (26,850) (23,800)

Net cash flows generated from operating activities 2,868,589 3,855,209




57 tHeoperAtionsofislAMicbAnKinG(continued) cashflowstatementsforthefinancialyearended31december2008(continued)

2008 2007 note rM’000 rM’000 investingactivities Net purchase of available-for-sale securities 43,125 (396,902)Purchase of property, plant and equipment (1,735) (6,219)Purchase of intangible assets (278) (1,042)Net proceeds from maturity of held-to-maturity securities (1,115,468) 58,562 Dividend from held-to-maturity securities 21,905 10,291 Dividend from available-for-sale securities 24,433 17,674 Dividend from held for trading securities 19,812 3,394 Net cash flows used in investing activities (1,008,206) (314,242) financingactivities Issuance of share capital - 436,693 Payment to holding company - (389,794)

Net cash flows generated from financing activities - 46,899

netincreaseincashandcashequivalents 1,860,383 3,587,866 cashandcashequivalentsatbeginningoffinancialyear 4,908,276 1,329,114 effectofexchangeratechanges (6,015) (8,804)

cashandcashequivalentsatendoffinancialyear 6,762,644 4,908,176

cashandcashequivalentscomprise: cashandshort-termfunds (a) 6,762,644 4,908,176




57 tHeoperAtionsofislAMicbAnKinG(continued)

2008 2007 rM’000 rM’000 (a) cashandshort-termfunds Cash and balances with banks and other financial institutions 254,450 262,756 Money at call and deposit placements maturing within one month 6,508,194 4,645,420

6,762,644 4,908,176

(b) depositsandplacementswithbanksandotherfinancialinstitutions Generalinvestmentfunds: Licensed banks 729,001 297,646 Bank Negara Malaysia - 900,000 Other financial institutions 200,000 -

929,001 1,197,646

(c) securitiesheldfortrading Moneymarketinstruments: Government Investment Issues 14,649 28,942 Malaysian Government Treasury Bills - 29,742 Bank Negara Malaysia Negotiable Notes - 218,165 Khazanah bonds 9,791 72,589 Bankers’ acceptance and Islamic accepted bills 578,421 205,128 Islamic commercial papers 19,666 24,306 Negotiable instruments of deposits 2,864,182 19,581

3,486,709 598,453 unquotedsecurities: In Malaysia Sukuk Bank Negara Malaysia - 50,002 Private debt securities 15,711 20,419

3,502,420 668,874

During the financial year, the Malaysian Islamic subsidiary, CIMB Islamic, had reclassified certain held for trading securities to the held-to-maturity category. The reclassification has been accounted for in accordance with the BNM circular on ‘Reclassification of Securities under Specific Circumstances’ issued during the year, and is effective from 1 July 2008 until 31 December 2009.

The fair value of the securities reclassified from held for trading category to held-to-maturity category, as of the respective dates of reclassification is RM38 million.




57 tHeoperAtionsofislAMicbAnKinG(continued)(c) securitiesheldfortrading(continued)

Included in the other operating income (Note (u) and (v)) is the net gains/(losses) arising from the change in fair value recognised in the income statement in respect of the reclassified securities:

2008 2007 rM’000 rM’000 Net fair value gain/(loss) 894 (78)

As of the date of reclassification, the effective profit rates on the reclassified held for trading securities, based on the new cost is an average of 5.36% per annum with expected recoverable cash flows of approximately RM40 million in face value inclusive of coupon receivable on the securities.

2008 2007 rM’000 rM’000(d) Available-for-salesecurities

Moneymarketinstruments: unquoted:

Government Investment Issues 121,237 114,185 Islamic Cagamas bonds 48,914 34,420 Khazanah bonds 48,585 65,782

218,736 214,387

unquotedsecurities: In Malaysia Other Government Securities - 50,003 Private debt securities 393,067 389,909 Placement with Islamic Banking and Finance Institute Malaysia 575 575

612,378 654,874





2008 2007 rM’000 rM’000(e) Held-to-maturitysecurities Moneymarketinstruments: unquoted: Islamic commercial papers 34,832 - unquotedsecurities: In Malaysia Private debt securities 1,168,385 98,644 quotedsecurities: Outside Malaysia Islamic bonds 28,377 21,824 Medium term notes 7,883 3,520

1,239,477 123,988 Accretion of discount less amortisation of premium (4,997) (3,496) Less: Allowance for impairment loss (440) (256)

1,234,040 120,236

Included in the held-to-maturity securities are securities transferred from securities held for trading category during the financial year, with the following carrying value and fair value as at 31 December 2008 (2007: no such reclassification permitted):

2008 2007 rM’000 rM’000

Carrying value 37,430 -

Fair value 37,609 -




57 tHeoperAtionsofislAMicbAnKinG(continued)(f) derivativefinancialinstruments,commitmentsandcontingencies

(i) derivativefinancialinstruments The following tables summarise the contractual or underlying principal amounts of derivative financial instruments

held at fair value through income statement and hedging purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at balance sheet date, and do not represent amounts at risk. In the financial statements, trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in “Derivative financial instruments” Assets and Liabilities respectively.

2008 2007 principal Asset liability principal Asset liability rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 Foreignexchangederivative Currencyforwards 652,126 106 - 4,593 43 - Currencyswaps 313,695 2,349 (3,480) 107,827 - (38) 965,821 2,455 (3,480) 112,420 43 (38) Profitratederivatives Profitrateswap 5,807,679 337,495 (437) 3,122,410 156,048 (4,911) Equityderivatives Equityoptions 5,544,171 48,329 (48,336) - - -

Totalderivative assets/(liabilities) 12,317,671 388,279 (52,253) 3,234,830 156,091 (4,949)




57 tHeoperAtionsofislAMicbAnKinG(continued)(f) derivativefinancialinstruments,commitmentsandcontingencies(continued)

(ii) commitmentsandcontingencies Inthenormalcourseofbusiness,theGroupmakesvariouscommitmentsandincurcertaincontingentliabilitieswith

legalrecoursetotheircustomers.Nomateriallossesareanticipatedasaresultofthesetransactions. Thecommitmentsandcontingenciesconstitutethefollowing:

2008 2007 risk risk credit weighted credit weighted principal equivalent* amount principal equivalent* amount rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 creditrelated Directcreditsubstitutes 35,057 35,057 35,057 38,247 38,247 38,247 Certaintransaction-related contingentitems 381,536 190,768 113,978 190,777 95,389 95,389 Short-termself-liquidating trade-relatedcontingencies 147,568 29,514 3,042 269,577 53,915 53,915 Obligationunderunderwriting agreements 50,000 25,000 25,000 50,000 25,000 25,000 Islamicfinancingsolddirectly andindirectlytoCagamas withrecourse 294,946 294,946 294,946 575,918 575,918 575,918 Irrevocablecommitmentsto extendcredit: -maturitylessthanoneyear 1,738,739 21,905 10,799 908,605 - - -maturityexceedingoneyear 586,343 293,172 76,963 247,913 123,956 116,708 Forwardassetspurchases 5,000 - - - - - Miscellaneouscommitments andcontingencies: -Shariah-compliantequity option 1,164 1,164 1,164 1,814 1,814 1,814

Totalcredit-related commitmentsand contingencies 3,240,353 891,526 560,949 2,282,851 914,239 906,991




57 tHeoperAtionsofislAMicbAnKinG(continued)(f) derivativefinancialinstruments,commitmentsandcontingencies(continued)

(ii) commitmentsandcontingencies(continued)

2008 2007 risk risk credit weighted credit weighted principal equivalent* amount principal equivalent* amount rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 treasuryrelated

Foreignexchange relatedcontracts:-lessthanoneyear 652,126 12,384 3,531 112,420 2,082 450-fiveyearsandabove 313,695 10,742 2,883 - - -Profitraterelatedcontracts:-oneyeartoless thanfiveyears 5,807,679 192,352 38,470 3,122,410 51,421 10,284Equityrelatedcontracts:-lessthanoneyear 3,974,326 88,446 17,689 - - --oneyeartoless thanfiveyears 1,540,947 206,296 41,259 - - --fiveyearsandabove 28,898 1,484 297 - - -

Totaltreasury-related commitmentsand contingencies 12,317,671 511,704 104,129 3,234,830 53,503 10,734

15,558,024 1,403,230 665,078 5,517,681 967,742 917,725

* ThecreditequivalentamountisarrivedatusingthecreditconversionfactorsasperBankNegaraMalaysiaguidelines.Effective1October2008,thefollowingapproacheshavebeenadoptedforthecomputationofthecreditequivalentandriskweightedassets:- adoption of bilateral netting as provided under the Standardised Approach Framework which involves the

weightingofnetclaims rather thangrossclaimswith thesamecounterpartiesarisingoutof the full rangeofforwards,swaps,optionsandsimilarderivativecontracts.

- irrevocablecommitmentstoextendcredit(undrawnfinancing)havebeenrevisedtoincludeonlythoseundrawnfinancingwherebyallconditionsprecedenthavebeenmet.





2008 2007 rM’000 rM’000(g) financing,advancesandotherloans

(i) bytype: Cash line 235,945 125,348 Term financing - House financing 2,118,816 835,547 - Syndicated financing 559,285 571,723 - Hire purchase receivables 2,030,346 1,485,856 - Other term financing 4,312,092 796,475 Bills receivable - 32 Trust receipts 23,887 5,552 Claims on customers under acceptance credits 156,709 89,803 Staff financing 17 44 Revolving credits 422,299 117,160 Credit card receivables 2,980 - Share margin financing 68,003 55,631 Other financing 74 76

9,930,453 4,083,247 Less: Unearned income (2,887,714) (860,673)

7,042,739 3,222,574 Less: Financing sold to Cagamas (294,946) (575,918)

Gross financing, advances and other loans 6,747,793 2,646,656 Less: Specific allowance (102,902) (97,379)

6,644,891 2,549,277 Less: General allowance (83,638) (51,318)

Net financing, advances and other loans 6,561,253 2,497,959

Included in financing, advances and other loans are exposures to Restricted Profit Sharing Investment Accounts (“RPSIA”), as part of an arrangement between CIMB Islamic and CIMB Bank. CIMB Bank is exposed to risks and rewards on RPSIA financing and will account for all the general and specific allowances for bad and doubtful debts arising thereon. As at 31 December 2008, the gross exposures to RPSIA financing is RM1,893 million and the general allowance relating to this RPSIA amounting to RM32 million is booked in CIMB Bank.





2008 2007 rM’000 rM’000(g) financing,advancesandotherloans(continued)

(ii) bycontract: Bai Bithaman Ajil (deferred payment sale) 3,530,591 1,252,765 Murabahah (cost-plus) 728,647 215,720 Ijarah Muntahia Bittamlik/AITAB (lease ended with ownership) 2,080,452 1,633,900 Others 703,049 120,189


6,747,793 2,646,656

(iii) bytypeofcustomers: Domestic non-bank financial institutions - others 1,454 1,597 Domestic business enterprises - small medium enterprises 807,012 455,490 - others 2,896,762 837,031 Government and statutory bodies 8,231 - Individuals 2,988,508 1,686,284 Other domestic entities 41,908 8,814 Foreign entities 298,864 233,358


6,747,793 2,646,656

(iv) byprofitsensitivity: Fixed rate - House financing 390,465 393,006 - Hire purchase receivables 1,639,046 1,224,507 - Other fixed rate financing 1,630,051 992,261 Variable rate - Home financing 433,474 - - Others 2,949,703 612,800


6,747,793 2,646,656






(v) byeconomicpurposes: Personal use 522,813 36,375 Credit card 2,980 - Purchase of consumer durables 1,626 163 Construction 33,700 5,622 Residential property 829,142 422,835 Non-residential property 661,912 174,444 Purchase of fixed assets other than land and building 167,293 11,241 Loans for refinancing - 100,480 Purchase of securities 1,417,806 214,276 Purchase of transport vehicles 1,656,270 1,232,363 Working capital 1,471,894 945,620 Other purpose 277,303 79,155


6,747,793 2,646,656

(vi) Movementsinnon-performingfinancing,advancesandotherloans At 1 January 257,787 259,838 Non-performing during the financial year 173,119 147,870 Reclassified to performing during the financial year (137,010) (75,487) Recoveries (30,441) (19,307) Amount written off (56,362) (55,127)

At 31 December 207,093 257,787 Less: Specific allowance (102,902) (97,379)

Net non-performing financing, advances and other loans 104,191 160,408

Ratio of net non-performing financing, advances and other loans to total financing, advances and other loans (including Islamic financing sold to Cagamas) less specific allowance 1.50% 5.13%






(vii)Movementsinallowanceforbadanddoubtfulfinancing Specific allowance At 1 January 97,379 93,017 Allowance made during the financial year 99,654 81,266 Amount recovered (40,611) (19,106) Amount written off (54,506) (57,502) Exchange fluctuation 986 (296)

At 31 December 102,902 97,379 General allowance At 1 January 51,318 45,128 Allowance made during the financial year 34,018 9,285 Exchange fluctuation (1,698) (3,095)

At 31 December 83,638 51,318

As % of gross financing, advances and other loans (including Islamic financing sold to Cagamas, but excluding RPSIA financing) less specific allowances 1.66% 1.64%

(viii)non-performingfinancingbyeconomicsectors: Personal use 21,854 11,955 Residential property 56,963 62,309 Non-residential property 15,770 38,008 Purchase of fixed assets other than land and building 1,620 - Purchase of securities 18,672 18,667 Purchase of transport vehicles 40,063 67,235 Working capital 48,903 56,738 Other purpose 3,248 2,875

207,093 257,787




57 tHeoperAtionsofislAMicbAnKinG(continued)(h) deferredtaxation

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 balance sheet:

2008 2007 rM’000 rM’000 General allowance for bad and doubtful financing 17,637 10,061 Accelerated tax depreciation (1,543) (1,384) Available-for-sale securities 573 549 Other temporary differences 4,702 7,625

Deferred tax assets 21,369 16,851

The movements in deferred tax assets and liabilities during the financial year comprise the following:

General allowance Available forbadand Accelerated -for other unutilised doubtful tax -sale temporary deferredtax taxlosses financing depreciation securities differences total assets/(liabilities) rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

2008At 1 January 2008 - 10,061 (1,384) 549 7,625 16,851 Credited/(charged) to income statement - 7,576 (159) - (2,923) 4,494 Transferred to equity - - - 24 - 24

At 31 December 2008 - 17,637 (1,543) 573 4,702 21,369

2007At 1 January 2007 2,298 9,231 (194) (1,024) 3,765 14,076 Credited/(charged) to income statement (2,298) 830 (1,190) - 3,860 1,202 Transferred to equity - - - 1,573 - 1,573

At 31 December 2007 - 10,061 (1,384) 549 7,625 16,851

(i) statutorydepositswithbanknegaraMalaysiaThe statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994), the amounts of which are determined at set percentages of total eligible liabilities.




57 tHeoperAtionsofislAMicbAnKinG(continued)(j) property,plantandequipment

renovations, office computer equipment, equipment furnitureand Motor andsoftware plantand fittings vehicles underlease machinery total 2008 rM’000 rM’000 rM’000 rM’000 rM’000 cost At 1 January 6,717 387 1,912 1,583 10,599 Additions arising from business combination 599 - - 121 720 Additions 1,504 - 231 - 1,735 Disposals (56) - - (47) (103) Reclassified from intangible assets 861 - - - 861 Exchange fluctuation 1,633 59 (358) (1,583) (249)

At 31 December 11,258 446 1,785 74 13,563

Accumulateddepreciation At 1 January 2,360 113 751 250 3,474 Depreciation arising from business combination 162 - - 18 180 Charge for the financial year 1,704 44 372 2 2,122 Reclassified from intangible assets 818 - - - 818 Exchange fluctuation 183 39 (107) (252) (137)

At 31 December 5,227 196 1,016 18 6,457

netbookvalueat31december 6,031 250 769 56 7,106




57 tHeoperAtionsofislAMicbAnKinG(continued)(j) property,plantandequipment(continued)

renovations, office computer equipment, equipment furnitureand Motor andsoftware plantand fittings vehicles underlease machinery total 2007 rM’000 rM’000 rM’000 rM’000 rM’000

cost At 1 January 9,305 31 1,174 - 10,510 Write-off (143) - - - (143) Reclassified to intangible assets (5,987) - - - (5,987) Additions 3,542 356 738 1,583 6,219

At 31 December 6,717 387 1,912 1,583 10,599

Accumulateddepreciation At 1 January 926 7 426 - 1,359 Charge for the financial year 1,434 106 325 250 2,115

At 31 December 2,360 113 751 250 3,474

netbookvalueat31december 4,357 274 1,161 1,333 7,125

The above property, plant and equipment include renovations and computer equipment and software under construction at cost of RM659,000 (2007: RM141,000).

2008 2007 rM’000 rM’000

(k) otherassets Dividend receivables 34,433 29,471 Other debtors, deposits and prepayments 76,163 79,397

110,596 108,868

(l) Goodwill At 1 January 136,000 - Goodwill arising from acquisition of Islamic banking operations - 136,000

At 31 December 136,000 136,000




57 tHeoperAtionsofislAMicbAnKinG(continued)(l) Goodwill(continued) Goodwill is wholly allocated to the retail banking cash-generating unit (“CGU”). The CGU does not carry any intangible

assets with indefinite useful lives.

The recoverable amount of CGU which are not classified as held for sale is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on the 2009 financial budgets approved by Board of Directors, projected for 5 years based on the average to year historical Gross Domestic Product (“GDP”) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the five-year period are extrapolated using an estimated growth rate of 5.00%. The cash flow projections are derived based on a number of key factors including the past performance and management’s expectation of market developments. The discount rate used in determining the recoverable amount of the CGUs is 9.80%. The discount rate is pre-tax and reflects the specific risks relating to the CGUs.

2008 2007 rM’000 rM’000

(m) intangibleassets computersoftware cost At 1 January 11,626 4,597 Additions 278 1,042 Reclassified to property, plant and equipment (861) 5,987

At 31 December 11,043 11,626 Accumulatedamortisation At 1 January 2,070 262 Charge for the financial year 3,829 1,808 Reclassified to property, plant and equipment (818) -

At 31 December 5,081 2,070

netbookvalueat31december 5,962 9,556





2008 2007 rM’000 rM’000

(n) depositsfromcustomers (i) By type of deposits Non-Mudharabah Demand deposits 1,925,997 327,327 Savings deposits 319,480 142,831 Commodity Murabahah-i 379,480 - Fixed return investment account 1,840,535 1,164,240 Negotiable Instruments of deposit 242,975 201,826 Fixed rate deposits 1,175,452 681,120 Others 291,358 620

6,175,277 2,517,964 Mudharabah Demand deposits 398,731 126,719 Savings deposits 129,375 52,478 General investment deposits 1,636,457 975,735 Special investment deposits 5,266,698 3,869,386 Specific investment deposits 1,746,613 870,705 Others 18,129 54,560

9,196,003 5,949,583

15,371,280 8,467,547 (ii) By type of customer Government and statutory bodies 3,363,354 1,657,849 Business enterprises 8,043,665 4,079,724 Individuals 3,307,475 1,213,322 Others 656,786 1,516,652

15,371,280 8,467,547 (o) depositsandplacementsofbanksandotherfinancialinstitutions Mudharabah Licensed banks 3,082,020 200,217 Licensed investment banks 200,300 - Bank Negara Malaysia 64,809 - Other financial institutions 321,820 -

3,668,949 200,217 Non-Mudharabah Licensed finance companies - 500,343

3,668,949 700,560





2008 2007 rM’000 rM’000

(p) provisionfortaxationandzakat Taxation 40,486 31,085 Zakat - 184

40,486 31,269

(q) otherliabilities Income payable 42,201 32,223 Profit equalisation reserve (Note (t)) - 2,200 Accruals and other payables 419,334 125,843

461,535 160,266 (r) ordinarysharecapital Authorised ordinarysharesofrM1.00each: At 1 January/31 December 900,000 900,000 issuedandfullypaid ordinarysharesofrM1.00each: At 1 January 550,000 150,000 Issued during the financial year - 400,000

At 31 December 550,000 550,000 perpetualpreferenceshares Authorised perpetualpreferencesharesofrM1.00each: At 1 January/31 December 100,000 100,000 issuedandfullypaid perpetualpreferencesharesofrM1.00each: At 1 January/31 December 70,000 70,000

(s) reserves(a) The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not

distributable as cash dividends. (b) Revaluation reserve of available-for-sale securities comprises gains and losses arising from changes in the fair value

of available-for-sale securities. The depositors’ portion of unrealised gains on available-for-sale securities at the end of the financial year is RM1.62 million (2007: RM1.42 million).





2008 2007 rM’000 rM’000

(t) profitequalisationreserve At 1 January 2,200 1,139 Arising from acquisition of subsidiary - 1,623 Amount provided during the financial year - 28,878 Amount written back during the financial year (2,200) (29,440)

At 31 December - 2,200

(u) incomederivedfrominvestmentofdepositors’fundsandothers Income derived from investment of: (i) General investment deposits 477,843 270,130 (ii) Specific investment deposits 84,565 70,633 (iii) Other deposits 142,812 73,771

705,220 414,534 (i) incomederivedfrominvestmentofgeneralinvestmentdeposits financeincomeandhibah: Financing, advances and other loans 215,330 138,497 Securities held for trading 8,364 1,854 Available-for-sale securities 18,219 12,829 Held-to-maturity securities 4,236 3,926 Money at call and deposit with financial institutions 168,406 76,439 Others 9,168 -

423,723 233,545 Accretion of discount less amortisation of premium 23,381 11,118

447,104 244,663

otheroperatingincome: Net gain from foreign exchange transaction 1,761 126 Net gain from sale of available-for-sale securities 78 105 Net (loss)/gain from sale of securities held for trading (37) 309 Net gain on derivative instruments 2,349 - Net unrealised loss on revaluation of securities held for trading (164) (277)

3,987 263

feesandcommissionincome: Fee on financing and advances 14,216 14,284 Guarantee fees 3,677 5,488 Services charges and fees 255 1,564

18,148 21,336 otherincome: Sundry income 8,604 3,868

477,843 270,130





2008 2007 rM’000 rM’000

(u) incomederivedfrominvestmentofdepositors’fundsandothers(continued) (ii) incomederivedfrominvestmentofspecificinvestmentdeposits financeincomeandhibah Financing, advances and other loans 21,309 1,696 Money at call and deposit with banks and other financial institutions 51,004 23,251 Held-to-maturity securities 11,635 - Others 617 -

84,565 24,947 otherincome - Net unrealised gain on profit rate swap - 96,382 - Shariah-compliant option premium - (50,696)

84,565 70,633 (iii) incomederivedfrominvestmentofotherdeposits financeincomeandhibah Financing, advances and other loans 79,611 43,966 Securities held for trading 1,883 591 Available-for-sale securities 4,543 3,126 Held-to-maturity securities 986 1,397 Money at call and deposit with banks and other financial institutions 39,251 19,387


132,750 71,592

otheroperatingincome: - Net gain from sale of available-for-sale securities 20 22 - Net gain from sale of securities held for trading 8,337 15 - Net unrealised gain/(loss) on revaluation of securities held for trading 227 (51) - Net gain from foreign exchange transactions 488 54

9,072 40

feesandcommissionincome: Guarantee fees 990 1,395 Services charges and fees - 358

990 1,753 otherincome - 386

142,812 73,771




57 tHeoperAtionsofislAMicbAnKinG(continued) 2008 2007 rM’000 rM’000

(v) incomederivedfrominvestmentofshareholders’funds financeincomeandhibah: Financing, advances and other loans 17,084 26,525 Available-for-sale securities 1,671 1,719 Securities held for trading 9,565 949 Held-to-maturity securities 5,048 4,968 Money at call and deposit with financial institutions 43,657 25,860 Others 150 -


79,284 61,871

otheroperatingincome: Net gain from sale of securities held for trading 338 42 Net unrealised gain/(loss) on revaluation of securities held for trading 134 (115) Net gain from foreign exchange transaction 365 15 Net gain from sale of available-for-sale securities 7 16 Unrealised gain on revaluation of derivatives 149,725 54,759 Net realised (loss)/gain on derivatives (32,901) 11,242 Shariah compliant option premium (16,078) (49,988)

101,590 15,971

feesandcommissionincome: Fees on financing, advances and other loans 22,913 2,447 Advisory fees 1,501 489 Guarantee fees 5,515 760 Service charges and fees - 60,618 Arrangement fees 13 40,645

29,942 104,959 otherincome 129 169

210,945 182,970





2008 2007 rM’000 rM’000

(w) Allowanceforlossesonfinancing,advancesandotherloans Allowance for bad and doubtful debts and financing: (i) Specific allowance - made during the financial year 99,654 81,266 - written back during the financial year (40,611) (19,106) (ii) General allowance - made during the financial year 34,018 9,285 Bad debts on financing: - recovered (7,369) (3,362) - written-off 47 -

85,739 68,083

(x) incomeattributabletodepositors Deposits from customers - Mudharabah 258,218 201,261 - Non-Mudharabah 128,469 27,100 Deposits and placements of banks and other financial institutions - Mudharabah 62,487 21,924 - Non-Mudharabah 17,961 3,858

467,135 254,143 (y) personnelexpenses - salaries, allowances and bonuses 21,619 16,000 - others 34,065 21,462

55,684 37,462 (z) otheroverheadsandexpenditures establishmentcosts - rental 3,041 2,618 - depreciation of property, plant and equipment 2,122 2,115 - others 24,948 21,218

30,111 25,951

Marketingexpenses - advertisement and publicity 14,369 3,157 - handling fees 8,333 1,427 - others 8,814 4,117

31,516 8,701





2008 2007 rM’000 rM’000

(z) otheroverheadsandexpenditures(continued) Administrationandgeneralexpenses - legal and professional fees 1,224 736 - amortisation of intangible assets 3,829 1,808 - others 27,613 21,794

32,666 24,338

94,293 58,990

Included in the personnel costs are fees paid to the Shariah Committee members amounting to RM659,568 (2007: RM668,053).

2008 2007 rM’000 rM’000

(aa)taxation (i) taxexpenseforthefinancialyear Current year tax - Malaysian income tax 43,664 44,107 Deferred taxation (note h) (4,494) (1,202) Over accrual in prior year (3,337) -

35,833 42,905 (ii) numericalreconciliationofincometaxexpense The explanation on the relationship between tax expense and profit Profit before taxation and zakat 204,075 179,264 Tax calculated at tax rate of 26% (2007: 27%) 53,060 48,401 - effect of different tax rates in other countries 548 226 - income not subject to tax (35,339) (26,632) - expenses not deductible for tax purposes 20,081 20,372 - change in tax rate 820 538 Over accrual in prior year (3,337) -

35,833 42,905




57

tH

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of

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tabl

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sum

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retu

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are

the

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ass

ets

and

liabi

litie

sat

thei

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by

the

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ero

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sof

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and

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57

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2008

liab

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Dep

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Am

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and

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Dep

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3,9

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582

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2

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6

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97,

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-

-

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00,5

60

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eriva

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inst

rum

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-

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-

-

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-

-

4,9

49

4,9

49

B

illsa

nda

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968

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ount

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ngc

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-

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-

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201

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ount

due

tore

late

dco

mpa

nies

-

-

-

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-

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Prov

isio

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rtax

atio

nan

dza

kat

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3

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1

60,2

66

to

tall

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litie

s4

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2

,025

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5

82,8

21

205

,538

1

,789

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4

22

538

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4

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9,

708,

782

to

talp

rofit

rat

ese

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vity

gap

6

32,8

80

(588

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)(4

08,9

20)

(46,

688)

(1,

125,

596)

1,

438,

726

722,

940




57 tHeoperAtionsofislAMicbAnKinG(continued) (ab)profitraterisk(continued)

The table below summarises the effective average profit rate for each class of financial assets and financial liabilities:

rM usd sGd

2008 2007 2008 2007 2008 2007 % % % % % % financialassets Cashandshort-termfunds 3.05 3.54 2.53 - - - Depositsandplacementswith banksandotherfinancial institutions 2.85 3.54 2.80 - 1.81 - Securitiesheldfortrading 3.51 3.61 - - - - Available-for-salesecurities 4.48 4.25 - 5.39 - - Held-to-maturitysecurities 5.23 4.88 - - - - Financing,advancesandother loans 5.86 6.05 4.34 5.96 - - financialliabilities Depositsfromcustomers 2.56 3.36 1.29 4.95 0.93 - Depositsandplacementsof banksandother financialinstitutions 3.38 3.45 2.17 - - -




57

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r

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9,4

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1

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0

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36,

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88,8

64

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328

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Fina

nce,

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busin

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3

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1

15,3

64

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126

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57 tHeoperAtionsofislAMicbAnKinG(continued) (ad)restatementofprioryearcomparatives

In the previous financial year, the business activities of Bank CIMB Niaga included Islamic banking business, which were not included in the prior year income statement and balance sheet as the amounts were immaterial. As the operations had increased in volume during the financial year, prior year comparatives have been restated to include the Islamic banking business of Bank CIMB Niaga for comparability.

The following discloses the adjustments that have been made to each of the line items in the Group’s balance sheet and income statement for the financial year ended 31 December 2007:

restatementofprioryearcomparatives

Adjustments toinclude islamicbanking business Aspreviously ofbank As reported ciMbniaga restated rM’000 rM’000 rM’000

Assets Cash and short-term funds 4,894,350 13,826 4,908,176 Deposits and placements with banks and other financial institutions 1,149,900 47,746 1,197,646 Securities held for trading 668,874 - 668,874 Available-for-sale securities 654,874 - 654,874 Held-to-maturity securities 95,148 25,088 120,236 Derivative financial instruments 156,048 43 156,091 Financing, advances and other loans 2,254,224 243,735 2,497,959 Deferred tax assets 16,851 - 16,851 Amount due from related companies 6,883 5,251 12,134 Amount due from holding company 607 - 607 Statutory deposits with Bank Negara Malaysia 101,144 - 101,144 Property, plant and equipment 5,758 1,367 7,125 Other assets 86,814 22,054 108,868 Goodwill 136,000 - 136,000 Intangible assets 9,556 - 9,556

totalassets 10,237,031 359,110 10,596,141




57 tHeoperAtionsofislAMicbAnKinG(continued) (ad)restatementofprioryearcomparatives(continued)


Adjustments toinclude islamicbanking business Aspreviously ofbank As reported ciMbniaga restated rM’000 rM’000 rM’000 liabilities Deposits from customers 8,205,905 261,642 8,467,547 Deposits and placements of banks and other financial institutions 697,073 3,487 700,560 Derivative financial instruments 4,906 43 4,949 Bills and acceptances payable 968 - 968 Amount due to holding company 201,869 - 201,869 Amount due to related companies 141,354 - 141,354 Provision for taxation and zakat 31,024 245 31,269 Other liabilities 75,604 84,662 160,266

totalliabilities 9,358,703 350,079 9,708,782

equity Islamic banking funds 91,693 - 91,693 Ordinary share capital 550,000 - 550,000 Perpetual preference shares 70,000 - 70,000 Reserves 134,639 6,237 140,876 846,332 6,237 852,569 Minority interests 31,996 2,794 34,790

Total equity 878,328 9,031 887,359

totalequityandliabilities 10,237,031 359,110 10,596,141




57 tHeoperAtionsofislAMicbAnKinG(continued) (ad)restatementofprioryearcomparatives(continued)


Adjustments toinclude islamicbanking business Aspreviously ofbank As reported ciMbniaga restated rM’000 rM’000 rM’000

Income derived from investment of depositors’ funds and others 372,614 41,920 414,534 Income derived from investment of shareholders’ funds 178,972 3,998 182,970 Allowances for losses on financing, advances and other loans (65,833) (2,250) (68,083) Allowance for impairment losses - (120) (120) Transfer to profit equalisation reserve 561 1 562 Other expenses directly attributable to the investment of the depositors and shareholders’ funds (4) - (4)

Total attributable income 486,310 43,549 529,859 Income attributable to depositors (236,287) (17,856) (254,143)

totalnetincome 250,023 25,693 275,716 Personnel expenses (30,243) (7,219) (37,462) Other overheads and expenditures (50,054) (8,936) (58,990)

profitbeforetaxationandzakat 169,726 9,538 179,264 Taxation (42,905) - (42,905) Zakat (70) - (70)

profitaftertaxationandzakat 126,751 9,538 136,289

Attributable to: Equity holders of the Bank 127,863 6,744 134,607 Minority interests (1,112) 2,794 1,682

126,751 9,538 136,289

58 AutHorisAtionforissueoffinAnciAlstAteMentsThe Financial Statements have been authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 7 April 2009.

Financial Statements

www.cimb.com


Annual Report 2008

Bum

iputra-Com

merce H

oldings Berhad

(50841-W)

Annual R

eport 2008 Financial Statem

ents

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Bumiputra-Commerce Holdings Berhad - MalaysiaStock.Biz...2009/04/16 · Bumiputra-Commerce Holdings Berhad (50841-W) 00 Annual Report 2008 Directors’ Report For the financial year