Five Years Financial Highlights Profile of the Board of ......Perbadanan Usahawan Nasional Berhad Mayban Fortis Holdings Bhd Experience Prior to joining the Maybank Group, he was the

2008A n n u a l R e p o r t

2 | Five Years Financial Highlights

4 | Profile of the Board of Directors

8 | Chairman’s Statement

14 | Management Team

18 | Corporate Highlights

24 | Departmental Review

29 | Products & Services

32 | Corporate Governance Statement

43 | Audit Committee of the Board

46 | Risk Management Committee of the Board

48 | Group Nomination Committee

50 | Group Remuneration & Establishment Committee

52 | Risk Management

58 | Shareholder

59 | Aseambankers’ Group Structure

60 | Malaysian Economic Review & Outlook

Statutory statement of accounts

64 | Director’s Report

69 | Statement by Directors

70 | Statutory Declaration

71 | Report of the Auditors

73 | Balance Sheet

74 | Income Statements

75 | Consolidated Statement of Changes in Equity

77 | Cash Flow Statements

79 | Notes to the Financial Statements

1

A S E A M B A N K E R S M A L A Y S I A B E R H A D

C O N T E N T S

2008

2


L a p o r a n t a h u n a n

3


313

148 16

6

22323

9

EARNINGSPERSHARE (RM)

08 07 06 05 04

739,

465

549,

528

491,

290

407,

905

795,

156

SHAREHOLDERS’FUND (RM’000)

08 07 06 05 04


F i v e Y e a r s F i n a n c i a l H i g h l i g h t s

2008 2007 2006 2005 2004

Gross Income (RM’000) 488,211 496,676 254,764 234,602 202,710

Net Income (RM’000) 242,704 285,955 137,999 126,282 108,135

Profit Before Tax (RM’000) 170,307 219,210 105,261 109,294 107,664

Total Assets (RM,000) 8,456,997 9,377,315 4,593,228 4,349,175 4,029,018

Loans & Advances (RM’000) 88,160 142,353 173,575 211,256 211,776

Shareholders’ Fund (RM’000) 795,156 739,465 549,528 491,290 407,905

Core Capital Ratio (%) 27.86 24.71 38.34 33.72 21.84

Risk Weighted Capital Ratio (%)

Credit Risk 107.32 60.89 97.54 39.36 26.34

Credit and Market Risk* 27.86 24.71 40.59 37.24 -

Net Tangible Assets 15.87 14.76 10.97 9.80 8.14

(NTA) per share (RM)

Earnings per share (Sen) 239 313 148 166 223

*The Bank Negara Malaysia Guidelines on Market Risk Capital Adequacy Framework is effective from April 1, 2005.

285,

955

137,

999

126,

282

104,

575

242,

704

NETINCOME (RM’000)

08 07 06 05 04

219,

210

105,

261

109,

294

107,

664

170,

307

PROFITBEFORETAX (RM’000)

08 07 06 05 04

2008

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5


TAN SRI MOHAMED BASIRBIN AHMADNon-Independent Non-Executive Chairman

Date of AppointmentSeptember28,1993

Age70years

QualificationBachelorofArts(Hons)(UniversityMalaya)AdvancedManagementProgram (HarvardBusinessSchool,USA)FellowofMalaysianInstituteofBankersDoctorateofCommercialScience(Hons) (OklahomaCityUniversity,USA)

ChairmanMalayanBankingBerhad(Maybank)MaybanFortisHoldingsBerhadPTBankMaybankIndocorpPhileoAlliedSecurities(Philippines)IncorporatedMaybankPhilippinesIncorporatedMNIHoldingsBerhad

Other DirectorshipJernihRimbunSdnBhdMalaysia-PhilippinesBusinessCouncilMaybankEducationFoundation

ExperiencePreviouslyattachedtoBankNegaraMalaysiaandretiredasanAdviserbeforeappointedasaDirector/ChairmanofMaybankin1993.

DATO’ AMINUDDIN MD DESANon-Independent Non-Executive DirectorMember of Credit & Underwriting Review CommitteeMember of Audit CommitteeMember of Risk Management Committee

Date of AppointmentJanuary31,2008

Age46years

QualificationAssociateofCharteredInsuranceInstitute(UK)AssociateofMalaysianInsuranceInstituteAdvanceDiplomainBusinessStudies(Insurance)DiplomainAccountancy

Other DirectorshipMalayanBankingBerhad(Maybank)MaybanFortisHoldingsBerhadMNIHoldingsBerhadEtiqaOffshoreInsurance(L)Ltd(formerly known as MNI Offshore Insurance (L) Ltd)EtiqaTakafulBerhad(formerly known as Takaful Nasional Berhad)EtiqaInsuranceBerhad(formerly known as Malaysia Nastional Insurance Berhad)LabuanReinsurance(L)Ltd

ExperienceHehasover20yearsworkingexperienceintheinsuranceindustry.HewastheChiefExecutiveOfficerofTakafulNasionalBhd(nowknownasEtiqaTakafulBerhad)from2001to2005priortobeingappointedasChiefExecutiveOfficerofMaybanFortisHoldingsBerhadinDecember2005,apositionhelduntilNovember30,2007.

HAJI MOHAMMAD BIN ABDULLAHIndependent Non-Executive DirectorChairman of Risk Management CommitteeMember of Audit Committee


Age67years

QualificationMemberofMICPAMemberofMIA

ChairmanMalaysiaRatingCorporationBerhad

Other DirectorshipMalaysianBulkCarriersBerhadBudayaTegasSdnBhdTheBritishSchoolofKualaLumpurSdnBhd3K.MSdnBhdEnterpriseRisksConsultantsSdnBhd

ExperiencePreviouslytheChairmanofMalaysianReinsuranceBhdandDirectorofMaybanksince1995priortohisretirementinSeptember29,2007.

P r o f i l e O f T h e B o a r d O f D i r e c t o r s

DATO’ SRI ABDUL WAHIDBIN OMARNon-Independent Non-Executive Director Chairman of Credit & Underwriting Review Committee

Date of AppointmentJuly9,2008

Age44years

QualificationFellowoftheAssociationofChartered CertifiedAccountants(UK)MemberofMIA

Other DirectorshipMalayanBankingBerhad(Maybank)BursaMalaysiaBerhadPerbadananUsahawanNasionalBerhadMaybanFortisHoldingsBhd

ExperiencePriortojoiningtheMaybankGroup,hewastheGroupChiefExecutiveOfficerofTelekomMalaysiaBerhadsinceJuly1,2004.HewasformerlytheManagingDirector/ChiefExecutiveOfficeroftheUEMGroupBerhadandUEMWorldBerhadaswellastheExecutiveViceChairmanofPLUSExpresswaysBerhad.PriortohisstintatUEMGroup,heservedTelekomMalaysiaBerhadastheChiefFinancialOfficerin2001.HepreviouslyservedasaDirectorofGroupCorporateServicescumDivisionalDirector,CapitalMarkertandSecuritiesAmanahCapitalPartnersBerhad,ChairmanofAmanahShortDepositsBerhadaswellasaDirectorofAmanahMerchantBankBerhadandseveralothercompaniesinthefinancialservicessector.

2008L a p o r a n t a h u n a n



HAJI MOHD HASHIR BIN HAJI ABDULLAHIndependent Non-Executive DirectorChairman of Audit Committee Member of Risk Management Committee


Age72years

QualificationTheInstituteofCharteredSecretariesand Administrator(UK)TheInstituteofCharteredAccountants(Australia)TheInstituteofCertifiedPublicAccountant (Malaysia)FellowofCharteredManagementInstitute(UK)FellowofCharteredInstituteofTransport(UK)AdvancedManagementProgram (HarvardBusinessSchool,USA)

Other DirectorshipMalayanBankingBerhad(Maybank)MaybankIslamicBerhadPTBankMaybankIndocorpMaybanVenturesSdn.Bhd.Maybank-JAICManagementSdn.Bhd.H&HAbdullahSdn.Bhd.MaybanAgroFundSdn.Bhd.

ExperiencePreviouslyhewastheGeneralManagerandChiefExecutiveOfficerofKelangPortAuthoritypriortohisretirementin1991.

SURACHET CHAIPATAMANONTChief Executive Officer & Director

Date of AppointmentJuly3,2006

Age40years

QualificationMasterofScience,OperationResearchinFinance, (ColumbiaUniversity,USA)BachelorofScienceinElectricalEngineering, (ColumbiaUniversity,USA)

ExperienceStartedhiscareerwithBear,Stearns&CoIncasaFinancialAnalystinNewYorkbeforemovingtoPeregrineCapital(USA)IncasAssociate,CorporateFinanceandwassubsequentlypromotedtoSeniorManager,RegionalCorporateFinanceinHongKong.

In1996,hejoinedJ.P.MorganSecurities(Asia)Ltd/MorganGuarantyTrustCo(HongKong)asanAssociate,CorporateFinance.HewaspromotedtoVice-President,FinancialInstitutionGroupin1999.HesubsequentlymovedtoJ.P.MorganSecurities(South-EastAsia)LtdinSingaporeasHeadofFinancialInstitutionGroup(South-EastAsia)Limitedandleftin2004.


6 7P r o f i l e O f T h e B o a r d O f D i r e c t o r s (cont’d)

HOOI LAI HOONGNon-Independent Non-Executive DirectorMember of Risk Management CommitteeMember of Credit & Underwriting Review Committee


Age59years

QualificationBachelorofScience(Economics) (LondonSchoolofEconomics, UniversityofLondon,UK)FellowofInstituteofChartered Accountants(England&Wales)MemberofMICPA

Other DirectorshipCapitalPropertiesBerhadIsland&PeninsularBerhad

ExperiencePreviouslytheDeputyPresidentofMaybankpriortoherretirementonSeptember3,2004.

2008

8




9


TAN SRI MOHAMED BASIRBIN AHMAD

On behalf of theBoard of Directors, it is mypleasure to present theAnnual Report and AuditedFinancial Statements ofASEAMBANKERS and itsGroup of Companies for thefinancial year endedJune 30, 2008.

MALAYSIAN ECONOMICREVIEW & OUTLOOK

Overall, the Malaysian economy registered healthypaceofgrowth in thefinancial year ending June30,2008.RealGrossDomesticProduct (GDP) growthwas 6.7% year-on-year in the third quarter of year2007 and 7.3% year-on-year in the fourth quarterofyear2007,bringing the full-year2007economicgrowth to 6.3% (2006: 5.8%). The pace wassustained in thefirst half of year 2008,with growthof7.1%year-on-yearinthefirstquarterofyear2008and6.3%year-on-year in the secondquarterofyear2008.ForthefinancialyearendedJune30,2008,theeconomy expanded by 6.9%, better than the 5.6%growth recorded for the financial year ended June30, 2007. Economic growth during the period underreview was essentially domestic-driven, especiallyamid strong growth in private sector spending i.e.consumer expenditure and fixed capital formation.

TheprospectforthefinancialyearendedJune30,2008however is more challenging as global economicoutlook is overshadowed by the unfolding financialcrisisandsharpeconomicslowdown–ifnotrecession–intheUnitedStates(US)thatistheproductofthe

sub-primemortgagemarketcollapseearlier.

The International Monetary Fund (IMF) expectsglobal growth to slow significantly in the second halfofyear2008beforerecoveringgraduallyinyear2009.Itprojectsglobaleconomicgrowthtoeaseto4.1%inyear2008and3.9%inyear2009afteraveraging5.0%perannuminyears2004to2007.

At the same time, the surge in crude oil and softcommodity prices during thefinancial year promptedtheGovernmenttoraisefuel-energypricestoreduceitsfuel-energysubsidybillsonJune5,2008.Consequently,inflation rate accelerated during the period from 1.6%year-on-yearinJuly2007to7.7%inJune2008.

Meanwhile,prolongedpoliticaluncertaintiessincetheMarch 2008 General Election, also weighed on theeconomyintermsofpolicydirection,particularlyovertheimplementationofmajorinfrastructureprojectsandinvestmentplansundertheNinthMalaysiaPlan(9MP)andthefive(5)RegionalDevelopmentCorridors.

Theslowingglobaleconomy,risinginflationarypressureaswellasuncertaintiesoverdomesticpoliticalsituationand policy directions are expected to take its toll ondomesticdemand,particularlyconsumerandbusinessspending, on top of the expected subdued export

growth.

Consequently,weestimatethattheMalaysia’srealGDPgrowthwillmoderatetobetween4.0%and4.5%inthesecondhalf of year2008, giving a full-year realGDPgrowth of 5.3% before stabilizing at around 5.1% inyear 2009. Inflation rate quickened further to 8.5%year-on-yearinthemonthofJuly2008,andwilllikelytoremainelevateduntilmid-2009beforeeasinginthesecondhalfofyear2009,resultingina6.0%inflationrateinyear2008(2007:2.0%)priortoamoderationto4.7%inyear2009.

To prevent excessive downside to the economy, bothmonetary and fiscal policies are expected to be pro-

growthduringthefinancialyearendedJune30,2008.ThiswillentailtheprospectofanunchangedOvernightPolicyRate(OPR)forthemostpartofthefinancialyearendedJune30,2008,coupledwiththepeople-orientedtaxincentivesandspendingintheBudget2009.Also,Government development spending should pick upfollowingthe15.0%increaseindevelopmentallocationtoRM230.0billionduringtheMid-termReviewofthe9MP.Meanwhile,more“non-interestrate”measuresareexpectedtobeannouncedtodealwithinflation.Latestmeasures includethe0.8sento0.22senreduction inpetrolanddieselpricestoreflectthecurrentcorrectionincrudeoilprices,whichpartlyreversesthe0.78sento

RM1.00hikesonJune5,2008.

The Debt Capital Markets’ league table position & market share for the financial year ended June 30, 2008

published by RAM and MARCranked ASEAMBANKERS No. 2 by the number of issues

with the notable market share of 19.0% andranked No. 3 by the amount issued with

a market share of 12.0%.

C h a i r m a n ’ s S t a t e m e n t

2008





C h a i r m a n ’ s S t a t e m e n t (cont’d)10 11

BUSINESS ENVIRONMENT

The operating environment during the financial yearendedJune30,2008startedoffstrong,butlaterturnedmixedas robustdomesticdemandweremoderatedbyweakeningexportsanddomesticuncertainties.

Nevertheless, the financial sector continues to recordrelatively healthy loans growth into June 2008 (6.5%year-to-date,11.7%year-on-year)wherebothhouseholdandbusiness loansgrew8.9%year-on-year and14.4%year-on-year respectively.Asset quality of thebankingsystemimprovedfurtherwithnetnon-performingloans(NPL) ratio declining to 2.7% as at June 30, 2008,from4.1%asatJune30,2007.Systemcapitalizationstayedstrongwithcorecapitalandriskweightedcapitalratios(RWCR)at10.1%and13.0%respectivelyasatJune30,2008.

However, the second half of year 2008 will be verychallengingforthefinancialservicesindustry,particularlyforthecapitalmarketswhichinthemonthofJune2008wereimpactedbytheintroductionwindfalltaxesontheindependent power producers (IPP), and may furtherbear the brunt of an anticipated move to review tollroadconcessionsinthecountry.Consequently,bankingprofitswereaffectedbythesell-offsandhollowingoutinthebondmarketinthesecondquarterofyear2008.

The impact on the equity market was much morepronounced.Afterthe11.0%rallyfromthestartofthefinancial year to its peak of 1,516 points on January11,2008,theKualaLumpurCompositeIndex(KLCI)suffered from steep foreign selling amid political andpolicyuncertainties following theMarch2008GeneralElection. Consequently, the KLCI has tumbled 25.9%to 1,070 points calendar year-to-date (as of August26, 2008).The average daily trading value has fallenfromRM2.04billioninthesecondhalfofyear2007(a76.0%year-on-yeargrowth)toonlyRM1.6billioninthefirsthalfofyear2008.

FIXED INCOME MARKET

In the bond market, a total of RM129.8 billion of

bondswereissuedbyboththepublicsectorandprivate

sectorduringthefinancialyearunderreview,up35.0%

fromthepreviousfinancialyear.Thiswaslargelydueto

the60.6%increaseinprivatedentsecurities(PDS)to

RM74.0billion, aspublic sector issuance roseby just

11.4% toRM55.8billion, ofwhichRM45.3billion

weretheMalaysianGovernmentSecurities(MGS).

Bond yields were generally stable throughout the

financial year.However, thebondmarket experienced

major sell down beginning June 5, 2008 when the

Government raised fuel-energy prices, causing MGS

yields to increase and the yield curve to steepen in

reactiontoexpectationsofhigherinflationarypressure

going forward. However, Bank Negara Malaysia’s

(BNM) decision to keep OPR steady in the months

ofJuneandAugust2008onaccountof thedownside

riskstogrowthhasbroughtMGS’syieldsdownslightly,

resultingindownwardshiftsoftheyieldcurve.

Going forward, the MGS yield curve is expected to

flattenconsideringtherecentreductionofpetrolprices

inlinewiththefallingcrudeoilprices,aswellasslowing

economicgrowth,allofwhichareexpectedtotemper

inflationarypressures.

HIGHLIGHTS OF ACHIEVEMENTS AND ACCOLADES

ASEAMBANKERSisarespectedplayerintheMalaysia

market. Known in the industry as one of the most

experiencedplayersinthelocalmarket,theInvestment

Bankhas aproudhistoryof chalkingupmanyfirsts

ininnovation,perseveranceandabilitytoresolvetheir

client’suniquefinancialsolutions.

As a leading Investment Bank in Malaysia,ASEAMBANKERS always aims to be competitive inoffering investment banking products and servicesandtostrengthenitsbusinesscoveragebyleveragingon the Maybank Group’s regional and internationalpresence.InpursuingouraspirationtobethepreferredInvestment Bank, ASEAMBANKERS will continueto broaden its product capability and strengthen itscompetitiveadvantageasatotalsolutionprovidertoourclients.Ourpresentleadingleaguetablepositionsacross debt and equity capital markets as well asmerger&acquisitions(M&A)areindicationthatwearewellonourwaythere.

ASEAMBANKERS’ strength in the Capital Markets,CorporateFinanceandEquityMarkets is showcasedwith the number of innovative market dealsstructure.Indeed,oncetheformulaofanewstructurehas been crafted, it becomes a commodity to themarket. Therefore, the experience and expertise ofthe ASEAMBANKERS’ Team has brought aboutcontinuous, innovativedealsrecentlythathaveresultedinpositivehigh league table rankings and awards fortheBank.

The outstanding growth of ASEAMBANKERS’performancewasbackedbyanumberofnotabledealsin the Debt Capital Market and reflected in leaguetablepositions.TheDebtCapitalMarkets’leaguetablepositionandmarketshareforthefinancialyearendedJune30,2008publishedbyRatingAgencyMalaysia(RAM)andMalaysianRatingCorporation (MARC)ranked ASEAMBANKERS No. 2 by the number ofissues with the notable market share of 19.0% andNo. 3 by the amount issued with a market share of12.0%. For the Bloomberg Underwriter LeagueTable,ASEAMBANKERS was ranked the top underwriterfor Malaysian Domestic Bonds with notable marketshareof28.8%.

Among the recent deals that the Investment Bankis proud about is the multiple award winning FirstSynthetic Securitisation and First Securitisation ofSmall and Medium Enterprise (SME) Loans forMalaysiaandSouthEastAsia.ThedealwasaSyntheticSecuritisation of SME Loan of up to RM600.0million in Nominal Value. The deal was issued by

Cagamas Berhad with Maybank as the originator,whereas ASEAMBANKERS was the Joint PrincipalAdvisor / Joint Lead Arranger. It was a breakthroughfortheMalaysiacapitalmarketandfinancialsystem.It enabledMalaysia toposition itself as amodel forSMEfundingintheSouthEastAsiaregion.Thisdealwas executedwith the aim todevelopandbuild theSMEsectorbyprovidingitwithcompetitivesourcesoffunding.

In the stockbroking arena, Bursa Malaysia’sperformance in year 2007 was noted among theregion’s top performers with 31.8% gain. KLCI hasdemonstrated a promising up-trend consistently lastyear where it reached 1386.67 points in the monthof June 2007 before recorded the new high mark of1410.0points in themonthofOctober 2007.KLCIrecorded1445.03pointson the last tradingdayof theyear(December31,2007).

In the month of January 2008, the KLCI indexrecordedthehighestpeakof1466.67pointsandlaterposted 9.5% drop after the 12th Malaysian GeneralElectioninMarch2008.Thetotalmarketcapitalizationhas significantly increased from RM850.0 billion toRM1.10trillionattheendofDecember2007.

In tandem with the Bursa Malaysia’s performance,ASEAMBANKERSrecordedatotaltradingvolumeof22.4 billion with 4.42% market share and the tradingvalueofRM38.5billionorequal4.2%marketshareforthefinancialyearendedJune30,2008againstthetotaltransaction recorded by all participating organizationin Bursa Malaysia of 506.0 billion units of tradingvolume, and RM916.0 billion worth of trading valuerespectively.

ASEAMBANKERSisinagoodpositiontostrengthenits competitive advantage capability in establishingitself as an international player with its awardwinningResearchTeam.TheEdgeyearlypoll awardedASEAMBANKERS’ Research Team as runner-upfor Top Research House, Best Overall Analysts, BestEconomist,whilst leading inseveral industrycategoriessuchasConsumer,Construction,Gaming,Oil&Gas,amongothersfortheyear2007.

2008





MOHAMED BASIR BIN AHMADChairmanSeptember 15, 2008

C h a i r m a n ’ s S t a t e m e n t (cont’d)

PERFORMANCE HIGHLIGHTS

ASEAMBANKERS’ total operating income for thefinancialyearendedJune30,2008ofRM242.7millionwas15.0% lower thanRM285.9million registered inthelastfinancialyear.Intandem,thenetprofitbeforetaxwasalsoloweratRM170.3million,a22.0%declinefromRM219.2millionthelastfinancialyear.

During the last financial year ended June 30, 2007where ASEAMBANKERS had undergone theInvestmentBanking rationalization scheme, therewasan exceptional gross dividend income of RM100.6million received from an associate, Maydis Berhad.With the exclusion of the extraordinary income,ASEAMBANKERS’ overall performances would haverecorded significant improvements with 41.0% and43.0% growth in total operating income and the netprofitbeforetaxrespectively.

BALANCE SHEET STRENGTH

ASEAMBANKERS’totalassetshavedecreasedto9.81%fromRM9.4billionasatJune30,2007toRM8.4billionasatJune30,2008.Thisisduetoadropindepositsandplacementwithbanksandotherfinancial institutions,aswellasdecreaseincashandshort-termfunds.

The net NPL ratios have registered an improvementsignificantly from 6.83% as at June 30, 2007 to4.13% as at June 30 2008. Although newly classifiedNPL has slightly increased to RM9.0 million againstRM4.8millionasatJune30,2007,butNPLrecoveredand regularized during the year has also significantlyimprovedfromRM10.4millionasatJune30,2007toRM38.2millionasatJune30,2008.

The loan loss reserve ratio has demonstrated slightchangesfrom27.78asatlastyearto27.60asatJune30,

2008.Thegeneralallowanceof31.80%asapercentageof gross loans and advances less specific allowance inthe financial year ended June 30 2008 was higher ascompared to 27.78% in the financial year ended lastyear. ASEAMBANKERS’ RWCR (credit and marketrisks),postedan increase from24.71%asat June30,2007to27.86%asatJune30,2008.

DIVIDENDS

The Board of Directors is not recommending anydividendsforthefinancialyearendedJune30,2008.

THE WAY FORWARD

In line with the Maybank Group’s vision,ASEAMBANKERSisnotonlyfocusedonexpandingitsinvestmentbankingbusinesslocallybutalsoinmarketswhere itsparent,Maybankisalreadypresent.Further,theCompany’s strategy for regional expansionwill becoveringopportunitiesintheneighboringcountriesandtoleverageonexistinggrouppresenceinternationallytostrengthenfootholdoninvestmentbankingactivities.

Closertohome,ASEAMBANKERShasbeenfocusingmore on Singapore as the next market of growth forinvestmentbanking.ASEAMBANKERSisalsolookingat the Indochinamarket,havingalreadyapresence inthisregionviaMaybank.

Withthestrength,experienceandexposurebothlocally and internationally, ASEAMBANKERS islookingforwardtoabiggerroleinternationally.Asmorelocal companies expand their wings internationally,ASEAMBANKERS’ aspires to grow in tandem byfulfilling and providing individualized, innovativesolutionsofitsclients’uniquefinancialneedstoresolvefinancialchallengesanddemands.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like tocongratulate ASEAMBANKERS’ Management andstaff for another excellent year, as evidenced by theprofitperformanceandtheaccoladesreceived,inspiteofchallengesfaced.IwouldalsoliketothankmyfellowBoardmembersfortheirvisionaryleadershipinsteeringtheBanktoitscurrentpositionintheindustry.Toourvaluedclientsandbusinesspartners,wethankyouforamutuallybeneficialrelationship,builtontrust.Welookforward to a more fruitful year ahead to serve you inmore comprehensive and seamlessway as professionalinvestmentbankers.

On behalf of fellow Board members, I would liketo acknowledge the leadership and contribution ofthe Board members who resigned during the year,namelyTan Sri Amirsham A Aziz, Dato’ MohammedHusseinandthelateDato’RichardHoUngHun;andthe recent resignations of Puan Hooi Lai Hoong andEncikSurachetChaipatamanont.Wethankallforthevaluablestewardship,experienceandknowledgesharedduring their tenure asDirectors thatwere essential to

the success ofASEAMBANKERS.A specialwordofthanks to our former Chief Executive Officer, EncikSurachet Chaipatamanont who had served and ledASEAMBANKERSformorethantwo(2)years.

WewouldalsoliketoexpressourdeepestcondolencestothefamilyofthelateDato’RichardHoUngHunwhopassed away in February 2008 and the recent demiseofhiswife,DatinMaryHoinSeptember2008.Dato’RichardwasexemplaryinhisserviceandwisecounseltotheGroup.

The directorship vacancies have since been filled upwithafewdistinguishedindividuals.Withthat,IwouldliketowelcomethenewlyappointedDirectors,namelyDato’ Sri Abdul Wahid Omar, Dato’ Aminuddin MdDesaandTuanHajiMohdHashirHjAbdullahaspartoftheTeam.

Last but by no means the least, my most sincereappreciation to the various Regulatory Authoritiesand Government Ministries and Departments for theinvaluableguidanceandadvicerendered.

1312

2008

14




15


Surachet ChaipatamanontChief Executive Officer & Director

Tracy OngChief Commercial Officer

QUALIFICATIONBachelorofEconomics(Hons)(UniversityMalaya)

DIRECTORSHIPMaybanInvestmentManagementAseamMalaysiaNominees(Tempatan)Sdn.Bhd.AseamMalaysiaNominees(Asing)Sdn.Bhd.MIDFConsultancyandCorporateServices SendirianBerhad

EXPERIENCETracyjoinedASEAMBANKERSin1985.In1999,shewasappointedHeadofCorporateBanking;andwaslatertransferredtoMaybankasHeadofMultinationalandMalaysianBusinessuntil2004.SheispresentlyoverseeingtheCorporateInvestmentBankingofASEAMBANKERSandMaybank.

QUALIFICATIONMasterofAppliedFinance(Macquarie University,Sydney,Australia)FellowofInstituteofBankingandFinance (Melbourne,Australia)SeniorAssociate,SecuritiesInstituteof Australia(Sydney,Australia)

DIRECTORSHIPMaybanSecuritiesNominees(Tempatan)Sdn.Bhd.MaybanSecuritiesNominees(Asing)Sdn.Bhd.MaybanFuturesSdn.Bhd.MaysecSdn.Bhd.Maysec(Ipoh)Sdn.Bhd.BudayaTegasSdn.Bhd.MaybanSecurities(Jersey)LimitedMaybanSecurities(H.K)LimitedPhileoAlliedSecurities(Philippines)Inc.

EXPERIENCEAnthonyhasmorethan17yearsofworkingexperienceintheBankingandFinancialindustrybothlocallyandoverseas.PriortojoiningASEAMBANKERSinJanuary2007,hewastheExecutiveDirector,OperationsofMaybanSecuritiesSendirianBerhad,apositionhehadassumedsince2005.AnthonyjoinedtheMaybankGroupuponhisreturnfromAustraliain1996asChiefExecutiveOfficerofMaybanFuturesSdn.Bhd.Followingthat,hewasappointedastheHeadofGroupMarketRiskManagementin2001.

QUALIFICATIONBachelorofEconomics(Hons) (UniversityofQueensland,Australia)

EXPERIENCEJohnChonghasmorethan14yearsexperienceintheoriginationandstructuringofPrivateDebtSecurities,ProjectFinanceandAssetBackedSecuritisationtransactions.

QUALIFICATIONMastersofBusinessAdministration(Finance) (TempleUniversity,Philadelphia,USA)BachelorofBusinessAdministration(Accounting) (TempleUniversity,Philadelphia,USA)

DIRECTORSHIPMaybanSecurities(Jersey)Limited

EXPERIENCEWanAsmadihasmorethan13yearsofexperienceinvariousfacetsofInvestmentBankingwhichincludescorporatefinance,advisoryservices,stockbroking,equityplacementsandpresentlyIslamicCapitalMarkets.

Healsohadpriorexperienceinoilandgas,accountingandtaxation.

Anthony Lim Choon EngHead, Equity Markets

John Chong Eng ChuanHead, Debt Markets

Wan Asmadi Wan AhmadHead, Islamic Capital Markets

M a n a g e m e n t T e a m

As as August 29, 2008

2008





M a n a g e m e n t T e a m (cont’d)

QUALIFICATIONBachelorofEconomics(Hons) (UniversityMalaya)Post-GraduateDiplomainFinance (UniversityofSouthBank,London,UK)

EXPERIENCESiewEnghasmorethan21yearsexperienceincorporateadvisoryactivities.PriortojoiningASEAMBANKERSin2004,shewaswithMalaysianInternationalMerchantBankersBerhad.

QUALIFICATIONBachelorofBusinessAdministration(Hons)(SimonFraserUniversity,Vancouver,Canada)

EXPERIENCERosalindhasmorethan7yearsexperienceofdealinginPrivateDebtSecuritiesandMalaysianGovernmentSecurities.PriortojoiningASEAMBANKERSin2005,shewaswithAmMerchantBankBerhad.

QUALIFICATIONMasterinBusinessAdministration (UniversityofNewHavenConnecticut,USA)BachelorinBusinessAdministration (UniversityofMiami,USA)DiplomainBusinessStudies (MARAInstituteofTechnology,Malaysia)

EXPERIENCEMazlanjoinedASEAMBANKERSin1985andwasattachedtotheProjectFinanceandAdvisoryDepartment.HewastransferredtoMaybankin1999andwasattachedtotheGroupRemedialDivisionuntil2003.HeispresentlyheadingtheRiskManagementDepartmentoverseeingCredit,MarketandOperationalRisks.

Lim Siew EngHead, Corporate Finance

Rosalind Kong Siew KuenHead, Sales & Distribution

Mazlan BabaHead, Risk Management

QUALIFICATIONFellowoftheInstituteofChartered Secretaries&Administrators,UKFellowoftheMalaysianInstituteof CharteredSecretaries&Administrators

DIRECTORSHIPAseamMalaysiaNominees(Tempatan)Sdn.Bhd.AseamMalaysiaNominees(Asing)Sdn.Bhd.

SECRETARYSHIPMaysecSdn.Bhd.Maysec(KL)Sdn.Bhd.Maysec(Ipoh)Sdn.Bhd.MaydisBhd.MaybanFuturesSdn.Bhd.MaybanSecurities(Tempatan)Sdn.Bhd.MaybanSecurities(Asing)Sdn.Bhd.AseamMalaysiaNominees(Tempatan)SdnBhd.AseamMalaysiaNominees(Asing)Sdn.Bhd.BudayaTegasSdn.Bhd.

EXPERIENCEFaudziahhasmorethan5yearsexperienceasCompanySecretarypriortojoiningASEAMBANKERSonMay2,1987.Currently,sheisoverseeingtheSecretarial,Licensing,AuthorisedDepository,CustodianandNomineesfunctions.

Faudziah IsmailHead, Corporate Services

Raja Fakran Raja Ahmad SupianHead, Corporate & Strategic Planning

QUALIFICATIONBachelorofArts(Hons)inEconomicsUniversityofNewcastleUponTyne, UnitedKingdom

EXPERIENCERajaFakranhasabout10yearsexperienceinCorporatePlanningincluding6yearswithinthefinancialindustry.Hisexperiencecoversorganisationalstrategyformulationandimplementation,businessopportunitiesevaluation,productandmarketstrategyandprojectmanagement.PriortojoiningASEAMBANKERS,RajaFakranwasattachedtoTakafulNasionalBerhad(nowknownasEtiqaTakafulBerhad)holdingsimilarportfolio.

Vincent Khoo Boo AikHead, Research

QUALIFICATIONCharteredFinancialAnalyst(CFAInstitute)MasterofBusinessAdministrationinFinance (UniversityofCincinnati,Ohio,USA)BachelorofArtsinEconomics (TheCollegeofWooster,Ohio,USA)

EXPERIENCEVincenthasmorethan16yearsexperienceinequityresearch,includinga4-yearstintintheUS.BeforejoiningASEAMBANKERS,hecoveredtheconsumer,auto,technologyandgamingsectorsatvariousresearchhousesandwasalsoHeadofResearchatalocalbrokerage.HewasratedasoneoftheTopAnalystsintheEdgeMalaysia’sBrokerPolls2007(intheoverall,consumerandgamingcategories)andalsooneofthetop10AnalystsinAsiamoney’s2007BrokersPoll.HehadpreviouslyalsobeenratedasaTopConsumerAnalystinthe1998and2000AsiamoneyPolls.

1716

As as August 29, 2008

2008

18




19


Alam Maritime Resources Berhad• IssuanceofRM500.0millionSukukIjarahMediumTermNotesFacility

• IssuanceofRM100.0millionMurabahahCommercialPapers/Murabahah MediumTermNotesProgramme

JULY 2007

AUGUST 2007

K-One Technology Berhad• Acquisitionof20.0%equityinterestinMoltecPrecisionSdnBhdforatotal cashconsiderationofRM4.59million.

Dreamgate Corporation Berhad• Issuance of RM200.0 million Commercial Papers / Medium Term Notes Programme

SEPTEMBER 2007

Permodalan Nasional Berhad (PNB)• Take-overofferbyPNBtoacquirealltheoutstandingsharesofRM1.00each inIsland&PeninsularBerhadnotheldbyPNBforatotalcashconsideration ofRM1.65billion.

Sabah Credit Corporation• Issuance of RM500.0 million Commercial Papers / Medium Term Notes Programme

Media Prima Berhad• IssuanceofRM180.0millionCommercialPapersProgramme

• Issuance of RM170.0 million Bank Guaranteed Medium Term Notes Programme

Quill Capita Trust• AcquisitionsofWismaTechnipandpartofPlazaMont’Kiaraforatotalcash considerationofRM215.0millionandplacementofupto251,440,000new unitsinQuillCapitaTrust

C o r p o r a t e H i g h l i g h t s

Cagamas SME Berhad• IssuanceofRM600.0millionSyntheticSecuritisationofSmallMedium EnterpriseLoans

OCTOBER 2007

MBF Cards (M’sia) Sdn Bhd• IssuanceofRM600.0millionCommercialPapers/MediumTermNotes Programme

SP Setia Berhad• IssuanceofRM500.0millionRedeemableSerialBondwithWarrants

Binariang GSM Sdn Bhd• IssuanceofRM19.0billionSukukMusyarakahIslamicCommercial Papers/MediumTermNotesProgramme

Taliworks Corporation Berhad (Taliworks)• Acquisitionof55.0%equityinterestinCerahSamaSdnBhdforatotalcash considerationofapproximatelyRM55.54million

• IssuanceofuptoRM225.0millionnominalvalueofConvertibleBonds

Perspective Lane (M) Sdn Bhd• MandatoryGeneralOffertoacquirealltheremainingordinarysharesin TradewindsCorporationBerhadandTradewindsHotels&ResortSdnBhd, Tradewinds(M)BerhadandTradewindsPlantationsBerhadforatotalcash considerationofRM1.97billion

NOVEMBER 2007

DECEMBER 2007

Eskan RMBS Company BSC (C)• IssuanceofBD30.0millionResidentialMortgage-BackedSecurities

BINARIANG GSMSDN BHD

2008





C o r p o r a t e H i g h l i g h t s (cont’d) 2120

Tradewinds Corporation Berhad (TWC)• Acquisitionof100.0%equityinterestinEdisiMindaSdnBhd,EratKilauan SdnBhdandSimbolArifSdnBhdforatotalcashconsiderationof RM145.0million

• OfferforSalebyTWCof53.02%equityinterestinTradewinds(M)Berhad toshareholdersofTWCforatotalcashconsiderationofRM597.34million

DECEMBER 2007

Taliworks Corporation Berhad• IssuanceofRM225.0millionConvertibleBonds

DRB-HICOM Berhad• Acquisitionof20.09%equityinterestinEdaranOtomobilNasionalBerhad (EON)andmandatoryofferbyHicomHoldingsBerhad(HICOM) fortheremainingsharesinEONnotalreadyheldbyHICOMforacash considerationRM2.10perEONshare

Amanahraya Real Estate Investment Trust• Acquisitionoffive(5)parcelsofleaseholdandfreeholdlandstogetherwith thebuildingsandstructureerectedonthelandsforatotalconsiderationof RM308.67million

• Placementofupto100,000,000newunitsinAmanahRayaEstate InvestmentTrust

JANUARY 2008

MNRB Holdings Berhad• IssuanceofRM200.0millionIslamicMediumTermNotesProgramme

JANUARY 2008

Titan Chemicals Corp. Bhd• ReversetakeoverofPTFatrapolindoNusaIndustriTbk.bywayof subscriptionincashofuptoRP1,778.89billioninPTFatropolindoand disposalof100.0%equityinterestinChemicalBrothersLimitedforatotal cashconsiderationofUSD188.4million

SP Setia Berhad (SP Setia)• IssuanceofRM500.0millionnominalvalueof2.0%RedeemableSerial Bondswith168,151,302detachableprovisionalrightstoallotmentof warrants

• Bonusissueof336,302,604newSPSetiasharesonthebasisofone(1) bonusshareforeverytwo(2)existingSPSetiashares

FEBRUARY 2008

Magnum Corporation Berhad • IndependentAdviserinrelationtoprivatisationofMagnumbyMulti- PurposeHoldingsBerhadviaaselectivecapitalrepaymentandreduction exerciseunderSection64oftheCompaniesAct,1965

WCT Engineering Berhad • VoluntaryOffertoacquirealltheremainingequityinterestandConvertible DebtSecuritiesinWCTLandBerhadwhicharenotalreadyheldbyWCT EngineeringBerhadforatotalconsiderationRM503.58million

DRB-HICOM Berhad• Disposalof20.2%equityinterestinEONCapitalBerhadtoPrimusPacific Partners1L.PforatotalcashconsiderationofRM1.34billion

PNB REIT• EstablishmentofPNBRealEstateInvestmentTrustwithanapprovedfund sizeof644.0millionunits

MARCH 2008

2008





C o r p o r a t e H i g h l i g h t s (cont’d) 2322

WCT Engineering Berhad• IssuanceofRM300.0millionIslamicSerialRedeemableBondswith DetachableProvisionalRightstoAllotmentofWarrants

MARCH 2007

APRIL 2008

YTL Power International Berhad• IssuanceRM2.2billionRedeemableBondswithDetachableWarrants

Lingkaran Trans Kota Sdn Bhd (LITRAK)• IssuanceofRM1.545billionIslamicCommercialPapers/MediumTerm NotesProgramme

PNB Structured Investment Fund• LaunchofPNBStructuredInvestmentFundwithanapprovedfundsizeof 3.0billionunits

Malayan Banking Berhad• Acquisitionofapproximately15.0%equityinterestinAnBinhCommercial JointStockBank,Vietnamforatotalcashconsiderationofapproximately VND2.1trillion(approximatelyRM430.0million)

Atlan Holdings Bhd • Conditionaltake-overoffertoacquirealltheremainingordinarysharesin NaluriCorporationBerhad

WCT Engineering Berhad • IssuanceofRM300.0millionvalueofIslamicSerialRedeemableSukukwith upto145,902,376detachablewarrantsonaboughtdealbasistoPrimary Subscriber

• IssuanceofRM300.0millionIslamicCommercialPapers/MediumTerm NotesProgramme

MAY 2008

Malayan Banking Berhad• Acquisitionofupto20.0%equityinterestinMCBBankLimited,Pakistan foratotalcashconsiderationofapproximatelyPKR44.29billion (approximatelyRM2.17billion)

KNM Group Berhad (KNM)• Acquisitionof100.0%equityinterestinBorsig Beteiligungverwltungsgeselschaftforatotalcashconsiderationof EuroDollar350.0million(approximatelyRM1.67billion);

• Renounceablerightsissueof263,735,925newordinarysharesofRM0.25 eachinKNM(RightsShares)onthebasisofone(1)RightsShareforevery four(4)existingsharesheldinKNM.

YTL Power International Berhad• IssuanceofRM2.2billionNominalValueofRedeemableBondswithup to2,205,127,393detachablewarrantsonaboughtdealbasistoPrimary Subscriber

DHTI Capital Sdn Bhd• IssuanceofRM120.0millionIslamicCommercialPapers/IslamicMedium TermNotesProgramme

MAY 2008

JUNE 2008

Malayan Banking Berhad• IssuanceofRM3.5billionNon-InnovativeHybridTier1Capital

2008





D e p a r t m e n t a l R e v i e w 2524

CORPORATE INVESTMENT BANKINGIn line with our focal point of customer centricity,Corporate Investment Banking (CIB) continued touphold the principle of “Optimizing Opportunities,Delivering Solutions” to our esteemed clientele baseof the Maybank Group and is proud to record ourcommendableperformanceoneyearfromourrolloutinJanuary2007.

CIB isalsoproudtoreport that severalnotabledealstotaling RM32.0 billion was concluded during theperiod under review with the accomplishments dulyhighlightedundertherespectiveproductteamsofDebtMarkets,CorporateFinanceandEquityMarkets.Thisfurther testifies the alignment of our client coveragemodelandobjectiveofbeingatotalfinancialsolutionsprovider.

ASEAMBANKERS continued to be ranked in thetop two (2) position in the Bloomberg’s Mergers &Acquisitions (M&A) league table for the first half ofyear2008.Amongstthenotablesuccessesinourclientcoverage model includes the DRB-Hicom Groupwhere we originated, structured and implementedM&A transactions of approximately RM3.3 billionduring the financial year. For Tradewinds Group,we advised and funded the M&A requirements ofapproximatelyRM1.9billionwhichsawthedemergerof Tradewinds Malaysia Berhad from TradewindsCorporationBerhadwherethree(3)mandatorygeneraloffers were triggered and completed fully in March2008.

CIB is also proud to record the successful executionfor substantial equity fund raising exercises viarights issue for the KNM Group of RM1.054billion and IOI Properties Berhad of RM932.0million amidst challenging environment. During theperiod under review, ASEAMBANKERS had alsooriginated and successfully concluded fund raisingtransactionssuchasYTLPowerInternationalBerhad’sRM2.2billionBondsandWarrants,SPSetiaBerhad’sRM500.0 million Redeemable Serial Bonds with

Warrants, Ann Joo Resources Berhad’s RenounceableRights Issue of New Warrants and others as dulyhighlightedundertherespectiveproductteams.

Inadditiontothesuccesseshighlighted,CIBwasalsoinstrumental in advising an innovative StructuredInvestment Fund which is the first of its kind inMalaysia. PNB Structured Investment Fund (PNBSIF)withafundsizeofRM2.5billionisconceivablythefirst stapledUnitTrustFundwith investments inacombinationofStructuredProductsandRealEstateInvestmentTrust(REIT)everlaunchedinMalaysia.

Movingahead,CIBwouldcontinuetoleadanddrivetheGroup’s initiatives inour regional expansion intoIndonesia, Indo-ChinaandGreaterChina.This is inlinewithourvisiontobecomethepreferredInvestmentBankbothlocallyandregionally.

DEBT MARKETSDebt Markets arranged a total of fourteen (14)domestic transactions during the financial year witha nominal value of RM10.8 billion and an off-shoretransaction with a nominal value of approximatelyRM300.0 million. As at June 30, 2008, BloombergrankedASEAMBANKERSasthetopunderwriterforMalaysiandomesticbonds,commandingamarketshareof28.8%.ASEAMBANKERS originated numerous landmarkdebt capital market transactions during the financialyear.

Notable TransactionsIn October 2007, ASEAMBANKERS arranged andlaunchedtheissuanceofSouthEastAsia’sfirstSyntheticSecuritisation utilizing Small-Medium Enterprises(SME)loansasanassetclassamountingtoRM600.0million.MaybankistheoriginatorwithCagamasSMEBerhadactingastheissuerforthistransaction.

Attheinternationallevel,ASEAMBANKERSexecutedthe first Residential Mortgage-Backed Securities(RMBS) transaction in Bahrain and in the GulfCooperationCouncil(GCC)regioninOctober2007.ThemaidentransactionamountingtoBD30.0million(approximatelyRM300.0million) is forEskanBank,whichisownedbytheBahrainGovernment.AnotherachievementforASEAMBANKERSwasourroleasJointLeadManagerintheRM19.0billionSukukMusyarakah Islamic Medium Term Notes IssuanceProgrammeforBinariangGSMSdnBhdinDecember2007.TheProgrammewasMalaysia’slargestcorporatebondissueandoneofthelargestAsiancorporatebondsissuesex-Japan.ASEAMBANKERSleadarrangedthree(3)BondswithWarrantIssuancesinthefinancialyear,underlyingourexpertiseinstructuringEquityLinkedIssuances.ThesewereSPSetiaBerhad’sRM500.0millionRedeemableSerialBondwithWarrantsinNovember2007,WCTBerhad’sRM300.0millionIslamicSerialRedeemableSukukwithWarrantsinMarch2008andYTLPowerInternationalBhd’sRM2.2billionRedeemableBondswithWarrantsinApril2008.WCTBerhad’sissuancewasthefirstIslamicBondwithWarrantIssuanceintheworld,basedontheprincipleofMusyarakah.ASEAMBANKERS also arranged Lingkaran TransKota Sdn Bhd’s RM1.55 billion Sukuk MusyarakahIslamic Commercial Papers / Medium-Term NotesIssuance Programme in April 2008.The Programmewas structured to refinance the Issuer’s existing debtsecurities programmes and redeemable unsecuredloan stocks via a comprehensive buyback andrefinancingexercise.InJune2008,ASEAMBANKERSarrangedMaybank’sRM3.5billionNon-InnovativeHybridTier1CapitalSecurities.Theissuancehassuccessfullysetanumberof precedents in the Malaysian financial scene. Not

only does this transaction represent the nation’s firstground-breakingNon-InnovativeHybridTier1basedon a stapled securities structure, it is also Maybank’sfirst Hybrid Tier 1 capital-raising from the PrivateDebtSecuritiesmarket.

League Table

ASEAMBANKERS continued to be ranked amongMalaysia’s top Lead Managers by both RAM RatingServices Malaysia (RAM) and Malaysian RatingCorporationBerhad(MARC).

Fortheyear2007,ASEAMBANKERStoppedMARC’sleague table for lead managing the most number ofIslamic Private Debt Securities. ASEAMBANKERSwasalsohonouredbyRAMforbeingamongthetopthree(3)LeadManagersinfour(4)categoriesnamely,Conventional Bonds by issue value, ConventionalBonds by number of deals, Islamic Sukuk by issuevalue and Islamic Sukuk by number of dealscategories.

ASEAMBANKERS received several awards fromRAM in the year 2007, most notably the SpecialMerit and Blueprint Awards. The Special MeritAward is a special acknowledgement awardpresentedto an institution that has made an outstandingcontribution towards elevating the country’s reputein the global financial market. The BlueprintAward was awarded for New Structured FinanceBenchmark Deal for the RM600.0 million SyntheticSecuritization of Small Medium Enterprise (SME)loans issued by Cagamas SME Berhad. In addition,ASEAMBANKERS also received the OutstandingDeal of The Year award for the RM22.0 billionSenior and RM3.02 billion Cumulative Non-Convertible Junior Sukuk Musyarakah issued byBinariangGSMSdnBhd.

2008





International Awards

During the financial year, ASEAMBANKERSreceivedseveralinternationalawardswhichshowcasedour ability to arrange and structure transactions ofinternationalstandard.

Maybank’s USD300.0 million SubordinatedBank Capital Sukuk, joint lead managed byASEAMBANKERS was named as the Best SukukDeal in the Euromoney Islamic Finance Awards(2008)andtheBestCountryDeal(2007)fromTheIslamicFinanceNews.

ASEAMBANKERS also won the ThomsonInternational Securitisation Report’s (ISR) AsianDeal of the Year 2007 Award for the inauguralRM600.0 million Synthetic Securitisation ofMaybank’s SME loans. The award was the firstbestowed upon an Asian Institution by ISR. Theprevious winners were dominated by European andAmerican entities because of the size and structuresof their deals. This transaction also won theprestigiousIFRAsiaMalaysiaCapitalMarketsDealoftheYear(2007)AwardandTheAssetMagazineDealofTheYearBestDomesticSecuritization(2007).

Continued Growth

Movingforward,havingastrongnetworkofinvestorsestablishedbytheInstitutionalSalesTeamandbackedby our in-house Research Team, Debt Markets willcontinue to strive inproviding a comprehensive andleadingedgefinancialservicesforawidespectrumofcorporateclients,domesticallyaswellasregionally.

CORPORATE FINANCE

The total value of all the Mergers and Acquisitions(M&A) transactions successfully completed duringthefinancialyearisapproximatelyRM13.15billion.Someofthenotabletransactionsinclude:

• MandatoryGeneralOfferbyPerspectiveLane(M) Sdn Bhd to acquire all the remaining ordinary shares in Tradewinds Corporation Berhad, Tradewinds Hotels & Resorts Sdn Bhd, Tradewinds (M) Berhad and Tradewinds PlantationsBerhad fora totalcashconsideration ofRM1.97billion;

• Acquisition of 100.0% equity interest in Edisi Minda Sdn Bhd, Erat Kilauan Sdn Bhd and SimbolArifSdnBhdbyTradewindsCorporation Berhad for a cash consideration of RM145.0 million;

• OfferforSalebyTradewindsCorporationBerhad (TWC)of53.02%equity interest inTradewinds (M) Berhad to shareholders ofTWC for a total considerationofRM597.34million;

• Acquisition of up to 20.0% equity interest in MCBBankLimited,PakistanbyMaybankforacash consideration of approximately PKR44.29 billion (approximately RM2.17 billion);

• Acquisition of approximately 15.0% equity interestinAnBinhCommercialJointStockBank, Vietnam by Maybank for a cash consideration ofapproximatelyVND2.1trillion(approximately RM430.0 million);

27D e p a r t m e n t a l R e v i e w (cont’d)26

• Acquisition of 100.0% equity interest in Borsig BeteiligungverwaltungsgeselschaftMBHbyKNM Process Systems Sdn Bhd, a wholly-owned subsidiary of KNM Group Berhad for a cash consideration Euro 350.0 million (approximately RM1.67 billion);

• Conditional Take-Over Offer by Permodalan Nasional Berhad to acquire all the remaining 702,838,655 ordinary shares of RM1.00 each in Island&PeninsularBerhadforatotalconsideration ofRM1.65billion;

• Voluntary Offer by WCT Engineering Berhad to acquire all the remaining equity interest inWCT Land Berhad for a total consideration of RM503.58million;and

• Acquisition of 20.09% equity interest in Edaran OtomobilNasionalBerhadincludingaMandatory General Offer by Hicom Holdings Berhad for a cashconsiderationofRM369.65million.

ISLAMIC CAPITAL MARKETS

Products and Services

Islamic Capital Markets Division (ICM) covers allIslamiccapitalmarketsbusinesses,offeringawiderangeof investment strategies and solutions across all assetclassestoanextensivegroupofclientsacrosstheregionandaroundtheworld.Weofferintegratedinvestmentstrategiesandsolutionstoclientswithcomprehensiverange of Shariah-compliant investments, includingrelevant insight, research and knowledge of Islamicfinance.

As one of the leading global Islamic capitalmarket players, has been involved in the various

innovative Islamic capital market products both inRinggit and non-Ringgit issues. ICM undertakesthe origination and structuring of Shariah-compliant debt and equity financial instruments inmeeting the growing demand from the local andinternational issuers and investors. Our involvementintheSukukmarketbothdomesticallyandgloballycanbeaffirmedbythenumerousawardsandrecognitionthatwereconferredtoASEAMBANKERS.Acknowledgingthe growth potentials, ASEAMBANKERS is furtherequippingitselfwithIslamiccapabilitiesforotherfacetsof Islamic finance including Islamic REITs, IslamicstockbrokingandIslamicPrivateEquityFunds.

Departmental Review ICM was set up in July 2007 with the objective ofbringing ASEAMBANKERS to the forefront of theIslamic capital markets industry by tapping on thestrengths of ASEAMBANKERS’ leadership positionin both domestic and global market and Maybank’sprominent presence in the Islamic banking spherevia the offerings of innovative Islamic capital marketsolutionstotheclientsacrossvariousindustries.

TheDivisioncomprisesofstrongteammemberswithdiverse backgrounds, backed by efficient and smoothexecutionteamswhohavecapabilitiesinvariousfacetsoftheIslamicfinancialmarkets.TheDivisionisdividedinto Shariah, Product Development and ResearchDepartmentandIslamicDebtMarketsDepartmentofwhicheachdepartmentisspecialistintheirrespectivefields to provide the edge for ASEAMBANKERSin the Islamic capital market arena. With this newsetup, ASEAMBANKERS had completed numerousnotable deals in the Islamic capital markets for thefinancialyearendedJune30,2008.

2008





D e p a r t m e n t a l R e v i e w (cont’d) 29

Notable Deals and Accolades

December2007sawASEAMBANKERSparticipating

astheJointLeadManagerforoneofthelargestSukuk

issueintheworldbyBinariangGSMfortheRM19.0

billionSukukMusharakahIslamicCommercialPaper/

MediumTermNotesIssuanceProgramme.TheSukuk

issue was two (2) times oversubscribed by investors,

indicatingthewideacceptancebyinvestorsconsidering

thelargesizeoftheoffer.

In March 2008, ASEAMBANKERS had solely lead

arrangedtheRM300.0millionSukukMusharakahwith

detachableprovisionalrightstoallotmentofWarrants

issuedbyWCTEngineeringBerhad(WCTE).Thedeal

wasanothersignificantmilestoneintheglobalIslamic

capital markets sphere. WCTE’s Sukuk Musharakah

withWarrantsisdeemedasthefirstSukukofitskind

intheworld.Theinnovativestructureisatestamentof

ASEAMBANKERS’abilityandcreativitytostructure

investmentofferingsthatwillbestsuittheissuersand

investorsneeds.

League Table

ASEAMBANKERScontinues tomark itspresence inthe Malaysian Islamic capital markets. For the year2007,ASEAMBANKERStoppedtheMARC’sleaguetable for managing the most number of Sukuk dealsandwasrankedthird(3rd)intermsofissuevalue.Asfor the RAM’s league table, ASEAMBANKERS wasrecognized to be on the second (2nd) place for leadmanagingseven(7)Sukukdealsandthird(3rd)placein terms of issue value amounting to RM9.2 billionintheIslamicSukukcategoryfortheyear2007.

To further strengthen ASEAMBANKERS’ positionin theMalaysian Islamiccapitalmarkets, for thefirsthalfofyear2008,ASEAMBANKERShassuccessfullyconsolidateditsecond(2nd)placeforMalaysianRinggitIslamicBondsintheBloomberg’sUnderwriterLeagueTable. For the same period, RAM had also rankedASEAMBANKERSasnumbertwo(2)intermofissuevalue and third (3rd) placing in terms of number ofdeals.ThisisagoodbeginningforASEAMBANKERS’Islamic Capital Markets to further excel in the nextfinancialyear.

28 P r o d u c t s A n d S e r v i c e s

CORPORATE FINANCE

Corporate Finance has been a core business ofASEAMBANKERS since its inception. Over theyears, we have developed leading edge advisory andoriginationskillsandbuiltanimpressivetrackrecordintheMalaysiancapitalmarket.

• Takeovers, Mergers & AcquisitionsTo advise on take-overs, mergers, expansionand alliances. These include acquisitions, jointventures, mergers, management buy-outs, take-overs(includingmandatoryandvoluntarygeneraloffers),reversetake-oversanddemergers.

• Initial Public OfferingsToadviseonpublicissuesofnewsecuritiesand/oroffers for sale of existing securities in companiesand real estate investment trusts seeking listingand quotation on the Main Board, SecondBoard or MESDAQ Market of Bursa MalaysiaSecuritiesBerhad.

• Debt RestructuringTo advise on financial solutions to companieswhichareunabletomeetdebtobligations.

• Secondary Offerings Toadviseonissuanceofsecuritieswhichincludesraising of funds through rights issues, restrictedissues, private placements and special issues ofboth equity and equity-linked instruments suchas redeemablepreference shares, convertible loanstocks,convertiblebondsandwarrants.

• General Corporate Advisory To advise on waivers from general offers,independent advice, bonus issues, capitalrepayment,employeeshareoptionschemes,listingtransfer,valuationofcompaniesorbusiness,etc.

• Project Advisory To advise parties on financial solutions relatingtoinfrastructureandprivatizationprojects.

DEBT MARKETS

Debt Markets has been successful in developinginnovative and comprehensive on-shore (Ringgit)and offshore (non-Ringgit) funding solutions toprovideclientstheflexibilityandmeanstotapboththelocalandinternationaldebtmarkets.

Islamic Private Debt Securities (PDS)Debt Markets, together with the Islamic CapitalMarket team, structures Islamic financing productsfor a host of local and international clients. Theproducts offered are tailored to fulfill Shariahrequirements and meet GCC standards so as toincrease the breadth and depth of the local IslamiccapitalmarketsandtheultimatedevelopmentoftheinternationalIslamicmarkets.

Project and Structured Finance TransactionsDebtMarketsoriginates,advisesandexecutesuniquefinancingstructures thatarebasedonriskassessmentandmitigationinprojectstoachievehigherlevelsofcreditratingandgearing.Theresultingstructuresaddvalue by increasing a project’s equity return. Thesestructures are particularly suited for projects in theinfrastructure,energyandutilitysectors.

Asset-Backed Securities (ABS)Debt Markets develops asset-backed and mortgage-backed securitisation structures, syntheticsecuritisation, collateraliseddebtobligations andotherstructured ABS products. Assets securitised includebank loans (term loans, mortgages, hire purchasesandleases),bondobligations,creditcardreceivables,wholebusinessfeaturesrevenues,publicutilitiesandgovernmentrevenues.

Underwriting & Primary IssuesDebt Markets is able to price issues competitivelybalancing investors’ appetite against current economicconditions.The collective underwriting capability oftheGroup,wellcomplementedbyastrongdistributionnetworkensures thesuccessful subscriptionof issuesbyawidebaseofinvestors.

2008





P r o d u c t A n d S e r v i c e s (cont’d)30 31

Loan SyndicationOur proven expertise and extensive experience inarranging loan syndication covers the arrangementand coordination of the overall syndication processand managing the funding transaction togetherwithothersyndicatedlenders.

SALES AND DISTRIBUTION

The Institutional Sales and Trading Markets arethe two essential sub unit desks in S&D. Itsprimaryrole is todistributefixed incomeandtreasuryproducts originated by Debt Capital Market andTreasury whereby the other unit concentrates intrading the interest rate products.The InstitutionalSales consists of experienced sales personnel with anextensive distribution network covering local andoffshore markets i.e. Singapore, Hong Kong andMiddle East. The Trading Markets comprise ofan experienced team who is one of the more activeparticipants in the fixed income and interest swapsmarkets.

Primary MarketThe Institutional Sales has strong rapport withinstitutional investors like financial institutions,government agencies, insurance companies andfund management companies locally as well as inmajorfinancialmarketssuchasSingapore,HongKongand Middle East. With this extensive distributionnetwork coverage, it enables ASEAMBANKERS tobe oneof the top lead arrangers andunderwriters inthe Malaysian capital market.The recent issuance ofYTLPowerGenerationtothetuneofRM2.20billionto a market, which was experiencing uncertainty, wasevidenceofourpositionasoneofthetopleadarrangers.ASEAMBANKERS has started to leave its footprintin the international market with its recent localcurrency issuance inBahrain i.e. theBD30.0millionissue of Eskan Bank and the USD issuance ofUSD300.0millionMaybankSukuk.

Secondary MarketASEAMBANKERS is one of the most active and

key player in the Malaysian fixed income markets.The year in review has been a challenging yearwith huge volatility seen due to uncertainty in

the political arena and mounting inflationarypressures. The desk has established itself to be oneof the active pricing provider for its own issuances

aswellasotherstopromoteliquidityinthesecondarymarket.

EQUITY MARKETS

Placement and DistributionEquity Capital Market undertakes the Bank’scentralised role of sales and distribution channelfor both primary and secondary issues of equity andequity-linkedinstruments.

In ensuring effective and successful equity placementefforts, Equity Capital Market continues tostrengthen its networking with investors or variousrisk appetite and investment preference, includingreputable local and international institutions,FundManagersandhighnet-worthindividuals.

Equity Capital Market also provides support toCorporate Investment Banking Department andCorporate Finance Department in marketing andstructuring of new proposals by providing inputsin terms of the pricing of equity and equity-linkedinstruments as well as providing insights from anequitymarketperspective.

UnderwritingEquityCapitalMarketundertakestheBank’scentralisedrole of underwriting of equity and equity-linked

instrumentsforbothprimaryandsecondaryissues.

RESEARCH

Recognised as a leading investment research house,ASEAMBANKERS’Researchcoversabroadspectrumofproducts,fromunique,“originalideas”toin-depththematic conferences and workshops, expositoryeconomic reports and timely market presentations.Ourresearchisaimedatprovidingtimely,independentresearchmaterialtoempowerinvestorswitheconomicandmarket knowledge, and is organised in four (4)broadcategories:

Equity Research – Fundamental Targeted at institutional clients, with bottom-upfundamentalresearchcoverageofmorethan80listedcompanies listed on Bursa Malaysia, sector andindustry-level research, as well as market outlookandinvestmentstrategy.

Equity Research – Technical / RetailExtensively tracking technical indicators and chartanalysis of equity securities, world indices, currencyandcommoditytrends-providingtimely,responsivedaily,weeklyandmonthly trading ideas for retail aswellasinstitutionalclients

Economics Providing value added insights and in-depth

analysisofdevelopments,policies, issuesandoutlookintheMalaysian,regionalandglobaleconomies.

Fixed IncomeAssisting institutional investors in managing theirbond portfolios by providing insights on various

risks in a bond portfolio such as market, creditand event risks. Coverage includes the MalaysianGovernment bond market as well as the PrivateDebtSecuritiesmarket.

NOMINEES AND REGISTRATION SERVICES

• Acts as nominee to ease administrative procedures forinstitutionalandretailclients;and

• Provision of registration services for the Central DepositorySystem(CDS),collectionofdividend andotherentitlementssuchasbonusandrights.

2008





33C o r p o r a t e G o v e r n a n c e S t a t e m e n t32

Goodcorporategovernanceisafundamentalpartoftheculture and business practices of ASEAMBANKERS.The Board and Management of ASEAMBANKERSuphold the value of good corporate governance bycontinuously advocating transparency, accountability,responsibility and adhering to the highest ethicalstandardsinstrivingtoenhancelong-termshareholders’valuesandsafeguardingthestakeholders’interest.

ASEAMBANKERS’corporategovernancestatement isstructuredontheGuidelinesonCorporateGovernanceforLicensedInstitutions(RevisedBNM/GP1)andbestpracticesoftheSecuritiesCommission’s(SC)MalaysianCode on Corporate Governance (Revised 2007) asfollows:

PRINCIPLE 1:

Every Licensed Institution Should Be Headed By An Effective Board, Which Assumes Specific Responsibilities. The Vision, Strategy And Corporate Values Of The Licensed Institution Should Be Clearly Specified And Understood.

A) VISION

As stewards of the Bank, the Board of Directorssets out in itsmid-termvision tohaveundisputedleadershipinMalaysiaacrossallattractiveproducts/segments, to strengthen our regional presence,to become a talent and execution – focusedcompanyandexpandintoregionalmarketswiththelong-termvisionofbeingaregionalpowerhouse.

B) CORPORATE VALUES

To achieve these visions and in line with there-energised Maybank Group Core Values, the

Board sets the following to direct the activitiesoftheBank:

TeamworkWeworktogetherasateambasedonmutualrespectandintegrity

• Workasateamtoprovidetheoptimaltotal customersolution

• Workasateambasedonmutualrespectand trust

• Createahighlyengagedteam

• Encourageotherstoexpressopinionsandideas

• Worktowardscommongoalsandobjectives

• CommunicateeffectivelytoachieveGroup synergyandGroupspirit

• Readilyshareexperienceandresourcesto achievesharedgoals

IntegrityWearehonest,professionalandethicalinallourdealings

• Betrustworthyandgenuineindealingwith customers

• Placehighvalueoncustomerprivacyand financialsecurity

• Upholdhighstandardsofpersonalintegrityand professionalism

• Beaccountableforownactions

• Behonestandethical

• Contributetostronggovernance

• Complywithlawandstatutoryrequirements

GrowthWearepassionateaboutconstantimprovementandinnovation

• Providesuperiorreturnstocustomersandgrow theirbusiness

• Focusonprofessionalandpersonalgrowthby continuouslearning

• Encourageinnovationandcreativitybythinking outofthebox

• Lookforopportunitiestoimprove

• Makedecisionsthatdrivelongtermgrowth

Excellence & EfficiencyWearecommittedtodeliveringoutstandingperformanceandsuperiorservice

• Delivertocustomersaspromisedandbeyond whatisexpected

• Beresponsiveandofferquickturnaround

• Haveasenseofurgency

• Becostefficientandriskawareineverythingthat wedo

• Achieveserviceandoperationalefficiency

• Deliversustainableoutstandingperformance

Relationship buildingWecontinuouslybuildlongtermandmutuallybeneficialpartnerships

• Showappreciation,respectandcustomer centricity

• Developlong-termandmutuallybeneficial relationships

• Buildcustomerloyaltyandunderstandtheir expectations

• Developstrongandfriendlyworkingrelationship withcolleaguestoachievebusinessgoals

• Embraceandsupportdiversityofworkforce(eg gender,race,experiences,views)

• Buildmutuallybeneficialrelationshipwithall stakeholders

ASEAMBANKERSobservestheMaybankGroupCoreValuesasillustratedbelow:

TTeamwork IIntegrity GGrowth EExcellence & Efficiency RBuild

Relationship

WALK THE TALK!

• Always provide the optimal total customer solution

• Work towards common goals and objectives

Customers

Employees

Organisation• Communicate effectively to achieve group synergy, group spirit

• Ensure customer privacy and trust - prerequisite banking relationship

• Be honest, ethical and accountable

• Contribute to strong governance

• Provide superior value to customers and grow business

• Focus and invest in professional and personal growth

• Make decisions that drive long term growth

• Be responsive, offer quick turnaround with sense of urgency

• Be cost efficient and risk aware

• Achieve service and operational excellence

• Show appreciation, respect and customer centricity

• Invest time in listening and working with your colleagues

• Embrace and support diversity

2008





C o r p o r a t e G o v e r n a n c e S t a t e m e n t (cont’d) 3534

INITIATIVE 30: RE-ENERGIZING OUR CORE VALUES

• Enriching their experiences with us

• Developing long term and mutually beneficial Relationships with them

• Placing a high value on their privacy and financial security

We serve ourCustomers by

• Committed to Excellence in everything they do Team players working together based on mutual respect, leadership by example and dignity in their dealings with everyone

• Ethical and upholds high levels of Integrity


• Consistently provides our shareholders with superior returns

• Focuses on sustainable and superior Growth guided by sound financial discipline• Operates in the most Efficient and effective manner


T I G E R

C. THE BOARD’S RESPONSIBILITY

TheBoard at all times ensures compliance to theprovisions of the Companies Act 1965, BankingAnd Financial Institutions Act 1989, CapitalMarkets and Services Act 2007, Rules of BursaMalaysiaSecuritiesBerhad,theMemorandumandArticles of Association of the Company includingthe guidelines as may be issued by relevantauthoritiesfromtimetotime.Inprovidingcounseland oversight, the roles and responsibilities oftheBoardincludes:

1. Setting corporate values and clear lines of responsibilities and accountability that are communicated throughout the organization within which Senior Management are to operate.

2. Reviewing and approving strategies and business plans which include the annual

budget, significant financial expenditures, new investments, divestments, mergers and acquisitions, establishment of subsidiaries, jointventuresorstrategicalliancesbothlocally aswellasoutsidethecountry.

3. Identifying and approving comprehensive policies, processes and infrastructure with respecttothemanagementofallriskcategories including but not limited to credit, market, liquidity, operational, legal and reputation risks.

4. Reviewing the adequacy and integrity of the Bank’sinternalcontrolsystemandmanagement information system, including systems for compliance with applicable laws, regulations, rulesandguidelines.

5. Approving policies and procedures on the prevention of money laundering and terrorist financing.

The Directors are committed to the collectivedecision-making processes of the Board whiledebating issues openly and constructively, andchallengingtheopinionofothers.

PRINCIPLE 2:

There Should Be An Effective Board Composition, With A Strong Independent Element Where No Individual Or Small Groups Of Individuals Should Be Allowed To Dominate The Board’s Decision Making.

The Board of Directors of ASEAMBANKERS is ledby six (6)Directors comprising two (2) IndependentNon-ExecutiveDirectors, three (3)Non-IndependentNon-Executive Directors and one (1) ExecutiveDirector.TheBoardisallowed,inaccordancewiththeArticlesofAssociation, to expand itsmembershipupto fourteen (14) members, but not less than five (5)membersatanyonetime.

The Board composition generates an ideal safeguardto curtail any possible domination by any individualor small group of individuals over decision-making,which may impeach a Board’s credibility andreasoning. Each Director ensures that no decision oractiontakenhastheeffectofplacinghisinterestbeforethat of the Bank. The wide spectrum of skills andexperience embedded within each Director’s personaprovideanaid toachieving theBank’sobjectivesandultimatelycultivatescomfortover thefirmcontrolofanaccountableandcompetentBoard.

ThepresenceofIndependentNon-ExecutiveDirectorsof high caliber carries significant weight in theBoard’s deliberations and has also enhanced valuableinsighttotheindependentview,adviceandjudgmentaswellasprotectionovertheinterestofotherparties.Independent Directors also debate issues openly andconstructively and are free to question and challengethe opinion of others. They bring clear judgmentbecause they have no relationship with the Bank

or others that could create or be perceived to createconflictinginterest.

TheBoardrecognizesthattocontinuetobeeffectiveand relevant in a regulated and competitive industry,members must fully satisfy the fit and proper test,including having the attributes and criteria relatingto matters such as relevant qualification, professionalstandingandbackgroundaswellasexperiencesinthefinancial,business,legalandtechnicalfields.

In this respect, thePolicy onFit andProperCriteriafor Appointment as Chairman, Directors and ChiefExecutiveOfficerofLicensedInstitutions inMaybankGroup (“Fit and Proper Policy”) acts as a guide fortheBoardnotonlytodeterminetheoverallsuitabilityof a candidate as a Director but to identify the gapsinskillsofthecurrentBoard.

Thebio-dataandcredentialsofeachindividualBoardmembersaredisclosedfrompage4to7ofthisAnnualReport.

PRINCIPLE 3:

There Should Be A Clear Division Of Responsibilities At The Helm Of A Licensed Institution, Which Will Ensure A Balanced And Clear Lines Of Role, Responsibility, Authority And Accountability Throughout The Licensed Institution.

As a measure to realize more effective managementsystem functions of the Board, the roles of boththe Chairman and the CEO are assigned to two (2)separate individuals.The distinction on the differentbut complementary jobs of both the Chairmanand CEO are clearly defined, thereby reducing thepossibilityofthattheoverlappingrolesmaycause.

TheroleoftheChairmancontinuestobepresidedbya Non-Executive Chairman to maintain the balanceof power and authority. The responsibility of theChairman is to oversee and ensures that the plansand policies formulated by the Board are properlyimplemented. He establishes a closer relationship oftrust with the CEO, providing support and advicewhilerespectingexecutiveresponsibility.





C o r p o r a t e G o v e r n a n c e S t a t e m e n t (cont’d)36 37

TheCEOontheotherhand,supportsandworkswiththe Chairman to the attainment of the objectives ofsuchplansandpolicies.

PRINCIPLE 4:

There Should Be A Formal And Transparent Process For The Appointment Of Directors To The Board And The Appointment Of Chief Executive Officer.

A) APPOINTMENT AND RE-ELECTION TO THE BOARD

The Articles of Association governs the terms ofappointmentandre-electionoftheDirectorstothe

Board. As dictated in the Articles of Association,one third of the Directors shall retire from theiroffice at each Annual General Meeting (AGM)and they shall be eligible to be re-elected by theshareholders.

Retiring Directors are also subject to a formalassessment of their performance by theNomination Committee at the Group level whichmakes its recommendation to the Board for theDirectors for re-election at the AGM. For thelast financial year, a review of retiring directorswas formally undertaken on June 27, 2007 bytheNominationCommitteeattheGrouplevel.

DirectorsinofficeatthedateofthisAnnualReportareasfollows:

Retiring andName of Director Appointed Independent Last Elected Seeking Election in 2008

TanSriMohamedBasirAhmad September28,1993 No September,2006 Yes(Under Sec 129)

Dato’RichardHoUngHun(resigned wef October 5, 2007)

DatukAmirshamAAziz(resigned wef March 18, 2008)

Dato’MohammedHussein(resigned wef January 31, 2008)

HooiLaiHoong January31,2005 No October,2007 No(resigned wef September 1, 2008)

HajiMohammadbinAbdullah January31,2005 Yes October,2007 Yes(Under Article 75)

HajiMohdHashirbinHajiAbdullah January21,2008 Yes - Yes(Under Sec 129)

Dato’AminuddinMdDesa January31,2008 No - Yes(Under Articles 81(a)

Dato’SriAbdulWahidOmar July9,2008 No - Yes(Under Articles 81(a)

SurachetChaipatamanont July3,2006 No - No(Article 115 of M&A)

TheBoard recognizes theurgentneed to refresh its composition, and itsdetermination to ensure theBoardcontinuestoleadandmanagetheBankeffectively.

B) SERVICE CONTRACT AND FORMAL EVALUATION OF THE CHIEF EXECUTIVE OFFICER

EncikSurachetChaipatamanontwasappointedastheCEOandDirectorofASEAMBANKERSwitheffect from July 3, 2006. As approved by BankNegaraMalaysia(BNM),hisappointmentisvalidfor a period of two (2) years. His contract wasextended for another three (3) months to expireonSeptember30,2008.

The responsibility of the CEO involvesoverseeingtheday-to-dayoperationsandbusinessmanagement towards achieving the Bank’sbusiness objectives. The CEO manages keycorporateresourcesoftheBankandregulatestheflowofimportantinformationtoDirectors.Thisis inlinewiththeprimeintentiontopreservethecollectivebestinterestoftheshareholders.

The Nomination Committee at the Group levelformallyevaluateandrecommendtheappointmentoftheCEOtotheBoardofASEAMBANKERS,who in turn will undertake their independentevaluation.TheRemunerationandEstablishmentCommitteeattheGrouplevelontheotherhand,willusethisevaluationasapointofreferenceinthe course of its deliberations when consideringtheremunerationpackageoftheCEO.

PRINCIPLE 5:

Directors Must Be Persons Of Caliber, Credibility And Integrity With The Necessary Skills And Experience And Be Able To Devote Time And Commitment.

A) DIRECTORS ARE PERSONS OF CALIBER, CREDIBILITY AND INTEGRITY

TheappointmentoftheBoardmembersisguidedbytherevisedGuidelinesonDirectorshipintheBanking Institutions (Revised BNM/GP1) andother guidelines as may be issued by BNM, theSCandBursaMalaysiaSecuritiesBerhad’sRules

fromtimetotime.TheBank’spolicyendorsesandacknowledgesa formalandtransparentprocedurefor the election and appointment of membersto the Board. The Board ensures that it selectspersonswithabroadrangeofskillsandexperienceappropriate to the needs of ASEAMBANKERS.They should also be of good standing in thecommunityandbepreparedtoupholdtheethicalvaluesoftheCompany.

The Nomination Committee at the Group levelconducts evaluation or screening process on theindividual candidate and subsequently makesrecommendationstotheBoardforapproval.Theappointment further obtains written consentfrom BNM as required under Section 55(1)and Section 57(2) of Banking and FinancialAct (BAFIA). As provided by the Articles ofAssociation,newlyappointedDirectorswouldbesubjecttore-electionatthefirstAGMfollowingtheirappointments.

B) DIRECTORS ORIENTATION AND CONTINUING EDUCATION

ASEAMBANKERS provides for an orientationprogram for eachnewDirectors appointed to theBoard.This istoensurethatthenewlyappointedDirectorsarefullyconversantandwellinformedabouttheCompanyandtheexternalenvironmentin which it operates with a strong command ofissuesrelevanttothebusiness.This is in accordance with Revised BNM/GP1Guidelines, which requires all new Directorsto participate in an in-house orientation andeducation program within three (3) months oftheirappointmentstotheoffice.

Additionally, the Directors participate incontinuous education program and seminars tokeep abreast with the relevant changes in lawsand regulations and ever-changing businessenvironment as well as to develop and refreshtheir knowledge and skills to ensure optimumcontributiontotheBoard.

2008





C o r p o r a t e G o v e r n a n c e S t a t e m e n t (cont’d)38 39

PRINCIPLE 6:

Board Should Meet Regularly And Be Duly Furnished With Complete And Timely Information.

The Board meets at least once a month to discussthekey issues relating to theoperationsof theBank.The Board also meets at other times when mattersrequiring its approval are raised and the timing is

such that it isnotprudentorpossible towait foraregularlyscheduledmeeting.

All the Board members attended more than 75.0%oftheBoardmeetingsheldinthefinancialyear.TheDirectors’ attendance record at the Board meetingsfor the last financial year for theDirectorswhoarestill in office at the end of the financial year is asfollows:

Name of Director Number of Board Meeting Attended

TanSriMohamedBasirAhmad 12/13

HooiLaiHoong(resigned wef September 1, 2008) 12/13

HajiMohammadbinAbdullah 12/13

HajiMohdHashirbinHajiAbdullah(appointed wef January 21, 2008) 6/6

Dato’AminuddinMdDesa(appointed wef January 31, 2008) 4/5

SurachetChaipatamanont 13/13

TheBoardhasascheduleofmattersfortheBoard’sinformation/deliberationatupcomingBoardmeetingas distributed by the Company Secretary to allmembersinadvanceofmeetingstoenablethoroughconsiderationof the issues facing theBoard.This alsohelpstofacilitatetheefficientuseofthemeetingtime.However, this doesnotpreclude anyDirector fromincludinganyothermattersintheagenda.

The Management endeavors to provide the Boardwithmaterialswhichareconciseyetabletoprovidesufficient information to assist inmaking informeddecisions.TheBoardacknowledgesthatcertainitemstobediscussedatBoardmeetingsareofanextremelysensitivenature and thatmaterialson thesemattersaredistributedonlyattheBoardmeeting.TheBoard in exercising its functions is assistedwiththe servicesof theCompanySecretary,whoensuresthat the Board is furnished with all the requiredupdates and information at all material times.The

BoardalsohasunrestrictedaccesstoallrecordsandmanagementstaffoftheBank.Ifdeemednecessary,the Board may obtain independent expert advice attheBank’sexpense.

PRINCIPLE 7:

There Should Be A Formal And Ongoing Assessment Of The Effectiveness Of The Board As A Whole, The Directors And The Chief Executive Officer.

The Nomination Committee at the Group levelis responsible for the annual assessment of theeffectivenessoftheBoardasawholeanditsvariousBoard Committees based on a combination ofevaluationparameterswhich amongothers include,the overall performance of the Group vis-à-vis thecorporate scorecard targets, peer institutions practicesandtheneedtoretainrequiredexpertise.

The evaluation process is used constructively as amechanismto improveBoardeffectiveness,maximizestrengthsandtackleweaknessesifanyandtheresultsoftheBoard’sevaluationissharedwiththeBoardasawhole.

PRINCIPLE 8:

There Should Be A Formal And Transparent Procedures For Fixing The Remuneration Packages Of Board Members, Chief Executive Officer And Senior Management, And The Remuneration Policies And Practices Should Be In Line With The Licensed Institution’s Ethical Values, Objectives And Culture.

The Remuneration and Establishment Committeeat the Group level is responsible for revising andrecommendingtheannualfeesandmeetingallowancesforNon-ExecutiveDirectors.ThemaximumaggregateremunerationforNon-ExecutiveDirectors issetouton page 115 and it can be varied only at a generalmeeting.

As for the Senior Management, the RemunerationandEstablishmentCommitteeat theGroup level isguided by the need to “attract and retain” the besttalentswhileseekingtoensuretherewardsarelinkedtoGroupand individualperformancesasembodiedin theapplicableBalanceScorecards.TheExecutiveDirectors have no role in determining their ownremuneration.

SeniorManagement’sbasicremunerationisdeterminedby their respective JobBands and generally ranks at apremiumtomarket rates.Shareoptionentitlements(whichhavetobepaidfor)andbonuspaymentsaredependentupontheattainmentof thepre-determinedperformance hurdles cited in the individual BalanceScorecards.

PRINCIPLE 9:

Persons Empowered With Decision Making Authority (Including Directors) Should Exercise Care To Avoid Situations That May Give Rise To A Conflict Of Interest Situation.

A) Compliance Charter

TheBoardiscommittedtotheGroup’scorevaluesandhasinplaceaComplianceChartersinceMay1,2003,which identifies the appropriateprofessionalconduct for its dealings with shareholders,management,employeesandclientsaccordingtothe applicable laws and the Company’s policies.Inaddition,eachDepartmenthasanOperationalManualorconductthatismonitoredandenforcedby their systems and procedures. The BoardreviewstheComplianceCharteranditscontentsonanongoingbasis.

Included in the Charter are ASEAMBANKERS’Code of Ethics and Conduct, Anti-MoneyLaunderingActivitiesPolicy,ChineseWallPolicy,ReportingProceduresforFraudandDefalcation,RelatedPartyTransactionsPolicyandtheWhistleBlowingPolicy.

B) Conflicts of Interest Management

ASEAMBANKERS,beinganinvestmentbankthatoffersmultipleequity,capitalanddebtmarketservices,issubjecttotheregulatorygovernancefromBNM,SCandBursaSecuritiesMalaysiaBerhad.Pursuantto the amendments made to the Rule of BursaSecuritiesthattookeffectfromNovember8,2006inrelationtoissuanceofGuidelinesonInvestmentBanks by BNM and the SC, ASEAMBANKERSmust abide by the relevant governing laws andregulatory requirements on the managementof Conflict of Interest. ASEAMBANKERS hasdevelopedanoverallframeworkformanagementofconflictsofinterestasfollows:

i) HarvestingofCurrentorPotentialConflict Relationship

ii) CentralizationoftheConflictManagement Database




C o r p o r a t e G o v e r n a n c e S t a t e m e n t (cont’d)


40 41

iii)ChineseWallPolicy

Thegeneralprinciplesofthispolicyare:

•GovernanceonSafeguardingTheFlowof MaterialNon-PublicPriceSensitive Information

•GovernanceonManagingConflictof Interest

•GovernanceontheWatchListand RestrictedList;andGovernanceon Employee/DirectorTrading

C) Anti-Money Laundering Initiatives

As a continuous commitment to enhance itsinternalpolicyandprocedures,ASEAMBANKERShave since revised itsAML/CFTpolicy toeffecttherevisionsmadetotheAnti-MoneyLaunderingand Anti-Terrorism Financing Act 2001 andalso performed risk profiling in identifying thered flags for any suspicious transaction in thestockbrokinganditsclients,postLegalDay1.

As part of our effort to further enhance ourSystematic Approach To Identify SuspiciousTransactionChecklist(SAFE),ASEAMBANKERShas developed an in-house risk based CustomerDueDiligence(CDD)proceduresappliedtoourstockbroking activities since second quarter of2008.

The risk-based CDD procedures entails andembedstheprincipleof‘thegreatestrisksreceivethehighest attention’whereas the secondvariablebeing ‘whererisksare low,simplifiedorreducedcontrols may be applied’. Such customizationare able to ensure that measures to prevent ormitigatemoneylaunderingandterroristfinancingare commensurate to the risks identified. Thiswill also aide in identification of the suspicioustransaction connected to the stockbroking’sexistingandprospectiveclients.

D) Human Capital Development

Inadditiontosettingtheappropriategovernancestructureinplaceinlightoftheenlargedactivitiesoftheinvestmentbank,theBoardviewsseriouslyhuman capital development with the aim ofenhancing continuously the understanding of thestaff ’sobligationsandresponsibilities so that theydischarge their fiduciary duties with the rightstandards and levels of care that is expected ofthem.

PRINCIPLE 10:

There Should Be A Clear Separation Between Shareholders And Management So As Not To Impede Sound Corporate Governance.

The day-to-day operations of ASEAMBANKERSare clearly stipulated in the CEO’s responsibilities,togetherwiththeSeniorManagementandthusclearlydelineatesshareholder’sinvolvementonthematter,savethealignmenttoMaybankGroup’soveralloversightasthebankholdingcompany.

The Board at all times ensures compliance to theprovisions of the Companies Act 1965, the BankingandFinancial InstitutionsAct1989,CapitalMarketsand Services Act 2007, Rules of Bursa MalaysiaSecurities Berhad, the Articles of Association of theBank including the guidelines as may be issued byrelevant authorities from time to time to providethe requiredbusinessdirections.TheBoardperformsthetaskofmanagementassignedtoitinadherencetothepillarsofbusinessjudgment,toestablishfulfillmentofcareanddiligence,goodfaith,properpurposeandforthebestinterestoftheBank.

The Board specifically reserves the approval for allmatters involving business direction and operationsof the Bank, and other formal determinations thatarerequiredbytheGroup’sconstitutionaldocuments,by statute or by other external regulations. All otherremainingauthoritiesaredelegatedtotheoversightofthe CEO/Management.This delegation is supportedby appropriate controls, which are documented invarious policies and resolutions by the Board. TheCEOremainsaccountabletotheBoardauthoritythatisdelegatedtohim.

PRINCIPLE 11:

There Should Be A Robust Auditing Requirements And The Auditor, Board And Management Need To Maintain Professional And Objective Relationships.

ASEAMBANKERS establishes a sound systemof internal control to safeguard its shareholders’investment and the Bank’s assets. The Directorsacknowledge their overall responsibility to ensure thattheGroupmaintainsanappropriatesystemofinternalcontrolsandtheirresponsibilitytocontinuouslyreviewitslevelofeffectiveness.

Althoughno systemof internal control canprovideabsoluteassurancethatthebusinessriskswillbefullymitigated, the internal control systems have beendesigned to meet the Bank’s specific needs and theriskstowhichitisexposed.

The Internal Auditors perform independent objectiveassurance and consulting activity which enables theBoard to make decisions related to the Bank’s policy,endorsement of Manager’s proposals and to ensurethat it is always probable to continue to carry onwith its business. The information is also relevantas it assists the Directors to exercise its duty tosupervise and prevent conflict of interest orfraudagainsttheBank.

TheAuditCommittee of theBoard (ACB) receivesthe reports from the Internal Auditor on a regularbasis for consideration and ensures that timelyand appropriate corrective actions are undertaken.In addition, significant business units through aprogram of self-assessment also provide assurance onthemaintenanceoffinancialcontrolsandcompliancewithpolicies.

The Board establishes formal and transparentrelationshipwiththeExternalAuditors throughtheACB.TheACBmeetsanddiscusseswiththeExternalAuditors at least once a year without the presenceof theManagementTeam.IncompliancewithBNMGuidelines, the Audit Engagement Partner willrotateuponservingfive(5)yearsfromthedateofhisappointment.

The Board, through the Audit Committee maintainsa transparent and professional relationship withthe Bank’s Auditors, both external and internal.The accounts of ASEAMBANKERS are audited byMessrs. Ernst & Young.The Auditors are appointedby the shareholders on an annual basis, throughrecommendation of the Audit Committee and theBoard.

A full report of the Audit Committee of the Boardoutlining its role in relation to Internal andExternalAuditors is set out on pages 43 of this AnnualReport.

PRINCIPLE 12:

Licensed Institution Should Engage In Regular, Effective And Fair Communication With Shareholders/ Stakeholders.

ASEAMBANKERS strives to maintain a goodrelationship with its investors, shareholders andclients by having regular meetings throughout theyeartodiscussbusinessopportunities.

TheBank’swebsitewww.aseam.com.myalsoprovidesa broad range of information to stakeholders.Thiswebsite continues to foster the Bank’s corporateimageandisahelpfulsourceofinformationtothirdparties on ASEAMBANKERS updated and currentactivities.

PRINCIPLE 13:

Conducting Corporate Governance In A Transparent Manner Can Reinforce Sound Corporate Governance.

TheBoarddelegates someof its functions to variousCommitteesoftheBoardwithaviewtoassistinthefulfillment of its responsibilities. Each CommitteeestablishedatASEAMBANKERS’levelcomprisesatleast three (3)members and isgovernedbyawrittencharter approved by the Board. The Chairmanof various Committees report to the Board of anyresolution agreed at its meeting and such reports areincorporated in the Board meeting. Minutes of eachCommitteemeetingarealsocirculatedtotheBoard.

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42 C o r p o r a t e G o v e r n a n c e S t a t e m e n t (cont’d) 43

The Board Committees established atASEAMBANKERSareasfollows:

1. Audit Committee of the Board (ACB)

The establishment of the ACB, which is inaccordance with the BNM/GP1, functions toreview the financial condition, internal controls,performanceandfindingsoftheInternalAuditorsand recommend appropriate remedial actions.TheACBischairedbyTuanHajiMohdHashirHaji Abdullah, an Independent Non-ExecutiveDirectorandcomprisesoftwo(2)othermembers,one of whom is also an Independent Non-ExecutiveDirectorandone(1)Non-IndependentNon-ExecutiveDirector.

Inaddition,theACBalsotooverseescompliancewith the relevant laws, regulations and internalcodesofconduct.

2. Risk Management Committee (RMC)

TheRMCoverseesSeniorManagement’sactivitiesinmanagingcredit,market, liquidity,operational,legal and other risk inherent in the business, andensures that proper risk management process isadopted.

The RMC is chaired byTuan Haji Mohammadbin Abdullah, an Independent Non-ExecutiveDirector and comprises two (2) other Non-IndependentNon-ExecutiveDirectors.

TheTermsofReferenceoftheACBandRMCarestatedonpage43to47ofthisAnnualReport.

3. Credit and Underwriting Review Committee (CURC)

The CURC assists the Board in reviewingor modifying the Credit and Underwritingproposals,whichhasbeenapprovedbytheCreditandUnderwritingCommittee,wheretheCURCview that such proposals would possibly exposeASEAMBANKERStoundueexcessiverisks.

The CURC is chaired by Dato’ Sri Abdul Wahidbin Omar, a Non-Independent Non-ExecutiveDirector and comprises of one (1) Non-

IndependentNon-ExecutiveDirectorandone (1)IndependentNon-ExecutiveDirector.

4. Nomination Committee and Remuneration and Establishment Committee at Group level

In 2004, BNM has granted an exemption toASEAMBANKERS as a subsidiary to Maybankfrom complying with the requirement toestablish the Nomination Committee and theRemuneration and Establishment Committee;and approved that the aboveCommittees operateat Group level. Decisions made by these GroupCommittees were subsequently tabled andapprovedatASEAMBANKERS’Boardlevel.

The Nomination Committee at the Grouplevel recommends appointments to the Board,whether fornewDirectorsor re-appointmentofexisting Directors, and the Remuneration andEstablishment Committee at the Group levelensures that remuneration packages are designedin such away thatDirectors andExecutiveshaveincentivestoenhanceshareholders’value.

TheTermsofReferenceoftheGroupNominationCommittee and the Group Remuneration andEstablishmentCommitteeare statedonpage48to51ofthisAnnualReport.

PRINCIPLE 14:

Board is collectively responsible and accountable for the veracity of disclosures and management of risk.

ThisCorporateGovernanceStatementisentrenchedaspartandparceloftheBank’sinternalpolicesandpractices in accordance to the BNM/GP1 and bestpractices of the SC’s Malaysian Code CorporateGovernance.

The Board also recognizes that good governancepractices and procedures can always be improvedandtheywouldcontinuouslyreviewthestandardsatASEAMBANKERSthroughouttheyearahead.

This statement is made in accordance with theBoard’sresolutiondatedSeptember18,2008.

A u d i t C o m m i t t e e O f T h e B o a r d

ChairmanHajiMohdHashirHajiAbdullah(Independent Non-Executive Director)

MembersMohammadbinAbdullah (Independent Non-Executive Director)Dato’AminuddinMdDesa (Non-Independent Non-Executive Director)

SecretaryFaudziahIsmail

QuorumTwo(2)members

Size and CompositionTheCommittee shall consist of at least three (3)members, appointedby theBoard fromamongst itsNon-ExecutiveDirectorsoftheBank,majorityofwhichmustbeindependent.

TheChairmanmustbeanIndependentNon-ExecutiveDirectorandshouldbereviewedandifnecessaryrotatedonceineverythree(3)years.

Frequency of MeetingsMeetingsshallbeheldatafrequencytobedecidedbytheCommitteebutnotlessthanonceeveryquarter.

AuthorityThe Committee may invite any person to be in attendance to assist in its deliberations. At least once a year, theCommitteeshallmeetwiththeExternalAuditorswithoutthepresenceoftheManagementandExecutiveDirectors.

ObjectiveTo provide independent oversight of ASEAMBANKERS’ financial reporting and internal control system andensuringchecksandbalancewithinASEAMBANKERS.

Roles and ResponsibilitiesTheCommitteeisauthorizedbytheBoardtodothefollowing:

(i) InvestigateanyactivitiesormatterswithinitsTermsofReference.

(ii) Havetheresources,whicharerequiredtoperformitsduties.

(iii) Havefullandunrestrictedaccesstoanyinformationanddocumentsrelevanttoitsactivities.

(iv) HavedirectcommunicationchannelswithExternalAuditors,person(s)carryingouttheinternalauditfunction oractivityandtoSeniorManagementoftheBankanditssubsidiaries.

(v) Obtainoutsidelegalorotherindependentprofessionaladviceandtosecuretheattendanceofoutsiderswith relevantexperienceandexpertiseifitconsidersnecessary.

(vi) ConvenemeetingswithExternalAuditors,withouttheattendanceoftheExecutives,toconsideranymatters thattheAuditorsbelieveshouldbebroughttotheattentionoftheDirectorsandShareholders.

2008

44




45


A u d i t C o m m i t t e e O f T h e B o a r d (cont’d)

Specific Duties

TheAuditCommittee shallbe responsible to review,appraise, recommend(whereapplicable)andreport to theBoardofDirectorsonthefollowing:

(a)With the External Auditors, the scope of the audit and audit plan of both the internal and External Auditors.

(b)WiththeExternalAuditors,theadequacyoftheestablishedpolicies,proceduresandguidelinesoninternal controlsystems.

(c)With theExternalAuditors, the effectiveness of internal controls systems, riskmanagementprocesses and the internal and/or External Auditors’ evaluation of these systems and in particular the External Auditors’ managementletterandmanagement’sresponse.

(d)WiththeExternalAuditors,theirauditreport.

(e)The scope of the internal audit programme, internal audit findings and recommend actions to be taken by Management;

(f )EvaluateperformanceandreviewrelevantHumanResourcerelatedissuesoftheChiefInternalAuditorand HeadofAudit,InvestmentBanking.

(g)The internal auditprogramme,processes, aswell as summaryof thefindings from investigationundertaken and whether or not appropriate remedial action is taken or the recommendations of the internal audit function.

(h)Thequarterlyresultsandyear-endfinancialstatementsfocusingparticularlyonthechangesinaccounting policy, significant and unusual events as well as compliance with accounting standard and other legal requirementsincludingpromptpublicationofthefinancialaccounts.

(i) Anyrelatedparty transactionsandconflictof interest situation thatmayarisewithin theBankorGroup includinganytransactions,proceduresorcourseofconductthatraisesquestionsofmanagementintegrity.

(j) Thenominationorre-appointmentoftheExternalAuditorsandtheirfeesaswellasmatterspertainingto resignation,terminationorchangeoftheExternalAuditors

(k)PrepareanAuditCommitteeReportattheendofeachfinancialyear, ifdeemnecessaryandthisreportwillbe setoutclearlyintheAnnualReport.

(l) Approvetheprovisionofnon-auditservicestobeprovidedbytheExternalAuditorsandensurethatthereare propercheckandbalances inplacesothattheprovisionofnon-auditservicesdoesnot interferewiththe exerciseofindependentjudgmentoftheAuditors.

Responsibilities in Relation to AMLA*

The Audit Committee shall be responsible to review the internal control issues identified by the Auditors andregulatoryauthoritiesandtoevaluate theadequacyandeffectivenessof the internalcontrols for itsAntiMoneyLaundering andCounter Financing ofTerrorism (AML/CFT) measures.The Committee’s duty shall at leastincludethefollowing:

(a)Ensuringindependentauditsareconductedtocheckandtesttheeffectivenessofthepolicies,proceduresand controlsforAML/CFTmeasures;

(b)EnsuringeffectivenessofinternalauditfunctioninassessingandevaluatingtheAML/CFTcontrols;

(c)EnsuringtheAML/CFTmeasuresareincompliancewiththeAMLA,itsregulationsandtherelevantguidelines; and

(d)Assessing whether current AML/CFT measures which have been put in place are in line with the latest developmentsandchangesoftherelevantAML/CFTrequirements.

* Anti Money Laundering Act 2001, the AMLA Regulations and the relevant guidelines on AML/CFT issued by Bank Negara Malaysia as well as the relevant laws and regulations of other relevant supervisory authority, if any.

2008

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47


R i s k M a n a g e m e n t C o m m i t t e e O f T h e B o a r d

ChairmanHajiMohammadbinAbdullah(Independent Non-Executive Director)

MembersHajiMohdHashirbinHajiAbdullah(Independent Non-Executive Director)Dato’AminuddinMdDesa (Non-Independent Non-Executive Director) SecretaryFaudziahIsmail

Size And CompositionAminimumofthree(3)members.

Frequency of MeetingsAtleastonceeveryquarter.

QuorumTwo(2)members.

TheCommitteemayinviteanypersontobeinattendancetoassistinitsdeliberations.

ObjectiveTooverseeSeniorManagement’sactivitiesinmanagingcredit,market,liquidity,operational,legalandotherriskandtoensurethattheriskmanagementprocessisinplaceandfunctioning.

Role and ResponsibilitiesTheCommitteeshallberesponsibleforthefollowing:

(i) To review and assess adequacy of risk management strategies, policies and risk tolerance for Board’s approval.

(ii) To review and assess adequacy of risk management policies and framework in identifying, measuring, monitoringandcontrollingrisksandtheextenttowhichtheyoperateeffectively.

(iii) To ensure infrastructure, resources and systems are in place for risk management i.e. ensuring that the staff responsible for implementing risk management systems perform those duties independently of theInvestmentBanking(IB)risktakingactivities.

(iv) ToreviewManagement’speriodicreportsonriskexposure,riskportfoliocompositionandriskmanagement activities.

(v) ToformulateandrecommendtotheBoardpoliciestoidentify,measure,monitor,manageandcontrolthe followingriskcomponents,amongothers:

(a) Credit /Market Risk Theriskoflossduetoborrowerorcounter-partydefaults.Theriskoflossrelatingtothechangeinvalueof financial instrument or portfolio due to change in the value of market variables, such as interest rates, foreignexchangerates,creditspread,equitypricesandcommodityprices.

(b) Liquidity Risk Theriskoflossarisingfrombeingunabletofundtheportfolioofassetsatappropriatematuritiesand ratesandunabletoliquidatepositioninatimelymanneratareasonableprice.

(c) Operational Risk The risk of loss resulting from inadequate or failed internal process or systems, human factors or external events.Internalprocessincludesaspectrelatingtoaccounting/book-keeping,reporting,businessprocedures/ process,tax,legalcomplianceandpersonnelmanagement. (d) Legal Risk Theriskof lossarisingfromtheuncertaintyof legalproceedings,suchasbankruptcyandpotential legal proceedings.

(e) Reputational Risk Theriskof lossofreputationintheeyesofthepublicat large,customersorauthorities,duetoinefficiency in handling assignments, inability to complete assignments or non adherence to the authorities’ rules and guidelineswhichmayleadtocustomer’scomplaintandcaution/warning/reprimandbytheauthorities.

Specific DutiesTheCommitteeshallberesponsibleforthefollowing:

1. To oversee the formal development of policies within the Bank, encompassing all products and businesses, andensuringthedevelopmentofpolicy,manualandprocedures.

2. Tosettheframeworkandparametersrelatingtolendingandcollateralpolicy.

3. Tomonitor,assessandadviseontheriskportfoliocompositionoftheBank.

4. ToperiodicreviewoftheIB’scapitalstructure,theimpactofriskandstressscenariosandtheadequacyof capitalvis-a-visitsriskprofile.

5. Toassesstherisk-returntrade-off.

6. Toreviewreportsofthecreditreviewprocess,assetqualityandensurethatcorrectiveactionistaken.

7. Toreviewandevaluatethevariousproductsengagedbythebankinginstitutiontoensurethatitisconducted withinthestandardsandpoliciessetbytheBoard.

8. ToreviewandassesstheappropriatelevelsofcapitalfortheIBaswellasmonitoradherenceofthetargeted capitalratios.

9. To approve the operating guidelines and trading limits for the money market and trading operations includingderivatives.

10. Toreviewandassesstheadequacyofriskmitigationprocesses(including insurance coverage).

11. Toreviewandrecommendstrategicactions tobe takenby the IBarising fromBasel II implementation for theBoard’sapproval.

12.To review and approve new products and ensure compliance with the prevailing guidelines issued by BankNegaraMalaysiaorotherrelevantregulatorybodies.

13.Toconsiderandapprovetheappointmentofprofessionalexternaladvisors/consultantsinareasfallingwithin the jurisdictionof theCommittee subject toacap(to be determined by the Board)perappointment (regardless of whether budgeted or unbudgeted)andtonotifytheBoardofthesame.

14. To promote risk awareness and give advice to the Board on the information, instruction and trainingrequirementsofstaff.

15. ToundertakesuchotherresponsibilitiesasmaybedelegatedbytheBoardfromtimetotime.

2008

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49


G r o u p N o m i n a t i o n C o m m i t t e e

Activities Undertaken During the YearThe Committee had deliberated key matters during the financial year, which include, amongst others, thefollowing:

1. Deliberationandrecommendationto theBoardontheappointmentofnewDirectors, thenewPresident& CEO and Chief Financial Officer (both Executive Directors) and the key Senior Management of the Group.

2. Deliberation of the results of the Annual Directors, Board and Peer Assessment exercise throughout the MaybankGroupandrecommendationsontheactionableimprovementprogrammetotheBoard.

3. ReviewofthecompositionoftheBoard,BoardCommitteesandBoardsofsubsidiarieswithintheGroup.

4. Reviewanddeliberateonthere-electionandretirementofDirectorsattheAnnualGeneralMeeting(AGM) andonthere-appointmentofDirectorssubmittedtoBNM.

5. Deliberation and recommendation to the Board on the Balanced Score Card and Long-Term Initiatives for the financial year ended June 30, 2008 for the President & CEO and key Senior Management of the Group.

6. Deliberationon theperformance assessmentof thePresident&CEOandkeySeniorManagementof the Group.

7. ReviewoftheTermofReferenceoftheNominationCommittee.

ChairmanHajiMohdHashirbinHajiAbdullah(Independent Non-Executive)

MembersDatukAbdulRahmanbinMohdRamli(Non-Independent Non-Executive)DatukZainunAishahbintiAhmad(Non-Independent Non-Executive)TanSriDato’MegatZaharuddinbinMegatMohdNor (Independent Non-Executive)DatukSyedTamimAnsaribinSyedMohamed (Independent Non-Executive)

SecretaryMohdNazlanMohdGhazali

Size and CompositionTheCommitteeshallconsistofNon-ExecutiveDirectors,themajorityofwhomareIndependent.

Quorum MinimumThree(3)memberswithatleasttwo(2)IndependentDirectors.

Frequency of MeetingsAtleasttwiceayear.

Specific Responsibilities of the Committee include, amongst others, the following:1. TorecommendtotheBoardsuitablepersonsforappointmentasBoardmembersofMaybankanditssubsidiary companiesandtooverseethegeneralcompositionoftheBoard(takingintoaccountthesize,skillandbalance betweenExecutiveDirectorsandNon-ExecutiveDirectors);

2. To recommend to the Boards of relevant subsidiaries the appointment, comfirmation, promotion and terminationofChiefExecutiveOfficers (CEO)of subsidiarieswhichareregulatedbyBankNegaraMalaysia (BNM)whichrequiretheirappointmentstobeapprovedbyBNM;

3. TorecommendtotheBoardstheappointmentoftheCEOandkeySeniorManagementoftheGroup;

4. To assess the performance and effectiveness of individual and collective members of the Boards of the Group,itssubsidiariesandtherespectiveBoardCommittees,aswellastorecommendtotheBoardmeasures toupgradetheeffectivenessoftheBoardsandBoardCommittees;

5. To review the performance of the Board members of Maybank and its subsidiary companies and consider the procedure for the assessment thereof, and to recommend measures to upgrade the effectiveness of the Boards;

6. To review the individual contributionof eachDirector to theeffectivenessof theBoardand toconsider the procedure for the assessment thereof, as well as the performance of the CEO and the key management personnel;and

7. To ensure that all the Directors receive appropriate and continuous training to keep abreast with the latest developmentintheindustry.

2008

50




51


Group Remuneration & Establishment Committee

ChairmanTanSriDato’MegatZaharuddinbinMegatMohdNor(Independent Non-Executive)

MembersDatukAbdulRahmanbinMohdRamli(Non-Independent Non-Executive)DatukZainunAishahbintiAhmad(Non-Independent Non-Executive)TanSriDato’SriChuaHockChin(Independent Non-Executive)

SecretaryMohdNazlanMohdGhazali

Size and CompositionTheCommitteeshallconsistofanIndependentDirectoras theChairmanandshallcompriseofNon-ExecutiveDirectorsofwhomthemajorityareindependent.

WheretheChairmanisunabletoattendameeting,themembersshallelectapersonamongthemselveswhoisanIndependentDirectorasChairman.

TheCommitteemayinviteanypersontobeinattendancetoassistinitsdeliberation.

Quorum Three(3)members.

Frequency of MeetingsAtleastonceeveryquarter.

Broad ResponsibilityTheCommitteeisresponsiblefortheformulationofaneffectivehumanresourcestrategy,includinginitiativestothedevelopmentandmanagementofhumancapitalwiththeobjectiveofattracting,developingandretainingthebesttalentfortheMaybankGroup.

Specific Responsibility of the Committee include amongst others, the following:1. To recommend to the Board, a Performance Management Framework / Model, including the setting of appropriate performance target parameters and benchmark for the Group Balanced Scorecard at the start ofeachfinancialyear;

2. TorecommendtotheBoard,alearningstrategyfortheGroup,includinglearningprogrammesforExecutive DirectorsofMaybankandaLeadershipDevelopmentFrameworkfortheGroup;

3. To recommend to the Board, the organisational structure and commensurate job grades and ranges for employeesintheGroup;and

4. To recommend to the Board, the remuneration package, the compensation and benefits policies and the TermsandConditions,includingthejobgradeforSeniorManagementOfficers.

Activities Undertaken During the YearThe Committee had deliberated key matters during the financial year which include amongst others, thefollowing:

1. Deliberation and recommendation on compensation package for appointments of key management positionsacrosstheMaybankGroup;

2. Deliberation on the quantum of compensation based on the performance assessment of members of Senior ManagementoftheGroupforthefinancialyearendedJune30,2008;

3. ReviewoftheCompensationFrameworkandLongTermIncentivePlanDesignandthecost-benefitanalysis forMaybankGroup;

4. DeliberationandrecommendationontheMaybankGroupVariableBonusPlan;

5. ReviewoftheFlexi-BenefitPlanandthecost-benefitanalysisfortheemployeesofMaybankGroup;and

6. ReviewoftheTermsofReferenceoftheRemunerationandEstablishmentCommittee.

2008

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53


R i s k M a n a g e m e n t

ASEAMBANKERS’IntegratedRiskManagementFrameworkencompassescredit,marketandoperationalrisk.

In line with the framework, ASEAMBANKERS risk management structure is functionally and organizationallyindependent of business division; and theBoardofDirectors (Board) throughRiskManagementCommittee(RMC)maintainstheoverallresponsibilityforriskoversightwithinASEAMBANKERS.

TheRMCisresponsibleforformulatingandrecommendingtotheBoardpoliciestoidentify,measure,monitor,manageandcontroltheriskcomponents.Forthefinancialyearended30June2008,theRMChasconvenedeight(8)meetings.

Currently,theRMCcomprisesof:

Chairman (1) TuanHajiMohammadbinAbdullah

Members (2) Dato’AminuddinbinMdDesa (3) TuanHajiMohdHashirbinAbdullah (who replaced Puan Hooi Lai Hoong effective from September 1, 2008)

Consistent with the Maybank Group, ASEAMBANKERS’ risk management approach is premised on thefollowingconceptofthree(3)linesofdefense:-

FIRST LINE OF DEFENSE – RISK TAKING UNITS

Responsible for the day-to-day management of risk in their business activities.

SECOND LINE OF DEFENSE – RISK CONTROL UNIT (GROUP RISK MANAGEMENT)

Responsible for setting the risk management framework and developing tools and methodologiesfor the identification, measurement, monitoring and pricing of risk.

THIRD LINE OF DEFENSE – INTERNAL AUDIT

Provides independent assurance of the effectiveness of the risk management approach.

CREDIT RISK MANAGEMENT

CREDIT RISK is theriskofnon-paymentduetotheinabilityorunwillingnessofacustomerorcounterpartytomeetitsfinancialobligationstotheBank.Exposuretocreditriskarisesprimarilyfromlending,underwriting,treasury activities and share trading.TheCreditRiskUnit is entrustedwith theoverall responsibility in settingthe credit risk management framework, managing credit risks and credit portfolio of ASEAMBANKERSwhichincludesthefollowing:

• Credit Risk Identification and Measurement • NewProductApprovalProgramme. • EmployvariousriskmanagementtoolssuchasCreditRiskRatingSystem(CRRS),StressTesting,etc. , • Pre-approval evaluation of credit applications, opening of shares trading account (includes Know Your Customer rule)andMarginTradingFinancingFacility.

• Credit Risk Policy • Develop and review credit riskpolicies (e.g. Credit Policy on Authorization Powers, Policy on Defaulted Bonds, Shares Trading Policy on Shares Valuation, Single Counter Exposure Limit and Margin Trading Financing),processesandprocedurestoensuresoundriskmanagementpractices.

• Credit Risk Monitoring and Control • Adoptsasetofpolicies/limitswhichareinlinewiththeMaybankGrouptoavoidundueconcentrationof creditrisksoncountries,businesssegments,economicsectors, singlecustomergroups,banks,counter parties,singlecounterexposurelimitandmarginposition,etc. • MonitorsDealers’Representativesandclients’sharestradingpositionandoverallBank’sexposuretoshares tradingthroughOnlineRiskManagementSystem(ORMS). • Restrictedtradingonselectionofsharessoastolimittheexposureontheseshares.

• Credit Risk Reports • ThecreditriskreportsareescalatedtotheRMC,Boardandotherrelevantcommittees.

MARKET RISK MANAGEMENT

MARKET RISK istheriskoffluctuationsinthevalueofthepositions/portfoliosresultingfromchangesinmarketratesandmarketprices,suchasinterestrates,foreignexchangeratesandshareprices.

The Market Risk Framework outlines the process of identifying, measuring, monitoring, controlling andreporting market risk exposures. This framework facilitates ASEAMBANKERS to manage its market riskexposuresinasystematicandconsistentmanner.

• Market Risk Identification and Measurement • NewProductApprovalProgramme. • EmployvariousriskmanagementtoolstoquantifymarketrisksuchasValue-at-Risk,Earnings-at-Risk, EconomicValueatRisk,StopLoss,StressTesting,etc.

2008





• Market Risk Policy • Develop and review market risk policies, processes and procedures to ensure sound risk management practices.

• Market Risk Control and Monitoring • Establishvariousmarketrisklimitsandtriggerstocap/managemarketriskexposureswithinacceptablerisk levelsanddaily/periodicmonitoringtoensureadherencetoapprovedrisklimitsandpolicies. • MonitorsDealers’Representativesandclients’sharestradingpositionandoverallBank’sexposuretoshares tradingthroughORMS.

• Market Risk Reporting • ThemarketriskreportsareescalatedtotheRMC,Boardandotherrelevantcommittees.

Liquidity Risk and Funding Risk,whicharecomponentofmarket riskaremonitoredwithNewLiquidityFramework(NLF)simulationandisfurthermitigatedwiththeultimatesourceoffundingfromMaybank.

OPERATIONAL RISK MANAGEMENT OPERATIONAL RISKistheriskofdirectorindirectlossresultingfrominadequateorfailedinternalprocesses,peopleandsystemsorfromexternalevents.Inmanagingofoperationalrisks,thebusinessandsupportunitsarethe primary parties responsible for the management of day-to-day operational risk inherent in their respectivefunctionalareas.

ASEAMBANKERS under the Maybank Group has established an Operational Risk Management (ORMFramework),whichaimedtoprovidetheoveralloperationalriskstrategicdirectionandensurethataconsistentandeffectiveORMandmeasurementprocessisadoptedthroughouttheBank.

TheORMFrameworkcomprisesof:• Risk Strategy -DrivestheothercomponentswithintheORMFramework.

• Organizational Structure-Thebank-widefoundationforallORMactivities.

• Reporting-EncompassesthereportingofoperationalriskdatatotheBoard,RMC,relevantcommittees, Managementandalsotothebusinesslines.

• Building Blocks–Specificeffortstogather,define,group,assess,mitigateandmodeltheoperationalrisks thataffecttheBank.

• Information Technology-ThefoundationandfacilitatoroftheORMFramework.

TheOperationalRiskUnitisentrustedwiththeoverallresponsibilityinsettingtheORMFramework,managingoperationalrisksandfacilitatetheimplementationoftheORMFrameworkintheBank:• Operational Risk Identification and Measurement • NewProductApprovalProgramme. • Implementation of a risk management tool referred to as Risk and Control Self-Assessment (RCSA) toidentifytheoperationalrisksinherenttotherespectivedepartmentsintheBank. • ImplementationofariskmanagementtoolreferredtoasIncidentManagementDataCollection(IMDC) tologinoperationalriskincidentsoccurredintheBank.

R i s k M a n a g e m e n t (cont’d) 5554

• Operational Risk Policy • Developandreviewoperationalriskpolicies,frameworks,processesandprocedurestoensuresoundrisk managementpractices.

• Operational Risk Monitoring and Control • ImplementationofariskmanagementtoolreferredtoasKeyRiskIndicators(KRI)tomonitorandtrack thekeyoperationalrisks.

• Operational Risk Reports • TheoperationalriskreportsareescalatedtotheRMC,Boardandotherrelevantcommittees.

ASEAMBANKERS together with the Maybank Group currently utilizes numerous ORM tools specificallydesigned for the Bank and Maybank Group. The ORM tools currently used are IMDC, RCSA and KRI.ThefollowingdiagramillustrateshowtheORMtoolsfitintheORMFramework.

BUSINESS CONTINUITY MANAGEMENT (BCM)

• BCMispartofoperational riskmitigationbuildingblock that focuseson strengthening theBank’sbusiness resilienceandbuildinghumancapital capability andconfidence in responding toa crisis arising frommajor operationaldisruption.

• BCM compliments efforts of the disaster recovery team which oversees the technological aspect by focusing on people centric aspects such as people safeguarding measures and building human capital capability through training, simulation exercises and heightened awareness. BCM initiates streamlining crisiscommunicationtoallourstakeholders.

Note: BIS – Bank for International Settlement

ORMFramework &Governance

BIS CapitalCharge

INFORMATION TECHNOLOGY

BUILDING BLOCKS

REPORTING

ORGANISATIONALSTRUCTURE

RISKSTRATEGY

Mitigation

LossData

Definitions,Linkages and

Structures

Key RiskIndicators

CapitalModeling

RiskAssessment

IMDCRSCA

KRI

BCM

2008





56 57R i s k M a n a g e m e n t (cont’d)

KEY INITIATIVES FOR BASEL II

1. CREDIT RISK INITIATIVES ASEAMBANKERSinlinewiththeMaybankGroupintendtomigratedirectlytotheFoundationInternal Ratings-Based(FIRB)ApproachforCreditRiskby2010.

Theon-goingcriticalinitiativescurrentlyundertakenbycreditriskincludes:

• Credit Risk Rating System (CRRS)

TheCRRSProjecthasbeenimplementedsinceApril2006withthefollowingcapabilities:

•DeterminationofcreditriskratingandthecomputationofExpectedLoss(EL); •Consistent and optimized approach to credit risk rating for Corporate and Commercial Borrowers; and •BaselIIcompliantonFIRBApproach.

• Risk Data Management Systems Project (RDMS)

TheRDMSProjectwillbeimplementedattheendofAugust2008andisequippedwithaBaselIIcapital calculator and risk-reporting tool, which will provide a foundation for the implementation of the Risk- AdjustedPerformanceManagement.

• Group Collateral Management System (GCMS)

TheGCMSProjecthasbeenimplementedinOctober2007withthefollowingcapabilities:

•BaselIIcompliantforthepurposeofcreditriskmitigation; •Facilitatetheconsolidationofallcollateralinformationtoprovideaholisticportfolioviewofcollaterals; and •Facilitatetimelymonitoringandreportingofcollateralpositions.

• Group Exposure Management System (GEMS)

Phase I of theprojecthasbeen implemented inMay2008whilePhase II of theprojectwill be fully implementedinSeptember2008withthefollowingcapabilities:

•Anautomatedaggregationofexposurestocorrelatedborrowers;and •Asafoundationforglobalportfoliomanagement.

2. MARKET RISK INITIATIVES

• Treasury Project Management Office (TPMO) Giventhatthemarketisheadingtowardsmoresophisticatedhybrid/structuredproducts,MaybankGroup recognized that there is a need to enhance itsTreasury infrastructure capabilities in order to adequately meetthecurrentandfuturebusinessrequirements.Inviewofthis,TPMOhadbeenformedtoaccelerate the progression that aimed to improve theGroup-wide treasury-related infrastructure capabilities.The TPMOprojectkickedoffinMay2008,whereaProjectWorkingCommitteewasestablishedtoensure timelyimplementationoftheproject.

3. OPERATIONAL RISK INITIATIVES

• Risk Awareness Communications Program isanon-goinginitiative,whichisconductedtoallnewstaff ofASEAMBANKERSviatheInductionProgrammetofurthereducateandheightentheirunderstanding ofrisks.

• Group-Wide Integrated Operational Risk Management Solutions Project (ORM Solutions Project) is aimedatpreparingASEAMBANKERS tobe in compliancewithBASEL II requirements aswell as toenhancetheBank’scapabilitiesof identifying,assessingandmanagingoperationalrisks.Theinitiatives currentlyundertakenundertheORMSolutionsProjectare:

•Establishmentof a consistentORMFramework andGovernance throughout theGroup,whichwas endorsedbyASEAMBANKERSrespective committees.The frameworkwillbe reviewedand revisedas andwhenrequiredtoensureitseffectivenessandrelevancy.

•Preparation and Computation of Operational Risk Capital Charge Requirements under BASEL II andBNM.

• ImplementationofIMDC,RCSAandKRI.

• Desktop Review Exercise was conducted on the critical business units (whose maximum tolerable downtime were classified as 48 hours and below) and the Crisis Support ManagementTeam to validate theBCMstrategy.This encompasses a discussionof actions tobe taken in response to surprise scenario challengesinjected.

• Disaster Recovery Plan Testing was conducted on the critical systems and applications to support the criticalbusinessunits identified togetherwith theOutsourcedAgents tovalidate its functionality against therecoverytimeobjective.

2008



ASEAMBANKERSiswhollyownedbyMalayanBankingBerhad(Maybank).

Maybank is the largest financial services group in Malaysia and is listed on Bursa Malaysia. Its shareholders’fundsisRM19.3billion,withtotalassetsexceedingRM269.10billionasatJune30,2008.Itisranked141*amongthetop1,000banksintheworld.

The Maybank Group offers a comprehensive range of financial solutions, services and products includingcommercialbanking,investmentbanking(includingstockbroking),offshorebanking,hirepurchase/autofinance,insurance,assetmanagement,fundmanagement,venturecapital, leasing,factoring,trusteeservicesandnomineeservices.

MaybankGrouphasthelargestbranchnetworkinMalaysiawithmorethan361branchesandover2,000AutomatedTellerMachines(ATM).Inaddition,ithas22branchesinSingapore,3inBrunei,1eachinHongKong,London,NewYork,Bahrain,PhnomPenh,Hanoi andShanghai, aswell as representativeoffices inBeijing andHoChiMinhCity.IthascommercialbankingsubsidiariesinPapuaNewGuinea(withbranchesinPortMoresbyandLae),45branchesinPhilippinesand3inIndonesia.

MaybankbecamethefirstMalaysianbanktoembarkonthecomputerisationprogrammeandhassincemaintainedits position as a leader in innovative financial services. Maybank has achieved various milestones in innovativeproductsandservices,amongstwhichare:

1) FirstbankinMalaysiatointroduceInternetbankingservices(Maybank2u.com)andanintegratedweb-based cashmanagementportal(Maybank2e.net)

2) FirstbankinAsiatoofferpersonalisedfinancialplanningservice(Bankassurans)

3) First bank in Malaysia to offer ticketless travel convenience for domestic flights on Malaysia Airlines (MASElectronicTicketingorMASET)

* Source : The Banker, July 2008.

S h a r e h o l d e r A s e a m b a n k e r s ’ G r o u p S t r u c t u r e 59


A n n u a l R e p o r t2008

58

Maybank 100%

Maysec Sdn. Bhd. 100%

Maysec (KL) Sdn. Bhd.

Maysec (Ipoh) Sdn. Bhd.

Mayban Futures Sdn. Bhd.

Mayban Securities (Jersey) Sdn. Bhd.

100%

100%

Aseam Malaysia Nominees (Tempatan) Sdn. Bhd.

Aseam Malaysia Nominees (Asing) Sdn. Bhd.

Mayban Securities Nominees (Tempatan) Sdn. Bhd.

Mayban Securities Nominees (Asing) Sdn. Bhd.

Mayban Ventures Sdn. Bhd. 70%30%

Maydis Berhad 69.9%30.1%

100%

Mayban Securities (HK) Limited

Phileo Allied Securities (Philippines) Inc.

Budaya Tegas Sdn. Bhd.

Baiduri Securities Sdn. Bhd.

100%

100%

39%

2008

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61


M a l a y s i a n E c o n o m i c R e v i e w & O u t l o o k

Overall,theMalaysianeconomyregisteredhealthypaceofgrowthinthefinancialyearendedJune30,2008.RealGrossDomesticProduct(GDP)growthwas6.7%year-on-yearinthirdquarterofyear2007and7.3%year-on-yearinfourthquarterofyear2007,bringingthefull-year2007economicgrowthto6.3%(2006:5.8%).Thepacewassustainedinthefirsthalfofyear2008,withgrowthof7.1%year-on-yearinfirstquarterofyear2008and6.3%year-on-yearinsecondquarterofyear2008.ForfinancialyearendedJune30,2008,theeconomyexpandedby6.9%,betterthanthe5.6%growthrecordedforfinancialyearendedJune30,2007.Economicgrowthduringtheperiodunderreviewwasessentiallydomestic-driven,especiallyamidstronggrowthinprivatesectorspendingi.e.consumerexpenditureandfixedcapitalformation.

TheprospectforthefinancialyearendedJune30,2008howeverismorechallengingasglobaleconomicoutlookisovershadowedbytheunfoldingfinancialcrisisandsharpeconomicslowdown–ifnotrecession–intheUnitedStates(US)thatistheproductofthesubprimemortgagemarketcollapseearlier.TheInternationalMonetaryFund(IMF)expectsglobalgrowthtoslowsignificantlyinthesecondhalfofyear2008beforerecoveringgraduallyinyear2009.Itprojectsglobaleconomicgrowthtoeaseto4.1%inyear2008and3.9%inyear2009afteraveraging5.0%p.a.inyears2004to2007.

Atthesametime,thesurgeincrudeoilandsoftcommoditypricesduringthefinancialyearpromptedtheGovernmentto raise fuel-energy prices to reduce its fuel-energy subsidy bills on June 5, 2008. Consequently, inflation rateacceleratedduringtheperiodfrom1.6%year-on-yearinJuly2007to7.7%inJune2008.

Meanwhile,prolongedpoliticaluncertaintiessincetheMarch2008GeneralElection,alsoweighedontheeconomyintermsofpolicydirection,particularlyovertheimplementationofmajorinfrastructureprojectsandinvestmentplansundertheNinthMalaysiaPlan(9MP)andthefive(5)regionaldevelopmentcorridors.

Theslowingglobaleconomy,risinginflationarypressureaswellasuncertaintiesoverdomesticpoliticalsituationandpolicydirectionsareexpectedtotakeitstollondomesticdemand,particularlyconsumerandbusinessspendingontopoftheexpectedsubduedexportgrowth.

Consequently,weestimatedthattheMalaysia’srealGDPgrowthwillmoderatetobetween4.0%and4.5%inthesecondhalfofyear2008,givingafull-yearrealGDPgrowthof5.3%beforestabilisingataround5.1%inyear2009.Inflationratequickenedfurtherto8.5%year-on-yearinJuly2008,andwilllikelyremainedelevateduntilmid-2009beforeeasinginsecondhalfofyear2009,resultingina6.0%inflationrateinyear2008(2007:2.0%)priortoamoderationto4.7%inyear2009.

Topreventexcessivedownside to theeconomy,bothmonetaryandfiscalpoliciesareexpected tobepro-growthduringfinancialyearendingJune30,2009.ThiswillentailtheprospectofanunchangedOvernightPolicyRate(OPR)forthemostpartoffinancialyearendingJune30,2009,coupledwiththepeople-orientedtaxincentivesandspendingintheBudget2009.Also,Governmentdevelopmentspendingshouldpickupfollowingthe15.0%increaseindevelopmentallocationtoRM230.0billionduringtheMid-termReviewofthe9MP.Meanwhile,more“non-interestrate”measuresareexpectedtobeannouncedtodealwithinflation.Latestmeasuresincludethe0.8sento0.22senreductioninpetrolanddieselpricestoreflectthecurrentcorrectionincrudeoilprices,whichpartlyreversesthe0.78sentoRM1.00hikesonJune5,2008.

Business Environment

TheoperatingenvironmentduringthefinancialyearendingJune30,2009startedoffstrong,butlaterturnedmixedasrobustdomesticdemandweremoderatedbyweakeningexportsanddomesticuncertainties.

Nevertheless,thefinancialsectorcontinuestorecordrelativelyhealthyloansgrowthintoJune2008(6.5%year-to-date,11.7%year-on-year)wherebothhouseholdandbusinessloansgrew8.9%year-on-yearand14.4%year-on-yearrespectively.Assetqualityofthebankingsystemimprovedfurtherwithnetnon-performingloans(NPL)ratiodecliningto2.7%asatJune2008,from4.1%asatJune2007.Systemcapitalisationstayedstrongwithcorecapitalandriskweightedcapitalratiosat10.1%and13.0%respectivelyasatJune2008.

However,secondhalfofyear2008willbeverychallengingforthefinancialservicesindustry,particularlyforthecapitalmarketswhichinJune2008wereimpactedbytheintroductionwindfalltaxesontheindependentpowerproducers,andmayfurtherbearthebruntofananticipatedmovetoreviewtollroadconcessionsinthecountry.Consequently,bankingprofitswere affectedby the sell-offs andhollowingout in thebondmarket in secondquarterofyear2008.

The impact on the equity market was much more pronounced. After the 11.0% rally from the start of thefinancial year to its peak of 1,516 points on January 11, 2008, the Kuala Lumpur Composite Index (KLCI)suffered from steep foreign selling amidpolitical andpolicyuncertainties following theMarch2008GeneralElection.Consequently,theKLCIhastumbled25.9%to1,070pointscalendaryear-to-date(asofAugust26,2008).TheaveragedailytradingvaluehasfallenfromRM2.04billioninsecondhalfofyear2007(a76.0%year-on-yeargrowth)toonlyRM1.67billioninfirsthalfofyear2008.

Fixed Income Market

Inthebondmarket,atotalofRM129.8billionofbondswasissuedbyboththepublicsectorandprivatesectorduringthefinancialyearunderreview,up35.0%fromthepreviousfinancialyear.Thiswaslargelyduetothe60.6%increaseinPrivateDebtSecurities(PDS)toRM74.0billion,aspublicsectorissuancerosebyjust11.4%toRM55.8billion,ofwhichRM45.3billionweretheMalaysianGovernmentSecurities(MGS).

Bondyieldsweregenerallystablethroughoutthefinancialyear.However, thebondmarketexperiencedmajorselldownbeginningJune5,2008whenthegovernmentraisedfuel-energyprices,causingMGSyieldstoincreaseandtheyieldcurvetosteepeninreactiontoexpectationsofhigherinflationarypressuregoingforward.However,BNM’sdecisiontokeepOPRsteadyintheJuneandAugust2008onaccountofthedownsideriskstogrowthhasbroughtMGS’syieldsdownslightly,resultingindownwardshiftsoftheyieldcurve.

Goingforward,theMGSyieldcurveisexpectedtoflattenconsideringtherecentreductionofpetrolpricesinlinewiththefallingcrudeoilprices,aswellasslowingeconomicgrowth,allofwhichareexpectedtotemperinflationarypressures.

Documents

Five Years Financial Highlights Profile of the Board of ......Perbadanan Usahawan Nasional Berhad Mayban Fortis Holdings Bhd Experience Prior to joining the Maybank Group, he was the