Post on 19-Mar-2018
transcript
Company No: 14389-U
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
for the financial period ended 31 December 2014
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Glossary
Terms Descriptions
AFS Available-for-Sale
Basel II Basel II Capital Accord
Basel III Basel III Capital Accord
BNM Bank Negara Malaysia
BOD Board of Directors
BRMC Board Risk Management Committee
CEO Chief Executive Officer
BCRC Board Credit Review Committee
CIS Collective Investment Scheme
CMD Credit Management Department
CSA Credit Support Annex
DOA Delegation of Authority
ECAIs External Credit Assessment Institutions
AHIB Affin Hwang Investment Bank Berhad or the Bank
ICAAP Internal Capital Adequacy Assessment Process
IRRBB Interest rate risk in banking book
ISDA International Swap and Derivative Association
KRI Key Risk Indicator
LDC Loss Data Collection
NPSP New Products and Services Process
ORM Operational Risk Management
ORMU Operational Risk Management Unit
RCSA Risk and Control Self-Assessment
RMD Risk Management Department
CROC Compliance and Risk Oversight Committee
RWCAF Risk Weighted Capital Adequacy Framework
VaR Value-at-Risk
1
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
OVERVIEW
Bank Negara Malaysia (BNM) Risk Weighted Capital Adequacy Framework (RWCAF)
(Basel II) Disclosure Requirements (Pillar 3) aims to improve the transparency of financial
institution activities and risks, which is a key element of an effectively supervised financial
system.
Pillar 3 Disclosures is governed by Affin Hwang Investment Bank Berhad (the Bank)
Disclosure Policy on Bank Negara Malaysia Risk Weighted Capital Adequacy Framework -
Pillar 3 and Capital Adequacy Framework (Capital Components) issued by BNM, which
spells out the guidelines in determining the contents (including materiality, appropriateness
and confidentiality), frequency, medium, location of public disclosures, as well as internal
controls over the disclosure verification process.
The following disclosure information is based on 31 December 2014 financial period end
data and has been independently reviewed by the Internal Audit Department. However,
where data is equivalent to that included in the Banks audited financial statements, such
data has been subjected to review by the Bank's external auditor during the formal review
and verification process.
The Pillar 3 Disclosures is published on the Banks corporate website, which can be found
at http://www.affinhwang.com.
2
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
1 SCOPE OF APPLICATION
2 CAPITAL MANAGEMENT
i)
ii)
During the financial year, the Groups subsidiaries (excluded from the consolidation for regulatory risk
reporting) did not report any capital deficiencies.
The principal activities of the subsidiaries are asset management, management of unit trust funds and private
retirement schemes, Islamic fund management, dealing in options and futures and provision of nominee
The Bank's objectives when managing capital are to comply with:
The minimum capital requirement of 8% under Bank Negara Malaysias Risk-Weighted Capital Adequacy
The Board-approved Internal Capital Adequacy Assessment Process ("ICAAP"), which amongst others:
The Pillar 3 Disclosures attached herewith relates to the Bank and its subsidiaries (the Group). This Pillar 3
Disclosures is published for the financial period ended 31 December 2014, with comparative information for
both the Bank and the Group for the financial period ended 31 July 2013.
For financial reporting purposes, the basis for consolidation of the Bank and the Group financial statements is
in accordance to the Malaysian Financial Reporting Standards.
The basis for accounting consolidation is defined as per Note B to the financial statements of the Bank. Further
information on the Banks consolidated entities is referenced in Note 13 to the Banks financial statements.
The principal activities of the Bank are in investment banking, stockbroking activities and related financial
During the financial year, the Group did not experience any restrictions or impediments in the distribution of
dividends, transfer of funds or regulatory capital.
To safeguard the Bank's ability to continue as a going concern so that it can continue to provide
returns to the shareholders and benefits for other stakeholders; and
To maintain a strong capital base to support the development of its business.
3
(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
2.1 Capital Adequacy Ratios
Credit risk (Standardised Approach) Market risk (Standardised Approach) Operational risk (Basic Indicator Approach)
The capital adequacy ratios of the Group consist of total capital and risk-weighted assets derived from
consolidated balances of the Bank and its subsidiary companies (including non-financial subsidiaries) for
regulatory capital reporting at consolidated level.
The Group and the Bank have adopted the following approaches to assess its regulatory capital
requirements under BNM RWCAF Pillar 1:
With effect from 1 January 2013, the regulatory capital ratios as well as the level of these ratios of which
the Bank is required to operate are computed in accordance with Bank Negara Malaysia's revised Risk-
Weighted Capital Adequacy Framework: Standardised Approach for Credit Risk and Market Risk, and
Basic Indicator Approach for Operational Risk (Basel III) and Capital Adequacy framework (capital
components).
4
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
The Group
As at 31 December 2014Gross
exposures
Net
exposures
Risk Weighted
Assets
Capital
requirements
(i) Credit risk RM000 RM000 RM000 RM000
Exposure Class
On-Balance Sheet Exposures
Sovereigns/Central Banks 1,280,136 1,280,136 1,419 114
Banks, Development Financial
Institutions ("DFIs") & Multilateral
Development Banks ("MDBs")1,461,310 1,461,310 370,062 29,605
Insurance Companies, Securities
Firms & Fund Managers
3,457 3,457 3,457 277
Corporates 2,860,093 2,813,610 1,677,664 134,213
Regulatory Retail 152,242 136,279 135,089 10,807
Other Assets 472,481 472,481 433,683 34,695
Defaulted Exposures 11,918 11,918 10,795 864
Total for on-balance sheet
exposures6,241,637 6,179,191 2,632,169 210,575
Off-Balance Sheet Exposures
Over-the-counter (OTC) derivatives 182,562 182,562 102,769 8,222
Off-balance sheet exposures other than
OTC or Credit Derivatives 203,504 203,504 203,504 16,280
Total for off-balance sheet
exposures 386,066 386,066 306,273 24,502
Total credit risk exposures 6,627,703 6,565,257 2,938,442 235,077
- - - -
(iii) Market riskNet
exposures
Risk Weighted
Assets
Capital
requirements
RM000 RM000 RM000
Long Position Short Position
RM'000 RM'000
Interest rate risk 3,399,673 3,406,288 (6,615) 88,027 7,042
Foreign currency risk 2,372,154 2,382,192 (10,038) 25,338 2,027
Equity risk 26,188 - 26,188 66,270 5,302
Option - - - 17,124 1,370
Total market risk exposures 5,798,015 5,788,480 9,535 196,759 15,741
(iv) Operational risk Risk Weighted
Assets
Capital
requirements
RM000 RM000
Operational risk 427,786 34,223
3,562,987 285,041
The following table depicts the risk weighted assets (RWA) and regulatory capital requirements:
Table 1: Risk-Weighted Assets and Capital Requirements
(ii) Large exposures risk requirements
Gross exposures
RM000
Total risk-weighted assets and capital requirements
5
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
The Bank
As at 31 December 2014Gross
exposures
Net
exposures
Risk Weighted
Assets
Capital
requirements
(i) Credit risk RM000 RM000 RM000 RM000
Exposure Class
On-Balance Sheet Exposures
Sovereigns/Central Banks 1,280,079 1,280,079 1,419 114
Banks, Development Financial
Institutions ("DFIs") & Multilateral
Development Banks ("MDBs") 1,196,980 1,196,980 305,129 24,410
Insurance Companies, Securities
Firms & Fund Managers
3,457 3,457 3,457 277
Corporates 2,859,510 2,813,027 1,677,080 134,166
Regulatory Retail 152,242 136,279 135,089 10,807
Other Assets 386,989 386,989 352,736 28,219
Defaulted Exposures 11,918 11,918 10,795 864 Total for on-balance sheet
exposures 5,891,175 5,828,729 2,485,705 198,857
Off-Balance Sheet Exposures
182,562 182,562 102,769 8,222
OTC or Credit Derivatives 203,504 203,504 203,504 16,280 Total for off-balance sheet
exposures 386,066 386,066 306,273 24,502
Total credit risk exposures 6,277,241 6,214,795 2,791,978 223,359
- - - -
(iii) Market riskNet
exposures
Risk Weighted
Assets
Capital
requirements
RM000 RM000 RM000
Long Position Short Position
RM'000 RM'000
Interest rate risk 3,399,673 3,406,288 (6,615) 88,027 7,042
Foreign currency risk 2,350,192 2,382,192 (32,000) 34,625 2,770
Equity risk 18,903 - 18,903 51,701 4,136
Option - - - 17,124 1,370
Total market risk exposures 5,768,768 5,788,480 (19,712) 191,477 15,318
(iv) Operational risk Risk Weighted
Assets
Capital
requirements
RM000 RM000
Operational risk 325,813 26,065
3,309,268 264,742
RM000
Total risk-weighted assets and capital requirements
Table 1: Risk-Weighted Assets and Capital Requirements (Continued)
Over-the-counter (OTC) derivatives
Off-balance sheet exposures other than
(ii) Large exposures risk requirements
Gross exposures
6
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
The Group
As at 31 July 2013Gross
exposures
Net
exposures
Risk Weighted
Assets
Capital
requirements
(i) Credit risk RM000 RM000 RM000 RM000
Exposure Class
On-Balance Sheet Exposures
Sovereigns/Central Banks 546,013 546,013 1,370 110
Public Sector Entities - - - -
Banks, Development Financial
Institutions ("DFIs") & Multilateral
Development Banks ("MDBs") 1,099,802 1,099,802 385,088 30,807
Insurance Companies, Securities
Firms & Fund Managers 9,425 9,243 9,243 739
Corporates 1,325,988 1,325,895 903,432 72,275
Regulatory Retail 152,620 152,620 152,618 12,209
Other Assets 360,724 360,999 291,145 23,292
Securitisation 20,540 20,540 4,108 329
Defaulted Exposures 405 405 86 7 Total for on-balance sheet
exposures 3,515,517 3,515,517 1,747,090 139,768
Off-Balance Sheet Exposures
Over-the-counter (OTC) derivatives 149,551 149,551 69,953 5,596 Off-balance sheet exposures other than
OTC or Credit Derivatives 53,873 53,873 53,873 4,310
Defaulted Exposures - - - -
Total for off-balance sheet
exposures 203,424 203,424 123,826 9,906
Total credit risk exposures 3,718,941 3,718,941 1,870,916 149,674
- - - -
(iii) Market riskNet
exposures
Risk Weighted
Assets
Capital
requirements
RM000 RM000 RM000
Long Position Short Position
RM'000 RM'000
Interest rate risk 2,752,685 2,743,030 9,655 65,017 5,201
Foreign currency risk 1,905,213 1,870,321 34,892 39,574 3,166
Equity risk 23,746 - 23,746 63,700 5,096
Option - - - - -
Total market risk exposures 4,681,644 4,613,351 68,293 168,291 13,463
(iv) Operational risk Risk Weighted
Assets
Capital
requirements
RM000 RM000
Operational risk 305,023 24,402
2,344,230 187,539
Table 1: Risk-Weighted Assets and Capital Requirements (Continued)
(ii) Large exposures risk requirements
Gross exposures
RM000
Total risk-weighted assets and capital requirements
7
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
The Bank
As at 31 July 2013Gross
exposures
Net
exposures
Risk Weighted
Assets
Capital
requirements
(i) Credit risk RM000 RM000 RM000 RM000
Exposure Class
On-Balance Sheet Exposures
Sovereigns/Central Banks 546,013 546,013 1,370 110
Public Sector Entities - - - -
Banks, Development Financial
Institutions ("DFIs") & Multilateral
Development Banks ("MDBs") 1,095,057 1,095,057 383,895 30,712
Insurance Companies, Securities
Firms & Fund Managers 9,243 9,243 9,243 739
Corporates 1,325,895 1,325,895 903,432 72,274
Regulatory Retail 152,620 152,620 152,618 12,209
Other Assets 360,556 360,556 291,150 23,292
Securitisation 20,540 20,540 4,108 329
Defaulted Exposures 405 405 86 7 Total for on-balance sheet
exposures 3,510,329 3,510,329 1,745,902 139,672
Off-Balance Sheet Exposures
149,551 149,551 69,953 5,596
OTC or Credit Derivatives 53,873 53,873 53,873 4,310
Defaulted Exposures - - - - Total for off-balance sheet
exposures 203,424 203,424 123,826 9,906
Total credit risk exposures 3,713,753 3,713,753 1,869,728 149,578
- - - -
(iii) Market riskNet
exposures
Risk Weighted
Assets
Capital
requirements
RM000 RM000 RM000
Long Position Short Position
RM'000 RM'000
Interest rate risk 2,752,685 2,743,030 9,655 65,017 5,201
Foreign currency risk 1,905,213 1,870,321 34,892 39,574 3,166
Equity risk 23,746 - 23,746 63,700 5,096
Option - - - - -
Total market risk exposures 4,681,644 4,613,351 68,293 168,291 13,463
(iv) Operational risk Risk Weighted
Assets
Capital
requirements
RM000 RM000
Operational risk 298,889 23,911
2,336,908 186,952 Total risk-weighted assets and capital requirements
Table 1: Risk-Weighted Assets and Capital Requirements (Continued)
Over-the-counter (OTC) derivatives
Off-balance sheet exposures other than
(ii) Large exposures risk requirements
Gross exposures
RM000
8
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
2.2 Capital Structure
CET 1 Capital
Additional Tier 1 Capital
Tier 2 Capital
For regulatory purposes, capital is categorised into Common Equity Tier 1 ("CET 1") Capital, Additional
Tier 1 Capital and Tier 2 Capital which are described below:
CET 1 Capital /Tier I Capital (Basel III) include ordinary paid-up share capital, share premium, statutory
reserves, audited retained profit, unrealised gains on AFS instruments and exclude regulatory
adjustments namely goodwill, intangible assets, 55% of unrealised gains on AFS instruments and
investment in subsidiaries.
Share capital is the issued and fully paid share capital and there is no obligation to pay a coupon or
dividend to the shareholders. Retained profits and statutory reserve are accumulated resources included
in shareholders funds in the Statement of Financial Position. The statutory reserve is maintained in
compliance with the provisions of section 47(2)(f) of the Financial Services Act, 2013 and BNM's
Guidelines on Capital Funds and is not distributable as cash dividends. Regulatory deductions include
the excess of Additional Tier 1 Capital or Tier 2 Capital deducted in CET 1 Capital (if any).
Tier 2 capital comprises of collective impairment assessment and certain regulatory deductions.
Regulatory deductions include investment in subsidiaries.
Additional Tier 1 capital comprises of non-controlling interest and certain regulatory deductions.
Regulatory deductions include the excess of Tier 2 Capital deducted in Additional Tier 1 Capital (if any).
9
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 2: Constituents of Eligible Capital and Capital Adequacy Ratios
31.12.2014 31.07.2013 31.12.2014 31.07.2013
RM'000 RM'000 RM'000 RM'000
Common Equity Tier (CET) 1 Capital :
Paid-up share capital 780,000 500,000 780,000 500,000
Share premium 219,800 - 219,800 -
Statutory reserve 199,071 148,861 199,071 148,861
Retained profit 210,721 216,854 264,248 214,038
Unrealised gains on AFS instruments 5,479 3,564 5,347 3,564
1,415,071 869,279 1,468,466 866,463
Less : Regulatory adjustment
Goodwill and other Intangible assets (320,806) (162,502) (314,772) (162,502)
Investment in subsidiaries - - (124,563) -
Collective allowance reserve (3,556) - (3,556) -
55% of unrealised gains on AFS instruments (3,013) (1,960) (2,941) (1,960)
Deferred tax assets (10,836) (463) (5,990) (463)
1,076,860 704,354 1,016,644 701,538
Additional Tier 1 Capital
Non-controlling interests 3,000 208 - -
Tier 1 Capital 1,079,860 704,562 1,016,644 701,538
Tier 2 capital
Non-controlling interests - 49 - -
Collective allowance 12,557 5,476 12,557 5,476
Less : Regulatory adjustment
Investment in subsidiaries - - (12,557) (399)
Total Tier 2 capital 12,557 5,525 - 5,077
Total Capital 1,092,417 710,087 1,016,644 706,615
Proposed dividends - - - -
Capital Ratio
CET 1 capital ratio 30.224% 30.046% 30.721% 30.020%
Tier 1 capital ratio 30.308% 30.055% 30.721% 30.020%
Total capital ratio 30.660% 30.291% 30.721% 30.237%
CET 1 capital ratio (net of proposed dividends) 30.224% 30.046% 30.721% 30.020%
Tier 1 capital ratio (net of proposed dividends) 30.308% 30.055% 30.721% 30.020%
Total capital ratio (net of proposed dividends) 30.660% 30.291% 30.721% 30.237%
The Group The Bank
10
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
3 RISK MANAGEMENT
Risk Governance
Under the Credit Authority Framework approved by the Board, Group Management Loan Committee ("GMLC")
and Board Credit Review Committee (BCRC) is authorised to review and approve, reject or modify proposals
for credit and underwriting applications.
Internal Audit is responsible to provide reasonable assurance of effective and efficient operations of the
business or support units, and compliance with law and regulations, as well as with internal procedures and
guidelines.
RMD acts as an independent and neutral party in providing comprehensive and independent views of Bank-
wide risk of the Bank.
As a full-fledged investment bank, the Bank has established robust and comprehensive risk management
policies and framework, supported by Group Risk Management Framework and Policies based on best
practices, to ensure that the salient risk elements in the operations of the Bank are adequately managed and
mitigated. The Banks framework for the management of financial risks is congruent with the primary
corporate objective of creating and enhancing shareholders value, guided by a prudent and robust framework
of risk management methodologies and policies.
The Banks risk management policies and framework are reviewed periodically to ensure that they are
comprehensive in addressing the multi-faceted risks associated with the investment banking sector.
The Risk Management Department (RMD) is primarily responsible for the development and maintenance of
the risk management policies and framework of the Bank and supports the functions of Assets and Liabilities
Committee (ALCO), Compliance and Risk Oversight Committee ("CROC"), the Board Risk Management
Committee (BRMC) and the Board Credit Review Committee ("BCRC") as well as Group committees of the
Affin Banking Group.
Appropriate risk governance structure is cascaded throughout all level of the Bank which comprise of Board of
Directors ("Board"), relevant committees, business units and support units.
The Board is ultimately responsible for assuming the risks inherent in the Bank's business activities and
defining the policies for governing those activities. BRMC is responsible to support the Board in the oversight
of the Bank's risk management.
BRMC is authorised by the Board in overseeing all risk-taking activities in the Bank. Its key responsibilities
involve reviewing and recommending risk management strategies, risk tolerance, new products, capital
allocation process; and assessing the adequacy of risk management policies, framework, infrastructure and
resources for implementation of risk strategies. For monitoring purpose, BRMC reviews periodic reports on risk
exposures, risk portfolio composition and risk management activities. These reports, prepared by RMD which
covers credit, market, liquidity and operational risks.
At management level, CROC and ALCO assist the BRMC and Board in their supervisory roles in the
management of credit, market, liquidity, and operational risks as well as assets and liabilities management of
the Bank. These two committees provide an executive forum for discussion and decision on all aspects of
credit, market, liquidity and operational risks; and assets and liabilities management matters.
11
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Risk Measurement
Stress Testing
Risk Reporting and Monitoring
The risk measurement tools employed by the Bank are commonly used in market practices and commensurate
with the size and complexity of the Banks business operations.
The Bank has deployed stress testing in assessing the impact of stressed market conditions on its capital,
profit, liquidity and asset quality in accordance with the Group Stress Test Framework and Methodology.
Risk limits are reviewed on an annual basis or as and when required, to ensure their relevance with regards to
the risk taking activities of the Bank and current banking regulations.
Internal Audit acts as an independent party in performing an annual review of the Banks stress testing policy,
procedures and processes including the stress scenarios used to ensure the quality and effectiveness of the
programme.
The stress testing methodology covers a range of risks and business areas and there are two types of stress
testing currently in use:
Sensitivity Analysis, which moves a single risk factor by a magnitude of shock. This method can be
processed relatively quickly and can be used to form a first approximation and assessment of the impact.
Scenario Analysis, which contains simultaneous moves in a number of market risk factors (e.g. equity
prices, interest rates, foreign exchange rates and etc.). A stress test scenario analysis can be based on
historical scenario, hypothetical scenario, forward looking scenario and second round/spill-over effect.
Scenario analysis can be performed on a portfolio-driven approach or event-driven approach.
The stress testing is performed periodically in meeting both internal and regulatory external reporting
requirements.
The Banks risk appetite (i.e. risk tolerance) and business plans determine the amount of risk capital set aside
(i.e. risk capacity) to support its operational and market activities as well as capital allocation to respective
business units. This forms a basis in setting risk limits for business units.
RMD is responsible for the monitoring and timely reporting of risk exposures against the established risk limits.
Any breaches in risk limits are subject to the exception escalation procedures that aim to rectify any excesses
within practical time and within the specified authority level. There is a formal process for risk reporting to the
CEO, business units, relevant management/ board committee such as CROC, and BRMC as well as Group
Risk Management of Affin Bank Berhad to facilitate the making of informed decisions and strategies. BRMC
reviews and monitors any significant risk issues and reports to the Board.
Stress testing results are periodically reported to ALCO and BRMC to enable them to consider the implications
on the Banks overall business strategy, capital management, risk profile and to consider appropriate
corrective measures when necessary.
12
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
4 CREDIT RISK
Risk Governance
Credit Risk Identification and Measurement
(a) Corporate Credit and Financing
Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the
Banks underwriting criteria and the ability of the Bank to make a return commensurate to the level of risk
undertaken. All corporate loans, underwritings and share margin financing applications above specified limits
are evaluated by Credit Management Department (CMD) and forwarded to the relevant approving authorities
based on the Credit Authority Framework approved by Board.
The corporate credits and financing accounts are reviewed by the Business Units on periodic basis and
independently commented by CMD to complement the risk identification, early warnings detection as well as in
ensuring creditability and financial performance of the corporate where applicable to protect the Banks position
in debt recovery. Remedial action is taken where evidence of deterioration exists.
A critical element in the evaluation process is the assignment of a credit risk grade to the counterparty. This
assists in the risk assessment and decision making process. The Bank adopts internal rating models to support
the assessment and quantification of credit risk as guided by the internal Credit Risk Grading Model. A number
of relevant risk factors such as competitive position, operating performance, cash flow strength and
management strength are taken into consideration when identify and analyse counterparty credit risk.
Credit risk refers to the potential risk of financial loss arising from defaults by counterparties in meeting their
obligations. The Bank's exposure to credit risks arises primarily from share trading, share margin financing,
corporate/inter-bank lending activities, bonds investment, foreign exchange trading, equity and debt
underwriting as well as from participation in securities settlements and payment transactions.
The management of credit risk is governed by a set of approved credit policies, guidelines, circulars and
procedures to ensure that the overall lending objectives achieved are in compliance with the internal and
regulatory requirements. The policies are subject to review by the BRMC, a sub-committee of the Board that
reviews the adequacy of the Banks risk policies and framework.
The Banks credit risk framework is further strengthened with an established credit authority framework for the
approval of new, restructured and review of loans, bond investments, debt and equity underwriting proposals.
The approving authorities are Chief Executive Officer, Underwriting Committee, Group Management Loan
Committee (GMLC) and Board Credit Review Committee (BCRC).
GMLC is established within senior management to approve complex and larger loans, bond investments, debt
underwriting as well as workout/recovery proposals beyond the delegated authority of the concerned individual
senior management personnel of Affin Hwang Investment Bank (AHIB). BCRC is established to assist the
functions of the Board in respect of its inherent authority over the credit and underwriting proposals which are
considered by the GMLC. BCRC reviews proposals that exceed specified limits and criteria, as well as to
consider whether to reject the proposal or modify the terms of the proposal.
13
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(b) Stockbroking Brokerage
(c) Share Margin
Credit Risk Limit Control
Risk Reporting and Monitoring
The credit risk exposure for derivative and loan books is managed as part of the overall lending limits with
customers together with potential exposure from market movements.
Internal risk management reports are produced on a regular basis, providing information on credit related
issues to CROC and BRMC for risk monitoring and appropriate level of management decision making.
For stockbroking brokerage business, daily management and monitoring of credit risk associated with securities
brokerage is undertaken by Credit Control team to ensure compliance with approved policies and procedures of
the Bank and regulatory requirements.
In addition, RMD reviews the overall stockbroking credit exposures and CMD assess/approve trading limit
proposals that exceed specified limits. The assessment is based on clients and/or dealers representatives risk
profiles, creditworthiness, past trading records and pledged collaterals.
Credit risk exposures are mitigated via preventive risk management measures in limiting the exposure in
accordance with the Bank's risk appetite as well as regular monitoring of credit exposures.
The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue
concentration of credit risk in its credit portfolio. The limits include single counterpartys groupings, connected
parties, broad property sector, geographical and industry segments. These risks are monitored regularly and
the limits reviewed annually to best reflect the bank portfolio strategy and market environment.
For share margin financing, all new margin applications as well as applications for additional facilities are
subject to credit review by the Margin Operations. It will be forwarded to CMD for independent credit evaluation
if the proposals exceed specified limits before recommending to the Approving Authorities. Credit risk
exposures associated with share-margin trading are reviewed and monitored closely on daily basis by
designated staff from Margin Operations, Credit Management and independently by RMD, who will review
amongst others, credit limit utilization, exposure to single security or client/ group of counterparty and equity
positions against collateral.
14
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
4.1 Distribution of Credit Exposures
(i)
Table 3: Gross Credit Exposures by Geographic Distribution
The Group
As at 31 December 2014 Malaysia Other Countries Total
Exposure Class RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign / Central Banks 1,280,136 - 1,280,136
Banks, DFIs & MDBs 1,331,499 129,811 1,461,310
Insurance Companies, Securities
Firms & Fund Managers
2,359 1,098 3,457
Corporates 2,602,161 257,932 2,860,093
Regulatory Retail 150,786 1,456 152,242
Other assets 435,114 37,367 472,481
Defaulted Exposures 11,918 - 11,918
Total for On-Balance Sheet Exposure 5,813,973 427,664 6,241,637
Off-Balance Sheet Exposure
OTC Derivatives 146,848 35,714 182,562
Non OTC Derivatives 203,504 - 203,504
Total Off-Balance Sheet Exposure 350,352 35,714 386,066
Total Gross Credit Exposures 6,164,325 463,378 6,627,703
The Bank
As at 31 December 2014 Malaysia Other Countries Total
Exposure Class RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign / Central Banks 1,280,079 - 1,280,079
Banks, DFIs & MDBs 1,067,169 129,811 1,196,980
Insurance Companies, Securities
Firms & Fund Managers
2,359 1,098 3,457
Corporates 2,601,578 257,932 2,859,510
Regulatory Retail 150,786 1,456 152,242
Other assets 349,622 37,367 386,989
Defaulted Exposures 11,918 - 11,918
Total for On-Balance Sheet Exposure 5,463,511 427,664 5,891,175
Off-Balance Sheet Exposure
OTC Derivatives 146,848 35,714 182,562
Non OTC Derivatives 203,504 - 203,504
Total Off-Balance Sheet Exposure 350,352 35,714 386,066
Total Gross Credit Exposures 5,813,863 463,378 6,277,241
The following table depicts the geographical distribution of the Banks gross credit exposures, based
on the country of incorporation or residence:
15
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 3: Gross Credit Exposures by Geographic Distribution (Continued)
The Group
As at 31 July 2013 Malaysia Other Countries Total
Exposure Class RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign / Central Banks 546,013 - 546,013
Banks, DFIs & MDBs 1,027,265 72,537 1,099,802
Insurance Companies, Securities
Firms & Fund Managers - 9,425 9,425
Corporates 913,400 412,588 1,325,988
Regulatory Retail 148,751 3,869 152,620
Other assets 360,637 87 360,724
Securitisation 20,540 - 20,540
Defaulted Exposures 405 - 405
Total for On-Balance Sheet Exposure 3,017,011 498,506 3,515,517
Off-Balance Sheet Exposure
OTC Derivatives 100,323 49,228 149,551
Non OTC Derivatives 53,873 - 53,873
Total Off-Balance Sheet Exposure 154,196 49,228 203,424
Total Gross Credit Exposures 3,171,207 547,734 3,718,941
The Bank
As at 31 July 2013 Malaysia Other Countries Total
Exposure Class RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign / Central Banks 546,013 - 546,013
Banks, DFIs & MDBs 1,022,520 72,537 1,095,057
Insurance Companies, Securities
Firms & Fund Managers
- 9,243 9,243
Corporates 913,400 412,495 1,325,895
Regulatory Retail 148,751 3,869 152,620
Other assets 360,476 80 360,556
Securitisation 20,540 - 20,540
Defaulted Exposures 405 - 405
Total for On-Balance Sheet Exposure 3,012,105 498,224 3,510,329
Off-Balance Sheet Exposure
OTC Derivatives 100,323 49,228 149,551
Non OTC Derivatives 53,873 - 53,873
Total Off-Balance Sheet Exposure 154,196 49,228 203,424
Total Gross Credit Exposures 3,166,301 547,452 3,713,753
16
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(ii) The following table depicts the Banks gross credit exposures by sector analysis or industrial distribution:
Table 4: Gross Credit Exposures by Sectorial Analysis or Industrial Distribution
The Group
As at 31 December 2014
Primary
Agriculture
Mining and
Quarrying
Manufacturing
(including Agro-
based)
Electricity,
Gas and
Water
Supply Construction
Wholesale
and Retail
Trade
Restaurants
and Hotels
Transport,
Storage and
Communication
Finance,
Insurance, Real
Estate and
Business
Activities
Education,
Health and
Others Household Others Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks - - - - - - - 15,435 143,149 45,701 - 1,075,851 1,280,136
Public Sector Entities - - - - - - - - - - - - -
Banks, DFSs & MDBs - - - - - - - - 1,461,310 - - - 1,461,310
Insurance Companies,
Securities Firms & Fund
Managers - - - - - - - - 3,457 - - - 3,457
Corporates 40,049 186,896 125,938 542,289 367,122 94,680 - 243,517 634,494 310,561 153,238 161,309 2,860,093
Regulatory Retail - - - - - - - - - - 152,242 - 152,242
Other assets 2,550 348 2,442 499 191 - - 554 362,127 - - 103,770 472,481
Securitisation - - - - - - - - - - - - -
Defaulted Exposures - - 8,735 - - 2,037 - - 9 - 626 511 11,918
Total for On-Balance Sheet
Exposure 42,599 187,244 137,115 542,788 367,313 96,717 - 259,506 2,604,546 356,262 306,106 1,341,441 6,241,637
Off Balance Sheet Exposure
OTC Derivatives - - - - 14 - - - 182,523 - - 25 182,562
Non OTC Derivatives - 3,000 8,000 720 51,850 1,884 - 115,000 5,163 4,600 5,287 8,000 203,504
Defaulted Exposures - - - - - - - - - - - - -
Total Off-Balance Sheet
Exposure - 3,000 8,000 720 51,864 1,884 - 115,000 187,686 4,600 5,287 8,025 386,066
Total Gross Credit Exposure 42,599 190,244 145,115 543,508 419,177 98,601 - 374,506 2,792,232 360,862 311,393 1,349,466 6,627,703
17
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 4: Gross Credit Exposures by Sectorial Analysis or Industrial Distribution (Continued)
The Bank
As at 31 December 2014
Primary
Agriculture
Mining and
Quarrying
Manufacturing
(including Agro-
based)
Electricity,
Gas and
Water
Supply Construction
Wholesale
and Retail
Trade
Restaurants
and Hotels
Transport,
Storage and
Communication
Finance,
Insurance, Real
Estate and
Business
Activities
Education,
Health and
Others Household Others Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks - - - - - - - 15,435 143,092 45,701 - 1,075,851 1,280,079
Public Sector Entities - - - - - - - - - - - - -
Banks, DFSs & MDBs - - - - - - - - 1,196,980 - - - 1,196,980
Insurance Companies,
Securities Firms & Fund
Managers - - - - - - - - 3,457 - - - 3,457
Corporates 40,049 186,896 125,938 542,289 367,122 94,680 - 243,517 634,495 310,561 153,238 160,725 2,859,510
Regulatory Retail - - - - - - - - - - 152,242 - 152,242
Other assets 2,550 348 2,442 385 191 - - 528 331,046 - - 49,499 386,989
Securitisation - - - - - - - - - - - - -
Defaulted Exposures - - 8,735 - - 2,037 - - 9 - 626 511 11,918
Total for On-Balance Sheet
Exposure 42,599 187,244 137,115 542,674 367,313 96,717 - 259,480 2,309,079 356,262 306,106 1,286,586 5,891,175
Off Balance Sheet Exposure
OTC Derivatives - - - - 14 - - - 182,523 - - 25 182,562
Non OTC Derivatives - 3,000 8,000 720 51,850 1,884 - 115,000 5,163 4,600 5,287 8,000 203,504
Defaulted Exposures - - - - - - - - - - - - -
Total Off-Balance Sheet
Exposure - 3,000 8,000 720 51,864 1,884 - 115,000 187,686 4,600 5,287 8,025 386,066
Total Gross Credit Exposure 42,599 190,244 145,115 543,394 419,177 98,601 - 374,480 2,496,765 360,862 311,393 1,294,611 6,277,241
18
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 4: Gross Credit Exposures by Sectorial Analysis or Industrial Distribution (Continued)
The Group
As at 31 July 2013
Primary
Agriculture
Mining and
Quarrying
Manufacturing
(including Agro-
based)
Electricity,
Gas and
Water
Supply Construction
Wholesale
and Retail
Trade
Restaurants
and Hotels
Transport,
Storage and
Communication
Finance,
Insurance, Real
Estate and
Business
Activities
Education,
Health and
Others Household Others Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks - - - - - - - - 185,640 - - 360,373 546,013
Public Sector Entities - - - - - - - - - - - - -
Banks, DFSs & MDBs - - - - - - - - 1,099,802 - - - 1,099,802
Insurance Companies,
Securities Firms & Fund
Managers - - - - - - - - 9,425 - - - 9,425
Corporates 12,508 183,951 91,865 257,458 71,497 129,854 147,224 62,114 231,212 77,772 - 60,533 1,325,988
Regulatory Retail - - - - - - - - - - 152,620 - 152,620
Other assets - - - 477 - - - 239 284,781 - 10,540 64,687 360,724
Securitisation - - - - - - - - 20,540 - - - 20,540
Defaulted Exposures - - - - - - - - - - 405 - 405
Total for On-Balance Sheet
Exposure 12,508 183,951 91,865 257,935 71,497 129,854 147,224 62,353 1,831,400 77,772 163,565 485,593 3,515,517
Off Balance Sheet Exposure
OTC Derivatives - - 31 - - - - - 149,520 - - - 149,551
Non OTC Derivatives - - 40,000 - - 8,488 5,385 - - - - - 53,873
Defaulted Exposures - - - - - - - - - - - - -
Total Off-Balance Sheet
Exposure - - 40,031 - - 8,488 5,385 - 149,520 - - - 203,424
Total Gross Credit Exposure 12,508 183,951 131,896 257,935 71,497 138,342 152,609 62,353 1,980,920 77,772 163,565 485,593 3,718,941
19
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 4: Gross Credit Exposures by Sectorial Analysis or Industrial Distribution (Continued)
The Bank
As at 31 July 2013
Primary
Agriculture
Mining and
Quarrying
Manufacturing
(including Agro-
based)
Electricity,
Gas and
Water
Supply Construction
Wholesale
and Retail
Trade
Restaurants
and Hotels
Transport,
Storage and
Communication
Finance,
Insurance, Real
Estate and
Business
Activities
Education,
Health and
Others Household Others Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks - - - - - - - - 185,640 - - 360,373 546,013
Public Sector Entities - - - - - - - - - - - - -
Banks, DFSs & MDBs - - - - - - - - 1,095,057 - - - 1,095,057
Insurance Companies,
Securities Firms & Fund
Managers - - - - - - - - 9,243 - - - 9,243
Corporates 12,508 183,951 91,865 257,458 71,497 129,854 147,224 62,114 231,212 77,772 - 60,440 1,325,895
Regulatory Retail - - - - - - - - - - 152,620 - 152,620
Other assets - - - 473 - - - 238 284,736 - 10,540 64,569 360,556
Securitisation - - - - - - - - 20,540 - - - 20,540
Defaulted Exposures - - - - - - - - - - 405 - 405
Total for On-Balance Sheet
Exposure 12,508 183,951 91,865 257,931 71,497 129,854 147,224 62,352 1,826,428 77,772 163,565 485,382 3,510,329
Off Balance Sheet Exposure
OTC Derivatives - - 31 - - - - - 149,520 - - - 149,551
Non OTC Derivatives - - 40,000 - - 8,488 5,385 - - - - - 53,873
Defaulted Exposures - - - - - - - - - - - - -
Total Off-Balance Sheet
Exposure - - 40,031 - - 8,488 5,385 - 149,520 - - - 203,424
Total Gross Credit Exposure 12,508 183,951 131,896 257,931 71,497 138,342 152,609 62,352 1,975,948 77,772 163,565 485,382 3,713,753
20
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(iii)
Table 5: Gross Credit Exposures by Residual Contractual Maturity Analysis
The Group
As at 31 December 2014 < 1 year > 1 - 5 years Over 5 years
No specific
maturity Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks 168,247 737,999 229,972 143,918 1,280,136
Public Sector Entities - - - - -
Banks, DFIs & MDBs 1,038,372 392,814 30,124 - 1,461,310
Insurance Companies,
Securities Firms & Fund
Managers 3,457 - - - 3,457
Corporates 595,719 1,547,749 716,625 - 2,860,093
Regulatory Retail 152,242 - - - 152,242
Other assets 46,906 - - 425,575 472,481
Securitisation - - - - -
Defaulted Exposures 1,137 10,781 - - 11,918
Total for On-Balance Sheet
Exposure 2,006,080 2,689,343 976,721 569,493 6,241,637
Off Balance Sheet Exposure
OTC Derivatives 84,690 97,872 - - 182,562
Non OTC Derivatives 203,219 285 - - 203,504
Defaulted Exposures - - - - -
Total Off-Balance Sheet Exposure 287,909 98,157 - - 386,066
Total Gross Credit Exposure 2,293,989 2,787,500 976,721 569,493 6,627,703
The following table depicts the Banks gross credit exposures analysed by residual contractual maturity
analysis:
21
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 5: Gross Credit Exposures by Residual Contractual Maturity Analysis (Continued)
The Bank
As at 31 December 2014 < 1 year > 1 - 5 years Over 5 years
No specific
maturity Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks 168,247 737,999 229,972 143,861 1,280,079
Public Sector Entities - - - - -
Banks, DFIs & MDBs 774,042 392,814 30,124 - 1,196,980
Insurance Companies,
Securities Firms & Fund
Managers 3,457 - - - 3,457
Corporates 595,136 1,547,749 716,625 - 2,859,510
Regulatory Retail 152,242 - - - 152,242
Other assets 46,901 - - 340,088 386,989
Securitisation - - - - -
Defaulted Exposures 1,137 10,781 - - 11,918
Total for On-Balance Sheet
Exposure 1,741,162 2,689,343 976,721 483,949 5,891,175
Off Balance Sheet Exposure
OTC Derivatives 84,690 97,872 - - 182,562
Non OTC Derivatives 203,219 285 - - 203,504
Defaulted Exposures - - - - -
Total Off-Balance Sheet Exposure 287,909 98,157 - - 386,066
Total Gross Credit Exposure 2,029,071 2,787,500 976,721 483,949 6,277,241
22
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 5: Gross Credit Exposures by Residual Contractual Maturity Analysis (Continued)
The Group
As at 31 July 2013 < 1 year > 1 - 5 years Over 5 years
No specific
maturity Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks 141,979 338,284 - 65,750 546,013
Public Sector Entities - - - - -
Banks, DFIs & MDBs 1,029,108 70,694 - - 1,099,802
Insurance Companies,
Securities Firms & Fund
Managers 9,425 - - - 9,425
Corporates 248,916 854,962 222,110 - 1,325,988
Regulatory Retail 152,620 - - - 152,620
Other assets 95,596 - - 265,128 360,724
Securitisation 10,181 10,359 - - 20,540
Defaulted Exposures - - - 405 405
Total for On-Balance Sheet
Exposure 1,687,825 1,274,299 222,110 331,283 3,515,517
Off Balance Sheet Exposure
OTC Derivatives 49,632 99,919 - - 149,551
Non OTC Derivatives 13,873 - 40,000 - 53,873
Defaulted Exposures - - - - -
Total Off-Balance Sheet Exposure 63,505 99,919 40,000 - 203,424
Total Gross Credit Exposure 1,751,330 1,374,218 262,110 331,283 3,718,941
23
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 5: Gross Credit Exposures by Residual Contractual Maturity Analysis (Continued)
The Bank
As at 31 July 2013 < 1 year > 1 - 5 years Over 5 years
No specific
maturity Total
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000
On-Balance Sheet Exposures
Sovereign/Central Banks 141,979 338,284 - 65,750 546,013
Public Sector Entities - - - - -
Banks, DFIs & MDBs 1,024,363 70,694 - - 1,095,057
Insurance Companies,
Securities Firms & Fund
Managers 9,243 - - - 9,243
Corporates 248,823 854,962 222,110 - 1,325,895
Regulatory Retail 152,620 - - - 152,620
Other assets 95,580 - - 264,976 360,556
Securitisation 10,181 10,359 - - 20,540
Defaulted Exposures - - - 405 405
Total for On-Balance Sheet
Exposure 1,682,789 1,274,299 222,110 331,131 3,510,329
Off Balance Sheet Exposure
OTC Derivatives 49,632 99,919 - - 149,551
Non OTC Derivatives 13,873 - 40,000 - 53,873
Defaulted Exposures - - - - -
Total Off-Balance Sheet Exposure 63,505 99,919 40,000 - 203,424
Total Gross Credit Exposure 1,746,294 1,374,218 262,110 331,131 3,713,753
24
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
4.2 Past Due And Impaired Loans, Advances And Financing
(i) Loans
(ii) Share Margin Financing
Loans are considered as past due once contractually agreed payments are due from the borrowers and not
settled. Whilst impairment means the Bank considers it probable that it will suffer a loss on a financial asset as
a result of issuers/borrowers inability to meet their commitments according to the contractual terms and the
absence of any alternative means of repayment of recovery.
Impaired exposures comprise of loans, advances and financing where individually identified impairment
allowance has been provided. Impairment allowances are provisions in the Statement of Financial Position as a
result of the charge against income statement for the incurred losses in loans, advances and financing. An
impairment allowance can be individually or collectively assessed.
The Bank will assess at each balance sheet date whether there is objective evidence that loans, advances and
financing are impaired. Regular reviews are also conducted to determine whether there is evidence of
impairment on individual assessment. The Bank recognises impairment losses as follows:
For the purposes of a collective evaluation of impairment, loans are grouped on the basis of similar credit risk
characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such
assets by being indicative of the debtors ability to pay all amounts due according to the contractual terms of the
assets being evaluated.
If in the subsequent period, the amount of impairment decreases, which can be objectively related to an event
occurring after the write down, the impairment loss is to be reversed and recognised in the income statement.
The reversal should not result in the carrying amount of the loans, advances and financing exceeding the
amortised cost at the date the impairment loss is reversed.
For individual impairment assessment, impairment loss is measured as the difference between the assets
carrying amount and its present values of estimated future cash flows discounted at the assets original
effective interest rate. The amount of impairment loss shall be recognised in the income statement. For
collateralised loans, the Bank will estimate future cash flows from the collateral or/and other sources of
repayment.
For individual impairment assessment, impairment loss is recognised when the equity ratio (collateral to
outstanding amounts) of the margin account falls below the threshold set by the Bank. Impairment loss is
measured as the difference between the assets carrying amount (net of collateral and interest-in-suspense)
and its present values of estimated future cash flows discounted at the assets original effective interest
rate. The amount of impairment loss shall be recognised in the income statement.
Pursuant to Paragraph 13 of the Guideline on Classification and Impairment Provisions for Loans/Financing,
Bank Negara Malaysia ('BNM') had issued a letter on 4 February 2014, which require banking institutions to
maintain, in aggregate collective impairment provisions and regulatory reserves of no less than 1.2% of total
outstanding loans/financing (excluding loans/financing with an explicit guarantee from the Federal Government
of Malaysia), net of individual impairment provisions. Banking institutions are required to comply with the
requirement by 31 December 2015.
As at reporting date, the Group and the Bank have maintained the collective impairment provisions and
regulatory reserves of no less than 1.2% in the books by transferring from retained profits to regulatory reserves
(Group and Bank: RM3.57 million).
25
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(i)
Table 6: Past Due and Impaired Loans, Advances and Financing by Sectorial Analysis
The Group and The Bank
As at 31 December 2014
Impaired loans,
advances and
financing*
Individual
assessment
allowance
Collective
assessment
allowance
Total Impairment
Allowance for
Loans, Advances
and Financing
By Sector RM'000 RM'000 RM'000 RM'000
Primary Agriculture - - - -
Mining and Quarrying - - 371 371
Manufacturing (including Agro-based) 22,500 13,766 189 13,955
Electricity, Gas and Water Supply - - 1,035 1,035
Construction - - 1,024 1,024
Wholesale and Retail Trade 11,506 10,351 551 10,902
Restaurants and Hotels - - - -
Transport, Storage and Communication - - 584 584
Finance, Insurance, Real Estate and Business Activities - - 1,233 1,233
Education, Health and Others - - 1,278 1,278
Household 122 122 2,717 2,839
Others - - - -
Total 34,128 24,239 8,982 33,221
* Impaired and past due loans, advances and financing form a subset of gross credit exposures.
The sectorial analysis of past due and impaired loans, advances and financing and the individual and collective impairment
loan provisions by sectors are depicted below:
26
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
Table 6: Past Due and Impaired Loans, Advances and Financing by Sectorial Analysis (Continued)
The Group and The Bank
As at 31 July 2013
Impaired loans,
advances and
financing*
Individual
assessment
allowance
Collective
assessment
allowance
Total Impairment
Allowance for
Loans, Advances
and Financing
By Sector RM'000 RM'000 RM'000 RM'000
Primary Agriculture - - 28 28
Mining and Quarrying - - 276 276
Manufacturing (including Agro-based) - - 482 482
Electricity, Gas and Water Supply - - 1,361 1,361
Construction - - - -
Wholesale and Retail Trade - - 396 396
Restaurants and Hotels - - 399 399
Transport, Storage and Communication - - - -
Finance, Insurance, Real Estate and Business Activities - - 672 672
Education, Health and Others - - - -
Household - - 1,720 1,720
Others - - 142 142
Total - - 5,476 5,476
* Impaired and past due loans, advances and financing form a subset of gross credit exposures.
27
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(ii)
Table 7: Past Due And Impaired Loans, Advances And Financing By Geographic Distribution
The Group and the Bank
As at 31 December 2014
Impaired loans,
advances and
financing*
Individual
Impairment
Provision on
impaired loans,
advances and
financing
Collective
assessment
allowance
Total
Impairment
Allowance for
Loans,
Advances and
Financing
By Geographic Distribution RM'000 RM'000 RM'000 RM'000
Malaysia 34,128 24,239 8,982 33,221
Other Countries - - - -
Total 34,128 24,239 8,982 33,221
* Impaired and past due loans, advances and financing form a subset of gross credit exposures.
The Group and the Bank
As at 31 July 2013
Impaired loans,
advances and
financing*
Individual
Impairment
Provision on
impaired loans,
advances and
financing
Collective
assessment
allowance
Total
Impairment
Allowance for
Loans,
Advances and
Financing
By Geographic Distribution RM'000 RM'000 RM'000 RM'000
Malaysia - - 5,379 5,379
Other Countries - - 97 97
Total - - 5,476 5,476
* Impaired and past due loans, advances and financing form a subset of gross credit exposures.
The geographic analysis of past due and impaired loans, advances and financing and the individual and
collective impairment loan provisions by geographical distribution can be analysed as follows:
28
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
(iii) The table below depicts the movement of impairment provisions:
Table 8: Reconciliation of Changes In Loan Impairment Provisions
31.12.2014 31.07.2013
RM'000 RM'000
Individual Impairment Provision
As at beginning of the financial period/year - 3,550
Vested from AIBB 20,269 -
Allowance made during the financial period/year 3,970 -
Amount written off - (3,550)
Amount written back - -
As at financial year end 24,239 -
Collective Impairment Provision
As at beginning of the financial period/year 5,476 4,511
Vested from AIBB 7,388 -
Allowance made during the financial period/year - 1,779
Amount written back (3,882) (814)
As at financial year end 8,982 5,476
Direct Income Statement Impacts
Direct write offs - -
Direct recoveries 3,882 -
The Group and the Bank
29
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
4.3 Credit Risk Assessment Under Standardised Approach
The Bank uses ratings assigned by the following ECAIs:
Standard & Poors Rating Services (S&P)
Moodys Investors Service (Moodys)
Fitch Ratings (Fitch)
RAM Rating Services Berhad (RAM)
Malaysian Rating Corporation Berhad (MARC)
These ratings are used in the calculation of the following exposure classes:
Sovereigns and Central Banks
Banking Institutions
Corporate
Insurance Companies, Securities Firms and Fund Managers
In the assessment of credit risk under the Standardised Approach, the Bank uses ratings assigned by
recognised External Credit Assessment Institutions (ECAIs) in determining risk weight for certain exposure
classes.
Each exposure class above must be assigned with rating if a rating issued by the recognised ECAIs is available
in order to determine the risk weight percentage. If more than one rating is available for a specific counterparty,
the selection criteria as set out under the Single and Multiple Assessment in BNM RWCAF are applied in
determining relevant risk weight for the capital calculation. Exposures cannot be assigned with a risk weight
that is lower than that of the sovereign risk of the country in which the asset is located. Where a rating is not
available, the Bank follows the provisions stipulated under BNM RWCAF and deems the exposures as unrated.
30
Affin Hwang Investment Bank Berhad(formerly known as HwangDBS Investment Bank Berhad)
(Incorporated in Malaysia)
PILLAR 3 DISCLOSURES
4.3 Credit Risk Assessment Under Standardised Approach
(i) Credit Exposure By Risk Weights
The following table depicts the credit risk exposure of the Bank by risk weight:
Table