AmBank Islamic 300619

Company No. 295576–U

AmBank Islamic Berhad(Incorporated in Malaysia)

Interim Financial StatementsFor the Financial Period

1 April 2019 to30 June 2019

(In Ringgit Malaysia)

Company No. 295576–UAmBank Islamic Berhad(Incorporated in Malaysia)

AS AT 30 JUNE 2019

30 June 31 March2019 2019

Note RM’000 RM’000

ASSETSCash and short-term funds A8 420,451 1,568,643 Derivative financial assets 32,220 43,136 Financial assets at fair value through profit or loss A9 2,867,498 5,113,974 Financial investments at fair value through other comprehensive income A10 4,359,757 3,492,140 Financial investments at amortised cost A11 1,682,474 1,705,455 Financing and advances A12 28,461,607 28,922,449 Statutory deposit with Bank Negara Malaysia 982,000 970,000 Other assets A13 249,073 406,985 Property and equipment 544 576 Intangible assets 1,280 1,351 TOTAL ASSETS 39,056,904 42,224,709

LIABILITIES AND EQUITYDeposits from customers A14 28,459,706 31,139,936 Investment accounts of customers A15 260,098 353,451 Deposits and placements of banks and other financial institutions A16 2,396,093 2,598,550 Investment account due to a licensed bank A17 1,538,203 1,465,539 Recourse obligation on financing sold to Cagamas Berhad 417,805 518,350 Derivative financial liabilities 47,776 55,519 Term funding 1,000,000 1,080,000 Subordinated Sukuk 1,150,000 1,150,000 Deferred tax liability 12,302 5,360 Other liabilities A18 309,399 330,874 Provision for zakat 2,775 2,059 TOTAL LIABILITIES 35,594,157 38,699,638

Share capital 1,387,107 1,387,107 Reserves 2,075,640 2,137,964 Equity attributable to equity holder of the Bank 3,462,747 3,525,071

TOTAL LIABILITIES AND EQUITY 39,056,904 42,224,709

COMMITMENTS AND CONTINGENCIES A34 11,991,178 11,593,921

NET ASSETS PER SHARE (RM) 7.00 7.13

UNAUDITED STATEMENT OF FINANCIAL POSITION

The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financialstatements of the Bank for the year ended 31 March 2019.

1


FOR THE FINANCIAL QUARTER ENDED 30 JUNE 2019

30 June 30 June 30 June 30 June2019 2018 2019 2018

Note RM’000 RM’000 RM’000 RM’000

Income derived from investment of depositors' funds A19 453,056 417,542 453,056 417,542 Income derived from investment of investment account funds A20 20,072 31,271 20,072 31,271 Income derived from investment of shareholder's funds A21 46,655 44,708 46,655 44,708 Allowance for impairment on financing and advances A22 (31,369) (23,716) (31,369) (23,716) Impairment writeback/(losses) on financial investments A23 671 (466) 671 (466) Impairment gain/(losses) on other financial assets A24 3 - 3 - Provision for commitments and contingencies - (allowance)/ writeback A25 (478) (2,288) (478) (2,288) Total distributable income 488,610 467,051 488,610 467,051 Income attributable to the depositors and others A26 (260,823) (242,243) (260,823) (242,243) Income attributable to the investment account holders A27 (18,793) (25,186) (18,793) (25,186) Total net income 208,994 199,622 208,994 199,622 Other operating expenses A28 (75,153) (86,162) (75,153) (86,162) Finance cost (25,704) (24,079) (25,704) (24,079) Profit before zakat and taxation 108,137 89,381 108,137 89,381 Zakat (717) (640) (717) (640) Taxation (23,293) (18,872) (23,293) (18,872) Profit for the financial period 84,127 69,869 84,127 69,869

Basic/Diluted earnings per share (sen) A29 17.02 14.13 17.02 14.13

UNAUDITED STATEMENT OF PROFIT OR LOSS

Individual Quarter Cumulative Quarter

The Unaudited Condensed Interim Financial Statements should be read in conjunction with the auditedfinancial statements of the Bank for the year ended 31 March 2019.

2


UNAUDITED STATEMENT OF COMPREHENSIVE INCOME


RM’000 RM’000 RM’000 RM’000

Profit for the financial period 84,127 69,869 84,127 69,869

Other comprehensive income/(loss):

Financial investments at fair value through other comprehensive income: Net unrealised gain on changes in fair value 25,800 (13,522) 25,800 (13,522) Expected credit loss ("ECL") (640) 455 (640) 455

statement of profit or loss (2,996) 1 (2,996) 1 Income tax effect (5,473) 3,245 (5,473) 3,245 Other comprehensive (loss)/income for the period, net of tax 16,691 (9,821) 16,691 (9,821) Total comprehensive income for the financial period 100,818 60,048 100,818 60,048




Items that may be reclassified subsequently to profit or loss:

Net gain reclassified (to)/from

3


Distributable

Share Regulatory Available-for-sale Fair value Retained Totalcapital reserve reserve/deficit reserve earnings equity

RM'000 RM'000 RM'000 RM'000 RM'000

Balance at 1 April 2018 - as previously stated 1,387,107 327,683 (5,492) - 1,632,472 3,341,770 - Effects of adoption of MFRS 9 at 1 April 2018 - (162,530) 5,492 15,535 38,894 (102,609) Restated balance at 1 April 2018 1,387,107 165,153 - 15,535 1,671,366 3,239,161

Profit for the financial period - - - - 69,869 69,869

Other comprehensive loss, net of tax - - - (9,821) - (9,821) Total comprehensive income for the financial period - - - (9,821) 69,869 60,048

Transfer from regulatory reserve - (116) - - 116 - Transfer of AMMB Holdings Berhad ("AMMB") Executives' Share Scheme ("ESS") shares recharged - difference on purchase price of shares vested - - - - (69) (69) Transactions with owner and other equity movements - (116) - - 47 (69)

At 30 June 2018 1,387,107 165,037 - 5,714 1,741,282 3,299,140

At 1 April 2019 1,387,107 164,928 - 39,151 1,933,885 3,525,071

Profit for the financial period - - - - 84,127 84,127 Other comprehensive income, net of tax - - - 16,691 - 16,691 Total comprehensive income/(loss) for the financial period - - - 16,691 84,127 100,818

Transfer from regulatory reserve - 76,773 - - (76,773) - Dividend on ordinary shares: - interim, financial year ended 31 March 2019 - - - - (163,142) (163,142) Transactions with owner and other equity movements - 76,773 - - (239,915) (163,142)

At 30 June 2019 1,387,107 241,701 - 55,842 1,778,097 3,462,747

Attributable to Equity Holder of the Bank


The Unaudited Condensed Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31 March 2019.

UNAUDITED STATEMENT OF CHANGES IN EQUITY

Non-distributable

4


30 June 30 June2019 2018

RM’000 RM’000

Profit before zakat and taxation 108,137 89,381 Adjustments for non-operating and non-cash items 26,772 14,438 Operating profit before working capital changes 134,909 103,819

Changes in working capital:Net change in operating assets 2,831,575 (3,003,040) Net change in operating liabilities (3,105,875) 2,357,613 Taxation paid (31,662) (7,175) Net cash generated from operating activities (171,053) (548,783) Net cash generated used in investing activities (814,000) (51,305) Net cash generated from financing activities (163,142) - Net decrease in cash and cash equivalents (1,148,195) (600,088) Cash and cash equivalents at beginning of the financial year 1,568,649 1,788,429 Cash and cash equivalents at end of the financial period 420,454 1,188,341

Cash and cash equivalents comprise:Cash and short-term funds 420,451 658,337 Deposits and placements with banks and other financial institutions with original maturity of less than 3 months - 530,000 Allowances for expected credit loss ("ECL") for cash and cash equivalents at end of the financial period 3 4

420,454 1,188,341


UNAUDITED CONDENSED STATEMENT OF CASH FLOWSFOR THE FINANCIAL QUARTER ENDED 30 JUNE 2019

5


Explanatory Notes

A1.

A1.1 Significant Accounting Policies

- MFRS 16 Leases- IC Interpretation 23 Uncertainty over Income Tax Treatments- Prepayment Features with Negative Compensation (Amendments to MFRS 9)- Long-term Interests in Associates and Joint Ventures (Amendments to MFRS 128)- Plan Amendment, Curtailment or Settlement (Amendments to MFRS119)- Annual Improvements to MFRSs 2015-2017 Cycle

(a) MFRS 16 Leases

These condensed interim financial statements have been prepared in accordance with MFRS 134, InterimFinancial Reporting issued by the Malaysian Accounting Standards Board (“MASB”) and complies with theInternational Accounting Standard ("IAS") 34, Interim Financial Reporting issued by the InternationalAccounting Standards Board.

These condensed interim financial statements do not include all of the information required for full annualfinancial statements, and should be read in conjunction with the annual financial statements of the Bank forthe financial year ended 31 March 2019.

The accounting policies adopted are consistent with those of the previous financial year except forthe adoption of the following new standards, amendments to published standards, and newinterpretation which became effective for the first time for the Bank on 1 April 2019:

MFRS 16, which supersedes MFRS 117, eliminates the classification of leases by the lesseeas either finance leases or operating leases. MFRS 16 requires a lessee to account for allleases under a single on balance sheet model similar to the accounting for a finance leaseunder MFRS 117 which involves the recognition of a “right-of-use” of the underlying asset anda lease liability reflecting future lease payments.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 Property,Plant and Equipment and the lease liability is accreted over time with profit expense recognisedin the statement of profit or loss.

The adoption of these new standards, amendments to published standards and new interpretationdid not have any material impact on the financial statements of the Bank. Other than the adoption ofnew accounting policies as disclosed in Note A1.2, the Bank did not have to change its accountingpolicies or make retrospective adjustments as a result of adopting the other amendments topublished standards and new interpretation.

The nature of the new standards, amendments to published standards relevant to the Bank aredescribed below:

BASIS OF PREPARATION

6


A1.

A1.1 Significant Accounting Policies (Cont'd.)

(a) MFRS 16 Leases (Cont'd.)

(i)

(ii)

(b) IC Interpretation 23 Uncertainty over Income Tax Treatments

The Bank has adopted MFRS 16 for the first time since 1 April 2019. In its transition to MFRS16, the Bank has made use of the following transitional practical expedients at the date of initialapplication:

The Bank has elected not to reassess whether an agreement is, or contains a lease at thedate of initial application. Instead, for agreements entered into before the transition datethe Bank relied on its previous assessments made in accordance with MFRS 117 and ICInterpretation 4 Determining whether an Arrangement contains a Lease.

The Interpretation provides guidance on how to recognise and measure deferred and currentincome tax assets and liabilities in situations where there is uncertainty over whether the taxtreatment applied by an entity will be accepted by the tax authority. If it is probable that the taxauthority will accept an uncertain tax treatment that has been taken or is expected to be takenon a tax return, the accounting for income taxes shall be determined consistently with that taxtreatment. If an entity concludes that it is not probable that the treatment will be accepted, itshould reflect the effect of the uncertainty in its income tax accounting in the period in whichthat determination is made, by applying the most likely amount method or the expected valuemethod. The adoption of this Interpretation did not have any material financial impact to theBank.

Lease agreements for which the remaining lease term ends within 12 months from thedate of initial application are accounted as short-term leases whereby the Bank haselected not to recognise the associated right-of-use assets and lease liabilities.

The Bank has elected not to recognise a right-of-use asset and a lease liability for short-termleases, i.e. leases without purchase option with a lease term of 12 months or less from thecommencement date. Similarly, the Bank will not recognise a right-of-use asset and a leaseliability on leases for which the underlying asset is of low value.

All contracts previously classified as operating leases have been evaluated and identified to beservice contracts. Accordingly, the adoption of MFRS 16 did not result in any impact on thefinancial statements of the Bank.

BASIS OF PREPARATION (CONT'D.)

7


A1.


(c) Prepayment Features with Negative Compensation (Amendments to MFRS 9)

(d)

(i)

(ii)

(iii)

(iv)

MFRS 11 Joint Arrangements

The amendments clarified that the party obtaining joint control of a business that is a jointoperation shall not remeasure any previously held interest in the joint operation. Theamendment has no impact as the Bank does not hold interest in any joint operation.

MFRS 112 Income Taxes

The amendments clarified that the income tax consequences of dividends on financialinstruments classified as equity should be recognised according to where the pasttransactions or events that generated the distributable amounts were recognised. Hencethe tax consequences are recognised in profit or loss only when an entity determinespayments on such instruments are distributions of profits. The amendment did not haveany material financial impact to the Bank.

Annual Improvements to MFRSs 2015-2017 Cycle

The Annual Improvements to MFRSs 2015-2017 Cycle include minor amendments affecting 4MFRSs as summarised below:

MFRS 3 Business Combinations

The amendments clarified that obtaining control of a business that is a joint operation is abusiness combination achieved in stages. The acquirer shall remeasure its previouslyheld interest in the joint operation at fair value at the acquisition date. The amendmenthas no impact as the Bank does not hold interest in any joint operation.

Under the current MFRS 9 requirements, the "solely payments of principal and profit on theprincipal amount outstanding" ("SPPP") condition is not met if the lender has to make asettlement payment in the event of early termination by the borrower. The existingrequirements are amended to enable entities, to measure at amortised cost or at fair valuethrough other comprehensive income (depending on the business model), some prepayablefinancial assets with negative compensation if the negative compensation is a reasonablecompensation for early termination of the contract. An example of such reasonablecompensation is an amount that reflects the effect of the change in the relevant benchmark rateof profit at the time of termination; the calculation of this compensation payment must be thesame for both the case of an early repayment penalty and the case of a early repayment gain.The adoption of these amendments did not result in any impact as the Bank do not hold anyprepayable financial asset with negative compensation.

MFRS 123 Borrowing Costs

The amendments clarified that if any specific borrowing remains outstanding after therelated asset is ready for its intended use or sale, that borrowing becomes part of thefunds that an entity borrows generally when calculating the capitalisation rate on generalborrowings. The amendment did not have any material financial impact to the Bank.


8


A1.


Standards issued but not yet effective

Description Effective for annual periodsbeginning onor after

- Amendments to References to the Conceptual Framework inMFRS Standards 1 January 2020

- Definition of a Business (Amendments to MFRS 3) 1 January 2020- Definition of Material (Amendments to MFRS 101 and MFRS 108) 1 January 2020- MFRS 17 Insurance Contracts 1 January 2021- Sale or Contribution of Assets between an Investor and its Associate To be

or Joint Venture (Amendments to MFRS 10 and MFRS 128) determined by MASB

(a) Standards effective for financial year ending 31 March 2021

Amendments to References to the Conceptual Framework in MFRS Standards

Definition of a Business (Amendments to MFRS 3)

The nature of the new standards, amendments to published standards and new interpretation thatare issued but not yet effective are described below. The Bank are assessing the financial effects oftheir adoption.

The amendments, affecting nine published standards and five published interpretations, wereissued as a consequence to the issuance of the revised Conceptual Framework for FinancialReporting ("Conceptual Framework") on 30 April 2018. The references and quotations in thesepublished standards and interpretations to the Conceptual Framework have been updated soas to clarify the version of the Conceptual Framework these published standards andinterpretations refer to. The amendments are effective for annual periods beginning on or after1 January 2020 for entities that develop an accounting policy by reference to the ConceptualFramework.

The amendments revised the definition of a business, whereby the term "outputs" is narrowedto focus on goods and services provided to customers, as well as generation of investmentincome and other income from ordinary activities; returns in the form of lower costs and othereconomic benefits are no longer considered. In addition, a new framework is added to helpevaluate when an input and a substantive process are present.

The amendments are applied prospectively to business combinations and asset acquisitionsthat occur on or after the beginning of the first annual reporting period beginning on or after 1January 2020. Early adoption is permitted.


9


A1.


(a) Standards effective for financial year ending 31 March 2021 (Cont'd.)

Definition of Material (Amendments to MFRS 101 and MFRS 108)

A1.2

(a) Leases

(i)

The amendments clarified the definition of material and how it should be applied through theaddition of definition guidance. In addition, the explanations accompanying the definition havebeen improved and aligned across all MFRS standards to make it easier for entities to makemateriality judgements. The amendments are applied prospectively from annual reportingperiod beginning on or after 1 January 2020. Early adoption is permitted.

The significant accounting policies adopted in preparing these condensed interim financialstatements are consistent with those as disclosed in the annual financial statements of the Bank forthe financial year ended 31 March 2019 except for the following new accounting policies which hasbeen applied from 1 April 2019 following the adoption of MFRS 16:

The Bank as a lessee (before 1 April 2019)

The determination of whether an arrangement is, or contains, a lease is based on whether thearrangement conveys a right to control the use the asset, even if that right is not explicitlyspecified in an arrangement.

Leases that transfer to the Bank substantially all the risks and benefits incidental toownership of the leased item are classified as finance leases, and are capitalised at thecommencement of the lease at the fair value of the leased property or, if lower, at thepresent value of the minimum lease payments. Any initial direct costs are also added tothe amount capitalised. The corresponding lease obligations, net of finance charges, areincluded in other short-term and long-term payables. Lease payments are apportionedbetween finance charges and reduction of the lease liability so as to achieve a constantrate of profit on the remaining balance of the liability. Finance charges are recognised in“profit expense” in profit or loss.

Summary of Significant Accounting Policies Applied from 1 April 2019


A leased asset is depreciated over the useful life of the asset. However, if there is noreasonable certainty that the Bank will obtain ownership by the end of the lease term, theasset is depreciated over the shorter of the estimated useful life of the asset and the leaseterm.

Leases that do not transfer to the Bank substantially all the risks and benefits incidental toownership of the leased items are operating leases. Operating lease payments arerecognised as an operating expense in profit or loss on a straight-line basis over the leaseterm. The aggregate benefits of incentives provided by the lessor are recognised as areduction of rental expenses over the lease term on a straight-line basis.

10


A1.

A1.2

(a) Leases (Cont'd.)

(ii)

In calculating the present value of lease payments, the Bank uses the incrementalborrowing rate at the lease commencement date if the profit rate implicit in the lease is notreadily determinable. After the commencement date, the amount of lease liabilities isincreased to reflect the accretion of profit and reduced for the lease payments made. Inaddition, the carrying amount of lease liabilities is remeasured if there is a modification, achange in the lease term, a change in the in-substance fixed lease payments or a changein the assessment to purchase the underlying asset.

Right-of-use assets are measured at cost, less any accumulated depreciation andimpairment losses, and adjusted for any remeasurement of lease liabilities. The cost ofright-of-use assets includes the amount of lease liabilities recognised, initial direct costsincurred, and lease payments made at or before the commencement date less any leaseincentives received. Unless the Bank is reasonably certain to obtain ownership of theunderlying asset at the end of the lease term, the recognised right-of-use assets aredepreciated on a straight-line basis over the shorter of its estimated useful life and thelease term. If the Bank is reasonably certain to obtain ownership of the underlying asset atthe end of the lease term, the right-of-use asset is depreciated over the underlying asset’suseful life. Right-of-use assets are assessed for impairment whenever there is anindication that the right-of-use assets may be impaired.

The Bank applies the short-term lease recognition exemption to its short-term leases, i.e.those leases that have a lease term of 12 months or less from the commencement dateand do not contain a purchase option. It also applies the lease of low-value assetsrecognition exemption to leases of office equipment that are considered of low value, i.e.those with a value of RM20,000 or less when new. Lease payments on short-term leasesand leases of low-value assets are recognised as expense on a straight-line basis overthe lease term.

The Bank as a lessee (from 1 April 2019)

Leases are recognised as a right-of-use asset and a corresponding lease liability at thedate at which the leased asset is available for use by the Bank.

At the commencement date of the lease, the Bank recognises lease liabilities measured atthe present value of lease payments to be made over the lease term. The lease paymentsinclude fixed payments (including in-substance fixed payments) less any lease incentivesreceivable, variable lease payments that depend on an index or a rate, and amountsexpected to be paid under residual value guarantees. The lease payments also includethe exercise price of a purchase option reasonably certain to be exercised by the Bankand payments of penalties for terminating a lease, if the lease term reflects the Bankexercising the option to terminate. The variable lease payments that do not depend on anindex or a rate are recognised as expense in the period on which the event or conditionthat triggers the payment occurs.


Summary of Significant Accounting Policies Applied from 1 April 2019 (Cont'd.)

11


A1.

A1.2

(a) Leases (Cont'd.)

(iii) The Bank as a lessor

A1.3 Significant Accounting Judgements, Estimates and Assumptions

A2. AUDIT QUALIFICATION

A3.

A4. UNUSUAL ITEMS DUE TO THEIR NATURE, SIZE OR INCIDENCE

There were no unusual items during the current financial quarter.

Summary of Significant Accounting Policies Applied from 1 April 2019 (Cont'd.)

The preparation of the condensed interim financial statements in accordance with MFRS requiresmanagement to make judgements, estimates and assumptions that affect the application ofaccounting policies and reported amounts of revenue, expenses, assets and liabilities, theaccompanying disclosures and the disclosure of contingent liabilities. Judgements, estimates andassumptions are continually evaluated and are based on the past experience, reasonableexpectations of future events and other factors. Uncertainty about these assumptions and estimatescould result in outcomes that require a material adjustment to the carrying amount of assets orliabilities affected in future periods.

In the process of applying the Bank's accounting policies, the significant judgements, estimates andassumptions made by management were the same as those applied to the annual financialstatements for the financial year ended 31 March 2019.

The operations of the Bank were not materially affected by any seasonal or cyclical fluctuation in thecurrent financial quarter.

SEASONALITY OR CYCLICALITY OF OPERATIONS

Leases in which the Bank does not transfer substantially all the risks and benefits ofownership of the asset are classified as operating leases. Rental income is recognisedover the term of the lease on a straight-line basis. Initial direct costs incurred innegotiating an operating lease are added to the carrying amount of the leased asset andrecognised over the lease term on the same basis as rental income. Contingent rents arerecognised as revenue in the period in which they are earned.


The auditors’ report on the audited annual financial statements for the financial year ended 31 March 2019was not qualified.

12


A5. CHANGES IN ESTIMATES

A6.

A7. DIVIDENDS

There was no material change in estimates of amounts reported in prior financial years that have a materialeffect on the financial period ended 30 June 2019.

ISSUANCE, REPURCHASE AND REPAYMENT OF DEBT AND EQUITY

During the financial period, the final single-tier cash dividend of 33.0 sen per ordinary share on494,368,541 ordinary shares amounting to approximately RM163,141,619 in respect of the financial yearended 31 March 2019 was paid in 21 June 2019.

There were no share buy-backs, share cancellations, shares held as treasury shares nor resale of treasuryshares by the Bank during the financial period.

There were no issuance, cancellation, repurchase, resale and repayment of debt securities during thefinancial quarter.

13

Company No. 295576–U AmBank Islamic Berhad(Incorporated in Malaysia)

A8. CASH AND SHORT-TERM FUNDS

30 June 31 March2019 2019


Cash and bank balances 20,454 17,649 Less: Allowances for ECL (a) (3) (6)

20,451 17,643

Deposits and placements maturing within one month: Licensed banks - 435,000 Bank Negara Malaysia 400,000 1,116,000

400,000 1,551,000

Total 420,451 1,568,643

(a) The movements in allowances for ECL are as follow:

Stage 112-Month

ECLRM’000

30 June 2019Balance at beginning of the financial period 6 Net remeasurement of allowances (3) Balance at end of the financial period 3

31 March 2019Balance at beginning of the financial year- as previously stated - - effects of adoption of MFRS 9 3 Balance at beginning of the financial year, as restated 3 Net remeasurement of allowances 3 Balance at end of the financial year 6

14


A9.

30 June 31 March2019 2019

RM’000 RM’000

At fair value:

Money Market Instruments: Malaysian Islamic Treasury bills 721,588 121,253 Malaysian Government Investment Issues 1,750,875 2,563,893

Bank Negara Monetary Notes 277,384 2,291,775 2,749,847 4,976,921

Unquoted Securities: In Malaysia: Sukuk 117,651 137,053

2,867,498 5,113,974

A10. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

30 June 31 March2019 2019

RM’000 RM’000

At fair value:

Money Market Instruments: Malaysian Government Investment Issues 1,206,235 449,619

Unquoted Securities: In Malaysia: Sukuk 3,153,522 3,042,521

4,359,757 3,492,140

30 June 31 March2019 2019

RM'000 RM'000

1,224 3,812 (2,101) (3,715)

(877) 97

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Bank had undertaken a fair value hedge on the profit rate risk of unquoted sukuk of RM350.0million using profit rate swap with AmBank (M) Berhad ("AmBank"). The gain/(loss) arising from thefair value hedge during the current financial year is as follows:

Relating to hedged itemRelating to hedging instrument

The fair value changes on the hedge item is taken up under fair value reserve and the hedging gain orloss on the hedged item is reclassified to profit or loss.

15


A10.

Movements in allowances for ECL are as follows:

Stage 1 Stage 212-Month Lifetime ECL

ECL not creditimpaired Total

RM’000 RM’000 RM’000

30 June 2019Balance at beginning of the financial period 2,383 18,636 21,019 Changes due to FVOCI movements: - Transfer to 12 month ECL (Stage 1) 204 (334) (130) New financial asset originated 1,177 - 1,177 Financial asset derecognised (716) - (716) Net remeasurement of allowances (306) (665) (971) Balance at end of the financial period 2,742 17,637 20,379

31 March 2019Balance at beginning of the financial year- as previously stated - - - - impact of adopting MFRS 9 6,088 4,132 10,220 Balance at beginning of the financial year, as restated 6,088 4,132 10,220 Changes due to FVOCI movements: - Transfer to Lifetime ECL not credit impaired (Stage 2) (2,929) 16,379 13,450 New financial asset originated 8,404 1,691 10,095 Financial asset derecognised (4,698) (4,244) (8,942) Net remeasurement of allowances (4,482) 678 (3,804) Balance at end of the financial year 2,383 18,636 21,019

FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME(CONT'D.)

16


A11. FINANCIAL INVESTMENTS AT AMORTISED COST

30 June 31 March2019 2019


Money Market Instruments: Malaysian Government Investment Issues 260,495 260,530

Unquoted Securities: In Malaysia: Sukuk 1,422,255 1,445,232 Less: Allowances for ECL (a) (276) (307)

1,682,474 1,705,455

(a) The movements in allowances for ECL are as follows:

Stage 112-Month

ECLRM’000

30 June 2019Balance at beginning of the financial period 307 Net remeasurement of allowances (31) Balance at end of the financial period 276

31 March 2019Balance at beginning of the financial year- as previously stated - - impact of adopting MFRS 9 201 Balance at beginning of the financial year, as restated 201 Net remeasurement of allowances 106 Balance at end of the financial year 307

At amortised cost:

17


A12. FINANCING AND ADVANCES

A12a. Financing and advances by type and Shariah contracts are as follows:

30 June 2019Al-Ijarah

Bai' Bithaman Musharakah Thummah Al Ajil Murabahah Mutanaqisah -Bai' ("AITAB") Bai' Inah Others Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At amortised cost:Cash lines - 455,968 - - 988,874 - 1,444,842 Term financing 744,135 6,203,067 10,025 - 2,148,870 54,622 9,160,719 Revolving credit 42,084 3,103,472 - - 1,508,290 - 4,653,846 Housing financing 2,934,495 3,537,532 48,134 - - - 6,520,161 Hire purchase receivables 4 - - 4,443,742 - - 4,443,746 Bills receivables - 113,858 - - - 19,975 133,833 Credit card receivables - - - - - 539,682 539,682 Trust receipts - 175,213 - - - - 175,213 Staff financing - 1,488 - - - - 1,488 Claims on customers under acceptance credits - 1,520,952 - - - 232,237 1,753,189 Gross financing and advances* 3,720,718 15,111,550 58,159 4,443,742 4,646,034 846,516 28,826,719 Less: Allowance for impairment on financing and advances (Note 12(j)) - Stage 1 - 12 months ECL (79,763) - Stage 2 - Lifetime ECL not credit impaired (170,313) - Stage 3 - Lifetime ECL credit impaired (115,036) Net financing and advances 28,461,607

18


A12. FINANCING AND ADVANCES (CONT'D.)

A12a. Financing and advances by type and Shariah contracts are as follows (Cont'd.):

31 March 2019Al-Ijarah

Bai' Bithaman Musharakah Thummah Al Ajil Murabahah Mutanaqisah -Bai' ("AITAB") Bai' Inah Others Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At amortised cost:Cash lines - 426,594 - - 1,050,183 - 1,476,777 Term financing 805,258 5,816,397 10,130 - 2,419,348 56,637 9,107,770 Revolving credit 42,075 3,478,539 - - 1,592,275 - 5,112,889 Housing financing 2,970,696 3,235,311 49,022 - - - 6,255,029 Hire purchase receivables 4 - - 4,618,823 - - 4,618,827 Bills receivables - 88,416 - - - 15,992 104,408 Credit card receivables - - - - - 533,122 533,122 Trust receipts - 324,347 - - - - 324,347 Staff financing - 1,197 - - - - 1,197 Claims on customers under acceptance credits - 1,558,829 - - - 236,875 1,795,704 Gross financing and advances* 3,818,033 14,929,630 59,152 4,618,823 5,061,806 842,626 29,330,070 Less: Allowance for impairment on financing and advances (Note 12(j)) - Stage 1 - 12 months ECL (80,362) - Stage 2 - Lifetime ECL not credit impaired (204,632) - Stage 3 - Lifetime ECL credit impaired (122,627) Net financing and advances 28,922,449

*

.

Included in financing and advances are exposures to the Restricted Investment Account ("RA") arrangement between the Bank and AmBank (M) Berhad("AmBank") amounting to RM1,542.7 million (31 March 2019: RM1,470.1 million). Under the RA contract, the profit is shared based on a pre-agreed ratio.AmBank is exposed to the risks and rewards on the RA financing and it shall account for all allowance for impairment arising from the RA financing. Furtherdetails of the RA are disclosed in Note A17.

19


A12.

A12b. Gross financing and advances analysed by type of customer are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Domestic banking institution 15 415 Domestic non-bank financial institutions 1,071,019 1,296,857 Domestic business enterprises - Small medium enterprises ("SME") 5,513,121 5,802,022 - Others 7,465,698 7,656,095 Government and statutory bodies 506,680 506,738 Individuals 14,161,846 13,962,248 Other domestic entities 14,834 11,939 Foreign individuals and entities 93,506 93,756

28,826,719 29,330,070

A12c. All financing and advances reside in Malaysia.

A12d. Gross financing and advances analysed by profit rate sensitivity are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Fixed rate - Housing financing 183,088 188,642 - Hire purchase receivables 4,259,113 4,402,401 - Other financing 3,139,094 3,305,821 Variable rate - Base rate and base financing rate plus 11,209,641 10,826,666 - Cost plus 7,942,120 8,509,615 - Other variable rates 2,093,663 2,096,925

28,826,719 29,330,070

FINANCING AND ADVANCES (CONT'D.)

20


A12.

A12e. Gross financing and advances analysed by sector are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Agriculture 1,690,615 1,648,017 Mining and quarrying 661,377 666,823 Manufacturing 3,732,402 3,969,234 Electricity, gas and water 106,063 135,928 Construction 1,015,077 1,006,587 Wholesale and retail trade and hotel and restaurants 1,598,859 1,578,778 Transport, storage and communication 1,361,664 1,431,629 Finance and insurance 1,071,034 1,297,273 Real estate 1,868,493 2,135,224 Business activities 673,982 650,398 Education and health 772,173 733,635 Household of which: 14,255,872 14,056,509 - Purchase of residential properties 6,467,380 6,202,262 - Purchase of transport vehicles 4,078,140 4,272,070 - Others 3,710,352 3,582,177 Others 19,108 20,035

28,826,719 29,330,070

A12f. Gross financing and advances analysed by residual contractual maturity are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Maturing within one year 9,493,207 10,226,890 Over one year to three years 3,146,626 2,967,834 Over three years to five years 3,433,830 3,765,533 Over five years 12,753,056 12,369,813

28,826,719 29,330,070


21


A12.

A12g. Movements in impaired financing and advances are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Balance at beginning of the financial year 572,549 582,538 Impaired during the period/year 165,863 376,962 Reclassified as non-impaired (30,162) (131,055) Recoveries (10,040) (27,839) Amount written off (91,574) (228,057) Balance at end of the financial period/year 606,636 572,549

Gross impaired financing and advances as % of gross financing and advances 2.10% 1.95%

Financing loss coverage (including regulatory reserve and ECL on financing commitments and financial guarantees) 103.1% 103.2%

A12h. All impaired financing and advances reside in Malaysia.

A12i. Impaired financing and advances by sector are as follows:

30 June 31 March2019 2019

(Restated)(Note A37)

RM’000 RM’000

Agriculture 2 2 Mining and quarrying 6,258 2,638 Manufacturing 53,733 22,165 Construction 28,569 3,521 Wholesale and retail trade and hotel and restaurants 20,995 11,353 Transport, storage and communication 64,473 66,608 Finance and insurance 1 - Real estate 241,962 290,231 Business activities 6,817 904 Education and health 3,350 3,422 Household of which: 180,476 171,705 - Purchase of residential properties 74,781 71,902 - Purchase of transport vehicles 65,660 62,885 - Others 40,035 36,918

606,636 572,549


22


A12.

A12j. The movements in the allowances for ECL are as follows:

Stage 1 Stage 2 Stage 312-month Lifetime ECL Lifetime ECL

ECL Not Credit CreditImpaired Impaired Total

RM'000 RM'000 RM'000 RM'000

30 June 2019Balance at beginning of the financial period 80,362 204,632 122,627 407,621 Allowance for/(writeback of) impairment on financing and advances movements: (599) (34,319) 83,983 49,065 - Transfer to 12 month ECL

(Stage 1) 4,322 (23,919) (740) (20,337) - Transfer to Lifetime ECL not

credit impaired (Stage 2) (6,108) 40,657 (9,658) 24,891 - Transfer to Lifetime ECL

credit impaired (Stage 3) (379) (10,317) 53,105 42,409 New financial assets originated 10,560 4,479 - 15,039 Net remeasurement of allowances (2,770) (41,206) 58,176 14,200 Modification of contractual cash flows of financial assets 2 3 - 5 Financial assets derecognised (6,226) (4,016) (16,900) (27,142) Amount written-off - - (91,574) (91,574) Balance at end of the financial period 79,763 170,313 115,036 365,112


23


A12.

A12j. The movements in the allowances for ECL are as follows (Cont'd.):



RM'000 RM'000 RM'000 RM'000

31 March 2019Balance at beginning of the financial year - as previously stated - - - 258,586 - effects of adoption of MFRS 9 - - - 143,964 Balance at beginning of the financial year, as restated 72,384 204,922 125,244 402,550 Allowance for/(writeback of) impairment on financing and advances movements: 7,974 (290) 225,440 233,124 - Transfer to 12 month ECL

(Stage 1) 3,319 (33,489) (2,064) (32,234) - Transfer to Lifetime ECL not

credit impaired (Stage 2) (7,165) 55,244 (8,080) 39,999 - Transfer to Lifetime ECL

credit impaired (Stage 3) (939) (8,674) 85,704 76,091 New financial assets originated 22,540 67,790 5,309 95,639 Net remeasurement of allowances (27) (61,345) 172,865 111,493 Modification of contractual cash flows of financial assets (30) 37 - 7 Financial assets derecognised (9,724) (19,853) (28,294) (57,871) Foreign exchange difference 4 - - 4 Amount written-off - - (228,057) (228,057) Balance at end of the financial year 80,362 204,632 122,627 407,621


24


A13. OTHER ASSETS

30 June 31 March2019 2019

RM’000 RM’000

Other receivables, deposits and prepayments 31,154 46,658 Amount due from related companies 39,511 213,340 Amount due from originators 17,805 18,350 Profit receivable 85,671 64,143 Tax recoverable 17,876 8,038 Deferred charges 57,056 56,456

249,073 406,985

A14. DEPOSITS FROM CUSTOMERS

30 June 31 March2019 2019

RM’000 RM’000

(i) By type of deposit:

Savings depositCommodity Murabahah 2,045,005 2,002,816 Qard 16,473 15,041

Demand depositCommodity Murabahah 6,741,031 6,935,337 Qard 15,320 15,375

Term Deposits:Commodity Murabahah 19,487,712 20,771,281 Qard 154,165 402,099

Negotiable instruments of depositsBai' Bithaman Ajil - 997,987

Total 28,459,706 31,139,936

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

Government and statutory bodies 3,084,707 4,030,053 Business enterprises 14,512,743 15,833,377 Individuals 10,167,832 10,223,309 Others 694,424 1,053,197

28,459,706 31,139,936

(iii)

Due within six months 14,195,363 16,032,555 Over six months to one year 4,290,131 4,994,369 Over one year to three years 1,001,670 602,241 Over three years to five years 154,713 542,202

19,641,877 22,171,367

The maturity structure of all term deposits and negatiableintruments of deposits are as follows:

25


A15. INVESTMENT ACCOUNTS OF CUSTOMERS

30 June 31 March2019 2019

RM’000 RM’000

Unrestricted investment account:Without maturity- Wakalah 18,630 18,643 With maturity- Mudarabah 241,468 334,808

260,098 353,451

The investments accounts are sourced from the following types of customers:

Business enterprises 238,375 335,052 Individuals 21,723 18,399

260,098 353,451

Wakalah MudarabahRM’000 RM’000

Investment asset:

30 June 2019Interbank placement 18,630 - House financing - 241,468 Total investment 18,630 241,468

31 March 2019Interbank placement 18,643 - House financing - 334,808 Total investment 18,643 334,808

26


A15. INVESTMENT ACCOUNTS OF CUSTOMERS (CONT'D.)

Average Averageprofit sharing performance

sharing Average rate incentiveratio (%) of return (%) fee (%)

30 June 2019Maturity :less than 3 months 79.13 3.22 3.12 between 3 to 12 months 86.19 3.98 -

31 March 2019Maturity :less than 3 months 79.16 2.98 3.25 between 3 to 12 months 87.59 4.04 -

A16. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

30 June 31 March2019 2019

RM’000 RM’000

Non-MudarabahLicensed Islamic banks 448,790 848,278 Licensed banks 298,564 328,566 Licensed investment bank 564,911 820,181 Other financial institutions 1,080,842 596,499 Bank Negara Malaysia 2,986 5,026 Total 2,396,093 2,598,550

A17. INVESTMENT ACCOUNT DUE TO A LICENSED BANK

30 June 31 March2019 2019

RM’000 RM’000Restricted investment account- Mudarabah Muqayyadah 1,538,203 1,465,539

1,538,203 1,465,539 1,538,203 1,465,539 Total investment

Investment account holder

Investment asset:Financing

Average Rate of Return and Average Performance Incentive Fee for the investment accounts are asfollows:

27


A17. INVESTMENT ACCOUNT DUE TO A LICENSED BANK (CONT'D.)

30 June 31 March 30 June 31 March 2019 2019 2019 2019

Profit Profit sharing sharing Average rate Average rateratio (%) ratio (%) of return (%) of return (%)

Maturity:between 1 year to 2 years - 46 - 2.36 over 2 years to 5 years 90 90 4.29 4.62 more than 5 years 90 77 3.98 3.86

A18. OTHER LIABILITIESNote 30 June 31 March

2019 2019RM’000 RM’000

Profit payable 214,763 228,715 Other creditors and accruals 38,227 48,184 Deferred income 15,143 14,566 Advance rental 6,710 5,350 Amount due to related companies 124 105 Provision for commitments and contingencies - others 15,724 15,724 Allowances for ECL on financing commitments and financial guarantees (a) 18,708 18,230

309,399 330,874

Amount due to related companies are unsecured, non-profit bearing and are repayable on demand.

Investment account holder

The RA is a contract based on the Shariah concept of Mudarabah between two parties, that is, capitalprovider and entrepreneur to finance a business venture where the business venture is managedsolely by the Bank as the entrepreneur. The profit of the business venture is shared between bothparties based on a pre-agreed ratio. The capital provider for the RA contracts is AmBank, a relatedcompany.

As at 30 June 2019, the tenure of the RA contracts is for a period of 5 months to 10 years (31 March2019: 8 months to 11 years).

As at 30 June 2019, ECL allowance for the investment asset borne by AmBank amounted to RM3.8million (31 March 2019: RM3.7 million).

Profit Sharing Ratio and Average Rate of Return for the investment account based on originalcontractual maturity are as follows:

28


A18. OTHER LIABILITIES (CONT'D.)

(a) The movements in allowances for ECL are as follows:



RM'000 RM'000 RM'000 RM’000

30 June 2019Balance at beginning of the financial period 10,135 8,083 12 18,230 Allowance for/(writeback of) ECL during the year: 836 (478) 120 478 - Transfer to 12 month ECL

(Stage 1) 345 (2,120) - (1,775) - Transfer to Lifetime ECL not

credit impaired (Stage 2) (337) 2,522 - 2,185 - Transfer to Lifetime ECL

credit impaired (Stage 3) (35) (111) - (146) New financial instruments originated 2,974 810 - 3,784 Net remeasurement of allowances (571) (1,079) 120 (1,530) Financial instruments derecognised (1,540) (500) - (2,040)

Balance at end of the financial period 10,971 7,605 132 18,708

31 March 2019Balance at beginning of the financial year- as previously stated - - - 10,698 - impact of adopting MFRS 9 - - - 4,065 Balance at beginning of the financial year, as restated 8,817 5,911 35 14,763 Allowance for/(writeback of) ECL during the year: 1,319 2,168 (23) 3,464 - Transfer to 12 month ECL

(Stage 1) 190 (2,100) - (1,910) - Transfer to Lifetime ECL not

credit impaired (Stage 2) (327) 1,879 - 1,552 - Transfer to Lifetime ECL

credit impaired (Stage 3) (45) (84) - (129) New financial instruments originated 3,587 4,001 - 7,588 Net remeasurement of allowances 623 (506) (23) 94 Financial instruments derecognised (2,709) (1,022) - (3,731) Foreign exchange difference (1) 4 - 3 Balance at end of the financial year 10,135 8,083 12 18,230

29


A19. INCOME DERIVED FROM INVESTMENT OF DEPOSITORS' FUNDS


RM’000 RM’000 RM’000 RM’000

Finance income and hibah:

Financing and advances- Financing income 327,970 317,191 327,970 317,191 - Financing income

on impaired financing 602 692 602 692 Financial assets at fair value through profit or loss 30,034 20,424 30,034 20,424 Financial investments at fair value through other comprehensive income 40,010 36,656 40,010 36,656 Financial investments at amortised cost 17,224 14,482 17,224 14,482 Deposits and placements with banks and other financial institutions 8,810 12,516 8,810 12,516 Total finance income and hibah 424,650 401,961 424,650 401,961

Other operating income:

Fee and commission income: - Fees on financing, advances and securities 13,922 8,853 13,922 8,853 - Guarantee fees 4,094 2,979 4,094 2,979 - Remittances 38 31 38 31 - Service charges and fees 523 502 523 502 - Others 1,383 1,030 1,383 1,030 Foreign exchange 848 2,524 848 2,524 Gain from disposal of financial assets at fair value through profit or loss 4,589 392 4,589 392 Gain/(loss) on revaluation of financial assets at fair value through profit or loss 661 (915) 661 (915) Gain from disposal of financial investments at fair value through other comprehensive income 2,734 (1) 2,734 (1) Net gain/(loss) on derivatives (502) 212 (502) 212 Others 116 (26) 116 (26) Total other operating income 28,406 15,581 28,406 15,581

Total 453,056 417,542 453,056 417,542


30


A20. INCOME DERIVED FROM INVESTMENT OF INVESTMENT ACCOUNT FUNDS


RM’000 RM’000 RM’000 RM’000

Income derived from investment of:

- Restricted investment account 17,797 29,149 17,797 29,149 - Unrestricted investment

accounts 2,275 2,122 2,275 2,122 20,072 31,271 20,072 31,271

Income derived from investment of restricted investment account


Financing and advances- Financing income 17,797 29,149 17,797 29,149 Total finance income and hibah 17,797 29,149 17,797 29,149

Income derived from investment of unrestricted investment accounts


Financing and advances- Financing income 2,128 1,953 2,128 1,953 Deposits and placements with banks and other financial institutions 147 169 147 169 Total finance income and hibah 2,275 2,122 2,275 2,122


31


A21. INCOME DERIVED FROM INVESTMENT OF SHAREHOLDER'S FUNDS


RM’000 RM’000 RM’000 RM’000


Financing and advances - Financing income 31,455 30,411 31,455 30,411 - Financing income

on impaired financing 58 66 58 66 Financial assets at fair value through profit or loss 2,880 1,958 2,880 1,958 Financial investments at fair value through other comprehensive income 3,837 3,515 3,837 3,515 Financial investments at amortised cost 1,652 1,388 1,652 1,388 Deposits and placements with banks and other financial institutions 845 1,200 845 1,200 Total finance income and hibah 40,727 38,538 40,727 38,538

Other operating income:

Fee and commission income: - Bancassurance commission 1,518 2,634 1,518 2,634 - Fees on financing, advances and securities 1,353 863 1,353 863 - Guarantee fees 393 286 393 286 - Remittances 171 702 171 702 - Service charges and fees 819 806 819 806 - Others 865 669 865 669 Foreign exchange 81 242 81 242 Gain from disposal of financial assets at fair value through profit or loss 440 38 440 38 Gain/(loss) on revaluation of financial assets at fair value through profit or loss 63 (88) 63 (88) Gain from disposal of financial investments at fair value through other comprehensive income 262 - 262 - Net gain/(loss) on derivatives (48) 20 (48) 20 Others 11 (2) 11 (2) Total other operating income 5,928 6,170 5,928 6,170

Total 46,655 44,708 46,655 44,708

Cumulative QuarterIndividual Quarter

32


A22. ALLOWANCES FOR IMPAIRMENT ON FINANCING AND ADVANCES


RM’000 RM’000 RM’000 RM’000

Allowance for impairment on financing and advances 49,065 43,482 49,065 43,482 Impaired financing and advances recovered, net (17,696) (19,766) (17,696) (19,766)

Total 31,369 23,716 31,369 23,716

A23. IMPAIRMENT (WRITEBACK)/LOSSES ON FINANCIAL INVESTMENTS


RM’000 RM’000 RM’000 RM’000

Financial investments at amortised cost - sukuk (31) 11 (31) 11 Financial investments at fair value through other comprehensive income - sukuk (640) 455 (640) 455

Total (671) 466 (671) 466

A24. IMPAIRMENT LOSSES ON OTHER ASSETS


RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (3) - (3) -




33


A25. PROVISION FOR COMMITMENTS AND CONTINGENCIES - (ALLOWANCE)/WRITEBACK


RM’000 RM’000 RM’000 RM’000

Provision for commitments and contingencies - financial commitments and financial guarantee contracts 478 2,288 478 2,288

A26. INCOME ATTRIBUTABLE TO THE DEPOSITORS AND OTHERS


RM’000 RM’000 RM’000 RM’000

Non-Mudarabah fundDeposit from customers 234,354 216,931 234,354 216,931 Deposits and placements of banks and other financial institutions 19,364 17,763 19,364 17,763

253,718 234,694 253,718 234,694

Others 7,105 7,549 7,105 7,549

Total 260,823 242,243 260,823 242,243

A27. INCOME ATTRIBUTABLE TO THE INVESTMENT ACCOUNT HOLDERS


RM’000 RM’000 RM’000 RM’000

Unrestricted investment accounts2,770 1,634 2,770 1,634

Restricted investment account16,023 23,552 16,023 23,552 18,793 25,186 18,793 25,186


Individual Quarter

Cumulative Quarter

Customers

Cumulative Quarter

Individual Quarter

Licensed bank

34


A28. OTHER OPERATING EXPENSES


RM’000 RM’000 RM’000 RM’000

Personnel costs: - Salaries, allowances

and bonuses 3,885 3,279 3,885 3,279 - Amortisation for share and

options granted under AMMB ESS - charge/(write back) 70 (169) 70 (169)

- Contributions to EPF/Private Retirement Scheme 721 690 721 690

- Social security cost 19 19 19 19 - Staff incentive 688 1,032 688 1,032 - Others 647 344 647 344

6,030 5,195 6,030 5,195

Establishment costs: - Amortisation of intangible

assets 91 74 91 74 - Cleaning, maintenance

and security 3 10 3 10 - Computerisation costs 349 319 349 319 - Depreciation of property

and equipment 32 30 32 30 - Rental of premises 201 219 201 219 - Others 7 10 7 10

683 662 683 662

Marketing and communication expenses: - Communication, advertising

and marketing 1,101 1,372 1,101 1,372 - Others 37 28 37 28

1,138 1,400 1,138 1,400

Administration and general expenses: - Professional services 1,158 1,251 1,158 1,251 - Others 73 5,151 73 5,151

1,231 6,402 1,231 6,402

Service transfer pricing expense, net 66,071 72,503 66,071 72,503

75,153 86,162 75,153 86,162


35


A29. BASIC EARNINGS PER SHARE

Basic/Diluted


Net profit attributable to equity holder of the Bank (RM'000) 84,127 69,869 84,127 69,869

Weighted average number of ordinary shares in issue at the end of the financial period ('000) 494,369 494,369 494,369 494,369

Basic/Diluted earnings per share (sen) 17.02 14.13 17.02 14.13


Basic earnings per share is calculated by dividing the net profit attributable to the equity holder of theBank by the number of ordinary shares at beginning of the financial year and end of the financialperiod.

36


A30. BUSINESS SEGMENT ANALYSIS

The Bank comprises the following main business segments:

(a) Retail Banking

(b) Business Banking

(c) Wholesale Banking

Wholesale Banking comprises Corporate Banking and Group Treasury and Markets:

(i) Corporate Banking

(ii) Group Treasury and Markets

(d) Investment Banking

(e) Group Funding and Others

Note:

(i)

(ii) The financial information by geographical segment is not presented as the Bank's activities areprincipally conducted in Malaysia.

Group Funding and Others comprise activities to maintain the liquidity of the Bank as well assupport operations of its main business units and non-core operations of the Bank.

Segment information is presented in respect of the Bank’s business segments. The business segmentinformation is prepared based on internal management reports, which are regularly reviewed by theChief Operating Decision-Maker in order to allocate resources to a segment and to assess itsperformance.

Retail Banking continues to focus on building mass affluent, affluent and small businesscustomers. Retail Banking offers products and financial solutions which includes auto finance,mortgages, personal financing, credit cards, small business financing, priority banking services,wealth management, remittance services and deposits.

Corporate Banking offers a full range of products and services of corporate lending, tradefinance, and cash management solutions to wholesale banking clients.

Group Treasury and Markets includes proprietary trading as well as providing full range ofShariah compliant products and services relating to treasury activities, including foreignexchange, derivatives and fixed income. It also offers Shariah compliant customisedinvestment solutions for customers.

The revenue generated by a majority of the operating segments substantially comprise financeincome. The Chief Operating Decision Maker relies primarily on the net finance incomeinformation to assess the performance of, and to make decisions about resources to be allocatedto these operating segments.

Business Banking (“BB”) focuses on the small and medium sized enterprises segment, whichcomprises Enterprise Banking and Commercial Banking. Solutions offered to Enterprise Bankingcustomers encompass Capital Expenditure (“CAPEX”) financing, Working Capital financing andCash Management, and while Commercial Banking offers the same suite of products, it alsoprovides more sophisticated structures such as Contract Financing, Development Financing, andProject Financing. Previously, BB was not disclosed as a reputable segment and included inWholesale Banking division in review of its contribution to the Group in terms of revenue, profitand total assets.

Investment Banking offer Islamic advisory services and a wide range of Shariah-compliantfinancial and investment solutions that include sukuk origination, Islamic equity or equity relatedcapital markets offerings, Islamic structured finance and Islamic syndicated financing.

37

Company No. 295576–U AmBank Islamic Berhad (Incorporated in Malaysia)

A30. BUSINESS SEGMENT ANALYSIS (CONT'D.)

For the financial period ended 30 June 2019

Business Corporate Group Treasury Investment Group FundingRetail Banking Banking Banking and Market Banking and Others Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 194,082 48,112 173,872 103,175 391 151 519,783 Revenue from other segments (9,907) (20,921) (84,917) 53,427 11 62,307 - Total operating revenue 184,175 27,191 88,955 156,602 402 62,458 519,783

Net finance income 81,885 16,384 56,210 12,972 11 15,116 182,578 Other income 6,554 2,470 13,732 8,587 391 151 31,885 Net income 88,439 18,854 69,942 21,559 402 15,267 214,463Other operating expenses of which: (48,459) (2,139) (12,995) (1,967) (78) (9,515) (75,153)

Depreciation of Property and Equipment - - - - - (32) (32) Amortisation of Intangible Assets (3) - - - - (88) (91)

Profit before impairment losses 39,980 16,715 56,947 19,592 324 5,752 139,310Allowance for impairment on financing and advances (23,183) (7,943) (243) - - - (31,369) Impairment (losses)/writeback on financial investments - - 588 83 - - 671 Impairment losses on other assets - - - 3 - - 3 Provision for commitments and contingencies - charge (1,283) (384) 1,189 - - - (478)

Profit before zakat and taxation 15,514 8,388 58,481 19,678 324 5,752 108,137 Zakat and taxation (3,723) (2,013) (14,035) (4,723) (78) 562 (24,010)Profit for the financial period 11,791 6,375 44,446 14,955 246 6,314 84,127

Other information

Total segment assets 14,280,626 3,149,880 11,950,443 9,610,080 - 65,875 39,056,904 Total segment liabilities 12,826,218 1,316,890 4,118,539 13,191,533 1,380 4,139,597 35,594,157 Cost to income ratio 54.8% 11.3% 18.6% 9.1% 19.4% 62.3% 35.0%Gross financing and advances 14,461,139 3,180,195 11,185,385 - - - 28,826,719 Net financing and advances 14,213,989 3,148,123 11,099,495 - - - 28,461,607 Impaired financing and advances 192,314 102,472 311,850 - - - 606,636 Total deposits 12,679,060 1,291,026 4,052,916 12,832,797 - - 30,855,799 Additions to : Intangible assets - - - - - 21 21

Wholesale banking

38


A30. BUSINESS SEGMENT ANALYSIS (CONT'D.)

For the financial period ended 30 June 2018

Business Corporate Group Treasury Investment Group FundingRetail Banking Banking Banking and Market Banking and Others Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 195,890 36,739 178,751 68,500 1,050 12,591 493,521 Revenue from other segments 5,899 (14,274) (102,264) 75,666 129 34,844 - Total operating revenue 201,789 22,465 76,487 144,166 1,179 47,435 493,521

Net finance income 84,086 13,711 54,900 10,738 2 17,198 180,635 Other income 9,412 2,239 7,700 773 1046 208 21,378 Net income 93,498 15,950 62,600 11,511 1,048 17,406 202,013Other operating expenses of which: (54,490) (2,235) (13,498) (1,942) 3 (14,000) (86,162)

Depreciation of Property and Equipment - - - - - (30) (30) Amortisation of Intangible Assets (3) - - - - (71) (74)

Profit before impairment losses and provision 39,008 13,715 49,102 9,569 1,051 3,406 115,851(Allowance)/Writeback for impairment on financing and advances (19,442) 718 (3,564) - - (1,428) (23,716) Impairment (losses)/writeback on financial investments - - 86 (252) - (300) (466) Provision for commitments and contingencies - (charge)/writeback (456) (166) (1,666) - - - (2,288)

Profit/(loss) before zakat and taxation 19,110 14,267 43,958 9,317 1,051 1,678 89,381 Zakat and taxation (4,587) (3,424) (10,550) (2,236) (252) 1,537 (19,512)Profit/(loss) for the financial period 14,523 10,843 33,408 7,081 799 3,215 69,869

Other information

Total segment assets 13,836,183 2,373,229 12,792,159 9,191,623 325 1,148,809 39,342,328 Total segment liabilities 15,025,451 1,007,714 2,981,426 14,403,226 13,103 2,612,268 36,043,188 Cost to income ratio 58.3% 14.0% 21.6% 16.9% -0.3% 80.4% 42.7%Gross financing and advances 13,994,722 2,383,985 12,061,437 - 188 - 28,440,332 Net financing and advances 13,764,310 2,371,698 11,929,256 - 188 (8,477) 28,056,975 Impaired financing and advances 169,424 69,788 326,237 - - - 565,449 Total deposits 14,868,971 984,056 2,920,133 13,891,733 12,001 (1,846,698) 30,830,196 Additions to : Property and Equipment - - - - - 394 394 Intangible assets - - - - - 194 194

Notes:1. Operating revenue of the Bank comprise financing income and hibah and other operating income.

Wholesale banking

39


A31.

A32.

Banks have sufficient liquid assets with an industry liquidity coverage ratio of 153% as at end of June2019, well above the regulatory requirement of 100.0%. Funding profiles of banks have been welldiversified with the industry's financing-to-fund ratio and financing-to-fund and equity ratio standing at82.6% and 72.2% respectively as at June 2019.

The Bank reported a higher profit before zakat and taxation of RM108.1 million for the financial periodended 30 June 2019 which was RM18.7 million or 20.9% higher as compared to the correspondingperiod ended 30 June 2018 of RM89.4 million. The higher profit was mainly due to lower otheroperating expenses of RM11.0 million, higher other operating income of RM10.5 million, higher netfinance income of RM1.9 million, lower provision for commitment and contingencies on financialcommitments and financial guarantee contracts of RM1.8 million and lower impairment losses offinancial investments of RM1.1 million, offset by higher allowance for impairment on financing andadvances of RM7.7 million.

In the opinion of the directors, the results of operations of the Bank for the financial period have notbeen substantially affected by any item, transaction or event of a material and unusual nature.

The economy expanded by 4.9% year-on-year during the second quarter of 2019, supported bysustained domestic demand. The economy is projected to grow at 4.5% for the full year of 2019, withan upside of 4.7% while the downside to growth is at 4.0%. Domestic demand will be the mainstay of2019’s growth with private consumption taking the lead. Private consumption will also be supported bysteady wage growth plus benign inflation environment and cheap financing cost. Though our basecase is 4.5%, the downside risk to growth remains high in view of the current external headwinds,added with domestic noises.

Inflation in the first seven months of 2019 rose 0.3% year-on-year while the core inflation for the sameperiod was at +0.8% year-on-year. With underlying inflation on a soft trend, we believe our 1%inflation target for 2019 could be overestimated. However, the low base in the second half of 2019may provide some upside pressure to the inflation data.

In 2018, the banking system's financing expanded by 7.7%. For 2019, financing is projected to growaround 4.6% based on our view that Gross Domestic Product ("GDP") will continue to expand by4.5%.

The decision to cut the Overnight Policy Rate ("OPR") rate by 25bps by BNM to 3.00% fell withinexpectation. While our broad view suggests the policy rate will remain unchanged at 3.00% for therest of the year, there is still room for BNM to reduce the OPR further by another 25bps in SecondHalf 2019. Much will depend on: (1) how the domestic economy crafts out; (2) outlook of the potentialinflation; and (3) dynamics of the global economic scenario.

PERFORMANCE REVIEW FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2019

PROSPECTS FOR THE FINANCIAL YEAR ENDING 31 MARCH 2020

40


A32. PROSPECTS FOR THE FINANCIAL YEAR ENDING 31 MARCH 2020 (CONT'D.)

For FY2020, our financial priorities will be centred on the following:

•

•

•

•

A33. VALUATION OF PROPERTY AND EQUIPMENT

Digital Banking: We aim to provide digital solutions that seamlessly integrate into and improvecustomers' day-to-day lives. Our digital transformation investment plan in FY2020 will continue topave way for the digitalisation of our products and solutions, focus on enhancing digital mobileplatform, building infrastructure and application programming interface readiness, partnershipswith key financial technology players and the use of big data analytics to capture alternativesources of business and drive internal efficiencies.

Revenue growth: We will continue to drive our income growth momentum, in line with our keysegments and products strategies, especially in the areas of transaction banking, foreignexchange, SME and wealth management.

Business efficiency transformation ("BET 300"): Moving into the third year of our BET 300programme, we will continue to maintain a tight rein on cost and pacing our investments whiledriving operational efficiencies through digitalisation and streamlining of processes.

Capital accretive growth: We aim to further strengthen our capital position and deliver sustainabledividend payout to our shareholders, focusing on managing returns on capital employed and risk-weighted assets.

The Bank’s property and equipment are stated at cost less accumulated depreciation andaccumulated impairment losses (if any).

41


A34. COMMITMENTS AND CONTINGENCIES

30 June 31 March2019 2019

RM'000 RM'000

ContingenciesDirect credit substitutes 530,621 568,350 Transaction related contingent items 811,715 831,509 Short-term self liquidating trade-related contingencies 132,747 90,954

1,475,083 1,490,813

CommitmentsOther commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 5,168,324 4,333,925 Other commitments, such as formal

standby facilities and credit lines, with anoriginal maturity of over one year 515,024 446,645

Unutilised credit card lines 1,257,232 1,334,232 Forward asset purchase 124,901 195,620

7,065,481 6,310,422

Derivative Financial InstrumentsForeign exchange related contracts: - One year or less 1,736,974 1,973,689 - Over one year to five years 1,163,640 1,108,997 Profit rate related contracts - Over one year to five years 200,000 360,000 - Over five years 350,000 350,000

3,450,614 3,792,686

Total 11,991,178 11,593,921

In the normal course of business, the Bank makes various commitments and incurs certaincontingent liabilities with legal recourse to its customers. No material losses are anticipated as aresult of these transactions. The commitments and contingencies are not secured against the Bank’sassets.

The principal/notional amounts of the commitments and contingencies of the Bank are as follows:

42


A35. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2 :

Level 3 :

Non market observable inputs means that fair values are determined, in whole or in part, using a valuationtechnique (model) based on assumptions that are neither supported by prices from observable currentmarket transactions in the same instrument, nor are they based on available market data. The main assetclasses in this category are unlisted equity investments and debt instruments. Valuation techniques areused to the extent that observable inputs are not available, thereby allowing for situations in which there islittle, if any, market activity for the asset or liability at the measurement date. However, the fair valuemeasurement objective remains the same, that is, an exit price from the perspective of the Bank.Therefore, unobservable inputs reflect the Bank's own assumptions about the assumptions that marketparticipants would use in pricing the asset or liability (including assumptions about risk). These inputs aredeveloped based on the best information available, which might include the Bank's own data.

Financial assets and liabilities measured using a valuation technique based on assumptions that aresupported by prices from observable current market transactions are assets and liabilities for which pricingis obtained via pricing services, but where prices have not been determined in an active market, financialassets with fair values based on broker quotes, investments in private equity funds with fair valuesobtained via fund managers and assets that are valued using the Bank’s own models whereby the majorityof assumptions are market observable.

Determination of fair value and fair value hierarchy

The Bank uses the following hierarchy for determining and disclosing the fair value of financial instrumentsby valuation technique:

Other techniques for which all inputs which have a significant effect on the recorded fair valueare observable, either directly or indirectly;Techniques which use inputs which have a significant effect on the recorded fair value that arenot based on observable market data.

43


A35. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (CONT'D.)

a)

Level 1 Level 2 Level 3 TotalRM'000 RM'000 RM'000 RM'000

30 June 2019

Assets measured at fair valueDerivative financial assets - 32,220 - 32,220 Financial assets at fair value through profit or loss - Money market securities - 2,749,847 - 2,749,847 - Unquoted sukuk - 117,651 - 117,651 Financial investments at fair value through other comprehensive income - Money market securities - 1,206,235 - 1,206,235 - Unquoted sukuk - 3,153,522 - 3,153,522

- 7,259,475 - 7,259,475

Liabilities measured at fair valueDerivative financial liabilities - 47,776 - 47,776

- 47,776 - 47,776

31 March 2019

Assets measured at fair valueDerivative financial assets - 43,136 - 43,136 Financial assets at fair value through profit or loss - Money market securities - 4,976,921 - 4,976,921 - Unquoted sukuk - 137,053 - 137,053 Financial investments at fair value through other comprehensive income - Money market securities - 449,619 - 449,619 - Unquoted sukuk - 3,042,521 - 3,042,521

- 8,649,250 - 8,649,250

Liabilities measured at fair valueDerivative financial liabilities - 55,519 - 55,519

- 55,519 - 55,519

There were no transfers between Level 1 and Level 2 during the current financial period and previousfinancial year for the Bank.

The following table provides the fair value measurement hierarchy of the Bank’s assets and liabilities.

Valuation techniques

44


A36. CAPITAL ADEQUACY

(a) The capital adequacy ratios of the Bank are as follows:

30 June 31 March2019 2019

Before deducting proposed dividendsCommon Equity Tier 1 Capital ratio 11.039% 11.654%Tier 1 Capital ratio 11.039% 11.654%Total Capital ratio 16.296% 16.836%

After deducting proposed dividendsCommon Equity Tier 1 Capital ratio 11.039% 11.084%Tier 1 Capital ratio 11.039% 11.084%Total Capital ratio 16.296% 16.267%

Notes:

(i)

(ii)

(a) a Capital Conservation Buffer ("CCB") of 2.5%; and(b)

CCB

Calendar year 2016 0.625%Calendar year 2017 1.25%Calendar year 2018 1.875%Calendar year 2019 onwards 2.5%

As for CCyB, BNM will communicate any decision on the CCyB rate by up to 12 months beforethe date from which the rate applies.

The CCB requirements under transitional arrangements shall be phased-in starting from 1January 2016 as follows:

The capital adequacy ratios are computed in accordance with BNM guidelines on CapitalAdequacy Framework for Islamic Banks (Capital Components) and Capital AdequacyFramework (Basel II – Risk Weighted Assets) issued by BNM on 2 February 2018.

Pursuant to BNM's Capital Adequacy Framework (Capital Components), financialinstitutions are required to maintain minimum Common Equity Tier 1 (“CET1”) Capital Ratioof 4.5%, Tier 1 Capital Ratio of 6.0% and Total Capital Ratio of 8.0% at all times. The Bankalso required to maintain the following capital buffers:

a Countercyclical Capital Buffer ("CCyB") determined as the weighted-average of theprevailing CCyB rates applied in the jurisdictions in which the Bank has creditexposures.

45


A36. CAPITAL ADEQUACY (CONT'D.)

(b)

30 June 31 March2019 2019

RM’000 RM’000

Common Equity Tier 1 Capital

Ordinary shares 1,387,107 1,387,107 Retained earnings 1,693,970 1,933,885 Fair value reserve 55,842 39,151 Regulatory reserve 241,701 164,928 Less : Regulatory adjustments applied on CET1 Capital

- Intangible assets (1,280) (1,351) - 55% of cumulative gains of FVOCI (30,713) (21,533) - Regulatory reserve attributable to financing

and advances (241,701) (164,928) CET 1 Capital/ Tier 1 Capital 3,104,926 3,337,259

1,150,000 1,150,000 General provision* 328,692 334,015

1,478,692 1,484,015

4,583,618 4,821,274

* Consists of stage 1 and stage 2 loss allowances and regulatory reserve.

The breakdown of the risk weighted assets ("RWA") in various categories of risk are as follows:

30 June 31 March2019 2019

RM’000 RM’000

Credit RWA 28,079,537 28,526,091

Investment Account (1,784,207) (1,804,893) Total Credit RWA 26,295,330 26,721,198 Market RWA 372,305 475,926 Operational RWA 1,460,214 1,439,025

Total Risk Weighted Assets 28,127,849 28,636,149

Tier 2 Capital instruments meeting all relevent criteria for inclusion

Less : Credit RWA absorbed by

Total Capital

Tier 2 Capital

Tier 2 Capital

The components of Common Equity Tier 1 Capital, Tier 2 Capital and Total Capital of the Bankare as follows:

46


A37. RESTATEMENT OF COMPARATIVE INFORMATION

During the current financial quarter, the Bank conducted a review of the reporting of its impairedfinancing portfolio. The review did not result in any changes to impaired financing balances orimpairment allowances for financing except for certain amendments in disclosure of impairedfinancing by sector as at 31 March 2019 as reflected in the restated disclosure in Note A12i.

47

Date post:	18-Dec-2021
Category:	Documents
Upload:	others
View:	4 times
Download:	0 times

AmBank Islamic 300619

Documents