CITIBANK BERHAD ANNUAL REPORT - Citibank · PDF fileCITIBANK BERHAD ANNUAL REPORT 2014 02 ......

C I T I B A N K B E R H A D ANNUAL REPORT

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Chairman’s Statement

CEO’s Statement

Board Of Directors

Directors’ Profile

Corporate CitizenshipAt Citi

Valuing Our People

CORPORATE INFORMATION

GOVERNANCE

C O N T E N T S

Statement OfCorporate Governance

Risk Management

Statement Of InternalAudit & Internal Control

Management Reports

Ratings Statement

Shariah Committee

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Directors’ Report

Statement By Directors

Declaration Pursuant

Shariah Committee‘sReport

IndependentAuditors’ Report

Statements OfFinancial Position

Statements Of ProfitOr Loss And Other

Comprehensive Income

Statements OfChanges In Equity

Statements OfCash Flows

Notes To TheFinancial Statements

FINANCIAL STATEMENTS

02CITIBANK BERHAD ANNUAL REPORT 2014

Registered Office45th Floor, Menara Citibank,165 Jalan Ampang50450 Kuala Lumpur

Date of Incorporation22 April, 1994

AuditorsKPMG

The work we do here at Citi in Malaysia would not be possible without the strength of a diverse and skilled talent pool.


Citi today is a stronger, safer,

simpler and smaller

institution.


I am pleased to present to you our Annual Report for the financial year ended 31 December 2014.

The year 2014 proved one of sustainable business growth amid the challenges of global economic uncertainties and change that came our away with the departure of our Chief Executive Officer (“CEO”) Sanjeev Nanavati in August. We wish to acknowledge his contribution and thank him his commitment to the success of our franchise over the seven years that he was CEO. We welcomed our new Chief Executive Officer Lee Lung Nien in October 2014. Lee is a 25-year Citi veteran. We are confident that the combination of new leadership, our experienced team and sound franchise in Malaysia will open new avenues for us to differentiate in market and secure greater leadership in our chosen business segments.

Malaysia is a strategic market for Citi. 2014 was yet another commendable year for us as we recorded pre-tax profit of RM703 million and total net income of RM524 million. This is testament to our ability to adapt swiftly to the changes in the market place and our strength in delivering innovative products best suited to the needs of clients in challenging times.

Our competitive advantage is our global presence and deep relationships we have with clients, cultivated through years of mutual trust and fulfilment of client needs. Citi today is a stronger, safer, simpler and smaller institution. We have returned to our roots as the world’s most global consumer, commercial and institutional bank.

In Malaysia, we remain focused on our aspiration to be the trusted financial partner of choice and exemplary corporate citizen contributing to the country’s economic prosperity.

I thank my fellow Board members, the senior management and all employees of Citibank Berhad for their support and commitment shown during the financial year. I would like to take this opportunity to welcome Datuk Ali Abdul Kadir who joined our Board of Directors on 6 May 2014. I would also like to place on record our gratitude to Tan Sri Dato’ Hj Omar Ibrahim who retired from the Board on 1 May 2014. We wish to thank him for his guidance and support during his 14-year tenure with the Board.

It has been a good year, made possible by a determination to succeed and an unwavering commitment to our shared vision and goals. For this, I am grateful and certain that 2015 will see us even better as a global financial leader here in Malaysia.

Mr Terence CuddyreChairman

Chairman’sStatement



Citi has been here in this market for over 50 years.

We are a strong franchise enriched by local market knowledge and capabilities.

I am writing to you for the first time as Chief Executive Officer of Citibank Berhad. As we look at the financial year ended December 31, 2014, we have as a franchise done well despite the volatility of the global environment, regulatory changes and competition for greater market leadership locally.

Our prudent management of business, constant emphasis on ethics and strong governance culture remain our inherent strengths. Our aspiration to be acknowledged as the best in market continues to be the challenge we set for ourselves internally to ensure consistent standards of service excellence and fulfilment of customer expectations.

Overview

Malaysia’s gross domestic product (GDP) growth was a strong 6% in 2014 given external sector recovery and domestic demand being the key driving force of economic growth. Malaysia’s economic fundamentals remained intact despite the spiralling oil prices and ringgit depreciation. Strong employment and wage growth supported public consumption which grew to 6.5%, an increase over the 5.5% in 2013. This, however, is likely to moderate in 2015 given the net effects of lower commodity prices, the impact of the implementation of the Goods and Services Tax (GST) in April 2015 and slower credit growth. Inflation pressures remained strong in 2014, averaging 3.2% due to price adjustments arising from the subsidy rationalisation and spill-over effect.

In financial services, the year under review had its fair share of challenges for the sector. Earnings continued to trend down amidst weak capital markets and ongoing net-income margin compression.

Performance Review

The Bank recorded pre-tax profit of RM703 million for the financial year ended December 31, 2014. The steady performance although marginally lower than the RM717 million recorded the previous year, was boosted by the Bank’s high levels of capital, liquidity and operating cash flows.

Total net income was RM524 million in 2014. Net interest income totalled RM1.17 billion in 2014 while non-interest income stood at RM643 million. During the same period, the Bank’s return on equity before tax was a solid 16.2%. Liquidity continues to be exceptionally

CEO’s Statement

strong, with cash and short-term funds and placements with financial institutions in excess of RM7.30 billion. The Bank’s Risk Weighted Capital Adequacy Ratio stood at 16.6%.

Business Highlights

Summary We have during the year made good strides in growing our leadership in the market through innovation and technology. Citi in Malaysia is today the market leader in credit cards holding 18% share in sales volume by usage and receivables. The Bank has also a dominant share in wealth management. In Malaysia, Citi is the top foreign owned bank for Corporate FX, Cross border Cash Management, e-Payments and institutional investor transactions and is the only foreign owned bank to have the distinction of being rated AAA by the Rating Agency Malaysia for 15 consecutive years.

Innovative campaigns driven across different product lines have reinforced the Bank’s leading position as a global financial leader in the country. Citi has been a pillar of support to local companies and MNCs growing their business in Malaysia and in the region. Despite increased competition following more liberalised measures in the financial sector, Citi remains the bank of choice for cross border transactions and clients with regional and international business operations.

The Corporate Sales and Structuring (CSS) business, for example, which provides FX Services and Risk Management Solutions to a wide range of clients in Malaysia, recorded higher volumes and gained market share in 2014. The business was ranked in The Asiamoney 2014 Poll as “Best for overall FX services” in Malaysia.

During the year, several foreign currency denominated unit trust funds, retail bonds and market-linked investment were also launched, offering clients the opportunity to diversify their investment portfolios.

In our wealth business, we introduced the Wealth Portfolio in our Citibank Online portal. The Wealth portfolio provides CitiGold customers asset allocation guidance for periodic evaluation and prospective investments. In Malaysia, Citi is the only foreign bank to provide customers with the Private Retirement Schemes (PRS) services from the Government as an alternative investment for customers to enhance their retirement funds.


CEO’s Statement

High adoption and utilisation of electronic banking platforms (CitiDirect, Citibank.com, CitiConnect) by both our corporate and consumer clients further validate our digital strategy as the world’s premier digital bank.

Consumer Banking

Credit CardsWe continued to search for new drivers of growth in an environment of heightened competition, thinning margins and stricter regulations. Priorities included maintaining market share, building wallet share, improving cost synergies and productivity, dominating digital and payment products and greater regional coordination.

Industry accolades during the year included the Award of Credit Card Product of the Year (Malaysia) for the Citi Rewards Platinum Card which was launched in 2013. The award was given out in 2014 during the Cards and Electronic Payment International (CEPI) Asia Pacific Trailblazers Awards event.

The same card won the 2014 Marketing Effectiveness Awards for excellence in launch marketing campaign “New Card, New Rules” given out by the Advertising & Marketing Magazine in Malaysia.

Differentiating in today’s competitive lending landscape, Citi in Malaysia further enhanced its unsecured personal loan value proposition in July 2014 by offering loans up to 8x of the applicant’s monthly gross income or a maximum of RM150,000, whichever is lower. This strategy has put our lending business on an upward trajectory with an average quarter-on- quarter sales growth of 61% after this implementation.

Retail Banking In view of uncertainty in the global economy and financial market volatility, our key focus in the retail business was to address the changing needs of our customers by carefully assessing their portfolio requirements and identifying opportunities in an otherwise challenging macro-economic environment.

We continued to build on the successes of 2013 by rolling out more customised product propositions such as investment products denominated in foreign currencies to give more options to clients diversifying their asset holdings.

By June 2014, the business achieved a new milestone when assets under management (AUM) exceeded

RM3.50 billion, the highest AUM level since the start of the business in 2000.

On the awards front, Citi in Malaysia won the Principal Financial Group’s Best IUTA for AUM Builder Fund Award in 2014 for the sixth consecutive year. This award honours Citi for its outstanding performance in terms of Unit Trust sales for CIMB-Principal in Malaysia.

We also continued to leverage our strong research and advisory services to organise our Citi Wealth Series of market outlook presentations for CitiGold and investment customers. Eight seminars were held in Kuala Lumpur, Penang and Johor Bahru delivered by our regional investment strategist.

Mortgages Bank Negara Malaysia (BNM) introduced several guidelines to promote and build long term stability in the property market namely the cap on the maximum loan-to-value ratio and curbs to the Developer Interest Bearing Scheme. Real Property Gains Tax rates were increased to curb speculation. There were changes in the rules governing acquisition of residential properties by foreigners.

In line with market conditions, Citi partnered with top tier developers to offer more property buyers Citi’s unique selling proposition of fastest turnaround time via the 10-minute home loan approval.

Institutional Client Group

Treasury and Trade SolutionsCiti played a leading role in driving the digitisation agenda for corporate and institutional clients in Malaysia.

Our CitiDirect BE. Payment Risk Analytics offered clients new insights into their corporate payment trends, helped identify abnormalities and supported enhanced controls. Liquidity Management and Direct Collection modules gave clients the ability to manage corporate funding and export documentation online, with enhanced flexibility.

Complementing the new services, we organised for clients the annual Shared Services Centre forum and an industry forum for the consumer sector. A client education series for transaction banking was run at Citi’s offices in Kuala Lumpur, Penang and Johor Bahru for more than 300 clients.

We were also proud to celebrate industry recognition


CEO’s Statement

with some of our corporate clients based on their use of Citi services. The Adam Smith award for Best Card Solution in Asia Pacific was won by Sime Darby, a Citibank corporate card client in Malaysia. Four clients were recognised in the MyClear Direct Debit Top Merchants category namely AIA Berhad, BMW Credit (M) Sdn. Bhd., Toyota Capital (M) Sdn. Bhd., and AXA Affin Life Insurance Berhad.

Securities ServicesCiti’s Securities Services achieved a successful year with year-on-year growth in Asset Under Custody (AUC) and transaction volume on the back of additional mandates from new and existing clients.

We were voted “Global Outperformer”, “Market Outperformer” and “Category Outperformer” in the 2014 Global Custodian Agent Banks in Emerging Markets Survey, demonstrating Citi’s significant service strengths in the industry.

Global MarketsCiti in Malaysia was voted best foreign exchange (FX) provider for overall FX services corporates in Malaysia in the Asiamoney industry poll in 2014. Citigroup won the top spot in overall results for the 2014 Euromoney FX survey.

Islamic Banking DivisionIt has been another year of transition and adjustment following the coming into force of the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA) in 2013. We participated actively in various transitional programmes organised by Bank Negara Malaysia to ensure industry players are kept well-informed of updates and progress relating to the implementation of the FSA and the IFSA.

Citi Transaction Services continued to record growth in cross-border Shariah compliant services with funds of more than RM2.65 billion under management for clients across Citi branches in Asia and Europe. These services support Islamic investments offshore and multinational treasury management centres in Malaysia.

Working For and In Community Citi’s citizenship initiatives in Malaysia have in the last 10 years focused primarily on financial education. Our programmes are implemented through grants from Citi Foundation. In 2014, we made a deliberate strategic move to diversify our citizenship focus to also cover urban transformation. We carried out a pilot urban

support programme and partnered Think City, an entity of Khazanah Nasional, to do an urban community project in Georgetown, Penang for Global Community Day. The response from the municipal council, Citibank volunteers and locals was encouraging. We also added The Edge Education Foundation as a new partner to our grants programme covering youth economic opportunities in the Klang Valley.

Our Citi Foundation grant of RM734,265 in 2014 was channelled to our citizenship partners for the Financial Education Policy Initiative and Pre-School Education Programme by Education & Research Association for Consumers (ERA Consumer) Malaysia and the “Money & Me” Youth Financial Empowerment Programme by the Edge Education Foundation.

Citi’s integration into the world community signifies our commitment to reach out into the communities we serve. In 2014, more than 1,200 Citi volunteers joined other Citi employees worldwide for Global Community Day on June 7, 2014. The theme “Serving My City” saw Citi volunteers plant mangrove saplings to support environment conservation in Selangor, redevelopment of a small park in the heart of Johor Bahru, cleaning a river in Pahang and a community environment project in Penang.

Our People The work that we do here at Citi in Malaysia would not be possible without the strength of a diverse and skilled talent pool.

At Citibank, we value our employees and have a consistent approach to training and development across the company. This gives us a unified culture and set of standards which transcend business and product lines. The global nature of our business also provides our employees with mobility opportunities to be located across our network to gain international banking experience.

Equal opportunity based on merit, mutual respect and supporting workforce diversity is important to us. We are constantly identifying top banking talent and take pride that we have trained over the years a number of senior banking professionals in the country.

Key Priorities for 2015

In my first dialogue with employees in November 2014, I shared with all Citibankers our aspiration to be a world class franchise and the best bank in Malaysia. We will execute this through four main pillars covering People,


CEO’s Statement

Clients, Controls and Relationships. Our aim is to be a trusted advisor to clients and to be the employer of choice.

Our business priorities focus on harnessing the power of our global network, delivering remarkable customer experience and consistent, high quality earnings. Our code of conduct calls for the highest standards of ethics and business integrity. These are aligned to our culture of Responsible Finance and to protect at all times the reputation of our over 200-year-old institution.

Outlook for 2015

We approach 2015 with cautious optimism. There are global economic realities that cannot be ignored. The operating environment is likely to remain challenging into 2015 amid slower economic growth, further moderation in consumer demand amid higher inflation post-GST, and rising funding costs amid tighter liquidity.

Citi has been here in this market for over 50 years. We are a strong franchise enriched by local market knowledge and capabilities. We face the year ahead with confidence, guided by our wealth of past experience and the courage to do the right thing.

I would like to take this opportunity to thank our Chairman and Board of Directors, my senior colleagues, all employees in Malaysia, our partners and regulatory authorities for their support during the financial year.

Adapting swiftly in an environment that is being constantly reshaped by innovation and technology calls for bold and responsible leadership. We need to make that difference in the market place. I know that we will.

Lee Lung NienChief Executive Officer

Sources: Malaysian Institute of Economic Research (MIER) 2014Bank Negara Malaysia World Bank Report 2014


11CITIBANK BERHAD ANNUAL REPORT 2014 11CITIBANK BERHAD A N N U A LA N N U A L R E P O R TR E P O R T 2 0 1 42 0 1 4

Equal opportunity based on merit,

mutual respect and supporting diversity

is important to us.

Standing from left to right

Mr. Lee Lung Nien , Dato’ Dr. R. Thillainathan,Mr. Terence Cuddyre, Ms. Agnes Liew Yun Chong


Standing from left to right

Dato’ Siow Kim Lun, Datuk Ali Bin Tan Sri Abdul KadirCompany Secretary: Ms. Tang Wan Chee, Ms. Ho Li Chin

Board ofDirectors


Mr. Lee Lung Nien was appointed Chief Executive Officer of Citibank Berhad in October, 2014.

He is a veteran Citibanker with 25 years of experience. Prior to his current appointment, Lung was the AML Business Head for Asia

and had senior oversight of the AML monitoring hub in Kuala Lumpur. He was responsible for streamlining the AML business

processes regionally, implementing policy changes and managing global AML implementations. He was also the primary AML

Contact with Business Leadership, and tasked with implementing globally consistent AML initiatives to enhance controls and

mitigate AML risk. Together with Compliance, he developed a regional AML strategy for Asia Pacific.

In 2010, Lung was the Chief Operating Officer (“COO”) for Singapore where he was responsible for driving the Bank’s

business results, implementing the country’s strategy, developing the bank’s talent pool and executing various cost franchise initiatives. In addition to his role as COO, Lung was also the

Singapore Markets Manager and worked closely with Singapore regulators to coordinate compliance and regulatory processes for

the Citi Singapore dealing room.

Lung was the Co-Head of Corporate Sales & Structuring for Asia Pacific in 2007. He was responsible for all foreign exchange,

options and derivatives sales to corporate and institutional clients in the region. He started his career as a Credit Analyst in the Bank

and has held various key positions including Head of Singapore Treasury Marketing, Sales and Trading Head for Malaysia and

Regional e-Commerce Head.

He graduated with a Bachelor of Business Administration, Magna Cum Laude from Chaminade University, USA.

Mr. Terence Cuddyre is Chairman of the Board. He joined the Board on 14 December 2010 as a Non-Independent Non-Executive Director. He serves on the Audit Committee and Risk Management Committee of the Bank.

He was Citigroup Country Officer for Brunei Darussalam from July 2009 to December 2014. Prior to that, he spent four years as Asia Pacific Head of Training for the Citi Centre for Advanced Learning. He also served as Citigroup’s Country Officer for Thailand from 2002 to 2005. He was the North Asia Regional Risk Officer from 2000 to 2001.

Mr. Cuddyre joined Citigroup in 2000 after 23 years with Bank of America where he held numerous international roles including Country Head of Ireland, Korea, Hong Kong and China. He also held several risk positions in North America and Asia.

He was also active in the American Chamber of Commerce, serving on the boards in Hong Kong, Korea and China. In Thailand, he served as the Chairman.

Mr. Cuddyre holds a B.A. in Economics from the University of California, Santa Barbara and an MBA from the Wharton Business School, University of Pennsylvania.

Directors’Profile


Dato’ Siow Kim Lun is currently a board member of Kumpulan Wang Persaraan, UMW Holdings Berhad, Eita

Resources Berhad, Hong Leong Assurance Berhad, Eco World International Berhad, Sunway Construction Group Berhad and

MainStreet Advisers Sdn. Bhd. He is also a member of the Land Public Transport Commission.

From 1993 to 2006, Dato’ Siow was with the Securities Commission (“SC”), where he has served as the Director of its

Issues and Investment Division and Director of its Market Supervision Division. Prior to joining the SC, Dato’ Siow

worked in the investment banking and financial services industry in Malaysia for over 12 years.

Dato’ Siow holds an MBA from the Catholic University of Leuven, Belgium and a Bachelor of Economics (Hons) from

the National University of Malaysia. He has also attended the Advanced Management Program at Harvard Business School.

Dato’ Siow has been a director of Citibank Berhad since April 2007. He is currently the Chairman of the Bank‘s Risk

Management Committee, and a member of the Nominating Committee and Audit Committee.

Ms. Agnes Liew Yun Chong was appointed as Non-Independent Non-Executive Director of the Bank on 1 November, 2010. She is also a member of the Risk Management Committee and Nominating Committee of Citibank Berhad.

Ms. Liew also sits on the board of Citibank (China) Co. Ltd.

Since 2010, Ms Liew has been the Asia Pacific Head of Global Corporate Banking. The Asia Pacific Corporate Bank is the coverage organisation that delivers the full spectrum of product solutions and Citi's extensive global network which spans over 100 countries, to institutional clients across 16 markets in Asia, including large public and private corporations. She is also a member of the Global Corporate Banking Operating Committee (NY) and chairs the Asia Pacific Corporate Banking Operating Committee.

Ms. Liew joined Citi as a Management Associate in 1982 and during her career with Citi, has held a number of diverse key management positions in Risk and Banking in Asia Pacific. Between 2000 and 2003, she was the Corporate Bank Head of Singapore. In 2003, she was appointed Country Risk Manager of the Corporate and Investment Bank, Citi Taiwan. She subsequently moved into the Regional Risk Management Office in Asia Pacific and assumed the role of Head of Risk, ASEAN, Corporate and Investment Bank in 2005.

Between 2007 and 2010, Ms. Liew led Global Subsidiaries Group in Asia Pacific and was responsible for the relationship coverage of global multinational subsidiaries across 16 markets. Under her leadership, the Global Subsidiaries Group in Asia grew to be a significant pillar of the Global Banking franchise. During that time, she was also the Global Banking Head of ASEAN (ex Singapore), responsible for the relationship coverage of large corporate clients, including financial institutions.

Ms. Liew was named by Finance Asia in 2011 as one of the Top 20 Women in Finance in Asia.

She holds an LL.B (Hons) from the University of Singapore and is a member of the Supreme Court of Singapore.

Directors’Profile


Dato’ Dr. R. Thillainathan was appointed to the Board on 6 September 2012 as an Independent Non-Executive Director. He is the Chairman of the Audit Committee, and Nominating Committee and a member of the Risk Management Committee.

He sits on the Boards of Genting Berhad, Allianz General Insurance Company (Malaysia) Berhad, Allianz Life Insurance Malaysia Berhad, Allianz Malaysia Berhad and Asia Capital Reinsurance Malaysia Sdn Bhd. He is also a board member of Private Pension Administrator Malaysia, Wawasan Open University Sdn Bhd, UM Holdings Sdn Bhd and UM Plantations Sdn Bhd.

He has been with the Genting Group since 1989. He was the Chief Operating Officer of the company from 2002 to 2006 and retired as an Executive Director in 2007. Dato’ Dr. R. Thillainathan has extensive years of experience in finance and banking and has been actively involved in numerous professional and national bodies. He was also the past president of the Malaysian Economic Association.

He graduated from University of Malaya in 1968 and holds a Bachelor of Arts Degree with First Class in Economics. He obtained his Masters and PhD in Economics from the London School of Economics. He is also a Fellow of the Institute of Bankers, Malaysia.

Directors’Profile

Datuk Ali bin Tan Sri Abdul Kadir was appointed to the Board on 6 May 2014 as an Independent Non-Executive Director of Citibank

Bhd. Datuk Ali is a member of the Audit Committee, Risk Management Committee and Nominating Committee of the Bank.

He is a Fellow of the Institute of Chartered Accountants in England and Wales ("ICAEW"), member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. He is also currently Honorary Advisor to ICAEW Malaysia, Honorary Fellow

of the Institute of Chartered Secretaries & Administrators (UK) and the Malaysian Institute of Directors. Datuk Ali is currently the

Chairman of Jobstreet Corporation Berhad, Privasia Technology Berhad and the Financial Reporting Foundation. He is a Board

Member of Glomac Berhad, and Labuan Financial Services Authority.

Datuk Ali was appointed as Chairman of the Securities Commission of Malaysia on 1 March 1999 and served in that capacity until 29

February 2004. He also served on the Foreign Investment Committee, and the Oversight Committee of National Asset

Management Company (Danaharta). Prior to his appointment to the Securities Commission, he was the Executive Chairman and Partner

of Ernst & Young and its related firms. He was also the former President of the Malaysian Association (now Institute) of Certified

Public Accountants, chairing both its Executive Committee and Insolvency Practices Committee and co-chairing the Company Law Forum. He was a member of the Malaysian Audit Oversight Board. He was appointed as an Adjunct Professor in the Accounting and

Business Faculty, University of Malaya in 2008 and retired in August 2011. He was then appointed to the Advisory Board of the same Faculty.

On the international front, Datuk Ali was the Chairman of the International Organisation of Securities Commissions’ (“IOSCO”)

Asia Pacific Regional Committee and the Islamic Capital Market Working Group, and a member of IOSCO’s Executive Committee. In

addition, he was also a Trustee of the Accounting and Auditing Organisation for Islamic Financial Institutions and Force of Nature

Aid Foundation; and the Advisor to the Sri Lanka Securities and Exchange Commission in 2006 for their Capital Market Strategic Plan.


When people make progress, so does Citi. That’s why at Citi, we dedicate much of our creativity and innovation to expanding financial inclusion around the world. We have a long and successful history of introducing mainstream financial services to under-banked people, supporting small businesses and entrepreneurs and stimulating local economies through microfinance and affordable housing.

In fact, one of the main Citizenship efforts is to promote financial inclusion and economic progress. Here, we look to provide financial opportunities, access, knowledge and support for the underserved communities and individuals worldwide.

As a financial institution and a group, we embrace the challenge to help reach the 2.5 billion people in the world with no access to financial services.

In Malaysia, a large aspect of our corporate citizenship focuses on helping consumers build their own financial capability by pairing financial education with access to appropriate products and services so they can save, wisely manage their money and weather setbacks.

In 2014, we received a RM734,265 grant from Citi Foundation and worked with partners to support programmes that help people take control of their finances by improving their financial behaviours and making informed decisions about financial products and services.

Corporate Citizenship At Citi


Financial Education Policy Initiative & Pre-School Education Programme – Education and Research Association of Consumers (ERA Consumer)

In 2009, Citi launched our flagship financial education programme, “Stretching Your Ringgit” in collaboration with ERA Consumer Malaysia, which is still currently ongoing. To date, ERA Consumer has reached out to more than 1,200 students since the inception of “My First Ringgit” (MFR) programme. The MFR, a customised financial education programme aimed at educating and instilling good financial habits among young children, is a component of Citi’s “Stretching Your Ringgit” (SYR) financial education series. ERA Consumer has a strong network of kindergarten groups and teachers to get their support for organising the programmes as well as follow up of the programmes.

In 2014, ERA Consumer implemented the 2014 Strengthening Financial Education in Malaysia programme. The programme is a financial education policy initiative which will address the development of a national financial education policy and a national financial education mechanism that would align the national vision and strategy for all stakeholders involved in financial education.


Programme Highlights: ‘Money & Me’ Youth Financial Empowerment Programme

Citi Foundation provided RM349,650 for The Edge Education Foundation’s ‘Money & Me’ Youth Financial Empowerment Programme.

Under the programme, low income students aged between 13 and 16 years went through Youth Economic Opportunities workshops with a financial education component. The funding was utilised for:

1) Capacity building for The Edge Education foundation.

2) Development of evaluation framework and stakeholder engagement with Bank Negara Malaysia, Ministry of Education and government secondary schools.

In 2014, ERA Consumer received a RM384,615 grant from Citi Foundation which was utilised for:

● Setting the baseline data on the state of the current financial knowledge, habits and behaviours of Malaysian consumers.

● Creating a directory of all existing agencies/programmes involved in financial education in the country.

● Developing a model of the causes and consequences of current financial problems as well as an initial comprehensive model and financial education infrastructure to deliver programmes effectively.

● Engaging stakeholders to discuss the model through the establishment of a national high level conference that will focus on financial education in Malaysia.

● Developing a draft National Financial Literacy Policy.

● Conducting “My First Ringgit” (MFR) financial education workshops targeting 800 kindergarten students.

The objective of the ‘Money & Me’ programme is to improve employment prospects for low income students aged between 13 and 16 by equipping them with transferable skills. Two particular skills - communications and financial literacy - were to enable them to secure jobs that pay enough to meet daily needs or to obtain post-secondary education or training in vocational and technical skills. These skills were also to help provide these students with entrepreneurship training that would enable them to start or run small businesses. Students also learned how to register a business, understand profit and loss, identify markets, maintain a simple set of accounts and ensure the sustainability of the business.

Another component is to help low-income students develop the financial knowledge and skills they need to manage their money well and plan for the future.

In 2014, a pilot entrepreneurship and financial education workshop was conducted for 30 students.



As a team, we have done a

variety of activities that

benefit the community.


Global Community Day Citi Malaysia’s Global Community Day was held on 7 June 2014 with the theme “Supporting the Development of Sustainable Environments”.

Over 1,031 employees from Klang Valley, Kuantan, Penang and JB participated in this effort.

In KL, over 300 Citi Volunteers [from both Menara Citibank branch and CTSM KL Citi Service Centre] ventured out into two mangrove rehabilitation sites located in Kuala Selangor and Bagan Lalang. Citi volunteers experienced first-hand the replanting of mangrove saplings which contribute to the habitat rehabilitation process to enrich local fishery resources, safeguard the coastline from erosion and minimise destruction caused by tsunamis.

In Kuantan, over 90 Citi Volunteers took part in the ‘One State, One River’ programme to clean up Sungai Galing, the main river flowing through Kuantan town. Sungai Galing is one of the most polluted rivers in the state of Pahang and has been included in the One State, One River programme to rehabilitate rivers under a national development plan targeted for completion in 2015.

In Johor Bahru, more than 100 Citi volunteers turned up at Hutan Bandar Recreational Park to do their bit to save the environment. The main event of the day – tree planting, saw a total of 15 trees planted in the spots marked by the park authorities. The volunteers planted the Laburnum x watereri vossi or better known as the golden chain tree, one of the most popular of laburnums now planted in gardens.

Meanwhile in Penang, Citibankers worked hard early Saturday morning to spruce up Little India, in the heart of Georgetown, a Unesco World Heritage site. In a collaborative initiative with the Penang State Govern-ment, the state Municipal Council, George Town World Heritage Incorporated, Citi, Think City and the Little India Joint Action Committee, close to 400 Citibankers, their families and friends launched the “Towards a Zero Waste Zone” community clean-up project.



Citi-FT Financial Education Summit 2014

Over 250 delegates from non-profit organisations, government agencies, regulators, financial institutes and advocacy groups attended the Citi-FT Financial Educa-tion Summit 2014.

The summit was officiated by YBhg. Tan Sri Dato’ Sri Dr Zeti Akhtar Aziz, Governor of Bank Negara Malaysia.

Themed “Expanding Opportunity through Financial Capability: Urban Innovations and Partnerships”, the summit focused on the challenges of helping the increas-ing population of low-income workers, youths and older people settling in urban areas gain greater financial access and inclusion in the formal economy. Delegates from 26 countries around the world shared and explored large-scale financial capability programmes that combined the strengths of the public and private sectors and civil society. They also looked at models of cross-sector urban partnerships, to deliver greater economic progress, maximising scale and impact.




ValuingOur People

At Citi, we aim to be an Employer of Choice, offering our people progressive career paths and an energised work environment. Our people philosophy centres on our belief that talent grows talent and it is our responsibility to facilitate an environment that supports employees’ professional growth, allows them to contribute meaningfully to the organisation’s priorities and develop pride in their work. With Citi’s geographical reach and the rich diversity of businesses, we have the ability to equip our employees to continuously enhance our clients’ lives while having a lifetime career.

In 2014, we continued our efforts in the talent space. Our graduate Management Associate (“MA”) programmes attracted the best talent in the market – out of over 2000 applications reviewed, we hired and on-boarded a class of 11 MAs in Citibank Berhad in 2014, and also launched the new Operations & Technology Management Associate (O&T MA) programme with a cohort of 7 O&T MAs. This gives us 70 future leaders hired since 2010 who continue to grow with us as part of our strategy to build leadership bench strength. Of this MA pool, two of our Malaysian MAs were selected to be part of a cohort of just eight regional MAs for the Post Global Consumer Banking (“GCB”) MA Development Programme. They were subsequently given 12 months of off-shore exposure to strengthen their business knowledge and to develop the Consumer Banking pipeline across the region. The eight were selected from the top 20 percent highest performing MAs in the APAC region, and Malaysia’s nominees making up a quarter of the cohort speak to the quality of our graduate talent.

Our Leadership Enhancement & Accelerated Development (“LEAD”) programme, focused on the development of the top three percent of our best employees, saw some of our best talent collaborating on cross-franchise projects driven by business seniors across the organisation. This exposed them to products, services and people outside of their normal day-to-day roles, allowing them an opportunity to glean insights and to explore other parts of the organisation they would otherwise not have experienced. Customised training for LEAD participants (called LEAD-ers) included a Communications Masterclass presented by the established international TV broadcast journalist Lorraine Hahn and development planning workshops. LEAD-ers also benefitted from exclusive networking sessions with regional seniors, country management committee members, and fellow high-performing LEAD peers.

Leveraging our global presence in 160 countries and the diversity of our businesses, Citi is second to none in our

ability to provide in-country, regional and global mobility opportunities. This is evidenced by 714 mobility transfers in 2014, including lateral moves and promotions as well as our export of talent to Singapore, Taiwan and Australia; and our import of talent from other Citi franchises including India, Hong Kong, Philippines, Thailand, China, Australia, Japan and Vietnam.

From a learning and development viewpoint, our consistent approach to training and development across the organisation ensures that we have a unified culture and a set of standards that transcend business, product and regional lines. In 2014, Citibank Malaysia rolled out 102 classroom sessions covering 1580 Citibankers together with 12 leadership programmes across the franchise covering 190 Citi leaders. The calibre of our training unit is partly demonstrated by our leadership trainer being recognized as Citi’s Top 3 Highest Delivering Facilitator in APAC for the second year running, and Malaysia being selected as a pilot country for important regional training initatives on Respect at Work and Power of One (delivery of a remarkable experience to our clients as one bank, one culture and one team).

Employee engagement is a key priority in enhancing our work culture and making Citi a vibrant and productive workplace. In 2014, a Citi Club committee was formed as part of efforts to improve employee engagement, drive change and instil pride in our organisation. Citi Club successfully organised a Dinner and Dance which further strengthened camaraderie among over 1200 employees across the entire franchise including our regional service centres. Citi Club also facilitated Citi employees coming together in the Citi Malaysia Flood Relief effort to drive donations of food, cash and volunteering services to help thousands affected by the floods in several Malaysian states.

Recognising that a diverse workforce enhances our ability to manoeuvre in an increasingly diverse environment, as part of our commitment to gender diversity and the advancement of women as leaders and economic drivers, Citibank also organised initiatives in conjunction with International Women’s Day (“IWD”). Franchise-wide programmes connected Citi women to facilitate their progress personally, professionally and within the community. One particular initiative was Citi’s sponsorship of the Ikal Mayang Festival 2014 releasing 16 short films written, directed and produced by women in the Asian region. Citi women were invited to a special film screening and encouraged to sponsor tickets for other screenings and dialogue sessions with the film directors so that underprivileged female youth would


ValuingOur People

also have the opportunity to be exposed to the films’ empowering messages.

A key component to ensure that we are able to keep Citibankers engaged and motivated is to provide a conducive and nurturing work environment, with focus on mental and physical health. In 2014, Citi’s “Live Well” platform and Employee Assistance Programme (“EAP”) continued to provide support services such as counselling, wellness talks and on-site consultations to

all Citibankers, with talks covering key health tips, office ergonomics, and suitable food and exercises. In total 88 such initiatives were carried out for the benefit of employees across the franchise.

Citi will continue to focus on building the talent pipeline and developing and implementing relevant programmes, initiatives, policies and processes to ensure we provide the best that we can for our employees.


The Bank aspires to achieve the highest standards in ethical conduct by delivering our promise to clients, reporting our financial results accurately and transparently and maintaining full compliance with all laws, rules and regulations governing the Bank‘s business operations.

The Bank has also taken the necessary steps to ensure conformity with Bank Negara Malaysia‘s (“BNM”) Guidelines on Corporate Governance for Licensed Institutions (Revised BNM/GP1).

Board Composition

The Board comprises six members.

The following is the board line-up:

Mr. Terence Kent CuddyreNon-Independent Non-Executive Director/Chairman

Mr. Lee Lung NienNon-Independent Executive Director/Chief Executive Officer

(appointed on 7 October 2014)

Dato’ Siow Kim LunIndependent Non-Executive Director

Ms. Agnes Liew Yun ChongNon-Independent Non-Executive Director

Dato’ Dr Thillainathan a/l Ramasamy

Independent Non-Executive Director

Datuk Ali bin Abdul KadirIndependent Non-Executive Director

(appointed on 6 May 2014)

Tan Sri Dato’ Hj Omar B. IbrahimIndependent Non-Executive Director

(retired on 1 May 2014)

Mr. Sanjeev NanavatiNon-Independent Executive Director/Chief Executive Officer

(resigned on 1 August 2014)

The individual profiles of the current directors are set out on pages 14 to 16 of this report.

The composition of the Bank’s Board of Directors is in compliance with the Revised BNM/GP1, which requires at least one-third of the board members to be independent directors.

The presence of two non-independent non-executive directors and three independent non-executive directors

Statement Of Corporate Governance

enables the Bank to view all relevant issues objectively and in a balanced manner. This further enhances the accountability of the decision making process within Citibank Berhad.

The presence of the non-executive directors is also beneficial as it provides room for new perspectives and ideas that could help improve the effectiveness and efficiency of the Board on the whole.

The revised BNM/GP1 guideline stipulates the need for a maximum of one Executive Director in the Bank’s Board of Directors line-up.

Mr. Terence Kent Cuddyre was appointed to the Board on 14 December 2010, and has been the Chairman of Citibank since 12 March 2013.

Roles and Responsibilities

The primary responsibility of the Board of Directors is to provide effective governance in terms of the Bank’s affairs for the benefit of all shareholders and also to balance the interests of different constituencies such as customers, employees, suppliers and the local community.

Among other things, the Board also reviews and approves the Bank’s strategic business plans annually, oversees the management of the business and monitors the Bank’s actual performance against projections.

The Board also ensures that the infrastructure, internal controls and risk management processes within the Bank remains robust and are implemented in a consistent and timely manner.

In addition, the Board carries out various other functions and responsibilities as stipulated in the guidelines and directives issued by BNM from time to time.

In relation to the requirements stated under the revised BNM/GP1, the Bank has submitted an application to BNM for deviation of Principle 10 (shareholders should be entirely independent of the management and that the CEO should derive authority only from the Board) and Principle 12 (regular communication to be held with shareholders).

On 3 May 2006, BNM approved the Bank’s official request for the above-mentioned deviations.

As the Bank falls under the global structure of Citi, the Board also ensures that the Bank adopts applicable Citi policies in relation to credit approval processes and operational manuals.



As a means to ensure the Bank has a beneficial influence on the economy of the local community, the Directors have a continuous responsibility to provide banking services and facilities that are conducive to a well-balanced economic growth.

Frequency and Conduct of Board Meetings and Attendance

The Board of Directors meet at least six times a year in order to effectively discharge their duties as well as to comply with the revised BNM/GP1 guideline requirements.

During Board meetings, the Directors are provided with an agenda, papers on the Bank’s most recent financial performance, risk management reports, budgets, new business initiatives or product launches, Board committees meetings’ minutes and updates on industry regulations or policy changes. The Board also receives business presentations on topical matters, subject to such requests.

The Board meeting agenda and papers are distributed to all Directors prior to the scheduled meetings so as to grant them sufficient time to review all materials/issues that will be discussed during the actual meeting. This procedure goes a long way in ensuring that all Board meeting discussions as well as decisions made/taken, are meaningful and based on accurate facts and figures.

The proceedings of all Board meetings are also taken down as official minutes and such minutes are later circulated for the Directors’ perusal prior to confirmation during the following meetings.

The attendance record for each Board member for the financial year ended 31 December 2014 is as shown below:

Number of Board MeetingsName of Director Held AttendedMr. Terence Kent Cuddyre (Chairman) 9 9Mr Lee Lung Nien 1 2* 2Dato’ Siow Kim Lun 9 9Ms. Agnes Liew Yun Chong 9 7Dato’ Dr Thillainathan a/l Ramasamy 9 9Datuk Ali bin Abdul Kadir 2 6* 6Tan Sri Dato’ Hj Omar B. Ibrahim 3 3* 3Mr. Sanjeev Nanavati 4 6* 6 1 appointed on 7 October 2014 2 appointed on 6 May 2014 3 retired on 1 May 2014 4 resigned on 1 August 2014

* Reflects the number of meetings held during the time the Director held office.

Board Committees

The Board of Directors established several ‘Board Committees’ to assist them in the overall management and supervision of the Bank’s business operations.

The committee members shall be appointed by the Board upon recommendation of the Nominating Committee.

Each committee has its own written charter, clearly outlining the mission and responsibilities of the respective committee as well as well-defined terms of reference approved by the Board.

Pursuant to the revised BNM/GP1 guideline, the Board is also required to establish the following additional committees besides the existing Audit Committee then:

• Nominating Committee

• Remuneration Committee

• Risk Management Committee

The Bank has since set up the Nominating Committee and Risk Management Committee.

The Bank submitted an application to BNM for a waiver from establishing the Remuneration Committee. On 3 May 2006, BNM granted the Bank approval on the above application.

Audit Committee

Composition and Frequency of Meetings

The Audit Committee was established in 1994.

The attendance record for each Audit Committee member for the financial year ended 31 December 2014 is as shown below:

Number of MeetingsName of Audit Committee Member Held AttendedDato’ Dr Thillainathan a/l Ramasamy 4 4(Chairman)

Dato’ Siow Kim Lun 4 4Mr. Terence Kent Cuddyre 4 4Datuk Ali bin Abdul Kadir 3* 3Tan Sri Dato’ Hj Omar B. Ibrahim 1 1* - 1 ceased on 1 May 2014


All the Audit Committee members are non-executive directors of the Bank.



Terms of Reference

The Board has approved the terms of reference for the Audit Committee.

The purpose of the Audit Committee is to assist the Bank’s Board in fulfilling its oversight responsibility relating to (i) the integrity of the Bank’s financial statements and financial reporting process, and the Bank’s systems of internal accounting and financial controls; (ii) the performance of Internal Audit (iii) providing any concerns or recommendations to the Citigroup Audit Committee regarding the annual independent integrated audit of the Bank’s financial statements and effectiveness of the Bank’s internal control over financial reporting, the engagement of the independent registered public accounting firm (“Independent Auditors”) and the evaluation of the Independent Auditors’ qualifications, independence and performance, where feasible for the local team; (iv) policy standards and guidelines for risk assessment and risk management; (v) the compliance by the Bank with local legal and regulatory requirements; and (vi) the fulfillment of the other responsibilities set out in the Audit Committee Charter.

The Audit Committee’s main duties and responsibilities are as follows:

Financial Statement and Disclosure Matters

• Review and discuss with management and the Independent Auditors the annual audited financial statements of Citibank Berhad where provided as well as any disclosure requirements.

• Review and discuss with management (1) any significant deficiencies or material weaknesses in the design or operation of Citibank Berhad’s internal control over financial reporting, and (2) any fraud, whether or not material, involving management or other employees who have a significant role in Citibank Berhad’s internal control over financial reporting.

• Review and discuss periodically reports from the Independent Auditors on, among other things, certain:

- Critical accounting policies and practices to be used;

- Alternative treatments of financial information in conformance with locally accepted accounting principles;

- Other material written communications between the Independent Auditors and management, such as any management letter and Citibank Berhad’s response to such letter or schedule of unadjusted differences; and

- Difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, any significant disagreements with management, and communications between the audit team and the audit firm’s national office, (if relevant), with respect to difficult auditing or accounting issues presented by the engagement.

• Review and discuss with management and the Independent Auditors, at least annually:

- Developments and issues with respect to loan loss reserves (if set at local level);

- Regulatory and accounting initiatives, as well as off-balance sheet structures, and their effect on Citibank Berhad’s financial statements; and

- Accounting policies used in the preparation of Citibank Berhad’s financial statements and, in particular, those policies for which management is required to exercise discretion or judgment regarding the implementation thereof.

• Review with management its evaluation of Citibank Berhad’s internal control structure and procedures for financial reporting and review periodically, but in no event less frequently than quarterly, management’s conclusions about the efficacy of such internal controls and procedures, including any significant deficiencies or material weaknesses in such controls and procedures.

• Annually review and discuss with management and the Independent Auditors (1) management’s assessment of the effectiveness of Citibank Berhad’s internal control structure and procedures for financial reporting and (2) the Independent Auditors’ report on the effectiveness of Citibank Berhad’s internal control over financial reporting.

• Ensure that prior to publication of the annual report, a complete review is done to comply with the regulatory listing requirements.



• To monitor related party transactions and conflict of interest situation that may arise within the Bank including any transactions, procedure or course of conduct that raises questions on management integrity.

• To review any letter of resignation from the external auditors of Citibank Berhad.

• To select external auditor for appointment by the Board unless otherwise advised is not suitable for re-appointment (supported by justification/ grounds).

Oversight of Citibank Berhad’s Relationship with the Local Independent Auditors

• Have direct communication channels with the external auditors.

• Review and discuss key local staffing and local lead audit partner rotation plans.

• Review and discuss the scope and plan of the independent audit.

• Be able to convene meetings with the external auditors, wherever deemed necessary.

• Provide any concerns or recommendations regarding the qualifications, performance and independence of the Independent Auditors to the Citigroup Audit Committee.

Oversight of Internal Audit

• In consultation with the Chief Auditor of Citigroup or his/her designee, review and approve the appointment and replacement of the Chief Audit Executive who shall report directly to the Committee and to the Chief Auditor of Citigroup or his/her designee; and, in consultation with the Chief Auditor of Citigroup or his/her designee discuss the Chief Audit Executive's base compensation, adjustments and incentive compensation.

• Review and discuss any significant Internal Audit findings that have been reported to management, management’s responses, and the progress of the related corrective action plans.

• Review and evaluate the adequacy of the work performed by the Chief Audit Executive and Internal Audit, and ensure that Internal Audit is independent and has adequate resources to fulfill its duties, including implementation of the annual audit plan.

• If the Committee considers that internal audit support is required from a third party provider, the Committee shall consult with the Citigroup Chief Auditor directly before engaging any external parties, so as to ensure compliance with the requirements of Citigroup’s lead regulators regarding external providers of internal audit services.

• Review and approval of Internal Audit Charter, where relevant.

Compliance, Regulation and Controls Oversight Responsibilities

• Review and discuss with management, at least annually Citibank Berhad’s major financial risk exposures and the steps management has taken to monitor and control such exposures.

• Receive and discuss reports from management responsible for the following topics on a quarterly and as needed basis relating to: significant regulatory and compliance issues; compliance with regulatory internal control and compliance reporting requirements; business resumption and contingency planning, including disaster recovery; fraud and operating losses; internal and external fraud incidents, and associated control enhancements and remediation plans; and technology and information security.

• Have the discretion to call on any staff of Citibank Berhad for explanation

• Have authority to investigate any matter within its terms of reference.

• Have the resources which are required to perform its duties.

• Have full and unrestricted access to any information pertaining to the Citibank Berhad.

• Be able to obtain independent professional or other advice.



Nominating Committee


The Nominating Committee was established in 2006.

The attendance record for each Nominating Committee member for the financial year ended 31 December 2014 is as shown below:

Number of MeetingsName of Nominating Committee Member Held AttendedDato’ Dr Thillainathan a/l Ramasamy 7 7(Chairman) 1

Mr. Lee Lung Nien 2 2* 2Dato’ Siow Kim Lun 7 7Ms. Agnes Liew Yun Chong 7 6Datuk Ali bin Abdul Kadir 3 5* 5Tan Sri Dato’Hj Omar B. Ibrahim 4 2* 2Mr. Sanjeev Nanavati 5 5* 5 1 appointed as Chairman of Nominating Committee on 1 May

20142 appointed on 7 October 20143 appointed on 6 May 20144 ceased as Chairman of Nominating Committee on 1 May 20145 ceased on 1 August 2014


The constitution of the Nominating Committee comprises four non-executive directors and one executive director.

Terms of Reference

The Board has approved the terms of reference for the Nominating Committee.

The main objective of the Nominating Committee is to provide a formal and transparent procedure for the appointment of directors as well as assessing the effectiveness of individual directors, the Board as a whole and also the performance of the CEO along with other key senior management staff.

The Nominating Committee’s main responsibilities are as follows:

• Review and assess the adequacy of the Bank’s Code of Conduct and other internal policies and guidelines and monitor that the principles described therein are being incorporated into the Bank’s culture and business practices.

• Establish minimum requirements for the Board, i.e. required mix of skills, experience, qualification and other core competencies required of a director. The Committee is also responsible for establishing minimum requirements for the CEO. The requirements and criteria should be approved by the full Board.

• Review the appropriateness of the size of the Board relative to its various responsibilities. Review the overall composition of the Board, taking into consideration factors such as business experience and specific areas of expertise of each Board member and make recommendations to the Board as necessary.

• Review and assess that the directors do not have any directorship(s) which could potentially result in conflict of interest(s).

• Recommend to the Board the number of committees required, identify their respective responsibilities, propose a suitable Chairperson as well as suggest ordinary members for the different committees. This includes advising the Board on committee member appointments and removal of such members from the relevant committees or from the Board, rotation of the committee members and Chairperson as well as proposals on individual committee structures and operations.

• Assist the Board in developing criteria to identify and select qualified individuals who may be nominated for election to the Board, which shall reflect, at a minimum, all applicable laws, rules and governing regulations. This includes assessing directors for re-appointment before an application for approval is submitted to BNM. The actual decision as to who shall be nominated should be the responsibility of the full Board.

• Recommend to the Board qualified individuals to become members of the Board.

• Review and recommend periodically to the Board, the compensation structure for non-executive directors.

• Recommend to the Board the removal of a director/CEO from the Board/Management, if the director/CEO is ineffective, errant and negligent in discharging his responsibilities.



• Assess annually the effectiveness of the Board as a whole in meeting its responsibilities and the contribution of each director to the effectiveness of the Board, contribution of the Board’s various committees and the performance of the CEO.

• Report annually to the Board with an assessment of the Board’s performance and such assessment is conducted based on an objective performance criteria. Such performance criteria to be approved by the full Board.

• Leveraging on the Bank’s Performance Management and Talent Inventory development process in overseeing the appointment, management succession planning and performance evaluation of key senior management staff, except that (as recommended by Bank Negara Malaysia) the Committee shall play an active role in reviewing and recommending the nominees for the position of Chief Executive Officer, Chief Financial Officer and Chief Risk Officer.

• Assess annually to ensure the directors and key senior management staff are not disqualified under the Financial Services Act 2013.

• Plan and ensure all directors receive appropriate and continuous training program in order to keep abreast with the latest developments in the industry.

• Conduct an annual review of the Committee’s performance and report the results to the Board periodically, assess the adequacy of its charter and recommend changes to the Board as needed.

• Report regularly to the Board on the Committee’s activities.

• Perform any other duties and responsibilities expressly delegated to the Committee by the Board from time to time.

Risk Management Committee


The Risk Management Committee was established in 2006.

The attendance record for each Risk Management Committee member for the financial year ended 31 December 2014 is as shown below:

Number of MeetingsName of Risk Management Committee Member Held AttendedDato’ Siow Kim Lun (Chairman) 4 4Mr. Terence Kent Cuddyre 4 4Ms. Agnes Liew Yun Chong 4 2Dato’ Dr Thillainathan a/l Ramasamy 4 4Datuk Ali bin Abdul Kadir 3* 3Tan Sri Dato’Hj Omar B. Ibrahim 1 1* - 1 ceased on 1 May 2014 * Reflects the number of meetings held during the time the

Director held office.

All the Risk Management Committee members are non-executive directors of the Bank.

Terms of Reference

The Board has approved the terms of reference for the Risk Management Committee.

The main objective of the Risk Management Committee is to oversee the senior management’s activities in managing credit, market, liquidity, operational, legal and other risk(s) while ensuring proper risk management process is properly in place and functioning well.

The Risk Management Committee’s main responsibilities are as follows:

• Ratify the adoption of Citi risk management strategies, policies, and risk tolerance; and recommend the same for the Board’s approval.

• Discuss with Management the Bank’s major credit, market, liquidity and operational risk exposures and steps that the Management has taken to monitor and control such exposures, including the Bank’s risk assessment and risk management policies.

• Assess the adequacy of risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these are operating effectively.



• Ensure appropriate infrastructure, resources and systems are in place for actual risk management implementation, i.e. ensure staff responsible for implementing the risk management system perform their duties independently of the Bank’s risk taking activities.

• Periodically review management reports on risk exposure, risk portfolio, composition and other risk management activities.

• Review periodically with management, including independent Risk Officer, Head of Compliance and Legal Counsel, any correspondence(s) with or action by, regulators or governmental agencies, any material legal affairs of the Bank and the Bank’s compliance with applicable laws and regulations.

• Report regularly to the Board on the Committee’s activities.

• Review annually and report to the Board on its own performance.

• Review and assess the adequacy of its charter annually and recommend any proposed changes to the Board for approval.

• Present the risk strategy and the risk appetite to the Board of Directors and seek approval on an annual basis.

• Share the Bank’s risk appetite indicators with the Board on a regular basis to ensure that the risk appetite remains consistent with the Bank’s risk taking ability, its inherent risk profile and its external market and macroeconomic conditions.

• Discuss matters related to Comprehensive Capital Analysis and Review (“CCAR”) / Dodd-Frank Act Stress Testing (“DFAST”) and provide adequate oversight. The Risk Management Committee will also be the governance vehicle for the Bank’s Board to provide oversight to the strategic forecasting and stress testing processes (CCAR / DFAST) including forecasting framework, models and non-model analyses and forecast results. Specific invitees to such meetings may be included.



RiskManagement

Please refer to Pillar 3 disclosure.


Statement of Internal Auditand Internal Control

Citibank Berhad’s Board of Directors is responsible to establish and maintain adequate internal control over financial reporting standards and related issues.

The Bank’s internal control system is designed to provide reasonable assurance to the company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with the provisions under the Companies Act 1965 and other applicable approved standards in Malaysia.

All internal control systems no matter how well designed and implemented have inherent limitations.

In view of the limitations, therefore, even the best of systems determined to be effective can only provide a reasonable assurance in relation to the preparation and presentation of financial statements.

A comprehensive system of controls is maintained to ensure that all transactions are executed in accordance with the management’s authorization, assets are safeguarded and that the financial records are reliable.

The management also takes relevant steps to see that information and communication flows are effective and monitor the performance of internal control procedures.

Citibank Berhad’s risk management policies, procedures and practices set out the foundation to the risk architecture governing its business activities.

The management conducts business monitoring initiatives and continuously assesses their significant processes and controls in accordance with the Manager’s Control Assessment Procedures / Operational Risk policy for all applicable businesses.

Control system weaknesses resulting in corrective actions will be documented, escalated to the management and track to closure. Citibank Berhad’s Internal Audit reports to the Audit Committee. The role of Internal Audit is to provide independent, objective, reliable, valued and timely assurance to the Boards of Directors of Citigroup and Citibank Berhad, the Audit Committees, senior management and regulators over the effectiveness of governance, risk management, and controls that mitigate current and evolving risks and enhance the control culture within Citigroup and Citibank Berhad.

The scope of the audit activities are reviewed and endorsed by the Audit Committee while audits are carried out on a risk-based approach, to provide an independent and objective report on operational and management activities.

The Audit Committee regularly reviews and deliberates with management on the actions taken on internal control issues identified in reports prepared by Internal Audit, the external auditors, regulatory authorities and the management themselves.

The management of Citibank Berhad has also set up a Country Coordinating Committee, Business Risk Compliance and Control Committee, Legal Vehicle Committee, Asset and Liability Committee, Country Legal and Compliance Committee and Management Committee as part of its monitoring function to ensure effective management and supervision of the areas under the respective Committee’s purview.

Citibank Berhad has also adopted the Citi Code of Conduct which expresses the values that each employee is expected to appreciate and apply in their respective working life.

Ethics hotlines are made available to employees who wish to voice concerns about suspected violations of law or industry regulation as well as actions that may fail to live up to the Bank’s high standards of ethical conduct.

The Bank has an internal policy prohibiting retaliatory actions against any individual for raising legitimate concerns or questions regarding ethical matters, or for reporting suspected violations.


ManagementReports

The pre-set agenda, management reports and other ad-hoc proposals or applications are circulated to the Directors prior to the actual Board meetings.

This enables the Board of Directors to assess the overall performance of the Bank and make sound management decisions.

Management reports presented to the Board include, among others, the following:

● Economic Updates

● Business Plans

● Year to date Financial Performance Report

● Financial performance by major business segments

● Quarterly Performance Scorecard

● Semi-annual BNM Stress Tests Results

● Credit Risk Management Report

● Liquidity & Market Risk Management Reports

● Quarterly Derivative Outstanding Report

● Minutes of Audit Committee meetings

● Minutes of Risk Management Committee meetings

● Minutes of Nominating Committee meetings

● Minutes of Shariah Committee meetings


RAM Rating Services Berhad (“RAM”) has, on 19 December 2014, reaffirmed the AAA/Stable/P1 financial institution ratings of Citibank Berhad.

The stable rating outlook reflects Citibank’s market position in the consumer-banking arena will remain intact and that the Bank will maintain its strong funding and liquidity profile, as well as preserve its asset quality and healthy capitalization.

Bank Rating Symbolsand Definitions:

AAA A financial institution rated AAA has a superior capacity to meet its financial obligations. This is the highest long-term FIR assigned by RAM Ratings.

P1 A financial institution rated P1 has a strong capacity to meet its short-term financial obligations. This is the highest short-term FIR assigned by RAM Ratings.

RatingsStatement


ShariahCommittee

Citibank Berhad's Shariah Committee is responsible for the provision of Shariah oversight in relation to Citibank Berhad‘s Islamic Banking business operations. The duties and responsibilities of the Shariah Committee are governed by the Shariah Governance Framework for Islamic Financial Institution as issued by the Bank Negara Malaysia (BNM).

For the year 2014, the Shariah Committee convened 11 times. Additionally, individual Shariah Committee members participated in various business discussions where Shariah advice was required prior to submission to the full Shariah Committee.

Citibank Berhad‘s Islamic Banking business operations were subjected to a full Shariah audit conducted jointly by Citibank Berhad‘s Internal Audit together with Citi‘s Global Islamic Control unit. The Shariah Committee reviewed the findings of the Shariah audit and was satisfied with the report and its findings.

Citibank Berhad‘s Shariah Committee effective from 1 June 2013 included the following distinguished members:

Professor Dr. Abdul Ghafar Ismail (Chairman)

Abdul Ghafar Ismail has been a Professor in Banking and Financial Economics, School of Economics, Universiti Kebangsaan Malaysia (UKM) since 2003. He is currently the Head of Islamic Economics and Finance Research Division, Islamic Research and Training Institute (IRTI), Islamic Development Bank (IDB), Saudi Arabia.

He has published extensively in several refereed journals among others Journal of Business Ethics; Review of Islamic Economics; Journal of Islamic Economics, Banking and Finance; Humanomics; International Journal of Social Economics; Savings and Development; Global Journal of Finance and Economics; Review of Financial Economics; Journal of Financial Services Marketing; International Journal of Islamic and Middle Eastern Finance and Management; Australian Journal of Basics and Applied Sciences; Research in Financial Qualitative Markets; and Investment Management and Financial Innovations. His papers have also been presented in many international and local conferences, such as International Seminar on Islamic Economics and Finance, IRTI International Conference and Malaysia Finance Association Conference.

He has also published several textbooks among others, Ar-Rahnu: Islamic Pawnbroking; and Money, Islamic Banks and Real Economy. His research interests include

learning process and growth theory, inter-temporal allocation of resources, earning management, capital adequacy standard for Islamic banks, and risk management. He has been a lecturer since 1987 and has been teaching several economics courses such as money and banking, financial economics, advanced macroeconomics, money and capital market in Islam, Islamic economics system, Islamic economics analysis, and international finance; risk management in Islamic banking; issues in Islamic banking; Islamic banking; and money, zakat and real economy.

He holds a PhD from the University of Southampton, England.

En. Mohd Bahroddin Badri(Deputy Chairman)

Mohd Bahroddin is a researcher at the International Shariah Research Academy (ISRA). Prior to that, he was attached to International Islamic University Malaysia (“IIUM”) as a lecturer in the Department of Islamic Revealed Knowledge and Human Resources.

He is actively involved in Islamic finance and Shariah related seminars, workshops and trainings organised by ISRA and Bank Negara Malaysia (“BNM”) to name few. He has also published outstanding research papers such as Critical Appraisal of the Rahn-based Islamic Microcredit Facility, Shariah Analysis on Gold Investment Products in Malaysia, Shariah Analysis on Zakat in Gold Investment, Kafalah bil Ujrah in Islamic Banking Guarantee Product: A Shariah Analysis, Fiqh of Risk Sharing in Islamic Finance and Shariah Rules and Interpretations Across Jurisdictions: Towards Greater Global Connectivity in Islamic Finance.

He holds Bachelor of Islamic Revealed Knowledge (Fiqh & Usul Fiqh) from IIUM and Master Degree in Shariah from University of Malaya.

En. Nik Abdul Rahim binNik Abdul Ghani

Nik Abdul Rahim is a lecturer of Fiqh Muamalat at Department of Shariah, Faculty of Islamic Studies, UKM.

He regularly conducts lectures, researches and presents papers at seminars and conferences, both locally and internationally on the areas of Fiqh Muamalat and Usul Fiqh particularly those related to Islamic banking, Islamic insurance (Takaful) and current issues of Islamic transaction laws.


ShariahCommittee

He is currently a member of the Research Centre for Islamic Economics and Finance (EKONIS) or formerly known as Islamic Economics and Finance Research Group. He is also a member of the committee of Klinik Hukum Syarak and Guaman Syarie, Department of Shariah, and an expert consultant and speaker for Pusat Islam UKM and Unit Latihan UKM programmes related to Islamic Law.

He holds a Master Degree in Shariah from UKM and currently is a PhD candidate at International Centre for Education in Islamic Finance (“INCEIF”).

En. Mat Noor Mat Zain

Mat Noor Mat Zain is a lecturer at the Department of Shariah, Faculty of Islamic Studies, UKM.

His specialisation areas are in Fiqh Muamalah, Islamic Contract and Islamic Family Law. He has extensive research experience in the area of Fiqh Muamalah and Islamic Finance such as Instruments of Islamic Hedging, Term and Condition in Standard Form Contract. He teaches several courses related to Muamalah and Islamic Jurisprudence such as Fiqh Muamalat, Islamic Finance, and Principles of Islamic Jurisprudence.

He has presented many papers related to Islamic banking and finance at domestic and international level. He is a consultant for UKM Pakarunding, an expert speaker for ILIM/JAKIM programmes related to Fiqh Muamalah and consulting article assessors in several journals such as The Journal of Muamalat and Islamic Finance Research (“JMIFR”) published by Islamic Science University of Malaysia (“USIM”).

He holds a Bachelor of Shariah from Islamic University of Medina, Saudi Arabia, Master Degree in Islamic Studies (Muamalah) from UKM and currently a PhD candidate in the field of Islamic Contract.

Dr. Mohammad Firdaus BinMohammad Hatta Mohammad Firdaus is a senior lecturer at the Department of Islamic Banking, Faculty of Business Management, Mara University of Technology (“UITM”).

He has also published outstanding research papers such as The Impact of Islamic Financial System on Malaysian Economy, Islam in Malaysia and Its Political Dimensions: Past, Present and Future, The IMF and World Bank: The Growth - or Crisis Promoters?, Concept and the application of Kafalah in Bank’s Letter of Guarantee and Effect of Sub-Prime Crisis on the Global Economy and

How Such Crisis should have been Averted in an Islamic Finance Environment among others.

He holds Bachelor of Bachelor of Shariah from Islamic University of Medina, Saudi Arabia, Master Degree in Fiqh & Usul Fiqh from IIUM, Diploma in Islamic Finance, Markfield Institute of Higher Education and Phd in Islamic Banking from the University of Wales, United Kingdom.

Dr. Hakimah Hj Yaacob

Hakimah Yaacob is a researcher at ISRA. She is also a certified arbitrator and mediator by the Malaysian Bar Council and Malaysian Chartered of Arbitration Association (“CIArb”).She has written many books such as Alternative Dispute Resolution (“ADR”): Expanding Options in Islamic Finance Dispute.

She is a certified negotiator and drafter in the International Contract from International Chamber of Commerce (“ICC”). She is a professional trainer in Islamic Finance. She has conducted local and international trainings in Islamic Finance for government sectors, government linked companies, statutory bodies and private entities. She has received the best paper award and has presented many papers at international level such as the World Bank Conference in Bahrain, Accounting and Auditing Organisation of Islamic Finance (“AAOIFI”) on International Convention for Islamic Finance.

She holds Bachelor and Master Degree in Law and PhD in Victimology and Takaful Justice.

Dr. Ruzian Hj Markom

Ruzian Markom is a senior lecturer at the Department of Law, UKM.

Her specialisation areas are in Islamic Banking, Takaful, Islamic Capital Market, Consumer Protection and Law. She has extensive research experience such as Renewable Energy Act 2011 and the Feed Tariff System: An Islamic Legal Analysis; Steps to Eradicate Loan Shark Activities in Malaysia According To Islamic And Civil Law; Regulations of Consumer Credit Laws in Malaysia; Sovereignty and Transformational Challenges Facing Islamic Financial System at the Central Bank Level: Towards A New Model, Litigation as Dispute Resolution Mechanism in Islamic Finance: Malaysian Experience. European Journal of Law and Economics and The Current Practices of Islamic Build Operate Transfer (“BOT”) Financing Contracts: A Legal Analysis.

She holds Bachelor Degree in Law, Master in Business Law and PhD in Law from IIUM.

Directors’ Report

Statement By Directors

Declaration Pursuant

Shariah Committee‘sReport

IndependentAuditors’ Report

Statements OfFinancial Position

Statements Of ProfitOr Loss And Other

Comprehensive Income

Statements OfChanges In Equity

Statements OfCash Flows

Notes To TheFinancial Statements

FINANCIAL STATEMENTS

C O N T E N T S

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45

46

47

48

49

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52

The Directors have pleasure in submitting their report and the audited financial statements of the Group and the Bank for the year ended 31 December 2014.

Principal activitiesThe Bank is principally engaged in banking and related financial services that also include Islamic Banking business whilst the principal activities of the subsidiaries are stated in Note 12 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

Results Group and Bank

RM’000

Profit before taxation 702,751Tax expense (178,726) Profit for the year 524,025

Reserves and provisions There were no material transfers to or from reserves and provisions during the year under review except as disclosed in the financial statements.

DividendsSince the end of the previous financial year, the Bank paid a single tier ordinary dividend of 411 sen per ordinary share totalling RM500 million in respect of the year ended 31 December 2013 on 20 June 2014.

The final ordinary dividend recommended by the Directors in respect of the year ended 31 December 2014 is 329 sen per ordinary share totalling RM400 million.

Bad and doubtful debts and financingBefore the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that actions had been taken in relation to the writing off of bad debts and financing and the making of provisions for impaired debts and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate provisions made for impaired debts and financing.

At the date of this report, the Directors are not aware of any circumstances, which would render the amount written off for bad debts and financing, or the amount of the provision for impaired debts and financing, in the financial statements of the Group and the Bank inadequate to any substantial extent.

Current assetsBefore the financial statements of the Group and the Bank were made out, the Directors took reasonable steps

to ascertain that the value of any current assets, other than debts and financing, which were unlikely to be realised in the ordinary course of business, as shown in the accounting records of the Group and the Bank, have been written down to an amount which they might be expected to realise.

At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and the Bank misleading.

Valuation methodsAt the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities in the financial statements of the Group and the Bank misleading or inappropriate.

Contingent and other liabilitiesAt the date of this report, there does not exist:

(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year and which secures the liabilities of any other person, or

(b) any contingent liabilities in respect of the Group or the Bank that has arisen since the end of the financial year other than those incurred in the ordinary course of business.

No contingent or other liability of the Group and the Bank have become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and the Bank to meet their obligations as and when they fall due.

Change of circumstancesAt the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and the Bank, that would render any amount stated in the financial statements misleading.

Items of an unusual natureThe results of the operations of the Group and the Bank for the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature, in the opinion of the Directors, likely to affect substantially the results of the operations of the Group and the Bank for the current financial year in which this report is made.

Directors’ ReportFor The Year Ended 31 December 2014


Compliance with Bank Negara Malaysia’s expectations on financial reportingIn the preparation of the financial statements, the Directors have taken reasonable steps to ensure that Bank Negara Malaysia’s expectations on financial reporting have been complied with, including those as set out in the Guidelines on Financial Reporting and the Guidelines on Classification and Impairment Provisions for Loans/Financing.

Directors’ interests in sharesThe interests in the ordinary shares and options over shares of the Bank and of its related corporations of those who were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of USD1 each At At 1.1.2014 Bought Sold 31.12.2014Shares in Citigroup Inc. Direct interests Dato’ Siow Kim Lun @ Siow Kim Lin 900 - - 900 Agnes Liew Yun Chong 20,026 7,610 - 27,636 Terence Kent Cuddyre 1,043 905 355 1,593

Number of ordinary shares of USD1 each At At 1.1.2014/ Granted Vested 31.12.2014 7.10.2014 Capital Accumulation Program/ Supplementary CAP/SEA in Citigroup Inc.

Lee Lung Nien (appointed on 7.10.2014) 21,591 - - 21,591 Agnes Liew Yun Chong 19,376 4,625 7,610 16,391 Terence Kent Cuddyre 2,302 604 905 2,001

Number of options over ordinary shares of USD1 each At At 1.1.2014 Granted Forfeited 31.12.2014 Stock Option Plan in Citigroup Inc.

Agnes Liew Yun Chong 3,600 - - 3,600 Terence Kent Cuddyre 816 - - 816

None of the other Directors holding office at 31 December 2014 had any interest in the ordinary shares and options over ordinary shares of the Bank and of its related corporations during the financial year.

Directors of the BankDirectors who served since the date of the last report are:

● Lee Lung Nien (appointed on 7 October 2014)

● Datuk Ali Bin Tan Sri Abdul Kadir (appointed on 6 May 2014)

● Dato’ Siow Kim Lun @ Siow Kim Lin● Agnes Liew Yun Chong● Terence Kent Cuddyre● Dato’ Dr. Thillainathan A/L Ramasamy ● Sanjeev Nanavati (resigned on 1 August 2014)

● Tan Sri Dato’ Hj. Omar Bin Ibrahim (resigned on 1 May 2014)



Directors’ benefitsSince the end of the previous financial year, no Director of the Bank has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of related corporations) by reason of a contract made by the Bank or a related company with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures of the Bank or any other body corporate apart from the Directors above who were granted options to subscribe for shares in the ultimate holding company under various stock incentive and purchase schemes where the price and terms are as determined by the said schemes.

Issue of shares and debenturesThere were no changes in the issued and paid-up capital of the Bank during the financial year.

There were no debentures issued during the financial year.

Options granted over unissued sharesNo options were granted to any person to take up unissued shares of the Bank during the financial year.

AuditorsThe auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Lee Lung Nien

Dato’ Dr. Thillainathan A/L Ramasamy

Kuala LumpurDate: 19 June 2015



In the opinion of the Directors, the financial statements set out on pages 47 to 143 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Bank as of 31 December 2014 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Lee Lung Nien

Dato’ Dr. Thillainathan A/L Ramasamy


Statement By DirectorsPursuant To Section 169(15) Of The Companies Act, 1965


I, Tang Wan Chee, the officer primarily responsible for the financial management of Citibank Berhad, do solemnly and sincerely declare that the financial statements set out on pages 47 to 143 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Kuala Lumpur on 19 June 2015.

Tang Wan Chee

Before me:

Commissioner for Oaths

Declaration PursuantTo Section 169(16) Of The Companies Act, 1965


We, members of Citibank Berhad Shariah Committee hereby confirm that we have reviewed the principles and the contracts relating to the transactions and applications introduced by Citibank Berhad’s Islamic Banking division during the financial year ended 31 December 2014.

We have also conducted our review to form an opinion as to whether Citibank Berhad’s Islamic Banking division has complied with the Shariah principles and with the Shariah rulings issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us.

The management of Citibank Berhad’s Islamic Banking division is responsible for ensuring that the financial institution conducts its business in accordance with Shariah principles. It is our responsibility to form an independent opinion, based on our review of the operations of the Citibank Berhad’s Islamic Banking division, and to report to you.

We have assessed the work carried out by Shariah Compliance Officer and internal Shariah audit which included examining, on a test basis, each type of transaction, the relevant documentation and procedures adopted by the Citibank Berhad’s Islamic Banking division.

We planned and performed our review so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Citibank Berhad’s Islamic Banking division has not violated the Shariah principles.

In our opinion:

1. the contracts, transactions and dealings entered into by the Citibank Berhad’s Islamic Banking division during the year ended 31 December 2014 that we have reviewed are in compliance with the Shariah principles; and

2. the allocation of profit and charging of losses relating to investment accounts conform to the basis that had been approved by us in accordance with Shariah principles.

We, the members of Citibank Berhad Shariah Committee, do hereby confirm that the operations of the Citibank Berhad’s Islamic Banking division for the year ended 31 December 2014 have been conducted in conformity with the Shariah principles.

We beg Allah the Almighty to grant us success and lead us on the right path.

Wassalamu Alaikum Wa Rahmatullahi Wa Barakatuh.

Professor Dr. Abdul Ghafar Ismail Mohd Bahroddin BadriChairman of the Shariah Committee Deputy Chairman of the Shariah Committee

Nik Abdul Rahim Nik Abdul Ghani Mat Noor Mat ZainMember of the Shariah Committee Member of the Shariah Committee

Dr. Mohammad Firdaus Mohammad Hatta Dr. Hakimah Hj YaacobMember of the Shariah Committee Member of the Shariah Committee

Dr. Ruzian Hj MarkomMember of the Shariah Committee


Shariah Committee’s ReportIn The Name Of Allah, The Beneficent, The Merciful


Report on the Financial StatementsWe have audited the financial statements of Citibank Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and the Bank, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and the Bank for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 143.

Directors’ Responsibility for the Financial StatementsThe Directors of the Bank are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Bank’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

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

Independent Auditors’ ReportTo The Members Of Citibank Berhad

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Group and the Bank as of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory RequirementsIn accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its subsidiaries have been properly kept in accordance with the provisions of the Act.

b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Bank’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

c) Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

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

KPMG Ahmad Nasri bin Abdul WahabFirm Number: AF 0758 Approval Number: 2919/03/16(J)Chartered Accountants Chartered Accountant

Petaling Jaya, MalaysiaDate: 19 June 2015


Group Bank

2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 3 7,194,881 10,847,348 7,194,861 10,847,328

Deposits and placements with banks and other financial institutions 4 104,628 843,609 104,628 843,609

Securities purchased under resale agreements 1,079,867 484,631 1,079,867 484,631

Financial assets held-for-trading 5 3,562,669 2,543,577 3,562,669 2,543,577

Financial investments available-for-sale 6 2,046,945 1,792,120 2,046,945 1,792,120

Loans, advances and financing 7 21,641,546 20,498,282 21,641,546 20,498,282

Other assets 9 1,532,346 901,806 1,532,346 901,806

Statutory deposits with Bank Negara Malaysia 10 395,000 359,000 395,000 359,000

Deferred tax assets 11 19,783 19,105 19,783 19,105

Investments in subsidiary companies 12 - - 20 20

Plant and equipment 13 56,413 82,733 56,413 82,733

Total assets 37,634,078 38,372,211 37,634,078 38,372,211

Liabilities

Deposits from customers 14 26,176,674 25,783,529 26,176,674 25,783,529

Deposits and placements of banks and other financial institutions 15 4,782,586 5,856,257 4,782,586 5,856,257

Bills and acceptances payable 47,984 52,688 47,984 52,688

Other liabilities 16 2,284,812 2,352,153 2,284,812 2,352,153

Total liabilities 33,292,056 34,044,627 33,292,056 34,044,627

Equity

Share capital 17 121,697 121,697 121,697 121,697

Reserves 18 4,220,325 4,205,887 4,220,325 4,205,887

Total equity attributable to equity holder of the Bank 4,342,022 4,327,584 4,342,022 4,327,584

Total liabilities and equity 37,634,078 38,372,211 37,634,078 38,372,211

Commitments and contingencies 36 78,182,067 77,626,306 78,182,067 77,626,306

The notes on pages 52 to 143 are an integral part of these financial statements.

Statements Of Financial PositionAs At 31 December 2014


Group and Bank

2014 2013

Note RM’000 RM’000

Revenue 2(b) 2,265,523 2,206,698

Interest income 20 1,593,601 1,540,762

Interest expense 21 (427,722) (448,500)

Net interest income 1,165,879 1,092,262

Net income from Islamic banking operations 37(n) 28,505 48,909

Other operating income 22 643,417 617,027

Total net income 1,837,801 1,758,198

Other operating expenses 23 (1,001,357) (908,044)

Operating profit 836,444 850,154

Allowance for loans, advances and financing 24 (133,693) (133,285)

Profit before taxation 702,751 716,869

Tax expense 25 (178,726) (183,982)

Profit for the year 524,025 532,887

Other comprehensive (expense)/income, net of tax

Items that are or may be reclassified subsequently to profit or loss

- Net loss on revaluation of financial investments available-for-sale (6,002) (3,460)

Items that will not be reclassified subsequently to profit or loss

- Net (loss)/gain on remeasurement of defined benefit plan (3,585) 12,337

Total other comprehensive (expense)/income for the year (9,587) 8,877

Total comprehensive income for the year 514,438 541,764

Profit for the year attributable to:

Owner of the Bank 524,025 532,887

Total comprehensive income attributable to:


Earnings per share - basic (sen) 26 431 438


Statements Of Profit Or Loss AndOther Comprehensive Income For The Financial Year Ended 31 December 2014



Attributable to owner of the Bank

Non-distributable Distributable

Share Share Statutory Other Retained Total

Note Capital Premium Reserve Reserve Profits Reserves Total

Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2013 121,697 380,303 121,697 (823) 3,662,946 4,164,123 4,285,820

Net loss on revaluation of financial investments available-for-sale - - - (3,460) - (3,460) (3,460)

Net gain on remeasurement of defined benefit plans - - - 12,337 - 12,337 12,337

Total other comprehensive income for the year - - - 8,877 - 8,877 8,877

Profit for the year - - - - 532,887 532,887 532,887

Total comprehensive income for the year - - - 8,877 532,887 541,764 541,764

Dividends to owner of the Bank 27 - - - - (500,000) (500,000) (500,000)

Total contribution to owner - - - - (500,000) (500,000) (500,000)

At 31 December 2013 121,697 380,303 121,697 8,054 3,695,833 4,205,887 4,327,584

Note 17 Note 18

At 1 January 2014 121,697 380,303 121,697 8,054 3,695,833 4,205,887 4,327,584

Net loss on revaluation of financial investments available-for-sale - - - (6,002) - (6,002) (6,002)

Net loss on remeasurement of defined benefit plans - - - (3,585) - (3,585) (3,585)

Total other comprehensive expense for the year - - - (9,587) - (9,587) (9,587)

Profit for the year - - - - 524,025 524,025 524,025

Total comprehensive income for the year - - - (9,587) 524,025 514,438 514,438

Dividends to owner of the Bank 27 - - - - (500,000) (500,000) (500,000)

Total contribution to owner - - - - (500,000) (500,000) (500,000)

At 31 December 2014 121,697 380,303 121,697 (1,533) 3,719,858 4,220,325 4,342,022

Note 17 Note 18

Statements Of Changes In EquityFor The Financial Year Ended 31 December 2014


Group Bank

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before taxation 702,751 716,869 702,751 716,869

Adjustments for:

Amortisation of premium less accretion of discount of financial investments available-for-sale 105,587 81,253 105,587 81,253

Allowance for bad and doubtful debts (net of write-back) 133,693 133,285 133,693 133,285

Depreciation 32,219 35,575 32,219 35,575

Dividends from unquoted investment securities (175) (245) (175) (245)

Unrealised loss from revaluation of financial assets held-for-trading 6,838 4,445 6,838 4,445

Gain from disposal of financial investments available-for-sale (4,434) (12,237) (4,434) (12,237)

Plant and equipment written off 579 - 579 -

Loss on disposal of plant and equipment 266 32 266 32

Operating profit before working capital changes 977,324 958,977 977,324 958,977

Changes in working capital:

Deposits and placements with banks and other financial institutions 738,981 (546,834) 738,981 (546,834)

Securities purchased under resale agreements (595,236) 259,290 (595,236) 259,290

Financial assets held-for-trading (1,025,930) 497,035 (1,025,930) 497,035

Loans, advances and financing (1,276,958) (1,355,373) (1,276,958) (1,355,373)

Other assets (625,206) (79,267) (625,206) (79,267)

Statutory deposits with Bank Negara Malaysia (36,000) 79,840 (36,000) 79,840

Deposits from customers 393,145 (546,613) 393,145 (546,613)

Deposits and placements of banks and other financial institutions (1,073,671) 342,180 (1,073,671) 342,180

Bills and acceptances payable (4,704) (80,388) (4,704) (80,388)

Other liabilities (67,341) 162,894 (67,341) 162,894

Cash used in operating activities (2,595,596) (308,259) (2,595,596) (308,259)

Income taxes paid (185,239) (176,053) (185,239) (176,053)

Net cash used in operating activities (2,780,835) (484,312) (2,780,835) (484,312)

For The Financial Year Ended 31 December 2014


Group Bank

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000Cash flows from investing activities

Dividend from investment securities 175 245 175 245

Purchase of plant and equipment (10,478) (9,206) (10,478) (9,206)

Proceeds from disposal of plant and equipment 3,734 209 3,734 209

Purchase of financial investments available-for-sale (1,554,967) (3,839,635) (1,554,967) (3,839,635)

Redemption of financial investments available-for-sale 634,419 1,205,202 634,419 1,205,202

Proceeds from disposal of financial investments available-for-sale 555,485 4,181,610 555,485 4,181,610

Net cash (used in)/generated from investing activities (371,632) 1,538,425 (371,632) 1,538,425

Cash flows from financing activities

Dividend paid to owner (500,000) (500,000) (500,000) (500,000)

Net cash used in financing activities (500,000) (500,000) (500,000) (500,000)

Net (decrease)/increase in cash and cash equivalents (3,652,467) 554,113 (3,652,467) 554,113

Cash and cash equivalents at 1 January 10,847,348 10,293,235 10,847,328 10,293,215

Cash and cash equivalents at

31 December (Note 3) 7,194,881 10,847,348 7,194,861 10,847,328


Statements Of Cash FlowsFor The Financial Year Ended 31 December 2014


Citibank Berhad (“the Bank”) is a public limited liability company, incorporated and domiciled in Malaysia. The address of both its principal place of business and registered office is as follows:

45th Floor, Menara Citibank 165 Jalan Ampang50450 Kuala Lumpur

The consolidated financial statements of the Bank as at and for the year ended 31 December 2014 comprise the Bank and its subsidiaries (together referred to as the “Group”).

The Bank is principally engaged in banking and related financial services that also include Islamic Banking business whilst the principal activities of the subsidiaries are as stated in Note 12 to the financial statements.

The immediate holding company is Citigroup Holdings (Singapore) Pte. Ltd., a company incorporated in Singapore and the ultimate holding company is Citigroup Inc., a company incorporated in the United States of America.

The financial statements were authorised for issue by the Board of Directors on 19 June 2015.

1. Basis of preparation

A. Statement of compliance The financial statements of the Group and the

Bank have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements also incorporate those activities relating to Islamic Banking which have been undertaken by the Bank. Islamic Banking refers generally to the acceptance of deposits and granting of financing under the Shariah principles.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Bank:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014

• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013 Cycle)

• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)

• Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)

• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions

• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 140, , Investment Property (Annual Improvements 2011-2013 Cycle)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2016

• Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

• Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other Entities and MFRS 128, Investments in Associates and Joint Ventures – Investment Entities: Applying the Consolidation Exception

• Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations

• MFRS 14, Regulatory Deferral Accounts

• Amendments to MFRS 101, Presentation of Financial Statements – Disclosure Initiative

• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation

• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141, Agriculture – Agriculture: Bearer Plants

• Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 127, Separate Financial Statements – Equity Method in Separate Financial Statements

• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)


• MFRS 15, Revenue from Contracts with Customers

Notes To The Financial Statements


1. Basis of preparation (continued)

A. Statement of compliance (continued)


• MFRS 9, Financial Instruments (2014)

The Group and the Bank plan to apply the abovementioned accounting standards, amendments and interpretations:

• from the annual period beginning on 1 January 2015 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 July 2014, except for amendments to MFRS 1, MFRS 3, MFRS 8, MFRS 138 and MFRS 140 which are not applicable to the Group and the Bank.

• from the annual period beginning on 1 January 2016 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2016, except for MFRS 14, amendments to MFRS 5, MFRS 10, MFRS 11, MFRS 12, MFRS 127, MFRS 128, MFRS 134 and MFRS 138 which are not applicable to the Group and the Bank.

• from the annual period beginning on 1 January 2017 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2017.

• from the annual period beginning on 1 January 2018 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2018.

Material financial impact of initial application of MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments are discussed below:

(i) MFRS 15, Revenue from Contracts with Customers MFRS 15 replaces the guidance in MFRS 111,

Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Constructions of Real Estate, IC interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services. Upon adoption of MFRS 15, it is expected that the timing of revenue recognition might be different as compared with the current practices.

The adoption of MFRS 15 may result in a change in accounting policy. The Group and the Bank is currently assessing the financial impact that may arise from the adoption of MFRS 15.

(ii) MFRS 9, Financial Instruments MFRS 9 replaces the guidance in MFRS 139,

Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting.

This standard requires all financial assets to be classified based on an entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Financial assets are to be initially measured at fair value. Subsequent to initial recognition, depending on the business model under which these assets are acquired, these will be measured at either fair value or amortised cost.

This standard also specifies the requirements for the classification and measurement of financial liabilities, which are generally similar to the requirements of MFRS 139. However, this standard requires that for financial liabilities designated at fair value through profit or loss, changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income, whereas the remaining amount of the change in fair value will be presented in the income statement.

The adoption of MFRS 9 may result in a change in accounting policy. The Group and the Bank is currently assessing the financial impact that may arise from the adoption of MFRS 9.

The initial application of the other applicable accounting standards, amendments and interpretations are not expected to have any material financial impact to the current period and prior period financial statements of the Group and the Bank.

B. Basis of measurement The financial statements have been prepared on

the historical cost basis other than those disclosed in Note 2.

C. Functional and presentation of currency The financial statements are presented in Ringgit

Malaysia (“RM”), which is the Group’s and the Bank’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

D. Use of estimates and judgements The preparation of financial statements in

conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.


when assessing control only when such rights are substantive. The Bank also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Bank’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

ii. Transactions eliminated on consolidation Intra-group balances and transactions, and any

unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

B. Revenue Revenue comprises of gross interest income,

other income derived from banking operations and net income from Islamic Banking operation.

C. Interest and financing income and expense Interest income and expense are recognised in the

profit or loss using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or financial liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group and the Bank estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.

Interest income and expense presented in the statements of profit or loss and other comprehensive income include:

• Interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest rate basis; and

• Interest on financial assets held-for-trading, financial investments available-for-sale on an effective interest rate basis

D. Fees and commission Fees and commission income and expense that are

integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the effective interest rate (see (c)).

Other fees and commission income, including

account servicing fees, investment management fees, sales commission, placement fees and syndication fees – are recognised as the related services are performed. If a loan commitment is


1. Basis of preparation (continued)

D. Use of estimates and judgements (continued)

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:

• Note 2(g)(i) - Impairment losses on loans, advances and financing

Collective impairment allowance for loan losses represents management’s estimate of probable losses inherent in the portfolio. The allowance is available to absorb probable loan losses inherent in the overall portfolio.

The allowance attributed to these loans is established via a process that estimates the probable losses inherent in the portfolio based upon various analysis. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, together with analysis that reflect current trends and conditions.

• Note 2(f)(vi) - Fair value estimation for financial assets and liabilities

The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in accounting policy in Note 2(f)(vi).

• Note 2(o)(iii) - Actual valuation for employee benefits

The liability for the defined benefit plan is recognised as the present value of the defined benefit obligation less the fair value of the Plan’s assets.

2. Significant accounting policies The accounting policies set out below have been applied

consistently to the periods presented in these financial statements and have been applied consistently by the Group and the Bank, unless otherwise stated.

A. Basis of consolidation

i. Subsidiaries Subsidiaries are investees, including

unincorporated entities, controlled by the Bank. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases.

The Bank controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered


2. Significant accounting policies (continued)

D. Fees and commission (continued)

not expected to result in the draw-down of a loan, then the related loan commitment fees are recognised on a straight-line basis over the commitment period. When it is probable that a loan commitment will result in a specific lending arrangement, commitment fees are included in the measurement of the effective interest rate.

Other fees and commission expense relate mainly to transaction and service fees, which are expensed as the services are received.

E. Net trading income Net trading income comprises gains less losses

related to trading assets and liabilities, and includes all realised and unrealised fair value changes, interest, dividends and foreign exchange differences.

F. Financial assets and financial liabilities

i. Initial recognition and measurement A financial asset or a financial liability is

recognised in the statement of financial position when, and only when, the Group or the Bank becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

ii. Financial instrument categories and subsequent measurement

The Group and the Bank categorise financial instruments as follows:

Financial assets

a. Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity

instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at fair values with the gain or loss recognised in profit or loss.

b. Held-to-maturity investments Held-to-maturity investments category

comprises debt instruments that are quoted in an active market and the Group or the Bank has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

c. Loans and receivables Loans and receivables category comprises

debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

d. Financial investments available-for-sale Available-for-sale category comprises

investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(g)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a




F. Financial assets and financial liabilities (continued) ii. Financial instrument categories and subsequent

measurement (continued)

Financial liabilities (continued)

financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with the gain or loss recognised in profit or loss.

iii. Regular way purchase or sale of financial assets A regular way purchase or sale is a purchase or

sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

a. the recognition of an asset to be received and the liability to pay for it on the trade date, and

b. derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

iv. Derecognition A financial asset or part of it is derecognised

when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

v. Offsetting Financial assets and liabilities are offset and the

net amount reported in the statements of financial position when, and only when, the Group and the Bank have a legal right to set off the amounts and intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Group’s and the Bank’s trading activity.

vi. Fair value measurement Fair value of an asset or a liability, except for

share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use that asset in its highest and best use.

The determination of fair values of financial assets and financial liabilities are based on quoted market prices or dealer price quotation, for financial instruments traded in active markets without any deduction for transaction cost. The Group and the Bank also use widely recognised valuation models for determining the fair value of common and simpler financial instruments such as options and interest rate and currency swaps. For these financial instruments, inputs into models are market observable.

The Group and the Bank use valuation techniques to determine the fair value of financial assets and liabilities where quoted prices in an active market are not available. The valuation techniques used for different financial instruments are selected to reflect how the market would be expected to price the instruments, using inputs that reasonably reflect risk-return factors inherent in the instruments. Depending upon the characteristics of the financial instruments, observable market factors are available for use in most valuations, while other valuations may involve a greater degree of judgement and estimation.

The value produced by a model or other valuation techniques is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation adjustments are recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes that these




F. Financial assets and financial liabilities (continued)

vi. Fair value measurement (continued)

valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the statements of financial position.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group and the Bank can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group and the Bank recognise transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

G. Impairment

i. Financial assets At each reporting date, the Group and the Bank

assess whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets categorised as held to maturity and loans and receivables are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows on the asset that can be estimated reliably. Impairment losses are measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original effective interest rate.

The Group and the Bank assess whether objective evidence of impairment exists individually for financial assets that are individually significant. For financial assets that are not individually significant, assessment of objective evidence of impairment is done individually or/and collectively.

Objective evidence that a loan or a loan portfolio is impaired includes observable data that could include the following loss events:

• significant financial difficulty of the issuer or obligor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• observable data relating to a portfolio of financial assets such as:

i) adverse changes in the payment status of borrowers in the portfolio; and

ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

• the disappearance of an active market for a security.

Above all, a loan is also classified as impaired if the repayment conduct of the loan is past due for more than 90 days of either principal, interest or both.

If the Group and the Bank determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a separate collective assessment of impairment.

For the purposes of the collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics by using a grading process that considers obligor type, industry, geographical location, collateral type, past-due status and other relevant factors. These characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the likelihood of receiving all amounts due under a facility according to the contractual terms of the assets being evaluated.

In assessing the collective impairment, the Group and the Bank use methods as listed below depending on the loan portfolio:-

i) statistical modelling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether the current economic and credit conditions are such that the actual losses incurred are likely to be greater or less than suggested historical modelling. Default rates, loss rates and expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure they remain appropriate; or

ii) based upon historical delinquency flow rates, charge-off statistics and loss severity, adjusted for management’s judgement as to whether current economic and credit conditions are such that actual losses are likely to be greater or less than suggested by historical modelling.

Losses are recognised in the profit or loss and reflected in an allowance account against loans and advances.

An impairment loss in respect of financial investments available-for-sale is recognised in




G. Impairment (continued)

i. Financial assets (continued)

profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of a financial investments available-for-sale has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

ii. Other assets The carrying amounts of other assets (except

for deferred tax asset and assets arising from employee benefits) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the profit or loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

H. Repurchase and resale agreement Securities purchased under resale agreements are

securities which the Group and the Bank had purchased with a commitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the statements of financial position.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank have sold from its portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligations to repurchase the securities in its entirety are reflected as a liability on the statements of financial position. The securities sold under repurchase agreements are treated as pledged assets and continue to be recognised as assets in the statements of financial position.

I. Cash and cash equivalents Cash and cash equivalents consist of cash and bank

balances and short term funds that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, with original maturity within one month.

Cash and cash equivalents are categorised as loans and receivables and carried at amortised cost in the statements of financial position in accordance to the accounting policy stated in Note 2(f)(ii)(c).

J. Plant and equipment

i. Recognition and measurement Items of plant and equipment are measured at

cost less accumulated depreciation and accumulated impairment losses, if any.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the assets and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.




J. Plant and equipment (continued) i. Recognition and measurement (continued)

If significant parts of an item of plant and equipment have different useful lives, then they are accounted for as separate items (major components) of plant and equipment.

Any gain or loss on disposal of an item of plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised net within “other income” or “other expenses” in profit or loss.

ii. Subsequent costs Subsequent expenditure is capitalised only

when it is probable that the future economic benefits of the expenditure will flow to the Group and the Bank. Ongoing repairs and maintenance are expensed as incurred.

iii. Depreciation Depreciation is based on the cost of an asset

less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of the asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group and the Bank will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative periods are as follows:

• building and leasehold land 40 years - 50 years • installations 8 years - 14 years • furniture and equipment 2 years - 10 years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

K. Leased assets

i. Finance lease Leases in terms of which the Group or the Bank

assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each

period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

ii. Operating lease Leases, where the Group or the Bank does not

assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

L. Bills and acceptances payable Bills and acceptances payable represent the

Group’s and the Bank’s own bills and acceptances rediscounted and outstanding in the market.

M. Foreign currency Transactions in foreign currencies are translated

into the functional currency of the Group and the Bank at the spot exchange rates at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into the functional currency at the spot exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of financial investments available-for-sale equity instruments, which are recognised in other comprehensive income.

N. Income tax Income tax expense comprises current and

deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.




N. Income tax (continued)

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

O. Employee benefits

i. Short-term employee benefits Short-term employee benefit obligations in

respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related services are provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group and the Bank have a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Group and the Bank contribute to the Employees Provident Fund (“EPF”) for eligible employees on a monthly basis. Obligations for contributions to EPF are recognised as an expense in the profit or loss in the year to which they relate. Once the contributions have been paid, the Group and the Bank have no further payment obligations.

ii. Defined contribution plan In addition to the contribution requirement by

law, the Group and the Bank are contributing additional amounts for those employees eligible under the defined contribution plan. The contribution is made to Citibank Malaysia Official Staff Retirement Plan ("the Plan") and is recognised as an expense in the profit or loss as incurred.

iii. Defined benefit plan The Bank and certain related companies

contribute to the Citibank Malaysia Official Staff Retirement Plan ("the Plan") for eligible officers. Contributions are made based on an external actuarial report to the Plan, which is a defined benefit scheme and defined contribution scheme (as explained in item (ii) above), and is funded to the extent permitted by tax allowable Bank contributions.

The Group’s and the Bank’s net obligation in respect of the defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group and the Bank, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group and the Bank determine the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in personnel expenses in profit or loss.




O. Employee benefits (continued)

iii. Defined benefit plan (continued) When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group and the Bank recognise gains and losses on the settlement of a defined benefit plan when the settlement occurs.

iv. Share-based compensation The Group and the Bank participate in

equity-settled and cash-settled share- based compensation plan for the employees that is offered by the ultimate holding company, Citigroup Inc.. The fair value of the services received in exchange for the grant of the options is recognised as an expense in the profit or loss over the vesting periods of the grant.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market

vesting conditions are included in assumptions about the number of options that are expected to vest. At each reporting date, the Group and the Bank revise its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the profit or loss.

P. Provisions A provision is recognised if, as a result of a past

event, the Group and the Bank have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Q. Deposits from customers and deposits and placements of banks and financial institutions

Deposits from customers are stated at placement values and adjusted for accrued interest. Deposits and placements of banks and financial institutions are stated at placement values.

3. Cash and short term funds Group Bank

2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000 Cash and balances with banks and other financial institutions 54,280 84,618 54,260 84,598

Money at call and deposit placements maturing within one month 7,140,601 10,762,730 7,140,601 10,762,730

7,194,881 10,847,348 7,194,861 10,847,328

4. Deposits and placements with banks and other financial institutions Group and Bank

2014 2013

RM’000 RM’000

Bank Negara Malaysia - 100,000

Licensed banks 104,628 743,609 104,628 843,609



5. Financial assets held-for-trading

Group and Bank

2014 2013

At fair value RM’000 RM’000

Malaysian Government Treasury Bills 289,131 161,551

Malaysian Government Securities 1,407,797 100,312

Malaysian Government Investment Issues 258,803 113,221

Bank Negara Malaysia Bills/Notes 1,606,938 2,168,493 3,562,669 2,543,577

6. Financial investments available-for-sale

Group and Bank

2014 2013

At fair value RM’000 RM’000

Malaysian Government Treasury Bills/Securities 1,258,591 599,952


Bank Negara Malaysia Bills - 545,552

2,039,796 1,784,621

At cost

Unquoted securities 7,149 7,499

2,046,945 1,792,120



7. Loans, advances and financing

i. By type Group and Bank

2014 2013

RM’000 RM’000

Overdrafts 567,511 474,258 Term loans/financing

- housing loans/financing 10,383,815 9,218,551

- other term loans/financing 1,530,326 1,812,808

Bills receivable 1,113,626 1,023,755

Trust receipts - 1,223

Claims on customers under acceptance credits 654,603 761,376

Staff loans 72,803 82,866

Share margin financing 201,816 209,105

Credit cards receivables 6,580,185 6,364,477

Revolving credit 1,116,416 1,128,461

22,221,101 21,076,880

Unearned interest and income (17,016) (20,686)

Gross loans, advances and financing 22,204,085 21,056,194 Less: Allowance for impaired loans, advances and financing

- Collective assessment allowance (380,755) (368,381)

- Individual assessment allowance (181,784) (189,531)

Net loans, advances and financing 21,641,546 20,498,282

ii. By type of customer

Domestic non-bank financial institutions

- others 246,783 810,099

Domestic business enterprises

- small and medium enterprises 551,274 474,295

- others 3,122,053 2,735,094

Individuals 17,853,396 16,753,454

Foreign entities 430,579 283,252

22,204,085 21,056,194



7. Loans, advances and financing (continued)

iii. By interest/profit rate sensitivity Group and Bank

2014 2013

RM’000 RM’000 Fixed rate

- Housing loans/financing 679,077 697,459

- Other fixed rate loans/financing 10,340,347 9,873,938

Variable rate

- BLR plus 10,487,546 9,727,043

- Cost plus 697,115 757,754

22,204,085 21,056,194

iv. By sector

Primary agriculture 14,051 24,337

Mining and quarrying 77,367 41,557

Manufacturing (including agriculture based) 1,945,793 1,614,026

Electricity, gas and water 11,921 11,112

Construction 48,797 38,516

Wholesale, retail trade, restaurants and hotels 726,230 711,917

Transport, storage and communication 257,331 320,181

Finance, insurance, real estate and business services 402,342 968,580

Social & community services 23,993 20,453

Household

- consumption credit 7,428,929 6,993,296

- residential 10,006,208 9,321,700

- purchase of securities 201,816 209,105

- others 216,443 229,353

Other sectors 842,864 552,061

22,204,085 21,056,194

v. By purpose

Purchase of securities 201,816 209,105

Purchase of landed property 10,712,502 9,934,658

Purchase of fixed assets excluding land and building 1,052 1,532

Personal use 963,804 725,123

Credit card 6,580,185 6,364,477


Working capital 3,682,891 3,779,344

Other purposes 51,130 27,574

22,204,085 21,056,194



7. Loans, advances and financing (continued)

vi. Residual contractual maturity Group and Bank

2014 2013

RM’000 RM’000

Maturing within one year 10,647,258 10,443,716

One to five years 743,607 658,579

Over 5 years 10,813,220 9,953,899

22,204,085 21,056,194

vii. By geographical distribution

Within Malaysia 22,204,085 21,056,194

8. Impaired loans, advances and financing

i. Movements in impaired loans, advances and financing are as follows: Group and Bank

2014 2013

RM’000 RM’000

At 1 January 452,354 481,854

Classified as impaired during the year 601,225 657,235

Reclassified as performing during the year (287,581) (369,473)

Amount recovered (154,426) (154,339)

Amount written off (141,471) (162,922)

At 31 December 470,101 452,355

Individual assessment allowance (181,784) (189,531)

Net impaired loans, advances and financing 288,317 262,824

Ratio of net impaired loans and financing to gross loans

and financing less individual assessment allowance 1.31% 1.26%



8. Impaired loans, advances and financing (continued)

ii. Movements in impairment provisions for loans, advances and financing are as follows:

Group and Bank

2014 2013

RM’000 RM’000 Collective assessment allowance

At 1 January 368,381 357,064

Allowance made during the year, net 12,374 11,317

At 31 December 380,755 368,381

As % of gross loans, advances and financing less individual assessment allowance 1.73% 1.77%

Individual assessment allowance

At 1 January 189,531 205,769

Allowance made during the period 17,104 12,976

Written back during the year (13,455) (12,658)

Written off during the year (11,396) (16,556)

At 31 December 181,784 189,531

iii. Impaired loans, advances and financing by sector Group and Bank

2014 2013

RM’000 RM’000

Primary agriculture 7,388 7,388

Mining and quarrying 592 748

Manufacturing (including agriculture based) 29,245 28,280


Wholesale, retail trade, restaurants and hotels 14,607 12,245

Transport, storage and communication 480 61

Finance, insurance, real estate and business services 5,078 7,762

Household

- consumption credit 103,075 104,762

- residential 275,729 258,538

- purchase of securities 19,308 19,490

Other sectors 707 658

470,101 452,355

iv. Impaired loans, advances and financing by geographical distribution

Within Malaysia 470,101 452,355



9. Other assets Group and Bank

2014 2013

RM’000 RM’000 Interest/Income receivable 43,774 28,315

Other debtors, deposits and prepayments 546,404 246,439

Retirement benefits (Note 19(i)) 3,697 10,228

Derivative assets (Note 30) 916,922 600,510

Tax recoverable 21,549 16,314

1,532,346 901,806

10. Statutory deposits with Bank Negara Malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) to satisfy the Statutory Reserve Requirement (“SRR”) as per Section 26(2)(c) of the Central Bank of Malaysia Act, 2009. The amount of which is determined as a set percentage of total eligible liabilities.

11. Deferred tax assets

Recognised deferred tax assets/(liabilities) are attributable to the followings:

Reserves - Plant and Financial Retirement equipment - investments Plan - Capital available- Defined allowances Provisions for-sale Benefit Total

Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2013 (14,816) 31,833 275 - 17,292

Recognised in profit or loss 4,415 (3,755) - - 660

Recognised in other comprehensive income - - 1,153 - 1,153

At 31 December 2013/ At 1 January 2014 (10,401) 28,078 1,428 - 19,105

Recognised in profit or loss 4,467 (2,872) - - 1,595

Recognised in other comprehensive income - - 2,000 (2,917) (917)

At 31 December 2014 (5,934) 25,206 3,428 (2,917) 19,783

Deferred tax assets and liabilities are offset above as there is a legally enforceable right to set off current tax

assets against current tax liabilities.



12. Investments in subsidiary companies Group and Bank

2014 2013

RM’000 RM’000 Unquoted shares at cost – in Malaysia 20 20 Details of the wholly owned subsidiaries are as follows:

Effective Country of Ownership Name of subsidiary Principal activity incorporation Interest 2014 2013 Citigroup Nominee (Malaysia) Sdn. Bhd. Nominee company Malaysia 100% 100% Citigroup Nominees (Tempatan) Sdn. Bhd.* Nominee company Malaysia 100% 100% Citigroup Nominees (Asing) Sdn. Bhd.* Nominee company Malaysia 100% 100%

* Wholly owned by Citigroup Nominee (Malaysia) Sdn. Bhd. All income and expenditure arising from the activities of the subsidiaries have been recognised in the Bank’s

statement of profit or loss and other comprehensive income.



13. Plant and equipment Building on Furniture leasehold and Group and Bank land Installations equipment Total

Cost RM’000 RM’000 RM’000 RM’000

At 1 January 2013 6,398 111,360 332,284 450,042

Additions - 184 9,022 9,206

Disposals - (6,874) (11,343) (18,217)

Write-off (73) - - (73)

Reclassification 104,661 (104,661) - -

At 31 December 2013/1 January 2014 110,986 9 329,963 440,958

Additions 64 485 9,929 10,478

Disposals - (1,093) (9,841) (10,934)

Write-off - - (641) (641)

Reclassification (1,093) 1,093 - -

At 31 December 2014 109,957 494 329,410 439,861

Depreciation

At 1 January 2013 4,688 87,023 248,988 340,699

Charge for the year 6,628 3,468 25,479 35,575

Disposals - (6,863) (11,113) (17,976)

Write-off (73) - - (73)

Reclassifications 83,624 (83,624) - -


Charge for the year 9,540 3 22,676 32,219

Disposals - (982) (5,952) (6,934)

Write-off - - (62) (62)

Reclassification (1,093) 1,093 - -

At 31 December 2014 103,314 118 280,016 383,448

Carrying amounts

At 1 January 2013 1,710 24,337 83,296 109,343


At 31 December 2014 6,643 376 49,394 56,413



14. Deposits from customers

i. By type of deposit Group and Bank

2014 2013

RM’000 RM’000

Demand deposits 12,168,152 11,068,690

Saving deposits 1,141,457 1,117,806

Fixed deposits 8,261,530 9,231,986

Other deposits 4,545,421 4,352,378

Negotiable instruments of deposit - 10,000

Others - cash collateral 60,114 2,669

26,176,674 25,783,529

ii. Maturity structure of fixed deposits, other deposits and negotiable instruments of deposit are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Due within six months 11,628,796 12,326,286

Six months to one year 1,167,770 1,260,122

One year to three years 10,385 7,956

12,806,951 13,594,364

iii. By type of customer Group and Bank

2014 2013

RM’000 RM’000

Government and statutory bodies 7,644 7,343

Business enterprises 13,414,053 13,043,042

Individuals 11,977,544 11,886,623

Others 777,433 846,521

26,176,674 25,783,529



15. Deposits and placements of banks and other financial institutions

Group and Bank

2014 2013

RM’000 RM’000

Bank Negara Malaysia 427,069 131,422

Licensed banks 1,866,494 3,163,145

Licensed finance companies 2,489,023 2,561,690

4,782,586 5,856,257

16. Other liabilities Group and Bank

2014 2013

RM’000 RM’000

Interest/Profit payable 46,683 48,902

Other creditors and accruals 1,530,954 1,778,633

Derivative liabilities (Note 30) 707,175 524,618

2,284,812 2,352,153

17. Share capital Group and Bank

Number Number

Amount of shares Amount of shares

2014 2014 2013 2013

RM’000 ’000 RM’000 ’000 Ordinary shares of RM1 each:

Authorised 500,000 500,000 500,000 500,000

Issued and fully paid 121,697 121,697 121,697 121,697

18. Reserves Group and Bank

2014 2013

RM’000 RM’000

Share premium 380,303 380,303

Statutory reserve 121,697 121,697

Retained profits 3,719,858 3,695,833

Other reserve (1,533) 8,054

- Fair value reserve (10,285) (4,283)

- Defined benefit reserve 8,752 12,337

Total reserves 4,220,325 4,205,887

The share premium arose from the issuance of 121,696,972 ordinary shares of RM1 each at an issue price of RM4.125 per share.



18. Reserves (continued)

The statutory reserve is maintained in compliance with Section 47(2)(f) of the Financial Services Act 2013 and is not distributable as cash dividends. No transfers were made to the statutory reserve during the year as the Bank has met the reserve requirements.

The fair value reserve is in respect of unrealised fair value gains and losses on financial investments available-for-sale.

The defined benefit reserve is in respect of remeasurement of the defined benefit plan assets/liabilities.

19. Employee benefits

i. Retirement benefits

The amounts recognised in the statements of financial position are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Fair value of plan assets 26,554 36,889 Present value of the funded obligation (22,857) (26,661)

Total employee benefit assets 3,697 10,228

The Group and the Bank make contributions to a fully funded and separately administrated defined benefit scheme (“Defined Benefit Plan”) for its employees. Under the Defined Benefit Plan, eligible employees are entitled to one and a half month of the final/last drawn salary multiplied by all years of continuous employment with the Group and the Bank, not in excess of 40 upon attainment of the retirement age of 55. For employees who leave before the attainment of the retirement age, the retirement benefit will be computed based on the scale rate stipulated in the rules of the Defined Benefit Plan.

On 1 January 2007, majority of the members’ benefits accrued under the Defined Benefit Plan were converted to the new Defined Contribution Plan. Only those staff who satisfied the criteria below, will continue to be maintained under the Defined Benefit Plan (collectively, Defined Benefit Plan and Defined Contribution Plan are known as “the Plan”).

a. Age as at 31 December 2006: at least 40 years

b. Years of service as at 31 December 2006: at least 5 years

c. Sum of age and years of service as at 31 December 2006: at least 55 years



19. Employee benefits (continued)

i. Retirement benefits (continued)

Plan assets comprise: Group and Bank 2014 2013 RM’000 RM’000

Equities 13,292 11,159

Securities 13,346 9,617

Others (84) 16,113

26,554 36,889

Funding Arrangement and Policies Contribution to the Plan take into account the funding valuation results, subject to the local tax effective contribution limit up to 19% of the Plan members’ total remuneration (including the Bank’s contributions to the EPF for the members).

Results from the latest funding valuation recommend a contribution holiday for the 2015 year. The surplus under the Defined Benefit Plan will also be used to fund the contribution requirements of the Defined Contribution Plan. The funding position is reviewed quarterly by the Trustees and the Bank.

Movement in the present value of the defined benefit obligations: Group and Bank 2014 2013 RM’000 RM’000

Defined benefit obligations at 1 January (26,661) (31,391)

Settlements 5,357 2,177

Benefits paid from plan assets - 598

Current service costs and interest (2,161) (2,456)

Plan changes/amendments - (42)

Remeasurement/Actuarial gains 608 4,453

Defined benefit obligations at 31 December (22,857) (26,661)

Movement in the fair value of plan assets: Group and Bank 2014 2013 RM’000 RM’000

Fair value of plan assets at 1 January 36,889 38,934

Contributions paid into the plan* (5,301) (2,918)

Settlements (5,357) (2,177)

Benefits paid from plan assets - (598)

Remeasurement/Actuarial gains (1,276) 2,120

Interest Income 1,599 1,528

Fair value of plan assets at 31 December 26,554 36,889

* Negative employer contributions for the year 2014 and 2013 reflect transfer of funds from the Defined Benefit Plan to the Defined Contribution Plan.





The amounts recognised in the statements of profit or loss and other comprehensive income are as follows:

Group and Bank 2014 2013 RM’000 RM’000

Current service costs 984 1,205

Interest cost (486) (295)

Past services cost - 42

Plan administration cost 64 44

Amount included under “personnel costs” 562 996

Actual return on plan assets - -

Movement in the net benefit asset/(liability) recognised in the statements of financial position are as follows:


Balance as at 1 January 10,228 (270)

Included in Profit or Loss

- Current service cost (1,048) (1,205)

- Past service cost - 2,049

- Interest income 486 235

(562) 1,079

Included in Other Comprehensive Income

Remeasurement gain

- Prior year - 5,140

- Current year (668) 7,197

(668) 12,337

Other

Contributions paid by employer (5,301) (2,918)

Balance as at 31 December 3,697 10,228

The latest valuation of the Defined Benefit Plan as at 31 December 2014 was conducted by Towers Watson (Malaysia) Sdn. Bhd.. The unfunded portion of the total liability will continue to be borne by Citibank Berhad. Projected unit credit method is used to calculate the actuarial present value of promised retirement benefits.





Principal actuarial assumptions used at the reporting date (expressed as weighted averages):


Discount rate 4.75% 4.75%

Rate of increase in salary levels 5.00% 5.00%

Price inflation 3.50% 3.50%

Assumptions regarding future mortality are based on published statistics and mortality tables. The average

life expectancy of an individual retiring is at the age of 60 years.

Historical information

Group and Bank 2014 2013 2012 2011 2010

RM’000 RM’000 RM’000 RM’000 RM’000

Fair value of plan assets 26,554 36,889 38,934 37,343 37,488

Present value of the defined benefit obligation (22,857) (26,661) (31,391) (35,439) (34,633)

Surplus in the plan 3,697 10,228 7,543 1,904 2,855

Experience adjustments arising on plan assets - (losses)/gains (1,276) 2,120 1,168 (833) 9,602

Experience adjustments arising on plan liabilities - gains 608 1,775 2,866 686 1,342

Assumption adjustment on plan liabilities – gains/(losses) - 2,678 1,155 (484) (508)

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

2014 Increase Decrease RM’000 RM’000

Defined benefit obligation

Discount rate (1% movement) (1,287) 1,394

Future salary growth (1% movement) 2,143 (2,016)

Other assumptions are held constant when quantifying the sensitivity results to a particular assumption.

The sensitivity results above determine their individual impact on the Plan’s end of year defined benefit obligation. In reality, the Plan is subject to multiple external experience items which may move the defined benefit obligation in similar or opposite directions, while the Plan’s sensitivity to such changes can vary over time.




ii. Share option plan

The Group and the Bank have a number of stock option programmes for their officers and employees as part of a discretionary award package. Certain stock awards with performance conditions or certain claw back provisions are subject to variable accounting, pursuant to which the associated compensation expense fluctuates with changes in Citigroup’s stock price. Options are granted on Citigroup stock at the market value denominated in US dollar at the time of grant. Compensation cost related to awards granted to employees who meet certain age plus years of service requirements (retirement eligible employees) is accrued in the year prior to the grant date.

Group and Bank

2014 2013

Outstanding at 1 January 743,304 683,830

Granted - -

Exercised (263,406) (8,931)

Transfer in 63,733 69,040

Lapsed/Cancelled (11,187) (635)

Outstanding at 31 December 532,444 743,304

Details of share options granted during the year:

Group and Bank

2014 2013 Expiry dates - -

Average grant price per ordinary share (RM) - -

Aggregated proceeds if shares are issued (RM’000) - -

Details of share options exercised during the year:

Year of expiry 2015 2015

Average exercise price per ordinary share (RM) 17.78 13.38

Aggregated issue proceeds (RM’000) 468 120

Fair value at date of vesting (RM’000) 468 120

Terms of the options outstanding at 31 December:

Group and Bank

2014 2013 Expiry dates Exercise price - 11,182

- 732,122

532,444 -

532,444 743,304

RM 80.18

RM 13.80

RM 14.26

Jan 2014

Oct 2015

Oct 2015



iii. Share capital accumulation plan (CAP)

The Group and the Bank have a number of capital accumulation programmes for the officers and employees. The Core CAP is a discretionary award of restricted shares. The number of CAP shares in a Core CAP award is calculated using a 25% discount from the market price of Citigroup common stock. Supplemental CAP is a discretionary retention award programme composed of an award of CAP shares. The difference between Supplemental CAP award and a Core CAP award is that generally, a Supplementary CAP is given in addition to the discretionary award package and the number of shares awarded will not be based on a discount from the market price of Citigroup common stock. CAP granted in 2014 typically vest 25% each year for four years, with the first vesting date occurring 12 months after the grant date. Shares acquired upon exercise of a CAP option generally may not be sold for two years following the exercise date.

Group and Bank

2014 2013

Outstanding at 1 January 429,791 607,580

Granted 232,809 240,739

Vested (238,383) (335,637)

Lapsed/Cancelled (103,913) (56,898)

Net transferred (in)/out 100,504 (25,993)

Outstanding at 31 December 420,808 429,791

Details of CAP granted during the year:

Group and Bank

2014 2013

Expiry dates Feb 18, 2017 Feb 18, 2017

Average grant price per ordinary share (RM) 17.37 14.41

Aggregated proceeds if shares are issued (RM’000) 4,043 3,468

Details of CAP vested during the year:

Average exercise price per ordinary share (RM) 18.30 13.07

Aggregated issue proceeds (RM’000) 3,068 3,732

Fair value at date of vesting (RM’000) 4,361 3,871



20. Interest income Group and Bank 2014 2013 RM’000 RM’000 Loans and advances

- Interest income other than recoveries from impaired loans 1,217,765 1,147,135

- Recoveries from impaired loans 50,568 46,016

Money at call and deposit placements with financial institutions 169,878 165,395

Financial assets held-for-trading 42,537 38,160

Financial investments available-for-sale 33,962 61,778

Securities purchased under resale agreements 25,841 24,585

1,540,551 1,483,069

Accretion of discount 53,050 57,693

Total interest income 1,593,601 1,540,762

21. Interest expense Group and Bank 2014 2013 RM’000 RM’000

Deposits and placements of banks and other financial institutions 45,974 44,176

Deposits from customers 377,753 400,177

Others 3,995 4,147

427,722 448,500


iii. Share capital accumulation plan (CAP) (continued)

Terms of the CAP outstanding at 31 December:

Group and Bank

2014 2013 Year of expiry Grant price

- 22,765

1,220 -

36,520 -

- 60,127

- 133,190

83,776 -

- 213,709

146,570 -

152,722 -

420,808 429,791

RM 11.53

RM 12.29

RM 17.55

RM 16.46

RM 10.01

RM 10.68

RM 14.41

RM 15.36

RM 17.37

Jan 2014

Jan 2015

Jan 2015

Jan 2015

Jan 2016

Jan 2016

Feb 2017

Feb 2017

Feb 2018



22. Other operating income Group and Bank 2014 2013 RM’000 RM’000 Fee income:

Commission 158,718 154,139

Service charges and fees 7,329 13,128

Guarantee fees 6,888 6,677

Bankcard fees 237,977 214,916

Insurance premium and referral 27,597 30,399

Other fee income 78,073 64,443

516,582 483,702

Trading income:

Unrealised loss from revaluation of financial

assets held-for-trading (6,838) (4,445)

Net gain/(loss) from sales of securities

- Financial assets held-for-trading 12,870 (3,277)

- Financial investments available-for-sale 4,434 12,237

Gross dividends from financial investments available-for-sale 175 245

10,641 4,760

Other income:

Foreign exchange profit

- unrealised gain 78,459 165,955

- realised gain 29,525 31,144

Gain/(Loss) from derivatives 8,476 (68,502)

Loss on disposal of plant and equipment (266) (32)

116,194 128,565

643,417 617,027



23. Other operating expenses Group and Bank

2014 2013

RM’000 RM’000

Personnel costs - Salaries, allowances and bonuses 331,532 328,587

- Contributions to Employees Provident Fund 42,355 42,406

- Staff benefits and other compensations 41,842 35,143

- Others 4,934 9,696

420,663 415,832

Establishment costs

- Depreciation 32,219 35,575

- Rental of premises 23,304 23,625

- Hire of equipments 924 2,045

- Utilities 5,516 5,252

- Plant and equipment written off 579 -

- Others 14,651 17,667

77,193 84,164

Marketing expenses

- Advertisement and promotional expenses 33,149 43,602

- Others 596 664

33,745 44,266

Administrative and general expenses

- Processing cost 335,618 261,732

- Auditors’ remuneration

- Statutory audit 411 371

- Other services 341 305

- Stationeries and supplies 4,046 4,165

- Communication expenses 18,184 10,256

- Maintenance of office equipment 609 1,218

- Others 110,547 85,735

469,756 363,782

Total other operating expenses 1,001,357 908,044



23. Other operating expenses (continued) Group and Bank

2014 2013

RM’000 RM’000 i. CEO and Directors’ remuneration

Executive Directors (including CEO) Salary and other remuneration, including meeting allowances 3,893 2,676

Bonuses 299 766

Benefits-in-kind 326 460

Share-based payment 347 1,667

Others 234 -

Non-executive Directors

Fees 298 300

5,397 5,869

ii. Other key management personnel:

Short-term employee salary and benefits 2,066 5,505

Salary Benefits- and others in- remunerations Fees Bonuses kind Total

RM’000 RM’000 RM’000 RM’000 RM’000

Executive Director and CEO

Sanjeev Nanavati 3,453 - - 289 3,742

Lee Lung Nien 440 - 299 37 776

Non-executive Directors

Terence Kent Cuddyre - - - - -

Tan Sri Dato’ Hj Omar Ibrahim - 33 - - 33

Dato’ Siow Kim Lun @ Siow Kim Lin - 100 - - 100

Agnes Liew Yun Chong - - - - -

Dato’ Dr. Thillainathan A/L Ramasamy - 100 - - 100

Datuk Ali Bin Tan Sri Abdul Kadir - 65 - - 65

3,893 298 299 326 4,816



24. Allowance for loans, advances and financing Group and Bank

2014 2013

RM’000 RM’000 Allowance for loans, advances and financing:

Individual assessment

- allowance made during the year 17,104 12,976

- written back (13,455) (12,658) Collective assessment - allowance made during the year 12,374 11,317 Impaired loans, advances and financing - written back (87,938) (87,493)

- written off 205,608 209,143

133,693 133,285

25. Tax expense Group and Bank

2014 2013

RM’000 RM’000 Malaysian income tax

- current year 181,446 186,425

- prior year over provision (1,125) (1,783)

180,321 184,642 Deferred tax expense

- origination and reversal of temporary differences (6,914) (6,391)

- prior year under provision 5,319 5,731

178,726 183,982

A reconciliation of the effective tax expense based on the applicable tax rate is as follows:-

Group and Bank

2014 2013

RM’000 RM’000


Income tax using Malaysian tax rate of 25% 175,688 179,217

Non-deductible expenses 270 817

Others (1,426) -

174,532 180,034

Under provision in prior year 4,194 3,948

178,726 183,982



26. Earnings per share

The earnings per ordinary share has been calculated based on the profit for the year of RM524,025,000 (2013 – RM532,887,000) divided by 121,696,972 units of ordinary shares of RM 1 each issued during the financial year under review.

27. Dividends Dividends recognised by the Bank are:

Sen Total per share amount Date of RM’000 payment 2014 Final 2013 ordinary - single tier 411 500,000 20 June 2014

2013 Final 2012 ordinary - net of tax 411 500,000 28 June 2013

After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial period upon approval by the equity holder of the Bank.

Sen Total per share amount RM’000

Final 2014 ordinary - single tier 329 400,000

28. Significant related party transactions and balances

For the purpose of these financial statements, parties are considered to be related to the Group or the Bank if the Group or the Bank has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Bank and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The related parties of the Group and the Bank are:

(i) Parent companies Parent companies of the Group and the Bank are Citigroup Holdings (Singapore) Pte. Ltd. and Citigroup Inc..

(ii) Other related companies Entities which are related by virtue of having Citigroup Holdings (Singapore) Pte. Ltd. as the holding

company or having Citigroup Inc. as the ultimate holding company.

(iii) Key management personnel Key management personnel are defined as those persons having authority and responsibility for

planning, directing and controlling the activities of the Group or the Bank either directly or indirectly. The key management personnel of the Group or the Bank includes all the Directors and certain members of senior management of the Group or the Bank. Key management personnel compensation is disclosed in Note 23 (i) and (ii).



28. Significant related party transactions and balances (continued)

Transactions and balances with parent companies and other related companies Group and Bank Group and Bank

2014 2013

RM’000 RM’000 RM’000 RM’000

Parent Other related Parent Other related companies companies companies companies Income

Interest on interest bearing deposits - 14,267 - 20,667

Other income 6,817 237,375 9,805 40,883

6,817 251,642 9,805 61,550

Expenditure

Interest on interest bearing deposits - 5,817 - 8,709

Other expenses 114,793 547,602 26,173 410,061

114,793 553,419 26,173 418,770

Amount due from

Interest bearing deposits - 1,935,806 - 2,933,357

Current account balances 375 293,905 22,507 543,447

Other balances 42,887 132,372 69,206 88,419

43,262 2,362,083 91,713 3,565,223

Amount due to

Interest bearing deposits - 1,015,443 - 1,691,532

Current account balances 197,785 624,356 301,761 1,165,247

Other balances 85,595 433,435 50,909 240,863

285,380 2,073,234 352,670 3,097,642

All related party transactions are conducted at arm’s length basis and on normal commercial terms which are

not more favourable than those generally available to public.



29. Credit transactions and exposures with connected parties Group and Bank

2014 2013

RM’000 RM’000 Outstanding credit exposures with connected parties 876,150 1,252,786

Total credit exposure which is non-performing or in default - -

Total credit exposures 63,555,606 61,380,539

Percentage of outstanding credit exposures to connected parties - as a proportion of total credit exposures 1.38% 2.04%

- as a proportion of capital base 18.96% 27.58%

- which is non-performing or in default 0.00% 0.00%

The disclosure on Credit Transactions and Exposures with Connected Parties above are presented in accordance with para 9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties, which became effective on 1 January 2008.

Based on these guidelines, a connected party refers to the following:

i. Directors of the Bank and their close relatives;

ii. Controlling shareholder and his close relatives;

iii. Executive Officer, being a member of management having authority and responsibility for planning, directing and/or controlling the activities of the Bank, and his close relatives;

iv. Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status of existing credit transactions, either as a member of a committee or individually, and their close relatives;

v. Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv) above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor, and their subsidiaries or entities controlled by them;

vi. Any person for whom the persons listed in (i) to (iv) above is a guarantor; and

vii. Subsidiary of or an entity controlled by the Bank and its connected parties.

Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. They also include holdings of equities and private debt securities issued by the connected parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions no more favourable than those entered into with other counterparties with similar circumstances and creditworthiness. Due care has been taken to ensure that the creditworthiness of the connected party is not less than that normally required of other persons.



30. Derivative financial instruments

2014 2013

Positive Negative Positive Negative

Contract fair fair Contract fair fair

amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Foreign exchange related contracts:

- Forwards 46,628,915 495,957 322,926 38,338,105 252,550 147,650

- Cross currency interest rate swaps 3,728,782 190,539 169,379 4,346,640 112,908 154,316

- Options 3,031,141 34,369 25,038 2,264,685 25,948 19,241

Interest rate contracts:

- Futures 7,443,000 - - 13,132,100 - -

- Swaps 17,241,705 155,021 138,418 20,170,970 199,432 181,449

- Options 662,539 3,110 111 446,307 121 843

Equity related contracts 282,652 14,423 14,423 222,224 4,104 4,104

Others 290,624 23,503 36,880 461,870 5,447 17,015

79,309,358 916,922 707,175 79,382,901 600,510 524,618

Note 9 Note 16 Note 9 Note 16


31. Financial risk management

The Group’s and the Bank’s risk management framework are designed to monitor, evaluate and manage the principal risk they assume in conducting their activities. These risks include the following:

● credit risk

● market risk

● operational risk

1. Credit Risk

Credit risk is the risk of financial loss to the Group and the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s and the Bank’s loans and advances to customers and other banks, and investment in debt securities and when the Group or the Bank acts as an intermediary on behalf of its clients and other third parties.

The credit risk management process of the Group and the Bank relies on corporate-wide standards to ensure consistency and integrity, with business-specific policies and practices to ensure applicability and ownership. While business managers and independent risk management are jointly responsible for managing risk/return trade offs as well as establishing limits and risk management practices, the origination and approval roles are clearly defined and segregated. In addition to conforming to established corporate standards, independent credit risk management is responsible for establishing policies that comply with local regulations and any other relevant legal requirements.

Independent credit risk management is also responsible for implementing portfolio limits, including obligor limits through risk rating, maturity and business segments limits to ensure diversification of portfolios, monitoring business risk management performance, providing on-going assessment of portfolio credit risk and approving new products.

Continuous monitoring of credit behaviour aided by sophisticated scoring modules, plus portfolio delinquency performance allows independent credit risk management to constantly assess the health of the credit portfolio.

The Group and the Bank secure various forms of collateral to mitigate credit risk exposures. The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows:

● for residential mortgages - charges over residential properties

● for commercial property loans - charges over the properties being financed

● for share margin financing - pledges over quoted securities

● for other loans - charges over business assets such as premises, inventories, trade receivables or deposits



31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration

The following tables present the Group’s maximum exposure to credit risk of its on and off balance sheet financial instruments at each reporting dates, by industry and geographical analysis, before taking into account collateral held or other credit enhancements.

i. By Industry analysis

Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Primary Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2014 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

Cash and short term funds 2,453,700 - 4,741,181 - - - - - - - - - 7,194,881

Deposits and placements with bank and other financial institutions - - 104,628 - - - - - - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - - - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - - - - - - - - - 3,562,669

Financial investments available-for-sale 2,039,796 - - - - - - - - - - 7,149 2,046,945

Loans, advances and financing - 17,853,396 402,342 14,051 77,367 1,945,793 11,921 48,797 726,230 257,331 23,993 842,864 22,204,085

Other assets - - 1,002,811 4,594 3,354 162,729 22,835 18 23,655 21,396 7 290,947 1,532,346

Statutory deposits with Bank Negara Malaysia 395,000 - - - - - - - - - - - 395,000

9,531,032 17,853,396 6,250,962 18,645 80,721 2,108,522 34,756 48,815 749,885 278,727 24,000 1,140,960 38,120,421

Contingent liabilities - - 1,158,114 5,743 381,797 559,896 141,911 13,767 815,492 327,286 946 525 3,405,477

Commitments - 27,013,393 227,208 494 373,348 1,724,113 45,800 593 304,217 51,881 825 - 29,741,872

Total Credit Exposures 9,531,032 44,866,789 7,636,284 24,882 835,866 4,392,531 222,467 63,175 1,869,594 657,894 25,771 1,141,485 71,267,770



Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Primary Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2013 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

Cash and short term funds 6,369,000 - 4,478,348 - - - - - - - - - 10,847,348

Deposits and placements with bank and other financial institutions 100,000 - 743,609 - - - - - - - - - 843,609

Securities purchased under resale agreements 484,631 - - - - - - - - - - - 484,631

Financial assets held- for-trading 2,543,577 - - - - - - - - - - - 2,543,577

Financial investments available-for-sale 1,784,621 - - - - - - - - - - 7,499 1,792,120

Loans, advances and financing - 16,753,454 968,580 24,337 41,557 1,614,026 11,112 38,516 711,917 320,181 20,453 552,061 21,056,194

Other assets - - 525,648 7,521 16,783 106,961 2,248 19 13,435 282 12 228,897 901,806

Statutory deposits with Bank Negara Malaysia 359,000 - - - - - - - - - - - 359,000

11,640,829 16,753,454 6,716,185 31,858 58,340 1,720,987 13,360 38,535 725,352 320,463 20,465 788,457 38,828,285

Contingent liabilities - - 516,417 17,515 400,710 561,167 203,280 6,562 643,462 878,234 2,119 9,587 3,239,053

Commitments - 27,454,308 316,354 - 333,290 1,866,784 31,943 - 353,162 1,204 826 - 30,357,871

Total Credit Exposures 11,640,829 44,207,762 7,548,956 49,373 792,340 4,148,938 248,583 45,097 1,721,976 1,199,901 23,410 798,044 72,425,209

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

i. By Industry analysis (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents deposited by the subsidiaries which were eliminated in the above tables.



Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 4,682,667 1,768,939 97,567 67,960 8,647 390,022 57,001 122,078 7,194,881

Deposits and placements with banks and other financial institutions 984 103,644 - - - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - - - - - 3,562,669

Financial investments available-for-sale 2,046,945 - - - - - - - 2,046,945

Loans, advances and financing 22,204,085 - - - - - - - 22,204,085

Other assets 1,208,543 19,181 - - 1,613 74,145 36,695 192,169 1,532,346

Statutory deposits with Bank Negara Malaysia 395,000 - - - - - - - 395,000

35,180,760 1,891,764 97,567 67,960 10,260 464,167 93,696 314,247 38,120,421

Contingent liabilities 2,964,713 9,775 256,129 - 2,110 21,390 303 151,057 3,405,477

Commitments 29,741,872 - - - - - - - 29,741,872

Total Credit Exposures 67,887,345 1,901,539 353,696 67,960 12,370 485,557 93,999 465,304 71,267,770


ii. By Geographical analysis




ii. By Geographical analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 8,011,251 1,824,416 41,290 16,583 7,417 610,069 302,013 34,309 10,847,348

Deposits and placements with banks and other financial institutions 702,805 140,804 - - - - - - 843,609

Securities purchased under resale agreements 484,631 - - - - - - - 484,631

Financial assets held- for-trading 2,543,577 - - - - - - - 2,543,577

Financial investments available-for-sale 1,792,120 - - - - - - - 1,792,120

Loans, advances and financing 21,056,194 - - - - - - - 21,056,194

Other assets 770,367 2,237 19 - 1,768 100,745 26,670 - 901,806

Statutory deposits with Bank Negara Malaysia 359,000 - - - - - - - 359,000

35,719,945 1,967,457 41,309 16,583 9,185 710,814 328,683 34,309 38,828,285

Contingent liabilities 2,931,038 14,948 170,534 - 3,226 68,284 2,595 48,428 3,239,053

Commitments 30,357,871 - - - - - - - 30,357,871

Total Credit Exposures 69,008,854 1,982,405 211,843 16,583 12,411 779,098 331,278 82,737 72,425,209




31. Financial risk management (continued)

B. Deposits and placements with banks and other financial institutions

i. Deposits and placements with banks and other financial institutions analysis by credit rating Group and Bank

2014 2013

RM’000 RM’000

AAA - 600,000

AA to AA- - -

A+ to A- 104,628 143,609

Unrated - 100,000

104,628 843,609

ii. Deposits and placements with banks and other financial institutions analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

2014 2013

RM’000 RM’000

Malaysia 984 702,805

Other 103,644 140,804

104,628 843,609

C. Other securities Group and Bank

2014 2013

RM’000 RM’000

Financial assets held-for-trading 3,562,669 2,543,577

Financial investments available-for-sale 2,046,945 1,792,120

5,609,614 4,335,697




C. Other securities (continued)

i. Other securities analysis by credit rating

At the reporting date, the credit quality of investment in other securities by designation of an external credit assessment institution is as follows:-

Group and Bank

2014 2013

RM’000 RM’000

AAA - -

A+ to A- 5,602,465 4,328,198

Unrated 7,149 7,499

5,609,614 4,335,697

ii. Other securities analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

2014 2013

RM’000 RM’000

Malaysia 5,609,614 4,335,697




D. Credit quality of loans, advances and financing Group and Bank

2014 2013

RM’000 RM’000 Loans, advances and financing

- neither past due nor impaired 20,185,770 19,046,142

- past due but not impaired 1,548,214 1,557,697

- impaired 470,101 452,355

Gross amount 22,204,085 21,056,194

Individual assessment allowance (181,784) (189,531)

Collective assessment allowance (380,755) (368,381)

Carrying amount 21,641,546 20,498,282

Neither past due nor impaired

Included in the total loans, advances and financing of neither past due nor impaired are renegotiated loans. The analysis below represents the carrying amount of loans that would otherwise be past due or impaired if their terms had not been renegotiated. These renegotiated loans are considered neither past due nor impaired after they have been monitored as impaired loans until a minimum number of payments have been received under the new terms.

Group and Bank

2014 2013

RM’000 RM’000

Renegotiated loans 657,459 738,811

Past due but not impaired

Analysis of loans, advances and financing to customers that are past due but not impaired analysed based on aging are as follows:

Group and Bank

2014 2013

RM’000 RM’000

1 - 29 dpd 1,107,760 1,096,247

30 - 59 dpd 323,688 335,775

60 - 89 dpd 116,766 125,675

90 - 119 dpd - -

120 - 180 dpd - -

>180 dpd - -

1,548,214 1,557,697




D. Credit quality of loans, advances and financing (continued)

Impaired

Loans, advances and financing are classified as impaired when they meet one of the following criteria:

i. principal or interest or both are past due for three (3) months or more;

ii. where there is an individual impairment provision on the loan;

iii. impaired loans that have been rescheduled or restructured that have not met the continuous repayment behavior based on the revised rescheduled and/or restructured terms over the observation period.

Loans, advances and financing to customers that are individually impaired analysed by age are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Current 28,304 24,882

1 - 29 dpd 28,136 25,771

30 - 59 dpd 29,018 30,115

60 - 89 dpd 35,027 26,557

90 - 1 19 dpd 66,570 56,356

120 - 180 dpd 85,519 98,463

>180 dpd 197,527 190,211

470,101 452,355

Estimated value of collaterals against past due but not impaired and impaired loans are RM 780,123,000 (2013 – RM 705,890,000).



31. Financial risk management (continued) 2. Market Risk

Market risk encompasses price risk and liquidity risk, both arising from the normal course of business operations of the Group and the Bank. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return on risk.

Market risk in the Group and the Bank are managed through corporate-wide standards and business-specific policies and procedures with the help of responsible personnel and committees delegated by the Board of Directors such as the Risk Management Committee, Asset and Liability Committee and Market Risk Management. The business is required to establish risk measures, limits and controls, clearly defining approved risk profiles within the parameters of the Group’s and the Bank’s overall risk appetite and for operating within the established market risk limit framework. Independent market risk management establishes policies and procedures, approves limits and monitors exposures against limits.

Price Risk

Price risk is the risk associated to earnings arising from changes in interest rate, foreign exchange rates, equity and commodity prices and in their implied volatilities. Price risk arises in non-trading as well as trading portfolios. Price risk in non-trading portfolio is measured predominantly through earnings-at-risk and factor sensitivities supplemented with additional tools such as stress testing and cost-to-close analysis. Price risk in trading portfolios is measured through tools such as factor sensitivities, value-at-risk and stress testing.

Interest rate risk primarily results from the timing differences in the repricing of interest bearing assets, liabilities and commitments. It is also related to positions from non-interest bearing liabilities including shareholders’ funds and current accounts, as well as from certain fixed rate loans and liabilities.

The Group and the Bank are exposed to such risks associated with the effects of the fluctuations in the prevailing market interest rates on its financial positions and cash flows.

Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor. For the sensitivity analysis provided in this section, the Group and the Bank have used a 90 basis points movement for interest rates and a 4% movement in foreign exchange rates to measure the impact of these market risk movements on the Group and the Bank.

Interest rate risk – Sensitivity analysis

At 31 December 2014, it is estimated that a general increase of 90 basis points in interest rate, with all other variables held constant, would decrease the Group’s and the Bank’s profit before tax by approximately RM10,696,000 whereas a general decrease of 90 basis points in interest rate, with all other variables held constant, would have an equal but opposite effect.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the reporting date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date and that all other variables, in particular foreign exchange rates, remain constant. The above basis point increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual reporting date.

Foreign currency risk – Sensitivity analysis

As at 31 December 2014, it is estimated that a movement of 4% in Ringgit Malaysia (“RM”) against foreign currencies, with all other variables held constant, would result in maximum loss of approximately RM1,924,000.

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to the Group’s and the Bank’s exposure to currency risk for both derivative and non-derivative financial instruments in existence at that date, and that all other variables, in particular interest rate, remains constant. The sensitivity analysis includes balances where the denomination of the balances is in a currency other than the Ringgit Malaysia (“RM”).

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual reporting date. Results of the analysis represent an aggregation of the effects on the Group’s and the Bank’s profit before tax measured in the respective functional currencies, translated into Ringgit Malaysia (“RM”) at the exchange rate ruling at the reporting date for presentation purposes.




2. Market Risk (continued)

Liquidity Risk

Liquidity risk is the risk that the Group and the Bank will not be able to meet its financial commitments when due. Under the Group’s and the Bank’s internal liquidity risk management policy, there is a set of standards for the measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk. Management of liquidity is performed on a daily basis and is monitored by the Treasurer. The Asset and Liability Committee and the Treasurer undertake the joint responsibility of overall liquidity risk management which covers establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and periodic stress tests.

The Group and the Bank include the net cash flow position for derivatives as part of their daily liquidity reports under off-balance sheet items, which are consolidated together with the on-balance sheet items to monitor the overall liquidity position of the Group and the Bank. The daily report prepared to monitor the daily liquidity position is known as the Market Access Report (“MAR”). It is prepared by major currencies and it has maturity analysis ranging from overnight to more than 2 years and limits are set for each tenor bucket. Maturity mismatches are monitored through the daily MAR report for necessary treasury actions on funding and gapping.

Limits are determined by the ultimate holding company and are reviewed as often as on a quarterly basis and is done in conjunction with the liquidity stress testing.

The following table indicates the effective interest rate at the reporting dates and periods in which the financial instruments reprice or mature, whichever is earlier.

i. Interest/profit rate risk

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 6,662,319 - - - - 532,562 - 7,194,881 2.00%

Deposits and placements with banks and other financials institutions - 93,229 11,399 - - - - 104,628 2.29%

Securities purchased under resale agreements 1,079,867 - - - - - - 1,079,867 3.48%

Financial assets held-for-trading - - - - - - 3,562,669 3,562,669 3.11%

Financial investments available-for-sale - 10,004 111,737 1,779,441 145,763 - - 2,046,945 3.25%

Loans, advances and financing

- performing 2,624,452 945,210 6,989,701 653,783 10,520,838 (380,755) - 21,353,229 6.05%

- impaired - - - - - 288,317 - 288,317

Other assets - - - - - 615,424 916,922 1,532,346

Statutory deposits with Bank Negara Malaysia - - - - - 395,000 - 395,000

Deferred tax assets - - - - - 19,783 - 19,783

Plant and equipment - - - - - 56,413 - 56,413

Total assets 10,366,638 1,048,443 7,112,837 2,433,224 10,666,601 1,526,744 4,479,591 37,634,078




i. Interest/profit rate risk (continued)



Liabilities and Shareholders’ Equity

Deposits from customers 22,920,990 1,320,711 1,927,067 7,906 - - - 26,176,674 1.32%

Deposits and placements of banks and other financial institutions 4,386,299 26,982 247,703 121,602 - - - 4,782,586 3.83%

Bills and acceptances payable - - - - - 47,984 - 47,984

Other liabilities - - - - - 1,577,637 707,175 2,284,812

Total liabilities 27,307,289 1,347,693 2,174,770 129,508 - 1,625,621 707,175 33,292,056

Shareholders’ equity - - - - - 4,342,022 - 4,342,022

Total liabilities and shareholders' equity 27,307,289 1,347,693 2,174,770 129,508 - 5,967,643 707,175 37,634,078

On-balance sheet interest sensitivity gap (16,940,651) (299,250) 4,938,067 2,303,716 10,666,601 (4,440,899) 3,772,416

Off-balance sheet interest sensitivity gap 6,426,834 53,848 (1,660,349) (6,436,581) 253,303 - -

(10,513,817) (245,402) 3,277,718 (4,132,865) 10,919,904 (4,440,899) 3,772,416







Assets

Cash and short term funds 9,607,138 - - - - 1,240,210 - 10,847,348 1.37%

Deposits and placements with banks and other financials institutions - 827,682 15,004 923 - - - 843,609 2.94%

Securities purchased under resale agreements 484,631 - - - - - - 484,631 2.88%

Financial assets held-for-trading - - - - - - 2,543,577 2,543,577 3.27%

Financial investments available-for-sale - 298,216 257,413 1,180,568 55,923 - - 1,792,120 3.70%

Loans, advances and financing

- performing 2,116,631 1,310,774 7,061,004 492,718 9,622,713 (368,382) - 20,235,458 6.14%

- impaired - - - - - 262,824 - 262,824

Other assets - - - - - 301,296 600,510 901,806

Statutory deposits with Bank Negara Malaysia - - - - - 359,000 - 359,000


Plant and equipment - - - - - 82,733 - 82,733

Total assets 12,208,400 2,436,672 7,333,421 1,674,209 9,678,636 1,896,786 3,144,087 38,372,211








Liabilities and Shareholders’ Equity

Deposits from customers 22,167,030 1,415,748 2,192,795 7,956 - - - 25,783,529 1.56%

Deposits and placements of banks and other financial institutions 5,324,233 29,583 182,746 319,695 - - - 5,856,257 0.68%

Bills and acceptances payable - - - - - 52,688 - 52,688

Other liabilities - - - - - 1,827,535 524,618 2,352,153

Total liabilities 27,491,263 1,445,331 2,375,541 327,651 - 1,880,223 524,618 34,044,627

Shareholders’ equity - - - - - 4,327,584 - 4,327,584

Total liabilities and shareholders' equity 27,491,263 1,445,331 2,375,541 327,651 - 6,207,807 524,618 38,372,211

On-balance sheet interest sensitivity gap (15,282,863) 991,341 4,957,880 1,346,558 9,678,636 (4,311,021) 2,619,469

Off-balance sheet interest sensitivity gap (114,000) 12,000 (40,000) 55,000 (33,000) - -

(15,396,863) 1,003,341 4,917,800 1,401,558 9,645,636 (4,311,021) 2,619,469




ii. Foreign currency risk

Foreign currency risk results in the Group’s exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The tables below summarise the RM equivalent amount of the Group’s and the Bank’s exposure to foreign currency exchange rate risk as at reporting date:

Group MYR USD JPY Others Total

2014 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 2,567,285 3,703,571 68,354 855,671 7,194,881

Deposits and placements with banks and other financial institutions - 5,794 - 98,834 104,628

Securities purchased under resale agreements 1,079,867 - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - 3,562,669

Financial investments available-for-sale 2,046,945 - - - 2,046,945

Loans, advances and financing 20,055,478 1,518,205 25,433 42,430 21,641,546

Other assets (7,738,432) 9,988,053 (180,938) (536,337) 1,532,346

Statutory Deposits with Bank Negara Malaysia 395,000 - - - 395,000

Deferred tax assets 19,783 - - - 19,783

Plant and equipment 56,413 - - - 56,413

Total assets 22,045,008 15,215,623 (87,151) 460,598 37,634,078

Liabilities

Deposits from customers 19,039,767 5,914,331 40,872 1,181,704 26,176,674

Deposits and placements of banks and other financial institutions 3,228,119 1,336,763 4,552 213,152 4,782,586

Bills and acceptances payable 5,923 38,411 706 2,944 47,984

Other liabilities (4,378,788) 7,693,513 (127,014) (902,899) 2,284,812

Total liabilities 17,895,021 14,983,018 (80,884) 494,901 33,292,056

Shareholder’s equity 4,342,022 - - - 4,342,022

Total liabilities and shareholder’s equity 22,237,043 14,983,018 (80,884) 494,901 37,634,078



Group MYR USD JPY Others Total

2013 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 7,125,786 2,572,071 17,507 1,131,984 10,847,348

Deposits and placements with banks and other financial institutions 700,000 32,056 - 111,553 843,609

Securities purchased under resale agreements 484,631 - - - 484,631

Financial assets held- for-trading 2,543,577 - - - 2,543,577

Financial investments available-for-sale 1,792,120 - - - 1,792,120

Loans, advances and financing 18,994,052 1,319,455 138,415 46,360 20,498,282

Other assets (6,853,372) 6,844,450 (331,061) 1,241,789 901,806

Statutory Deposits with Bank Negara Malaysia 359,000 - - - 359,000

Deferred tax assets 19,105 - - - 19,105

Plant and equipment 82,733 - - - 82,733

Total assets 25,247,632 10,768,032 (175,139) 2,531,686 38,372,211

Liabilities

Deposits from customers 19,723,007 4,962,954 72,767 1,024,801 25,783,529

Deposits and placements of banks and other financial institutions 3,876,690 1,687,712 100,026 191,829 5,856,257

Bills and acceptances payable 12,091 37,781 2,112 704 52,688

Other liabilities (2,490,458) 3,761,338 (317,402) 1,398,675 2,352,153

Total liabilities 21,121,330 10,449,785 (142,497) 2,616,009 34,044,627

Shareholder’s equity 4,327,584 - - - 4,327,584

Total liabilities and shareholder’s equity 25,448,914 10,449,785 (142,497) 2,616,009 38,372,211


ii. Foreign currency risk (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.



No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2014 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 5,664,473 997,846 - - - - - - 532,562 7,194,881

Deposits and placements with banks and other financial institutions - - 93,229 6,158 5,241 - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - - 1,079,867

Financial assets held-for-trading 139,640 270,201 863,282 542,485 597,514 687,277 178,745 283,525 - 3,562,669

Financial investments available-for-sale - - 10,004 - 111,737 559,237 1,220,204 145,763 - 2,046,945

Loans, advances and financing 897,097 1,130,623 1,009,255 452,069 6,712,310 470,125 358,596 10,520,838 90,633 21,641,546

Other assets 440,443 93,539 138,861 130,669 218,007 172,029 96,950 17,540 224,308 1,532,346

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 395,000 395,000

Deferred tax assets - - - - - - - - 19,783 19,783

Plant and equipment - - - - - - - - 56,413 56,413

Total assets 8,221,520 2,492,209 2,114,631 1,131,381 7,644,809 1,888,668 1,854,495 10,967,666 1,318,699 37,634,078


iii. Analysis of assets and liabilities by remaining maturity

The following maturity profile is based on the remaining period at the reporting date to the contractual maturity.





Liabilities and shareholders’ funds

Deposits from customers 17,412,456 5,508,534 1,320,711 756,817 1,170,250 7,906 - - - 26,176,674

Deposits and placements of banks and other financial institutions 4,315,292 71,007 26,982 15,701 232,002 121,602 - - - 4,782,586

Bills and acceptances payable 564,641 (204,275) (190,669) (121,713) - - - - - 47,984

Other liabilities 1,266,834 88,677 93,487 106,670 82,346 141,102 91,784 17,903 396,009 2,284,812

Total liabilities 23,559,223 5,463,943 1,250,511 757,475 1,484,598 270,610 91,784 17,903 396,009 33,292,056

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 4,220,325 4,220,325

Total equity attributable to equity holder of the bank - - - - - - - - 4,342,022 4,342,022

Total liabilities and equity 23,559,223 5,463,943 1,250,511 757,475 1,484,598 270,610 91,784 17,903 4,738,031 37,634,078


iii. Analysis of assets and liabilities by remaining maturity (continued)





Assets

Cash and short term funds 7,270,324 2,336,813 - - - - - - 1,240,211 10,847,348

Deposits and placements with banks and other financial institutions - - 827,682 8,489 6,515 923 - - - 843,609

Securities purchased under resale agreements 484,631 - - - - - - - - 484,631

Financial assets held-for-trading 4,999 41,676 592,747 1,034,621 731,728 116,439 65,990 (44,623) - 2,543,577

Financial investments available-for-sale - - 298,216 247,336 10,077 1,099,152 81,416 55,923 - 1,792,120

Loans, advances and financing 795,543 859,230 1,366,175 408,158 6,839,140 459,877 198,702 9,953,899 (382,442) 20,498,282

Other assets 171,522 53,542 108,828 85,181 59,843 69,242 179,917 17,266 156,465 901,806

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 359,000 359,000

Deferred tax assets - - - - - - - - 19,105 19,105

Plant and equipment - - - - - - - - 82,733 82,733

Total assets 8,727,019 3,291,261 3,193,648 1,783,785 7,647,303 1,745,633 526,025 9,982,465 1,475,072 38,372,211







Liabilities and shareholders’ funds

Deposits from customers 15,892,470 6,274,561 1,415,748 932,672 1,260,122 7,956 - - - 25,783,529

Deposits and placements of banks and other financial institutions 4,427,590 896,643 29,583 55,990 126,756 319,695 - - - 5,856,257

Bills and acceptances payable 654,402 (162,376) (324,490) (114,848) - - - - - 52,688

Other liabilities 1,420,924 60,227 71,728 78,555 19,511 89,588 132,837 22,525 456,258 2,352,153

Total liabilities 22,395,386 7,069,055 1,192,569 952,369 1,406,389 417,239 132,837 22,525 456,258 34,044,627

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 4,205,887 4,205,887

Total equity attributable to equity holder of the bank - - - - - - - - 4,327,584 4,327,584

Total liabilities and equity 22,395,386 7,069,055 1,192,569 952,369 1,406,389 417,239 132,837 22,525 4,783,842 38,372,211







iv. Analysis of financial liabilities by contractual undiscounted cash flows

The table below details the remaining contractual maturities at the reporting date of the Group’s financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or if floating, based on current rates at the reporting date) and the earliest date the Group can be required to pay.

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Deposits from customers 26,176,674 26,405,824 23,071,972 1,340,968 1,984,621 8,263 -

Deposits and placements of banks and other financial institutions 4,782,586 4,783,737 4,386,516 27,068 248,551 121,602 -

Bills and acceptances payable 47,984 47,984 360,366 (190,669) (121,713) - -

Other liabilities 2,284,812 2,284,812 1,751,520 93,487 189,016 232,886 17,903

Total 33,292,056 33,522,357 29,570,374 1,270,854 2,300,475 362,751 17,903

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Deposits from customers 25,783,529 26,059,866 20,824,359 1,638,097 3,565,084 32,326 -

Deposits and placements of banks and other financial institutions 5,856,257 5,857,530 5,324,524 29,695 183,616 319,695 -

Bills and acceptances payable 52,688 52,688 492,027 (324,490) (114,849) - -

Other liabilities 2,352,153 2,352,153 1,937,409 71,728 98,066 222,425 22,525

Total 34,044,627 34,322,237 28,578,319 1,415,030 3,731,917 574,446 22,525





3. Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. It includes reputation and franchise risk associated with business practices or market conduct that the Group and the Bank may undertake and includes the risk of failing to comply with applicable laws, regulations and Citigroup policies.

Operational risk is inherent in the Group’s and the Bank’s business activities and is managed through an overall framework with checks and balances that include recognised ownership of the risk by businesses and independent risk management oversight. The Group and the Bank mitigate their operational risk by setting up its key controls and assessments according to Citigroup’s and Regulators’ standards. They are also evaluated, monitored, and managed by its sound governance structure.

The Group’s and the Bank’s Operational Risk Management clearly defines the Group’s and the Bank’s approach to operational risk management. The objective of the policy is to establish a consistent approach to assessing relevant risks and the overall control environment across the Group and the Bank, to facilitate adherence to regulatory requirements and other corporate initiatives.

32. Financial assets and liabilities

32.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

a. Loans and receivables (“L&R”);

b. Fair value through profit or loss (“FVTPL”):

- Held for trading (“HFT”);

c. Financial investments available-for-sale (“AFS”);

d. Other liabilities (“OL”).


32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount OL - HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2014

Financial Assets

Cash and short-term funds 7,194,881 7,194,881 - -

Deposits and placements with banks and other financial institutions 104,628 104,628 - -

Securities purchased under resale agreements 1,079,867 1,079,867 - -

Financial assets held-for-trading 3,562,669 - 3,562,669 -

Financial investments available-for-sale 2,046,945 - - 2,046,945

Loans, advances and financing 21,641,546 21,641,546 - -

Statutory deposits with Bank Negara Malaysia 395,000 395,000 - -

Derivatives financial assets 916,922 - 916,922 -

Interest/Income receivable 43,774 43,774 - -

Total financial assets 36,986,232 30,459,696 4,479,591 2,046,945

Financial Liabilities

Deposits from customers 26,176,674 25,984,364 192,300 -

Deposits and placements of banks and other financial institutions 4,782,586 4,461,409 321,177 -

Bills and acceptances payable 47,984 47,984 - -

Derivatives financial liabilities 707,175 - 707,175 -

Interest/Profit payable 46,683 46,683 - -

Total financial liabilities 31,761,102 30,540,440 1,220,652 -



32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount OL - HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2013

Financial Assets

Cash and short-term funds 10,847,348 10,847,348 - -

Deposits and placements with banks and other financial institutions 843,609 843,609 - -

Securities purchased under resale agreements 484,631 484,631 - -

Financial assets held-for-trading 2,543,577 - 2,543,577 -


Loans, advances and financing 20,498,282 20,490,828 7,454 -

Statutory deposits with Bank Negara Malaysia 359,000 359,000 - -

Derivatives financial assets 600,510 - 600,510 -

Interest/Income receivable 28,315 28,315 - -

Total financial assets 37,997,392 33,053,731 3,151,541 1,792,120

Financial Liabilities

Deposits from customers 25,783,529 25,694,455 89,074 -

Deposits and placements of banks and other financial institutions 5,856,257 5,496,484 359,773 -

Bills and acceptances payable 52,688 52,688 - -

Derivatives financial liabilities 524,618 - 524,618 -

Interest/Profit payable 48,902 48,902 - -

Total financial liabilities 32,265,994 31,292,529 973,465 -



32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy

MFRS 13 Fair Value Measurement requires each class of assets and liabilities measured at fair value in the statements of financial position after initial recognition to be categorised according to hierarchy that reflects the significance of inputs used in making the measurements, in particular, whether the inputs used are observable or unobservable as discussed in note2(f)(vi).

32.2.1 Financial instruments carried at fair value

Level 1 Level 2 Level 3 Total

Group and Bank RM’000 RM’000 RM’000 RM’000

2014

Financial assets

Financial assets held-for-trading 3,562,669 - - 3,562,669

Financial investments available-for-sale 2,039,796 - 7,149 2,046,945

Derivative financial assets - 916,922 - 916,922

5,602,465 916,922 7,149 6,526,536


Deposits from customers - - 192,300 192,300

Deposits and placements of banks and other financial institutions - - 321,177 321,177

Derivative financial liabilities 572,954 134,221 707,175

- 572,954 647,698 1,220,652



Level 1 Level 2 Level 3 Total

Group and Bank RM’000 RM’000 RM’000 RM’000

2013

Financial assets

Financial assets held-for-trading 2,543,577 - - 2,543,577


Loans, advances and financing - - 7,454 7,454

Derivative financial assets - 597,048 3,462 600,510

4,335,697 597,048 10,916 4,943,661


Deposits from customers - - 89,074 89,074

Deposits and placements of banks

and other financial institutions - - 359,773 359,773

Derivative financial liabilities - 509,697 14,921 524,618

- 509,697 463,768 973,465


32.2 Determination of fair value and fair value hierarchy (continued)

32.2.1 Financial instruments carried at fair value (continued)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

Transfers between Level 1 and Level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial year (2013: no transfer in either directions).






The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

Group and Bank

2014 2013

RM’000 RM’000

Financial assets

Balance at 1 January 10,916 7,591

Transfer into Level 3 - 10,288

Total losses recognised in profit or loss: Attributable to losses relating to assets that have not been realised (3,767) (6,963)

Balance at 31 December 7,149 10,916


Balance at 1 January 463,768 7,440

Transfer into Level 3 - 500,972

Total gains recognised in profit or loss: Attributable to losses relating to assets that have not been realised 183,930 (44,644)

Balance at 31 December 647,698 463,768






The following shows the valuation techniques used in the determination of fair values within Level 3.

a. Loans, advances and financing

Loans, advances and financing carried at fair value are those structured products (hybrid financial instruments) offered by the Group and the Bank. The fair values are estimated based on expected future cash flows of contractual installment payments and discounted at prevailing rates at the reporting date offered for similar products to new borrowers with similar credit profiles, where applicable. For impaired loans, if any, the fair values are deemed to approximate the carrying values, net of individual assessment allowance for bad and doubtful debts and financing. Collective assessment allowance is excluded from the carrying value.

b. Deposits from customers and deposits and placements of banks and other financial institutions

Deposits from customers and deposits and placements of banks and other financial institutions carried at fair value are those structured products (hybrid financial instruments) offered by the Group and the Bank. The fair values are estimated based on discounted contracted cash flows using rates currently offered for deposits of similar features and remaining maturities. The fair values of Islamic deposits are deemed to approximate their carrying values as at the reporting date as the profit rates are determined at the end of their holding periods based on the profit generated from the assets invested.

c. Derivative financial assets and liabilities

Fair values of financial instrument classified at Level 3 are determined using appropriate valuation technique which, includes the use of mathematical models, such as discounted cash flow models and option pricing models, comparison to similar instruments for which market observable prices exist and other valuation techniques. Valuation techniques used incorporate assumptions regarding discount rates, interest/profit rate yield curves, estimates of future cash flows and other factors, as applicable.

In respect of cash and short term funds, deposits and placements with banks and other financial institutions, securities purchased under resale agreements, other assets (excluding derivatives), bills and acceptances payable, and other liabilities (excluding derivatives), the carrying amounts in the statements of financial position approximate their fair values due to the relatively short term/ on demand nature of these financial instruments.

The fair values of other financial assets, together with the carrying amounts shown in the statements of financial position, are as follows:

Carrying Level 1 Level 2 Level 3 Total Amount Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000

2014

Financial assets Loans, advances and financing - - 21,618,988 21,618,988 21,641,546

Financial liabilities Deposits from customers - - 26,176,605 26,176,605 25,984,364

Deposits and placement of banks and other financial institution - - 4,782,586 4,782,586 4,461,409





32.2.2 Financial instruments not carried at fair value (continued)

Carrying Level 1 Level 2 Level 3 Total Amount Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000

2013

Financial assets Loans, advances and financing - - 20,522,081 20,522,081 20,490,828

Financial liabilities Deposits from customers - - 25,783,506 25,783,506 25,694,455

Deposits and placement of banks and other financial institution - - 5,856,257 5,856,257 5,496,484

32.3 Offsetting of financial assets and liabilities

The Group and the Bank enters into derivative transactions under International Swaps and Derivatives Association (“ISDA”) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions are aggregated into a single net amount that is payable by one party to the other. In certain circumstances – e.g. when a credit event such as a default occurs, all outstanding agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.

The ISDA agreements do not meet the criteria for offsetting in the statements of financial position. This is because the Group and the Bank currently do not have any legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as a by the counterparty.

The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values at statements of financial position date. The fair value for loans, advances and financing, deposits from customers and deposit and placement of banks and other financial institutions are estimated with similar methodology as discussed in 32.2.1(a) and (b).



32.3 Offsetting of financial assets and liabilities (continued)

The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.

Related

Gross amount financial

recognized/ instrument

Amount that are not

presented offset but

in the subject to

statements of netting Net

Group and Bank financial position agreement amount

2014 RM’000 RM’000 RM’000

Derivative financial assets

Foreign exchange related contracts 720,865 (1,651) 719,214

Interest rate contracts 158,131 (42,572) 115,559

Equity related contracts 14,423 - 14,423

Other contracts 23,503 (89) 23,414

916,922 (44,312) 872,610

Derivative financial liabilities

Foreign exchange related contracts (517,343) 16,738 (500,605)

Interest rate contracts (138,529) - (138,529)

Equity related contracts (14,423) 14,829 406

Other contracts (36,880) 12,745 (24,135)

(707,175) 44,312 (662,863)



Related

Gross amount financial

recognized/ instrument

Amount that are not

presented offset but

in the subject to

statements of netting Net

Group and Bank financial position agreement amount

2013 RM’000 RM’000 RM’000

Derivative financial assets

Foreign exchange related contracts 391,406 (23,142) 368,264

Interest rate contracts 199,553 (88,224) 111,329

Equity related contracts 4,104 (3,665) 439

Other contracts 5,447 (1,896) 3,551

600,510 (116,927) 483,583

Derivative financial liabilities

Foreign exchange related contracts (321,207) 39,559 (281,648)

Interest rate contracts (182,292) 66,045 (116,247)

Equity related contracts (4,104) 1,354 (2,750)

Other contracts (17,015) 9,969 (7,046)

(524,618) 116,927 (407,691)


32.3 Offsetting of financial assets and liabilities (continued)



33. Lease commitments

The Group and the Bank have lease commitments in respect of rented premises and equipment for hire, all of which are classified as operating leases. A summary of the non-cancellable long term commitments, net of sub leases are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Within 1 year 7,886 25,674

Between 1 and 5 years 2,911 5,415

10,797 31,089

34. Capital commitments Group and Bank

2014 2013

RM’000 RM’000

Capital expenditures:

Authorised and contracted for 2,410 3,803



35. Capital adequacy

A. The capital adequacy ratios are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 22,069,051 22,178,804

Total market RWA 2,318,795 2,004,327

Total operational RWA 3,401,571 3,427,065

Total Risk Weighted Asset 27,789,417 27,610,196

Computation of Capital Ratios

Common Equity Tier (I) (“CET I”) Capital 4,318,542 4,298,251

Tier 1 Capital 4,318,542 4,298,251

Total Capital 4,620,357 4,542,195

Before deducting proposed dividends:

CET I Capital ratio 15.540% 15.568%

Total Tier I Capital ratio 15.540% 15.568%

Total capital ratio 16.626% 16.451%

After deducting proposed dividends:

CET I Capital ratio 14.101% 13.757%

Total Tier I Capital ratio 14.101% 13.757%

Total Capital ratio 15.187% 14.640%

Detailed information on the risk exposures above are disclosed in the Pillar 3 disclosures of the annual report as prescribed under BNM’s Risk Weighted Capital Adequacy Framework (Basel II) – Disclosures requirements (Pillar 3).

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) dated 28 November 2012 and 27 June 2013 respectively. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components), the minimum capital adequacy requirement for common equity Tier I capital ratio and Tier I capital ratio are 4.0% and 5.5% respectively for year 2014. The minimum regulatory capital adequacy requirement remains at 8.0% (2013 – 8.0%) for total capital ratio.



35. Capital adequacy (continued)

B. The components of CET I, Tier I and Tier II Capital are as follows:

Group and Bank

2014 2013

RM’000 RM’000

Paid up ordinary share capital 121,697 121,697

Share premium 380,303 380,303

Retained profits 3,719,858 3,695,833

Other reserves 120,164 129,751

Less: Deferred tax assets (19,783) (19,105)

Defined benefit pension fund assets (3,697) (10,228)

Total CET I Capital/Tier I Capital 4,318,542 4,298,251

Innovative Tier 1 capital securities - -

Non-innovative Tier 1 stapled securities - -

Qualifying CET 1 and additional Tier 1 capital

instruments held by third parties - -

Total Tier I Capital 4,318,542 4,298,251

Tier II Capital

Collective impairment provisions* 301,815 243,944

Total Tier II Capital 301,815 243,944

Total Eligible Tier II Capital 301,815 243,944

Less: Investments in subsidiary companies - -

Total Capital 4,620,357 4,542,195

* Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM78.9million (2013: RM124.4million).



36. Commitments and contingencies

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows: 2014 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Direct credit substitutes 2,193,693 2,193,693 1,969,729

Transaction related contingent items 651,560 325,780 298,477

Short term self liquidating trade related contingencies 250,663 50,133 28,988

Forward asset purchases 309,561 309,561 50

Foreign exchange related contracts:

One year or less 25,826,352 978,066 688,789

Over one year to five years 2,871,232 398,784 191,752

Over five years - - -

Interest/Profit rate related contracts:

One year or less 4,246,358 16,202 5,044


Over five years 1,204,188 118,939 76,556

Equity related contracts:

One year or less 74,373 20,438 7,171

Over one year to five years 176,810 12,592 6,430


Debt security contracts and other commodity contracts:

One year or less 60,237 29,082 25,283

Over one year to five years 2,225 711 458


Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 516,896 103,379 103,379

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,275,523 637,762 468,730

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 6,014,307 - -

Unutilised credit card lines 21,935,146 4,387,029 3,293,079

Total 78,182,067 9,917,839 7,268,954



2013 Credit Risk Group and Bank Principal equivalent weighted amount amount assets


Direct credit substitutes 2,516,407 2,516,407 2,348,766

Transaction related contingent items 527,562 263,781 229,143

Short term self liquidating trade related contingencies 151,656 30,331 28,147

Forward asset purchases 43,428 43,428 2,140

Foreign exchange related contracts:

One year or less 21,335,774 580,044 432,001



Interest/Profit rate related contracts:

One year or less 6,193,843 27,530 9,979


Over five years 1,379,978 114,475 61,343

Equity related contracts:

One year or less 25,587 2,303 1,102



Debt security contracts and other commodity contracts:

One year or less 248,611 30,325 12,745

Over one year to five years 2,295 705 629


Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 364,271 72,854 72,854

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,855,219 927,610 696,522

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 6,216,423 - -

Unutilised credit card lines 21,921,958 4,384,392 3,291,028

Total 77,626,306 9,803,018 7,539,929

36. Commitments and contingencies (continued)



37. The operations of Islamic Banking

Statement of financial position as at 31 December 2014

Bank

2014 2013


Assets

Cash and short term funds (a) 936,041 725,216

Financial assets held-for-trading (b) 149,597 9,751

Financial investments available-for-sale (c) 50,005 249,018

Financing, advances and other loans (d) 298,094 345,725

Deferred tax assets - 1,732

Other assets (f) 197,144 28,663

Total assets 1,630,881 1,360,105

Liabilities

Deposits from customers (g) 1,093,957 994,630

Deferred tax liabilities 1,023 -

Other liabilities (h) 226,274 73,110

Total liabilities 1,321,254 1,067,740

Islamic banking funds (i) 309,627 292,365

Total liabilities and Islamic banking funds 1,630,881 1,360,105

Commitments and contingencies (s) 664,359 581,621




37. The operations of Islamic Banking (continued)

Statement of profit or loss and other comprehensive income for the financial year ended 31 December 2014

Bank

2014 2013


Income derived from investment of depositors’ funds and others (j) 28,028 32,764

Provision for financing, advances and others

written back/(made) (k) 70 (126)

Total attributable income 28,098 32,638

Income attributable to depositors (l) (7,136) (6,224)

Total attributable to the Bank 20,962 26,414

Income derived from investment of Islamic Banking Funds (m) 7,613 22,369

Total net income 28,575 48,783

Other operating expenses (o) (1,544) (4,614)


Tax expense (p) (9,670) (7,002)

Profit for the year 17,361 37,167

Other comprehensive loss, net of tax Net loss on revaluation of financial investments available-for-sale (99) (69)

Total comprehensive income for the year 17,262 37,098

Profit for the year attributable to:


Total comprehensive income attributable to:






Statement of changes in Islamic Banking funds for the financial year ended 31 December 2014

Bank

Capital Fair value Retained

funds reserve profits Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2013 20,000 169 235,098 255,267

Fair value changes on financial investments available-for-sale - (69) - (69)

Total other comprehensive income for the year - (69) - (69)

Profit for the year - - 37,167 37,167

Total comprehensive income for the year - (69) 37,167 37,098

At 31 December 2013/ 1 January 2014 20,000 100 272,265 292,365

Fair value changes on financial investments available-for-sale - (99) - (99)

Total other comprehensive loss for the year - (99) - (99)

Profit for the year - - 17,361 17,361

Total comprehensive income for the year - (99) 17,361 17,262

At 31 December 2014 20,000 1 289,626 309,627

Note 37(i)





Statement of cash flows for the financial year ended 31 December 2014

Bank

2014 2013

RM’000 RM’000

Cash flows from operating activities


Adjustments for:

Amortisation of premium less accretion of discount of investment securities (3,522) (7,658)

Provision for financing, advances and others (written back)/made (70) 126

Mark-to-market gain on financial assets held-for-trading (49) (95)

Operating profit before working capital changes 23,390 36,542

Changes in working capital:

Financial assets held-for-trading (139,797) 662,167

Financing, advances and others 47,701 51,232

Other assets (169,617) (19,413)

Deposits from customers 99,327 87,078

Other liabilities 153,165 8,142

Cash generated from in operating activities 14,169 825,748

Income taxes paid (6,803) (8,879)

Net cash generated from in operating activities 7,366 816,869

Cash flows from investing activities

Purchase of financial investments available-for-sale (49,081) (249,088)

Proceeds from disposal of financial investments available-for-sale 252,540 65,730

Net cash generated/(used in) from investing activities 203,459 (183,358)

Net increase in cash and cash equivalents 210,825 633,511

Cash and cash equivalents at 1 January 725,216 91,705

Cash and cash equivalents at 31 December (Note 37(a)) 936,041 725,216





a. Cash and short term funds Bank

2014 2013

RM’000 RM’000

Cash and balances with banks and other financial institutions 3,041 4,216

Money at call and deposit placements maturing within one month 933,000 721,000

936,041 725,216

b. Financial assets held-for-trading Bank

2014 2013

RM’000 RM’000

At fair value

Bank Negara Malaysia Islamic Bills 149,597 -

Malaysian Government Treasury Bills - 9,751

149,597 9,751

c. Financial investments available-for-sale Bank

2014 2013

RM’000 RM’000

At fair value





d. Financing, advances and others

i. By type Bank

2014 2013

RM’000 RM’000

Term financing

- Housing financing 312,032 363,374

312,032 363,374

Unearned income (12,595) (16,226)

Gross financing, advances and others 299,437 347,148

Less:

Allowance for impaired financing, advances and others

- Collective assessment allowance (687) (615)

- Individual assessment allowance (656) (808)

Total net financing, advances and others 298,094 345,725

ii. By contract

Bai’Bithamin Ajil 20,096 24,534

Diminishing Musharakah 279,341 322,614

299,437 347,148

iii. By type of customer

Domestic business enterprises

- Others 562 3,408

Individuals 298,875 343,740

299,437 347,148



d. Financing, advances and others (continued)

iv. By profit rate sensitivity Bank

2014 2013

RM’000 RM’000

Fixed rate

- Housing financing 299,437 347,148

v. By sector

Household - residential 298,875 343,740

Other sectors 562 3,408

299,437 347,148

vi. By purpose

Purchase of landed property 299,437 347,148




e. Impaired financing, advances and others

i. Movements in impaired financing, advances and others are as follows:

Bank

2014 2013

RM’000 RM’000

At 1 January 10,840 9,758

Classified as impaired during the year 1,821 6,101

Amount recovered (3,104) (3,642)

Amount written off - (1,377)

At 31 December 9,557 10,840

Individual assessment allowance (656) (808)

Net impaired financing, advances and others 8,901 10,032

Ratio of net impaired financing, advances and others to total gross financing, advances and others less individual assessment allowance 2.98% 2.90%

ii. Movements in impairment provision for financing, advances and others are as follows:

Bank

2014 2013

RM’000 RM’000

Collective assessment allowance

At 1 January 615 543

Allowance made during the year 72 72

At 31 December 687 615

As % of gross financing, advances and others less individual assessment allowance 0.23% 0.18%



e. Impaired financing, advances and others (continued)

ii. Movements in impairment provision for financing, advances and others are as follows (continued):

Bank

2014 2013

RM’000 RM’000


At 1 January 808 2,144

Allowance made during the year 61 176

Allowance written back during the year (203) (122)

Amount written off (10) (1,390)

At 31 December 656 808

iii. Impaired financing, advances and others by sector

Bank

2014 2013

RM’000 RM’000

Household - residential 9,557 10,840

f. Other assets Bank

2014 2013

RM’000 RM’000

Profit receivables 957 891

Other debtors, deposits and prepayments 178,365 5,136

Revaluation gain on profit rate undertaking contracts (Note 37(t)) 17,755 22,636

Taxation 67 -

197,144 28,663




g. Deposits from customers

i. By type of deposit Bank

2014 2013

RM’000 RM’000

Non-Mudharabah Fund

Demand deposits 946,609 834,654

Saving deposits 53,994 63,511

Other deposits 7,071 4,371

Mudharabah Fund

General investment deposits 703 6,514

Negotiable Instruments of Deposits 85,580 85,580

1,093,957 994,630

ii. By type of customer Bank

2014 2013

RM’000 RM’000

Government and statutory bodies 722,727 141,657

Business enterprises 280,744 760,135

Individuals 60,658 72,562

Others 29,828 20,276

1,093,957 994,630




h. Other liabilities Bank

2014 2013

RM’000 RM’000

Profit payable 13 36

Other creditors and accruals 208,506 50,437

Taxation - 1

Revaluation loss on profit rate undertaking contracts (Note 37(t)) 17,755 22,636

226,274 73,110

i. Islamic banking funds Bank

2014 2013

RM’000 RM’000

Fund allocated 20,000 20,000

Fair value reserve 1 100

Retained earnings 289,626 272,265

309,627 292,365

j. Income derived from investment of depositors’ funds and others

Bank

2014 2013

RM’000 RM’000

Income derived from investment of:

(i) General investment deposits 25,233 29,403

(ii) Other deposits 2,795 3,361

28,028 32,764




j. Income derived from investment of depositors’ funds and others (continued)

i. Income derived from investment of general deposits

Bank

2014 2013

RM’000 RM’000

Finance income and hibah


Money at call and placements with financial institutions 11,447 9,084

Income from financial investments available- for-sale 1,213 1,521

23,564 23,829

Accretion of discount less amortisation of premium 1,668 5,518

Total finance income and hibah 25,232 29,347

Other operating income

Fee income 1 56

Income from general investment deposits 25,233 29,403



j. Income derived from investment of depositors’ funds and others (continued)

ii. Income derived from investment of other deposits Bank

2014 2013

RM’000 RM’000

Finance income and hibah



Income from financial investments available- for-sale 134 174

2,610 2,724

Accretion of discount less amortisation of premium 185 631



Fee income - 6

Income from investment of other deposits 2,795 3,361

k. Provision for financing, advances and others (made)/written back

Bank

2014 2013

RM’000 RM’000


- made during the year (61) (176)

- written back 203 122

Collective assessment allowance

- made during the year (72) (72)

70 (126)



l. Income attributable to depositors

Bank

2014 2013

RM’000 RM’000

Deposits from customers

- Mudharabah Fund 4,181 3,330

- Non-Mudharabah Fund 2,899 2,829

Others 56 65

7,136 6,224

m. Income derived from investment of Islamic Banking funds

Bank

2014 2013

RM’000 RM’000



Income from financial investments available-for-sale 390 311

Income from securities held-for-trading - 23

7,573 5,236

Accretion of discount less amortisation of premium 1,669 1,509



Gain from financial assets held-for-trading 49 95

Fee income 637 1,011

(Loss)/Gain from trading activities (2,346) 14,394

Insurance premium and referral 31 124

(1,629) 15,624

Income from Islamic Banking Capital Funds 7,613 22,369




n. Income from Islamic banking operations

For consolidation with the conventional operations, income from Islamic Banking operations comprises the following:

Bank

2014 2013


Income derived from investment of depositors’ funds and others (j) 28,028 32,764

Income attributable to depositors (l) (7,136) (6,224)

Income derived from investment of Islamic Banking Funds (m) 7,613 22,369

28,505 48,909

o. Other operating expenses Bank

2014 2013

RM’000 RM’000

Personnel costs

- Salaries, allowances and bonuses 8 91

- Staff benefits and other compensations 24 27

- Others 156 -

Establishment costs

- Utilities - 1

- Rental 22 21

- Others 66 -

Marketing expenses

- Advertisement - 76

Administrative and general expenses

- Others 1,268 4,398

1,544 4,614

Included in other operating expenses is the Shariah Committee’s remuneration of RM306,000 (2013 – RM228,000).

p. Taxation Bank

2014 2013

RM’000 RM’000

Current tax expense 6,869 7,294

Deferred tax expense 2,801 (292)

9,670 7,002




q. Zakat

Zakat is compulsory for business activities. According to the principles of Shariah, the Muslim shareholders of the Bank are obliged to make the payment. Thus, the Bank is not responsible for the collection or payment of zakat on behalf of its Muslim shareholders and depositors as resolved by its Shariah Committee.

As of 31 December 2014, the shareholding of Citibank Berhad is 100% owned by Citigroup Holding Singapore Pte. Ltd., hence no assessment was made on zakat payable.

r. Capital adequacy

i. The capital adequacy ratios are as follows: Bank

2014 2013

RM’000 RM’000

Computation of Total Risk Weighted

Assets (“RWA”)

Total credit RWA 121,945 143,700

Total market RWA 159,484 99,584

Total operational RWA 73,038 68,023

Total Risk Weighted Assets 354,467 311,307

Computation of Capital Ratios

Common Equity Tier (I) (“CET I”) Capital 309,626 290,578

Tier 1 Capital 309,626 290,578

Total Capital 309,943 290,748

CET I Capital Ratio 87.350% 93.341%

Total Tier I Capital Ratio 87.350% 93.341%

Total Capital Ratio 87.439% 93.396%

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components and Basel II – Risk-weighted Assets) dated 28 November 2012 and 27 June 2013 respectively. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components), the minimum capital adequacy requirement for common equity Tier I capital ratio and Tier I capital ratio are 4.0% and 5.5% respectively for year 2014. The minimum regulatory capital adequacy requirement remains at 8.0% (2013 – 8.0%) for total capital ratio.



r. Capital adequacy (continued)

ii. The components of CET I, Tier I and Tier II Capital are as follows:

Bank

2014 2013

RM’000 RM’000

Fund allocated 20,000 20,000

Retained earnings 289,626 272,265

Other reserves 1 100

Less: Deferred tax assets - (1,732)

55% of cumulative gains of AFS financial

instruments (other than financing and

receivables) (1) (55)

Total CET I Capital/Tier I Capital 309,626 290,578

Tier II Capital

Collective impairment provisions* 317 170

Total Tier II Capital 317 170

Total Capital 309,943 290,748

* Excludes collective assessment allowance on impaired financing restricted from Tier II Capital by BNM of RM370,000 (2013 – RM445,000).




s. Commitments and contingencies

The off-balance sheet exposures and their related counterparty credit risk of the Bank for each reporting dates are as follows:

2014 Credit Risk Principal equivalent weighted amount amount assets


Profit rate related contracts:

One year or less - - -


Over five years 75,000 8,321 1,664

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of over one year 4,359 2,179 1,579

Total 664,359 38,084 8,760

2013

Profit rate related contracts:

One year or less - - -


Over five years 75,000 10,343 2,069

Other commitments, such

as formal standby facilities

and credit lines, with an original

maturity of over one year 6,621 3,310 2,466

Total 581,621 46,446 11,094



2014 2013

Positive Negative Positive Negative

Contract fair fair Contract fair fair

amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Islamic profit

rate undertaking

contracts 1,420,000 17,755 17,755 1,250,000 22,636 22,636

1,420,000 17,755 17,755 1,250,000 22,636 22,636

Note 37(f) Note 37(h) Note 37(f) Note 37(h)


t. Derivative financial instruments



Effective

Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading profit

Bank month months months years years sensitive book Total rate


Assets

Cash and short term funds 933,000 - - - - 3,041 - 936,041 1.75%

Financial assets

held-for-trading - - - - - - 149,597 149,597 3.02%

Financial investments available-for-sale - - 50,005 - - - - 50,005 3.44%

Financing, advances and others

- performing 565 33 318 7,071 281,893 (687) - 289,193 4.94%

- impaired - - - - - 8,901 - 8,901

Deferred tax assets - - - - - - - -

Others assets - - - - - 179,389 17,755 197,144

Total assets 933,565 33 50,323 7,071 281,893 190,644 167,352 1,630,881

Effective




Liabilities and

Islamic Banking funds

Deposits from customers 1,000,659 416 232 92,650 - - - 1,093,957 0.67%

Deferred tax liabilities - - - - - 1,023 - 1,023

Other liabilities - - - - - 208,519 17,755 226,274

Total liabilities 1,000,659 416 232 92,650 - 209,542 17,755 1,321,254

Islamic Banking funds - - - - - 309,627 - 309,627

Total liabilities and Islamic

Banking funds 1,000,659 416 232 92,650 - 519,169 17,755 1,630,881

On-balance sheet profit

sensitivity gap (67,094) (383) 50,091 (85,579) 281,893 (328,525) 149,597


u. Profit rate risk




u. Profit rate risk (continued)

Effective




Assets

Cash and short term funds 721,000 - - - - 4,216 - 725,216 2.09%

Financial assets

held-for-trading - - - - - - 9,751 9,751 3.39%

Financial investments available-for-sale - 198,848 - 50,170 - - - 249,018 2.13%

Financing, advances and others

- performing 48 44 194 4,059 331,963 (615) - 335,693 4.82%

- impaired - - - - - 10,032 - 10,032


Others assets - - - - - 6,027 22,636 28,663

Total assets 721,048 198,892 194 54,229 331,963 21,392 32,387 1,360,105

Effective




Liabilities and

Islamic Banking funds

Deposits from customers 902,760 416 1,503 89,951 - - - 994,630 0.66%

Other liabilities - - - - - 50,474 22,636 73,110

Total liabilities 902,760 416 1,503 89,951 - 50,474 22,636 1,067,740

Islamic Banking funds - - - - - 292,365 - 292,365

Total liabilities and Islamic

Banking funds 902,760 416 1,503 89,951 - 342,839 22,636 1,360,105

On-balance sheet profit

sensitivity gap (181,712) 198,476 (1,309) (35,722) 331,963 (321,447) 9,751



CITIBANK BERHAD (297089M)

45th Floor, Menara Cit ibank, 165 Jalan Ampang,50450 Kuala Lumpur

+603 2383 8585 +603 2383 6000

www.citibank.com.my

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