a m i nvestment b ank b erhad (incorporated in malaysia ... · 3/31/2008 · business franchise...

A M I N V E S T M E N T B A N K B E R H A D ( 2 3 7 4 2 - V )

(Incorporated in Malaysia) Directors’ Report and Audited Financial Statements 31 March 2008

Company No.:23742-V

AmInvestment Bank Berhad Financial Statements For The Year Ended 31 March 2008

AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES DIRECTORS’REPORT AND AUDITED FINANCIAL STATEMENTS 31 MARCH 2008 CONTENTS PAGE DIRECTORS’ REPORT 1 – 19 STATEMENT BY DIRECTORS 20 STATUTORY DECLARATION 21 REPORT OF THE AUDITORS 22 – 23 BALANCE SHEETS 24 – 25 INCOME STATEMENTS 26 STATEMENTS OF CHANGES IN EQUITY 27 – 30 CASH FLOW STATEMENTS 31 – 34 NOTES TO THE FINANCIAL STATEMENTS 35 – 166

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AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES DIRECTORS’ REPORT The directors have pleasure in presenting their report together with the audited financial statements of AmInvestment Bank Berhad for the financial year ended 31 March 2008. PRINCIPAL ACTIVITIES The Bank and its subsidiary companies, as listed in Note 15 to the financial statements, provide a wide range of merchant banking and related financial services which also include the Islamic banking business, investment advisory and asset, real estate investments and unit trusts management, stock and share-broking and futures broking. There have been no significant changes in the nature of the activities of the Group and of the Bank during the financial year. SIGNIFICANT EVENTS 1. The Bank and Saudi Arabian parties had mutually agreed to discontinue the proposed joint venture in a

company to be established for carrying on capital market activity in Saudi Arabia.

2. On 29 November 2007, the Bank had entered into a memorandum of understanding with Woori, a member of the Woori Financial Group of Korea for the purpose of promoting the cooperation in the investment banking business between the two parties, enabling both the financial groups to leverage on each other’s established business franchise and network in both the domestic and regional capital markets.

SUBSEQUENT EVENTS On 11 March 2008, the ultimate holding company, AMMB Holdings Berhad, announced a Group Proposed Internal Restructuring involving: (a) the transfer of the fund-based activities of the Bank to AmBank (M) Berhad (“AmBank”) and AmBank’s

wholly-owned subsidiary, AmIslamic Bank Berhad (“AmIslamic”) (the “Proposed Business Transfer”); and

(b) the re-alignment of the shareholding structure of certain operating subsidiaries to fully constitute the Capital Market Group and Asset Management Group (the “Proposed Internal Transfer”).

On 11 March 2008, the Bank entered into separate Business Transfer Agreement each with AmBank and AmIslamic respectively in respect of the Proposed Business Transfer.

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Bank Negara Malaysia (“BNM”) and the Ministry of Finance (“MOF”) have on 19 December 2007 approved the Proposed Business Transfer. It will be implemented by way of a vesting order (the “Order”) of the High Court of Malaya (the “Court”) to be obtained by the Bank, AmBank and AmIslamic pursuant to Section 50 of the Banking and Financial Institutions Act 1989, whereby:-

(i) Subject to exclusions as may be agreed between the Bank and AmBank, AmBank will acquire the assets and

assume the liabilities relating to the Bank’s conventional Fund-Based Activity which shall include the Bank’s 100% shareholding interest in AMIL, a licensed offshore bank; and

(ii) Subject to exclusions as may be agreed between the Bank and AmIslamic, AmIslamic will acquire the assets and assume the liabilities relating to the Bank’s Islamic Fund-Based Activity,

based on the book value of the assets and liabilities as at the date the Order comes into effect. The consideration for the Proposed Business Transfer, computed on the basis of the book value of the assets acquired less the book value of the liabilities assumed, will be settled in cash by AmBank and AmIslamic. After the completion of the Proposed Business Transfer, the Bank will restructure its capital funds and any excess thereof will be distributed to AHB (through the immediate holding company, AmInvestment Group Berhad (“AIGB”)) for working capital requirements.

The Proposed Internal Transfer, which has received BNM approval on 19 December 2007, will involve the following intra-group transfer of the following AmBank Group companies:-

(a) The Bank will acquire from AmSecurities Holding Sdn Bhd (“AMSH”) the following companies:-

(i) AmFutures Sdn Bhd (“AMF”), a licensed futures broker for a cash consideration based on book value;

(ii) AmResearch Sdn Bhd (“AMR”) involved in providing investment advice, for a cash consideration

based on book value; and

(iii) PT. AmCapital Indonesia (“AMCI”), a licensed stockbroking, which also undertake underwriting and investment management activities, for a cash consideration based on cost of investment.

(b) AIGB will acquire from the Bank the following companies:-

(i) AmInvestment Management Sdn Bhd, an asset management company for a cash consideration based on

book value; and

(ii) AmInvestment Services Berhad, an unit trust management company for a cash consideration based on book value.

In addition to the approvals of MOF and BNM, the Proposed Internal Restructuring is also subject to the approvals of Securities Commission for the Proposed Internal Transfer (other than AMCI), Badan Pengawas Pasar Modal and Lembaga Kewangan for transfer of AMCI and any other relevant authorities, if necessary.

Approvals from Labuan Offshore Financial Services Authority for the transfer of AmInternational (L) Ltd , Foreign Investment Committee and High Court of Malaya for the Proposed Business Transfer were obtained on 21 December 2007, 7 March 2008 and 12 April 2008 respectively. On 12 April 2008, the Bank completed the Business Transfer for a cash consideration of RM1,370.5 million based on the book value of the assets and liabilities as at 11 April 2008 pursuant to the Business Transfer Agreement, dated 11 March 2008 entered into with AmBank and AmIslamic.

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FINANCIAL RESULTS Group Bank RM'000 RM'000 Profit before share in results of associated companies 382,586 347,367 Share in results of associated companies 88 - Profit before taxation 382,674 347,367 Taxation (91,881) (84,922)

Net profit attributable to the shareholder of the Bank 290,793 262,445 Unappropriated profit at beginning of year 928,752 858,457 Profit available for appropriation 1,219,545 1,120,902 Proposed preference dividends (7,500) (7,500) Ordinary dividends paid (128,760) (128,760) Unappropriated profit at end of year 1,083,285 984,642 BUSINESS PLAN AND STRATEGY The Bank will continue to provide a diversified product range of conventional and Islamic investment banking services to the large corporate and institutional clients, following the transfer of the fund-based business activities into AmBank. In addition, the Bank will also continue to leverage on regional business expansion opportunities in various capital market activities through the AmBank Group’s recent partnership with Australia and New Zealand Banking Group Limited. The Bank is confident that the partnership together with the Bank’s operational efficiency and steady leadership positions in various market segments and products, will enhance its position as a leading investment bank globally.

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OUTLOOK FOR NEXT FINANCIAL YEAR The global economic environment is expected to be more challenging in 2008, due to a sharp slowdown in economic growth in the USA and moderation in other developed countries. However, strong commodity prices, domestic demand and more diversified export markets and products, will continue to benefit Malaysia, and the economy is expected to expand by 5% to 6% in 2008. The banking sector, expects sustained demand for financing, by both households and businesses, particularly with the implementation of the 9th Malaysia Plan. Although the equity markets will continue to be impacted by the broad trends affecting most regional markets, the debt markets, however, are expected to remain robust in view of the strong domestic liquidity. The active promotion of Islamic financing by the Malaysian government and growing demand for Shariah compliant securities from local and international investors provide an impetus for the issuance of the capital market securities. The Group will continue to pursue its strategy of expanding its business operations regionally whilst maintaining its leadership position in the industry. The Group is confident that it has built an infrastructure, customer base and brand-awareness that enables it to take advantage of industry growth opportunities. Further, it is envisaged that the Group’s strategic tie-up with Australia and New Zealand Banking Group Limited will elevate the Group to a level on par with international banks. ITEMS OF AN UNUSUAL NATURE In the opinion of the directors, the results of operations of the Group and of the Bank for the financial year have not been 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 likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Bank for the succeeding twelve months. DIVIDENDS During the financial year, the Bank paid a final ordinary dividend of 45.0% less 26.0% taxation and a preference dividend of 10.0% less 26.0% taxation, in respect of the previous financial year amounting to RM79,920,000 and RM7,400,000 for the ordinary and preference shares, respectively, which amount has been dealt with in the directors’ report for that financial year. In respect of the current financial year, the Bank paid an interim ordinary dividend of 27.5%, less 26.0% taxation, amounting to RM48,840,000 for the ordinary shares. The directors now recommend the payment of a final ordinary dividend of 50.0%, less 25.0% taxation, and a preference dividend of 7.5%, amounting to RM90,000,000 and RM7,500,000 for the ordinary and preference shares, respectively. The financial statements for the current financial year do not reflect the proposed final ordinary dividend. Such dividend, if approved by the shareholder, will be accounted for in the shareholder's equity as an appropriation of unappropriated profit in the next financial year ending 31 March 2009.

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RESERVES, PROVISIONS AND ALLOWANCES The following material transfers to or from reserves, provisions and allowances were made during the financial year: Notes to the Financial Statements Group Bank RM'000 RM'000 (a) Available-for-sale reserve Arising from net unrealised gain on revaluation of securities available-for-sale 10,636 10,636 (b) Exchange fluctuation reserve Arising from translation of Labuan offshore branch, subsidiary and associated companies expressed in foreign currencies (4,624) 587 (c) Allowances/(Reversal of allowances): Loan and financing loss allowances: General allowance 34 5,780 6,537 Specific allowance - net 34 19,396 19,379 Impairment loss on: Securites 36,374 36,374 Provision for commitments 1,641 1,641

BAD AND DOUBTFUL DEBTS AND FINANCING Before the income statements and balance sheets of the Group and of the Bank were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and financing and the making of allowances for doubtful debts and financing and have satisfied themselves that all known bad debts and financing had been written off and adequate allowance had been made for doubtful debts and financing. At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts and financing or the amount of the allowance for doubtful debts and financing in the Group and the Bank inadequate to any substantial extent.

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CURRENT ASSETS Before the income statements and balance sheets of the Group and of the Bank were made out, the directors took reasonable steps to ascertain that current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and of the Bank, have been written down to their estimated realisable values. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Bank misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the Group's and the Bank's financial statements misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist: (a) any charge on the assets of the Group and of the Bank that has arisen since the end of the financial year and

which secures the liabilities of any other person; or (b) any contingent liability in respect of the Group and of the Bank that has arisen since the end of the financial

year, other than those incurred in the normal course of business. No contingent or other liability of the Group and of the Bank has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Bank to meet their obligations as and when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Bank, that would render any amount stated in the financial statements misleading. ISSUE OF SHARES AND DEBENTURES The Bank has not issued any new shares and debentures during the financial year. SHARE OPTIONS There are no options granted by the Bank to take up unissued shares of the Bank. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Bank. As at the end of the financial year, there were no unissued shares of the Bank under options.

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DIRECTORS The directors who served on the Board since the date of the last report are: Tan Sri Dato' Azman Hashim Tan Sri Datuk Dr Aris Osman @ Othman (Independent Director) Tan Sri Datuk Clifford Francis Herbert (Independent Director) Dato’ Izham Mahmud (Independent Director) Mr Cheah Tek Kuang Mr Kok Tuck Cheong (Managing Director/ Chief Executive Officer) Ms Pushparani A Moothathamby (Executive Director) Tun Mohammed Hanif Omar (Appointed on 8.10.2007) Mr Anthony John Healy (Appointed on 8.10.2007) In accordance with Article 87 of the Bank’s Articles of Association, Tan Sri Datuk Clifford Francis Herbert and Ms Pushparani A Moothathamby retire and, being eligible, offer themselves for re-election. In accordance with Article 95 of the Bank’s Articles of Association, Tun Mohammed Hanif Omar and Mr Anthony John Healy retire and, being eligible, offer themselves for re-election. DIRECTORS’ INTERESTS None of the directors as at 31 March 2008 held any shares in the Bank during the financial year. Under the Bank's Articles of Association, the directors are not required to hold shares in the Bank. The interests in shares and debentures of related companies, of those who were directors at the end of the financial year as recorded in the Register of Directors’ Shareholdings kept by the Bank under Section 134 of the Companies Act, 1965, are as follows: DIRECT INTERESTS In the immediate holding company, AmInvestment Group Berhad No. of Ordinary Shares of RM1.00 each Balance at Balance at Shares 1.4.2007 Bought *Sold 31.3.2008 Tan Sri Dato' Azman Hashim 95,554,848 - 95,554,848 - Tan Sri Datuk Dr Aris Osman @ Othman 50,000 - 50,000 - Tan Sri Datuk Clifford Francis Herbert 50,000 - 50,000 - Dato’ Izham Mahmud 101,070 - 101,070 - Mr Cheah Tek Kuang 370,100 - 370,100 - Mr Kok Tuck Cheong 700,000 - 700,000 - Ms Pushparani A Moothathamby 897,001 - 897,001 - * Pursuant to the Privatisation of the immediate holding company, AmInvestment Group Berhad, by the ultimate holding company, AMMB Holdings Berhad.

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DIRECT INTERESTS (CONTD.) In the ultimate holding company, AMMB Holdings Berhad No. of Ordinary Shares of RM1.00 each Balance at Exercised Balance at Of Rights Shares 1.4.2007 Warrants Bought Issue Sold 31.3.2008 Dato’ Izham Mahmud 4,670 - - 2,330 - 7,000 Mr Cheah Tek Kuang 23,800 46,189 - 8,811 - 78,800 Ms Pushparani A Moothathamby 423,149 13,710 - 52,893 - 489,752 Mr Anthony John Healy - - 150,000 - - 150,000

No. of Warrants Balance at Balance at Warrants 2003/2008 1.4.2007 Bought Exercised 31.3.2008 Mr Cheah Tek Kuang 46,189 - 46,189 - Ms Pushparani A Moothathamby 13,418 292 13,710 -

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DIRECTORS’ INTERESTS (CONTD.) DEEMED INTERESTS In the ultimate holding company, AMMB Holdings Berhad No. of Ordinary Shares of RM1.00 each Balance at Balance at Shares Name of Company 1.4.2007 Bought Sold 31.3.2008 Tan Sri Dato' AmcorpGroup Berhad 700,742,421 94,922,918 315,514,006 480,151,333

Azman AMDB Equipment Hashim Trading Sdn Bhd 439,047 - 439,047 -

No. of Warrants Warrants 2003/2008

Name of Company

Balance at1.4.2007 Bought

Sold/ Exercised

Balance at 31.3.2008

Tan Sri Dato' AmcorpGroup Berhad 40,602,771 - 40,602,771 -


In the immediate holding company, AmInvestment Group Berhad No. of Ordinary Shares of RM1.00 each Shares

Name of Company

Balance at1.4.2007 Bought

*Sold

Balance at 31.3.2008

Tan Sri Dato' AmcorpGroup Berhad 157,656,926 - 157,656,926 -


Azman Hashim Holdings Sdn Bhd 209,502 - 209,502 -

* Pursuant to the Privatisation of the immediate holding company, AmInvestment Group Berhad, by the ultimate holding company, AMMB Holdings Berhad. By virtue of their shareholdings as mentioned above, the above directors are deemed to have an interest in the shares of the Bank and its related companies, to the extent that the ultimate holding company have interest.

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DIRECTORS’ BENEFITS At the end of the financial year, or at any time during that year, none of the directors of the Bank have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors shown in the financial statements) by reason of a contract made by the Bank or a related corporation with a director or with a firm in which a director is a member, or with a company in which a director has a substantial financial interest, except for the related party transactions as shown in Note 35 to the financial statements. Neither during nor at the end of the financial year was the Bank a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or any other body corporate. CORPORATE GOVERNANCE (ii) BOARD RESPONSIBILITY AND OVERSIGHT

The Board of Directors ("the Board") remains fully committed in ensuring that the principles and best practices in corporate governance are applied consistently in the Group and subscribes to the Malaysian Code on Corporate Governance. The Board supervises the management of the Group’s businesses and affairs with the goal of enhancing shareholders’ value. In addition to determining the overall strategy of the Group and the supervision of Senior Management of the Group, the Board meets regularly to address key matters in the area of strategy, policies, finance, structure and organisation, and business development (subject to the matters reserved for shareholders’ meetings by law). The Board approves the strategic plans and the annual financial plans developed by management of the Group and reviews the performance and effectiveness of the business units in the Group. It establishes guidelines for overall business, risk and control policies, capital allocation and approves major changes in the Group’s business activities, including major lending and borrowing transactions. It also approves major business developments such as acquisitions and disposals of businesses or assets, investments or new businesses, mergers, joint ventures and alliances and consider other matters of strategic importance to the Group. There is a clear division between the roles of Chairman and Chief Executive Officer, and the roles remain separate and distinct. The Board currently comprises nine (9) directors with wide skills and experience, of which three (3) are Independent Non-Executive Directors. The Directors participate fully in decision making on key issues regarding the Bank and its subsidiaries. The Independent Non-Executive Directors ensure strategies proposed by the management are fully discussed and examined, as well as take into account the long term interests of various stakeholders. The Independent Non-Executive Directors are from varied business backgrounds, and their experiences enable them to exercise independent judgment on the Board as their views carry substantial weight in Board decisions. Board Meetings are scheduled every month, with additional or special Board meetings convened as and when required. All directors review a monthly board report circulated prior to the board meeting to enable the directors to obtain further explanations where necessary. In order to be briefed adequately, the senior management team is invited to attend Board Meetings to provide the Board with presentations, detailed explanations and clarification on matters that have been tabled. As a full board or in their individual capacity, the directors have access to all information within the Group and the advice and services of the Group Company Secretary. Independent professional advice is also available to the Directors, if necessary, at the Group’s expense.

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CORPORATE GOVERNANCE (CONTD.)

(i) BOARD RESPONSIBILITY AND OVERSIGHT (CONTD.)

The number of meetings of the Board and the number of meetings attended by each Director of the Bank during the financial year is summarised in the table below.

Directors Eligible to attend Attended Tan Sri Dato’ Azman Hashim 13 13 Tan Sri Datuk Dr Aris Osman @ Othman 13 13 Tan Sri Datuk Clifford Francis Herbert 13 13 Dato’ Izham Mahmud 13 11 Mr Cheah Tek Kuang 13 13 Mr Kok Tuck Cheong 13 13 Ms Pushparani A Moothathamby 13 11 Tun Mohammed Hanif Omar * 5 5 Mr Anthony John Healy * 5 5

* Appointed on 8.10.2007. In accordance with the Bank’s Articles of Association, all Directors who are appointed by the Board are subject to election by shareholders at the following general meeting after their appointment. The Articles also provide that the Directors are subject to re-election by rotation at each Annual General Meeting at least once every three years. As an integral process of appointing new directors, there is an inhouse orientation programme for the new Board members to familiarise and provide them with an overview of the Group’s businesses, the markets in which it operate; responsibilities and duties of the Board as a whole, its corporate and risk management strategies, regulatory constraints and compliance. Besides that, all members of the Board are encouraged to attend seminars, conferences and various training programmes to keep abreast with developments in the financial services industry. The Group Company Secretary has been empowered by the Board to assist the Board in matters of governance and in complying with statutory duties.

(ii) RISK MANAGEMENT

Risk management is about managing uncertainties such that deviations from the Group’s intended objectives are kept within acceptable levels. Sustainable profitability forms the core objectives of the Group’s risk management strategy.

Every risk assumed by the Group carries potential for gains as well as potential to erode shareholders’ value. Risk management policy is designed to identify, capture and analyse these risks at an early stage, continuously measure and monitor these risks and to set limits, policies and procedures to control them to ensure sustainable risk-taking and sufficient returns. Seven types of risk identified are strategic, capital, credit, market, funding, operational and legal risks.

The Risk Governing Bodies Managing risks is the responsibility of every unit within the Group. Nevertheless, the Group has set up committees where risk issues are centrally reviewed for management attention and bank wide decisions. They comprise the Board of Directors, the Risk Management Committee of Directors and the Executive Risk Management Committees.

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CORPORATE GOVERNANCE (CONTD.) Board Overview The focus on risk and risk management policies begins at the most senior level of the Bank, i.e the Board of Directors who: (a) approves the risk management strategy of the Bank and sets the broad risk tolerance level for the

Bank; and (b) approves the engagement of new products or activities after taking into account the risk bearing

capacity and readiness of the Bank.

The Risk Management Committee of Directors assists the Board in discharging their functions and overseeing the executive body by having a more focused forum on risk issues. The Committee is independent from management and comprises only non-executive directors. The Committee: (a) ensures that risks at all levels are managed effectively and the Board’s risk tolerance level is effectively

enforced; and (b) reviews high-level risk exposures and management decisions to ensure that they are within the overall

interests of the Bank.

Management The Executive Risk Management Committees carry out the day-to-day management of risks and implements the Board’s approved risk management policies. The Committees are chaired by senior level executives and participated by relevant senior executives of both the business and non-business units. The Committees: (a) implement the risk strategy and capital allocation decisions of the Board and Risk Management

Committee of Directors; (b) review risk exposures of the Bank and the environment, and set appropriate risk positioning strategy;

(c) assess the Bank’s ability to accommodate risks under normal and stress scenario;

(d) review compliance with limits or constraints set;

(e) monitor and assess risk-return profile; and

(f) evaluate and approve recommendations made by the risk management and business units.

At the Group level, the consolidated risks of the Bank are reviewed and discussed at the Group Risk Forum. The Forum is represented by the Bank's chief executive officers, heads of risk management and other key senior executives of the Bank.

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CORPORATE GOVERNANCE (CONTD.) The Forum reviews risks at Group level and sets uniform standards in risk measurement and risk tolerance for the Group. The Forum also discusses and makes decisions on common risk issues for adoption across the Group. Risk Management Department The Risk Management Department is independent of business units and reports to the Group Managing Director. It also serves to assist the Executive Risk Management Committees in discharging their duties and implementing the directives of the committees. The major role of the Risk Management Department is to: (a) be a central platform for which risks throughout the Bank can be aggregated for overview on a

portfolio basis; (b) standardise risk measurement methodology to enable comparability;

(c) act as a central resource for evaluating risks to assist management, business and operating units; and

(d) recommend means to control or minimise risks on a portfolio basis.

The Risk Management Department is made up of several units to provide a comprehensive coverage of all risks in the Bank. Their functions encompass research and analysis, portfolio risk exposure reporting, compliance monitoring, formulation of policies and risk assessment methodology and formulation of the Bank’s risk strategies. To achieve group harmonisation, risk measurement and evaluation methodologies are standardised across the Group. The resources of the research and development function of the risk management department are mobilised as a central resource for the Group.

(iii) INTERNAL AUDIT AND INTERNAL CONTROL ACTIVITIES

The Group Internal Audit Department reports to the Audit and Examination Committee and assists the Board of Directors in maintaining a sound system of internal control. The Audit Charter safeguards the independence of the internal audit function as the Head of Group Internal Audit reports to the Audit and Examination Committee. The Audit and Examination Committee approves the work of the internal audit function and monitors and reviews the conclusion of its work. The Internal Audit Department’s annual audit plan is approved by the Audit and Examination Committee. The Internal Audit function covers all units and operations within the Group, with major emphasis being placed on high risk units. The frequency of audit depends on the risk profile of the business or operations unit and high risk units are audited at least once a year.

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CORPORATE GOVERNANCE (CONTD.) This audit function covers all major business groups and consists of 5 main categories of work: 1) Planned audits 2) Systems development life-cycle review of major IT infrastructure projects 3) Special focus reviews 4) Mandatory audits 5) Ad-hoc reviews and special assignments The audit plan covers reviews of adequacy of risk management, operational controls, compliance with law and regulations, quality of assets, management efficiency and level of customer service amongst others. The audit plans are drawn up based on the inherent business risks and control risks in each operating unit and their financial significance, and these reviews are on a risk-based approach, rather than solely compliance. The internal auditing function is conducted to ensure consistency in the control environment and the application of policies and procedures. A systematic and disciplined approach is adopted to provide the required assurance to stakeholders, and also to add value and improve the Group’s operations by providing an independent and objective review. Other Key Elements Of Internal Control (a) The Bank and its subsidiary companies had designed the organization structure with the objective to

delineate appropriate authorization levels and proper segregation of duties. (b) The roles, responsibilities and expectations between the holding company and the subsidiary

companies are clearly defined.

(c) Various executive, management and operational committees are established by the major subsidiary companies to assist their respective Boards in ensuring the effectiveness of the operations.

(d) The internal control culture is promoted via the introduction of various forms of initiatives which

include, amongst others, emphasis on avoidance of conflict of interest and confidentiality of information, code of ethics and exceptions management procedure.

(e) The banking subsidiary companies have established policies and procedures for anti-money laundering

to facilitate the detection and reporting of money laundering activities.

(f) Policies and procedures to ensure compliance with internal controls and the relevant laws and regulations are documented and duly approved by the respective Boards. The policies and procedures of banking subsidiary companies are stated in operation manuals, guidelines and directives issued by the subsidiary companies which are updated from time to time.

(g) Group annual budget is prepared and table for the Board’s approval. Actual performance is compared

against budget and reviewed by the Board with explanation of major variances.

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CORPORATE GOVERNANCE (CONTD.) (iv) MANAGEMENT REPORTS

At the Bank level, monthly consolidated number for the Group are tabled to the Board for deliberation and approval. The Group quarterly consolidated numbers are tabled to the Audit and Examination Committee for review and the Board for approval for the purpose of quarterly reporting to Bank Negara Malaysia. Major subsidiary companies’ performance are also circulated and tabled monthly in the Board meetings.

INFORMATION ON COMMITTEE OF THE BANK

The Board delegates certain responsibilities to Board Committees. These committees, which were created to assist the Board in certain areas of deliberation are: 1. Nomination Committee 2. Remuneration Committee 3. Audit and Examination Committee 4. Risk Management Committee

The number of meeting of Committees of the Board and the number of meetings attended by each Directors of the Bank during the financial year is summarised in the table below: Nomination Committee Remuneration Committee Directors

Eligible to attend

Attended

Eligible to attend

Attended

Tan Sri Dato’ Azman Hashim 2 2 2 2 Tan Sri Datuk Dr Aris Osman @

Othman 2

2 (chairman)

2

2

Tan Sri Datuk Clifford Francis Herbert 2 2 - - Dato’ Izham Mahmud 2 2 2 2 (chairman) Mr Cheah Tek Kuang 2 2 - - Mr Kok Tuck Cheong - - - - Ms Pushparani A Moothathamby - - - - Tun Mohammed Hanif Omar - - - - Mr Anthony John Healy Nil Nil Nil Nil

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Audit and Examination Committee

Risk Management Committee

Directors

Eligible to attend

Attended

Eligible to attend

Attended

Tan Sri Dato’ Azman Hashim - - - - Tan Sri Datuk Dr Aris Osman @

Othman 9

9 (chairman)

6

6

Tan Sri Datuk Clifford Francis Herbert 9 9 6 6 (chairman) Dato’ Izham Mahmud 9 9 - - Mr Cheah Tek Kuang - - - - Mr Kok Tuck Cheong - - - - Ms Pushparani A Moothathamby - - - - Tun Mohammed Hanif Omar - - 4 4 Mr Anthony John Healy 3 3 - -

INFORMATION ON COMMITTEE OF THE BANK

The Nomination Committee

This Committee comprises five (5) directors of which the majority are independent directors. It is responsible for regularly reviewing the board structure, size and composition, as well as making recommendations to the Board with regard to any changes that are deemed necessary. It also recommends the appointment of Directors to the Board and Committees of the Board as well as annually reviews the performance of the Board, Committees of the Board and of individual Directors the mix of skills and experience and other qualities and competencies that Non-Executive Directors should bring to the Board. The Board of Directors, on the recommendation of the Nomination Committee had also approved the mechanism for the formal assessment on the effectiveness of the Board as a whole and Committees and the contribution of each Director to the effectiveness of the Board. There were two (2) Nomination Committee meetings held at the Bank during the financial year ended 31 March 2008. The Remuneration Committee All members of this Committee are Non-Executive Directors. The Committee is responsible for determining and recommending to the Board the framework or broad policy for the remuneration of the Directors, Chief Executive Officer and other senior management members of the staff.

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CORPORATE GOVERNANCE (CONTD.) Remuneration is determined at levels which enable the Group to attract and retain the Directors, Chief Executive Officer and Senior Management staff with the relevant experience and expertise needed to assist in managing the Group effectively.

The Audit and Examination Committee

The Board has overall responsibility to shareholders for ensuring that the Group is well managed and guided by strategic objectives. The Board has appointed the Audit and Examination Committee (A & E Committee) to assist in discharging its duties of maintaining a sound system of internal control to safeguard the Group’s assets and shareholders’ investments. The principal functions of the Committee are as follows: (a) To provide assistance and to review and report to the Board in relation to:

(i) fulfilling the statutory and fiduciary responsibilities of the Group and of the Bank; and

(ii) monitoring of the accounting and financial reporting practices of the Group and of the Bank; (b) To determine that the Group and the Bank has adequate established policies, procedures and

guidelines, operating and internal controls, and that they are being complied with and are operating effectively in promoting efficiency and proper conduct and protecting the assets of the Group and of the Bank;

(c) To serve as an independent and objective party in the review of the financial information of the Group

and of the Bank that is presented by Management to the Board and Shareholders;

(d) To review the quarterly results and year-end financial statements of the Group and of the Bank and to ensure compliance with accounting standards and legal requirements;

(e) To review and approve the scope of audits, audit plans and audit reports of both the external and

internal auditors;

(f) To evaluate the adequacy and effectiveness of the Management control systems of the Group and of the Bank through the review of the reports of both the external and internal auditors that highlight internal accounting, organisational and operating control weaknesses and to determine that appropriate corrective actions are being taken by the Management;

(g) To ensure the adequacy of the scope, functions and resources of the internal audit functions and that

they have the necessary authority to carry out their work;

(h) To ensure through discussions with the external and internal auditors, that no restrictions are being placed by the Management and employees on the scope of their examinations;

(i) To direct and supervise any special project or investigation considered necessary;

(j) To prepare when deemed necessary, periodic reports to the Board summarizing the work performed in

fulfilling the Committee’s primary responsibilities;

Company No.:23742-V


18


(k) To review any related party transactions and conflict of interest situation that may arise within the Bank/Group including any transaction, procedure or course of conduct that raises questions of management integrity; and

(l) To review the annual appointment of external auditors, or letter of resignation from external auditors,

to negotiate and approve the annual audit fees and/or special audit fees, and evaluate basis of billings therewith.

The following is a summary of the main activities carried out by the Committee during the year: (a) Reviewed and approved the Internal Audit Department’s annual audit plan, including its resource and

training needs; (b) Reviewed the Internal Audit Department’s methodology in assessing and rating the risk levels of the

various auditable areas and ensured that audit emphasis was given on high and critical risk areas;

(c) Monitored the progress of the Internal Audit Department in completing its audit plan and assessed the performance of the Department;

(d) Reviewed the adequacy and effectiveness of the system of controls, reporting and risk management to

ensure there is a systematic methodology in identifying, assessing and mitigating/controlling risk areas;

(e) Reviewed and discussed reports of the Internal Audit Department, including internal investigations, BNM, external auditors and other external parties, considered Management’s response and accordingly directed the Management to take the necessary remedial action. The Committee also followed-up on major issues raised in the reports;

(f) To evaluate the adequacy and effectiveness of the Management control systems of the Group and of

the Bank through the review of the reports of both the external and internal auditors that highlight internal accounting, organisational and operating control weaknesses and to determine that appropriate corrective actions are being taken by the Management;

(g) Reviewed related party transactions and the adequacy of the Group’s procedures in identifying,

monitoring, reporting and reviewing related party transactions;

(h) Reviewed the quarterly results and financial statements of the Group and the Bank; and

(i) Reviewed appointment of the external auditors’, their audit plan and annual audit fees.

The Managing Directors and the representatives of the external auditors are invited to attend the respective Committee meetings. The Company Secretary is the secretary to the Committee. The minutes of the Committee meetings are tabled at subsequent Board meetings.

Risk Management Committee The Risk Management Committee oversees the overall management of all risks impacting the Group. It comprises non-executive Directors and is chaired by an Independent Director to ensure independence from management as it is the Committee that reviews and approves risk management policies and risk tolerance limits.

Company No.:23742-V


19

The Risk Management Committee comprises of the following members and in carrying out their duties the Risk Management Committee met six (6) times during the financial year. IMMEDIATE AND ULTIMATE HOLDING COMPANY The directors regard AmInvestment Group Berhad and AMMB Holdings Berhad, both of which are incorporated in Malaysia, as the holding company and the ultimate holding company respectively. RATING BY EXTERNAL AGENCY The Bank’s sound financial health is reflected by the strong domestic credit ratings of AA3/P1 from Rating Agency of Malaysia, and AA-/MARC-1 from Malaysian Rating Corporation Berhad. This is complemented by international ratings of BB+/B from Standard and Poor’s and BB+/B from Fitch Rating Singapore Pte Ltd. The RM1.0 billion Long-term Negotiable Instruments of Deposits have been accorded with a long-term rating of AA3 by RAM. The Bank’s RM460.0 million Redeemable Unsecured Subordinated Bonds and RM200.0 million Subordinated Tier 2 Bonds have both been accorded a long-term rating of A1 by Rating Agency Malaysia Berhad. SHARIAH COMMITTEE The Shariah Committee was established under Bank Negara Malaysia “Guidelines on the Governance of Shariah Committee for the Islamic Financial Institutions” (BNM/GPS1) to advise and provide guidance to the Board of Directors on all matters pertaining to Shariah principles including product development, marketing and implementation activities. The Shariah advisor also assist in the setting up of business and operational procedures with respect to compliance with Shariah principles. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors

TAN SRI DATO' AZMAN HASHIM KOK TUCK CHEONG Kuala Lumpur, Malaysia Date: 13 May 2008

Company No.:23742-V


20

AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, TAN SRI DATO' AZMAN HASHIM and KOK TUCK CHEONG, being two of the directors of AmINVESTMENT BANK BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 24 to 166 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and of the Bank as at 31 March 2008 and of the results and the cash flows of the Group and of the Bank for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors. TAN SRI DATO' AZMAN HASHIM KOK TUCK CHEONG Kuala Lumpur, Malaysia Date: 13 May 2008

Company No.:23742-V


21

AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, ARUNASALAM MUTHUSAMY, being the officer primarily responsible for the financial management of AmINVESTMENT BANK BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 24 to 166 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed ARUNASALAM MUTHUSAMY at Kuala Lumpur in the Wilayah Persekutuan on 13 May 2008.

ARUNASALAM MUTHUSAMY Before me, COMMISSIONER FOR OATHS Lodged on behalf by : Address: 22nd Floor, Bangunan AmBank Group, No.55 Jalan Raja Chulan, 50200 Kuala Lumpur. Telephone Number : 03-20362633/44/55

Company No.:23742-V


22

REPORT OF THE AUDITORS TO MEMBER OF AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) We have audited the financial statements set out on pages 24 to 166. These financial statements are the responsibility of the Company’s directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies

Act, 1965 and applicable Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of:

(i) the financial position of the Group and of the Bank as at 31 March 2008 and of the results and the

cash flows of the Group and of the Bank for the year ended 31 March 2008; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial

statements; and (b) the accounting and other records and the registers required by the Act to be kept by the Bank and by its

subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

Company No.:23742-V


23

We have considered the financial statements and the auditors' report of the subsidiary of which we have not acted as auditors, as indicated in Note 15 of the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in respect of the subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174(3) of the Act. ERNST & YOUNG LIM SAW KENG AF : 0039 No.2215/10/09(J) Chartered Accountants Partner Kuala Lumpur, Malaysia Date: 13 May 2008

Company No: 23742-V

AmINVESTMENT BANK BERHAD(Incorporated in Malaysia)AND ITS SUBSIDIARY COMPANIES

BALANCE SHEETS AS AT 31 MARCH 2008

Group Bank Group BankNote RM'000 RM'000 RM'000 RM'000

ASSETS

Cash and short-term funds 5 3,172,633 2,551,326 3,483,697 3,276,782 Securities purchased under

resale agreements 6 - - 393,329 374,155 Deposits and placements with

banks and other financial institutions 7 750,461 749,500 1,828,841 1,924,828

Securities held-for-trading 8 4,971,446 4,970,666 5,734,091 5,700,187 Securities available-for-sale 9 1,211,755 1,210,858 3,419,740 3,401,440 Securities held-to-maturity 10 661,426 620,470 1,191,597 1,146,967 Loans, advances and financing 11 4,543,095 4,510,839 4,181,657 4,096,669 Derivative financial assets 12 299,018 299,018 380,742 380,742 Other assets 13 1,027,814 769,013 1,060,263 829,925 Statutory deposit with Bank

Negara Malaysia 14 133,690 133,690 169,050 169,050 Investments in subsidiary

companies 15 - 155,691 - 154,872 Investments in associated

companies 16 2,225 100 2,590 138 Prepaid land lease payments 17 2,656 2,656 2,716 2,716 Property and equipment 18 40,125 35,024 36,758 33,013 Deferred tax assets 38 14,175 12,965 43,468 43,083 Intangible assets 19 52,721 4,826 50,591 3,558

TOTAL ASSETS 16,883,240 16,026,642 21,979,130 21,538,125

2008 2007

24AmInvestment Bank Berhad

Financial Statements For The Year Ended 31 March 2008

Company No: 23742-V


BALANCE SHEETS AS AT 31 MARCH 2008 (CONTD.)


LIABILITIES AND SHAREHOLDER'S EQUITY

Deposits from customers 20 6,232,188 5,729,276 5,251,328 5,046,701 Deposits and placements of

banks and other financial institutions 21 6,418,326 6,399,711 9,837,132 9,921,613

Obligations on securities sold under repurchase agreements 22 - - 2,789,379 2,789,379

Derivative financial liabilities 12 325,270 325,270 333,670 333,670 Other liabilities 23 952,573 733,987 1,123,812 896,301 Recourse obligation on loans sold

to Cagamas Berhad 24 35,140 35,140 52,421 52,421 Term loans 25 271,490 271,490 103,680 103,680 Redeemable unsecured subordinated bonds 26 595,000 595,000 595,000 595,000 Total liabilities 14,829,987 14,089,874 20,086,422 19,738,765

Share capital 27 340,000 340,000 340,000 340,000 Interest Bearing Irredeemable

Convertible Unsecured LoanStocks 2002/2007 28 - - - -

Reserves 29 1,713,253 1,596,768 1,552,708 1,459,360 Shareholder's equity 2,053,253 1,936,768 1,892,708 1,799,360

TOTAL LIABILITIES ANDSHAREHOLDER'S EQUITY 16,883,240 16,026,642 21,979,130 21,538,125

COMMITMENTS ANDCONTINGENCIES 44 43,926,520 43,926,520 42,778,034 42,774,969

NET ASSETS PER SHARE (RM) 47 8.56 8.07 7.89 7.50

NET ASSETS PER SHAREAFTER DEDUCTINGTHE PREFERENCE SHARECAPITAL (RM) 47 8.14 7.65 7.47 7.08

The accompanying notes form an integral part of the financial statements.

2008 2007



Company No: 23742-V


INCOME STATEMENTSFOR THE YEAR ENDED 31 MARCH 2008


Operating revenue 1,277,745 1,165,615 1,306,771 1,204,937

Interest income 30 785,545 774,083 770,720 753,741 Interest expense 31 (612,584) (608,779) (619,024) (607,651)Net interest income 172,961 165,304 151,696 146,090 Net income from Islamic banking business 53 (xxiv) 42,477 41,750 48,222 47,252Other operating income 32 449,723 349,782 487,829 403,944 Net Income 665,161 556,836 687,747 597,286 Other operating expenses 33 (281,965) (208,313) (183,852) (142,732)

Operating profit 383,196 348,523 503,895 454,554 Writeback of allowance/(Allowance) for

losses on loans and financing 34 37,300 36,560 (85,788) (74,549)Transfer (to)/from profit equalisation

reserve (109) - 25 181 Impairment loss on:

Securities (36,374) (36,374) (66,738) (56,647)Assets acquired in exchange of

debts (45) (45) (2,555) (2,555)Writeback of allowance for

doubtful sundry receivables - net 259 344 2,440 2,002(Provision)/Writeback of provision

for commitments (1,641) (1,641) 25 25Profit before share in results

of associated companies 382,586 347,367 351,304 323,011 Share in results of associated

companies 88 - 1,113 - Profit before taxation 382,674 347,367 352,417 323,011 Taxation 37 (91,881) (84,922) (88,169) (83,207)Profit after taxation 290,793 262,445 264,248 239,804

Attributable to:Equity holder of the company 290,793 262,445 264,248 239,804

Earnings per share (sen) 40Basic 118.0 106.2 107.0 96.8 Fully diluted 85.5 77.2 77.7 70.5


2008 2007



Company No: 23742-V

AmInvestment Bank Berhadand its subsidiary companies(Incorporated in Malaysia)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2008

DistributableExchange Total

Share Capital Share Statutory Available-for- fluctuation Unappropriated shareholder'scapital ICULS reserve premium reserve sale reserve reserve profits equity

Group Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2006 310,000 120,000 2,815 100,284 329,549 (3,055) 27,179 824,181 1,710,953 Net unrealised gain on revaluation of securities available-for-sale - - - - - 15,935 - - 15,935 Interest on ICULS - - - - - - - (5,722) (5,722) Net income/(expense) recognised directly in equity - - - - - 15,935 - (5,722) 10,213 Profit for the year - - - - - - - 264,248 264,248 Total recognised income for the year - - - - - 15,935 - 258,526 274,461 Arising from ICULS conversion 30,000 (120,000) - 90,000 - - - - - Proposed preference dividends 39 - - - - - - - (7,400) (7,400) Ordinary dividends paid 39 - - - - - - - (55,944) (55,944) Interim ordinary dividend paid 39 - - - - - - - (30,660) (30,660) Transfer from income statements - - - - 59,951 - - (59,951) - Exchange fluctuation adjustments - - - - - - 1,298 - 1,298

At 31 March 2007 340,000 - 2,815 190,284 389,500 12,880 28,477 928,752 1,892,708

<--------------------------------------------------Attributable to equity holder of the Bank------------------------------------------------>

Non-distributable



Company No: 23742-V


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2008


Share Capital Share Statutory Available-for- fluctuation Unappropriated shareholder'scapital ICULS reserve premium reserve sale reserve reserve profits equity

Group Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2007 340,000 - 2,815 190,284 389,500 12,880 28,477 928,752 1,892,708 Net unrealised gain on revaluation of securities available-for-sale - - - - - 10,636 - - 10,636 Net income recognised directly in equity - - - - - 10,636 - - 10,636 Profit for the year - - - - - - - 290,793 290,793 Total recognised income for the year - - - - - 10,636 - 290,793 301,429 Proposed preference dividends 39 - - . - - - - (7,500) (7,500) Ordinary dividends paid 39 - - - - - - - (79,920) (79,920) Interim ordinary dividends paid 39 - - - - - - - (48,840) (48,840) Exchange fluctuation adjustments - - - - - - (4,624) - (4,624)

At 31 March 2008 340,000 - 2,815 190,284 389,500 23,516 23,853 1,083,285 2,053,253

<--------------------------------------------------Attributable to equity holder of the Bank------------------------------------------------>

Non-distributable



Company No: 23742-V


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTD.)FOR THE YEAR ENDED 31 MARCH 2008


Share Share Statutory Available-for- fluctuation Unappropriated shareholder'scapital ICULS premium reserve sale reserve reserve profits equity

Bank Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2006 310,000 120,000 100,284 329,549 (3,410) - 778,330 1,634,753 Net unrealised gain on revaluation of securities available-for-sale - - - - 16,238 - - 16,238 Interest on ICULS - - - - - - (5,722) (5,722) Net income/(expense) recognised directly in equity - - - - 16,238 - (5,722) 10,516 Profit for the year - - - - - - 239,804 239,804 Total recognised income for the year - - - - 16,238 - 234,082 250,320 Arising from ICULS conversion 30,000 (120,000) 90,000 - - - - - Proposed preference dividends 39 - - - - - - (7,400) (7,400) Ordinary dividends paid 39 - - - - - - (55,944) (55,944) Interim ordinary dividends paid 39 - - - - - - (30,660) (30,660) Transfer from income statements - - - 59,951 - - (59,951) - Exchange fluctuation adjustments - - - - - 8,291 - 8,291

At 31 March 2007 340,000 - 190,284 389,500 12,828 8,291 858,457 1,799,360

<--------------------------------------Attributable to equity holder of the Bank---------------------------------------->

Non-distributable



Company No: 23742-V


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTD.)FOR THE YEAR ENDED 31 MARCH 2008


Share Share Statutory Available-for- fluctuation Unappropriated shareholder'scapital ICULS premium reserve sale reserve reserve profits equity

Bank Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2007 340,000 - 190,284 389,500 12,828 8,291 858,457 1,799,360 Net unrealised gain on revaluation - of securities available-for-sale - - - - 10,636 - - 10,636 Net income recognised directly in equity - - - - 10,636 - - 10,636 Profit for the year - - - - - 262,445 262,445 Total recognised income for the year - - - - 10,636 - 262,445 273,081 Proposed preference dividends 39 - - - - - - (7,500) (7,500) Ordinary dividends paid 39 - - - - - - (79,920) (79,920) Interim ordinary dividends paid 39 - - - - - - (48,840) (48,840) Exchange fluctuation adjustments - - - - - 587 - 587

At 31 March 2008 340,000 - 190,284 389,500 23,464 8,878 984,642 1,936,768

The accompanying notes form an integral part of the financial statements

<--------------------------------------Attributable to equity holder of the Bank---------------------------------------->

Non-distributable



Company No: 23742-V


CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 MARCH 2008

Group Bank Group BankRM'000 RM'000 RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 382,674 347,367 352,417 323,011 Add/(Less) adjustments for:

(Writeback of allowance)/Allowance for losses on loans and financing, net of recoveries (37,300) (36,560) 85,788 74,549

Impairment loss on securities 36,374 36,374 66,738 56,647Depreciation of property and equipment 7,597 6,107 5,204 4,272 Impairment loss on assets acquired in

exchange of debts 45 45 2,555 2,555Amortisation of computer software 1,653 1,576 1,207 1,073 Amortisation of prepaid land lease payments 60 60 284 284 Net interest suspended 2,580 2,580 390 390Computer software written off 7 7 312 - Sundry bad debts written off - net 444 444 273 264Property and equipment written off 37 13 228 4Transfer to/(from) profit equalisation

reserve 109 - (25) (181)Provision/(Writeback of provision) for commiments 1,641 1,641 (25) (25)Gain on disposal of property and

equipment (193) (192) (150) (10)Loss/(Gain) on revaluation of derivatives 19,249 17,898 (638) (3,553)Share in results of associated

companies (88) - (1,113) - Unrealised foreign exchange gain (2,016) (1,135) (1,566) (619)Writeback of allowances for doubtful sundry receivables - net (259) (344) (2,440) (2,002)Amortisation of premiums less

accretion of discounts (16,454) (16,454) (10,420) (10,420)Net gain from sale of securities

available-for-sale (4,766) (4,766) (16,893) (1,892)Gross dividend income from investments (33,061) (50,451) (30,062) (40,555)Net gain on redemption of securities

held-to-maturity (88,804) (89,219) (42,166) (42,135)Loss/(Gain) on revaluation of securities

held-for-trading 94,052 93,675 (76,499) (76,067)Net gain from sale of securities

held-for-trading (101,247) (100,658) (156,751) (156,606)Operating profit before working capital

changes carried forward 262,334 208,008 176,648 128,984

20072008



Company No: 23742-V




CASH FLOWS FROMOPERATING ACTIVITIES (CONTD.)

Operating profit before working capitalchanges brought forward 262,334 208,008 176,648 128,984

Decrease/(Increase) in operating assets:Deposits and placements with banks

and other financial institutions 1,078,380 1,175,328 (601,639) (701,772)Securities held-for-trading 769,839 736,504 1,559,511 1,571,910 Securities purchased under resale

agreement 393,329 374,156 135,938 130,308 Other assets 97,805 127,402 (706,157) (583,922)Statutory deposit with Bank Negara

Malaysia 35,360 35,360 75,080 75,080 Loans, advances and financing (326,717) (380,190) 50,277 (9,725)Deposits and monies held in

trust with financial institutions (1,873) (6,862) (238,895) (233,685)Increase/(Decrease) in operating liabilities:

Deposits from customers 980,859 682,575 (1,180,849) (1,183,691)Deposits and placements of

banks and other financial institutions (3,418,805) (3,521,902) 2,320,234 2,239,492

Obligations on securities sold under repurchase agreements (2,789,379) (2,789,379) 199,098 199,098

Acceptances payable - - (3,103) (3,103) Term loans 167,810 167,810 - -

Recourse obligation on loans sold toCagamas Berhad (17,281) (17,281) (37,273) (37,273)

Other liabilities (153,041) (137,729) 474,258 368,266 Cash generated from/(used in) operations (2,921,380) (3,346,200) 2,223,128 1,959,967 Taxation paid (87,660) (77,018) (61,425) (72,190)Net cash generated from/(used in)

operating activities (3,009,040) (3,423,218) 2,161,703 1,887,777

2008 2007



Company No: 23742-V




CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of/(Purchase of ) securities – net 2,822,397 2,801,735 (1,955,728) (2,007,288)

Vesting in stockbrokingbusiness - - 188,251 188,251

Dividends received from otherinvestments - - 21,644 21,853

Dividends received from subsidiarycompanies 24,465 37,334 - 7,752

Proceeds from disposal of propertyand equipment 411 410 153 22

Final return paid to contributories of MVSB 453 - - - Acquisition of remaining 51.0% equity interest in FIPL (818) - - -

Acquisition of additional shares in subsidiary company - (781) (1,353) (49,957)

Purchase of computer software (2,883) (2,763) (349) (313) Purchase of property and equipment (11,662) (8,775) (3,424) (1,679) Net cash used in financing activities 2,832,363 2,827,160 (1,750,806) (1,841,359)

CASH FLOWS FROM FINANCINGACTIVITIES

ICULS interest paid - - (5,722) (5,722) Preference dividends paid (7,500) (7,500) (7,400) (7,400) Dividends paid by the Bank to its

shareholder (128,760) (128,760) (86,604) (86,604) Repayment of subordinated term loans - - (172,553) 103,680 Net cash generated from/(used in)

financing activities (136,260) (136,260) (272,279) 3,954

2008 2007



Company No: 23742-V



Net (decrease)/increase in cash and cashequivalents (312,937) (732,318) 138,618 50,372

Cash and cash equivalents at beginning of year 3,483,697 3,276,782 3,106,184 2,992,725

Cash and cash equivalents at end of year (Note 1) 3,170,760 2,544,464 3,244,802 3,043,097

Note 1 : Cash and cash equivalents


Cash and short term funds 3,172,633 2,551,326 3,483,697 3,276,782 Less: Cash and bank balances and deposits held in trust (1,873) (6,862) (238,895) (233,685)

3,170,760 2,544,464 3,244,802 3,043,097


2008 2007

20072008

For the purpose of the cash flow statements, cash and cash equivalents consist of cash and short-term funds net of bank overdraft. Cash and cash equivalents included in the cash flow statementscomprise the following balance sheet amounts:



Company No. 23742-V

AmInvestment Bank berhad Financial Statements For The Year Ended 31 March 2008

35

AmINVESTMENT BANK BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2008 1. PRINCIPAL ACTIVITIES

The Bank and its subsidiary companies, as listed in Note 15, provide a wide range of merchant banking and related financial services which also include the Islamic banking business, investment advisory, stock and share-broking and asset, real estate investments and unit trust management. There have been no significant changes in the nature of the activities of the Bank and its subsidiary companies during the financial year. The Bank is a public limited liability company, incorporated and domiciled in Malaysia. The registered office and the principal place of business of the Bank is located at 22nd Floor, Bangunan AmBank Group, No. 55 Jalan Raja Chulan, 50200 Kuala Lumpur. The financial statements of the Group and of the Bank have been approved and authorised for issue by the Board of Directors on 29 April 2008.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and of the Bank have been prepared under the historical cost

convention unless otherwise indicated and in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards (“FRS”) in Malaysia as modified by the Banking and Financial Institutions Act, 1989 and Bank Negara Malaysia ("BNM") Guidelines.

The financial statements incorporate those activities relating to the Islamic banking business, which have been undertaken by the Group. Islamic banking business refers generally to the acceptance of deposits, granting of financing, capital market and treasury activities under the Shariah Principles. The financial statements are presented in Ringgit Malaysia (“RM”) and rounded to the nearest thousand (RM’000), unless otherwise stated. The preparation of financial statements in conformity with FRS requires management to exercise judgement use of estimates and make assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements, and areas involving higher degree of judgement and complexity, are disclosed in Note 4.

Company No. 23742-V


36

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies are consistent with those adopted in the previous audited annual financial statements except for the adoption of the following: (i) The new and revised FRSs that are applicable to the Group and the Bank with effect from the

financial period beginning on or after 1 April 2007: FRS 117 Leases FRS 124 Related Party Disclosures The principal effects of the change in accounting policies resulting from the adoption of FRS 117 are disclosed in Note 52. The adoption of FRS 124 did not result in significant changes in accounting policies of the Group.

(ii) The Group and the Bank has not early adopted the following FRSs, amendments to FRS and IC Interpretations, which are effective for financial years beginning on or after 1 July 2007:

FRS FRS 107 : Cash Flow Statements FRS 111 : Construction Contracts FRS 112 : Income Taxes FRS 118 : Revenue FRS 119 : Employee Benefits FRS 120 : Accounting for Government Grants and Disclosure of Government Assistance FRS 134 : Interim Financial Reporting FRS 137 : Provisions, Contingent Liabilities and Contingent Assets Amendment to FRS 121 : The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation IC Interpretation 1 : Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2 : Members’ Shares in Co-operative Entities and Similar Instruments IC Interpretation 5 : Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IC Interpretation 6 : Liabilities arising from Participating In a Specific Market – Waste Electrical and Electronic Equipment IC Interpretation 7 : Applying the Restatement Approach to FRS 129 Financial Accounting in Hyperinflationary Economies IC Interpretation 8 : Scope of FRS 2 Share-based Payments

In the previous financial year, the Malaysian Accounting Standards Board (“MASB”) had also issued FRS 139 Financial Instruments: Recognition and Measurement for which the MASB has yet to announce the effective date. The impact of applying FRS 139 on this financial statements upon first adoption of the standards as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors are not required to be disclosed by virtue of exemptions provided under paragraph 103AB of FRS 139.

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Basis Of Consolidation

Financial statements of subsidiary companies are consolidated using the acquisition method of accounting and the Group’s financial statements include the financial statements of the Bank and all its subsidiary companies listed in Note 15 made up to the end of the financial year. Under the acquisition method, the results of the subsidiary companies acquired or disposed of during the financial year are included in the Group financial statements from the effective date of acquisition or to the effective date of disposal, as applicable. The cost of an acquisition is measured as fair value of the assets given, liabilities incurred or assumed and equity instruments issued at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill on consolidation. If the cost of acquisition is less than the fair value of the net assets of the subsidiary company acquired, the difference is recognised directly in the income statement. Where necessary, adjustments are made to the financial statements of subsidiary companies to bring their accounting policies into line with those used by other members of the Group. All significant intercompany transactions, balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless the transaction provides evidence of an impairment of an asset transferred. The gain or loss on disposal of a subsidiary company is the difference between the net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the subsidiary company being disposed. All gains or losses on disposal of subsidiaries are recognised in the consolidated income statement. Minority interest represents that part of the net results of operations and net assets of a subsidiary company attributable to equity interests and debentures that are not owned, directly or indirectly through subsidiary companies, by the Bank or subsidiary companies. It is measured at the minorities' share of the fair value of the subsidiary companies' identifiable assets and liabilities at the acquisition date and the minorities' share of changes in the subsidiary companies’ equity since that date, except when the losses applicable to the minority interest exceed the minority interest in the equity of that subsidiary company. In such cases, the excess and further losses applicable to the minority interest are attributable to the equity holders of the Bank or subsidiary companies, unless the minority interest has a binding obligation to, and is able to, make good the losses. When that subsidiary company subsequently reports profits, the profits applicable to the minority interest are attributed to the equity holders of the Bank or subsidiary companies until the minority interest’s share of losses previously absorbed by the equity holders of the Bank or subsidiary companies has been recovered.

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For business combinations where the Group’s equity interest in a subsidiary company is increased by virtue of a subscription to a higher proportion of the subsidiary company’s new issue of shares as compared to its existing equity interest and where the share issue price is above or below the subsidiary company’s net asset value, the resultant dilution or accretion of its share of net assets in the subsidiary company is recognized in equity. Investments In Subsidiary Companies Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. It is generally accompanied by a shareholding of more than 50.0% of voting rights. Potential voting rights that are exercisable or convertible are considered when determining whether an entity is considered a subsidiary company. Investments in subsidiary companies, which are eliminated on consolidation, are stated in the Bank's financial statements at cost less impairment losses, if any. On disposal of such investments, the difference between the net disposal proceeds and their carrying amount is charged or credited to the income statement. Investments In Associated Companies An associated company is a company in which the Group exercises significant influence, but which it does not control. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not in control over those policies. Investments in associated companies are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associated companies includes premium on consolidation identified on acquisition, net of accumulated impairment losses, if any. The Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves from the date that significant influence commences and until the date that significant influence ceases. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognise further losses, except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associated company. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of associated companies to bring their accounting policies into line with those used by other members of the Group. The results of the associated companies are taken from the latest audited accounts or unaudited management accounts of the associated companies, prepared at dates not more than three months prior to the end of the financial year of the Group.

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Premium on consolidation relating to an associated company is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associated company’s profit or loss in the period in which the investment is acquired. Investments in associated companies are stated at cost less accumulated impairment losses, if any, in the Bank’s balance sheet. On disposal of such investments, the difference between the net disposal proceeds and their carrying amount is charged or credited to the income statement. Intangible Assets (i) Goodwill/Premium On Consolidation

Goodwill on consolidation of subsidiary companies is included in intangible assets on the balance sheet. Premium on consolidation of associated companies is included in investments in associated companies. Goodwill/premium on consolidation for acquisitions prior to 1 January 2006 represents the excess of the purchase consideration over the Group’s share in the fair values of the identifiable net assets of the subsidiary or associated company recognised at the date of acquisition. Goodwill/premium on consolidation for acquisitions on or after 1 January 2006 represents the excess of the purchase consideration over the Group’s share in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary or associated company recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated impairment losses, if any. Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. On disposal of a subsidiary or an associated company, the attributable amount of goodwill/premium on consolidation is included in the determination of the gain or loss on disposal.

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(ii) Computer Software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised using the straight-line method over their expected useful lives of three to five years. Costs associated with developing or maintaining computer software programmes are recognised as an expense when incurred. Costs that are directly associated with the identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include software development employee costs and an appropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised using the straight-line method over their useful lives of three to five years.

(iii) Other intangible assets

Other intangible assets acquired are measured at cost on initial recognition. Subsequent to initial recognition, intangible assets are carried at costs less accumulated amortisation and accumulated impairment losses, if any. For intangible assets with finite useful lives, they are amortised on a straight-line basis over the estimated useful lives and assessed for impairment whenever there is an indication of impairment. The amortisation charges are recognised in the income statement. The useful life and amortisation method are reviewed at each financial year-end. Intangible assets with indefinite useful lives are not amortised but reviewed and tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying amount may be impaired either individually or at the cash-generating unit level. The useful life of the asset is also reviewed annually to ensure its continuing relevance.

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Repurchase Agreements Securities purchased under resale agreements are securities, which the Group and the Bank had purchased with commitments to resell at future dates. The commitments to resell the securities are reflected as an asset on the balance sheet. Conversely, obligations on securities sold under repurchase agreements are securities, which the Group and the Bank had sold from its portfolio, with commitments to repurchase at future dates for funding purposes. The carrying values of the securities underlying these repurchase agreements remain as assets on the balance sheet of the Group and the Bank while the obligations to repurchase such securities at agreed prices on specified future dates are accounted for as a liabilities on the balance sheet. Securities borrowed are not recognised in the financial statements, unless these are sold to third parties, in which case the purchase and sale are recorded with the gain or loss included in trading income. The obligation to return the borrowed securities is recorded as securities sold not yet re-purchased as reflected under other liabilities. Provision is made for any diminution in value based on the fair value of the securities, if any.

Securities

The holdings of the securities portfolio of the Group and the Bank are recognised based on the following categories and valuation methods. (i) Securities held-for-trading

Securities are classified as held-for-trading if they are acquired principally for the purpose of benefiting from actual or expected short-term price movements or to lock in arbitrage profits. The securities held-for-trading will be stated at fair value and any gain or loss arising from a change in their fair values or the derecognition of securities held-for-trading are recognised in the income statement.

(ii) Securities held-to-maturity Securities held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that the Group have the positive intent and ability to hold to maturity. Unquoted shares in organisations set up for socio-economic purposes and equity instruments received as a result of loan restructuring or loan conversion which do not have a quoted market price in an active market and whose fair value cannot be reliably measured are also classified as securities held-to-maturity and are measured at cost.

Securities held-to-maturity are measured at accreted/amortised cost based on the effective yield method less impairment, if any. Amortisation of premium, accretion of discount and impairment as well as gain or loss arising from the derecognition of securities held-to-maturity are recognised in the income statement. Any sale or reclassification of a significant amount of securities held-to-maturity not close to their maturity would result in the reclassification of all securities held-to-maturity to securities available-for-sale, and prevent the Group from classifying the similar class of securities as securities held-to-maturity for the current and following two financial years.

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(iii) Securities available-for-sale

Securities available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity. The securities available-for-sale are measured at fair value or at amortised costs (less impairment losses) if the fair value cannot be reliably measured. Any gain or loss arising from a change in fair value are recognised directly in equity through the statement of changes in equity, until the financial asset is sold, collected, disposed off or impaired, at which time the cumulative gain or loss previously recognised in equity will be transferred to the income statement.

Allowance For Doubtful Debts And Financing Based on management's evaluation of the portfolio of loans, advances and financing, specific allowances for doubtful debts and financing are made when the collectibility of receivables becomes uncertain. In evaluating collectibility, management considers several factors such as the borrower's financial position, cash flow projections, management, quality of collateral or guarantee supporting the receivables as well as prevailing and anticipated economic conditions.

A general allowance based on set percentages of the net increase in receivables is also made. These percentages are reviewed annually in the light of past experiences and prevailing circumstances and an adjustment is made to the overall general allowance, if necessary.

An uncollectible loan and financing or portion of a loan and financing classified as bad is written off after taking into consideration the realisable value of collateral, if any, when in the judgement of management, there is no prospect of recovery. The specific and general allowances for loans, advances and financing of the Group are computed based on BNM's guidelines on the "Classification of Non-Performing Loans and Provisions for Substandard, Bad and Doubtful Debts" ("BNM/GP3") requirements. . However, the Group has adopted a more stringent classification policy on non-performing loans, whereby loans are classified as non-performing and sub-standard when repayments are in arrears for more than three (3) months from the first day of default or after maturity date.

The Group adopted a more stringent basis for specific allowances on non-performing loans and are as follows: (i) Values assigned to collateral held for non-performing loans secured by properties is

determined based on the realisable values of the properties on the following basis:

(a) assigning only fifty percent (50%) of the realisable value of the properties held as collateral for non-performing loans which are in arrears for more than five (5) years but less than seven (7) years; and

(b) no value assigned to the realisable value of the properties held as collateral for non-

performing loans which are in arrears for more than seven (7) years. (ii) Specific allowance of 20% is provided on non-performing loans which are 3 to less than

6 months-in-arrears. Previously, specific allowance was only made when a non-performing loan was in arrears of 6 months and above.

The Directors are of the view that such treatment will reflect a more prudent provisioning policy for loans, advances and financing.

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Trade And Other Receivables Trade and other receivables are stated at nominal value as reduced by the appropriate allowances for estimated irrecoverable amounts. Allowance for doubtful debts is made based on estimates of possible losses which may arise from non-collection of certain receivable accounts. The Bank’s stock and share-broking operations’ policies for the suspension of interest in respect of bad and doubtful accounts and the making of specific and general allowances are in accordance with Schedule 7 of the Rules of Bursa Malaysia, are as follows: (i) Specific allowance is made against bad and doubtful receivables at rates of 50% and 100%,

respectively, subject to deduction of interest-in-suspense and the value of collateral held. In addition, a general allowance is maintained based on 1.5% of total trade receivables after deducting the amount of interest-in-suspense and the specific allowance.

(ii) Interest income accrued on these accounts are suspended when they are considered non-

performing in accordance with Schedule 7 of the Rules of Bursa Malaysia. In accordance with the Rules of Bursa Malaysia, clients’ accounts are classified as non-performing (doubtful and bad) under the following circumstances:

Criteria for classification as non-performing

Types Doubtful Bad Contra losses When the account remains When the account remains outstanding for 16 to 30 calendar outstanding for more than 30 days from the date of contra calendar days from the date of transactions. contra transactions Overdue purchase When the account remains When the account remains contracts outstanding from T+3 market outstanding for more than 30 days to 30 calendar days calendar days.

Foreclosed Properties Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at cost less impairment loss, if any. Property And Equipment And Depreciation Property and equipment are stated at cost less accumulated depreciation and any impairment loss. Costs include expenditure that is directly attributable to the acquisition of the respective items of property and equipment. Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced parts is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred. Freehold land is not depreciated. Leasehold land is amortised over the shorter of the lease period or fifty years. Depreciation of other property and equipment is calculated using the straight-line method at rates based on the estimated useful lives of the various assets.

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The annual depreciation rates for the various classes of property and equipment are as follows:

Freehold buildings 2% Leasehold buildings 2% or over the term of short term lease Motor vehicles 20% Leasehold improvements 10% - 33 1/3% Computer hardware 20% - 33 1/3% Office and residential equipment, furniture and fittings 10% - 33 1/3%

The residual values, useful lives and depreciation methods of assets are reviewed, and adjusted if appropriate, at each balance sheet date, to ensure that they reflect the expected economic benefits derived from these assets. An asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gain or loss arising from derecognition of an asset is determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset, and is charged or credited to the income statement. Investment Properties Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Investment properties of the Group are stated at cost less any accumulated depreciation and impairment losses. Investment properties are depreciated on a straight line basis to write off the cost of the assets to their residual valued over their estimated useful lives. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year in which they arise Assets Purchased Under Lease Assets purchased under finance leases which in substance transfer the risks and benefits of ownership of the assets to the Group are capitalised under property and equipment. The assets and the corresponding lease obligations are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets at the beginning of the lease terms, less accumulated depreciation and impairment losses. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine, otherwise the Group's incremental borrowing rate is used. Leases which do not meet such criteria are classified as operating leases and the related rentals are charged to the income statement as incurred.

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When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. As at 31 March 2008, the Group and the Bank do not have any assets purchased under lease. Impairment Of Assets (i) Securities available-for-sale

Impairment of securities available-for-sale is calculated as the difference between the asset’s carrying amount and the estimated recoverable amount. For equity investment classified as available-for-sale, a significant or prolonged decline in the fair value of the asset below its cost is considered in determining whether the asset is impaired. If such evidence exists, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement, is removed from the available-for-sale reserve within equity and recognised in the income statement. Impairment losses on equity investments recognised in the income statement are not reversed through the income statement, until the investments are disposed of. For debt instrument, reversal of impairment is recognised in the income statement if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in the income statement.

(ii) Securities held-to-maturity

For securities held-to-maturity which are carried at amortised cost, the amount of the impairment loss is measured as the difference between the assets’s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The amount of the impairment loss is recognised in the income statement. Subsequent reversals in the impairment loss is recognised when the decrease can be objectively related to an event occurring after the impairment was recognised, to the extent that the securities’ carrying amount does not exceed its amortised cost if no impairment had been recognised. The reversal is recognised in the income statement. For securities held-to-maturity which are carried at cost, the amount of the impairment loss is measured as the difference between the carrying amount of the asset and present value of its estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent period.

(iii) Goodwill

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (“CGU”) expected to benefit from the synergies of the combination. Each CGU represents the lowest level at which the goodwill is monitored and is not larger than a segment based on either the Group’s primary reporting format. CGU to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the

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CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period.

(iv) Other non- financial assets

The carrying values of the Group's other non-financial assets, other than deferred tax assets and non-current assets (or disposal groups) held for sale, are reviewed for impairment when there is an indication that the asset might be impaired. If such an indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value in use) of the asset is estimated to determine the amount of impairment loss. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the assets does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the CGU to which the asset belongs. An impairment loss is recognised in the income statement when the carrying amount of the asset (or CGU) exceeds the recoverable amount of the asset (or CGU). An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the assets’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the assets in prior years.

Acceptances Payable Acceptances payable represent the Bank own acceptances rediscounted and outstanding in the market. Liabilities Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for services received. Trade payables in respect of the stock and share-broking operations of the Bank represent contra gains owing to non-margin clients and outstanding sale contracts which were entered into on behalf of clients where settlement has yet to be made. The credit term for trade settlement of the company is three (3) market days according to rules of the Bursa. Malaysia. Clients and trust monies relate to monies owing to clients maintained in aggregated accounts of the Bank. Deposits from customers and deposits and placement of banks and other financial institutions are stated at placement values. Profit Equalisation Reserve ("PER") PER is a mechanism to reduce the fluctuation in the profit rates payable to depositors under the Islamic banking business. It is provided based on the Framework of the Rate of Return issued by BNM. The account of PER is appropriated from and written back to the total Islamic banking gross income. PER is reflected under "other liabilities" of the Group and of the Bank.

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Provisions A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present legal or constructive obligation as a result of a past event and a reliable estimate can be made of the amount. Interest Bearing Borrowings All borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using effective interest method. Redeemable Unsecured Subordinated Bonds These are long-term debts with remaining maturity of more than one year. The issue proceeds are recognised at cost and used to grant an unsecured term loan to its related licensed commercial bank for its capital refinancing. The interest incurred is recognised on a straight-line accrual basis. Interest Bearing Irredeemable Convertible Unsecured Loan Stocks (ICULS) The ICULS are regarded as equity instruments and the full issuance proceeds reflected as equity. The interest is accrued on a straight-line basis and recognised in equity. Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of equity are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction, which would have otherwise been avoided. Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interests, dividends and gains and losses relating to a financial instrument classified as liabilities, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

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Trading Derivative Financial Instruments And Hedge Accounting Trading derivative financial instruments are measured at fair value and are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gain or loss arising from the change in the fair value of the derivative instrument is recognised in the income statements unless they are part of a hedging relationship, which qualifies for hedge accounting where the gain or loss is recognised as follows: (i) Fair value hedge

Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability, any gain or loss on the hedging instruments is recognised in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognised in the income statement.

(ii) Cash flow hedge

Gains and losses on the hedging instruments, to the extent that the hedge is effective, are deferred in the separate component of equity. The ineffective part of any gain or loss is recognised in the income statement. The deferred gains and losses are then released to the income statement in the periods when the hedged item affects the income statement.

Forward Exchange Contracts Unmatured forward exchange contracts are valued at forward rates prevailing at balance sheet date, applicable to their respective dates of maturity, and the resultant gains and losses are recognised in the income statements. Sell And Buy Back Agreements These are obligations of the Group to perform its commitment to buy back specified Islamic securities at maturity. Gains and losses are recognised upon sale and shown as trading gain or loss from securities held-for-trading. Contingent Liabilities And Contingent Assets The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognized because it cannot be measured reliably. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognize contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

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Operating Revenue Operating revenue of the Group comprises of net interest income, income from Islamic banking business and other operating income but after elimination of all related companies transactions. Operating revenue of the Bank comprises of net interest income, income from Islamic banking business and other operating income. Interest And Financing Income And Expense Recognition Interest income is recognised in the income statement for all interest bearing assets on an accrual basis. Interest income includes the amortisation of premium or accretion of discount. Interest and financing income on securities are recognised on an effective yield basis. The Group and the Bank follow the financing method of accounting for income from leasing activities. Under the financing method, the excess of aggregate rentals over the cost (reduced by estimated residual value at the end of the lease) of the leased property is taken as income over the term of the lease in decreasing amounts proportionate to the declining balance of the unrecovered sum using the 'sum-of-digits' method. Income from Islamic Banking financing is recognised on an accrual basis in accordance with the principle of Shariah. Where a loan becomes non-performing, interest accrued and recognised as income prior to the date the loans are classified as non-performing is reversed out of income and set-off against the accrued interest receivable account in the balance sheet. Thereafter, the interest accrued on the non-performing loans is recognised as income on a cash basis. An account is classified as non-performing where repayment is in arrears for more than three months and after maturity dates for trade bills, bankers' acceptances and trust receipts. The Group's policy on recognition of interest income on loans and advances is in conformity with BNM's "Guideline on Classification of Non-Performing Loans and Provision for Bad and Doubtful Debts"("BNM/GP3") and revised Guidelines on Financial Reporting for Licensed Institutions (BNM/GP8). Interest expense and attributable income on deposits and borrowings (pertaining to activities relating to Islamic banking business) of the Group are accrued on a straight-line basis. Fee And Other Income Recognition Loan arrangement, management and participation fees, net brokerage income, acceptance and factoring commissions and underwriting commissions, are recognised as income upon execution of contracts. Fees from advisory and corporate finance activities are recognised as income on completion of each stage of the engagement. Asset, property and unit trusts management fees, margin rollover fees, agency and commitment fees are recognised as income based on time apportionment.

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Guarantee fees are recognised as income over the duration of the guarantee period. All gains or losses on disposal of non-performing loans are recognised in the income statement upon execution of contracts. The gain or loss on disposal of non-performing loans is the difference between the net disposal proceeds and the carrying value of the non-performing loans being disposed. Revenue from sale of trust units is recognised upon allotment of units, net of cost of units sold. Equipment and property rental are recognised on an accrual basis. Dividends are recognised when the right to receive payment is established. Rental income is recognised on an accrual basis when it falls due. Employee Benefits (i) Short-term Employee Benefits

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

(ii) Defined Contribution Plan As required by law, companies within the Group make contributions to the state pension scheme. Such contributions are recognised as an expense in the income statement as incurred. Once the contribution has been paid, the Group has no further payment obligations.

(iii) Termination Benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

Income Taxes Tax on profit or loss for the financial year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent it relates to items recognised directly in equity, in which case the income tax is also recognised in equity. Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based on the taxable profits.

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Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences and unutilised tax losses to the extent it is probable that taxable profit will be available against which the deductible temporary differences and unutilised tax losses can be utilised. Temporary differences are not recognised for goodwill or negative goodwill or from the initial recognition of assets and liabilities that at the time of transaction, affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. Foreign Currencies (i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Bank’s functional currency.

(ii) Foreign Currency Transactions

In preparing the financial statements of the Bank, Labuan offshore branch, subsidiary and associated companies, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions or, if covered by foreign exchange contracts, at contracted rates. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the exchange rate prevailing at the date of the initial transaction. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in the income statement for the year. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the income statement for the year except for differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(iii) Foreign Operations

For the purpose of presenting consolidated financial statements, the assets and liabilities of Labuan offshore branch, subsidiary and associated companies expressed in foreign currencies are translated into RM at the rates of exchange ruling at the balance sheet date while income statement is translated into RM at the average exchange rate for the year. Gains or losses arising on translation into RM are classified as equity and transferred to the Group’s exchange fluctuation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate.

Company No. 23742-V


52

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used for translation of foreign operations are as follows: 31.03.2008 31.03.2007 Singapore Dollar (SGD) 2.31 2.28 United States Dollar (USD) 3.19 3.46

Cash Flow Statements

The Group and the Bank adopt the indirect method in the preparation of the cash flow statements.

Cash And Cash Equivalents

For the purpose of the cash flow statements, cash and cash equivalents consist of cash and short-term funds net of bank overdrafts.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Preparation of the financial statements involved making certain estimates, assumptions concerning the future and judgments. They affect the accounting policies applied, amounts of assets, liabilities, income and expenses reported and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are as follows: (a) Impairment of goodwill

The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are performed if events indicate that this is necessary. The recoverable amounts of CGU are determined based on the value-in-use method, which requires the use of estimates. The value-in-use calculations apply a discounted cash flow model using cash flow projections based on the most recent one year budget approved by management. Cash flows for the second to fifth years are extrapolated using estimated weighted average growth rates. No growth rate is estimated for the sixth to tenth years. The discount rates applied to the cash flow projections are derived from the CGU’s pre-tax weighted average cost of capital at the date of assessment. Changes to the assumptions used by management, particularly the discount rate and growth rate, may significantly affect the results of the impairment test.

Company No. 23742-V


53

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTD.) (b) Fair value estimation

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the balance sheet date. Quoted market prices or dealer quotes for similar instruments and discounted cash flows are some of the common techniques used to calculate the fair value of these instruments.

(c) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Company No: 23742-V

5. CASH AND SHORT-TERM FUNDS


Cash and bank balances 70,173 49,903 103,798 52,436Money at call and deposits maturing within one month: Licensed banks: Subsidiary - - - 121,182 Related 723,924 720,424 474,657 470,000 Others 1,038,848 441,311 929,532 657,454 Bank Negara Malaysia 1,240,000 1,240,000 1,733,790 1,733,790 Other financial institutions 99,688 99,688 241,920 241,920

3,172,633 2,551,326 3,483,697 3,276,782

6. SECURITIES PURCHASED UNDER RESALE AGREEMENTS


Securities purchased under resale agreements - - 393,329 374,155

7. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks: Subsidiary - - - 100,224 Related 750,461 749,500 896,988 896,268 Others - - 176,317 172,800 Bank Negara Malaysia - - 130,000 130,000 Other financial institutions - - 625,536 625,536

750,461 749,500 1,828,841 1,924,828

2008 2007

20072008

2008 2007

The deposits and placements with banks and other financial institutions mature within one year.

Included in the above are interbank lendings of RM3,030,676,000 (RM3,343,136,000 in 31 March 2007) andRM2,501,423,000 (RM3,223,892,000 in 31 March 2007) for the Group and the Bank, respectively and shortterm deposits and money held on behalf of remisiers and clients amounting to approximately RM240,768,000(RM25,906,000 in 31 March 2007) and RM240,547,000 (RM20,696,000 in 31 March 2007) for the Group andthe Bank respectively.

Included in the above are interbank lendings of RM749,500,000 (RM1,824,604,000 in 31 March 2007) andRM749,500,000 (RM1,924,828,000 in 31 March 2007) for the Group and the Bank, respectively.

Included in the above are money held on behalf of remisiers and clients amounting to RM Nil (RM212,989,000in 31 March 2007) for the Group and the Bank.



Company No: 23742-V

8. SECURITIES HELD-FOR-TRADING


At Fair Value Money Market Securities:

Treasury bills 26,566 26,566 - - Islamic Treasury bills 43,680 43,680 - - Malaysian Government securities 140,489 140,489 1,401,040 1,401,040 Malaysian Government Investment

Certificates 279,402 279,402 535,577 535,577 Cagamas bonds - - 60,230 60,230 Cagamas Mudharabah bearer bonds 2,091 2,091 16,217 16,217 Khazanah bonds 59,359 59,359 11,741 11,741 Negotiable instrument of deposits 14,389 14,389 - - Negotiable Islamic debt certificate 313,742 313,742 60,082 60,082 Bank Negara monetary notes 274,645 274,645 413,656 413,656 Islamic Bank Negara monetary notes 134,107 134,107 - -

1,288,470 1,288,470 2,498,543 2,498,543

Securities Quoted:In Malaysia:

Shares 5,302 5,302 170,971 170,971 Corporate bonds - - 33,922 - Trust units 63,803 63,803 88,330 88,330

Outside Malaysia:Shares 70,016 69,236 43,067 43,085

139,121 138,341 336,290 302,386

Unquoted Private Debt SecuritiesOf Companies Incorporated:In Malaysia:

Corporate notes 76,672 76,672 50,224 50,224 Corporate bonds 1,235,163 1,235,163 704,771 704,771 Islamic corporate bonds 1,790,218 1,790,218 1,548,093 1,548,093 Islamic corporate notes 151,737 151,737 63,947 63,947

Outside Malaysia:Corporate bonds 142,769 142,769 119,185 119,185

3,396,559 3,396,559 2,486,220 2,486,220

Unquoted Guaranteed Private Debt Securities Of Companies IncorporatedIn Malaysia:

Corporate bonds 116,571 116,571 239,745 239,745 Corporate notes - - 39,749 39,749 Islamic corporate bonds - - 103,119 103,119 Islamic corporate notes 30,725 30,725 30,425 30,425

147,296 147,296 413,038 413,038 Total securities held-for-trading 4,971,446 4,970,666 5,734,091 5,700,187

2008 2007

Certain money market securities held have been sold under repurchase agreements for funding purposes.The carrying values of the securities underlying these repurchase agreements remain in the respective assetaccounts while the obligations to repurchase such securities at agreed prices on specified future dates areaccounted for as liabilities as shown in Note 22.



Company No: 23742-V

9. SECURITIES AVAILABLE-FOR-SALE


At Fair Value Money Market Securities:

Negotiable instruments of deposits 69,762 69,762 2,580,599 2,580,599

Securities Quoted: In Malaysia:

Corporate bonds - - 17,329 - Warrants - - - - Trust units - - - -

Outside Malaysia:Shares - - - -

Securities Quoted in Malaysia - - 17,329 -

Debt Equity Converted Securities:Quoted in Malaysia:

Shares 5,128 5,128 5,634 5,634Shares - with options - - 15,172 15,172Loan stocks 9,145 9,145 - - Corporate bonds 4,411 4,411 - -

Unquoted securities outside Malaysia:Shares 897 - 971 -

19,581 18,684 21,777 20,806


Corporate bonds 116,610 116,610 96,920 96,920Islamic corporate bonds 927,167 927,167 558,857 558,857

Outside Malaysia: Corporate bonds 78,635 78,635 - -

1,122,412 1,122,412 655,777 655,777

Unquoted Guaranteed Private Debt Securities Of Companies Incorporated In Malaysia:

Corporate bonds - - 144,258 144,258Total securities available-for-sale 1,211,755 1,210,858 3,419,740 3,401,440

20072008

The money market securities mature within one year.



Company No: 23742-V

10. SECURITIES HELD-TO-MATURITY


At Amortised Cost Money Market Securities:

Negotiable instrument of deposit 141,601 141,601 89,589 89,589

Quoted Securities:In Malaysia:

Shares 2 - 2 - Corporate bonds - - 34,560 - Trust units 2,010 2,010 1,001 1,001

Islamic Corporate bonds 25,552 - - - Outside Malaysia: Islamic Corporate bonds 6,388 - - -

33,952 2,010 35,563 1,001

Unquoted Securities Of Companies Incorporated:In Malaysia:

Shares 60,289 60,289 60,588 60,588Corporate bonds 100 100 100 100

Outside Malaysia:Shares 6,423 6,423 7,580 7,580

66,812 66,812 68,268 68,268

Quoted Debt Equity Converted Securities:In Malaysia:

Loan stocks - collateralised 971 - 971 - Loan stocks - with options 80,595 80,595 424,490 424,490

81,566 80,595 425,461 424,490

Unquoted Debt Equity Converted Securities Of CompaniesIncorporated In Malaysia:

Shares 1,679 - 1,679 - Corporate bonds 277,869 258,016 356,556 334,760

279,548 258,016 358,235 334,760


Corporate bonds denominated in USD - - 56,871 56,871Islamic corporate bonds 190,331 190,331 193,598 193,598

Outside Malaysia: Corporate notes denominated in USD - - 103,680 103,680

190,331 190,331 354,149 354,149

20072008



Company No: 23742-V

10. SECURITIES HELD-TO-MATURITY (CONTD.)


Unquoted Guaranteed Private DebtSecurities Of Companies Incorporated In Malaysia:

Corporate bonds - - 79,216 79,216

Total 793,810 739,365 1,410,481 1,351,473 Accumulated impairment losses (132,384) (118,895) (218,884) (204,506)Total securities held-to-maturity 661,426 620,470 1,191,597 1,146,967

Market/Indicative valueMoney Market Securities:

Negotiable instrument of deposit 141,877 141,877 89,604 89,604

Quoted Securities: In Malaysia: Shares 2 - 2 - Corporate bonds - - 28,215 -

Trust units 2,010 2,010 1,001 1,001 Islamic Corporate bonds 25,486 - - - Outside Malaysia:

Islamic corporate bonds 6,278 - - -

Quoted Debt Equity Converted Securities In Malaysia: Loan stocks - collateralised 971 - 971 - Loan stocks - with options 66,985 66,985 381,413 381,413

Unquoted Debt Equity Converted Securities of Companies Incorporated In Malaysia: Corporate bonds 169,877 156,404 295,884 280,683

Unquoted Guaranteed Private Debt Securities of Companies Incorporated In Malaysia: Corporate bonds - - 79,240 79,240

The money market securities mature within one year.

2008 2007



Company No: 23742-V

11. LOANS, ADVANCES AND FINANCING


Term loans and revolving creditsCustomers 4,714,081 4,681,926 4,364,635 4,254,404 Related companies 35,943 35,943 31,295 31,295 Staff loans 22,516 21,909 25,055 24,268

Gross loans, advances and financing 4,772,540 4,739,778 4,420,985 4,309,967

Less: Allowance for bad and doubtful debts

and financing: General 69,179 68,689 63,677 62,386 Specific 160,266 160,250 175,651 150,912

229,445 228,939 239,328 213,298

Net loans, advances and financing 4,543,095 4,510,839 4,181,657 4,096,669


Maturing within one year 3,083,981 3,082,971 2,417,178 2,383,505One year to three years 658,040 637,342 665,591 611,019Three to five years 505,120 494,554 905,337 894,899Over five years 525,399 524,911 432,879 420,544

4,772,540 4,739,778 4,420,985 4,309,967

2008

2008 2007

2007

The maturity structure of loans, advances and financing is as follows:



Company No: 23742-V

11. LOANS, ADVANCES AND FINANCING (CONTD.)

Loans, advances and financing analysed by their economic purposes are as follows:


Working capital 1,903,161 1,871,607 1,876,776 1,775,019Purchase of securities 811,799 811,799 622,876 622,876Construction 542,489 542,489 750,864 750,864Fixed assets 487,834 487,834 300,362 300,362Other purpose 481,272 480,672 402,086 399,557Merger and acquisition 278,877 278,877 207,044 207,044Purchase of landed properties: - Residential 49,128 48,565 51,749 51,216 - Non-residential 165,746 165,746 200,638 194,471Personal use 48,671 48,671 5,391 5,391Purchase of transport vehicles 3,563 3,518 3,199 3,167

4,772,540 4,739,778 4,420,985 4,309,967

Loans, advances and financing analysed by type of cutomers are as follows :


Domestic :Other non-bank financial institutions 79,535 79,535 121,453 121,453Business enterprises:

Small medium enterprise 195,769 195,768 208,749 208,528Other domestic business enterprise 3,894,442 3,875,988 3,615,883 3,566,541

Government & statutory bodies 45,399 45,399 57,489 22,918Individuals 369,877 369,270 268,461 267,896Foreign entities 187,518 173,818 148,950 122,631

4,772,540 4,739,778 4,420,985 4,309,967

Loans, advances and financing analysed by interest rate sensitivity are as follows:


Variable rate:Cost-plus 3,927,499 3,913,802 3,757,465 3,711,708Other variables rates 132,494 114,640 137,867 75,938

4,059,993 4,028,442 3,895,332 3,787,646 Fixed rate:

Housing loans 18,954 18,391 21,833 21,101Hire purchase receivables 3,562 3,518 3,222 3,167Other fixed rates loans 690,031 689,427 500,598 498,053

712,547 711,336 525,653 522,321

4,772,540 4,739,778 4,420,985 4,309,967

2007

2007

2008 2007

2008

2008

Net loans, advances and financing of the Group includes loans relating to the offshore banking subsidiaryamounting to USD10,064,000 (USD24,527,000 in 31 March 2007) and are translated into RinggitMalaysia at the exchange rate of RM3.19 (RM3.46 in 31 March 2007).



Company No: 23742-V



GrossBalance at beginning of year 364,131 329,423 530,269 497,739Non-performing during the year 86,324 86,324 63,991 63,991Reclassification to performing loans, advances and financing (21,272) (21,272) (8,585) (8,585)Recoveries (73,025) (66,959) (59,228) (59,228)Debt equity conversion (32,807) (32,807) - - Amount written off (25,126) (1,980) (173,128) (173,128)Exchange fluctuation adjustment (5,711) (215) 2,001 (177)Reclassification from trade receivable 658 658 - -

Transfer from stock and share-broking operations - - 8,811 8,811Balance at end of year 293,172 293,172 364,131 329,423

Less: Specific allowance (160,266) (160,250) (175,651) (150,912)Non-performing loans and financing - net 132,906 132,922 188,480 178,511

Ratios of NPLs to total loans, advances and financing - net 2.88% 2.90% 4.44% 4.29%

NPLs analysed by their economic purposes are as follows:


Construction 107,723 107,723 117,146 117,146Merger and acquisition - - 15,020 15,020Purchase of non-residential landed properties 4,801 4,801 16,803 10,636Other purpose 30,367 30,367 15,664 15,664Purchase of securities 7,350 7,350 14,336 14,336Personal use 4,390 4,390 4,390 4,390Purchase of transport vehicles - - 65 65Working capital 138,541 138,541 180,707 152,166Gross NPLs, advances and financing 293,172 293,172 364,131 329,423

2008 2007

2008 2007

Movements in non-performing loans and financing ("NPLs") are as follows:



Company No: 23742-V



General allowance

Balance at beginning of year 63,677 62,386 63,925 61,553Reversal of allowance during the

year (Note 34) 5,780 6,537 (1,260) (277)Exchange fluctuation adjustments (278) (234) (309) (211)Transfer from stock and share-broking operations - - 1,321 1,321 Balance at end of year 69,179 68,689 63,677 62,386

% of total loans, advances and financing less specific allowances and

interest/income-in-suspense 1.50% 1.50% 1.50% 1.50%

Specific allowance

Balance at beginning of year 175,651 150,912 235,984 222,357Allowance during the year 39,865 39,848 122,090 109,868Amount written back in respect

of recoveries and reversals (20,469) (20,469) (16,777) (16,777)Net charge to income statements 19,396 19,379 105,313 93,091

(Note 34)Reclassification from sundry receivables 1,485 1,485 - - Debt equity conversion (9,046) (9,046) - - Amount written off (25,344) (2,480) (173,278) (173,278)Exchange fluctuation adjustments (1,876) - (1,109) 1Transfer from stock and share-broking operations - - 8,741 8,741Balance at end of year 160,266 160,250 175,651 150,912

2008 2007

Movements in allowances for bad and doubtful debts and financing are as follows:



Company No: 23742-V

12. DERIVATIVE FINANCIAL ASSETS/LIABILITIES

Contract/ Positive Negative Contract/ Positive Negative Notional Fair Fair Notional Fair Fair

Group and Bank Amount Value Value Amount Value Value RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Trading derivative Interest rate related contracts:

Interest rate futures 270,000 6,574 6,907 290,000 - - Interest rate swaps 35,395,380 162,603 158,980 31,943,579 251,697 237,250

Foreign exchange related contracts:Forward exchange contracts 2,681,436 17,702 31,533 3,178,447 68,081 15,599 Cross currency swaps 624,647 106,939 126,658 811,310 59,638 57,534

Malaysian Government securities futures - - - 5,000 1 - Equity related contracts:

Options 151,596 5,200 1,192 165,618 1,325 23,287 Futures 363 - - - - -

39,123,422 299,018 325,270 36,393,954 380,742 333,670

2008 2007

Derivative financial instruments are off-balance sheet financial instruments whose values change in response to changes in prices or rates (such asforeign exchange rates, interest rates and security prices) of the underlying instruments. These instruments allow the Group and its customers to transfer,modify or reduce their foreign exchange and interest rate risks via hedge relationships. The Group also transacts in these instruments for proprietarytrading purposes. The default classification for derivative financial instruments is trading, unless designated in a hedge relationship and are incompliance with the hedge effectiveness criteria. The risks associated with the use of derivative financial instruments, as well as management's policyfor controlling these risks are set out in Note 45.

The table below shows the Group's and the Bank's derivative financial instruments as at the balance sheet date. The contractual or underlying principalamounts of these derivative financial instruments and their corresponding gross positive (derivative financial asset) and gross negative (derivativefinancial liability) fair values at balance sheet date are analysed below. These values are stand-alone without taking into account their potentialoffsetting relationships with other non-derivatives exposures of the lump.

Fair value of derivative financial instruments are normally zero or negligible at inception and the subsequent change in value is favourable (assets) orunfavourable (liabilities) as a result of fluctuations in market interest rates or foreign exchange rates relative to their terms.



Company No: 23742-V

13. OTHER ASSETS


Trade receivables, net of allowance for doubtful debts for the Group of RM13,309,000 (RM15,281,000 in 2007) and the Bank of RM11,954,000 (RM14,017,000 in 2007) 634,621 390,256 666,909 452,696 Other receivables, deposits and prepayments, net of allowance for doubtful debts for the Group of RM5,098,000 (RM11,604,000 in 2007) and the Bank of RM5,098,000 (RM11,604,000 in 2007) 219,865 194,034 195,368 178,327 Interest/Dividends receivable 71,937 82,472 104,399 103,731 Amount due from Originators 35,140 35,140 52,421 52,421Amount due from brokers 57,076 57,076 22,671 22,671Amount due from: Ultimate holding company 143 143 3,561 3,561 Subsidiary companies - 1,030 - 1,691 Related companies 8,127 7,957 8,102 7,995 Assets acquired in exchange of debts, net of impairment loss of RM100,000 (RM4,025,000 in 31 March 2007) 905 905 6,832 6,832

1,027,814 769,013 1,060,263 829,925

14. STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA (CENTRAL BANK OF MALAYSIA)

2008 2007

Trade receivables mainly relate to the stock and share-broking operations of subsidiary companies and the Bank,and represent amount outstanding in purchase contracts net of allowances.

The non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance with Section37(1)(c) of the Central Bank of Malaysia Act, 1958, the amounts of which are determined at set percentages oftotal eligible liabilities.

Amount due from Originators represent loans, hire purchase and leasing receivables acquired from theOriginators for onward sale to Cagamas Berhad as mentioned in Note 24.

Amounts due from subsidiary companies and other related companies are unsecured, interest-free and representexpenses paid on behalf and interest receivable.



Company No: 23742-V

15. INVESTMENTS IN SUBSIDIARY COMPANIES

Issued and Paid-up EffectivePrincipal Ordinary Capital Equity InterestActivities 2008 2007 2008 2007

RM'000 RM'000 % %Subsidiary Companies

AmInvestment Management of unit Services Berhad ("AIS") trusts 5,539 5,539 100 100 AmInvestment Management Sdn Bhd ("AIM") Asset management 2,000 2,000 100 100 AMMB Consultant Sdn Bhd ("AMC") Ceased Operations 500 500 100 100 AMMB Nominees (Tempatan) Sdn Bhd ("AMN_T") Nominee services 10 10 100 100 AMMB Nominees (Asing) Sdn Bhd ("AMN_A") Nominee services 10 10 100 100 AmProperty Trust Management Bhd ("AMPT") Dormant 500 500 100 100 AMMB Properties Sdn Bhd ("AMMB_PROP") Dormant -** -** 100 100 AM Nominees (Tempatan) Sdn Bhd ("AAMN_T) Nominee services -** -** 100 100 AM Nominees (Asing) Sdn Bhd ("AAMN_A") Nominee services -** -** 100 100 AMSEC Nominees (Tempatan) Sdn Bhd ("AMSN_T") Nominee services 1 1 100 100 AMSEC Nominees (Asing) Sdn Bhd ("AMSN_A") Nominee services 1 1 100 100

US$'000 US$'000AMMB Labuan (L) Ltd Dormant 200 200 100 100 AmInternational (L) Ltd Offshore banking 10,000 10,000 100 100

The subsidiary companies which are stated at cost, all unquoted and incorporated in Malaysia unlessindicated otherwise, are:



Company No: 23742-V

15. INVESTMENTS IN SUBSIDIARY COMPANIES (CONTD.)

Issued and Paid-up EffectivePrincipal Ordinary Capital Equity InterestActivities 2008 2007 2008 2007

S$'000 S$'000 % %Subsidiary Companies

AmFraser International Pte. Ltd. (Formerly known as Frasers International Pte. Ltd. ("FIPL"))*(2) Investment holding 18,910 18,910 100 100 AmFraser Securities Pte. Ltd. (Formerly known as Fraser Securities Stock and share- Pte. Ltd.)*(2) broking 32,528 32,528 100 100 Fraser Financial Planners Pte. Ltd.*(2) Dormant 1,000 1,000 100 100 Fraser Financial Services Pte. Ltd.*(2) Dormant 200 200 100 100 Fraser-AMMB Research Pte. Ltd.*(2) Dormant 500 500 100 100 AmFraser Nominees Pte.Ltd. (Formerly known as Frasers Nominees Private Limited)*(2) Nominee services 1 1 100 100

* Subsidiary company not audited by Ernst & Young.** Subsidiary companies with an issued and paid up ordinary capital of RM2(2) Incorporated in the Republic of Singapore.



Company No: 23742-V

16. INVESTMENTS IN ASSOCIATED COMPANIES


Unquoted shares, at cost 100 100 138 138 Share in net post acquisition profit 2,125 - 2,452 -

2,225 100 2,590 138

2008 2007RM'000 RM'000

Group's share of aggregate net tangible assets 2,225 2,590

Issued and Paid-upPrincipal Ordinary Capital Equity Interest Activities 2008 2007 2008 2007

RM'000 RM'000 % %

Incorporated in Malaysia

Malaysian Ventures Sendirian Ceased operations 17 17 27.41 27.41Bhd*

Malaysian Ventures (Two) Ceased operations 19 19 34.67 34.67Sdn Bhd*

AmTrustee Berhad Trustee services 500 500 20.00 20.00

Effective

2008 2007

Group

As at 31 March 2008, the carrying values of the investments in associated companies are represented by:

The associated companies, all unquoted and held through AmInvestment Bank, are as follows:

* Associated company under members' voluntary liquidation.

On 2 July 2007, Malaysian Ventures Sendirian Bhd declared and paid a final return to contribution in the amount of RM453,000.



Company No: 23742-V

17. PREPAID LAND LEASE PAYMENTS

2008 2007Group and Bank RM’000 RM’000

COST

Balance at beginning of year 3,000 3,000 Balance at end of year 3,000 3,000

ACCUMULATED AMORTISATION

Balance at beginning of year 284 224 284 224

Additions 60 60 Balance at end of year 344 284

NET BOOK VALUE

As at 31 March 2008 2,656 2,716

Long term leasehold land

The three pieces of long-term leasehold land, two of which are located in the Federal Territory of Labuan and onelocated in the Federal Territory of Kuala Lumpur, are for lease periods of 99 years with unexpired lease periodsof 50, 82 and 83 years, respectively.

Details of prepaid long term leasehold land payments are as follows:



Company No: 23742-V

18. PROPERTY AND EQUIPMENTOffice

equipment,2008 Freehold Leasehold Motor Leasehold Computer furnitureGroup land land Buildings vehicles improvements hardware and fittings Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000COST

Balance at beginning of year 198 443 17,215 6,177 21,240 66,447 33,523 145,243 Additions - - - 571 1,009 6,340 3,742 11,662 Disposals - - - (1,419) (70) - (66) (1,555) Written off - - - - - (495) (296) (791) Reclassification/Transfer - (410) 410 - (106) (99) (247) (452) Exchange adjustments - (33) - (8) (1) 67 (65) (40) Balace at end of year 198 - 17,625 5,321 22,072 72,260 36,591 154,067

ACCUMULATED DEPRECIATION

Balance at beginning of year - 96 1,781 3,381 14,457 61,677 27,093 108,485 Additions - - 345 929 2,256 2,201 1,866 7,597 Arising from transfer of stock and share-broking operations - - - - - - - - Acquisition of a subsidiary - - - - - - - - Disposals - - - (1,208) (69) - (60) (1,337) Written off - - - - - (483) (271) (754) Reclassification/Transfer - (89) 89 (1) (1) (26) 2 (26) Exchange adjustments - (7) - (8) (1) 56 (63) (23) Balace at end of year - - 2,215 3,093 16,642 63,425 28,567 113,942

NET BOOK VALUE

As at 31 March 2008 198 - 15,410 2,228 5,430 8,835 8,024 40,125



Company No: 23742-V

18. PROPERTY AND EQUIPMENT (CONTD.)Office

equipment,2007 Freehold Leasehold Motor Leasehold Computer furnitureGroup land land Buildings vehicles improvements hardware and fittings Total


Balance at beginning of year 198 472 17,215 3,451 16,746 35,265 20,176 93,523 Reclassification to prepaid land lease payments upon adoption of FRS 117 - - - - - - - - Additions - - - 803 650 1,409 562 3,424 Arising from transfer of stock and share-broking operations 421 - - 2,121 3,905 25,797 10,749 42,993 Acquisition of a subsidiary - - - 598 - 6,274 2,645 9,517 Disposals - - - (755) - (10) (66) (831) Written offs - - - (4) - (1,214) (60) (1,278) Reclassification/Transfer (421) - - (22) (60) (1,040) (391) (1,934) Exchange adjustments - (29) - (15) (1) (34) (92) (171) Balace at end of year 198 443 17,215 6,177 21,240 66,447 33,523 145,243


Balance at beginning of year - 93 1,434 1,964 9,530 31,844 15,114 59,979 Additions - 9 347 508 1,888 1,381 1,295 5,428 Arising from transfer of stock and share-broking operations - - - 1,278 2,945 25,087 9,153 38,463 Acquisition of a subsidiary - - - 395 - 5,267 2,115 7,777 Disposals - - - (763) - (4) (61) (828) Written offs - - - (2) - (991) (57) (1,050) Exchange adjustments - (6) - (18) (1) (36) (93) (154) Balace at end of year - 96 1,781 3,381 14,457 61,677 27,093 108,485

NET BOOK VALUE

As at 31 March 2007 198 347 15,434 2,796 6,783 4,770 6,430 36,758



Company No: 23742-V

18. PROPERTY AND EQUIPMENTOffice

equipment,2008 Freehold Leasehold Motor Leasehold Computer furnitureBank land land Buildings vehicles improvements hardware and fittings Total


Balance at beginning of year 198 - 17,215 4,838 21,233 58,738 27,409 129,631 Additions - - - 571 1,009 4,727 2,468 8,775 Disposals - - - (1,419) (70) - (13) (1,502) Written off - - - - - (312) (113) (425) Reclassification/Transfer - - - - (107) (74) (247) (428) Balace at end of year 198 - 17,215 3,990 22,065 63,079 29,504 136,051


Balance at beginning of year - - 1,783 2,982 14,450 55,505 21,898 96,618 Additions - - 336 637 2,256 1,586 1,292 6,107 Disposals - - - (1,208) (69) - (8) (1,285) Written off - - - - - (305) (107) (412) Reclassification/Transfer - - - (1) (1) (1) 2 (1) Balace at end of year - - 2,119 2,410 16,636 56,785 23,077 101,027

NET BOOK VALUE

As at 31 March 2008 198 - 15,096 1,580 5,429 6,294 6,427 35,024



Company No: 23742-V

18. PROPERTY AND EQUIPMENT (CONTD.)Office

equipment,2007 Freehold Leasehold Motor Leasehold Computer furnitureBank land land Buildings vehicles improvements hardware and fittings Total


Balance at beginning of year 198 - 17,215 2,866 16,738 32,245 16,305 85,567 Additions - - - 4 590 709 376 1,679 Arising from transfer of stock and share-broking operations 421 - - 2,121 3,905 25,797 10,750 42,994 Disposals - - - (149) - (13) (12) (174) Written offs - - - (4) - - (11) (15) Reclassification/Transfer (421) - - - - - 1 (420) Balace at end of year 198 - 17,215 4,838 21,233 58,738 27,409 129,631


Balance at beginning of year - - 1,434 1,500 9,522 29,431 11,945 53,832 Additions - - 349 355 1,888 993 911 4,496 Arising from transfer of stock and share-broking operations - - - 1,278 2,945 25,087 9,154 38,464 Disposals - - - (149) - (6) (7) (162) Written offs - - - (2) - - (9) (11) Reclassification/Transfer - - - - 95 - (96) (1) Balace at end of year - - 1,783 2,982 14,450 55,505 21,898 96,618

NET BOOK VALUE

As at 31 March 2007 198 - 15,432 1,856 6,783 3,233 5,511 33,013



Company No: 23742-V

18. PROPERTY AND EQUIPMENT (CONTD.)

(b) Details of fully depreciated property and equipment which are still in use are:Office

equipment,Motor Leasehold Computer furniture

2008 vehicles improvements hardware and fittings TotalRM'000 RM'000 RM'000 RM'000 RM'000

GroupCost 872 8,787 30,230 11,988 51,877

BankCost 582 8,777 28,186 9,933 47,478

2007

GroupCost 1,288 7,306 29,753 10,912 49,259

BankCost 1,018 7,297 27,552 8,415 44,282



Company No: 23742-V

19. INTANGIBLE ASSETS

The net carrying amount of intangible assets are as follows:


Goodwill 47,685 - 46,866 - Computer software 5,036 4,826 3,725 3,558

52,721 4,826 50,591 3,558

The movements in intangible assets are as follows:

(a) Goodwill

2008 2007RM'000 RM'000

At beginning of year 46,866 36,442 Expenses capitalise in relation to the acquisition of FIPL 819 - Arising on acquisition of the remaining 51.0% equity interest in FIPL - 10,424 At end of year 47,685 46,866

Impairment tests for goodwill

GroupRM'000

Investment Banking 11,243 Fund Management 36,442

47,685

Group

2008 2007

The recoverable amount of the CGU, which are the reportable business segments, is based on their value inuse, computed by discounting the expected future cash flows of the units. The key assumptions for thecomputation of value in use include the discount rates and growth rates applied. The discount rates applied tothe cash flow projections are derived from the pre-tax weighted average cost of capital plus a reasonable riskpremium at the date of assessment of the respective CGU. The discount rate applied for the financial year was12.0%. Cash flow projection is based on the most recent one-year financial budget approved by seniormanagement, taking into account projected regulatory capital requirements. Cash flows for the second to fifthyear are extrapolated using the weighted average growth rates ranging from 13.0% to 58.0% to extrapolatecash flows beyond the projected years. Cash flows for the sixth to tenth years are projected to remain constant.The growth rates do not exceed the long-term average growth rate for the market in which the businessesoperate. Impairment is recognised in the income statement when the carrying amount of a cash-generating unitexceeds its recoverable amount.

Management believes that any reasonably possible change in the key assumptions would not cause the carryingamount of the goodwill to exceed the recoverable amount of the cash generating units.

At the date of acquisition, goodwill is allocated to the Group’s cash generating units (“CGU”) for impairmenttesting purposes, identified according to business segments expected to benefit from the synergies and are asfollows:



Company No: 23742-V

19. INTANGIBLE ASSETS (CONTD.)

(b) Computer SoftwareGroup Bank Group Bank

RM'000 RM'000 RM'000 RM'000COSTAt beginning of year 37,951 34,313 31,057 26,792 Additions 2,883 2,763 349 313 Disposal (20) - (20) - Written-Off (101) (99) (643) - Reclassification/Transfer 125 80 - - Arising from transfer of stock and share-broking operations - - 7,209 7,209 Exchange fluctuation adjustments (2) - (1) (1) At end of year 40,836 37,057 37,951 34,313


At beginning of year 34,226 30,755 27,316 23,633 Additions 1,653 1,576 1,207 1,073 Disposal (20) - (20) - Written-Off (94) (92) (331) - Reclassification/Transfer 37 (8) - - Arising from transfer of stock and share-broking operations - - 6,048 6,048 Exchange fluctuation adjustments (2) - 6 1 At end of year 35,800 32,231 34,226 30,755

NET CARRYING AMOUNT 5,036 4,826 3,725 3,558

2008 2007



Company No: 23742-V

20. DEPOSITS FROM CUSTOMERS


Term/Investment deposits 5,036,237 4,533,325 4,822,143 4,617,516Negotiable instruments of deposits - - 300 300Other deposits 1,195,951 1,195,951 428,885 428,885

6,232,188 5,729,276 5,251,328 5,046,701


Due within six months 5,982,121 5,479,800 4,792,903 4,588,276 Six months to one year 49,476 49,476 256,375 256,375 One year to three years 200,591 200,000 202,050 202,050

6,232,188 5,729,276 5,251,328 5,046,701


Business enterprises 3,582,319 3,081,326 3,252,167 3,050,923Individuals 26,846 25,446 35,768 33,410Government 1,351,198 1,351,198 738,043 738,043Others 1,271,825 1,271,306 1,225,350 1,224,325

6,232,188 5,729,276 5,251,328 5,046,701

2007

2007

2007

2008

2008

2008

The maturity structure of deposits from customers is as follows:

The deposits are sourced from the following types of customers:



Company No: 23742-V

21. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks: Subsidiary - 5,500 - 116,486 Related 1,094,618 1,094,618 4,397,316 4,397,316 Others 803,632 803,632 1,373,390 1,373,389 Licensed investment banks 17,174 17,174 - - Bank Negara Malaysia - - 9,100 9,100 Other financial institutions 4,502,902 4,478,787 4,057,326 4,025,322

6,418,326 6,399,711 9,837,132 9,921,613


Negotiable instruments of deposits 1,874,435 1,874,435 3,151,898 3,151,898 Interbank borrowings 1,094,618 1,100,118 4,398,514 4,514,999


Interbank lendings (Notes 5 and 7) 3,780,176 3,250,923 5,167,740 5,148,720 Interbank borrowings (1,094,618) (1,100,118) (4,398,514) (4,514,999) Net interbank lendings 2,685,558 2,150,805 769,226 633,721

2008

2008

2008

2007

2007

2007

Included under deposits and placement of banks and other financial institutions of the Group are the following:

As at the end of the financial year, the net interbank borrowings and lendings position of the Group and theBank are as follows :



Company No: 23742-V

22. OBLIGATIONS ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS


Obligations on securities sold under repurchase agreements to: Customers - - 2,697,534 2,697,534 Ultimate holding company - - 43,450 43,450 Immediate holding company - - 4,751 4,751 Related companies - - 43,644 43,644

- - 2,789,379 2,789,379

23. OTHER LIABILITIES


Trade payables 742,461 562,141 754,012 584,108 Other payables and accruals 180,655 147,718 244,641 190,703 Provision for commitments 1,940 1,940 299 299 Amount due to related companies 14,571 14,555 14,678 14,669 Tax payable 4,209 - 4,290 780 Zakat payable 38 38 38 38 Profit equalisation reserve 335 95 245 95 Securities sold not yet re-purchased - - 98,209 98,209 Proposed preference dividend 7,500 7,500 7,400 7,400 Deferred tax liabilities (Note 38) 323 - - - Bank overdrafts 541 - - -

952,573 733,987 1,123,812 896,301

2008 2007

2008 2007

Trade payables mainly relate to the stock and share-broking operations of the Bank's subsidiary companies andrepresent amount payable in outstanding sales contracts.



Company No: 23742-V

23. OTHER LIABILITIES (CONTD.)


Interest payable 52,186 52,000 75,405 75,461

The movements in profit equalisation reserve are as follows:


Balance at beginning of year 245 95 276 276 Provision during the year 109 - - - Exhange fluctuation adjustments (19) - (6) - Amount written back - - (25) (181)

90 - (31) (181) Balance at end of year 335 95 245 95

24. RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD

25. TERM LOANS


Unsecured: Local financial institutions 271,490 271,490 103,680 103,680

(a)

2008 2007

2007

2007

2008

2008

Included under other payables and accruals of the Group and of the Bank are the following:

Amount due to holding company represents expenses paid on behalf.

Amount due to subsidiary company, related companies and associated companies represent interest payable ondeposit placements.

Recourse obligation on loans sold to Cagamas Berhad represents the proceeds received from loans, hire purchaseand leasing receivables acquired from the Originators (excluding Islamic financing) as disclosed in Note 13 andsold directly and indirectly to Cagamas Berhad with recourse. Under this back to back arrangement with theOriginators, the Bank acts as the intermediary financial institution and undertakes to administer the receivables onbehalf of Cagamas Berhad, and to buy back any receivables which are regarded as defective based on prudentialcriteria with recourse against the Originators.

Term loans pertaining to offshore banking represent:

unsecured loan obtained from a foreign offshore bank at interest rate of 0.125% per annum above LIBOR inthe amount of USD85,000,000 and are repayable in full within one year.



Company No: 23742-V

26. REDEEMABLE UNSECURED SUBORDINATED BONDS

2008 2007RM'000 RM'000

Balance at beginning and end of year 595,000 595,000

(a)

(a)

(b)

(c)

(b)

(a)

(b)

(c)

Group and Bank

Pursuant to a Trust Deed dated 23 September 2003, the Bank issued RM460,000,000 nominal amount ofRedeemable Unsecured Subordinated Bonds (“SubBonds”). The proceeds were used to grant aRM460,000,000 10-year unsecured subordinated term loan to AmBank (M) Berhad, its related licensedcommercial bank for the purpose of refinancing its RM460,000,000 exchangeable subordinated capital loanfrom Danamodal Nasional Berhad.

The salient features of the SubBonds are as follows:

The SubBonds bear interest at 6.5% per annum for the first five years and at 7.0% to 9.0% per annumor 3% above the yield of 5-year Malaysian Government Securities, whichever is higher for years 6 to10. The interest is payable on a semi-annual basis.

The SubBonds are redeemable on 30 September 2008 or on each anniversary date thereafter atnominal value together with interest accrued to the date of redemption.

The SubBonds are for a period of ten years maturing on 30 September 2013. However, subject to theprior approval of Bank Negara Malaysia, the Bank may redeem the SubBonds on 30 September 2008or on each anniversary date thereafter.

Pursuant to a Trust Deed dated 27 October 2005, the Bank issued RM200,000,000 nominal amount ofRedeemable Unsecured Subordinated Bonds (“Subordinated Tier 2 Bonds”) for the purpose of redemption ofRM200,000,000 nominal amount of unsecured subordinated certificates of deposits. As at 31 March 2008,the Bank had purchased and cancelled RM65,000,000 of the Subordinated Tier 2 Bonds.

The salient features of the Subordinated Tier 2 Bonds are as follows:

The Subordinated Tier 2 Bonds bear interest at 4.75% per annum for the first five years and at 5.25%to 7.25% per annum between years 6 to 10. The interest is payable on a semi-annual basis.

The Subordinated Tier 2 Bonds are redeemable on 31 October 2010 or on each anniversary datethereafter at nominal value together with interest accrued to the date of redemption.

The Subordinated Tier 2 Bonds are for a period of ten years maturing on 31 October 2015. However,subject to the prior approval of Bank Negara Malaysia, the Bank may redeem the Subordinated Tier 2Bonds on 31 October 2010 or on each anniversary date thereafter.



Company No: 23742-V

27. SHARE CAPITAL

2008 2007RM'000 RM'000

Authorised: Shares of RM1.00 each Balance at beginning and end of year 2,000,000 2,000,000

Issued and fully paid: Ordinary shares of RM1.00 each Balance at beginning of year 240,000 210,000 Arising from ICULS conversion - 30,000 Balance at end of year 240,000 240,000 Non-cumulative convertible preference shares of RM1.00 each 100,000 100,000 Balance at the end of the year 340,000 340,000

Salient features of the Preference Shares are as follows:

(a)

(b)

(c)

(d)

Group and Bank

On 16 January 2007, AmInvestment Group Berhad converted its entire RM120,000,000 nominal amount ofIrredeemable Convertible Unsecured Loan Stock 1997/2007 held in the Bank into 30,000,000 new ordinaryshares of RM1.00 each.

The Preference Shares shall rank in preference to ordinary shares in issue.

An annual gross dividend of 10% is payable on the shares.

Subject to approvals of the relevant authorities and holder of the Preference Shares, the Preference Sharesare convertible into new ordinary shares of RM1.00 each on the basis of one new ordinary share of RM1.00each for every Preference Share held.

The Bank shall at no time be obliged to redeem or purchase the Preference Shares or any part thereof .



Company No: 23742-V

28. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK (ICULS) 2002/2007

2008 2007RM'000 RM'000

Balance at beginning of the year - 120,000Conversion during the year - (120,000) Balance at end of year - -

(a)

(b)

(c)

(d)

(e)

Group and Bank

The salient features of the ICULS 2002/2007 issued to the immediate holding company, AmInvestment GroupBerhad are as follows:

The ICULS 2002/2007 bear interest at 6.0% per annum payable semi-annually or such other interval as maybe determined by AIGB .

The ICULS 2002/2007 are convertible into new ordinary shares at any time on the basis of one new ordinaryshare of RM1.00 each for every RM4.00 nominal amount of ICULS 2002/7 held.

The ICULS 2002/2007 were for an initial period of five years and has been extended for a further period offive years and matured on 15 January 2007.

The ICULS 2002/2007 were converted into 30,000,000 new ordinary shares of RM1.00 in the Bank on 16January 2007.

All new ordinary shares issued upon conversion of the ICULS 2002/2007 shall rank pari passu with the thenexisting ordinary shares of the Bank except for any dividend, rights, allotments or other distributions, theentitlement date of which is before the relevant conversion date.



Company No: 23742-V

29. RESERVES

Reserves as at 31 March 2008 are analysed as follows:


Non-distributable reserves: Capital reserve 2,815 - 2,815 - Share premium 190,284 190,284 190,284 190,284 Statutory reserve 389,500 389,500 389,500 389,500 Available-for-sale reserve 23,516 23,464 12,880 12,828 Exchange fluctuation reserve 23,853 8,878 28,477 8,291 Total non-distributable reserves 629,968 612,126 623,956 600,903

Distributable reserve: Unappropriated profit 1,083,285 984,642 928,752 858,457 Total reserves 1,713,253 1,596,768 1,552,708 1,459,360

2008 2007

Movements in reserves are shown in the statements of changes in equity.

Capital reserve is in respect of dilution and accretion in net attributable assets of the Group arising fromcapitalisation of subsidiary companies' bonus issues.

Share premium is used to record premium arising from new shares issued in the Bank.

The statutory reserves is maintained in compliance with the provisions of the Banking and Financial InstitutionsAct, 1989 and are not distributable as cash dividends.

Available-for-sale reserve is in respect of unrealised fair value gains and losses on securities available-for-sale.

Exchange fluctuation reserve arises on translation of Labuan offshore branch, foreign subsidiaries and associatedcompany, as decribed in accounting policies.

Distributable reserves are those available for distribution by way of dividends.

The Bank has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment ofdividend out of all its distributable reserves as at 31 March 2008.



Company No: 23742-V

30. INTEREST INCOME


Short-term funds and deposits with financial institutions 182,135 175,979 168,379 160,176 Securities held-for-trading 179,423 178,725 190,862 189,540 Securities available-for-sale 84,895 84,895 113,672 113,672 Securities held-to-maturity 9,968 9,909 18,340 18,340 Loans and advances - Interest income other than recoveries from NPLs 282,363 279,870 238,081 231,122 - Recoveries from NPLs 29,273 28,796 29,420 29,420 Others 3,614 2,035 1,936 1,441 Gross interest income 771,671 760,209 760,690 743,711 Amortisation of premium less accretion of discounts 16,454 16,454 10,420 10,420 Interest suspended (2,580) (2,580) (390) (390) Total after net interest suspension 785,545 774,083 770,720 753,741

31. INTEREST EXPENSE


Deposits from customers 336,620 327,920 283,272 272,305 Deposits of banks and other financial institutions 175,529 180,541 183,731 198,419 Securities sold under repurchase agreements 16,765 16,765 87,124 87,188 Subordinated deposits and term loans 7,689 7,689 15,191 33 Redeemable unsecured subordinated bonds 36,412 36,412 36,312 36,312 Securities sold not yet repurchased 8,122 8,122 1,292 1,292 Others 31,447 31,330 12,102 12,102

612,584 608,779 619,024 607,651

2008 2007

20072008



Company No: 23742-V

32. OTHER OPERATING INCOME


Fee income: Fees on loans and advances 22,968 22,169 14,975 11,749 Corporate advisory 38,534 37,257 20,805 20,206 Guarantee fees 5,740 4,225 19,263 8,643 Underwriting commissions 13,686 10,695 12,526 12,418 Portfolio management fees 21,792 - 9,540 - Unit trust management fees 62,584 - 37,920 - Property trust management fees - - 1,541 - Brokerage fees and commissions 138,297 109,065 22,683 9,136 Other fee income 27,643 30,136 19,997 18,581

331,244 213,547 159,250 80,733

Investment and trading income: Net gain from sale of securities held-for-trading 101,247 100,658 156,751 156,606 Net gain from sale of securities available-for-sale 4,766 4,766 16,893 1,892 Net gain on redemption of securities held-to-maturity 88,804 89,219 42,166 42,135 Gross dividend income from: Unquoted subsidiary companies - 17,390 - 10,495 Securities held-for-trading 10,918 10,918 7,651 7,649 Securities held-to-maturity 22,143 22,143 22,411 22,411 (Loss)/Gain on revaluation of derivatives (19,249) (17,898) 638 3,553 (Loss)/Gain on revaluation of of securities held-for-trading (94,052) (93,675) 76,499 76,067 Gain on acquisition of subsidiary company - - 1,492 -

114,577 133,521 324,501 320,808

Other income: Unrealised foreign exchange gain 2,016 1,135 1,566 619 Gain on disposal of property and equipment - net 193 192 150 10 Rental income 1,515 1,387 1,853 1,774 Other non-operating income 178 - 509 -

3,902 2,714 4,078 2,403 449,723 349,782 487,829 403,944

20072008



Company No: 23742-V

33. OTHER OPERATING EXPENSES


Personnel/Staff costs:- Salaries, allowances and bonuses 142,268 100,478 92,702 72,985 - Others 40,596 30,510 31,733 25,355

182,864 130,988 124,435 98,340 Establishment costs:- Depreciation of property and equipment (Note 18) 7,597 6,107 5,428 4,496 - Amortisation of computer software 1,653 1,576 1,207 1,073 - Amortisation of prepaid land lease payments 60 60 60 60 - Computerisation costs 15,806 8,753 11,086 8,359 - Rental 8,767 4,499 5,435 2,912 - Others 4,999 2,755 3,130 156

38,882 23,750 26,346 17,056 Marketing and communication expenses:- Sales commission 8,083 8,077 6,541 6,430 - Advertising 5,942 4,599 4,895 3,447 - Travel and entertainment 7,119 5,372 3,684 2,755 - Others 8,153 4,398 4,484 2,033

29,297 22,446 19,604 14,665 Administration and general expenses- Professional fees 17,423 15,048 5,850 4,052 - Others 13,499 16,081 7,617 8,619

30,922 31,129 13,467 12,671

281,965 208,313 183,852 142,732

Included in the above expenditure are the following statutory disclosures:


Directors' remuneration (Note 36) 7,866 7,813 6,830 6,790 Hire of motor vehicles and office equipment 1,617 982 2,326 794 Auditors' remuneration: Group auditor: Statutory audit 229 160 229 160 Special audit/Limited review 64 64 119 119 Other auditor: Statutory audit - - 183 - Computer software written off 7 7 312 - Property and equipment written off 37 13 228 4 Sundry receivables written off 444 444 273 264

2008

2007

2007

2008

Personnel/staff costs include salaries, bonuses, contributions to employees provident fund and all other staffrelated expenses. Contributions to employees provident fund of the Group and of the Bank amounted toRM21,453,000 (RM16,362,000 in 2007) and RM18,626,000 (RM12,950,000 in 2007), respectively.



Company No: 23742-V

34. (WRITEBACK OF ALLOWANCE)/ALLOWANCE FOR LOSSES ON LOANS AND FINANCING


Allowance/(Reversal of allowance) for bad and doubtful debts and financing: Specific allowance - net 19,396 19,379 105,313 93,091 General allowance 5,780 6,537 (1,260) (277) Bad debts and financing Written off 2,653 2,653 215 215 Recovered (65,129) (65,129) (18,225) (18,225) Recoveries of allowance for value impairment on amount recoverable from Danaharta - - (255) (255)

(37,300) (36,560) 85,788 74,549

20072008



Company No: 23742-V

35. RELATED PARTY TRANSACTIONS

The related parties of the Group and the Company are:

(i)

(ii)

(iii)

(iv) Companies in which certain directors have substantial financial interest

(v)

For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial or operational decisions, vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Subsidiary companies

Details of the subsidiary companies are shown in Note 15.

Transactions between the Company and its subsidiaries which are related parties of the Company, have been eliminated on consolidation.

Associated companies

An associated company is a company in which the Group exercises significant influence, but which it does not control. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not in control over those policies as disclosed in Note 16.

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 and the Company directly or indirectly. The key management personnel of the Group and the Company include Executive Directors and Non-Executive Directors of the Company and certain members of senior management of the Group and heads of major subsidiary companies (including close members of their families) of the Group.

These are entities in which significant voting power in such entities directly or indirectly resides with certain Directors of the Company.

Companies which have significant influence over the Group

These are entities who are substantial shareholders of the Company.



Company No: 23742-V

35. RELATED PARTY TRANSACTIONS (CONTD.)(a) The significant transactions of the Group with its related parties are as follows:

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

ExpensesCleaning and maintenance - - - - - - 32 - - - Rental of premises - - - - - - 17,140 15,551 - - Insurance premiums - - - - - - 2,428 1,184 - - Travelling expenses - - - - - - 1,529 799 - - Computer maintenance - - - - - - 24 195 - - Food and beverage - - - - - - 124 110 - - Other expenses - - - - - - - 7 - -

- - - - - - 21,277 17,846 - -

Capital expenditurePurchase of computer hardware,

software and related consultancy services - - - - - - 150 21 - -

- - - - - - 150 21 - -

Companies inwhich certain

Directors have Substantial shareholderssubstantial interest

Subsidiarycompanies

Associated Key managementpersonnelcompanies



Company No: 23742-V

(b) The significant transactions of the Bank with its related parties are as follows:

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

IncomeInterest on loans, advances

and financing 2,750 702 - - - - - - - - Recovery of management and other expenses - 979 - - - - - - - -

2,750 1,681 - - - - - - - -

ExpensesInterest on deposits 6,604 13,406 - - - - - - - - Interest on repo - 64 - - - - - - - -

6,604 13,470 - - - - - - - -


Subsidiary Associated Key management Directors have Substantial companies companies personnel substantial interest shareholders



Company No: 23742-V

(b) The significant outstanding balances of the Bank with its related parties are as follows (contd.):

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Amount due from:Cash and short-term funds - 121,182 - - - - - - - - Deposits and placements

with banks and other financial institutions - 100,224 - - - - - - - -

Others 1,030 2,017 - - - - - - - - 1,030 223,423 - - - - - - - -

Amount due to:Deposits and placements with banks

and other financial institutions - 136 - - - - - - - - - 136 - - - - - - - -


Subsidiary Associated Key management Directors have Substantial companies companies personnel substantial interest shareholders



Company No: 23742-V

(c)

(d) Key management personnel compensation

The remuneration of Directors and other members of key management during the year are as follows:

2008 2007 2008 2007RM'000 RM'000 RM'000 RM'000

Directors:Fees 216 204 180 180 Salary and other remuneration 4,298 3,555 4,281 3,539 Other short-term employees benefits (including estimated monetary value of benefits-in-kind) 3,352 3,071 3,352 3,071

Total short-term employee benefits 7,866 6,830 7,813 6,790

Group Bank

There were no granting of loans to the Directors of the Company. Loans made to other key management personnel of the Group and the Company is on similarterms and conditions generally available to other employees within the Group. All related party transactions are conducted at arm’s length basis and on normalcommercial terms which are not more favourable than those generally available to the public. No provisions have been recognised in respect of loans given to keymanagement personnel (2007 - RM Nil).



Company No: 23742-V

36. DIRECTORS' REMUNERATION


Executive directors Fees 12 - - - Salaries and other remuneration 2,092 2,087 1,721 1,710 Gratuity payment - - 500 500 Bonuses 1,674 1,674 1,187 1,187 Benefits-in-kind 150 150 156 156

3,928 3,911 3,564 3,553

Non-executive directors Fees 204 180 204 180 Salaries and other remuneration 2,206 2,194 1,834 1,829 Bonuses 1,421 1,421 1,097 1,097 Benefits-in-kind 107 107 131 131

3,938 3,902 3,266 3,237

Total directors’ remuneration 7,866 7,813 6,830 6,790 Total directors’ remuneration excluding benefits-in-kind 7,597 7,556 6,543 6,503


GroupExecutive directors RM1,500,001 - RM1,550,000 - - 1 1 RM1,600,001 - RM1,700,000 1 1 - - RM2,000,001 - RM2,050,000 - - 1 1 RM2,200,001 - RM2,250,000 1 1 - -

Non-executive directorsBelow RM50,000 2 2 1 1 RM50,001 - RM100,000 3 3 3 3 RM250,001 - RM300,000 1 1 1 1 RM2,650,001 – RM2,700,000 - - 1 1 RM3,350,001 – RM3,400,000 1 1 - -

2007

2007

2008

2008

Forms of remuneration in aggregate for all directors charged to the income statement for the financial year are asfollows:

* Directors’ fees for directors who are executives of companies of the Group are paid to their respectivecompanies.

The remuneration attributable to the managing director of the Bank, including estimated cash value of benefits-in-kind during the year amounted to RM2,212,486.



Company No: 23742-V

37. TAXATION


Estimated current tax payable 96,306 88,845 97,749 92,786 Transfer to deferred tax assets (Note 38 (a)) Relating to orignation and reversal of temporary differences 29,293 30,118 22,987 22,988 Transfer from other businessTransfer from deferred tax liabilities(Note 38 (b)) 323 - - -

125,922 118,963 120,736 115,774 Over provision of taxation in respect of prior years (34,041) (34,041) (32,567) (32,567) Total 91,881 84,922 88,169 83,207


Profit before taxation 382,674 347,367 352,417 323,011

Taxation at Malaysian statutory tax rate of 26.0% (2007 : 27.0%) 99,495 90,315 95,153 87,213 Effect of different tax rates in Labuan and certain subsidiaries (4,760) (2,826) (3,110) 101 Singapore statutory stepped income exemption (63) - (37) - Interest expense on ICULS included in statement of changes in equity which is deductible for tax purposes - - (1,545) (1,545) Effect of changes in tax rates on opening balance of deferred tax 518 518 2,380 2,380 Deferred tax recognised at different tax rates - - 1,679 1,679 Overprovision of tax expense in prior years (34,041) (34,041) (32,567) (32,567) Tax losses and capital allowances utilised not previously recognised - - (108) - Income not subject to tax (3,067) (2,717) (207) (177) Expenses not deductible for tax purposes 33,799 33,673 26,531 26,123 Tax expense for the year 91,881 84,922 88,169 83,207

2007

2008 2007

2008

As at the end of the current financial year, the Group and the Bank has tax exempt income totallingRM13,439,203 (RM6,617,509 as at 31 March 2007) and RM6,026,448 (RM5,669,552 as at 31 March 2007)respectively pertaining to subsidiary companies.

Domestic current income tax is calculated at the statutory tax rate of 26.0% (2007: 27.0%) of the estimatedassessable profit for the year. The domestic statutory tax rate will be reduced to 25.0% from the current year’srate of 26.0%, effective year of assessment 2009, as announced in the 2008 Malaysian Budget. The computationof deferred tax as at 31 March 2008 has reflected these changes.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate toincome tax expense at the effective income tax rate of the Group and of the Bank is as follows:



Company No: 23742-V

38. DEFERRED TAXATION

Deferred taxation pertains to subsidiary companies and is as follows:

(a) Deferred tax assets


Balance at beginning of year (43,468) (43,083) (66,644) (66,644) Prior year adjustments - - - - As restated (43,468) (43,083) (66,644) (66,644) Transfer to income statement (Note 37) 29,293 30,118 22,603 22,988 Transfer from stock and share-broking operations - - 573 573 Balance at end of year (14,175) (12,965) (43,468) (43,083)


Temporary differences between depreciation and tax allowances on property and equipment 2,226 3,436 3,095 3,480

Profit equalisation reserve (24) (24) (25) (25) Allowance for value impairment on amount recoverable from Danaharta - - (1,417) (1,417)

General allowance for loans, advances and financing (16,377) (16,377) (16,048) (16,048)

Gain on revaluation of securities held-for-trading - - - -

Impairment loss on securities - - (29,073) (29,073) Impairment loss on assets acquired in exchange of debts - - - -

Other temporary differences - - - - (14,175) (12,965) (43,468) (43,083)

2008 2007

20072008



Company No: 23742-V

38. DEFERRED TAXATION (CONTD.)

(b) Deferred tax liabilities


Balance at beginning of year - - 293 - Transfer to/(from) income statements (Note 37) 323 - (293) - Balance at end of year 323 - - -

39. DIVIDENDS

Dividends paid and proposed by the Bank are as follows:Bank

RM'000

In respect of financial year ended 2008

First and final ordinary dividend proposed – 50.0%, less 25.0% taxation, on 240,000,000 ordinary shares of RM1.00 each 90,000 Interim ordinary dividend paid - 27.5%, less 26.0% taxation, on 240,000,000 ordinary shares of RM1.00 each 48,840 Preference dividend proposed - 7.5% tax exempt single tier, on 100,000,000 preference shares of RM1.00 each 7,500

146,340 In respect of financial year ended 2007

First and final ordinary dividend paid – 45.0%, less 26.0% taxation, on 240,000,000 ordinary shares of RM1.00 each 79,920 Interim ordinary dividend paid - 20.0%, less 27.0% taxation, on 210,000,000 ordinary shares of RM1.00 each 30,660 Preference dividend paid - 10.0%, less 26.0% taxation, on 100,000,000 preference shares of RM1.00 each 7,400

117,980

20072008

Deferred tax liabilities of the Group is in respect of temporary difference between tax capital allowances andbook depreciation of property and equipment.

A proposed final ordinary dividend in respect of the financial year ended 31 March 2008 of 50.0%, less 25.0%taxation based on the issued and paid-up ordinary share capital of 240,000,000 of RM1.00 each amounting to atotal dividend of RM90,000,000 have been proposed by the Directors for shareholder approval at theforthcoming Annual General Meeting. The financial statements for the current financial year do not reflect thisproposed dividend. Such dividend, if approved by the shareholder, will be accounted for in shareholder’s equityas an appropriation of retained earnings in the next financial year ending 31 March 2009.



Company No: 23742-V

40. EARNINGS PER SHARE

(a) Basic earnings per share


Net profit attributable to shareholder of the Bank after deducting preference dividends 283,293 254,945 256,848 232,404 Number of ordinary shares at beginning of year 240,000 240,000 210,000 210,000 Effect of ordinary shares issued pursuant to conversion of ICULS - - 30,000 30,000 Weighted average number of ordinary shares in issue and issuable 240,000 240,000 240,000 240,000

Basic earnings per share (sen) 118.0 106.2 107.0 96.8

(b) Fully diluted earnings per share

2008 2007

Basic earnings per share is calculated by dividing the net profit attributable to shareholder of the Bank by theweighted number of ordinary shares in issue and issuable arising from conversion of ICULS 2002/2007.

Fully diluted earnings per share is calculated by dividing the adjusted net profit attributable to shareholder ofthe Bank by the adjusted weighted average number of ordinary shares in issue and issuable during thefinancial year.

The weighted average number of ordinary shares in issue and issuable has been arrived at based on theassumption that all the ICULS 2002/2007 issued and outstanding are converted to ordinary shares atbeginning of the year.



Company No: 23742-V

40. EARNINGS PER SHARE (CONTD.)

The Bank's preference share capital has dilutive potential ordinary shares.


Net profit attributable to shareholder of the Bank after deducting preference dividends 283,293 254,945 256,848 232,404 Adjusted for preference dividend 7,500 7,500 7,400 7,400 Adjusted net profit attributable to shareholder of the Bank 290,793 262,445 264,248 239,804

Weighted average number of ordinary shares in issue 240,000 240,000 240,000 240,000 Effect of ordinary shares issued pursuant to conversion of preference shares 100,000 100,000 100,000 100,000 Adjusted weighted average number of ordinary shares in issue and issuable 340,000 340,000 340,000 340,000 Fully diluted earnings per share (sen) 85.5 77.2 77.7 70.5

41. FIDUCIARY DUTY IN RESPECT OF INVESTMENT PORTFOLIO MANAGEMENT

2008 2007

Investment portfolio funds managed by the Group and the Bank on behalf of customers as at 31 March 2008amounted to RM18,515,948,000 (RM14,501,417,000 as at 31 March 2007) and RM224,672,000 (RM43,216,000 as at 31 March 2007), respectively.

The adjusted weighted average number of ordinary shares in issue and issuable has been arrived at based onthe assumption that all the preference shares issued and outstanding are converted to ordinary shares atbeginning of the year.



Company No: 23742-V

42. CAPITAL COMMITMENTS


Authorised and contracted but not provided for:Uncalled portion of total subscription price in the share capital of AmTrustee Berhad 100 100 100 100 Purchase of office equipment, information technology equipment and solutions 7,777 7,777 651 651 Purchase of other investments 192 192 311 311 Purchase of leasehold improvement - - 147 147

8,069 8,069 1,209 1,209 Authorised but not contracted for: Purchase of other investments 130 - 415 - Purchase of office equipment, - information technology equipment and solutions 351 112 210 210

481 112 625 210 8,550 8,181 1,834 1,419

43. LEASE COMMITMENTS

Group BankRM'000 RM'000

12 months ending 31 March

2009 14,550 11,261 2010 6,925 3,845 2011 and thereafter 1,508 1,456

22,983 16,562

2008 2007

As at 31 March 2008, capital commitments pertaining to the Group and the Bank are as follows:

The Group and the Bank have lease commitments in respect of rental of premises and equipment on hire, all ofwhich are classified as operating leases. A summary of the non-cancellable long-term commitments, net of sub-leases is as follows:

The lease commitments represent minimum rentals not adjusted for operating expenses which the Group and theBank are obligated to pay. These amounts are insignificant in relation to the minimum lease obligations. In thenormal course of business, leases that expire will be renewed or replaced by leases on other properties, thus it isanticipated that future annual minimum lease commitments will not be less than rental expenses for the financialyear.



Company No: 23742-V

44. COMMITMENTS AND CONTINGENCIES

Credit Risk Credit RiskPrincipal Equivalent Weighted Principal Equivalent Weighted

Group Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Derivative Financial InstrumentsInterest rate related contracts:

Interest rate futures 270,000 194,810 97,404 290,000 7,438 3,719 Interest rate swaps: Related companies 8,625,073 101,966 17,993 9,733,356 222,264 44,453 Others 26,770,307 601,940 126,949 22,210,223 535,135 111,156


Malaysian Government securities futures - - - 5,000 6 3 Equity related contracts:

Equity Options 151,596 - - 165,618 - - Equity Futures 363 - - - - -

39,123,422 1,037,306 270,063 36,393,954 969,772 200,316 CommitmentsIrrevocable commitments to extend credit maturing :

within one year 770,099 - - 538,155 - - more than one year 591,789 295,895 294,970 191,815 95,908 95,277

Sell and buy back agreements 1,216,782 1,216,782 879,744 2,801,157 2,801,157 1,397,343 Forward purchase commitments 338,081 338,081 30,108 834,911 834,911 218,958

2,916,751 1,850,758 1,204,822 4,366,038 3,731,976 1,711,578 Contingent LiabilitiesGuarantees given on behalf of customers 783,221 783,221 782,700 700,533 700,533 597,603 Certain transaction-related contingent items 453,126 226,563 214,301 522,509 261,255 235,918 Underwriting liabilities 650,000 325,000 241,800 795,000 397,500 257,100

1,886,347 1,334,784 1,238,801 2,018,042 1,359,288 1,090,621 43,926,520 4,222,848 2,713,686 42,778,034 6,061,036 3,002,515

20072008

In the normal course of business, the Group make various commitments and incur certain contingent liabilities with legal recourse to its customers. Nomaterial losses are anticipated as a result of these transactions. The commitments and contingencies are not secured against the Group's assets.

As at 31 March 2008, the commitments and contingencies outstanding are as follows:



Company No: 23742-V

Credit Risk Credit RiskPrincipal Equivalent Weighted Principal Equivalent Weighted

Bank Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Derivative Financial InstrumentsInterest rate related contracts:

Interest rate futures 270,000 194,810 97,404 290,000 7,438 3,719 Interest rate swaps: Related companies 8,625,073 101,966 17,993 9,733,356 222,264 44,453 Others 26,770,307 601,940 126,949 22,210,223 535,135 111,156


Malaysian Government securities futures - - - 5,000 6 3 Equity related contracts:

Equity Options 151,596 - - 165,618 - - Equity Futures 363 - - - - -

39,123,422 1,037,306 270,063 36,393,954 969,772 200,316 CommitmentsIrrevocable commitments to extend credit maturing :

within one year 770,099 - - 538,155 - - more than one year 591,789 295,895 294,970 191,815 95,908 95,277

Sell and buy back agreements 1,216,782 1,216,782 879,744 2,801,157 2,801,157 1,397,343 Forward purchase commitments 338,081 338,081 30,108 834,911 834,911 218,958

2,916,751 1,850,758 1,204,822 4,366,038 3,731,976 1,711,578 Contingent LiabilitiesGuarantees given on behalf of customers 783,221 783,221 782,700 697,468 697,468 594,538 Certain transaction-related contingent items 453,126 226,563 214,301 522,509 261,255 235,918 Underwriting liabilities 650,000 325,000 241,800 795,000 397,500 257,100

1,886,347 1,334,784 1,238,801 2,014,977 1,356,223 1,087,556 43,926,520 4,222,848 2,713,686 42,774,969 6,057,971 2,999,450

20072008



Company No: 23742-V

(a)

(b)

(c)

The credit equivalent amount is arrived at using the credit conversion factor as per BNM guidelines.

As at 31 March 2008, other contingencies and commitments of the Group and the Bank are as follows:

As required, the Bank has given a continuing guarantee to Bank Negara Malaysia on behalf ofAmInternational to meet all its liabilities and financial obligations and requirements.

The Bank has given guarantees in favour of Labuan International Financial Exchange ("LFX") in respect ofUSD 5 million each for AmInternational to act as a Listing Sponsor and as a Trading agent on the LFX.

A suit dated 12 December 2005 was filed by Meridian Asset Management Sdn Bhd ("Meridian") againstAmTrustee Berhad ("AmTrustee"), an associated company of the Bank in respect of a claim amounting toRM27.6 million for alleged loss and damage together with interests and costs arising from AmTrustee'sprovision of custodian services to Meridian.

Malaysian Assurance Alliance Bhd ("MAA") has claimed its portion of the abovementioned alleged loss,being general damages and special damages of RM19,640,178.83, together with interest and costs.AmTrustee was served on 24 March 2006 with a Writ and Statement of Claim dated 25 January 2006 bysolicitors acting for MAA. MAA had appointed Meridian as an external fund manager for certain of itsinsurance funds, and part of these funds were deposited by Meridian with AmTrustee.

Both claims are pending disposal. Neither material financial loss nor operational impact on the Group isexpected as a result of the writs and statements of claim.

AmTrustee has been served on 5 October 2006 with an application to add the Bank as 2nd Defendant to theWrit and Statement of Claim dated 12 December 2005 filed against AmTrustee by solicitors acting forMeridian Asset Management Sdn Bhd (Meridian). The claim by Meridian against the Bank is for allegedloss and damage amounting to RM36,967,166.84 together with interest and costs arising from the provisionof custodian services by AmTrustee to Meridian. The application is pending disposal.

Neither material financial nor operational impact is expected on the Group as a result of the addition of the2nd defendant.



Company No: 23742-V

45. RISK MANAGEMENT POLICY

MARKET RISK MANAGEMENT

Risk management is about managing uncertainties such that deviations from the Bank’s intended objectives arekept within acceptable levels. Sustainable profitability forms the core objectives of the Bank’s risk managementstrategy.

Every risk assumed by the Bank carries with it potential for gains as well as potential to erode shareholders’value. The Bank’s risk management policy is to identify, capture and analyse these risks at an early stage,continuously measure and monitor these risks and to set limits, policies and procedures to control them to ensuresustainable risk-taking and sufficient returns. The management approach towards the significant risks of the Bank are enumerated below.

Market risk is the risk of loss from changes in the value of portfolios and financial instruments caused bymovements in market variables, such as interest rates and foreign exchange rates and equity prices.

The primary objective of market risk management is to ensure that losses from market risk can be promptlyarrested and risk positions are sufficiently liquid so as to enable the Bank to reduce its position without incurringpotential loss that is beyond the sustainability of the Bank.

The market risk of the Bank’s trading and non-trading portfolio is managed separately using value-at-riskapproach to compute the market risk exposure of non-trading portfolio and trading portfolio. Value at risk is astatistical measure that estimates the potential changes in portfolio value that may occur brought about by dailychanges in market rates over a specified holding period at a specified confidence level under normal marketcondition.

The Bank controls the market risk exposure of its trading and non-trading activities primarily through a series ofrisk threshold. Risk thresholds are approved by the board of directors, these risk threshold structure alignsspecific risk taking activities with the overall risk appetite of the Bank.

To complement value at risk measurement, the Bank also institute a set of scenario analysis under variouspotential market conditions such as shifts in currency rates, general equity prices and interest rate movements toassess the changes in portfolio value.



Company No: 23742-V

45. RISK MANAGEMENT POLICY (CONTD.)

Non- EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest Trading interest

month months months months years years sensitive Book Total rateRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETSCash and short-term funds 2,596,804 - - - - - 575,829 - 3,172,633 3.33 Deposits and placements with banks

and other financial institutions 860 - 101 - - 749,500 - - 750,461 7.65 Securities held-for-trading - - - - - - - 4,971,446 4,971,446 3.59 Securities available-for-sale - - - 65,740 518,050 608,384 19,581 - 1,211,755 6.03 Securities held-to-maturity 9,532 6,388 35,685 1,060 330,806 98,920 179,035 - 661,426 4.46 Loans, advances and financing:

- performing 2,536,467 1,452,763 75,253 81,791 300,359 30,556 2,179 - 4,479,368 6.07 - non-performing * - - - - - - 63,727 - 63,727 -

Derivative financial assets - - - - - - 299,018 - 299,018 - Amount due from Originators - 6,430 26,042 - 2,668 - - - 35,140 4.33 Other non-interest sensitive balances - - - - - - 1,238,266 1,238,266 - TOTAL ASSETS 5,143,663 1,465,581 137,081 148,591 1,151,883 1,487,360 2,377,635 4,971,446 16,883,240

LIABILITIES AND EQUITYDeposits from customers 4,453,427 775,486 322,661 55,829 200,000 - 424,785 - 6,232,188 3.43 Deposits and placements of banks

and other financial institutions 3,564,168 517,486 116,916 220,352 605,444 1,138,801 255,159 - 6,418,326 3.14

<---------------------------------------------Non Trading Book----------------------------------------------->

2008

The following table shows the interest rate sensitivity gap, by time bands, on which interest rates of instruments are next repriced on a contractual basis or, if earlier, the dates on which theinstruments mature.



Company No: 23742-V


Non- EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest Trading interest


Derivative financial liabilities - - - - - - 325,270 - 325,270 - Recourse obligation on loans sold to

to Cagamas Berhad - 6,430 26,042 - 2,668 - - - 35,140 4.33 Term loans - - - 271,490 - - - - 271,490 5.45 Redeemable unsecured bonds - - - - - 595,000 - - 595,000 6.10 Other non-interest sensitive balances - - - - - - 952,573 - 952,573 - Total Liabilities 8,017,595 1,299,402 465,619 547,671 808,112 1,733,801 1,957,787 - 14,829,987

EQUITYShare capital - - - - - - 340,000 - 340,000 Reserves - - - - - - 1,713,253 - 1,713,253 Shareholder's equity - - - - - - 2,053,253 - 2,053,253 Minority interests - - - - - - - - - Total equity - - - - - - 2,053,253 - 2,053,253

TOTAL LIABILITIES AND EQUITY 8,017,595 1,299,402 465,619 547,671 808,112 1,733,801 4,011,040 - 16,883,240

On-balance sheet interest rate gap sensitivity (2,873,932) 166,179 (328,538) (399,080) 343,771 (246,441) (1,633,405) 4,971,446 -

Off-balance sheet interest rate gap sensitivity (1,951,885) 2,446,598 (460,571) (31,237) (338,838) 315,508 - - (20,425)

Total interest rate gap sensitivity (4,825,817) 2,612,777 (789,109) (430,317) 4,933 69,067 (1,633,405) 4,971,446 (20,425)

Cumulative interest rate gap sensitivity (4,825,817) (2,213,040) (3,002,149) (3,432,466) (3,427,533) (3,358,466) (4,991,871) (20,425)

* This is arrived at after deducting the general allowance and specific allowance from gross non-performing loans outstanding.

<---------------------------------------------Non Trading Book----------------------------------------------->

2008



Company No: 23742-V


Non- EffectiveUp to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest Trading interest

2007 month months months years years sensitive Book Total rateRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETSCash and short-term funds 2,701,042 - - - - - 782,655 - 3,483,697 3.93 Securities purchased under resale agreements 393,329 - - - - - - - 393,329 2.92 Deposits and placements with banks

and other financial institutions - 1,075,713 3,628 - - 749,500 - - 1,828,841 6.06 Securities held-for-trading - - - - - - - 5,734,091 5,734,091 3.90 Securities available-for-sale 705,048 1,002,593 946,873 - 447,834 278,285 39,107 - 3,419,740 4.09 Securities held-to-maturity 1,340 - 139,763 151,905 556,277 172,900 169,412 - 1,191,597 6.64 Loans, advances and financing:

- performing 1,851,092 1,730,499 86,266 78,591 258,826 18,616 41,642 - 4,065,532 6.39 - non-performing * - - - - - - 116,125 - 116,125 -

Derivative financial assets - - - - - - 380,742 - 380,742 - Amount due from Originators - 400 9,441 2,980 39,600 - - - 52,421 4.30 Other non-interest sensitive balances - - - - - - 1,313,015 - 1,313,015 - TOTAL ASSETS 5,651,851 3,809,205 1,185,971 233,476 1,302,537 1,219,301 2,842,698 5,734,091 21,979,130

LIABILITIES AND EQUITYDeposits from customers 3,028,870 1,121,422 292,142 162,496 221,528 - 424,870 - 5,251,328 3.58 Deposits and placements of banks

and other financial institutions 4,254,941 1,582,415 770,335 387,713 1,062,070 1,290,584 489,074 - 9,837,132 4.15 Obligations on securities sold under

repurchase agreements 2,737,032 49,275 3,072 - - - - - 2,789,379 3.38 Derivative financial liabilities - - - - - - 333,670 - 333,670 - Recourse obligation on loans sold

to Cagamas Berhad - 400 9,441 2,980 39,600 - - - 52,421 4.30

<---------------------------------------------Non Trading Book----------------------------------------------->

Group



Company No: 23742-V




Term loans - - - 103,680 - - - - 103,680 5.60 Redeemable unsecured subordinated

bonds - - - - - 595,000 - - 595,000 6.10 Other non-interest sensitive balances - - - - - - 1,123,812 - 1,123,812 - Total Liabilities 10,020,843 2,753,512 1,074,990 656,869 1,323,198 1,885,584 2,371,426 - 20,086,422

EQUITYShare capital - - - - - - 340,000 - 340,000 Reserves - - - - - - 1,552,708 - 1,552,708 Shareholder's equity - - - - - - 1,892,708 - 1,892,708

TOTAL LIABILITIES AND EQUITY 10,020,843 2,753,512 1,074,990 656,869 1,323,198 1,885,584 4,264,134 - 21,979,130

On-balance sheet interest rate gap sensitivity (4,368,992) 1,055,693 110,981 (423,393) (20,661) (666,283) (1,421,436) 5,734,091 -

Off-balance sheet interest rate gap sensitivity (3,257,352) 1,198,962 (600,545) 484,174 1,354,685 908,233 - - 88,157

Total interest rate gap sensitivity (7,626,344) 2,254,655 (489,564) 60,781 1,334,024 241,950 (1,421,436) 5,734,091 88,157 Cumulative interest rate gap

sensitivity (7,626,344) (5,371,689) (5,861,253) (5,800,472) (4,466,448) (4,224,498) (5,645,934) 88,157

<---------------------------------------------Non Trading Book----------------------------------------------->

Group



Company No: 23742-V


Non- EffectiveBank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest Trading interest


ASSETSCash and short-term funds 1,994,772 - - - - - 556,554 - 2,551,326 3.41Deposits and placements with

banks and other financial institutions - - - - - 749,500 - - 749,500 7.65

Securities held-for-trading - - - - - - - 4,970,666 4,970,666 3.59Securities available-for-sale - - - 65,740 518,050 608,384 18,684 - 1,210,858 6.03Securities held-to-maturity 518 - 10,133 1,060 330,803 98,920 179,036 - 620,470 4.37Loans, advances and financing:

- performing 2,505,314 1,452,763 75,253 81,791 300,085 30,110 1,290 - 4,446,606 6.08- non-performing * - - - - - - 64,233 - 64,233 -

Derivative financial assets - - - - - - 299,018 - 299,018 - Amount due from Originators - 6,430 26,042 - 2,668 - - - 35,140 4.33 Other non-interest sensitive balances - - - - - - 1,078,825 - 1,078,825 - TOTAL ASSETS 4,500,604 1,459,193 111,428 148,591 1,151,606 1,486,914 2,197,640 4,970,666 16,026,642

LIABILITIES AND EQUITYDeposits from customers 3,952,439 773,563 322,661 55,829 200,000 - 424,784 - 5,729,276 3.49Deposits and placements of banks

and other financial institutions 3,569,668 493,371 116,916 220,352 605,444 1,138,800 255,160 - 6,399,711 3.14

<---------------------------------------------Non Trading Book----------------------------------------------->

2008



Company No: 23742-V


Non- EffectiveBank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest Trading interest


Derivative financial liabilities - - - - - - 325,270 - 325,270 - Recourse obligation on loans sold to

to Cagamas Berhad - 6,430 26,042 - 2,668 - - - 35,140 4.33Term loans - - - 271,490 - - - - 271,490 5.45 Redeemable unsecured bonds - - - - - 595,000 - - 595,000 6.10 Other non-interest sensitive balances - - - - - - 733,987 - 733,987 - Total Liabilities 7,522,107 1,273,364 465,619 547,671 808,112 1,733,800 1,739,201 - 14,089,874

EQUITYShare capital - - - - - - 340,000 - 340,000 - Reserves - - - - - - 1,596,768 - 1,596,768 - Total equity - - - - - - 1,936,768 - 1,936,768 -

TOTAL LIABILITIES AND EQUITY 7,522,107 1,273,364 465,619 547,671 808,112 1,733,800 3,675,969 - 16,026,642

On-balance sheet interest rate gap sensitivity (3,021,503) 185,829 (354,191) (399,080) 343,494 (246,886) (1,478,329) 4,970,666 -

Off-balance sheet interest rate gap sensitivity (1,951,885) 2,446,598 (460,571) (31,237) (338,838) 315,508 - - (20,425)

Total interest rate gap sensitivity (4,973,388) 2,632,427 (814,762) (430,317) 4,656 68,622 (1,478,329) 4,970,666 (20,425)

Cumulative interest rate gap sensitivity (4,973,388) (2,340,961) (3,155,723) (3,586,040) (3,581,384) (3,512,762) (4,991,091) (20,425)

* This is arrived at after deducting the general allowance and specific allowance from gross non-performing loans outstanding.

<---------------------------------------------Non Trading Book----------------------------------------------->

2008



Company No: 23742-V




ASSETSCash and short-term funds 2,539,711 - - - - - 737,071 - 3,276,782 3.81Securities purchased under resale agreements 374,155 - - - - - - - 374,155 2.92Deposits and placements with banks

and other financial institutions - 1,175,328 - - - 749,500 - - 1,924,828 6.08Securities held-for-trading - - - - - - - 5,700,187 5,700,187 3.89Securities available-for-sale 705,048 1,002,593 946,873 - 447,834 278,287 20,805 - 3,401,440 4.08Securities held-to-maturity 1,340 - 139,763 138,005 630,363 172,900 64,596 - 1,146,967 6.64Loans, advances and financing:

- performing 1,774,547 1,730,499 105,402 78,591 273,058 18,084 363 - 3,980,544 6.39- non-performing * - - - - - - 116,125 - 116,125 -

Derivative financial assets - - - - - - 380,742 - 380,742 - Amount due from Originators - 400 9,441 2,980 39,600 - - - 52,421 4.30 Other non-interest sensitive balances - - - - - - 1,183,934 - 1,183,934 - TOTAL ASSETS 5,394,801 3,908,820 1,201,479 219,576 1,390,855 1,218,771 2,503,636 5,700,187 21,538,125

LIABILITIES AND EQUITYDeposits from customers 2,829,551 1,118,050 291,231 162,387 221,528 - 423,954 - 5,046,701 3.51Deposits and placements of banks

and other financial institutions 4,372,596 1,582,418 770,335 387,713 1,062,070 1,290,584 455,897 - 9,921,613 4.11Obligations on securities sold under

repurchase agreements 2,737,032 49,275 3,072 - - - - - 2,789,379 3.38

<---------------------------------------------Non Trading Book----------------------------------------------->

Bank



Company No: 23742-V




Derivative financial liabilities - - - - - - 333,670 - 333,670 - Recourse obligation on loans sold

to Cagamas Berhad - 400 9,441 2,980 39,600 - - - 52,421 4.30Term loans - - - 103,680 - - - - 103,680 5.60 Redeemable unsecured subordinated -

bonds - - - - - 595,000 - - 595,000 6.10 Other non-interest sensitive balances - - - - - - 896,301 - 896,301 - Total Liabilities 9,939,179 2,750,143 1,074,079 656,760 1,323,198 1,885,584 2,109,822 - 19,738,765

EQUITYShare capital - - - - - - 340,000 - 340,000 Reserves - - - - - - 1,459,360 - 1,459,360 Shareholder's equity - - - - - - 1,799,360 - 1,799,360

TOTAL LIABILITIES AND EQUITY 9,939,179 2,750,143 1,074,079 656,760 1,323,198 1,885,584 3,909,182 - 21,538,125

On-balance sheet interest rate gap sensitivity (4,544,378) 1,158,677 127,400 (437,184) 67,657 (666,813) (1,405,546) 5,700,187 -

Off-balance sheet interest rate gap sensitivity (3,257,352) 1,198,962 (600,545) 484,174 1,354,685 908,233 - - 88,157

Total interest rate gap sensitivity (7,801,730) 2,357,639 (473,145) 46,990 1,422,342 241,420 (1,405,546) 5,700,187 88,157 Cumulative interest rate gap

sensitivity (7,801,730) (5,444,091) (5,917,236) (5,870,246) (4,447,904) (4,206,484) (5,612,030) 88,157

<---------------------------------------------Non Trading Book----------------------------------------------->

Bank



Company No: 23742-V

LIQUIDITY RISK

-

-

-

Liquidity risk is the risk that the organization will not be able to fund its day-to-day operations at a reasonablecost. Liquidity risk exposure arises mainly from the deposit taking and borrowing activities, and to a lesser extent,significant drawdown of funds from previously contracted financing and purchase commitments.

The primary objective of liquidity risk management is to ensure the availability of sufficient funds at a reasonablecost to honour all financial commitments as they fall due.

The secondary objective is to ensure an optimal funding structure and to balance the key liquidity riskmanagement objectives, which includes diversification of funding sources, customer base, and maturity period.

The ongoing liquidity risk management at the Group is based on the following key strategies:

Management of cash-flow; an assessment of potential cash flow mismatches that may arise over a period of oneyear ahead and the maintenance of adequate cash and liquefiable assets over and above the standardrequirements of BNM.

Scenario analysis; a simulation on liquidity demands of new business, changes in portfolio as well as stressscenarios based on historical experience of large withdrawals.

Diversification and stabilisation of liabilities through management of funding sources, diversification ofcustomer depositor base and inter-bank exposures.

In the event of actual liquidity crisis occurring, a Contingency Funding Plan provides a formal process to identifya liquidity crisis and detailing responsibilities among the relevant departments to ensure orderly execution ofprocedures to restore the liquidity position and confidence in the Bank.



Company No: 23742-V

Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificGroup month months months months years years maturity Total

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

ASSETSCash and short-term funds 3,129,251 - - - - - 43,382 3,172,633 Deposits and placements with banks

and other financial institutions 860 - 749,601 - - - - 750,461 Securities held-for-trading 623,655 310,061 139,044 210,660 1,500,864 2,098,187 88,975 4,971,446 Securities available-for-sale - - - 65,740 518,050 608,384 19,581 1,211,755 Securities held-to-maturity 9,015 - 20,699 49,580 469,303 49,689 63,140 661,426 Loans, advances and financing 510,774 701,157 706,421 902,851 1,370,177 233,620 118,095 4,543,095 Derivative financial assets - - - - - - 299,018 299,018 Other assets 44,621 19,321 26,941 2,205 24,744 29,651 880,331 1,027,814 Statutory deposit with Bank

Negara Malaysia - - - - - - 133,690 133,690 Investments in associated companies - - - - - - 2,225 2,225 Prepaid land lease payments - - - - - - 2,656 2,656 Property and equipment - - - - - - 40,125 40,125 Deferred tax assets - - - - - - 14,175 14,175 Intangible assets - - - - - - 52,721 52,721 TOTAL ASSETS 4,318,176 1,030,539 1,642,706 1,231,036 3,883,138 3,019,531 1,758,114 16,883,240

LIABILITIES AND EQUITYDeposits from customers 4,696,206 869,689 543,709 63,641 58,943 - - 6,232,188 Deposits and placements of banks

and other financial institutions 3,662,789 608,286 779,173 233,998 634,080 500,000 - 6,418,326 Recourse obligation on loans sold to

to Cagamas Berhad - 6,430 26,042 - 2,668 - - 35,140 Derivative financial liabilities - - - - - - 325,270 325,270 Other liabilities 25,832 35,633 10,459 3,647 497 7,052 869,453 952,573 Term loans - - - - - 271,490 - 271,490

2008

The following table shows the maturity analysis of the Group’s assets and liabilities based on contractual terms.



Company No: 23742-V



Redeemable unsecured bonds - - - - 595,000 - - 595,000 Total Liabilities 8,384,827 1,520,038 1,359,383 301,286 1,291,188 778,542 1,194,723 14,829,987

Share capital - - - - - - 340,000 340,000 Reserves - - - - - - 1,713,253 1,713,253 Shareholders' equity - - - - - - 2,053,253 2,053,253 Minority interests - Total equity - - - - - - 2,053,253 2,053,253

TOTAL LIABILITIES AND EQUITY 8,384,827 1,520,038 1,359,383 301,286 1,291,188 778,542 3,247,976 16,883,240

Net maturity mismatch (4,066,651) (489,499) 283,323 929,750 2,591,950 2,240,989 (1,489,862) -

2008



Company No: 23742-V



ASSETSCash and short-term funds 3,437,987 - - - - - 45,710 3,483,697 Securities purchased under

resale agreements 393,329 - - - - - - 393,329 Deposits and placements with banks

and other financial institutions - 1,145,605 683,236 - - - - 1,828,841 Securities held-for-trading 42,188 75,834 218,369 440,689 2,510,260 2,158,158 288,593 5,734,091 Securities available-for-sale 705,065 1,002,755 964,319 - 469,756 248,874 28,971 3,419,740 Securities held-to-maturity 1,340 - 82,892 30,100 385,520 492,222 199,523 1,191,597 Loans, advances and financing 145,323 359,386 595,367 955,191 2,415,193 64,665 (353,468) 4,181,657 Derivative financial assets - - - - - - 380,742 380,742 Other assets 48,256 23,777 16,285 3,140 78,713 24,659 865,433 1,060,263 Statutory deposit with Bank

Negara Malaysia - - - - - - 169,050 169,050 Investments in associated companies - - - - - - 2,590 2,590 Prepaid land lease payments - - - - - - 2,716 2,716 Property and equipment - - - - - - 36,758 36,758 Deferred tax assets - - - - - - 43,468 43,468 Intangible assets - - - - - - 50,591 50,591 TOTAL ASSETS 4,773,488 2,607,357 2,560,468 1,429,120 5,859,442 2,988,578 1,760,677 21,979,130

LIABILITIES AND EQUITYDeposits from customers 2,897,033 1,572,060 325,560 256,375 200,300 - - 5,251,328 Deposits and placements of banks

and other financial institutions 4,362,711 1,883,307 682,336 692,297 925,831 1,290,650 - 9,837,132 Obligations on securities sold

under repurchase agreements 2,742,168 44,139 3,072 - - - - 2,789,379 Recourse obligation on loans sold to

to Cagamas Berhad - 400 9,441 2,980 39,600 - - 52,421 Derivative financial liabilities - - - - - - 333,670 333,670 Other liabilities 49,861 11,041 5,334 6,241 8,194 102,722 940,419 1,123,812 Term loans - - - - - 103,680 - 103,680

2007



Company No: 23742-V



Redeemable unsecured subordinated bonds - - - - - 595,000 - 595,000

Total Liabilities 10,051,773 3,510,947 1,025,743 957,893 1,173,925 2,092,052 1,274,089 20,086,422

Share capital - - - - - - 340,000 340,000 Reserves - - - - - - 1,552,708 1,552,708 Shareholders' equity - - - - - - 1,892,708 1,892,708 Minority interests - - - - - - - - Total equity - - - - - - 1,892,708 1,892,708

TOTAL LIABILITIES AND EQUITY 10,051,773 3,510,947 1,025,743 957,893 1,173,925 2,092,052 3,166,797 21,979,130

Net maturity mismatch (5,278,285) (903,590) 1,534,725 471,227 4,685,517 896,526 (1,406,120) -

2007



Company No: 23742-V

Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificBank month months months months years years maturity Total


ASSETSCash and short-term funds 2,521,432 - - - - - 29,894 2,551,326 Deposits and placements with banks

and other financial institutions - - 749,500 - - - - 749,500 Securities held-for-trading 623,655 310,061 139,044 210,660 1,500,864 2,098,187 88,195 4,970,666 Securities available-for-sale 65,740 518,050 608,384 18,684 1,210,858 Securities held-to-maturity 20,699 49,580 437,363 49,689 63,139 620,470 Loans, advances and financing 509,500 699,560 705,977 899,665 1,344,361 233,175 118,601 4,510,839 Amount due from Originators - 6,430 26,042 - 2,668 - - 35,140 Derivative financial assets - - - - - - 299,018 299,018 Other assets 3,284 16,656 26,910 2,172 24,744 29,651 630,456 733,873 Statutory deposit with Bank

Negara Malaysia - - - - - - 133,690 133,690 Investments in subsidiary companies - - - - - - 155,691 155,691 Investments in associated companies - - - - - - 100 100 Prepaid land lease payments - - - - - - 2,656 2,656 Property and equipment - - - - - - 35,024 35,024 Deferred tax assets - - - - - - 12,965 12,965 Intangible assets - - - - - - 4,826 4,826 TOTAL ASSETS 3,657,871 1,032,707 1,668,172 1,227,817 3,828,050 3,019,086 1,592,939 16,026,642

2008



Company No: 23742-V


RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000LIABILITIES AND EQUITYDeposits from customers 4,195,219 868,356 543,709 63,641 58,351 - - 5,729,276 Deposits and placements of banks

and other financial institutions 3,668,288 584,171 779,173 233,998 634,081 500,000 - 6,399,711 Recourse obligation on loans sold to

to Cagamas Berhad - 6,430 26,042 - 2,668 - - 35,140 Derivative financial liabilities - - - - - - 325,270 325,270 Other liabilities 23,933 6,444 10,459 3,614 497 7,052 681,988 733,987 Term loans - - - - - 271,490 - 271,490 Redeemable unsecured subordinated

bonds - - - - 595,000 - - 595,000 Total Liabilities 7,887,440 1,465,401 1,359,383 301,253 1,290,597 778,542 1,007,258 14,089,874


TOTAL LIABILITIES AND EQUITY 7,887,440 1,465,401 1,359,383 301,253 1,290,597 778,542 2,944,026 16,026,642

Net maturity mismatch (4,229,569) (432,694) 308,789 926,564 2,537,453 2,240,544 (1,351,087) -

2008



Company No: 23742-V



ASSETSCash and short-term funds 3,122,419 121,182 - - - - 33,181 3,276,782 Securities purchased under

resale agreements 374,155 - - - - - - 374,155 Deposits and placements with banks

and other financial institutions - 1,175,328 749,500 - - - - 1,924,828 Securities held-for-trading 42,188 75,834 218,369 440,689 2,510,260 2,124,257 288,590 5,700,187 Securities available-for-sale 705,065 1,002,755 946,990 - 469,756 248,874 28,000 3,401,440 Securities held-to-maturity 1,340 - 82,892 20,032 350,958 492,222 199,523 1,146,967 Loans, advances and financing 137,694 358,694 592,338 954,204 2,344,919 62,288 (353,468) 4,096,669 Derivative financial assets - - - - - - 380,742 380,742 Other assets 8,812 21,301 15,912 3,107 78,713 24,659 677,421 829,925 Statutory deposit with Bank

Negara Malaysia - - - - - - 169,050 169,050 Investments in subsidiary companies - - - - - - 154,872 154,872 Investments in associated companies - - - - - - 138 138 Prepaid land lease payments - - - - - - 2,716 2,716 Property and equipment - - - - - - 33,013 33,013 Deferred tax assets - - - - - - 43,083 43,083 Intangible assets - - - - - - 3,558 3,558 TOTAL ASSETS 4,391,673 2,755,094 2,606,001 1,418,032 5,754,606 2,952,300 1,660,419 21,538,125

LIABILITIES AND EQUITYDeposits from customers 2,579,057 1,568,688 324,650 256,375 200,300 117,631 - 5,046,701 Deposits and placements of banks

and other financial institutions 4,693,040 1,755,090 682,336 692,297 925,831 1,173,019 - 9,921,613 Obligations on securities sold

under repurchase agreements 2,742,168 44,139 3,072 - - - - 2,789,379 Recourse obligation on loans sold to

to Cagamas Berhad - 400 9,441 2,980 39,600 - - 52,421 Derivative financial liabilities - - - - - - 333,670 333,670 Other liabilities 15,791 9,731 5,312 6,129 8,194 102,722 748,422 896,301 Term loans - - - - - 103,680 - 103,680

2007



Company No: 23742-V



Redeemable unsecured subordinated bonds - - - - - 595,000 - 595,000

Total Liabilities 10,030,056 3,378,048 1,024,811 957,781 1,173,925 2,092,052 1,082,092 19,738,765


TOTAL LIABILITIES AND EQUITY 10,030,056 3,378,048 1,024,811 957,781 1,173,925 2,092,052 2,881,452 21,538,125

Net maturity mismatch (5,638,383) (622,954) 1,581,190 460,251 4,580,681 860,248 (1,221,033) -

2007



Company No: 23742-V

CREDIT RISK MANAGEMENT

OPERATIONAL RISK MANAGEMENT

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its paymentobligations. Exposure to credit risk arises primarily from lending and guarantee activities and, to a lesser extend,pre-settlement and settlement exposures of sales and trading activities.

The primary objective of credit risk management is to ensure that exposure to credit risk is always kept within itscapability and financial capacity to withstand potential future losses.

Lending activities are guided by internal group credit policies and guidelines that are approved by the Board orrisk commitee. Specific procedures for managing credit risks are determined at business levels in specific policiesand procedures based on risk environment and business goals.

Credit portfolio management strategies and significant exposures are reviewed and/or approved by the Board.These portfolio management strategies are designed to achieve a desired ideal portfolio risk tolerance level andsector distribution over the next few years. These portfolio management strategies include minimum credit ratingtargets from new facilities, a more aggressive approach towards reducing existing high-risk exposures andexposures to certain sectors.

Operational risk is the potential loss from a breakdown in internal process, systems, deficiencies in people andmanagement or operational failure arising from external events. It is increasingly recognised that operational riskis the single most widespread risk facing financial institutions today.

Operational risk management is the discipline of systematically identifying the critical potential risk points andcauses of failure, assess the relevant controls to minimise the impact of such risk through the initiation of riskmitigating measures and policies.

The Bank minimises operational risk by putting in place appropriate policies, internal controls and procedures aswell as maintaining back-up procedures for key activities and undertaking business continuity planning. Theseare supported by independent reviews by the Bank’s Internal Audit team.

For non-retail credits, risk measurement begins with an assessment and rating of the financial standing of theborrower or counterparty using a credit rating model. The model consists of quantitative and qualitative scoreswhich are translated into a rating grade, with nine (9) rating scale. Credit risk is quantified based on ExpectedDefault Frequencies and Expected Losses on default from its portfolio of loans and off-balance sheetcommitments. Expected Default Frequenciesare calibrated to the internal rating model.



Company No: 23742-V

LEGAL AND REGULATORY RISK

RISK MANAGEMENT POLICY ON FINANCIAL DERIVATIVES

Purpose of engaging in financial derivatives

The Bank manages legal and regulatory risks to its business. Legal risk arises from the potential that breaches ofapplicable laws and regulatory requirements, unenforceability of contracts, lawsuits, or adverse judgement, maylead to the incurrence of losses, disrupt or otherwise resulting in financial and reputational risk.

Legal risk is managed by internal legal counsel and where necessary, in consultation with external legal counselto ensure that legal risk is minimised.

Regulatory risk is managed through the implementation of measures and procedures within the organization tofacilitate compliance with regulations. These include a compliance monitoring and reporting process that requiresidentification of risk areas, prescription of controls to minimize these risks, staff training and assessments,provision of advise and disseminating of information.

Financial derivative instruments are contracts whose value is derived from one or more underlying financialinstruments or indices. They include swaps, forward rate agreements, futures, options and combinations of theseinstruments. Derivatives are contracts that transfer risks, mainly market risks. Financial derivatives is one of thefinancial instruments engaged by the Bank both for revenue purposes as well as to manage the Bank’s ownmarket risk exposure. The Bank’s involvement in financial derivatives is currently focussed on interest ratederivatives and foreign exchange rate derivatives.

The principal exchange rate contracts used are forward foreign exchange contracts and cross currency swaps.Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreign currency on aspecified future date at an agreed rate. A cross currency swap generally involves the exchange, or notionalexchange, of equivalent amounts of two currencies and a commitment to exchange interest periodically until theprincipal amounts are re-exchanged on a future date.

The principal interest rate contracts used are interest rate futures, interest rate swaps and forward rate agreements.Forward rate agreements are contracts for the payment of the difference between a specified interest rate and areference rate on a notional deposit at a future settlement date. There is no exchange of principal. An interest ratefutures is an exchange traded contract whose value is based on the difference between a specific interest rate anda reference rate on a notional deposit or fixed income security at a future settlement date. Interest rate swaptransactions generally involve the exchange of fixed and floating interest payment obligations without theexchange of the underlying principal amounts.

For revenue purposes the Bank maintains trading positions in these instruments and engages in transactions withcustomers to satisfy their needs in managing their respective interest rate and foreign exchange rate exposures.Derivative transactions generate income for the Bank from the buy-sell spreads. The Bank also takesconservative exposures, within acceptable limits, to carry an inventory of these instruments in order to providemarket liquidity and to earn potential gains on fluctuations in the value of these instruments.

As part of the asset and liability exposure management, the Bank uses derivatives to manage the Bank’s marketrisk exposure. As the value of these financial derivatives are principally driven by interest rate and foreignexchange rate factors, the Bank uses them to reduce the overall interest rate and foreign exchange rate exposuresof the Bank. These are performed by entering into an exposure in derivatives that produces opposite valuemovements vis-à-vis exposures generated by other non-derivative activities of the Bank. The Bank manages theserisks on a portfolio basis. Hence, exposures on derivatives are aggregated or netted against similar exposuresarising from other financial instruments engaged by the Bank.



Company No: 23742-V

Risk associated with financial derivatives

Market risk of derivatives used for trading purposes

As derivatives are contracts that transfer risks, they expose the holder to the same types of market and credit riskas other financial instruments, and the Bank manages these risks in a consistent manner under the overall riskmanagement framework.

Market risk arising from the above interest rate-related and foreign exchange-related derivatives contractsmeasures the potential losses to the value of these contracts due to changes in market rates/prices. Exposure tomarket risk may be reduced through offsetting on and off-balance sheet positions.

The contractual amounts of these contracts provide only a measure of involvement in these types of transactionsand do not represent the amounts subject to market risk. Value at risk method is used to measure the market riskfrom these contracts. Value at risk, is a statistical measures that estimates the potential changes in portfolio valuethat may occur brought about by daily changes in market rates over a 90-day period at a 99% confidence levelunder normal market condition.

As at 31 March 2008, value at risk of foreign exchange-related derivatives contracts used for trading purposes ofthe Group was RM5,824,499 (RM1,424,763 in 2007) and the Bank was RM5,824,499 (RM1,424,763 in 2007) . The value at risk of the interest rate derivatives related contracts used for trading purposes was RM22,381,970 (RM7,851,503 in 2007) and RM22,381,970 (RM7,851,503 in 2007) for the Group and the Bank, respectively.

The value at risk of the options related contracts used for trading purposes was RM Nil (RM26,007,862 in 2007)and RM Nil (RM26,007,862 in 2007) for the Group and the Bank, respectively.

The use of these instruments to hedge underlying exposures arising from funding or for fixed incomeinstruments acquired for investment purposes are not included in the market risk numbers above.

Credit risk of derivativesCounterparty credit risk arises from the possibility that a counterparty may be unable to meet the terms of thederivative contracts. Unlike conventional asset instruments, the Bank’s financial loss is not the entire contractedprincipal value of the derivatives, but rather a fraction equivalent to the cost to replace the defaulted contractwith another in the market. The cost of replacement is equivalent to the difference between the original value ofthe derivatives at time of contract with the defaulted counterparty and the current fair value of a similar substituteat current market prices. The Bank will only suffer a replacement cost if the contract carries a fair value gain attime of default.

As at 31 March 2008, the amount of credit risk, measured in terms of the cost to replace the profitable contracts,was RM55,506,579 (RM27,277,893 in 2007) and RM55,506,579 (RM27,277,893 in 2007) for the Group andthe Bank, respectively. This amount will increase or decrease over the life of the contracts, mainly as a functionof movement in market rates and time.



Company No: 23742-V

46. FAIR VALUES OF FINANCIAL INSTRUMENTS

Group BankCarrying Fair Carrying Fair

2008 Amount Value Amount ValueRM'000 RM'000 RM'000 RM'000

Financial AssetsCash and short-term funds 3,172,633 3,172,633 2,551,326 2,551,326 Deposits and placements with banks and other financial institutions 750,461 872,412 749,500 871,451 Securities held-for-trading 4,971,446 4,971,446 4,970,666 4,970,666 Securities available-for-sale 1,211,755 1,211,755 1,210,858 1,210,858 Securities held-to-maturity 661,426 664,183 620,470 623,227 Loans, advances and financing * 4,612,274 4,620,669 4,579,528 4,587,923 Amount due from Originators 35,140 35,156 35,140 35,156 Derivative financial assets 299,018 299,018 299,018 299,018 Other financial assets 991,769 991,769 732,968 732,968

16,705,922 16,839,041 15,749,474 15,882,593 Non-financial assets 177,318 277,168 TOTAL ASSETS 16,883,240 16,026,642

Financial instruments are contracts that gives rise to both a financial asset of one enterprise and a financialliability or equity instrument of another enterprise. The fair value of a financial instrument is the amount atwhich the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’slength transaction, other than a forced or liquidated sale. The information presented herein represents bestestimates of fair values of financial instruments at the balance sheet date.

Where available, quoted and observable market prices are used as the measure of fair values. Where such quotedand observable market prices are not available, fair values are estimated based on a number of methodologiesand assumptions regarding risk characteristics of various financial instruments, discount rates, estimates offuture cash flows and other factors. Changes in the assumptions could materially affect these estimates and thecorresponding fair values.

In addition, fair value information for non-financial assets and liabilities such as investments in subsidiarycompanies and taxation are excluded, as they do not fall within the scope of FRS1322004 (Financial Instruments:Disclosure and Presentation), which requires the fair value information to be disclosed. The estimated fair values of the Group’s and the Bank’s financial instruments are as follows:



Company No: 23742-V



Financial LiabilitiesDeposits from customers 6,232,188 6,230,417 5,729,276 5,727,505 Deposits and placements of banks and other financial institutions 6,418,326 6,457,194 6,399,711 6,438,579 Recourse obligation on loans sold to Cagamas Berhad 35,140 35,156 35,140 35,156 Derivative financial liabilities 325,270 325,270 325,270 325,270 Term loans 271,490 271,490 271,490 271,490 Subordinated term loan - - - - Redeemable unsecured bonds 595,000 676,997 595,000 676,997 Other financial liabilities 945,766 945,766 731,952 731,952

14,823,180 14,942,290 14,087,839 14,206,949 Non-Financial LiabilitiesOther non-financial liabilities 6,807 2,035 Shareholder's equity 2,053,253 1,936,768

2,060,060 1,938,803 TOTAL LIABILITIES ANDEQUITY 16,883,240 16,026,642

2007

Financial AssetsCash and short-term funds 3,483,697 3,483,697 3,276,782 3,276,782 Securities purchased under resale agreements 393,329 393,329 374,155 374,155 Deposits and placements with banks and other financial institutions 1,828,841 2,082,754 1,924,828 2,082,754 Securities held-for-trading 5,734,091 5,734,091 5,700,187 5,700,187 Securities available-for-sale 3,419,740 3,419,740 3,401,440 3,401,440 Securities held-to-maturity 1,191,597 1,168,551 1,146,967 1,152,379 Loans, advances and financing * 4,245,334 4,245,334 4,159,055 4,159,055 Amount due from Originators 52,421 52,591 52,421 52,591 Derivative financial assets 380,742 380,742 380,742 380,742 Other financial assets 1,001,010 1,001,010 770,672 770,672




Company No: 23742-V



Financial LiabilitiesDeposits from customers 5,251,328 5,046,508 5,046,701 5,046,508 Deposits and placements of banks and other financial institutions 9,837,132 10,104,179 9,921,613 10,104,179 Obligations on securities sold under . . repurchase agreements 2,789,379 2,789,379 2,789,379 2,789,379 Bills and acceptances payable - - - - Recourse obligation on loans sold to Cagamas Berhad 52,421 52,519 52,421 52,519 Derivative financial liabilities 333,670 333,670 333,670 333,670 Term loans 103,680 103,680 103,680 103,680 Subordinated certificates of deposits - - - - Subordinated term loan - - - - Redeemable unsecured subordinated bonds 595,000 695,453 595,000 695,453 Other financial liabilities 1,118,978 1,118,978 895,127 895,127

20,081,588 20,244,366 19,737,591 20,020,515 Non-Financial LiabilitiesOther non-financial liabilities 4,834 1,174 Shareholder's equity 1,892,708 1,799,360

1,897,542 1,800,534 TOTAL LIABILITIES ANDEQUITY 21,979,130 21,538,125

* The general allowance for loans, advances and financing for the Group and the Bank amounting toRM69,179,000 (RM63,677,000 in 2007) and RM68,689,000 (RM62,386,000 in 2007) respectively has beenincluded under non-financial assets.



Company No: 23742-V

(a) Cash And Short-Term Funds

(b)

(c)

(d)

The fair value of contingent liabilities and undrawn credit facilities are not readily ascertainable. These financialinstruments are presently not sold or traded. They generate fees that are in line with market prices for similararrangements. The estimated fair value may be represented by the present value of the fees expected to bereceived, less associated costs and potential loss that may arise should these commitments crystallize. The Bankassesses that their respective fair values are unlikely to be significant given that the overall level of fees involved isnot significant and no provisions is necessary to be made.

The following methods and assumptions were used to estimate the fair value of assets and liabilities as at 31March 2008:

The carrying values are a reasonable estimate of the fair values because of negligible credit risk and short-term in nature or frequent repricing.

The fair values of securities purchased under resale agreements and deposits and placements with banks andother financial institutions with remaining maturities less than six months are estimated to approximate theircarrying values. For securities purchased under resale agreements and deposits and placements with banksand other financial institutions with maturities of more than six months, the fair values are estimated basedon discounted cash flows using the prevailing KLIBOR rates and interest rate swap rates.

Securities Purchased Under Resale Agreements And Deposits And Placements With Banks AndOther Financial Institutions

The fair value of variable rate loans and financing are estimated to approximate their carrying values. Forfixed rate loans and financing, the fair values are estimated based on expected future cash flows ofcontractual instalment payments and discounted at prevailing indicative rates adjusted for credit risk. Inrespect of non-performing loans and financing, the fair values are deemed to approximate the carryingvalues, net of interest in suspense and specific allowance for bad and doubtful debts and financing.

Loans, Advances And Financing And Subordinated Term Loans (“Loans And Financing”)

The estimated fair value is based on quoted or observable market prices at the balance sheet date. Wheresuch quoted or observable market prices are not available, the fair value is estimated using discounted cashflow or net tangible assets techniques. The fair values of unquoted debt equity conversion securities whichare not actively traded, are estimated to be at a par value, taking into consideration of the underlyingcollateral values.Where discounted cash flow techniques are used, the estimated future cash flows arediscounted using market indicative rates of similar instruments at the balance sheet date.

Securities Held-For-Trading, Securities Available-For-Sale And Securities Held-To-Maturity



Company No: 23742-V

(e)

(f) Recourse Obligations on Loans Sold to Cagamas Berhad

(g)

(h) Interest Rate Swaps, Futures And Forward Rate Agreements

(i) Short Term Financial Assets And Financial Liabilities

(j) Derivative Financial Instruments

The fair values for recourse obligations on loans to Cagamas Berhad are determined based on discountedcash flows of future instalments payments at prevailing rates quoted by Cagamas Berhad as at balance sheetdate.

The fair values of borrowings with remaining maturities of less than six (6) months are estimated toapproximate their carrying values at balance sheet date. The fair values of borrowings with remainingmaturities of more than six (6) months are estimated based on discounted cash flows market indicative ratesof instruments with similar risk profiles at the balance sheet date.

Term Loans, Subordinated Certificates of Deposits, Subordinated Term Loans, and RedeemableUnsecured Bonds (“Borrowings”)

The estimated fair value is based on the market price to enter into an offsetting contract at balance sheetdate.

The estimated fair value is based on the market price to enter into an offseting contract at balance sheetdate.

The fair value of the other financial assets and other financial liabilities, which are considered short term innature, are estimated to be approximately their carrying value.

As assumptions were made regarding risk characteristics of the various financial instruments, discount rates,future expected loss experience and other factors, changes in the uncertainties and assumptions could materiallyaffect these estimates and the resulting value estimates.

The fair value of term deposits, negotiable instrument of deposits and obligations on securities sold underrepurchase agreements with remaining maturities of more than six months are estimated based ondiscounted cash flows using KLIBOR rates and interest rate swap rates.

Deposits From Customers, Deposits And Placements Of Banks And Other Financial Institutions AndObligations On Securities Sold Under Repurchase Agreements

The fair value of deposits liabilities payable on demand (“current and savings deposits”) or with remainingmaturities of less than six months are estimated to approximate their carrying values at balance sheet date.

The fair values of the derivative inancial instruments are obtained from quoted market prices in activemarkets, including recent market transactions and valuation techniques, including discounted cash flowmodels and option pricing models, as appropriate.



Company No: 23742-V

47. NET ASSETS PER SHARE (RM)


Total assets 16,883,240 16,026,642 21,979,130 21,538,125 Less :Total liabilities 14,829,987 14,089,874 20,086,422 19,738,765 Net assets 2,053,253 1,936,768 1,892,708 1,799,360

Less: Preference share capital 100,000 100,000 100,000 100,000 Net assets after deducting the preference share capital 1,953,253 1,836,768 1,792,708 1,699,360

Issued and fully paid up ordinary shares of RM1.00 each 240,000 240,000 240,000 240,000

Net assets per share (RM) 8.56 8.07 7.89 7.50

Net assets per share after deducting the preference share capital 8.14 7.65 7.47 7.08

2008 2007

Net assets per share represents the balance sheet total assets value less total liabilities, including long term loansand minority interests expressed as an amount per ordinary share.

Net assets per share is calculated as follows:



Company No: 23742-V

48. BUSINESS SEGMENT ANALYSIS

The Bank’s businesses are organized into five segments, based on the products and services that it provides.These segments are investment banking, Islamic banking, offshore banking, funds management and others.

Investment banking

The investment banking caters to the business needs of large corporate customers and financial institutions andprovides customers with, among other things, a broad range of financing options, treasury and derivativesolutions and services, corporate finance services, debt capital market, private banking, and stock and sharebroking operations which was transferred from AmSecurities to AmInvestment Bank with effect from 3 March2007.

Islamic banking

Islamic banking segment relates to Islamic banking business activities undertaken by the Bank which covers allIslamic products and services of investment banking.

Offshore banking

Through AmInternational (L) Ltd and AmInvestment Bank Labuan branch, the Bank has established a presencein the international arena at the Labuan International Offshore Financial Centre. The products and servicesoffered include corporate finance, advisory and trust services, conventional and Islamic banking and acting asListing Sponsor for corporations seeking listing on the Labuan International Financial Exchange.

Funds management

The Bank's funds management unit, comprising of AmInvestment Services Berhad and AmInvestmentManagement Sdn Bhd, provides investment management, management of unit trusts and customized investmentsolutions for both retail and institutional clients Others

Others are a variety of activities, which complements and supports the operations of the business units. Itincludes the Bank's corporate income and expense items that are not allocated to individual business segments.In addition, the income and the Bank's funding cost of the Group’s associated and subsidiary companies areincluded in this category.



Company No: 23742-V

48. BUSINESS SEGMENT ANALYSIS Total Elimination/

Group Investment Islamic Offshore Fund Before Consolidation2008 Banking Banking Banking Management Others Elimination Adjustments Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000External revenue 922,270 64,782 62,485 85,808 37,643 1,172,988 104,757 1,277,745 Revenue from other segments 127,758 3,577 6,652 15 131 138,133 (138,133) -

Operating revenue 1,050,028 68,359 69,137 85,823 37,774 1,311,121 (33,376) 1,277,745

Profit from operations 297,497 39,620 16,731 40,426 5,804 400,078 (17,492) 382,586 Share in results of associated companies - - - - - - 88 88 Profit/(Loss) before taxation 297,497 39,620 16,731 40,426 5,804 400,078 (17,404) 382,674 Taxation (78,266) (6,656) (20) (10,243) (1,002) (96,187) 4,306 (91,881) Net profit/(loss) for the year 219,231 32,964 16,711 30,183 4,802 303,891 (13,098) 290,793

Other information

Segment assets 14,338,102 1,035,272 1,108,673 93,319 276,020 16,851,386 (18,057) 16,833,329 Investments in subsidiary companies 155,691 - - - - 155,691 (155,691) - Investments in associated companies 100 - - - - 100 2,125 2,225 Goodwill on consolidation - - - - - - 47,686 47,686

Total Assets 14,493,893 1,035,272 1,108,673 93,319 276,020 17,007,177 (123,937) 16,883,240 Segment liabilities 12,735,112 719,784 1,164,639 43,572 186,693 14,849,800 (19,813) 14,829,987

Property and equipment purchases 8,700 75 76 622 2,189 11,662 - 11,662 Depreciation 6,092 15 65 364 1,061 7,597 - 7,597



Company No: 23742-V

48. BUSINESS SEGMENT ANALYSIS (CONTD.)Total Elimination/

Group Investment Islamic Offshore Fund Before Consolidation2007 Banking Banking Banking Management Others Elimination Adjustments Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000External revenue 960,574 72,834 73,879 51,717 18,776 1,177,779 128,992 1,306,771 Revenue from other segments 139,959 2,209 13,459 87 130 155,844 (155,844) -

Operating revenue 1,100,533 75,043 87,338 51,804 18,906 1,333,623 (26,852) 1,306,771 Profit from operations 289,179 35,021 7,189 23,426 5,467 360,281 (8,977) 351,304 Share in results of associated companies - - - - - - 1,113 1,113

Profit/(Loss) before taxation 289,179 35,021 7,189 23,426 5,467 360,281 (7,864) 352,417 Taxation (74,270) (8,937) (20) (6,241) (1,438) (90,906) 2,738 (88,169) Net profit/(loss) for the year 214,909 26,083 7,169 17,184 4,029 269,375 (5,126) 264,248

Other information

Segment assets 19,626,517 1,223,173 1,076,263 93,186 246,793 22,265,932 (336,259) 21,929,673 Investments in subsidiary companies 154,872 - - - - 154,872 (154,872) - Investments in associated companies 138 - - - - 138 2,452 2,590 Goodwill on consolidation - - - - - - 46,867 46,867

Total Assets 19,781,527 1,223,173 1,076,263 93,186 246,793 22,420,942 (441,812) 21,979,130

Segment liabilities 18,098,432 940,259 1,161,318 62,430 161,752 20,424,191 (337,769) 20,086,422

Property and equipment purchases 1,739 - 162 149 1,374 3,424 - 3,424 Depreciation 4,484 12 64 373 495 5,428 - 5,428



Company No: 23742-V

48. SEGMENT ANALYSIS (CONTD.)

49. CAPITAL ADEQUACY RATIO

(i)


Tier 1 capital Paid-up ordinary share capital 240,000 240,000 240,000 240,000 Paid-up non-cumulative preference 100,000 100,000 100,000 100,000 share capital Share premium 190,284 190,284 190,284 190,284 Capital Reserve 2,815 - 2,815 - Exchange fluctuation reserve 23,853 18,290 28,477 23,157 Statutory reserve 389,500 389,500 389,500 389,500 Unappropriated profit at end of year 1,083,285 1,023,693 928,752 891,048

2,029,737 1,961,767 1,879,828 1,833,989 Less : Deferred tax assets (14,175) (12,965) (43,468) (43,083) Goodwill (47,685) - (46,866) - Total tier 1 capital 1,967,877 1,948,802 1,789,494 1,790,906

Tier 2 capital Redeemable Unsecured Bonds 595,000 595,000 595,000 595,000 General allowance for bad and doubtful debts 69,316 69,316 63,905 63,905 Total tier 2 capital 664,316 664,316 658,905 658,905

Total capital funds 2,632,193 2,613,118 2,448,399 2,449,811 Less: Investment in subsidiary companies - 122,671 - 121,852 Investment in capital of related financial institutions 72,439 72,439 56,074 56,074 Capital base 2,559,754 2,418,008 2,392,325 2,271,885

Capital Ratios: Core capital ratio 13.79% 13.98% 11.75% 12.00% Risk-weighted capital ratio 17.94% 17.35% 15.71% 15.22% Core capital ratio (net of proposed final ordinary dividends ) 13.16% 13.33% 11.23% 11.46% Risk-weighted capital ratio (net of proposed final ordinary dividends) 17.31% 16.70% 15.18% 14.68%

2008 2007

The capital adequacy ratio of the Group and the Bank (including the operations of AmInternational (L) Ltd)as at 31 March 2008 are analysed as follows:

The financial information by geographical segment is not presented as the Group’s activities are principallyconducted in Malaysia except for AmFraser International Pte. Ltd. and its subsidiary companies, PT AmCapitalIndonesia and AmSecurities (HK) Ltd, activities of which are principally conducted in Singapore, Indonesia andHong Kong. These activities in Singapore, Indonesia and Hong Kong are not significant in relation to theGroup’s activities in Malaysia.

With effect from 1 January 2008, the capital adequacy ratios of the Group and the Bank are computed inaccordance with Bank Negara Malaysia's revised Risk-weighted Capital Adequacy Framework: StandardisedApproach for Credit Risk and Market Risk, and Basic Indicator Approach for Operational Risk (Basel II).



Company No: 23742-V

49. CAPITAL ADEQUACY RATIO (CONTD.)

(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

The capital adequacy ratio of the Group and of the Bank as at 31 March 2007 has not been restated for prioryear adjustments effect as mentioned in Note 52 to the financial statements.

Risk- Risk- Risk- Risk-Principal Weighted Principal Weighted Principal Weighted Principal WeightedRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

0% 1,426,801 - 1,426,788 - 2,359,827 - 2,359,815 - 10% - - - - 1,359 136 1,359 136 20% 3,929,771 785,954 3,842,908 768,582 7,168,582 1,433,716 7,062,589 1,412,518 35% 12,942 4,530 12,942 4,530 - - - - 50% 2,096,554 1,048,277 2,096,554 1,048,277 228,956 114,478 228,757 114,378 75% 49,099 36,824 49,099 36,824 - - - - 100% 7,465,043 7,465,043 7,154,941 7,154,941 7,900,813 7,900,813 7,622,487 7,622,487 150% 192,386 288,579 192,386 288,579 - - - -

15,172,596 9,629,208 14,775,618 9,301,733 17,659,537 9,449,143 17,275,007 9,149,519 Add: Total Risk Weighted Assets Equivalent for market risks 3,825,956 3,825,956 5,778,833 5,778,833 Operational Risk Weighted Assets 814,555 811,742 Large exposure risk requirement for single equity 449 449 449 449

14,270,167 13,939,879 15,228,425 14,928,801

2008 2007Group Bank Group Bank



Company No: 23742-V

50. OTHER SIGNIFICANT AND SUBSEQUENT EVENTS

(1)

(2)

(a)

(b)

(i)

(ii)

The Bank and Saudi Arabian parties had mutually agreed to discontinue the proposed joint venture in acompany to be established for carrying on capital market activity in Saudi Arabia.

On 29 November 2007, the Bank had entered into a memorandum of understanding with Woori, a memberof the Woori Financial Group of Korea for the purpose of promoting the cooperation in the investmentbanking business between the two parties, enabling both the financial groups to leverage on each other’sestablished business franchise and networks in both the domestic and regional capital markets.

Subsequent to the balance sheet date, on 11 March 2008, the ultimate holding company, AMMB HoldingsBerhad ("AHB"), announced a Group Proposed Internal Restructuring involving:

the transfer of the fund-based activity of the Bank to AmBank (M) Berhad ("AmBank") and AmBank’swholly-owned subsidiary, AmIslamic Bank Berhad (“AmIslamic”) (the “Proposed Business Transfer”); and

the re-alignment of the shareholding structure of certain operating subsidiaries to fully constitute the CapitalMarket Group and Asset Management Group (the “Proposed Internal Transfer”).

On 11 March 2008, the Bank has entered into a Business Transfer Agreement each with AmBank andAmIslamic respectively in respect of the Proposed Business Transfer.

Bank Negara Malaysia (“BNM”) and the Ministry of Finance (“MOF”) have on 19 December 2007 approvedthe Proposed Business Transfer. It was implemented by way of a vesting order (the “Order”) of the High Courtof Malaya (the “Court”) to be obtained by the Bank, AmBank and AmIslamic pursuant to section 50 of theBanking and Financial Institutions Act 1989, whereby:-

Subject to exclusions as may be agreed between the Bank and AmBank, AmBank will acquire the assets andassume the liabilities relating to the Bank’s conventional Fund-Based Activity which shall include theBank’s 100% shareholding interest in AMIL, a licensed offshore bank; and

Subject to exclusions as may be agreed between the Bank and AmIslamic, AmIslamic will acquire the assetsand assume the liabilities relating to the Bank’s Islamic Fund-Based Activity,

based on the book value of the assets and liabilities as at the date the Order comes into effect. The considerationfor the Proposed Business Transfer, computed on the basis of the book value of the assets acquired less bookvalue of the liabilities assumed, will be settled in cash by AmBank and AmIslamic.

After the completion of the Proposed Business Transfer, the Bank will restructure its capital funds and anyexcess thereof will be distributed to AHB (through the immediate holding company, AmInvestment GroupBerhad ("AIGB")) for working capital requirements.



Company No: 23742-V

50. OTHER AND SUBSEQUENT SIGNIFICANT EVENTS (CONTD.)

(a)

(i)

(ii)

(iii)

(b)

(i)

(ii)

The Proposed Internal Transfer, which has received BNM approval on 19 December 2007, will involve thefollowing intra-group transfer of the following AmBank Group companies:-

The Bank will acquire from AmSecurities Holding Sdn Bhd (“AMSH”) the following companies:-

AmFutures Sdn Bhd ("AMF"), a licensed futures broker for a cash consideration based on bookvalue;

AmResearch Sdn Bhd ("AMR") involved in providing investment advice, for a cash considerationbased on book value; and

PT.AmCapital Indonesia (“AMCI”), a licensed stockbroking, which also undertake underwritingand investment management activities, for a cash consideration based on cost of investment.

AIGB will acquire from the Bank the following companies:-

AmInvestment Management Sdn Bhd, an asset management company for a cash consideration basedon book value; and

In addition to the approvals of MOF and BNM, the Proposed Internal Restructuring is also subject to theapprovals of Securities Commission for the Proposed Internal Transfer (other than AMCI), Badan PengawasPasar Modal and Lembaga Kewangan for transfer of AMCI and any other relevant authorities, if necessary.

Approvals from Labuan Offshore Financial Services Authority for the transfer of AmInternational (L) Ltd,Foreign Investment Committee and High Court of Malaya for the Proposed Business Transfer were obtained on21 December 2007, 7 March 2008 and 12 April 2008 respectively.

On 12 April 2008, the Bank completed the Business Transfer for a cash consideration of RM1,370.5 millionbased on the book value of the assets and liabilities as at 11 April 2008 pursuant to the Business TransferAgreement, dated 11 March 2008 entered into with AmBank and AmIslamic.

AmInvestment Services Berhad, an unit trust management company for a cash consideration basedon book value.



Company No: 23742-V

51. PROPOSED BUSINESS AND INTERNAL TRANSFERS

BALANCE SHEETS AS AT 31 MARCH 2008After After After

Audited Proposed Proposed ProposedAs at Business Internal Internal

31 March 2008 Transfer Transfer TransferRM'000 RM'000 RM'000 RM'000

Group Note 1 Note 2 Note 3

ASSETS

Cash and short-term funds 3,172,633 1,504,782 1,495,978 262,194 Securities purchased underresale agreements - - 45,819 45,819 Deposits and placements with banks and other financial institutions 750,461 227,514 227,780 77,780 Securities held-for-trading 4,971,446 274,685 287,575 287,575 Securities available-for-sale 1,211,755 78,635 78,635 78,635 Securities held-to-maturity 661,426 161,570 161,570 161,570 Loans, advances and financing 4,543,095 497,147 497,147 497,147 Derivative financial assets 299,018 5,200 5,200 5,200 Other assets 1,027,815 772,970 938,863 938,863 Statutory deposit with Bank Negara Malaysia 133,690 - - - Investments in associated companies 2,225 2,225 2,225 2,225 Prepaid land lease payments 2,655 2,655 2,655 2,655 Property and equipment 40,125 39,615 39,943 39,943 Deferred tax assets 14,175 1,210 537 537 Intangible assets 52,721 52,719 31,882 31,882

TOTAL ASSETS 16,883,240 3,620,927 3,815,809 2,432,025


Deposits from customers 6,232,188 149,402 149,402 149,402 Deposits and placements of banksand other financial institutions 6,418,326 - - - Derivative financial liabilities 325,270 1,092 1,092 1,092 Other liabilities 952,573 894,848 1,102,129 1,102,129 Recourse obligation on loans sold to Cagamas Berhad 35,140 - - - Term loans 271,490 - 17,983 17,983 Subordinated term loans - - 7,000 7,000 Redeemable unsecured bonds 595,000 595,000 595,000 595,000 Total liabilities 14,829,987 1,640,342 1,872,606 1,872,606

Pursuant to the Proposed Business and Internal Transfers as mentioned in Note 50 to the financial statements,the proforma balance sheets for the Group and the Bank are as follows:



Company No: 23742-V

51. PROPOSED BUSINESS AND INTERNAL TRANSFERS (CONTD.)

BALANCE SHEETS AS AT 31 MARCH 2008 (CONTD.)After After After

Audited Proposed Proposed ProposedAs at Business Internal Internal

31 March 2008 Transfer Transfer TransferRM'000 RM'000 RM'000 RM'000

Group Note 1 Note 2 Note 3

Share capital 340,000 340,000 340,000 200,000 Reserves 1,713,253 1,640,585 1,603,203 359,419 Shareholder's equity 2,053,253 1,980,585 1,943,203 559,419

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 16,883,240 3,620,927 3,815,809 2,432,025

COMMITMENTS AND CONTINGENCIES 43,926,520 869,663 869,663 869,663

Note 1:

(i)

(ii)

Note 2:

(i)

(ii)

(iii)

Note 3:

(i)

(ii)

After adjusting for:

Transfer of the assets and liabilities relating to the Bank's fund based activity and the Bank's 100%shareholding interest in AMIL via vesting order under Section 50 of the BAFIA for an aggregatecash consideration of RM1,363.5 million; and Loss of RM48.5 million arising from the disposal of AMIL at book value.


Disposal of 100% equity interests in AIM and AIS to the immediate holding company,AmInvestment Group Berhad, at book value of RM17.2 million and RM31.6 million, respectively.Loss of RM37.4 million arising from the disposal of AIM and AIS;

Acquisition of 100% equity interest each in AMR and AMF from AmSecurities Holding Berhad fora cash consideration, based on the book value of RM0.5 million and RM13.9 million, respectively.Reserve on consolidation of RM4.8 million arising from the acquisition of AMR and AMF; and

Acquisition of 100% equity interest in AMCI from AmSecurities Holding Berhad for a cashconsideration, based on the cost of investment of RM70.2 million. Goodwill amounting to RM20.5million arising from the acquisition of AMCI.

After adjusting for the Bank capital return of RM1,383.8 million arising from the Proposed Businessand Internal Transfers and are as follows:

Payment of cash dividend amounting to RM864.0 million out of the Bank's unappropriated profit;and

Capital repayment of RM519.8 million by way of utilisation of entire share premium account,repayment of entire preference share capital and the remaining through reducing ordinary sharecapital.



Company No: 23742-V



After After AfterAudited Proposed Proposed Proposed

As at Business Internal Internal31 March 2008 Transfer Transfer Transfer

RM'000 RM'000 RM'000 RM'000Bank Note 1 Note 2 Note 3

ASSETS

Cash and short-term funds 2,551,326 1,413,368 1,377,562 143,778 Deposits and placements with banksand other financial institutions 749,500 226,553 226,553 76,553 Securities held-for-trading 4,970,666 273,905 273,905 273,905 Securities available-for-sale 1,210,858 78,635 78,635 78,635 Securities held-to-maturity 620,470 161,568 161,568 161,568 Loans, advances and financing 4,510,839 497,037 497,037 497,037 Derivative financial assets 299,018 5,200 5,200 5,200 Other assets 769,014 515,119 515,119 515,119 Statutory deposit with Bank Negara Malaysia 133,690 - - - Investments in subsidiary companies 155,691 122,671 158,477 158,477 Investments in associated companies 100 100 100 100 Prepaid land lease payments 2,655 2,655 2,655 2,655 Property and equipment 35,024 35,024 35,024 35,024 Deferred tax assets 12,965 - - - Intangible assets 4,826 4,826 4,826 4,826

TOTAL ASSETS 16,026,642 3,336,661 3,336,661 1,952,877


Deposits from customers 5,729,276 150,000 150,000 150,000 Deposits and placements of banksand other financial institutions 6,399,711 - - - Obligations on securities sold under repurchase agreements - - - - Derivative financial liabilities 325,270 1,092 1,092 1,092 Other liabilities 733,987 677,954 677,954 677,954 Recourse obligation on loans sold to Cagamas Berhad 35,140 - - - Term loans 271,490 - - - Redeemable unsecured bonds 595,000 595,000 595,000 595,000 Total liabilities 14,089,874 1,424,046 1,424,046 1,424,046



Company No: 23742-V



After After AfterAudited Proposed Proposed Proposed

As at Business Internal Internal31 March 2008 Transfer Transfer Transfer

RM'000 RM'000 RM'000 RM'000Bank Note 1 Note 2 Note 3

Share capital 340,000 340,000 340,000 200,000 Reserves 1,596,768 1,572,615 1,572,615 328,831 Shareholder's equity 1,936,768 1,912,615 1,912,615 528,831

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 16,026,642 3,336,661 3,336,661 1,952,877

COMMITMENTS AND CONTINGENCIES 43,926,520 869,663 869,663 869,663

Note 1:

Note 2:

(i)

(ii)

(iii)

Note 3:

(i)

(ii)

After adjusting for the transfer of the assets and liabilities relating to the Bank's fund based activity andthe Bank's 100% shareholding interest in AMIL via vesting order under Section 50 of the BAFIA for anaggregate cash consideration of RM1,363.5 million.


Disposal of 100% equity interests in AIM and AIS to the immediate holding company,AmInvestment Group Berhad, at book value of RM17.2 million and RM31.6 million, respectively.

Acquisition of 100% equity interest each in AMR and AMF from AmSecurities Holding Berhad fora cash consideration, based on the book value of RM0.5 million and RM13.9 million, respectively;and

Acquisition of 100% equity interest in AMCI from AmSecurities Holding Berhad for a cashconsideration, based on the cost of investment of RM70.2 million.

After adjusting for the Bank capital return of RM1,383.8 million arising from the Proposed Businessand Internal Transfers and are as follows:

Payment of cash dividend amounting to RM864.0 million out of the Bank's unappropriated profit;and

Capital repayment of RM519.8 million by way of utilisation of entire share premium account,repayment of entire preference share capital and the remaining through reducing ordinary sharecapital.



Company No: 23742-V


141

52. CHANGES IN ACCOUNTING POLICIES AND PRIOR YEAR ADJUSTMENTS

(a) Changes in accounting policies

During the financial period, the Group and Bank has adopted the revised FRS 117: Leases issued by MASB that is effective for the Group and Bank's annual reporting date, 31 March 2008 which have resulted in changes in accounting policies as follows: FRS 117: Leases Prior to 1 April 2007, lease of land and buildings held for own use was classified as property and equipment and was stated at cost less accumulated depreciation and impairment loss. The adoption of the revised FRS 117: Leases in 2007 resulted in a change in the accounting policy relating to the classification of leases of land and buildings. Under FRS 117, lease of land and buildings are classified as operating or finance leases in the same way as leases of other assets. The land and building elements of a lease of land and buildings are considered separately for the purposes of lease classification. Leasehold land held for own use is now classified as operating lease. The up-front payments made are allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and building element of the lease at the inception of the lease. The up-front payment represents prepaid land lease payment and is amortised on a straight-line basis over the remaining lease term. The Group and the Bank have applied the change in accounting policy in respect of leasehold land in accordance with the transitional provisions of FRS 117. At 1 April 2007, the unamortised carrying amount of leasehold land is classified as prepaid land lease payments. The reclassification of leasehold land as prepaid land lease payments has been accounted for retrospectively. Certain comparatives of the balance sheets of the Group and the Bank as at 31 March 2007 have been restated. There were no effects on the income statements of the Group and the Bank for the financial year ended 31 March 2008.

Company No: 23742-V


142

52. CHANGES IN ACCOUNTING POLICIES AND PRIOR YEAR ADJUSTMENTS (CONTD.)

(b) Restatement of comparatives

The following comparative amounts for the Group have been restated as a result of adopting FRS 117: Leases.

As previously Effect of reported change As restated RM'000 RM'000 RM'000 Balance Sheet as at 31 March 2007 Group Derivative financial assets - 380,742 380,742Other assets 1,130,623 (70,360) 1,060,263Prepaid land lease payments - 2,716 2,716Property and equipment 39,474 (2,716) 36,758Derivative financial liabilities - 333,670 333,670Other liabilities 1,147,100 (23,288) 1,123,812 Bank Derivative financial assets - 380,742 380,742Other assets 900,285 (70,360) 829,925Prepaid land lease payments - 2,716 2,716Property and equipment 35,729 (2,716) 33,013Derivative financial liabilities - 333,670 333,670Other liabilities 919,589 (23,288) 896,301

Company No: 23742-V

53. ISLAMIC BANKING BUSINESS

BALANCE SHEETSAS AT 31 MARCH 2008

Note Group Bank Group BankRM'000 RM'000 RM'000 RM'000

ASSETS

Cash and short-term funds (ii) 506,871 506,870 704,124 704,121 Securities held-for-trading (iii) 459,712 459,712 407,673 407,673 Securities available-for-sale (iv) - - 17,596 - Securities held-to-maturity (v) 32,373 - 35,092 - Financing, advances and other loans (vi) 18,848 18,848 33,649 33,649 Statutory deposit with Bank Negara Malaysia 14,500 14,500 14,500 14,500

Other receivables, deposits and prepayments 2,789 2,789 10,348 10,348

Property and equipment (vii) 93 93 31 31 Deferred tax assets (ix) 82 82 158 158 Intangible assets (viii) 3 3 2 2 TOTAL ASSETS 1,035,271 1,002,897 1,223,173 1,170,482

LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers (x) 426,268 424,785 424,870 423,843 Deposits and placements of banks and other financial institutions (xi) 279,281 255,159 489,074 455,897

Converted fund (xii) 2,160 - 14,197 - Other liabilities (xiii) 12,074 11,834 12,117 11,968 Total Liabilities 719,783 691,778 940,258 891,708

ISLAMIC BANKING FUNDSCapital funds (xiv) 102,839 100,000 102,839 100,000 Reserves 212,649 211,119 180,076 178,774 Islamic Banking Funds 315,488 311,119 282,915 278,774

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,035,271 1,002,897 1,223,173 1,170,482

COMMITMENTS AND CONTINGENCIES (xxi) 1,846,587 1,846,587 3,401,236 3,401,236

The accompanying notes form an integral part of the Islamic banking business financial statements.

2008 2007

The state of affairs as at 31 March 2008 and the results for the financial year ended 31 March 2008 of theIslamic banking business of the Group and included in the financial statements, after elimination ofintercompany transactions and balances, are summarised as follows:



Company No: 23742-V

INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 MARCH 2008

Note Group Bank Group BankRM'000 RM'000 RM'000 RM'000

Income derived from investment ofdepositors' funds and others (xv) 27,827 25,601 32,347 28,187

Allowance for losses on financing (xvi) 1,604 1,604 (9,258) (9,258)Transfer (to)/from profit equalisation reserve (109) - 25 181 Total attributable income 29,322 27,205 23,114 19,110 Income attributable to the depositors (xvii) (25,881) (24,102) (26,820) (23,335)Loss attributable to the Group and the Bank 3,441 3,103 (3,706) (4,225) Income derived from investment of Islamic banking funds (xviii) 40,531 40,251 42,695 42,400

Total net income 43,972 43,354 38,989 38,175 Other operating expenses (xix) (4,353) (4,353) (3,970) (3,970)Profit before taxation 39,619 39,001 35,019 34,205 Taxation (xx) (6,656) (6,656) (8,937) (8,937)Profit after taxation 32,963 32,345 26,082 25,268


2008 2007



Company No: 23742-V

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2008

DistributableCapital Available-for-sale Exchange Unappropriated

Funds reserve fluctuation reserve Profit TotalRM'000 RM'000 RM'000 RM'000 RM'000

Group

At 1 April 2006As previously stated 102,839 81 (9) 154,285 257,196 Net unrealised loss on revaluation of securities available-for-sale - (29) - - (29) Translation adjustments - - (334) - (334) Profit for the year - - - 26,082 26,082

At 31 March 2007 102,839 52 (343) 180,367 282,915

At 1 April 2007 102,839 52 (343) 180,367 282,915 Translation adjustments - - (390) - (390) Profit for the year - - - 32,963 32,963

At 31 March 2008 102,839 52 (733) 213,330 315,488

Non-Distributable



Company No: 23742-V

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 MARCH 2008

DistributableCapital Unappropriated

Funds Profit TotalRM'000 RM'000 RM'000

Bank

At 1 April 2006As previously stated 100,000 153,506 253,506 Prior year adjustments - - -

At 1 April 2006 (restated) 100,000 153,506 253,506 Profit for the year - 25,268 25,268

At 31 March 2007 100,000 178,774 278,774

At 1 April 2007 100,000 178,774 278,774 Profit for the year - 32,345 32,345

At 31 March 2008 100,000 211,119 311,119




Company No: 23742-V

CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2008


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 39,619 39,001 35,019 34,205 Add/(Less) adjustments for: Depreciation of property and equipment 13 13 12 12 (Reversal of specific allwance)/Specific allowance for bad and doubtful financing (348) (348) 9,870 9,870 Transfer from profit equalisation reserve (109) - (25) (181) Gain on revaluation of securities held-for-trading (284) (284) (561) (561) Reversal of general allowance for bad and doubtful financing (226) (226) (612) (612) Net gain on sale of securities held-for-trading (22,493) (22,493) (23,793) (23,793) Operating profit before working capital changes 16,172 15,663 19,910 18,940 (Increase)/Decrease in operating assets: Financing activities 15,376 15,376 30,946 30,946 Other receivables, deposits and prepayments 7,557 7,557 (843) (843) Securities held-for-trading (29,262) (29,262) (96,494) (96,494) Increase/(Decrease) in operating liabilities: Deposits from customers 1,397 941 177,333 176,306 Deposits and placements of banks and other financial institutions (209,793) (200,737) 214,799 181,622 Converted fund (12,037) - (57,113) - Other liabilities 2,148 2,337 (35,310) (34,969) Cash generated from/(used in) operations (208,442) (188,125) 253,228 275,508 Taxation paid (9,051) (9,051) (16,339) (16,339) Net cash generated from/(used in) operating activities (217,493) (197,176) 236,889 259,169

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of securities 20,315 - 22,283 - Purchase of property and equipment (75) (75) (19) (19) Net cash used in investing activities 20,240 (75) 22,264 (19)

Net increase in cash and cash equivalents (197,253) (197,251) 259,153 259,150 Cash and cash equivalents at beginning of year 704,124 704,121 444,971 444,971 Cash and cash equivalents at end of year 506,871 506,870 704,124 704,121


2008 2007



Company No: 23742-V

NOTES TO THE ISLAMIC BANKING BUSINESS FINANCIAL STATEMENTS

(i) ISLAMIC BANKING BUSINESS

Disclosure of Shariah Advisor

(a)

(b)

Zakat obligations

The Group and Bank does not pay zakat on behalf of the shareholder or depositors.

(ii) CASH AND SHORT TERM FUNDS


Cash and bank balances 221 220 234 231 Money on call and deposits maturing within one month:Licensed banks 106,650 106,650 30,000 30,000 Other banks 400,000 400,000 673,890 673,890

506,871 506,870 704,124 704,121

2008 2007

The Group and Bank’s Islamic banking activities are subject to conformity with Shariah requirements andconfirmation by the Shariah Advisor, Dr Amir Husin Mohd Nor, En. Adnan Yusoff and Professor MadyaDr. Noor Naemah Abdul Rahman. The role and authority of the Shariah Advisor are as follows:

Advise and provide guidance on all matters pertaining to Shariah principles including productdevelopment, marketing and implementation activities.

Assist in the setting up of business and operational procedures with respect to compliance with Shariahprinciples.



Company No: 23742-V

(iii) SECURITIES HELD-FOR-TRADING


At Fair ValueMoney Market SecuritiesTreasury bills 43,681 43,681 - - Cagamas bonds 2,091 2,091 1,226 1,226 Khazanah bonds 13,502 13,502 4,727 4,727 Negotiable Islamic Debt Certificates 313,741 313,741 60,081 60,081 Malaysian Government Investment Certificates - - 304,500 304,500

373,015 373,015 370,534 370,534

Unquoted Private Debt Securities of Companies Incorporated In Malaysia Islamic corporate bonds 86,697 86,697 37,139 37,139

459,712 459,712 407,673 407,673

(iv) SECURITIES AVAILABLE-FOR-SALE


At Fair ValueQuoted Securities In Malaysia Corporate bonds - - 17,596 -

(v) SECURITIES HELD-TO-MATURITY


At Amortised Cost Quoted Securities: In Malaysia: Corporate bonds 25,963 - 35,092 - Outside Malaysia Corporate bonds 6,410 - - -

32,373 - 35,092 -

Market/Indicative Value :Quoted Securities In Malaysia Corporate bonds 31,764 - 35,127 -

2008 2007

2008 2007

2008 2007



Company No: 23742-V

(vi) FINANCING ACTIVITIES


Term financing Syndicated financing 19,374 19,374 19,730 19,730 Other term financing 4 4 15,026 15,026 Revolving credit 22,946 22,946 22,943 22,943 Gross financing 42,324 42,324 57,699 57,699

Less: General allowance for bad and doubtful financing 287 287 513 513 Specific allowance for bad and doubtful financing 23,189 23,189 23,537 23,537

23,476 23,476 24,050 24,050

Net financing 18,848 18,848 33,649 33,649

Financing analysed by concepts are as follows:

Bai Bithaman Ajil 19,378 19,378 34,756 34,756 Murabahah 19,132 19,132 19,135 19,135 Wujuh 3,814 3,814 3,808 3,808

42,324 42,324 57,699 57,699

The maturity structure of financing are as follows:

Maturing within one year 18,323 18,323 18,112 18,112 One year to three years 24,001 24,001 24,583 24,583 Three to five years - - 15,004 15,004

42,324 42,324 57,699 57,699

Financing analysed by type of customers are as follows:

Business enterprises 42,324 42,324 57,699 57,699

Financing analysed by profit rate sensitivity are as follows:

Fixed rateTerm loans 23,192 23,192 38,564 38,564

Variable rateCost-plus 19,132 19,132 19,135 19,135

42,324 42,324 57,699 57,699

2008 2007



Company No: 23742-V

(vi) FINANCING ACTIVITIES (CONTD.)


Gross financing, advances and other loans analysed by their econimic purposes are as follows:

Purchase of landed non-residential properties 3,818 3,818 3,830 3,830 Working capital 19,132 19,132 34,139 34,139 Construction 19,374 19,374 19,730 19,730

42,324 42,324 57,699 57,699

Movements in non-performing financing are as follows:

Gross Balance at beginning of year 23,537 23,537 39,920 39,920 Non-performing during the year 37 37 50 50 Recoveries (385) (385) (330) (330) Amount written-off - - (16,103) (16,103) Balance at end of year 23,189 23,189 23,537 23,537 Specific allowance (23,189) (23,189) (23,537) (23,537) Net non-performing financing - - - -

Net NPL as % of gross financing less specific allowance - - - -

Non-performing financing analysed by their economic purposes are as follows:

Purchase of landed non-residential prope 3,815 3,815 3,808 3,808 Construction 19,374 19,374 19,729 19,729

23,189 23,189 23,537 23,537

Movements in allowances for bad and doubtful financing are as follows:

General Allowance Balance at beginning of year 513 513 1,125 1,125 Reversal of allowance during the year (226) (226) (612) (612) Balance at end of year 287 287 513 513

% of total financing less specific allowance 1.50% 1.50% 1.50% 1.50%

Specific Allowance Balance at beginning of year 23,537 23,537 29,911 29,911 Allowance made during the year (348) (348) 9,870 9,870 Amount written off - - (16,244) (16,244) Balance at end of year 23,189 23,189 23,537 23,537

2008 2007



Company No: 23742-V

(vii) PROPERTY AND EQUIPMENT

Officeequipment,

Leasehold Computer furniture andGroup improvements hardware fittings Total

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

COST

Balance at beginning of year 39 51 118 208 Additions 30 13 32 75 At end of year 69 64 150 283


39 37 101 177 Additions 3 7 3 13 At end of year 42 44 104 190

NET BOOK VALUE

As at 31 March 2008 27 20 46 93

COST

Balance at beginning of year 39 66 106 211 Additions - - 12 12 Reclassification/Transfer - (15) - (15) At end of year 39 51 118 208


38 43 98 179 Additions 1 3 3 7 Reclassification/Transfer - (9) - (9) At end of year 39 37 101 177

NET BOOK VALUE

As at 31 March 2007 - 14 17 31

2008

Balance at beginning of year

2007




Company No: 23742-V

(vii) PROPERTY AND EQUIPMENT (CONTD.)

Officeequipment,

Leasehold Computer furniture andBank improvements hardware fittings Total

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

COST

Balance at beginning of year 39 51 118 208 Additions 30 13 32 75 At end of year 69 64 150 283


39 37 101 177 Additions 3 7 3 13 At end of year 42 44 104 190

NET BOOK VALUE

As at 31 March 2008 27 20 46 93

COST

Balance at beginning of year 39 66 106 211 Additions - - 12 12 Reclassification/Transfer - (15) - (15) At end of year 39 51 118 208


38 43 98 179 Additions 1 3 3 7 Reclassification/Transfer - (9) - (9) At end of year 39 37 101 177

NET BOOK VALUE

As at 31 March 2007 - 14 17 31

2008


2007




Company No: 23742-V

(viii) INTANGIBLE ASSETS

Computer SoftwareGroup Bank Group BankRM'000 RM'000 RM'000 RM'000

COST

At beginning of year 8 8 - - Additions 2 2 8 8 At end of year 10 10 8 8


At beginning of year 5 5 - - Additions 1 1 5 5 At end of year 6 6 5 5

NET CARRYING AMOUNT 3 3 2 2

(ix) DEFERRED TAX ASSETS


Balance at beginning of year 158 158 44 44 Net transfer (to)/from income statement (Note xx) (76) (76) 114 114 Balance at end of year 82 82 158 158

The deferred taxation is in respect of the following:

General allowance for financing activites 72 72 138 138 Profit equalisation reserve 24 24 26 26 Temporary difference between depreciation and tax allowance (14) (14) (6) (6)

82 82 158 158

(x) DEPOSITS FROM CUSTOMERS


Mudarabah Fund Mudarabah Special Investment deposits 426,268 424,785 424,870 423,843

The maturity structure of term/investment deposits is as follows:


Due within six months 412,039 410,556 329,132 328,105 Six months to one year 14,229 14,229 95,738 95,738

426,268 424,785 424,870 423,843

2008 2007

2008 2007

2008 2007

2008 2007



Company No: 23742-V

(x) DEPOSITS FROM CUSTOMERS (CONTD.)

The deposits are sourced from the following types of customers:


Business enterprises 239,205 238,243 184,058 183,031 Others 187,063 186,542 240,812 240,812

426,268 424,785 424,870 423,843

(xi) DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS


Mudarabah Fund Licensed banks - - 9,100 9,100 Licensed Islamic banks 50,000 50,000 280,000 280,000 Other financial institutions 229,281 205,159 199,974 166,797

279,281 255,159 489,074 455,897

(xii) CONVERTED FUND

(xiii) OTHER LIABILITIES


Other payables and accruals 5,053 5,053 2,784 2,784 Amount owing to head office 68 68 - - Taxation and zakat payable 6,618 6,618 9,089 9,089 Profit equalisation reserve 335 95 244 95

12,074 11,834 12,117 11,968

The movements in profit equalisation reserve are as follows:


Balance at beginning of year 244 95 276 276 Provision during the year 109 - (25) (181) Amount written back - - - - Transfer from/(to) income statements 109 - (25) (181) Exchange fluctuation adjustments (18) - (7) - Balance at end of year 335 95 244 95

2008 2007

2008 2007

2008 2007

2008 2007

This represent funds transferred from non Islamic banking business to Islamic banking business for fundingpurposes at commercial terms.



Company No: 23742-V

(xiv) CAPITAL FUNDS


Allocated: Balance at beginning and end of year 102,839 100,000 102,839 100,000

Utilised: Balance at beginning and end of year 102,839 100,000 102,839 100,000

(xv) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS


Income derived from investment of: (i) general investment deposits 27,029 25,163 29,319 27,809 (ii) specific investment deposits 360 - 2,650 - (iii) others 438 438 378 378

27,827 25,601 32,347 28,187

(i) Income derived from investment of general investment deposits


Finance income and hibah: Financing activities 1,334 1,334 2,719 2,719 Securities held-for-trading 5,343 5,343 4,390 4,390 Securities available-for-sale 162 - 421 - Securities held-to-maturity 1,704 - 1,089 - Money at call and deposits with financial institutions 18,293 18,293 20,279 20,279

26,836 24,970 28,898 27,388 Gain on revaluation of securities-held-for-trading 193 193 421 421

27,029 25,163 29,319 27,809

2008 2007

2008 2007

2008 2007



Company No: 23742-V

(xv) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS (CONTD.)

(ii) Income derived from investment of specific investment deposits


Finance income and hibah: Securities available-for-sale 95 - 652 - Securities held-to-maturity 265 - 1,998 -

360 - 2,650 -

(iii) Income derived from investment of other deposits


Finance income and hibah: Financing activities 23 23 37 37 Securities held-for-trading 93 93 60 60 Money at call and deposits with financial institutions 319 319 275 275

435 435 372 372 Gain on revaluation of securities-held-for-trading 3 3 6 6

438 438 378 378

(xvi) ALLOWANCE FOR LOSSES ON FINANCING


(Reversal of allowance)/Allowance for bad and doubtful financing: - general allowance (226) (226) (612) (612) - specific allowance (net) (348) (348) 9,870 9,870 Bad debts written off 1,030 1,030 - -

(1,604) (1,604) 9,258 9,258

(xvii) INCOME ATTRIBUTABLE TO THE DEPOSITORS

Deposits from customers - Mudarabah Fund 1,465 1,423 880 850 Deposits and placements of banks and other financial institutions - Mudarabah Fund 24,113 22,679 23,676 22,485 Converted fund 303 - 2,264 -

25,881 24,102 26,820 23,335

2008 2007

2008 2007

2008 2007



Company No: 23742-V

(xviii) INCOME DERIVED FROM INVESTMENT OF ISLAMIC BANKING FUNDS


Finance income and hibah: Financing activities 509 509 418 418 Securities held-for-trading 2,445 2,445 1,391 1,391 Securities available-for-sale 23 - 70 - Securities held-to-maturity 257 - 188 - Money at call and deposits with financial institution 8,370 8,370 6,426 6,426

11,604 11,324 8,493 8,235

Net gain from sale of securities held-for-trading 22,493 22,493 23,793 23,793 Gain on revaluation of securities-held-for-trading 88 88 134 134

22,581 22,581 23,927 23,927 Fee and commission income Guarantee fees 1,437 1,437 3,058 3,058 Other fee income 4,909 4,909 7,217 7,180

6,346 6,346 10,275 10,238 Total 40,531 40,251 42,695 42,400

(xix) OTHER OPERATING EXPENSES


Personnel costs 2,709 2,709 2,584 2,584 Establishment costs 159 159 76 76 Marketing and communication expenses 309 309 282 282 Administration and general expenses 1,176 1,176 1,028 1,028

4,353 4,353 3,970 3,970

(xx) TAXATION


Estimated current tax payable 6,580 6,580 9,051 9,051 Transfer from/(to) deferred tax assets 76 76 (114) (114) Total 6,656 6,656 8,937 8,937

2008 2007

2008 2007

2008 2007



Company No: 23742-V

(xxi) COMMITMENTS AND CONTINGENCIES

Credit Risk Credit Risk Principal Equivalent Weighted Principal Equivalent Weighted

Group and Bank Amount Amount Amount Amount Amount AmountRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

CommitmentsIrrevocable commitments

to extend credit maturing within one year 75,000 - - 75,000 - -

Sell and buy back agreements 1,216,782 1,216,782 879,744 2,801,157 2,801,157 1,397,343 1,291,782 1,216,782 879,744 2,876,157 2,801,157 1,397,343

Contingent LiabilitiesIslamic revolving underwriting facilities 337,000 168,500 168,500 315,000 157,500 157,500 Certain transaction-related contingent items 4,496 2,248 2,248 4,217 2,109 2,109 Al-Kafalah guarantees 213,309 213,309 189,145 205,862 205,862 102,931

554,805 384,057 359,893 525,079 365,471 262,540 1,846,587 1,600,839 1,239,637 3,401,236 3,166,628 1,659,883

2008 2007

In the normal course of business, the Islamic banking business of the Group and the Bank make various commitments and incur certaincontingent liabilities with legal recourse to its customers. No material losses are anticipated as a result of these transactions. The commitmentsand contingencies are not secured against the Group’s assets.

As at 31 March 2008, the commitments and contingencies outstanding are as follows:



Company No: 23742-V

(xxii)YIELD/PROFIT RATE RISK

EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit Trading profit

month months months months years years sensitive Book Total rate2008 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %ASSETSCash and short-term funds 506,650 - - - - - 221 - 506,871 3.56 Securities held-for-trading - - - - - - - 459,712 459,712 4.29 Securities held-to-maturity - 32,373 - - - - - - 32,373 5.68 Financing activities - - performing 4 - 19,132 - - - - - 19,136 9.08 - non-performing* - - - - - (288) - (288) - Other non-profit sensitive balances - - - - - - 17,467 - 17,467 - TOTAL ASSETS 506,654 32,373 19,132 - - - 17,400 459,712 1,035,271

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 274,674 69,257 68,108 14,229 - - - - 426,268 3.45 Deposits and placements of banks and other financial institutions 107,314 48,658 24,840 13,646 84,823 - - - 279,281 3.62 Converted fund 2,160 - - - - - - - 2,160 3.34Other non-profit sensitive balances - - - - - - 12,074 - 12,074 - Total liabilities 384,148 117,915 92,948 27,875 84,823 12,074 - 719,783 Islamic Banking Funds - - - - - - 315,488 - 315,488 TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 384,148 117,915 92,948 27,875 84,823 - 327,562 - 1,035,271

On-balance sheet yield/profit rate gap sensitivity 122,506 (85,542) (73,816) (27,875) (84,823) - (310,162) 459,712 -

Off-balance sheet yiled/profit rate gapsensitivity (940,401) (217,662) 51,098 3,421 845,385 258,159 - - -

Total yield/profit rate sensitivity gap (817,895) (303,204) (22,718) (24,454) 760,562 258,159 (310,162) 459,712 - Cumulative yield/profit rate gap

sensitivity (817,895) (1,121,099) (1,143,817) (1,168,271) (407,709) (149,550) (459,712)

<----------------------------------------Non-trading book -------------------------------------->The following table shows the effective profit rates at the balance sheet date and the periods in which the financial instruments reprice or mature, whichever is earlier



Company No: 23742-V

(xxii)YIELD/PROFIT RATE RISK (CONTD.)Effective

Group Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit Trading profitmonth months months months years years sensitive Book Total rate

2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %ASSETSCash and short-term funds 703,890 - - - - - 234 - 704,124 3.56 Securities held-for-trading - - - - - - - 407,673 407,673 3.70 Securities available-for-sale - - 17,329 - - - 267 - 17,596 6.32 Securities held-to-maturity - 34,560 - - - - 532 - 35,092 6.64 Financing activities - performing 26 - 19,136 - 14,487 - - - 33,649 7.96 Other non-profit sensitive balances - - - - - - 25,039 - 25,039 - TOTAL ASSETS 703,916 34,560 36,465 - 14,487 - 26,072 407,673 1,223,173

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 183,892 116,931 28,418 95,629 - - - - 424,870 3.54Deposits and placements of banks and other financial institutions 341,886 96,814 7,373 5,904 37,097 - - - 489,074 3.78Converted fund 14,197 - - - - - - - 14,197 - Other non-profit sensitive balances - - - - - - 12,117 - 12,117 - Total liabilities 539,975 213,745 35,791 101,533 37,097 - 12,117 - 940,258 Islamic Banking Funds - - - - - - 282,915 - 282,915 TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 539,975 213,745 35,791 101,533 37,097 - 295,032 - 1,223,173

On-balance sheet yield/profit rate gap sensitivity 163,941 (179,185) 674 (101,533) (22,610) - (268,960) 407,673 -

Off-balance sheet yiled/profit rate gap sensitivity (2,171,170) (266,276) (474,307) 386,150 2,147,863 377,740 - - -

Total yield/profit rate gap sensitivity (2,007,229) (445,461) (473,633) 284,617 2,125,253 377,740 (268,960) 407,673 - Cumulative yield/profit rate gap

sensitivity (2,007,229) (2,452,690) (2,926,323) (2,641,706) (516,453) (138,713) (407,673)

<----------------------------------------Non-trading book -------------------------------------->

* This is arrived at after deducting the general allowance and specific allowance from gross non-performing financing outstanding.



Company No: 23742-V

(xxii)YIELD/PROFIT RATE RISK (CONTD.)

EffectiveBank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit Trading profit

month months months months years years sensitive Book Total rate2008 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %ASSETSCash and short-term funds 506,650 - - - - - 220 - 506,870 3.56 Securities held-for-trading - - - - - - - 459,712 459,712 4.29 Financing activities - performing 4 - 19,132 - - - - - 19,136 9.08 - non-performing* - - - - - (288) - (288) - Other non-profit sensitive balances - - - - - - 17,467 - 17,467 - TOTAL ASSETS 506,654 - 19,132 - - - 17,399 459,712 1,002,897

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 273,191 69,257 68,108 14,229 - - - - 424,785 3.45Deposits and placements of banks and

other financial institutions 107,314 24,536 24,840 13,646 84,823 - - - 255,159 3.71Other non-profit sensitive balances - - - - - - 11,834 - 11,834 - Total liabilities 380,505 93,793 92,948 27,875 84,823 11,834 - 691,778 Islamic Banking Funds - - - - - - 311,119 - 311,119 TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 380,505 93,793 92,948 27,875 84,823 - 322,953 - 1,002,897 On-balance sheet yield/profit rate gap

sensitivity 126,149 (93,793) (73,816) (27,875) (84,823) - (305,554) 459,712 - Off-balance sheet yiled/profit rate gap

sensitivity (940,401) (217,662) 51,098 3,421 845,385 258,159 - - - Total yield/profit rate sensitivity gap (814,252) (311,455) (22,718) (24,454) 760,562 258,159 (305,554) 459,712 - Cumulative yield/profit rate gap

sensitivity (814,252) (1,125,707) (1,148,425) (1,172,879) (412,317) (154,158) (459,712)

<----------------------------------------Non-trading book -------------------------------------->



Company No: 23742-V

(xxii)YIELD/PROFIT RATE RISK (CONTD.)

EffectiveBank Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit Trading profit

month months months months years years sensitive Book Total rate2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %ASSETSCash and short-term funds 703,890 - - - - - 231 704,121 3.56 Securities held-for-trading - - - - - - - 407,673 407,673 3.70 Financing activities - performing 26 - 19,136 - 14,487 - - - 33,649 7.96 Other non-profit sensitive balances - - - - - - 25,039 - 25,039 - TOTAL ASSETS 703,916 - 19,136 - 14,487 - 25,270 407,673 1,170,482

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 182,866 116,931 28,418 95,628 - - - - 423,843 3.54Deposits and placements of banks and other financial institutions 337,723 67,800 7,373 5,904 37,097 - - - 455,897 3.60Converted fund - - - - - - - - - - Other non-profit sensitive balances - - - - - - 11,968 - 11,968 - Total liabilities 520,589 184,731 35,791 101,532 37,097 11,968 - 891,708 Islamic Banking Funds - - - - - - 278,774 - 278,774 TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 520,589 184,731 35,791 101,532 37,097 - 290,742 - 1,170,482 On-balance sheet yield/profit rate gap

sensitivity 183,327 (184,731) (16,655) (101,532) (22,610) - (265,472) 407,673 - Off-balance sheet yiled/profit rate gap

sensitivity (2,171,170) (266,276) (474,307) 386,150 2,147,863 377,740 - - - Total yield/profit rate sensitivity gap (1,987,843) (451,007) (490,962) 284,618 2,125,253 377,740 (265,472) 407,673 - Cumulative yield/profit rate gap

sensitivity (1,987,843) (2,438,850) (2,929,812) (2,645,194) (519,941) (142,201) (407,673)

<----------------------------------------Non-trading book -------------------------------------->

* This is arrived at after deducting the general allowance and specific allowance from gross non-performing financing outstanding.



Company No: 23742-V

(xxiii) FAIR VALUE OF ISLAMIC BANKING BUSINESS FINANCIAL INSTRUMENTS

The estimated fair values of the Group’s Islamic banking business financial instruments are as follows:

Carrying Fair Carrying Fair2008 Value Value Value Value

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

Financial AssetsCash and short-term funds 506,871 506,871 506,870 506,870 Securities held-for-trading 459,712 459,712 459,712 459,712 Securities available-for-sale - - - - Securities held-to-maturity 32,373 32,197 - - Financing activities* 18,848 18,848 18,848 18,848 Other financial assets 14,500 14,500 14,500 14,500

1,032,304 1,032,128 999,930 999,930 Non-financial assets 2,967 2,967 TOTAL ASSETS 1,035,271 1,002,897

Financial LiabilitiesDeposits from customers 426,268 424,791 424,785 424,791 Deposits and placements of banks and other financial institutions 279,281 255,712 255,159 255,712 Converted fund 2,160 2,160 - - Other financial liabilities 5,121 5,121 11,739 11,739

712,830 687,784 691,683 692,242 Non-financial liabilities

Other non-financial liabilities 6,953 95 Islamic Banking Funds 315,488 311,119

322,441 311,214

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,035,271 1,002,897

Group Bank



Company No: 23742-V

(xxiii) FAIR VALUE OF ISLAMIC BANKING BUSINESS FINANCIAL INSTRUMENTS (CONTD.)

Carrying Fair Carrying Fair2007 Value Value Value Value

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

Financial AssetsCash and short-term funds 704,124 704,124 704,121 704,121 Securities held-for-trading 407,673 407,673 407,673 407,673 Securities available-for-sale 17,596 17,596 - - Securities held-to-maturity 35,092 35,127 - - Financing activities* 33,649 33,712 33,649 33,712 Other financial assets 14,500 14,500 14,500 10,335


Financial LiabilitiesDeposits from customers 424,870 424,116 423,843 424,116 Deposits and placements of banks and other financial institutions 489,074 456,852 455,897 456,852 Converted fund 14,197 14,197 - - Other financial liabilities 2,784 2,784 11,873 12,354

930,925 897,949 891,613 893,322 Non-financial liabilities

Other non-financial liabilities 9,333 95 Islamic Banking Funds 282,915 278,774

292,248 278,869

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,223,173 1,170,482

*

Group Bank

The general allowance for the Group and the Bank amounting to RM287,000 (RM513,000 in 2007)has been included under non-financial assets.



Company No: 23742-V

(xxiv) NET INCOME FROM ISLAMIC BANKING BUSINESS


Income derived from investment of depositors' funds 27,827 25,601 32,347 28,187

Less : Income attributable to depositors (25,881) (24,102) (26,820) (23,335) Income attributable to the Group and the Bank 1,946 1,499 5,527 4,852 Income derived from Islamic banking funds 40,531 40,251 42,695 42,400

42,477 41,750 48,222 47,252

(xxv) CAPITAL ADEQUACY RATIO

(i)


Tier 1 capital Islamic Banking Funds 102,839 102,839 102,839 100,000 Exchange fluctuation reserve (733) (733) (343) - Unappropriated profit at end of year 213,330 213,330 180,367 178,774

Total tier 1 capital 315,436 315,436 282,863 278,774

Less : Deferred tax asset, net (82) (82) (158) (158) 315,354 315,354 282,705 278,616

Tier 2 capital General allowance for bad and doubtful financing 287 287 513 513

Total tier 2 capital 287 287 513 513

Capital base 315,641 315,641 283,218 279,129

Capital Ratios: Core capital ratio 25.18% 25.18% 18.58% 18.46% Risk-weighted capital ratio 25.21% 25.21% 18.61% 18.49%

(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

2008 2007

2008 2007

For consolidation with the conventional operations, income from Islamic banking business comprises thefollowing items:

The capital adequacy ratio of the Islamic Banking Business as at 31 March 2008 is analysedas follows:

Risk- Risk- Risk- Risk-Principal Weighted Principal Weighted Principal Weighted Principal Weighted


0% 401,165 401,165 670,729 - 653,133 - 10% - - - - 6 1 6 120% 108,967 21,793 108,967 21,793 95,334 19,067 67,189 13,43850% 2,319 1,160 2,319 1,160 205,861 102,931 205,861 102,931

100% 274,248 274,248 274,248 274,248 51,554 51,554 44,607 44,607150% 4 6 4 6 - - - -

786,703 297,207 786,703 297,207 1,023,484 173,553 970,796 160,977 Add : Total equivalent to

market risk 864,143 864,143 1,348,400 1,348,400 Operational Risk 90,890 90,890 - -

1,252,240 1,252,240 1,521,953 1,509,377

BankGroup2008

Group2007

Bank

With effect from 1 January 2008, the capital adequacy ratios of the Group and the Bank are computed inaccordance with Bank Negara Malaysia's revised Risk-weighted Capital Adequacy Framework:Standardised Approach for Credit Risk and Market Risk, and Basic Indicator Approach for OperationalRisk (Basel II).



a m i nvestment b ank b erhad (incorporated in malaysia ... · 3/31/2008 · business franchise...

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