001

CONTENTS
Five Year Group Financial Highlights .........................
Simplied Group Statements of
Financial Position ......................... 002
Key Interest Bearing Assets
and Liabilities ......................... 003
Value Added Statements ......................... 004
Quarterly Financial Performance ......................... 005
Analysis of Financial Statements ......................... 006
Capital Management ......................... 008
Financial Calendar 2013 ......................... 010
Statement of Directors
Responsibilities ......................... 011
Directors Report ......................... 012
Statement by Directors ......................... 022
Statutory Declaration ......................... 022
Board Shariah Committees Report ......................... 023
Independent Auditors Report ......................... 026
Consolidated Statements of
Financial Position ......................... 028
Consolidated Statements of Income ......................... 030
Consolidated Statements of
Comprehensive Income ......................... 031
Company Statements of
Financial Position ......................... 032
Company Statements of Income ......................... 033
Company Statements
of Comprehensive Income ......................... 033
Consolidated Statements
of Changes in Equity ......................... 034
Consolidated Statements
of Changes in Equity ......................... 036
Company Statements of
Changes in Equity ......................... 038
Consolidated Statements of
Cash Flows ......................... 039
Company Statements of Cash Flows ......................... 042
Summary of Signicant Group
Accounting Policies ......................... 044
Notes the Financial Statements ......................... 070
Basel II Pillar 3 Disclosure ......................... 358
 INTO A NEW ERA

Five Year Group 001

Financial Highlights
Financial Year Ended 31 December
MFRS Framework FRS Framework
2013 2012* 2011** 2010** 2009**
Key Highlights RM000 RM000 RM000 RM000 RM000

Consolidated Statement of Income

Operating income 14,671,835 13,494,825 12,122,029 11,878,203 10,483,151
Overheads 8,457,870 7,612,099 6,629,912 6,613,304 5,551,847
Prot before allowances 6,213,965 5,882,726 5,492,117 5,264,899 4,931,304
Allowance for impairment losses on loans, advances and
nancing 660,607 329,098 487,343 607,176 1,022,605
Prot before taxation 5,849,229 5,677,893^ 5,203,142 4,626,717 3,791,293
Net prot for the nancial year 4,540,403 4,344,776 4,030,798 3,500,803 2,786,232
Consolidated Statement of Financial Position
Gross loans, advances and nancing 234,557,542 208,343,039 191,393,201 167,479,371 148,878,514
Total assets 370,912,797 336,461,160 299,737,840 269,018,947 239,781,199
Deposits from customers ^^ 265,408,979 247,295,039 221,933,142 199,845,664 178,882,336
Total liabilities 339,684,237 307,194,841 272,874,680 244,715,748 217,134,485
Shareholders' funds 30,271,098 28,292,994 25,936,470 23,229,966 20,345,014
Commitments and contingencies 522,489,461 460,550,153 414,197,407 349,069,257 322,892,443
Financial Ratios (%)
Common equity tier 1 ratio (CIMB Bank) # 9.6 n/a n/a n/a n/a
Tier 1 ratio (CIMB Bank) # 11.6 n/a n/a n/a n/a
Total capital ratio (CIMB Bank) # 12.9 n/a n/a n/a n/a
Core capital ratio (CIMB Bank) # n/a 12.4 14.5 13.9 14.8
Risk-weighted capital ratio (CIMB Bank) # n/a 15.5 16.8 14.8 15.1
Return on average equity 15.5 16.0 16.4 16.2 14.9
Return on average total assets 1.28 1.37 1.42 1.38 1.25
Net interest margin 2.85 3.07 3.12 3.34 3.28
Cost to income ratio 57.6 56.4 54.7 55.7 53.0
Gross impaired/non-performing loans to gross loans 3.2 3.8 5.1 6.1 5.0
Allowance coverage ratio 84.8 82.8 81.1 81.1 90.8
Loan loss charge 0.28 0.16 0.25 0.36 0.69
Loan deposit ratio 88.4 84.2 86.2 83.8 83.2
Net tangible assets per share (RM) 2.67 2.47 2.15 1.81 3.09
Book value per share (RM) 3.92 3.81 3.49 3.13 5.76
CASA ratio 34.2 34.7 34.2 32.7 31.7
Other Information
Earnings per share (sen)
basic 60.0 58.5 54.2 48.7 39.5
Gross dividend per share (sen) 23.15^^^ 23.38 22.00 26.08 18.50
Dividend payout ratio (%) 40 40 41 55 23
Number of shares in issue (000) 7,729,346 7,432,775 7,432,775 7,432,775 3,531,766
Weighted average number of shares in issue (000) 7,570,924 7,432,772 7,432,772 7,186,034 7,059,934
Non Financial Highlights
Share price at year-end (RM) 7.62 7.63 7.44 8.50 12.84
Number of employees 40,804 41,993 40,244 36,984 35,922
For nancial year 2013, CIMB Banks capital adequacy ratios is based on revised guideline on capital adequacy framework issued by BNM on 28 November 2012, which took effect beginning 1 January
2013. The revised guideline is in compliance with BASEL III. The comparative capital adequacy ratios were based on capital adequacy framework which was in compliance with Basel II

* The comparatives have been restated to reect the adoption of MFRS 10, MFRS 11 and MFRS 119
** The comparatives are before adoption of MFRS 1
^ Prot before taxation is inclusive of discontinuing operations
^^ Include structured investments classied as Financial liabilities designated as fair value
^^^ Based on the enlarged 8,229,341,531 ordinary shares, arising from the issuance of 500 million new ordinary shares pursuant to the private placement exercise completed in January 2014
# The capital ratio computed has not taken into account the effect of reinvestment of excess cash into CIMB Bank, pursuant to DRS implementation by CIMBGH on the proposed second interim
dividend for nancial year ended 31 December 2013/31 December 2012
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

002 Simplied Group Statements of

Financial Position
Assets

2013 2012
12.3% 12.3% Cash and balances with
banks and reverse
repurchase agreements
17.7% 20.1% Portfolio of nancial
investments

2013 2012
61.6% 60.1% Loans, advances and
nancing
1.7% 1.6% Statutory deposits with
central banks
6.7% 6.0% Other assets (including
intangible assets)

Liabilities & Equity

2013 2012
70.9% 73.5% Deposits from customers
5.6% 4.6% Deposits from banks
7.7% 6.0% Bills and acceptances
payable and other
liabilities

2013 2012
7.4% 7.2% Debt securities issued
and other borrowed funds
2.1% 2.2% Share capital
6.1% 6.2% Reserves
0.1% 0.1% Preference shares
0.2% 0.2% Non-controlling interests
 INTO A NEW ERA

Key Interest Bearing Assets 003

and Liabilities
FY13
Interest
Effective income/
As at 31 Dec interest rate expense
RM million RM million % RM million

Interest earning assets:

Cash and short-term funds & deposits and placements with banks and
other nancial institutions 37,468 2.08 875
Financial assets held for trading 23,403 2.58 635
Financial investments available-for-sale 30,334 3.92 1,203
Financial investments held-to-maturity 10,821 4.32 388
Loans, advances and nancing 228,432 6.42 13,721

Interest bearing liabilities:

Deposits from customers and nancial liabilities designated at fair value 265,136 2.30 6,127
Deposits and placements of banks and other nancial institutions 20,728 1.77 251
Bonds, debentures and other borrowings 15,263 3.79 507
Subordinated notes 12,067 4.98 625

FY12
Interest
Effective income/
As at 31 Dec interest rate expense
RM million RM million % RM million

Interest earning assets:

Cash and short-term funds & deposits and placements with banks and
other nancial institutions 35,750 1.92 818
Financial assets held for trading 25,383 2.61 621
Financial investments available-for-sale 29,208 3.92 967
Financial investments held-to-maturity 8,985 4.70 485
Loans, advances and nancing 202,138 6.49 12,780

Interest bearing liabilities:

Deposits from customers and nancial liabilities designated at fair value 247,295 2.27 5,733
Deposits and placements of banks and other nancial institutions 15,523 2.19 233
Bonds, debentures and other borrowings 11,491 3.48 350
Subordinated notes 12,660 4.96 594
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

004 Value Added Statements

2013 2012
RM000 RM000
Value added
Net interest income 7,954,146 7,395,880
Income from Islamic banking operations 1,592,863 1,689,343

2013 Non-interest income

Overheads excluding personnel costs and depreciation
Allowances for impairment losses on loans, advances and
5,124,826
(3,145,363)
4,409,602
(2,950,863)

nancing (660,607) (328,044)

Other allowances written back/(made) (65,567) (33,228)
Share of results of jointly controlled entities 55,170 20,366
Share of results of associates 306,268 137,127
Value added available for distribution 11,161,736 10,340,183

Distribution of Value Added

To employees:
Personnel costs 3,517,935 3,321,563
To the Government:
Taxation 1,240,407 1,281,086

2012 To providers of capital:

Dividends paid to shareholders 2,342,495 1,114,916
Minority interest 68,419 52,031
To reinvest to the Group:
Depreciation 343,360 345,663
Retained prot 3,649,120 4,224,924
Value added available for distribution 11,161,736 10,340,183

2013 2012
31.52% 32.12% To Employees:
Personnel costs

11.11% 12.39% To the Government:

Taxation

21.60% 11.29% To Providers of Capital:

Dividends paid to shareholders
Non-controlling interest

35.80% 44.20% To Reinvest to the Group:

Depreciation
Retained prot
 INTO A NEW ERA

Quarterly Financial Performance 005

2013
RM000 Q1 Q2 Q3 Q4

Operating revenue 3,945,320 3,444,227 3,485,070 3,797,218

Net interest income 1,896,624 1,975,551 2,033,643 2,048,328
Net non-interest income 1,670,457 1,084,196 1,071,431 1,298,742
Overheads (2,219,589) (2,042,431) (2,059,290) (2,136,560)
Prot before taxation 1,718,494 1,386,423 1,386,257 1,358,055
Net prot attributable to equity holders of the Company 1,386,178 1,054,267 1,061,691 1,038,267
Earning per share (sen) 18.65 13.98 13.94 13.50
Dividend per share (sen) 12.82 10.33

2012
RM000 Q1 Q2 Q3 Q4

Operating revenue 3,255,553 3,325,606 3,544,376 3,369,290

Net interest income 1,737,678 1,864,760 1,885,666 1,907,776
Net non-interest income 1,141,996 1,008,915 1,195,110 1,063,581
Overheads (1,792,473) (1,846,553) (2,007,095) (1,965,978)
Prot before taxation 1,341,222 1,469,527 1,495,768 1,371,376
Net prot attributable to equity holders of the Company 1,010,667 1,109,688 1,142,823 1,081,598
Earning per share (sen) 13.60 14.93 15.38 14.55
Dividend per share (sen) 5.00 18.38
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

006 Analysis of Financial Statements

ANALYSIS OF STATEMENTS OF INCOME C) Overhead expenses

The Groups total overhead expenses
(RMmil) FY12 FY11 Y-o-Y
stood at RM8.5 billion, an 11.1% Y-o-Y
Net interest income 8,791 7,947 10.6% increase from RM7.6 billion in FY12. The
increase was attributed to a combination of
Non-interest income 4,704 4,175 12.7%
normal business expansion plans, the
Operating income 13,495 12,122 11.3% one-off mutual separation scheme which
Overhead expenses (7,612) (6,630) 14.8% was concluded in 4Q13 and the full-year
PPOP 5,883 5,492 7.1% effect of costs related to the expansion of
the Groups APAC IB businesses. As such,
Loan impairment (329) (487) (32.4%)
the higher overhead expenses were
Other provisions (33) 47 n.a. unsurprisingly driven by a 15.1% rise in
Share of JV / Associates 157 151 4.0% personnel cost, whilst the other
PBT * 5,678 5,203 9.1% signicantly smaller segments witnessed
better restraint establishment (+8.6%),
Net prot 4,345 4,031 7.8%
marketing (+11.2%) and admin & general
EPS (sen) 58.4 54.2 7.7% (+1.6%). The Groups cost to income ratio
rose to 57.6% compared to 56.4% in
* Includes discontinued operations
FY12.

D) Allowance for Provisions and

A) Net interest income B) Non-interest income Impairments
The Groups net interest income (NII) grew Total net non-interest income for the Group Total net impairment allowances for losses
by 6.8% Y-o-Y to RM9.4 billion in FY13 increased by RM577.0 million (12.3% on loans, advances and nancing of
from RM8.8 billion in FY12 predominantly Y-o-Y growth) to RM5.3 billion in FY13. The RM660.6 million in FY13 doubled from the
underpinned by a 12.2% expansion in total improvement was attributed to the RM329.1 million recorded in FY12. This is
credit (gross loans excluding the bad bank, RM515.0 million gain arising from the principally due to much lower base in FY12
AFS and HTM) which was partially offset disposal of the Groups interest in CIMB which had a large amount of loan
by a 22bps decline in NIMs. The overall Aviva during the year. Excluding this, recoveries from the bad bank and a
credit growth was also impacted by the Group non-interest income would have normalisation of loan impairment in FY13.
generally weaker regional currencies versus been weaker Y-o-Y due to: 1) the higher Given this scenario, the Groups total credit
the Ringgit, resulting in lower translated NII. base for the Investment Banking division in charge stood at 0.28% with a gross
Regionally, loans growth was strongest in 2012 which was buoyed by several large impairment ratio of 3.2% in FY13.
Thailand and Singapore, off lower bases, transactions, as well as 2) the upheaval in
and within the commercial and selected global capital markets in mid-2013 which E) Net prots
consumer banking segments. resulted in a slowdown in deal ows and a For the 12-month period in 2013, the
more challenging xed income environment Group posted a net prot of RM4.5 billion,
which translated to a slower performance representing a 4.5% Y-o-Y growth
at the Corporate Banking and Treasury underpinned by the 8.7% expansion in
Markets division. Consumer non-interest revenues, which was partially offset by the
income sustained a strong upward 11.1% increase in overheads and doubling
momentum on the back of increased of impairment allowances during the year.
cross-selling and data mining activity. As a result, the Groups net EPS came in at
60.0 sen compared to 58.5 sen in FY12.
 INTO A NEW ERA

007

SIGNIFICANT MOVEMENT IN STATEMENT OF FINANCIAL POSITION prot or loss, Financial investments

available-for-sale and Financial investments
31 December 31 December held-to-maturity. The increase arose from
2013 2012
an increase in our holdings in money
RM000 RM000
market instruments, private debt securities
Assets and derivative nancial instruments,
Cash and balances with banks and reverse repurchase partially offset by mark-to-market losses for
agreements 45,728,405 41,344,508 some investments.
Portfolio of nancial investments 69,579,284 67,660,061
D) Total Liabilities
Loans, advances and nancing 228,431,705 202,137,818
The Groups total liabilities were 10.6%
Statutory deposits with central banks 6,361,648 5,264,920 higher at RM339.7 billion, representing a
Other assets (including intangible assets) 20,811,755 20,053,853 RM32.5 billion attributed to the continued
Total assets 370,912,797 336,461,160 increase in deposit from customers,
deposits and placement with banks and
other nancial institutions and other
Liabilities liabilities.
Deposits from customers 265,136,472 247,295,039
E) Total Deposits from Customers
Deposits from banks and other nancial institutions 20,727,845 15,522,591
Total Group deposits, inclusive of
Bills and acceptances payable and other liabilities 26,490,229 20,226,340
structured investments recognised under
Debts securities issued and other borrowed funds 27,329,692 24,150,871 nancial liabilities designated at fair value,
Total liabilities 339,684,237 307,194,841 grew by 7.2% Y-o-Y or RM17.8 billion
driven by a 9.5% Y-o-Y (or RM9.7 billion)
^ Inclusive of nancial liabilities designated at fair value
expansion in Corporate and Treasury
deposits. Retail and commercial banking
A) Total Assets Malaysian gross loans. Gross loans from
deposits rose by 5.7% and 6.0%
CIMB Groups total assets increased by Thailand and Singapore expanded by
respectively. Geographically, deposit
RM34.5 billion or 10.2% higher at 23.2% and 69.1% respectively, while
growth was strongest in Singapore at
RM370.9 billion over the 12-month period Indonesia gross loans rose 8.0% in local
36.1% from a relatively low base, while
ended 31 December 2013. The increase currency terms. Corporate gross loans
Malaysian deposits expanded at 5.9%.
was attributed to the 13.0% growth or increased 10.0% while retail gross loans
Indonesia and Thailand deposits grew
RM26.3 billion in loans, advances and and commercial banking gross loans grew
8.4% and 12.6% Y-o-Y respectively. The
nancing, 15.6% or RM5.5 billion 13.3% and 18.5% respectively. The
Groups CASA ratio was lower at 34.2%
expansion in other assets, 2.8% or RM1.9 Groups gross impaired loans ratio saw a
compared to 34.7% last year while overall
billion increase in nancial investments as marked improvement to 3.2% as at
net interest margin was marginally lower at
well as the 9.5% or RM2.9 billion rise in end-2013 compared to 3.8% as at a year
2.85% from 3.07% in FY12.
cash and short term deposit. previously.

F) Deposits and placements of banks and

B) Total Loans, Advances and Financing C) Financial Investments Portfolio
other nancial institutions
(includes derivatives)
The Groups loans, advances and nancing The increase of RM5.2 billion or 33.5%
stood at RM228.4 billion on a net basis as The Financial Investment Portfolio grew by
Y-o-Y in deposits and placements of banks
at end 31 December 2013, representing a a small RM1.9 billion or 2.8% given the
and other nancial institution is part of the
13.0% Y-o-Y growth respectively. This was weaker xed income markets during the
normal business of the Group in accessing
supported by a 12.3% expansion in year. This segment mainly consists of
the money market and interbank market.
Financial investments at fair value through
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

008 Capital Management

OVERVIEW The Groups capital management practice is To maintain a robust capital base to be able
underpinned by a capital management to withstand stress scenarios.
CIMB Group has always maintained a strong
framework with the following objectives:
capital position that consistently ensures a To remain exible to take advantage of
robust capital structure to meet the To maintain a strong capital base to meet strategic acquisitions to enhance the
requirements of its various stakeholders, regulatory capital requirements at all times. Groups franchise value.
including customers, shareholders, regulators
To maintain adequate levels of capital to To allocate appropriate levels of capital to
and external rating agencies. This has enabled
optimise returns to shareholders through business units and subsidiaries to optimise
the Group to rmly support the demands for
providing sustainable return on equity and return on capital.
capital for organic growth of its core businesses
stable dividend payout.
through economic cycles including market To ensure a capital position that is able to
shocks and stressed conditions, take advantage To retain optimal levels of capital to support meet the requirements of various other
of opportunities in strategic acquisitions as well the organic growth of core businesses and stakeholders of the Group (e.g. customers,
as new businesses, tap the capital markets to expansion into new businesses. corporate responsibility commitments, etc.).
enhance and diversify sources of capital, and
To maintain strong credit ratings from
provide a stable dividend payout to its
external rating agencies.
shareholders.

The Groups regulated banking entities have always maintained a set of internal targets which provide a strong buffer above the minimum regulatory
requirements. The table below shows the relevant capital ratios of each of the regulated banking entities of the Group in comparison to the minimum level
required by the respective central banks under Basel III framework.

Common Equity Tier 1 Tier 1 Total Capital

As at Minimum As at Minimum As at Minimum
Capital Ratios 31 December Regulatory 31 December Regulatory 31 December Regulatory
(After Proposed Dividend) 2013 Ratio 2013 Ratio 2013 Ratio
CIMB Bank * 9.649% 3.50% 11.552% 4.50% 12.910% 8.00%
CIMB Islamic 9.905% 3.50% 10.201% 4.50% 14.020% 8.00%
CIMB Investment Bank 26.364% 3.50% 26.364% 4.50% 26.364% 8.00%
CIMB Niaga ** N/A N/A 12.993% N/A 15.378% 8.00%
CIMB Thai 9.907% 4.50% 9.907% 6.00% 14.082% 8.50%

* CIMB Group Holdings (CIMBGH) announced that it would implement a Dividend Reinvestment Scheme (DRS) for the second interim dividend in respect of the nancial year ended 2013.
Pursuant to the DRS, CIMBGH intends to reinvest the excess cash dividend into CIMB Bank, which would increase the capital adequacy ratios of CIMB Bank Group and CIMB Bank above
those stated above.
** CIMB Niagas capital ratios are computed based on Basel II as per Bank Indonesias requirements.
 INTO A NEW ERA

009

KEY INITIATIVES KEY RATINGS UPDATES

Following are the key capital management CIMB Bank

initiatives that were undertaken during the On 12 June 2013, both RAM and MARC
nancial year: assigned long-term ratings of AA1 and AA+
CIMBGH continued to offer the Dividend respectively to CIMB Banks RM10 billion Tier 2
Reinvestment Scheme (DRS) to its subordinated debt programme, being the rst
shareholders in 2013, allowing the Group to Basel III compliant Tier 2 subordinated debt
accumulate RM1.94 billion of capital during instruments to be issued in Malaysia.
the year. On 20 November 2013, Moodys Investor
Services assigned positive outlook to ratings of
CIMBGH reinvested RM1.00 billion of capital nine Malaysian nancial institutions, including
into CIMB Bank via subscription of ordinary CIMB Bank and CIMB Islamic, following its
shares in CIMB Bank pursuant to the revision of Malaysias A3 sovereign rating
implementation of the DRS at CIMBGH outlook to positive from stable.
CIMBGH received total cash consideration
of RM1.06 billion via CIG and SBB Berhad, CIMB Islamic
arising from the sale of its entire 51% stake On 11 November 2013, CIMB Islamic was
in CIMB Aviva. As a result, CIMBGH was awarded credit ratings of A1/P-1 for domestic
able to release RM235 million of capital currency and A3/P-2 for foreign currency by
which would otherwise be subject to full Moodys Investors Services (Moodys). This
capital deduction against total capital. marks the rst international rating by Moodys
on CIMB Islamic, and the rst rating on a
CIMB Bank exercised its call option on
Malaysian Islamic bank by an international rating
RM1.5 billion of Tier 2 subordinated debt on
agency.
its callable date in March 2013.

CIMB Bank issued RM1.05 billion of Basel III CIMB Group Holdings
compliant Tier 2 subordinated debt out of On 27 November 2013, Standard & Poors (S&P)
the newly set up RM10.0 Billion Basel III revised its outlook on the Malaysian banking
Compliant Tier 2 Subordinated Debt sector in view of rising house prices and
Issuance Programme. elevated household debt levels in Malaysia. As a
result, the rating outlook of CIMB Group
The Group continuously assesses the potential Holdings together with three other Malaysian
of capital relief and RWA optimisation initiatives banks were revised to negative from stable.
to further strengthen its capital position,
wherever possible, taking into consideration the
costs involved against the expected capital
benets. The Group also continues to graduate
from the Standardised Approach of accounting
for its RWA to the Internal Ratings Based
Approach by product which better reects the
risk prole. The Group also continues to
enhance its capital allocation across its various
entities to optimise the distribution of capital
resources, with due consideration to the
compliance of local regulatory requirements.
 CIMB GROUP HOLDINGS BERHAD

2013 THURSDAY WEDNESDAY WEDNESDAY

7 FEBRUARY 2013 17 APRIL 2013 2 OCTOBER 2013
Notice of Extraordinary General Meeting 56th AGM Date of entitlement for the single tier
(EGM) for proposed establishment of interim dividend of 12.82 sen per share
Dividend Reinvestment Scheme (DRS) for the financial year ended 31 December
WEDNESDAY 2013

8 MAY 2013
MONDAY Payment of the single tier interim
WEDNESDAY
25 FEBRUARY 2013 dividend of 18.38 sen per share for the
Announcement of the unaudited financial year ended 31 December 2012 30 OCTOBER 2013
consolidated financial results for the Payment of the single tier interim
fourth quarter and financial year ended dividend of 12.82 sen per share for the
31December 2012 THURSDAY financial year ended 31 December 2013

9 MAY 2013
Additional listing of 183,075,800 new
MONDAY ordinary shares of RM1.00 each,
THURSDAY
25 FEBRUARY 2013 31 OCTOBER 2013
Financial Calendar

pursuant to the DRS

EGM Additional listing of 113,495,493 new
ordinary shares of RM1.00 each,
TUESDAY pursuant to the DRS
FRIDAY
21 MAY 2013
22 MARCH 2013 Announcement of the unaudited
Notice of 56th Annual General Meeting consolidated financial results for the first
MONDAY
(AGM) and issuance of Annual Report for quarter ended 31 March 2013 18 NOVEMBER 2013
the financial year ended 31 December Announcement of the unaudited
2012 consolidated financial results for the third
MONDAY quarter ended 30 September 2013

FRIDAY 26 AUGUST 2013

Announcement of the unaudited
29 MARCH 2013 consolidated financial results for the
Notice of book closure for single tier second quarter and half year ended
interim dividend of 18.38 sen per share 30June 2013
for the financial year ended 31 December
2012
FRIDAY
TUESDAY 20 SEPTEMBER 2013
Notice of book closure for the single tier
9 APRIL 2013 interim dividend of 12.82 sen per share
Date of entitlement for the single tier for the financial year ended 31 December
interim dividend of 18.38 sen per share 2013
for the financial year ended 31 December
2012
 INTO A NEW ERA

Statement of Directors Responsibilities 011

In Relation to Financial Statements

Pursuant to paragraph 15.26 (a) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad, and as required by Companies Act, 1965 (the Act), the Directors are responsible
to ensure that the nancial statements prepared for each nancial year, give a true and fair view of the
state of affairs of the Group and the Company as at the end of the nancial year and of the results
and cashows for the year then ended. As required by the Act and the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad, the nancial statements have been prepared in
accordance with the applicable approved accounting standards in Malaysia and the provisions of the
Act.

The Directors consider that, in preparing the nancial statements for the nancial year ended
31December 2013, the Group and the Company have used appropriate accounting policies,
consistently applied and supported by reasonable and prudent judgements and estimates, and
ensured that all applicable approved accounting standards have been followed and conrm that the
nancial statements have been prepared on a going concern basis.

The Directors are responsible for ensuring the Group and the Company maintains adequate
accounting records which disclose with reasonable accuracy the nancial position of the Group and
the Company to enable them to ensure that the nancial statements comply with the requirements of
the Act.

The Directors have a general duty to take such steps as are reasonably available to them to
safeguard the assets of the Group and the Company to prevent and detect fraud and other
irregularities.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

012 Directors Report

for the financial year ended 31 December 2013

The Directors have pleasure in submitting their Report and the Audited Financial Statements of the Group and the Company for the financial year
ended 31 December 2013.

PRINCIPAL ACTIVITIES

The principal activity of the Company during the financial year is investment holding. The principal activities of the significant subsidiaries as set out
in Note 12 to the Financial Statements, consist of commercial banking, investment banking, Islamic banking, offshore banking, debt factoring, trustee
and nominee services, property ownership and management, management of unit trust funds and fund management business, stock and sharebroking
and the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

FINANCIAL RESULTS
The The
Group Company
RM000 RM000

Net profit after taxation attributable to:

Owners of the Parent 4,540,403 2,126,943
Non-controlling interests 68,419

4,608,822 2,126,943

DIVIDENDS

The dividends on ordinary shares paid or declared by the Company since 31 December 2012 were as follows:

RM000

In respect of the financial year ended 31 December 2012:

Dividend on 7,432,771,238 ordinary shares, paid on 8 May 2013
single tier second interim dividend of 18.38 sen per ordinary share, consists of cash portion of 2.86 sen
per ordinary shares and an electable portion of 15.52 sen per ordinary shares which was reinvested in new
ordinary shares 1,366,143

In respect of the financial year ended 31 December 2013:

Dividend on 7,615,847,038 ordinary shares, paid on 30 October 2013
single tier first interim dividend of 12.82 sen per ordinary shares, consists of cash portion of 2.54 sen per
ordinary shares and an electable portion of 10.28 sen per ordinary shares which was reinvested in new
ordinary shares 976,352
 INTO A NEW ERA

013

DIVIDENDS (CONTINUED)
The Directors have proposed a single-tier second interim dividend of 10.33^ sen per ordinary share, on 8,229,341,531^ ordinary shares amounting
to RM850 million in respect of the financial year ended 31 December 2013. The single-tier second interim dividend was approved by the Board of
Directors on 11 February 2014.

The proposed dividend consists of an electable portion of 10.33^ sen which can be elected to be reinvested in new ordinary shares in accordance
with the Dividend Reinvestment Scheme (DRS) as disclosed in Note 28(b) to the Financial Statements.

The Financial Statements for the current financial year do not reflect this proposed dividend. Such dividend will be accounted for in equity as an
appropriation of retained earnings in the next financial year.

The Directors do not recommend the payment of any final dividend for the financial year ended 31 December 2013.

^ On 25 February 2014 the Company announced a single-tier interim dividend of 11.00 sen per ordinary share based on the share capital as at 31 December 2013 of 7,729,341,531
ordinary shares. Pursuant to the completion of the private placement in January 2014 of 500 million new ordinary shares which increased the share capital to 8,229,341,531 ordinary
shares, the single-tier second interim dividend translates to 10.33 sen per ordinary share.

RESERVES, PROVISIONS AND ALLOWANCES

There were no material transfers to or from reserves or provisions or allowances during the financial year other than those disclosed in the Financial
Statements and Notes to the Financial Statements.

ISSUANCE OF SHARES
During the financial year, the Company increased it issued and paid up capital by RM296,571,293 via:

(a) Issuance of 183,075,800 new ordinary shares of RM1.00 each arising from the DRS relating to electable portion of the second interim dividend
of 18.38 sen in respect of financial year ended 31 December 2012, as disclosed in Note 41(a) to the Financial Statements;

(b) Issuance of 113,495,493 new ordinary shares of RM1.00 each arising from the DRS relating to electable portion of the first interim dividend of
12.82 sen in respect of financial year ended 31 December 2013, as disclosed in Note 41(b) to the Financial Statements.

SHARE BUY-BACK AND CANCELLATION

The shareholders of the Company, had via an ordinary resolution passed at the Annual General Meeting held on 17 April 2013, approved the
Companys plan and mandate to authorise the Directors of the Company to buy back up to 10% of its existing paid-up share capital. The Directors
of the Company are committed to enhance the value of the Company to its shareholders and believe that the share buyback can be applied in the
best interest of the Company and its shareholders.

During the financial year, the Company bought back 1,199 shares, as stated in Note 31(b) to the Financial Statements, at an average price of
RM7.41 per share from the open market using internally generated funds. As at 31 December 2013, there were 4,408 ordinary shares held as
treasury shares. Accordingly, the adjusted issued and paid-up share capital of the Company with voting rights as at 31 December 2013 was
7,729,341,531 shares.

The shares purchased are held as treasury shares in accordance with the provisions of Section 67A of the Companies Act, 1965.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

014

SHARE-BASED EMPLOYEE BENEFIT PLAN

The Groups employee benefit schemes are explained in Note 43 to the Financial Statements.

BAD AND DOUBTFUL DEBTS, AND FINANCING

Before the Financial Statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that proper
action had been taken in relation to the writing off of bad debts and financing and the making of allowance for doubtful debts and financing, and
satisfied themselves that all known bad debts and financing had been written off and that adequate allowance had been made for doubtful debts
and financing.

At the date of this Report, the Directors are not aware of any circumstances which would render the amounts written off for bad debts and financing,
or the amount of the allowance for doubtful debts and financing in the Financial Statements of the Group and of the Company, inadequate to any
substantial extent.

CURRENT ASSETS

Before the Financial Statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that any 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 Company had been written down to an amount which they might be expected so to realise.

At the date of this Report, the Directors are not aware of any circumstances which would render the values attributed to current assets in the
Financial Statements of the Group and of the Company 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 method of
valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
 INTO A NEW ERA

015

CONTINGENT AND OTHER LIABILITIES

At the date of this Report, there does not exist:

(a) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liability of any
other person; or

(b) any contingent liability of the Group or the Company which has arisen since the end of the financial year other than in the ordinary course of
business.

No contingent or other liability in the Group or the Company 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 the
Company to meet their obligations 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 Company, that would render any amount stated in the Financial Statements misleading.

ITEMS OF AN UNUSUAL NATURE

In the opinion of the Directors:

(a) the results of the Groups and the Companys operations for the financial year have not been substantially affected by any item, transaction or
event of a material and unusual nature other than those disclosed in Notes 48 and Note 54 to the Financial Statements; and

(b) 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 to affect substantially the results of the operations of the Group or the Company for the financial year in which this
Report is made.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

016

DIRECTORS

The Directors of the Company who have held office since the date of the last report and at the date of this report are as follows:

Tan Sri Dato Md Nor bin Md Yusof

Dato Sri Mohamed Nazir bin Abdul Razak
Dato Zainal Abidin bin Putih
Dato Hamzah bin Bakar
Datuk Dr Syed Muhamad bin Syed Abdul Kadir
Dato Robert Cheim Dau Meng
Glenn Muhammad Surya Yusuf
Watanan Petersik
Katsumi Hatao (retired on 25 February 2014)

In accordance with Article 76 of the Articles of Association, the following Directors retire from the Board at the forthcoming Annual General Meeting
(AGM) and being eligible, offer themselves for re-election:

Tan Sri Dato Md Nor bin Md Yusof

Dato Sri Mohamed Nazir bin Abdul Razak

Dato Hamzah bin Bakar, being over the age of seventy is required to be re-appointed, pursuant to Section 129(6) of the Companies Act, 1965, as
Director of the Compny. Dato Hamzah bin Bakar had notified the Company that he will not be seeking re-appointment at the forthcoming AGM
and accordingly will retire at the conclusion of the forthcoming AGM pursuant to Section 129(2) of the Companies Act, 1965.

DIRECTORS INTERESTS IN SHARES, SHARE OPTIONS AND DEBENTURES

According to the Register of Directors Shareholdings, the beneficial interests of Directors who held office at the end of the financial year in the
shares, share options and debentures of the Company and its related corporations during the financial year are as follows:

No. of ordinary shares of RM1 each

As at Acquired/ As at
1 January Granted Disposed 31 December

CIMB Group Holdings Berhad

Direct interest
Tan Sri Dato Md Nor bin Md Yusof 400,000 400,000
* Dato Sri Mohamed Nazir bin Abdul Razak 51,784,281 391,700(a) 52,175,981
^ Dato Zainal Abidin bin Putih 110,000 1,857(b) 111,857
# Dato Robert Cheim Dau Meng 180,644 45,377(a) 226,021
 INTO A NEW ERA

017

DIRECTORS INTERESTS IN SHARES, SHARE OPTIONS AND DEBENTURES (CONTINUED)

Note: Includes shareholding of spouse/child, details of which are as follows:

No. of ordinary shares of RM1 each

As at Acquired/ As at
1 January granted Disposed 31 December

* Dato Azlina binti Abdul Aziz 4,000,000 4,000,000

^ Datin Jasmine binti Abdullah Heng 20,000 371(b) 20,371
^ Mohamad Ari Zulkarnain bin Zainal Abidin 10,000 10,000
# Cheim Tat Seng 46,522 29,857(a) 76,379

(a) Shares granted under Equity Ownership Plan (EOP) and acquired by way of the exercise of Dividend Reinvestment Scheme (DRS).
(b) Shares acquired by way of the exercise of DRS.

Debentures held
As at Acquired/ As at
1 January Granted Disposed 31 December

CIMB Group Holdings Berhad

Subordinated Fixed Rate Notes
Dato Robert Cheim Dau Meng RM1,000,000 RM1,000,000

PT Bank CIMB Niaga Tbk

Subordinated Notes
Dato Sri Mohamed Nazir bin Abdul Razak IDR4,500,000,000 IDR4,500,00,000
Dato Robert Cheim Dau Meng IDR1,000,000,000 IDR1,000,000,000

Other than as disclosed above, according to the Register of Directors Shareholdings, the Directors in office at the end of the financial year did not
hold any interest in shares, options over shares and debentures in the Company, or shares, options over shares and debentures of its related
corporations during the financial year.

DIRECTORS BENEFITS
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than Directors
remuneration disclosed in Note 38 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the
Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which the Company
is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures
of, the Company or any other body corporate, other than the Management Equity Scheme and Equity Ownership Plan (see Note 43 to the Financial
Statements) as disclosed in this Report.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

018

2013 BUSINESS PLAN AND STRATEGY

In 2013, the Group reinforced its position within the ASEAN universal banking space with the completion of the Asia Pacific investment banking
platform. This tied in well with the corporate theme for the year, Network CIMB, which sought to deliver seamless and value-added cross-border
services and benefits to both consumer and corporate clients across the franchise. CIMB has now positioned itself as a major Asia Pacific-based
intermediary for both ASEAN-Asia and Asia-to-Asia banking, trade and deal flows. Concurrently, the follow through results from the refreshments and
organisational changes made under CIMB 2.0 from the previous year continued the service improvement and product innovation drive across the
Group.

2013 was a relatively tumultuous year for the banking industry and capital markets, both within the region as well as globally. As such, we maintain
our cautious and prudent stance through the year in terms of asset growth and deposit accumulation, whilst placing greater emphasis on risk and
asset quality management. The Group also placed increased emphasis on capital management in 2013 with various capital optimisation initiatives
which included the disposal of our 51% interest in CIMB Aviva and introduction of the Dividend Reinvestment Scheme (DRS). Implementation of the
1Platform core banking system in Malaysia was crucial as the Group increased focus on digital banking initiatives to raise productivity and operational
efficiency going forward.

The Group posted a revenue and profit before tax (PBT) of RM14.7 billion and RM5.8 billion, an increase of 8.7% and 3.0% respectively year on
year (Y-o-Y) mainly due to a stronger performance at consumer banking. This translated to a net return on equity (ROE) of 15.5%. Net interest
income grew 6.8% Y-o-Y to RM9.4 billion on the back of a steady loans and credit growth partially offset by lower net interest margins (NIM). Non-
interest income expanded by 12.3% largely due to the RM515 million gain from sale of the 51% interest in CIMB Aviva.

The regional consumer PBT expanded by 11.2% Y-o-Y to RM2.3 billion led by the Malaysian and Indonesian consumer operations which grew 6.0%
and 28.2% Y-o-Y respectively. The Singapore consumer operations had a good year with maiden full-year profits, while the Thai consumer operations
posted a loss due to higher provisions. PBT for regional Wholesale Banking declined by 9.9% Y-o-Y to RM2.8 billion due to the volatile credit
markets and slower treasury flows. Corporate Banking showed good progress with steady lending growth in all markets bar Indonesia and lower
provisions. CIMB Niagas PBT rose 0.8% Y-o-Y to IDR5,832 billion driven by continued loans growth and strong non-interest income partially offset
by lower NIMs. CIMB Thais PBT declined 15.6% to THB1.4 billion from higher provisions, while CIMB Singapores PBT rose 49.9% to RM232
million.

Excluding the bad bank, the Groups total gross loans and credit (excluding financial investments available-for-sale and financial investments held-
to-maturity) expanded 13.0% and 12.2% Y-o-Y respectively. After adjusting for foreign exchange fluctuations, the Groups total gross loans and credit
increased by 16.5% and 15.5% Y-o-Y respectively. Commercial banking loans increased 18.5% while retail loans and corporate loans grew 13.3%
and 10.0% respectively. Total Group deposits grew by 7.3% Y-o-Y but were 10.2% higher Y-o-Y after excluding foreign exchange fluctuations. The
Groups CASA ratio stood at 34.2% from 34.7% last year while overall net interest margin was marginally lower at 2.85% from 3.07% in FY12.

The Groups allowances for impairment losses were 100.6% higher at RM660 million in FY13 compared to RM329 million in FY12. The Groups
total credit charge was 0.28%. The Groups gross impairment ratio improved to 3.2% for FY13 from 3.8% as at FY12, with an allowance coverage
(including regulatory reserve) of 108.3%. The Groups cost to income ratio was higher at 57.6% compared to 56.4% in FY12 from the one-off
organisational restructuring charges and new acquisitions.

The Group kept to its 40% dividend payout policy by declaring total FY13 dividends amounting to RM1.8 billion or 23.15 sen per share. This was
paid in two interim dividend payouts of 12.82 sen (paid in September 2013) and 10.33 sen, to be paid by April 2014 via the option of either cash
or via a DRS.
 INTO A NEW ERA

019

OUTLOOK FOR 2014

CIMBs corporate theme for 2014 is Differentiating CIMB a return to the basics of why customers choose one service provider over another as
technology, customer mindsets and regulatory frameworks all change. This means a deep analysis of the right messages to amplify in CIMBs
advertising and sales pitches. This means a clear look at areas of past excellence and future innovation in service and product quality, division by
division. Network CIMB will continue as a priority, after the success in 2013 of multi-country investment banking deals and cross-border corridor
activities. Other priorities include CIMB culture development, transaction banking, cost management, capital & liability management and performance
measurement.

Whilst the outlook appears more positive than 2013, the Group is cautiously optimistic on growth prospects against the backdrop of a challenging
external environment. We have set ourselves a ROE target of 13.5%-14% in light of our newly recapitalized balance sheet, underscored by a 14%
loan growth in 2014. We foresee a moderate recovery in Indonesia and strong growth both in Singapore and in our expanded investment banking
franchise. Expectations for Thailand are somewhat dampened by political instabilities, but we expect steady growth in our Malaysian consumer
business and our Corporate Banking and Treasury Markets operations. We will keep an eagle eye on asset quality across all business lines and
geographies, and will maintain our target dividend payout ratio of 40% for 2014. The completion of our private placement in early 2014 means that
the Group is now sufficiently capitalised to face challenges ahead and well positioned to react quickly as and when opportunities arise.

RATINGS BY EXTERNAL RATING AGENCY

Details of the rating of the Company and its debt securities are as follows:

Rating
Rating Agency Rating Date Rating Classification Accorded Outlook

RAM Holdings October 2013 1. Long-term Financial Institution Rating AA1 Stable
2. Short-term Financial Institution Rating P1
3. RM3.0 billion Subordinated Notes Programme AA3
4. RM6.0 billion Conventional and Islamic Commercial AA1
5. Papers/Medium-term Notes Programme

Standard & Poors December 2013 1. Long-term Foreign Rating BBB- Negative
Rating Services (S&P) 2. Short-term Foreign Rating A-3
3. Long-term Local Rating BBB- Negative
4. Short-term Local Rating A-3
5. Long-term Local ASEAN Rating axBBB+
6. Short-term Local ASEAN Rating axA-2
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

020

BOARD SHARIAH COMMITTEE

Pursuant to the enterprise wide Shariah governance framework as provided by Bank Negara Malaysia in its Guideline on Shariah Governance for
Islamic Financial Institutions and now as enshrined in the recently effective Islamic Financial Services Act 2013, the Board of Directors (the Board)
is ultimately responsible and accountable for the oversight and management of Shariah matters in the operation of the Groups Islamic banking and
finance activities. In undertaking its duties and responsibilities relating to Shariah, the Board relies on the advice of the Board Shariah Committee of
CIMB Group Holding Berhad that it established under its core Islamic operating entity, CIMB Islamic Bank Berhad (CIMB Islamic).

The main responsibility of the Board Shariah Committee is to assist the Board in the oversight and management of all Shariah matters relating to
the Islamic banking and finance business of the CIMB Group Holding Berhad. The Board Shariah Committee operates on the authority as delegated
and empowered to it by the Board and as attributed to it under relevant financial regulations and legislations.

All decisions by the Board on Shariah matters relating to the Islamic banking business of CIMB Group Holding Berhad shall be made based on the
decisions, views and opinions of the Board Shariah Committee. If the Board disagrees with any decisions, views, and opinions of the Board Shariah
Committee on any Shariah matter, the former shall refer back the matter to the latter for a second or third review before final decision is made. All
and any final decision of the Board on Shariah matter shall be made based on the final decisions, views and opinions of the Board Shariah
Committee. All decisions of the Board and the Board Shariah Committee on Shariah matters shall at all times be subordinated to the decision of
the Shariah Advisory Council of the relevant Malaysian financial regulators and shall take into consideration the relevant authority on Shariah matters
in the relevant jurisdiction it is doing business.

The Board Shariah Committee shall at all times assist the Board to ensure that the Groups Islamic banking and finance business does not have
elements/activities which are not permissible under Shariah.

The members of the Board Shariah Committee are as follows:

1. Sheikh Professor Dr. Mohammad Hashim Kamali

2. Sheikh Nedham Mohamed Saleh Yaqoobi

3. Sheikh Dr. Haji Mohd Naim bin Haji Mokhtar

4. Sheikh Associate Professor Dr. Shafaai bin Musa

5. Sheikh Dr. Yousef Abdullah Al Shubaily

6. Professor Dr. Noor Inayah Yaakub

The Board hereby affirms based on advice of the Board Shariah Committee that the Groups Islamic banking and finance operations has been done
in a manner that does not contradict with Shariah save and except for those that have been specifically disclosed in this financial report (if any).
This affirmation by the Board is independently verified and confirmed by the Board Shariah Committee in a separate Board Shariah Committee Report
made herein.
 INTO A NEW ERA

021

ZAKAT OBLIGATIONS

The obligation and responsibility for payment of Zakat lies with the Muslim shareholders of the Group. For the Groups banking and asset
management subsidiaries, the obligation and responsibility for payment of Zakat on deposits and investments received from their customers lies with
their respective Muslim customers only. The aforesaid is subject to the jurisdictional requirements on Zakat payment as may be applicable from time
to time on the Bank and its subsidiaries arising from changes to local legislation, regulation, law or market convention as the case may be. Accrual
of Zakat expenses (if any) in the financial statement of the Group is reflective of this.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 48 to the Financial Statements.

SUBSEQUENT EVENTS AFTER THE FINANCIAL YEAR END

Subsequent events after the financial year end are disclosed in Note 49 to the Financial Statements.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution.

Tan Sri Dato Md Nor bin Md Yusof

Chairman

Dato Sri Mohamed Nazir bin Abdul Razak

Managing Director

Kuala Lumpur
7 March 2014
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

022 Statement by Directors

Pursuant to Section 169(15) of the Companies Act, 1965

We, Tan Sri Dato Md Nor bin Md Yusof and Dato Sri Mohamed Nazir bin Abdul Razak, being two of the Directors of CIMB Group Holdings Berhad,
hereby state that, in the opinion of the Directors, the Financial Statements set out on pages 028 to 355 are drawn up so as to give a true and fair
view of the state of affairs of the Group and of the Company as at 31 December 2013 and of the results and cash flows of the Group and of the
Company for the financial year ended on that date, in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act, 1965 in Malaysia.

Signed on behalf of the Board of Directors in accordance with their resolution.

Tan Sri Dato Md Nor bin Md Yusof

Chairman

Dato Sri Mohamed Nazir bin Abdul Razak

Managing Director

Kuala Lumpur
7 March 2014

Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965

I, Kim Kenny, being the officer primarily responsible for the financial management of CIMB Group Holdings Berhad, do solemnly and sincerely declare
that the Financial Statements set out on pages 028 to 355 are, to the best of my knowledge and belief, correct and I make this solemn declaration
conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Kim Kenny

Subscribed and solemnly declared by the abovenamed

Kim Kenny at Kuala Lumpur before me, on 7 March 2014.

Commissioner for Oath

 INTO A NEW ERA

Board Shariah Committees Report 023

In the name of Allah, the Most Beneficent, the Most Merciful.

We, the members of the CIMB Group Board Shariah Committee as established under CIMB Islamic Bank Berhad (CIMB Islamic), is responsible to
assist the Board in the oversight and management of Shariah matters in the operation of the Groups Islamic banking and finance activities. Although
the Board is ultimately responsible and accountable for all Shariah matters under the Group, the Board relies on our independent advice on the
same.

Our main responsibility and accountability is to assist the Board in ensuring that the Groups Islamic banking and finance businesses does not have
elements/activities which are not permissible under Shariah. In undertaking our duties we shall follow and adhere to the decisions, views and opinions
of the Shariah Advisory Council of the relevant Malaysian financial regulators for businesses undertaken in Malaysia and for businesses outside
Malaysia we shall take into consideration the decisions, views and opinions of the relevant authority on Shariah matters (if any, sanctioned by law/
regulation to be followed by the Bank) in the relevant jurisdiction that the Group is doing business.

As members of the Board Shariah Committee, we are responsible to provide an independent assessment and confirmation in this financial report
that the operations of the Islamic banking and finance business of CIMB Group have been done in conformity with Shariah as has been decided
and opined by us and with those Notices, Rules, Standards, Guidelines and Frameworks on Shariah matters as announced and implemented by
relevant financial regulators in the relevant jurisdictions that the Groups Islamic banking and finance businesses were undertaken during the period
being reported.

Our independent assessment and confirmation has been used as the basis for the Boards affirmation of the same in the Directors Report herein
before.

In making our independent assessment and confirmation, we have always recognised the importance of CIMB Group maintaining and reinforcing the
highest possible standards of conduct in all of its actions, including the preparation and dissemination of statements presenting fairly the Shariah
compliant status of its Islamic banking and finance businesses. In this regard we have developed and maintained a system of monitoring and
reporting which provides the necessary internal controls to ensure that any new Islamic financial transactions are properly authorised and transacted
in accordance to the requirements of Shariah; the groups assets and liabilities under its statements of financial position of Islamic banking and
finance are safeguarded against possible Shariah non-compliance; and, that the day to day conduct of its Islamic banking and finance operations
does not contradict Shariah principles.

The system is augmented by written policies and procedures, the careful selection and training of Shariah qualified staff, the establishment of an
organisational structure that provides an appropriate and well-defined division of responsibility by Management and the communication of Shariah
policies and guidelines of business conduct to all staff of the Group.

Firstly, the system of internal control for effective Shariah governance is supported by a professional staff of Shariah researchers that supports us in
our decision and deliberations, providing check and balance for all Shariah matters as presented to us by the Management. Secondly, the
Management has instituted the Shariah review framework that operates on a front to back basis comprising of self-assessment/self-reporting
mechanism and periodic independent review undertaken by Group Compliance Department under the General Counsel Division. Thirdly, the system
is also augmented by the Management putting in place a Shariah risk management framework covering the first; second and; third line of defenses.
Lastly, there is also a strong team of internal auditors who conduct periodic Shariah audits of all the Groups Islamic banking and finance operations
on a scheduled and periodic basis.

We continue to acknowledge that in 2013 the emplaced system of internal control established in 2012 to meet the newly instituted enterprise wide
Shariah governance framework by Bank Negara Malaysia is still relatively new with a lot of rooms for further improvement although significant progress
has been made in the year. On balance, we are satisfied that the Management has put in place the appropriate level of control as required by us.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

024

All in all, the Management of the Group is responsible and accountable to the Board to ensure that the Islamic banking and finance businesses of
CIMB Group are done in accordance with the requirement of Shariah. It is our responsibility to form an independent opinion of the state of Shariah
compliancy of the business and its operations and advise the Board accordingly. Based on the internal and external controls that have been put in
place by the Management, in our opinion, to the best of our knowledge, the Group has complied with the Shariah rulings issued by the Shariah
Advisory Council of Bank Negara Malaysia and by all other financial regulators (where relevant), as well as Shariah decisions made by us except for
4 incidences of Shariah non-compliance at CIMB Islamic.

Nature of non-compliance Number

Failure to comply with Shariah requirement as set by Bank Negara Malaysia 2

Failure to comply with Shariah requirement set by the Board Shariah Committee 2

Arising from the identified incidences, the Management had, following direction from us, provided an amount totalling RM366,144.90 over the course
of the year, representing all the relevant income realised from the non-shariah compliant activities.

Various rectification and control measures were instituted to ensure the non-recurrence of such Shariah non-compliance activities including but not
limited to the following:

1. Updating CIMB Islamic and where relevant the Groups procedures and processes in the affected activities to reflect the Shariah requirements.

2. Enhance CIMB Islamic and where relevant the Groups technology used in the affected activities to ensure specific facilitation of Shariah
requirements.

3. Removed any element that does not comply with Shariah requirements in CIMB Islamics business communication immediately.

Over and above these specific measures, we have also directed the Management to undertake more training sessions, courses and briefings aimed
at building stronger and deeper understanding amongst the Groups employee on Shariah application in the financial activities undertaken by the
Group and its subsidiaries as well as to infuse the right culture for Shariah compliance amongst them.

In our opinion:

1. The contracts, transactions and dealings entered into by the Group during the financial year ended 31 December 2013 that were presented to
us were done in compliance with Shariah;

2. The allocation of profit and charging of losses relating to investment accounts conformed to the basis that were approved by us in accordance
with Shariah; and

3. All earnings that were realised from sources or by means prohibited by Shariah have been considered for disposal to charitable causes.
 INTO A NEW ERA

025

We have assessed the independent work carried out for Shariah review and Shariah audit functions by the relevant functionaries under the established
system of internal control, which included the examination, on a test basis, of each type of transaction, of relevant documentation and procedures
adopted by the Group. We are satisfied that the Management has planned and performed the necessary review and audit so as to obtain all the
information and explanations which are considered necessary to provide us with sufficient evidence to give reasonable assurance that the Bank has
not violated Shariah.

We, the members of the Board Shariah Committee, are of the opinion that the operations of the Bank for the year ended 31 December 2013 were
conducted in conformity with Shariah.

On behalf of the Board Shariah Committee

Sheikh Professor Dr. Mohammad Hashim Kamali

Member

Sheikh Associate Professor Dr. Shafaai bin Musa

Member

Kuala Lumpur
7 March 2014
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

026 Independent Auditors Report

to the members of CIMB Group Holdings Berhad
Company No: 50841-W
(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the Financial Statements of CIMB Group Holdings Berhad on pages 028 to 354, which comprise the statements of financial position
as at 31 December 2013 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash
flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory Notes, as
set out on Note 1 to 58.

Directors Responsibility for the Financial Statements

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

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

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

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

Opinion
In our opinion, the Financial Statements give a true and fair view of the financial position of the Group and of the Company as of 31 December
2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
 INTO A NEW ERA

027

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which
we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the Financial Statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which
are indicated in Note 12 to the Financial Statements.

(c) We are satisfied that the Financial Statements of the subsidiaries that have been consolidated with the Companys Financial Statements are in
form and content appropriate and proper for the purposes of the preparation of the Financial Statements of the Group and we have received
satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the Financial Statements of the subsidiaries did not contain any qualification or any adverse comment made under Section
174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 59 on page 355 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is
not part of the Financial Statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance
on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia
Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the
directive of Bursa Malaysia Securities Berhad.

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

PricewaterhouseCoopers Dato Mohammad Faiz Bin Mohammad Azmi

(No. AF: 1146) (2025/03/14(J))
Chartered Accountants Chartered Accountant

Kuala Lumpur
7 March 2014
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

028 Consolidated Statements of Financial Position

as at 31 December 2013

31 December 31 December 1 January

2013 2012 2012
Note RM000 RM000 RM000
Restated Restated

ASSETS
Cash and short-term funds 2 33,678,882 30,759,899 34,201,968
Reverse repurchase agreements 8,260,504 5,594,278 4,230,482
Deposits and placements with banks and other financial institutions 3 3,789,019 4,990,331 4,174,012
Financial assets held for trading 4 23,403,280 25,383,276 13,665,700
Derivative financial instruments 7 5,020,453 4,083,969 4,231,584
Financial investments available-for-sale 5 30,334,058 29,207,522 18,417,726
Financial investments held-to-maturity 6 10,821,493 8,985,294 12,460,832
Loans, advances and financing 8 228,431,705 202,137,818 183,838,777
Other assets 9 7,990,355 6,839,640 6,032,926
Tax recoverable 64,578 73,934 139,258
Deferred tax assets 10 357,250 110,344 78,669
Statutory deposits with central banks 11 6,361,648 5,264,920 5,084,105
Investment in associates 13 703,947 589,907 1,026,982
Investment in joint ventures 14 309,535 305,843 328,690
Property, plant and equipment 15 1,546,783 1,534,341 1,458,400
Investment properties 16 4,000 17,451 8,653
Prepaid lease payments 17 147,901 159,613 170,564
Goodwill 18 7,877,463 8,180,586 8,242,489
Intangible assets 19 1,760,225 1,677,520 1,611,879

370,863,079 335,896,486 299,403,696

Non-current assets held for sale 53 49,718 564,674 17,248

Total assets 370,912,797 336,461,160 299,420,944

LIABILITIES
Deposits from customers 20 263,004,302 247,295,039 221,895,460
Deposits and placements of banks and other financial institutions 21 20,727,845 15,522,591 10,833,001
Repurchase agreements 5,922,788 3,068,039 1,067,946
Financial liabilities designated at fair value 22 2,132,170
Derivative financial instruments 7 6,009,608 4,049,192 4,182,675
Bills and acceptances payable 4,713,219 4,257,257 7,566,691
Other liabilities 23 8,562,039 7,564,850 6,414,290
Current tax liabilities 384,800 322,400 483,820
Deferred tax liabilities 10 50,327 132,682 210,146
Bonds and debentures 25 7,490,265 3,850,660 1,021,702
Other borrowings 26 7,772,727 7,640,360 6,992,620
Subordinated obligations 27 12,066,700 12,659,851 10,925,756
Non-cumulative guaranteed and redeemable preference shares 29(a), 29(b) 847,447 831,920 881,016

Total liabilities 339,684,237 307,194,841 272,475,123

 INTO A NEW ERA

029

31 December 31 December 1 January

2013 2012 2012
Note RM000 RM000 RM000
Restated Restated

EQUITY
Capital and reserves attributable to owners of the Parent

Ordinary share capital 28 7,729,346 7,432,775 7,432,775

Reserves 30 22,542,356 20,860,814 18,590,664
Less: Shares held under trust 31(a) (563) (563) (563)
Treasury shares, at cost 31(b) (41) (32) (30)

30,271,098 28,292,994 26,022,846

Perpetual preference shares 29(c) 200,000 200,000 200,000
Non-controlling interests 757,462 773,325 722,975

Total equity 31,228,560 29,266,319 26,945,821

Total equity and liabilities 370,912,797 336,461,160 299,420,944

Commitments and contingencies 46 522,489,461 460,550,153 413,228,007

Net assets per share attributable to owners of the Parent (RM) 3.92 3.81 3.50
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

030 Consolidated Statements of Income

for the financial year ended 31 December 2013

2013 2012
Note RM000 RM000
Restated

Continuing operations
Interest income 32 14,677,300 13,540,605
Interest expense 33 (6,723,154) (6,144,725)

Net interest income 7,954,146 7,395,880

Income from Islamic banking operations 56 1,592,863 1,689,343
Net non-interest income 34 5,124,826 4,409,602

14,671,835 13,494,825
Overheads 35 (8,457,870) (7,612,099)

Profit before allowances 6,213,965 5,882,726

Allowance made for impairment losses on loans, advances and financing 36 (660,607) (329,098)
Allowance made for impairment losses on other receivables (38,918) (31,387)
Allowance written back for commitments and contingencies 23 1,334 13,473
Recoveries from investment management and securities services 11,932
Allowance made for other impairment losses 37 (39,915) (15,314)

5,487,791 5,520,400
Share of results of joint ventures 14 55,170 19,743
Share of results of associates 13 306,268 98,168

Profit before taxation 5,849,229 5,638,311

Taxation
Company and subsidiaries 39 (1,240,407) (1,281,086)

Profit for the year from continuing operations 4,608,822 4,357,225

Discontinuing operations
Share of results of associates from discontinued operations (attributable to owners of the Parent) 39,582

Profit for the financial year 4,608,822 4,357,225

Profit attributable to:

Owners of the Parent 4,540,403 4,344,776
Non-controlling interests 68,419 52,031

4,608,822 4,396,807

Earnings per share attributable to ordinary equity holders of the Parent (sen)
Basic
From continuing operations 40 60.0 58.0
From discontinuing operations 40 0.5

60.0 58.5
 INTO A NEW ERA

Consolidated Statements 031

of Comprehensive Income
for the financial year ended 31 December 2013

2013 2012
Note RM000 RM000
Restated

Profit for the financial year 4,608,822 4,396,807

Other comprehensive income/(expenses):
Continuing operations
Items that will not be reclassified to profit or loss
Remeasurement of post employment benefits obligation 74,413 (32,651)
Currency translation difference 2,011

76,424 (32,651)

Items that may be reclassified subsequently to profit or loss

Revaluation reserve-financial investments available-for-sale (852,747) 87,547

Net gain from change in fair value (778,348) 440,874

Realised gain transferred to statement of income on disposal and impairment (291,730) (390,306)
Income tax effects 194,369 42,490
Currency translation difference 22,962 (5,511)

Net investment hedge (130,221) 82,222

Hedging reserve-cash flow hedge (10,885) (45)

Net gain from change in fair value (13,838) (45)

Income tax effects 2,953

Exchange fluctuation reserve (1,258,753) (1,069,673)

Share of other comprehensive expense of
associate (725)
joint ventures (5,742) (13,505)

(2,259,073) (913,454)

Other comprehensive expense during the financial year, net of tax

from continuing operations (2,182,649) (946,105)

Total comprehensive income for the financial year 2,426,173 3,450,702

Total comprehensive income attributable to:

Owners of the Parent 2,401,087 3,413,349
Non-controlling interests 25,086 37,353

2,426,173 3,450,702

Total comprehensive income for the period attributable to owners of the Parent arising from:
Continuing operations 2,401,087 3,373,767
Discontinuing operation 39,582

2,401,087 3,413,349
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

032 Company Statements of Financial Position

as at 31 December 2013

31 December 31 December
2013 2012
Note RM000 RM000

ASSETS
Cash and short-term funds 2 69,573 135,075
Derivative financial instruments 7 3,940 10,712
Loans, advances and financing 8 71 95
Other assets 9 45,272 2,459
Tax recoverable 37,636 43,441
Amount owing by subsidiaries net of allowance for doubtful debts of RM2,225,852 (2012: RM775,423) 42 788 4,238
Investment in subsidiaries 12 20,719,439 18,930,222
Investment in associates 13 3,834 3,834
Property, plant and equipment 15 7,464 28,717
Investment properties 16 490 508

20,888,507 19,159,301
Non-current assets held for sale 53 7,862

Total assets 20,896,369 19,159,301

LIABILITIES
Derivative financial instruments 7 8,892
Other liabilities 23 5,027 1,408
Amount owing to subsidiaries 42 222
Deferred tax liabilities 10 1,998 2,127
Other borrowings 26 3,823,855 3,802,565
Subordinated notes 27 2,141,402 2,141,378

Total liabilities 5,972,504 5,956,370

EQUITY
Share capital 28 7,729,346 7,432,775
Reserves 30 7,194,560 5,770,188
Less: Treasury shares, at cost 31(b) (41) (32)

Total equity 14,923,865 13,202,931

Total equity and liabilities 20,896,369 19,159,301

Commitments and contingencies 46 500,000 965,000

 INTO A NEW ERA

Company Statements of Income 033

for the financial year ended 31 December 2013

2013 2012
Note RM000 RM000

Interest income 32 20,039 9,895

Interest expense 33 (268,586) (260,401)

Net interest expense (248,547) (250,506)

Net non-interest income 34 2,397,196 1,873,478

2,148,649 1,622,972
Overheads 35 (16,310) (9,890)

Profit before taxation 2,132,339 1,613,082

Taxation 39 (5,396) (258,427)

Net profit after taxation/Profit for the financial year 2,126,943 1,354,655

Company Statements
of Comprehensive Income
for the financial year ended 31 December 2013
2013 2012
Note RM000 RM000

Profit for the financial year/Total comprehensive income for the financial year 2,126,943 1,354,655
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

034 Consolidated Statements

of Changes in Equity
for the financial year ended 31 December 2013

Attributable to owners of the Parent

Revaluation
reserve
Share financial Share-
premium Exchange Shares investments based Perpetual Non-
Share -ordinary Statutory Capital fluctuation held under Treasury available- Other payment Regulatory Retained preference controlling
capital shares reserve reserve reserve trust shares for-sale reserves reserve reserve earnings Total shares interests Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 2013
as previously reported 7,432,775 4,192,596 4,306,464 137,104 (876,497) (563) (32) 800,965 (75,701) 59,459 1,173,577 11,226,520 28,376,667 200,000 774,779 29,351,446
Effects of adopting MFRS 10
& 11 54 325 325 (1,454) (1,129)
Effects of adopting MFRS 119 54 (73,743) (10,255) (83,998) (83,998)

As restated 7,432,775 4,192,596 4,306,464 137,104 (876,172) (563) (32) 800,965 (149,444) 59,459 1,173,577 11,216,265 28,292,994 200,000 773,325 29,266,319

Profit for the financial year 4,540,403 4,540,403 68,419 4,608,822

Other comprehensive income
(net of tax) (297) (1,230,805) (843,674) (65,193) 653 (2,139,316) (43,333) (2,182,649)
Financial investments available-
for-sale (837,207) (837,207) (15,540) (852,747)
Net investment hedge (130,221) (130,221) (130,221)
Hedging reserve
cash flow hedge (11,396) (11,396) 511 (10,885)
Remeasurement of post
employment benefits obligations 76,424 76,424 76,424
Currency translation difference (297) (1,230,805) 653 (1,230,449) (28,304) (1,258,753)
Share of other comprehensive
expense of
associate (725) (725) (725)
joint venture (5,742) (5,742) (5,742)
Total comprehensive income for
the financial year (297) (1,230,805) (843,674) (65,193) 653 4,540,403 2,401,087 25,086 2,426,173

Second interim dividend for

the financial year ended
31 December 2012 41 (1,366,143) (1,366,143) (1,366,143)
First interim dividend for
the financial year ended
31 December 2013 41 (976,352) (976,352) (976,352)
Non-controlling interest share
of dividend (10,144) (10,144)
 INTO A NEW ERA

Consolidated Statements 035

of Changes in Equity
for the financial year ended 31 December 2013 (Continued)

Attributable to owners of the Parent

Revaluation
reserve
Share financial Share-
premium Exchange Shares investments based Perpetual Non-
Share -ordinary Statutory Capital fluctuation held under Treasury available Other payment Regulatory Retained preference controlling
capital shares reserve reserve reserve trust shares -for-sale reserves reserve reserve earnings Total shares interests Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Transfer to statutory reserve 626,878 (626,878)

Transfer to regulatory reserve 570,306 (570,306)
Issuance of shares pursuant
to Dividend Reinvestment Plan 28 296,571 1,639,924 1,936,495 1,936,495
Purchase of treasury shares 31(b) (9) (9) (9)
Share-based payment expense 43(b) 97,493 97,493 97,493
Purchase of shares in relation
to Equity Ownership Plan
(EOP) (118,333) (118,333) (118,333)
Shares released under EOP 61,460 (55,963) 5,497 5,497
Arising from increase in capital
of subsidiaries 8,564 8,564
Arising from disposal
of subsidiaries (39.369) (39.369)
EOP for staff resigned (1,631) (1,631) (1,631)

Total transactions with

onwners/other equity
movements, recognised
directly in equity 296,571 1,639,924 626,878 (9) (56,873) 41,530 570,306 (3,541,310) (422,983) (40,949) (463,932)

At 31 December 2013 7,729,346 5,832,520 4,933,045 137,104 (2,106,977) (563) (41) (42,709) (271,510) 101,642 1,743,883 12,215,358 30,271,098 200,000 757,462 31,228,560
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

036 Consolidated Statements

of Changes in Equity
for the financial year ended 31 December 2012

Attributable to owners of the Parent

Revaluation
reserve
Share financial Share-
premium Exchange Shares investments based Perpetual Non-
Share -ordinary Statutory Capital fluctuation held under Treasury available- Other payment Regulatory Retained preference controlling
capital shares reserve reserve reserve trust shares for-sale reserves reserve reserve earnings Total shares interests Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 2012
as previously reported 7,432,775 4,192,596 4,103,591 137,104 174,664 (563) (30) 729,551 (111,642) 374,332 490,627 8,550,863 26,073,868 200,000 724,429 26,998,297
Effects of adopting MFRS 10
& 11 54 325 325 (1,454) (1,129)
Effects of adopting MFRS 119 54 (41,092) (10,255) (51,347) (51,347)

As restated 7,432,775 4,192,596 4,103,591 137,104 174,989 (563) (30) 729,551 (152,734) 374,332 490,627 8,540,608 26,022,846 200,000 722,975 26,945,821

Profit for the financial year 4,344,776 4,344,776 52,031 4,396,807

Other comprehensive income
(net of tax) (29) (1,051,161) 71,414 49,360 (1,011) (931,427) (14,678) (946,105)
Financial investments
available-for-sale 84,919 84,919 2,628 87,547
Net investment hedge 82,056 82,056 166 82,222
Hedging reserve
Cash flow hedge (45) (45) (45)
Remeasurement of post
employment benefits obligations (32,651) (32,651) (32,651)
Currency translation difference (29) (1,051,161) (1,011) (1,052,201) (17,472) (1,069,673)
Share of other comprehensive
expense of
joint venture (13,505) (13,505) (13,505)
Total comprehensive income
for the financial year (29) (1,051,161) 71,414 49,360 (1,011) 4,344,776 3,413,349 37,353 3,450,702

Second interim dividends for the

financial year ended
31 December 2011 41 (743,277) (743,277) (743,277)
 INTO A NEW ERA

Consolidated Statements 037

of Changes in Equity
for the financial year ended 31 December 2012 (Continued)

Attributable to owners of the Parent

Revaluation
reserve
Share financial Share-
premium Exchange Shares investments based Perpetual Non-
Share -ordinary Statutory Capital fluctuation held under Treasury available- Other payment Regulatory Retained preference controlling
capital shares reserve reserve reserve trust shares for-sale reserves reserve reserve earnings Total shares interests Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

First interim dividend for the

financial year ended
31 December 2012 41 (371,639) (371,639) (371,639)
Non-controlling interest share
of dividend (1,425) (1,425)
Transfer to statutory reserve 202,902 (202,902)
Transfer to regulatory reserve 682,950 (682,950)
Purchase of treasury shares 31(b) (2) (2) (2)
Share-based payment expense 43(b) 87,962 87,962 87,962
Purchase of shares in relation
to Equity Ownership Plan
(EOP) (112,770) (112,770) (112,770)
Shares released under EOP 66,700 (66,308) 392 392
Arising from (dilution)/accretion
of equity interests in
subsidiaries (7,530) (7,530) (19,193) (26,723)
Rights issue of a subsidiary 33,615 33,615
EOP for staff resigned 3,663 3,663 3,663
Expiry of MES (335,516) 335,516

Total transactions with owners/

other equity movements
recognised directly in equity 202,902 (2) (46,070) (313,862) 682,950 (1,669,119) (1,143,201) 12,997 (1,130,204)

At 31 December 2012 7,432,775 4,192,596 4,306,464 137,104 (876,172) (563) (32) 800,965 (149,444) 59,459 1,173,577 11,216,265 28,292,994 200,000 773,325 29,266,319
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

038 Company Statements of Changes in Equity

for the financial year ended 31 December 2013

Non-distributable
Distributable
Share Share Capital Treasury Retained
capital premium reserve shares earnings Total
The Company Note RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 2013 7,432,775 4,192,596 55,982 (32) 1,521,610 13,202,931

Profit for the financial year 21,269,432 21,269,432

Total comprehensive income

for the financial year 21,269,432 21,269,432
First interim dividend for
the financial year ended
31 December 2013 41 (1,366,143) (1,366,143)
Second interim dividend for
the financial year ended
31 December 2012 41 (976,352) (976,352)
Issue of share capital arising from:
dividend reinvestment scheme 28 296,571 1,639,924 1,936,495
Purchase of treasury shares 31(b) (9) (9)

At 31 December 2013 7,729,346 5,832,520 55,982 (41) 1,306,058 14,923,865

Non-distributable Distributable
Share Share Capital Treasury Retained
capital premium reserve shares earnings Total
The Company Note RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 2012 7,432,775 4,192,596 55,982 (30) 1,281,871 12,963,194

Profit for the financial year 1,354,655 1,354,655

Total comprehensive income 1,354,655 1,354,655

for the financial year
First interim dividend for 41 (743,277) (743,277)
the financial year ended
31 December 2012
Second interim dividend for 41 (371,639) (371,639)
the financial year ended
31 December 2011
Purchase of treasury shares 31(b) (2) (2)

At 31 December 2012 7,432,775 4,192,596 55,982 (32) 1,521,610 13,202,931

 INTO A NEW ERA

Consolidated Statements of Cash Flows 039

for the financial year ended 31 December 2013

2013 2012
RM000 RM000
Note Restated

OPERATING ACTIVITIES
Profit before taxation
from continuing operations 5,849,229 5,638,311
from discontinuing operation 39,582

5,849,229 5,677,893
Adjustments for:

Accretion of discounts less amortisation of premiums 32 (31,208) (215,587)

Amortisation of prepaid lease payments 35 11,802 12,642
Allowances made for impairment losses or other receivables 38,918 31,387
Allowance for impairment losses 37 39,915 15,314
Allowance made for impairment losses on loans, advances & financing 36 1,064,446 771,293
Allowance written back for commitments and contingencies (1,334) (13,473)
Amortisation of intangible assets 35 277,305 262,112
Depreciation of property, plant and equipment 35 343,360 345,663
Dividends from financial investments available-for-sale 34 (29,906) (26,197)
Dividends from financial assets held-for-trading 34 (32,502) (35,449)
Gain from fair value hedge of Redeemable Preference Shares (31,457) (17,088)
Gain on disposal of associate 34 (515,063) (445)
Gain on deemed disposal/disposal of net assets and interest in subsidiaries 34 (10,139) (2,567)
Gain on disposal of property, plant and equipment/assets held for sale 34 (38,300) (14,868)
Gain on disposal of leased assets 34 (38) (168)
Gain on sale of financial investments available-for-sale 34 (280,508) (388,868)
Gain on revaluation of investment properties 34 (1,021) (4,755)
Gain on sale of financial assets held for trading and derivative financial instruments 34 (692,793) (902,716)
Loss on disposal of foreclosed properties 34 40,827 9,387
Net gain from redemption/maturity of financial investment to held-to-maturity 34 (126,917) (35,581)
Net loss arising from hedging derivatives 34 36,839 26,912
Property, plant and equipment written off 35 3,949 731
Recoveries from investment management and securities services (11,932)
Share-based payment expense 43(b) 97,493 87,962
Share of results of associates^ (306,268) (137,750)
Share of results of joint ventures (55,170) (19,743)
Unrealised gain on financial lialibilities designated at fair value 34 (263,975)
Unrealised gain on foreign exchange 34 (273,933) (157,332)
Unrealised loss on revaluation of derivative financial instrument 34 262,947 217,480
Unrealised loss/(gain) on revaluation of financial assets held for trading 205,092 (38,944)

(279,571) (230,668)

5,569,658 5,447,225
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

040

2013 2012
RM000 RM000
Note Restated

(Increase)/decrease in operating assets

Reverse repurchase agreements (2,666,226) (1,363,796)

Deposits and placements with banks and other financial institutions 1,201,312 (816,065)
Financial assets held for trading 1,750,349 (11,412,367)
Loans, advances and financing (27,198,419) (18,900,661)
Other assets (1,063,547) (14,509)
Derivative financial instruments 1,511,760 (585,073)
Statutory deposits with central banks (1,096,728) (180,815)

(27,561,499) (32,103,140)
Increase/(decrease) in operating liabilities

Deposits from customers 15,709,263 25,399,579

Deposits and placements of banks and other financial institutions 5,205,254 4,689,590
Financial liabilities at fair value through profit or loss 2,396,145
Repurchase agreements 2,854,749 2,000,093
Bills and acceptances payable 455,962 (3,309,434)
Other liabilities 1,120,809 1,001,657

Cash flows generated from operations 27,742,182 29,781,485

5,750,341 3,125,570

Taxation paid (1,497,912) (1,451,419)

Net cash flows generated from operating activities 4,252,429 1,674,151

Investing Activities

Acqusition of RBS business and SSEC, net cash outflows 51 (26,435) (210,022)
Capital repayment from a joint venture 14 47,336
Dividends from an associate 13 21,763
Dividends received from financial investments available-for-sale 29,906 26,197
Dividends received from financial assets held for trading 32,502 35,449
Investments in associate 13 (23,274) (5,921)
Investments in joint ventures 14 (1,623)
Net (purchase)/proceeds of financial investments available-for-sale (1,588,860) 10,356,77
Net (purchase)/proceeds of financial investments held-to-maturity (1,720,098) 3,539,230
Net cash Inflow from investment of in subsidiaries (8,564)
Net cash inflow from disposal of subsidiaries 37,509 10,779
Proceed from disposal of CIMB AVIVA 48(b) 1,066,438
 INTO A NEW ERA

041

2013 2012
RM000 RM000
Note Restated

Proceed from disposal of certain interest in associates 13 4,047

Proceed from disposal of interest in joint venture 14 29,085
Proceed from disposal of prepaid lease payment 7
Proceeds from disposal of property, plant and equipment 99,177 46,960
Purchase of prepaid lease payment 17 (92)
Purchase of property, plant and equipment 15 (508,754) (507,909)
Proceeds from disposal of intangible assets 11,195 738
Proceeds from right issues of subsidiaries 33,738
Purchase of intangible assets (367,866) (319,672)

Net cash flows used in investing activities (2,900,321) (7,656,485)

Financing Activities

Dividends paid to shareholders 41(a),(b) (405,999) (1,114,916)

Dividends paid to non-controlling interests (10,144) (42,971)
Interest paid on bonds (219,005) (42,971)
Net (repayment)/proceeds from Subordinated obligations (593,151) 1,734,095
Net proceeds of commercial papers and medium term notes 279,997 55,814
Proceeds from bonds 8,479,747 2,880,241
Net (repayment)/drawdown from term loan facility and other borrowings (378,508) 144,074
Net proceeds from revolving credit and overdraft 231,806 447,851
Purchase of treasury shares 31(b) (9) (2)
Redemption of bonds (4,747,834)
Repayment of redeemable preference shares (11,455)
Net cash flows generated from financing activities 2,636,900 4,091,306

Net increase/(decrease) in cash and short-term funds during the financial year 3,989,008 (1,891,028)
Effects of exchange rate changes (1,070,025) (1,551,041)
Cash and short-term funds at beginning of the financial year 30,759,899 34,201,968

Cash and short-term funds at end of the financial year 2 33,678,882 30,759,899
Statutory deposits with Bank Indonesia* (3,741,377) (4,060,668)
Monies held in trust (30,429) (29,786)

Cash and cash equivalents at end of the financial year 29,907,076 26,669,445

^
This includes share of profits of associated from discontinuing operations

* This represents non-interest bearing statutory deposits of a foreign subsidiary maintained with Bank Indonesia in compliance with their applicable
legislation of RM3,741,377,000 (2012: RM4,060,668,000), which is not readily available for use by the Group.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

042 Company Statements of Cash Flows

for the financial year ended 31 December 2013

2013 2012
Note RM000 RM000

Operating Activities
Profit before taxation 2,132,339 1,613,082
Adjustments for:

Depreciation of property, plant and equipment 15 1,792 2,345

Depreciation of investment properties 16 18 19
Dividends from subsidiaries 34 (2,427,649) (1,882,314)
Gain on disposal of property, plant and equipment 34 (23,556) (104)
Interest expense on term loan 90,083
Interest expense on commercial papers 34 4,316 688
Net (gain)/loss arising from hedging derivatives 34 3,532 (63)
Unrealised (gain)/loss on foreign exchange 34 42,572 (10,749)
Unrealised loss/(gain) on revaluation of derivative financial instruments 5,458 17,950

(2,303,434) (1,872,228)

(171,095) (259,146)
Decrease/(Increase) in operating assets

Loans, advances and financing 24 835

Other assets (53,924) 20,700

(53,900) 21,535
Increase/(Decrease) in operating liabilities

Other liabilities 5,888 (1,098)

5,888 (1,098)

Cash flows used in operations (219,107) (238,709)

Net taxation refund 280 87,712

Net cash flows used in operating activities (218,827) (150,997)

Investing Activities

Acquisition of additional interest in subsidiary (1,789,217) (1,042,261)

Dividends from subsidiaries 2,427,649 1,586,026
Proceeds from disposal of property, plant and equipment 35,948 689
Purchase of property, plant and equipment 15 (793) (40)
Repayment from subsidiaries 3,672 573

Net cash flows generated from investing activities 677,259 544,987

 INTO A NEW ERA

043

2013 2012
Note RM000 RM000

Financing Activities

Dividends paid to shareholders 41(a)(b) (405,999) (1,114,916)

Interest paid on term loan (86,051)
Proceeds from term loan facility 86,305 490,432
Proceeds from commercial papers and medium term notes 834,828 148,743
Purchase of treasury shares 31(b) (9) (2)
Repayment of commercial papers and medium term notes (646,844) (100,000)
Repayment of term loan (306,164)

Net cash flows used in from financing activities (523,934) (575,743)

Net decrease in cash and cash equivalents during the financial year (65,502) (181,753)
Cash and cash equivalents at beginning of the financial year 135,075 316,828

Cash and cash equivalents at end of the financial year 2 (69,573) 135,075
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

044 Summary of Significant Group

Accounting Policies
for the financial year ended 31 December 2013

The following accounting policies have been used consistently in dealing with items that are considered material in relation to the Financial Statements.

A BASIS OF PREPARATION

The Financial Statements of the Group and the Company have been prepared in accordance with the Malaysian Financial Reporting Standards
(MFRS), International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia.

The Financial Statements have been prepared under historical cost convention, as modified by the revaluation of financial investments available-
for-sale, financial assets, financial liabilities (including derivatives financial instruments) at fair value through profit or loss, investment properties
and non-current assets/disposal groups held for sale.

The Financial Statements incorporate those activities relating to Islamic banking which have been undertaken by the Group. Islamic banking
refers generally to the acceptance of deposits, granting of financing and dealing in Islamic Securities under the Shariah principles.

The preparation of Financial Statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements,
and the reported amounts of income and expenses during the reported period. It also requires the Directors to exercise their judgement in the
process of applying the Groups and the Companys accounting policies. Although these estimates and judgement are based on the Directors
best knowledge of current events and actions, actual results may differ from those estimates.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 52.

(a) Standards and amendments to published standards that are effective and applicable to the Group and the Company
The new accounting standards and amendments to published standards that are effective and applicable to the Group and the Company
for the financial year beginning 1 January 2013 are as follows:
MFRS 10 Consolidated financial statements
MFRS 11 Joint arrangements
MFRS 12 Disclosures of interests in other entities
MFRS 13 Fair value measurement
Revised MFRS 127 Separate financial statements
Revised MFRS 128 Investments in associates and joint ventures
MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004)
Amendment to MFRS 7 Financial instruments: Disclosures offsetting financial assets and financial liabilities
Amendment to MFRS 101 Presentations of items of other comprehensive income
Amendment to MFRS 119 Employee benefits
Amendment to MFRS 134 Interim financial reporting
Amendment to MFRS 10, MFRS 11 and MFRS 12 Consolidated financial statements, joint arrangements and disclosure of interests
in other entities: Transition Guidance
 INTO A NEW ERA

045

A BASIS OF PREPARATION (CONTINUED)

(a) Standards and amendments to published standards that are effective and applicable to the Group and the Company
(Continued)

Annual improvements 2009-2011 Cycle

MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards Repeated application of MFRS 1 and borrowing costs
MFRS 101 Presentation of Financial Statements Clarification of the requirements for comparative information
MFRS 116 Property, Plant and Equipment Classification of servicing equipment
MFRS 132 Financial Instruments: Presentation Tax effect of distribution to holders of equity instruments
MFRS 134 Interim Financial Reporting Interim financial reporting and segment information for total assets and liabilities

The adoption of the new accounting standards, amendments and improvements to published standards did not have material impact on
the Financial Statements of the Group and the Company, except as disclosed in Note 54.

(b) Amendment to published standard that is early adopted by the Group and the Company
The Group and the Company have early adopted the following amendments to published standard for the financial year beginning 1
January 2013:

Amendment to MFRS 136 Recoverable amount disclosures for non-financial assets (effective from 1 January 2014) clarifies that disclosure
of recoverable amount is required for an asset or cash generating unit when an impairment loss has been recognised or reversed during
the period. When the recoverable amount of impaired assets is based on fair value less costs of disposal, additional information about fair
value measurement is required. This amendment removes the unintended requirement to disclose the recoverable amount for a cash-
generating unit (containing goodwill or indefinite lived intangible assets) when no impairment loss has been recognised or reversed during
the period. The amendment is not mandatory for the Group and the Bank until 1 January 2014, however, the Group and the Bank has
decided to early adopt the amendments as of 1 January 2013.

(c) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
the Company but not yet effective
The Group and the Company will apply these standards, amendments to published standards from:

(i) Financial year beginning on/after 1 January 2014

Amendment to MFRS 132 Financial instruments: Presentation (effective from 1 January 2014) does not change the current
offsetting model in MFRS 132. It clarifies the meaning of currently has a legally enforceable right of set-off that the right of set-
off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course
of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will
satisfy the MFRS 132 offsetting criteria.

Amendments to MFRS 10, MFRS 12 and MFRS 127 Investment entities (effective from 1 January 2014) introduce an exception
to consolidation of investment entities. Investment entities are entities whose business purpose is to invest funds solely for returns
from capital appreciation, investment income or both and evaluate the performance of its investments on fair value basis. The
amendments require investment entities to measure particular subsidiaries at fair value instead of consolidating them.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

046

A BASIS OF PREPARATION (CONTINUED)

(c) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
the Company but not yet effective (Continued)

(i) Financial year beginning on/after 1 January 2014 (Continued)

Amendment to MFRS 139 Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of
Hedge Accounting (effective 1 January 2014) provides relief from discontinuing hedge accounting in a situation where a derivative
(which has been designated as a hedging instrument) is novated to effect clearing with a central counterparty as a result of laws
or regulation, subject to meeting the following criteria the parties to the hedging instrument agree that the central counterparty
replaces the original counterparty, other changes to the hedging instrument are limited to those that are necessary to effect
replacement of the counterparty.

(ii) Financial year beginning on/after 1 January 2017

MFRS 9 Financial instruments classification and measurement of financial assets and financial liabilities (effective no earlier than
annual periods beginning on or after 1 January 2017) replaces the parts of MFRS 139 that relate to the classification and
measurement of financial instruments. MFRS 9 requires financial assets to be classified into two measurement categories: those
measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification
depends on the entitys business model for managing its financial instruments and the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard retains most of the MFRS 139 requirements. The main change is that, in cases
where the fair value option is taken for financial liabilities, the part of a fair value change due to an entitys own credit risk is
recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

The adoption of the above new accounting standards will not have any significant impact on the financial results of the Group and the
Company except for MFRS 9. The Group has initiated the assessment of the potential effect of adopting MFRS 9 but is awaiting finalisation
of the outstanding phases of MFRS 9 before the assessment can be completed. This standard is expected to have pervasive impact on
the Groups financial statements.

B ECONOMIC ENTITIES IN THE GROUP

(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.

The consolidated Financial Statements include the Financial Statements of the Company and all its subsidiaries made up to the end of the
financial year.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that
control ceases.

The group applies the acquisition method to account for business combinations.
 INTO A NEW ERA

047

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(a) Subsidiaries (Continued)

Under the acquisition method of accounting, the consideration transferred for an acquisition is measured as the acquisition date fair value
of the assets transferred, the liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair
value on the date of acquisition.

The Group applies predecessor accounting to account for business combinations under common control. Under the predecessor basis of
accounting, the results of subsidiaries are presented as if the business combination had been effected throughout the current and previous
years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control
shareholder at the date of transfer. On consolidation, the cost of the business combination is cancelled with the values of the shares
received. Any resulting credit difference is classified as equity. Any resulting debit difference is adjusted against merger reserves. Any share
premium, capital redemption reserve and any other reserves which are attributable to share capital of the combined entities, to the extent
that they have not been capitalised by a debit difference, are reclassified and presented as movement in other capital reserves.

In business combination achieved in stages, previously held equity interest in acquire are re-measured to fair value at the acquisition date
and any corresponding gain or loss is recognised in statement of income.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest
in acquiree (if any), and the fair value of the Groups previously held equity interest in acquiree (if any), over the fair value of the acquirees
identifiable net assets acquired is recorded as goodwill. The accounting policy for goodwill is set out in Note M. In instances where the
latter amount exceeds the former, the excess is recognised as gain on bargain purchase in statement of income on the acquisition date.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an acquisition-by-acquisition basis,
the Group measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share
of the acquirees net assets. At the end of reporting period, non-controlling interest consists of amount calculated on the date of
combinations and its share of changes in the subsidiarys equity since the date of combination.

All earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest, even if the attribution of losses to
the non-controlling interest results in a debit balance in the shareholders equity. Profit or loss attribution to non-controlling interests for
prior years is not restated.

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the
fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 either in
profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and
its subsequent settlement is accounted for within equity.

All material transactions and balances between group companies are eliminated and the consolidated Financial Statements reflect external
transactions only. Where necessary, the accounting policies of subsidiaries have been changed to ensure consistency with the policies
adopted by the Group.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

048

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(b) Transaction with non-controlling interests

Transactions with non-controlling interests that do not result in loss in control are accounted as equity transactions that is, as transactions
with the owners in their capacity as owners. For purchases from non-controlling interests, the difference between any consideration paid
and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. For disposals to non-
controlling interests, differences between any proceeds received and the relevant share of non-controlling interest are also recognised in
equity.

(c) Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
obligations each investor has rather than the legal structure of the joint arrangement.

The Groups interests in joint ventures are accounted for in the consolidated Financial Statements by the equity method of accounting.

Equity accounting involves recognising the Groups share of the post acquisition results of the joint ventures in the statements of
comprehensive income and its share of post acquisition movements within reserves in reserves. The cumulative post acquisition movements
are adjusted against the cost of the investment and include goodwill on acquisition, net of accumulated impairment loss (if any). When the
Groups share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that,
in substance, form part of the Groups net investment in the joint ventures), the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Groups interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

(d) Associates
The Group treats as associates, corporations, partnerships or other entities in which the Group exercises significant influence, but which
it does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power
to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies.
The Groups investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

Investments in associates are accounted for in the consolidated Financial Statements by the equity method of accounting.

The Groups share of its associates post-acquisition profits or losses is recognised in the statement of incomes, and its share of post-
acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any
other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf
of the associate.
 INTO A NEW ERA

049

B ECONOMIC ENTITIES IN THE GROUP (CONTINUED)

(d) Associates (Continued)

The interest in an associate is the carrying amount of the investment in the associate under the equity method together with any long-term
interests that, in substance, form part of the Groups net investment in the associate. After the Groups interest is reduced to zero,
additional losses are provided for, and a liability is recognised, only to the extent that the investor has incurred legal or constructive
obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its
share of those profits only after its share of the profits equals the share of losses not recognised.

For any of the associates net assets changes, other than profit or loss or other comprehensive income and distributions received, the
Groups policy is to account for such changes to the statement of income.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interest in the
associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If
this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and
its carrying value and recognises the amount adjacent to share of profit/(loss) of an associate in the statement of income.

(e) Changes in ownership interest

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is re-measured to its fair
value with the change in carrying amount recognised in statement of income. This fair value is its fair value on initial recognition as a
financial asset in accordance with MFRS 139. Any amounts previously recognised in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related assets or liabilities.

(f) Interests in subsidiaries, joint arrangements and associates

In the Companys separate financial statements, investments in subsidiaries, joint arrangements and associates are carried at cost less
accumulated impairment losses. On disposal of investments in subsidiaries, joint arrangements and associates, the difference between
disposal proceeds and the carrying amounts of the investments are recognised in statement of income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

050

C RECOGNITION OF INTEREST/PROFIT INCOME AND INTEREST/PROFIT EXPENSE

Interest income and expense for all interest-bearing financial instruments are recognised within interest income and interest expense in the
statement of income using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments
or receipts throughout the expected life of the financial instruments or, when appropriate, a shorter period to the net carrying amount of the
financial asset or financial liability. When calculating the effective interest rate, the Group takes into account all contractual terms of the financial
instrument and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective
interest rate, but not future credit losses.

Interest on impaired financial assets is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring
the impairment loss. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated.

Income from Islamic banking business is recognised on an accrual basis in accordance with the principles of Shariah.

D RECOGNITION OF FEES AND OTHER INCOME

Fees and commissions are recognised as income when all conditions precedent are fulfilled. Commitment fees for loans, advances and financing
that are likely to be drawn down are deferred (together with related direct costs) and income which forms an integral part of the effective interest
rate of a financial instrument is recognised as an adjustment to the effective interest rate on the financial instrument.

Guarantee fees, portfolio management fees and income from asset management and securities services which are material are recognised as
income based on a time apportionment method.

Brokerage fees are recognised as income based on inception of such transactions.

Fees from advisory and corporate finance activities are recognised as income on completion of each stage of the engagement.

Dividends are recognised when the right to receive payment is established.

 INTO A NEW ERA

051

E FINANCIAL ASSETS

(a) Classification
The Group and the Company allocate their financial assets into the following categories: financial assets at fair value through profit or loss,
loans and receivables, financial investments held-to-maturity and financial investments available-for-sale. Management determines the
classification of its financial instruments at initial recognition.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss comprise of financial assets held for trading and other financial assets designated
by the Group and the Company as fair value through profit or loss upon initial recognition.

A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in
the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence
of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading unless they are designated
and effective as hedging instruments.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

(iii) Financial investments held-to-maturity

Financial investments held-to-maturity are non-derivative instruments with fixed or determinable payments and fixed maturities that the
Groups and the Companys management have the positive intent and ability to hold to maturity. If the Group or the Company sells
other than an insignificant amount of financial investments held-to-maturity, the entire category will be tainted and reclassified as
financial investments available-for-sale.

(iv) Financial investments available-for-sale

Financial investments available-for-sale are those intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as financial assets at fair
value through profit or loss, loans and receivables and financial investments held-to-maturity.

(b) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Group and the Company
commence to purchase or sell the asset. Interbank placements are recognised on settlement date. Financial assets are initially recognised
at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Transaction costs for securities
carried at fair value through profit or loss are taken directly to the statement of income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

052

E FINANCIAL ASSETS (CONTINUED)

(c) Subsequent measurement

Financial assets at fair value through profit or loss and financial investments available-for-sale are subsequently carried at fair value, except
for investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably
measured in which case the investments are stated at cost. Gains and losses arising from changes in the fair value of the financial assets
at fair value through profit or loss are included in the statement of income in the period which they arise. Gains and losses arising from
changes in fair value of financial investments available-for-sale are recognised directly in other comprehensive income until the securities
are derecognised or impaired at which time the cumulative gains or losses previously recognised in equity are recognised directly in the
statement of income. Foreign exchange gains or losses of financial investments available-for-sale are recognised in the statement of income
in the period it arises.

Financial investments held-to-maturity are subsequently measured at amortised cost using the effective interest method. Gains or losses
arising from the de-recognition or impairment of the securities are recognised in the statement of income.

Interest from financial assets held at fair value through profit or loss, financial investments available-for-sale and financial investments held-
to-maturity is calculated using the effective interest method and is recognised in the profit or loss. Dividends from available-for-sale equity
instruments are recognised in the statement of income when the entitys right to receive payment is established.

Loans and receivables are initially recognised at fair value which is the cash consideration to originate or purchase the loan including the
transaction costs, and measured subsequently at amortised cost using the effective interest rate method. Interest on loans is included in
the statement of income. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan
and recognised in the statement of income.

(d) Reclassification of financial assets

The Group and the Company may choose to reclassify a non-derivative financial assets held for trading out of the held for trading category
if the financial asset is no longer held for the purposes of selling in the near term. In addition, the Group and the Company may choose
to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale
categories if the Group and the Company have the intention and ability to hold these financial assets for the foreseeable future or until
maturity at the date of reclassification.

Reclassifications are made at the fair value at the date of the reclassification. The fair values of the securities become the new cost or
amortised cost as applicable, and no reversals of fair value gains or losses recorded before the reclassification date are subsequently made.
The effective interest rates for the securities reclassified to held-to-maturity category are determined at the reclassification date. Further
changes in estimates of future cash flows are recognised as an adjustment to the effective interest rates.
 INTO A NEW ERA

053

F FINANCIAL LIABILITIES

Financial liabilities are measured at amortised cost, except for trading liabilities and liabilities designated at fair value, which are held at fair value
through profit or loss. Financial liabilities are initially recognised at fair value less transaction costs for all financial liabilities not carried at fair
value through profit or loss. Financial liabilities at fair value through profit or loss are initially recognised at fair value, and transaction costs are
expensed in statement of income. Financial liabilities are derecognised when extinguished.

(a) Financial liabilities at fair value through profit or loss

This category comprises two sub-categories: financial liabilities classified as held for trading, and financial liabilities designated at fair value
through profit or loss upon initial recognition.

A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the
near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking. Derivatives are also categorised as held for trading unless they are designated and effective
as hedging instruments. The specific Group and Company accounting policy on derivatives is detailed in Note Q.

The financial liabilities measured at fair value through profit and loss upon initial recognition are trading derivatives and financial liabilities
designated at fair value.

Financial instruments, other than those held for trading, are classified as financial liabilities designated at fair value if they meet one or more
of the criteria set out below, and are so designated by management. The Group and the Company may designate financial instruments
at fair value when the designation:

eliminates or significantly reduces measurement or recognition inconsistencies that would otherwise arise from measuring financial assets
or financial liabilities, or recognising gains and losses on them, on different bases. Certain structured investments with embedded callable
range accrual swaps are designated by the Group under this criterion. The interest payable on these structured investments has been
hedged with trading derivatives. An accounting mismatch would arise if the structured investments were accounted for at amortised cost,
because the related derivatives are measured at fair value with changes in the fair value recognised in the statements of income. By
designating the structured investments at fair value, the movement in the fair value of the structured investments will also be recognised
in the statement of income.
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054

F FINANCIAL LIABILITIES (CONTINUED)

(a) Financial liabilities at fair value through profit or loss (Continued)

applies to groups of financial assets, financial liabilities or combinations thereof that are managed, and their performance evaluated, on
a fair value basis in accordance with a documented risk management or investment strategy; and

relates to financial instruments containing one or more embedded derivatives that significantly modify the cash flows resulting from those
financial instruments.

The fair value designation, once made, is irrevocable. Designated financial liabilities are recognised when the Group and the Company enter
into the contractual provisions of the arrangements with counterparties, which is generally on trade date, and are normally derecognised
when either sold (assets) or extinguished (liabilities). Measurement is initially at fair value, with transaction costs taken to the statements of
income. Subsequently, the fair values are remeasured, and gains and losses from changes therein are recognised in the statements of
income.

(b) Financial liabilities at amortised cost

Financial liabilities that are not classified as fair value through profit or loss fall into this category and are measured at amortised cost. The
financial liabilities measured at amortised cost are deposits from customers, deposits and placement of banks and other financial institutions,
repurchase agreements, bills and acceptances payable, sundry creditors, bonds and debentures, other borrowings, subordinated notes and
redeemable preference shares.

G DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets
have been transferred and substantially all the risks and rewards of ownership of the assets are also transferred (that is, if substantially all the
risks and rewards have not been transferred, the Group tests control to ensure that continuing involvement on the basis of any retained powers
of control does not prevent derecognition). Financial liabilities are derecognised when they have been redeemed or otherwise extinguished.

Collateral furnished by the Group under standard repurchase agreements transactions is not derecognised because the Group retains
substantially all the risks and rewards on the basis of the predetermined repurchase price, and the criteria for derecognition are therefore not
met.

H OFFSETTING FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
 INTO A NEW ERA

055

I IMPAIRMENT OF FINANCIAL ASSETS

(a) Assets carried at amortised cost

A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a
result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated.

The criteria that the Group and the Company use to determine whether there is objective evidence of impairment loss include indications
that the borrower or a group of borrowers is experiencing significant financial difficulty, the probability that they will enter bankruptcy or
other financial reorganisation, default of delinquency in interest or principal payments and where observable data indicates that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually
significant, and individually or collectively for financial assets that are not individually significant. If the Group and the Company determines
that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment.

The amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash
flows discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account and the amount of the loss is recognised in the statement of income. If a loan or financial investments held-to-maturity
have a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under
the contract.

Financial assets that have not been individually assessed are grouped together for portfolio impairment assessment. These financial assets
are grouped according to their credit risk characteristics for the purposes of calculating an estimated collective loss. These characteristics
are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors ability to pay all amounts
due according to the contractual terms of the assets being assessed. Future cash flows on a group of financial assets that are collectively
assessed for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those
in the group.

The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group and the Company to reduce
any differences between loss estimates and actual loss experience.

When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after taking into
consideration the realisable value of collateral, if any, when in the judgement of the management, there is no prospect of recovery.

If, in a subsequent period, the amount of impairment losses decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtors credit rating), the previously recognised impairment loss is
reversed by adjusting the allowance account. The amount of the reversal is recognised in the statement of income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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056

I IMPAIRMENT OF FINANCIAL ASSETS (CONTINUED)

(b) Assets classified as available-for-sale

The Group and the Company assess at each date of the statements of financial position whether there is objective evidence that the
financial asset is impaired.

For debt securities, the Group and the Company use criteria and measurement of impairment loss applicable for assets carried at
amortised cost above. If in a subsequent period, the fair value of a debt instrument classified as financial investments available-for-sale
increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in statement of
income, the impairment loss is reversed through statement of income.

In the case of equity instruments classified as financial investments available-for-sale, in addition to the criteria for assets carried at
amortised cost above, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether
the securities are impaired. If there is objective evidence that an impairment loss on financial investments available-for-sale has incurred,
the cumulative loss that has been recognised directly in equity is removed from other comprehensive income and recognised in the
statement of income. The amount of cumulative loss that is reclassified to the statement of income is the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognised in statement of income. Impairment
losses recognised in statement of income on equity instruments are not reversed through the statement of income.

J SALE AND REPURCHASE AGREEMENTS

Securities purchased under resale agreements (reverse repurchase agreements) are securities which the Group had purchased with a
commitment to re-sell at future dates. The commitment to re-sell the securities is reflected as an asset on the statements of financial position.

Conversely, obligations on securities sold under repurchase agreements (repurchase agreements) are securities which the Group had sold from
its portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligation to repurchase the securities are
reflected as a liability on the statements of financial position.

The difference between sale and repurchase price as well as purchase and resale price is treated as interest and accrued over the life of the
resale/repurchase agreement using the effective yield method.
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057

K PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure
that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or 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
Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance costs are charged to the statement of income during the financial period in which they are incurred.

Freehold land and capital work-in-progress are not depreciated. Other property, plant and equipment are depreciated on a straight line basis
to write off the cost of the assets to their residual values over their estimated useful lives, summarised as follows:

Buildings on freehold land 40 years

Buildings on leasehold land 50 years or more 40 years or over the remaining period of
the lease, whichever is shorter

Leasehold land 50 years or over the remaining period of

the lease, whichever is shorter
Buildings on leasehold land less than 50 years 40-50 years or over the remaining period of
the lease, whichever is shorter
Office equipment, furniture and fixtures
office equipment 3-5 years
furniture and fixtures 5-10 years

Renovations to rented premises 5 years or over the period of the tenancy,

whichever is shorter
Computer equipment and software
servers and hardware 3-5 years
ATM machine 10 years

Computer equipment and software under lease 3 years or over the period of the lease,
whichever is shorter

Motor vehicles 5 years

General plant and machinery 5-8 years

Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment are reviewed for impairment at the end of each reporting period and whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, it is written down to its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in non-interest income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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058

L INVESTMENT PROPERTIES

Investment properties, comprising principally land and office buildings, are held for long term rental yields or for capital appreciation or both,
and are not occupied by the Group and the Company.

Investment properties of the Company are stated at cost less accumulated depreciation and accumulated impairment loss. At the Group level,
investment properties of the Company are classified as property, plant and equipment as the properties are rented out to an entity within the
Group.

Investment properties of the Group are stated at fair value, representing the open-market value determined annually by external valuers. Fair
value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this
information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow
projections. Changes in fair values are recorded in the statements of income as part of other income.

On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its
disposal, it shall be derecognised (eliminated from the statements of financial position). The difference between the net disposal proceeds and
the carrying amount is recognised in statement of income in the period of the retirement or disposal.

M INTANGIBLE ASSETS

(a) Goodwill
Goodwill arising from business combination represents the excess of the cost of acquisition and the fair value of the Groups share of the
net of identifiable assets of the acquired subsidiary. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.

Goodwill is allocated to cash-generating units (CGU) for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which goodwill arose,
identified according to operating segment.

Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment. The
carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell.
Any impairment is recognised immediately as an expense and is not subsequently reversed.

Goodwill on acquisitions of associates and joint arrangements respectively are included in investments in associates and joint arrangements.
Such goodwill is tested for impairment as part of the overall balance.
 INTO A NEW ERA

059

M INTANGIBLE ASSETS (CONTINUED)

(b) Other intangible assets

Other intangible assets are measured at fair value. Other intangible assets include customer relationships, core deposits, computer software
and license and club debentures. Other intangible assets are initially recognised when they are separable or arise from contractual or other
legal rights, the cost can be measured reliably and, in the case of intangible assets not acquired in a business combination, where it is
probable that future economic benefits attributable to the assets will flow from their use. The value of intangible assets which are acquired
in a business combination is generally determined using fair value at acquisition. Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to use the specific software.

Intangible assets that have an indefinite useful life, or are not yet ready for use, are tested for impairment annually. This impairment test
may be performed at any time during the year, provided it is performed at the same time every year. An intangible asset recognised during
the current period is tested before the end of the current year.

Intangible assets that have a finite useful life are stated at cost less accumulated amortisation and accumulated impairment losses, and
are amortised over their estimated useful lives.

Intangible assets are amortised over their finite useful lives as follows:

Customer relationships:
Credit card 12 years
Revolving credit 4 5 years
Overdraft 6 7 years
Trade finance 5 years

Core deposits 8 20 years

Computer software 3-15 years
Club debentures 10 years

N ASSETS PURCHASED UNDER LEASE

(a) Finance lease

Assets purchased under lease which in substance transfers the risks and benefits of ownership of the assets to the Group or the Company
are capitalised under property, plant 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 term. Such leased assets
are subject to depreciation on the same basis as other property, plant and equipment.

Leases which do not meet such criteria are classified as operating lease and the related rentals are charged to statement of income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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060

N ASSETS PURCHASED UNDER LEASE (CONTINUED)

(b) Operating lease

Leasehold land
Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term
is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid lease payments
that are amortised over the lease term in accordance with the pattern of benefits provided.

Others
Leases of assets under which all the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments
made under operating leases are charged to the statements of income on a straight line basis over the period of the lease.

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.

O ASSETS SOLD UNDER LEASE

(a) Finance lease

When assets are sold under a finance lease, the present value of the lease payments is recognised as a debtor. The difference between
the gross debtor and the present value of the debtor is recognised as unearned finance income. Lease income is recognised over the
term of the lease using the net investment method, which reflects a constant periodic rate of return.

(b) Operating lease

Assets leased out under operating leases are included in property, plant and equipment in the statements of financial position. They are
depreciated over their expected useful lives on a basis consistent with similar property, plant and equipment. Rental income is recognised
on a straight line basis over the lease term.

P BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable represent the Groups own bills and acceptances rediscounted and outstanding in the market.
 INTO A NEW ERA

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Q DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at
their fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation
techniques, including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fair
value is positive and as liabilities when fair value is negative. Changes in the fair value of any derivatives that do not qualify for hedge accounting
are recognised immediately in the statement of income.

The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e. the fair value of the consideration given or received)
unless the fair value of the instrument is evidenced by comparison with other observable current market transactions in the same instrument
(i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When
such evidence exists, the Group and the Company recognise the fair value of derivatives in statement of income immediately.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and
if so, the nature of the item being hedged. The Group and the Company designate certain derivatives as either: (1) hedges of the fair value of
recognised assets or liabilities or firm commitments (fair value hedge) or (2) hedges of future cash flows attributable to a recognised asset or
liability, or a highly probable forecasted transaction (cash flow hedge) or (3) hedges of a net investment in a foreign operation (net investment
hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

At the inception of the transaction, the Group and the Company document the relationship between hedging instruments and hedged items,
as well as their risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.

(a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in the statement of income,
together with any changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item is amortised to
the statement of income based on recalculated effective interest rate method over the period to maturity. The adjustment to the carrying
amount of a hedged equity security remains as part of the carrying amount until the disposal of the equity security.

(b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognised in
equity. The gain and loss relating to the ineffective portion is recognised immediately in the statement of income. Amounts accumulated
in equity are recycled to the statement of income in the periods in which the hedged item will affect the statement of income.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the
statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity
is immediately transferred to the statement of income.
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FINANCIAL STATEMENTS

062

Q DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING (CONTINUED)

(c) Net investment hedge

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging
instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss relating to the ineffective portion is
recognised immediately in the statement of income.

Gains and losses accumulated in the equity are recycled to the statement of income when the foreign operation is partially disposed or
sold.

(d) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not
qualify for hedge accounting are recognised immediately in the statement of income.

R CURRENCY TRANSLATIONS

(a) Functional and presentation currency

Items included in the Financial Statements of each of the Groups entities 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, which is the Companys functional and presentation currency.

(b) Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income, except when deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between
translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in the amortised cost are recognised in statement of income, and other changes in the carrying
amount are recognised in equity.
 INTO A NEW ERA

063

R CURRENCY TRANSLATIONS (CONTINUED)

(b) Foreign currency transactions and balances (continued)

Translation differences on non-monetary financial assets and liabilities, such as equity instruments held at fair value through profit or loss,
are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as
available-for-sale are included in the revaluation reserve-financial investments available-for-sale in equity.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statements of financial position presented are translated at the closing rate at the date of the statements
of financial position;

income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and

all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other
currency instruments designated as hedges of such investments, are taken to shareholders equity. When a foreign operation is partially
disposed of or sold, exchange differences that were recorded in equity are recognised in the statement of income as part of the gain or
loss on sale.

Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

S INCOME AND DEFERRED TAXES

The tax expense for the period comprises current and deferred tax. Tax is recognised in statement of income, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is recognised in other comprehensive
income or directly in equity, respectively.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based
upon the taxable profits.

Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Financial Statements. However, deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary
differences and unused tax losses can be utilised.
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064

S INCOME AND DEFERRED TAXES (CONTINUED)

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures except where the timing
of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in
the foreseeable future.

Deferred income tax related to the fair value re-measurement of financial investments available-for-sale, which is charged or credited directly to
equity, is also credited or charged directly to equity and is subsequently recognised in the statement of income together with deferred gain or
loss.

Deferred income tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the statements of financial
position date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity
or different taxable entities where there is an intention to settle the balances on a net basis.

T SHARE CAPITAL

(a) Classification
Ordinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Other shares are classified as
equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument
classified as an equity instrument are charged directly to equity.

(b) Share issue costs

Incremental external costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.

(c) Dividends
Dividends on ordinary shares are recognised as a liability when the shareholders right to receive the dividend is established.

(d) Repurchase, disposal and reissue of share capital (treasury shares)

Where any group company purchases the companys equity share capital (treasury shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted from equity attributable to the companys equity holders until the shares
are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable
incremental transaction costs and the related income tax effects, is included in equity attributable to the companys equity holders.
 INTO A NEW ERA

065

U EMPLOYEE BENEFITS

(a) Short-term employee benefits

The Group and the Company recognise a liability and an expense for bonuses. The Group and the Company recognise a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.

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 and the Company.

(b) Post employment benefits

The Group and the Company have various post employment benefit schemes. These benefits plans are either defined contribution or
defined benefit plans.

Defined contribution plans

A defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity (a
fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all
employee benefits relating to employee service in the current and prior periods.

The Groups and the Companys contributions to defined contribution plans are charged to the statement of income. Once the contributions
have been paid, the Group and the Company have no further payment obligations. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payments is available.

Defined benefit plans

Defined benefit plan is a pension plan that is not a defined contribution plan. Defined benefit plans define an amount of pension benefit
that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The defined benefit liability recognised in the statement of financial position is the present value of the defined benefit obligation at the end
of the reporting period less the fair value of plan assets, together with adjustments for actuarial gains/losses and unrecognised past service
cost.

The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity
such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the
end of the reporting period.

The defined benefit obligation, calculated using the projected credit unit method, is determined by independent actuaries, by discounting
estimated future cash outflows using market rates on government bonds that are denominated in the currency in which the benefits will
be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in profit or loss.

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066

U EMPLOYEE BENEFITS (CONTINUED)

(c) Other long term employee benefits

The cost of long term employee benefits (for example, long term service leave) is accrued to match the rendering of the services by the
employees concerned using a basis similar to that for defined benefit plans for the liability which is not expected to be settled within 12
months, except that remeasurements are recognised immediately in profit or loss.

(d) Termination benefits

Termination benefits are payable whenever an employees employment is terminated before the normal retirement date or whenever an
employee accepts voluntary redundancy in exchange for these benefits. The Group and the Company recognise termination benefits at the
earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises
costs for are structuring that is within the scope of MFRS 137 and involves the payment of termination benefits. In the case of an offer
made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept
the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(e) Bonus plans

The Group recognises a liability and an expense for bonuses, based on a formula that takes into consideration the profit attributable to
the Companys shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a
past practice that has created a constructive obligation.

(f) Share-based compensation benefits

Management Equity Scheme (MES or the Scheme)
The Group has an equity-settled, share-based compensation plan of the equities in the Group, which is settled by a shareholder of the
Company. The Group receiving the employees services should account for the plan as equity settled when it has no obligation to settle
the share-based payment transaction. The value of the employee services received in exchange for the grant of options of the Group is
recognised as an expense with a corresponding increase in the share option reserves over the vesting period. The total amount to be
recognised over the vesting period is determined by reference to the fair value of the options granted on the date of grant. Non-market
vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the
vesting date.

At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become
exercisable on the vesting date and recognises the impact of the revision of the estimate to the statement of income, with a corresponding
adjustment to the share option reserve over the remaining vesting period.

Employee Ownership Plan (EOP)

The Group operates an equity-settled, share-based compensation plan, where ordinary shares of the Company are purchased from the
market at market value and awarded to the eligible executive employees.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date on which the award is fully released to relevant employees (the
final release date). The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense
in statement of income over the period of release, based on the best available estimate of the number of shares expected to be released
at each of the relevant release date. On the final release date, the estimate will be revised to equal the actual number of shares that are
ultimately released to the employees.
 INTO A NEW ERA

067

V IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The
recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the statement of income unless it reverses a previous revaluation in which case it is charged to the revaluation
surplus. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is
recognised in the statements of comprehensive income unless it reverses an impairment loss on a revalued asset in which case it is taken to
revaluation surplus.

W FORECLOSED PROPERTIES

Foreclosed properties are stated at the lower of carrying amount and fair value less costs to sell and reported within Other Assets.

X PROVISIONS

Provisions are recognised by the Group and the Company when all of the following conditions have been met:

(i) the Group and the Company have a present legal or constructive obligation as a result of past events;

(ii) it is probable that an outflow of resources to settle the obligation will be required; and

(iii) a reliable estimate of the amount of obligation can be made.

Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.

Provisions are measured at the present values of the expenditures expected to be required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to passage
of time is recognised as interest expense.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

068

Y FINANCIAL GUARANTEE CONTRACTS

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs
because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees
are given to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts and other banking facilities.

Financial guarantees are initially recognised in the Financial Statements at fair value on the date the guarantee was given. The guarantees are
agreed on arms length terms and the value of the premium agreed corresponds to the value of the guarantee obligation. No receivable for the
future premiums is recognised. Subsequent to initial recognition, the Groups liabilities under such guarantees are measured at the higher of
the amount determined in accordance with MFRS 137 Provision, Contingent Liabilities and Contingent Assets, and the amount initially
recognised less, when appropriate, accumulative amortisation recognised in accordance with MFRS 118 Revenue. These estimates are
determined based on experience of similar transactions and history of past losses, supplemented by the judgment of management. The fee
income earned is recognised on a straight-line basis over the life of the guarantee.

Any increase in the liability relating to guarantees is reported in the statement of income within overheads.

Z CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in hand, bank balances and deposit placements maturing less than one month.

AA SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an
entity. The Group has determined the Group Management Committee as its chief operating decision-maker.

Intra-segment revenue and costs are eliminated at head office. Income and expenses directly associated with each segment are included in
determining business segment performance.
 INTO A NEW ERA

069

AB CONTINGENT ASSETS AND CONTINGENT LIABILITIES

Contingent assets arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the
Group. As this may result in the recognition of income that may never be realised, contingent assets are not recognised in the Groups financial
statements.

Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, are possible obligations that arise from
past events whose existence will be confirmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly
within the control of the Group; or are present obligations that have arisen from past events but are not recognised because it is not probable
that settlement will require the outflow of economic benefits, or because the amount of the obligations cannot be reliably measured.

Contingent liabilities are not recognised in the Financial Statements but are disclosed unless the probability of settlement is remote.

AC NON-CURRENT ASSETS/DISPOSAL GROUPS HELD FOR SALE

Non-current assets/disposal groups are classified as assets held for sale and stated at the lower of carrying amount and fair value less cost
to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use.

AD TRUST ACTIVITIES

The Group acts as trustees and in other fiduciary capabilities that result in holding or placing of assets on behalf of individuals, trust and other
institutions. These assets and income arising thereon are excluded from the Financial Statements, as they are not assets of the Group.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

070 Notes the Financial Statements

for the financial year ended 31 December 2013

1 GENERAL INFORMATION

The principal activity of the Company is investment holding. The principal activities of the significant subsidiaries as set out in Note 12 to the
Financial Statements, consist of commercial banking, investment banking, Islamic banking, offshore banking, debt factoring, trustee and nominee
services, property ownership and management, management of unit trust funds and fund management business, stock and sharebroking and
the provision of other related financial services. There was no significant change in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Bursa Malaysia
Securities Berhad.

The address of the registered office and principal place of business of the Company is Level 13, Menara CIMB, Jalan Stesen Sentral 2, Kuala
Lumpur Sentral, 50470 Kuala Lumpur, Malaysia.

2 CASH AND SHORT-TERM FUNDS

The Group The Company
31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
RM000 RM000 RM000 RM000 RM000
Restated Restated

Cash and balances with banks and

other financial institutions 10,732,954 10,281,208 9,181,251 5,032 6,546
Money at call and deposit placements
maturing within one month 22,945,928 20,478,691 25,020,717 64,541 128,529

33,678,882 30,759,899 34,201,968 69,573 135,075

(i) Included in the Groups cash and short-term funds is non-interest bearing statutory deposits of a foreign subsidiary of RM3,741,377,000
(31 December 2012: RM4,060,668,000; 1 January 2012: RM3,887,585,000) maintained with Bank Indonesia in compliance with their
applicable legislation.
 INTO A NEW ERA

071

2 CASH AND SHORT-TERM FUNDS (CONTINUED)

(ii) Monies held in trust in relation to the Groups stockbroking business:

The Group
31 December 31 December
2013 2012
RM000 RM000

Remisiers' trust balances 30,429 29,786

3 DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

The Group
31 December 31 December
2013 2012
RM000 RM000

Licensed banks 3,143,364 2,673,721

Licensed investment banks 17,010 232,154
Bank Negara Malaysia and other central banks 543,990 1,993,574
Other financial institutions 84,655 90,882

3,789,019 4,990,331
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

072

4 FINANCIAL ASSETS HELD FOR TRADING

The Group
31 December 31 December
2013 2012
RM000 RM000

Money market instruments:

Unquoted:

Malaysian Government securities 422,188 310,623

Cagamas bonds 14,891
Khazanah bonds 16,914
Malaysian Government treasury bills 75,075 215,116
Bank Negara Malaysia monetary notes 3,638,918 7,647,761
Negotiable instruments of deposit 1,874,343 2,929,556
Bankers acceptances and Islamic accepted bills 345,728 584,737
Credit-linked notes 49,347 46,291
Commercial papers 362,189 320,059
Other Government's securities 4,197,517 3,574,330
Government investment issues 106,451 413,357

11,086,647 16,058,744
Quoted securities:
In Malaysia
Shares 1,533,392 1,056,010

Outside Malaysia
Shares 114,456 2,452
Private and Islamic debt securities 325,660 387,834
Other Government bonds 1,100,785 621,390
Bank Indonesia certificates 546,404
Investment linked funds 497,482 472,208

4,118,179 2,539,894
Unquoted securities:
In Malaysia
Private and Islamic debt securities 5,324,359 4,886,688
Shares 6,716 6,544

Outside Malaysia
Private and Islamic debt securities 2,791,654 1,822,141
Shares 66,332 59,769
Unit trust 9,393 9,496

8,198,454 6,784,638

Total financial assets held for trading 23,403,280 25,383,276

 INTO A NEW ERA

073

5 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

The Group
31 December 31 December
2013 2012
RM000 RM000

Money market instruments:

Unquoted:
Malaysian Government Securities 656,270 860,826
Cagamas bonds 239,735 290,288
Khazanah bonds 322,874 400,350
Other Government securities 254,035 104,099
Other Government treasury bills 27,052 49,398
Bank Negara Malaysia monetary notes 497,386
Government investment issues 2,518,856 3,480,923
Commercial papers 9,999

4,018,822 5,693,269
Quoted securities:
In Malaysia
Shares 221,771 20,476
Unit trusts 163,834 134,276

Outside Malaysia
Shares 27 289
Private and Islamic debt securities 1,586,488 1,212,714
Other Government bonds 4,611,523 3,211,801
Unit trusts 86,798 292,873

6,670,441 4,872,429
Unquoted securities:
In Malaysia
Private and Islamic debt securities 13,629,307 13,982,613
Shares 1,080,282 1,003,666
Loan stocks 10,433 18,507
Property funds 189 194

Outside Malaysia
Shares 51,720 75,903
Private equity and unit trust funds 81,083 88,291
Private and Islamic debt securities 5,057,923 3,758,795
Loan stocks 1,672 1,889

19,912,609 18,929,858

30,601,872 29,495,556
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

074

5 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE (CONTINUED)

The Group
31 December 31 December
2013 2012
RM000 RM000

Allowance for impairment losses:

Private debt securities (100,236) (115,716)
Quoted shares (15,988) (12,464)
Quoted bonds (5,650) (8,423)
Unquoted shares (135,121) (134,972)
Unit trusts (386) (1,898)
Loan stocks (10,433) (14,561)

(267,814) (288,034)

30,334,058 29,207,522

Included in financial investments available-for-sale of the Group are securities in the form of unit trusts managed by CIMB Principal Asset
Management Berhad on behalf of the Group amounting to RM4,083 million (31 December 2012: RM4,329 million).

The table below shows the movements in allowance for impairment losses during the financial year for the Group:

The Group
2013 2012
RM000 RM000

At 1 January 288,034 376,356

Net allowance made during the financial year 41,568 5,749
Disposal of securities (58,976) (92,135)
Exchange fluctuation (2,812) (1,936)

At 31 December 267,814 288,034

 INTO A NEW ERA

075

6 FINANCIAL INVESTMENTS HELD-TO-MATURITY

The Group
31 December 31 December
2013 2012
RM000 RM000

Money market instruments:

Unquoted:
Malaysian Government Securities 802,446
Cagamas bonds 160,997 4,834
Other government securities 780,810 754,593
Other government treasury bills 16,830
Malaysian Government investment issues 808,104 20,686
Bank Negara Malaysia monetary notes 9,845 9,719
Khazanah bonds 66,736

2,645,768 789,832
Quoted securities:
Outside Malaysia
Private debt securities 1,930,753 2,560,527
Islamic bonds 6,789 18,519
Other Government bonds 501,824 177,690
Bank Indonesia certificates 155,219 150,745

2,594,585 2,907,481
Unquoted securities:
In Malaysia
Private debt securities 4,479,105 3,654,055
Loan stocks 27,388 28,813
Danaharta Urus Sdn Bhd (DUSB) bonds 130,139

4,506,493 3,813,007
Outside Malaysia
Private debt securities 1,116,035 1,485,557

10,862,881 8,995,877
Accretion of discount net of amortisation of premium (8,516) 30,746
Less: Allowance for impairment losses (32,872) (41,329)

10,821,493 8,985,294
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

076

6 FINANCIAL INVESTMENTS HELD-TO-MATURITY (CONTINUED)

In 2013, the Group reclassified previously held financial investments available-to-sale to financial investments held-to-maturity. Given the long
term nature of the holdings, the bonds were reclassified from financial investments available-to-sale to financial investments held-to-maturity as
part of the Groups Asset Liability Management. It reflects the Groups positive intent and ability to hold them until maturity. The bonds were
transferred at the prevailing mark-to-market prices.

The fair value and the carrying amount of the financial investments, and the balance of the revaluation reserve-financial investments available-
for-sale at the date of reclassification were RM774,913,000, RM776,148,000 and RM1,235,000 respectively.

As at 31 December 2013, the remaining unamortised revaluation reserve-financial investments available-for-sale amounting to RM1,182,000.

Included in the financial investments held-to-maturity of the Group as at 31 December 2013 are 10-year promissory notes of THB9 million
(31 December 2012: THB263 million) maturing between 2013 to 2015. The promissory notes were received from Thai Asset Management
Corporation (TAMC) for settlement of impaired loans transferred by CIMB Thai to TAMC. Such promissory notes are non-transferable, bear
interest at the average deposit rate of 5 major banks in Thailand and availed by the Financial Institutions Development Fund. As part of the
agreement to transfer the impaired loans to TAMC, CIMB Thai has a gain and loss sharing arrangement with TAMC arising from the recovery
of the impaired loans. During the financial year, CIMB Bank Thai has recognised a gain of approximately RM113 million (2012: RM133 million)
arising from the sharing arrangement.

The table below shows the movements in allowance for impairment losses during the financial year for the Group:

The Group
2013 2012
RM000 RM000

At 1 January 41,329 46,623

Allowance written back during the financial year (2,056) (2,906)
Disposal of securities (5,408)
Exchange fluctuation (993) (2,388)

At 31 December 32,872 41,329

7 DERIVATIVE FINANCIAL INSTRUMENTS

The following tables summarise the contractual or underlying principal amounts of trading derivatives and financial instruments held for hedging
purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding as at statements of financial
position date, and do not represent amounts at risk.

Trading derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in Derivative
Financial Instruments Assets and Liabilities respectively.
 INTO A NEW ERA

077

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group The Company
Principal Fair values Principal Fair values
amount Assets Liabilities amount Assets Liabilities
RM000 RM000 RM000 RM000 RM000 RM000

At 31 December 2013
Trading derivatives
Foreign exchange derivatives
Currency forwards 15,535,868 238,332 (245,114)
Up to 1 year 12,621,248 201,431 (142,366)
More than 1 year to 3 years 831,402 18,567 (21,322)
More than 3 years 2,083,218 18,334 (81,426)
Currency swaps 74,588,373 891,838 (984,888)
Up to 1 year 73,927,701 858,684 (979,138)
More than 1 year to 3 years 391,499 13,487 (3,224)
More than 3 years 269,173 19,667 (2,526)
Currency spots 7,270,147 6,317 (12,801)
Up to 1 year 7,270,147 6,317 (12,801)
Currency options 3,605,527 97,774 (88,128)
Up to 1 year 2,629,363 34,023 (24,965)
More than 1 year to 3 years 520,621 12,429 (12,424)
More than 3 years 455,543 51,322 (50,739)
Cross currency interest rate swaps 33,767,451 1,098,021 (1,043,097)
Up to 1 year 3,956,556 100,069 (144,281)
More than 1 year to 3 years 11,912,611 213,787 (392,459)
More than 3 years 17,898,284 784,165 (506,357)
134,767,366 2,332,282 (2,374,028)
Interest rate derivatives
Interest rate swaps 263,828,147 2,063,089 (1,541,162) 500,000 3,940
Up to 1 year 71,813,536 96,482 (109,301)
More than 1 year to 3 years 111,752,273 600,116 (573,553) 500,000 3,940
More than 3 years 80,262,338 1,366,491 (858,308)
Interest rate futures 4,646,388 12,418 (199)
Up to 1 year 3,734,506 10,901 (162)
More than 1 year to 3 years 911,882 1,517 (37)
More than 3 years
Interest rate options 598,180 1,701 (7,776)
Up to 1 year 359,691 108 (5,157)
More than 1 year to 3 years 238,489 1,593 (2,619)
269,072,715 2,077,208 (1,549,137) 500,000 3,940
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

078

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group The Company
Principal Fair values Principal Fair values
amount Assets Liabilities amount Assets Liabilities
RM000 RM000 RM000 RM000 RM000 RM000
Equity related derivatives
Index futures 43,473 (755)
Up to 1 year 43,473 (755)
Equity options 7,332,980 103,070 (1,401,984)
Up to 1 year 2,670,549 59,227 (823,089)
More than 1 year to 3 years 1,983,267 15,312 (541,463)
More than 3 years 2,679,164 28,531 (37,432)
Equity swaps 812,041 17,113 (172,249)
Up to 1 year 115,944 8,935 (140,632)
More than 1 year to 3 years 61,862 4,591 (28,020)
More than 3 years 634,235 3,587 (3,597)
8,188,494 120,183 (1,574,988)
Commodity related derivatives
Commodity options 238,781 158,512 (48,376)
Up to 1 year 73,965 1,086 (944)
More than 1 year to 3 years 77,304 109,769 (33,496)
More than 3 years 87,512 47,657 (13,936)
Commodity swaps 1,961,518 106,882 (105,681)
Up to 1 year 1,850,789 79,803 (79,308)
More than 1 year to 3 years 103,658 20,960 (20,254)
More than 3 years 7,071 6,119 (6,119)
2,200,299 265,394 (154,057)
Credit related contract
Credit default swaps 7,656,021 38,265 (89,176)
Up to 1 year 3,144,871 1,493 (63,846)
More than 1 year to 3 years 2,180,546 15,731 (10,541)
More than 3 years 2,330,604 21,041 (14,789)

Hedging derivatives
Interest rate swaps 19,335,113 182,117 (219,736)
Up to 1 year 21,526 41 (55)
More than 1 year to 3 years 3,942,730 77,097 (25,010)
More than 3 years 15,370,857 104,979 (194,671)
Currency forward 190,863 (4,646)
Up to 1 year 190,863 (4,646)
Cross currency interest rate swaps 2,224,201 5,004 (43,840)
Up to 1 year 326,652 (19,187)
More than 1 year to 3 years 1,380,496 414 (4,918)
More than 3 years 517,053 4,590 (19,735)
21,750,177 187,121 (268,222)
Total derivative assets/(liabilities) 443,635,072 5,020,453 (6,009,608) 500,000 3,940
 INTO A NEW ERA

079

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group The Company
Principal Fair values Principal Fair values
amount Assets Liabilities amount Assets Liabilities
RM000 RM000 RM000 RM000 RM000 RM000
Restated Restated Restated
At 31 December 2012
Trading derivatives
Foreign exchange derivatives
Currency forwards 13,542,140 170,004 (171,271)
Up to 1 year 10,297,294 67,972 (104,824)
More than 1 year to 3 years 1,136,705 59,776 (33,953)
More than 3 years 2,108,141 42,256 (32,494)
Currency swaps 53,863,289 235,347 (193,694)
Up to 1 year 53,461,234 219,441 (191,879)
More than 1 year to 3 years 215,636 5,172 (1,251)
More than 3 years 186,419 10,734 (564)
Currency spots 5,559,618 2,491 (3,729)
Up to 1 year 5,559,618 2,491 (3,729)
Currency options 1,592,825 7,455 (6,494)
Up to 1 year 1,592,825 7,455 (6,494)
Cross currency interest rate swaps 20,868,765 578,385 (339,913) 315,000 (8,892)
Up to 1 year 3,511,121 137,088 (87,179) 315,000 (8,892)
More than 1 year to 3 years 7,257,431 189,356 (109,816)
More than 3 years 10,100,213 251,941 (142,918)
95,426,637 993,682 (715,101) 315,000 (8,892)

Interest rate derivatives

Interest rate swaps 251,594,657 2,076,142 (1,675,990) 500,000 9,398
Up to 1 year 36,432,806 71,625 (68,101)
More than 1 year to 3 years 161,514,518 700,612 (680,522) 500,000 9,398
More than 3 years 53,647,333 1,303,905 (927,367)
Interest rate futures 8,199,677 20,571 (606)
Up to 1 year 4,571,511 8,894 (551)
More than 1 year to 3 years 3,119,440 10,459 (55)
More than 3 years 508,726 1,218
Interest rate options 2,478,652 1,400 (14,283)
Up to 1 year 290,000 862 (1,788)
More than 1 year to 3 years 170,000 489 (3,959)
More than 3 years 2,018,652 49 (8,536)
262,272,986 2,098,113 (1,690,879) 500,000 9,398
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

080

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group The Company
Principal Fair values Principal Fair values
amount Assets Liabilities amount Assets Liabilities
RM000 RM000 RM000 RM000 RM000 RM000
Restated Restated Restated
Equity related derivatives
Index futures 1,245,997 15,325 (15,336)
Up to 1 year 713,516 2,616 (2,627)
More than 1 year to 3 years 151,964 2,556 (2,556)
More than 3 years 380,517 10,153 (10,153)
Equity options 8,706,537 551,515 (983,801)
Up to 1 year 3,355,279 524,471 (941,504)
More than 1 year to 3 years 2,630,101 26,202 (29,627)
More than 3 years 2,721,157 842 (12,670)
Equity swaps 340,784 937 (945)
More than 3 years 340,784 937 (945)
10,293,318 567,777 (1,000,082)
Commodity related derivatives
Commodity options 521,350 141,739 (141,752)
Up to 1 year 367,498 16,895 (16,908)
More than 3 years 153,852 124,844 (124,844)
Commodity swaps 199,464 19,072 (19,870)
Up to 1 year 163,152 11,675 (12,565)
More than 1 year to 3 years 29,711 3,458 (3,366)
More than 3 years 6,601 3,939 (3,939)
Commodity futures 135 15
Up to 1 year 135 15
720,949 160,826 (161,622)
Credit related contract
Credit default swaps 4,306,161 8,881 (84,792)
Up to 1 year 2,445,962 819 (59,782)
More than 1 year to 3 years 1,064,578 3,488 (9,653)
More than 3 years 795,621 4,574 (15,357)

Hedging derivatives
Interest rate swaps 18,488,500 240,707 (384,450) 150,000 1,314
Up to 1 year 1,088,711 10,360 (3,697) 150,000 1,314
More than 1 year to 3 years 3,700,279 127,898 (53,971)
More than 3 years 13,699,510 102,449 (326,782)
Currency forward 208,663 203
Up to 1 year 208,663 203
Cross currency interest rate swaps 991,873 13,780 (12,266)
More than 1 year to 3 years 563,674 8,322 (1,055)
More than 3 years 428,199 5,458 (11,211)
19,689,036 254,690 (396,716) 150,000 1,314

Total derivative assets/(liabilities) 392,709,087 4,083,969 (4,049,192) 965,000 10,712 (8,892)

 INTO A NEW ERA

081

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group
Principal Fair values
amount Assets Liabilities
RM000 RM000 RM000
Restated Restated Restated

At 1 January 2012

Trading derivatives

Foreign exchange derivatives

Currency forwards 11,664,292 152,198 (172,128)
Up to 1 year 9,407,525 107,872 (126,346)
More than 1 year to 3 years 971,908 40,641 (22,110)
More than 3 years 1,284,859 3,685 (23,672)
Currency swaps 38,210,727 412,086 (328,753)
Up to 1 year 37,870,738 394,071 (324,315)
More than 1 year to 3 years 128,276 6,806 (4,081)
More than 3 years 211,713 11,209 (357)
Currency spots 3,185,666 2,100 (2,329)
Up to 1 year 3,185,666 2,100 (2,329)
Currency options 2,246,845 9,030 (14,226)
Up to 1 year 2,246,845 9,030 (14,226)
Cross currency interest rate swaps 16,993,262 535,129 (393,016)
Up to 1 year 3,516,246 90,581 (130,104)
More than 1 year to 3 years 6,199,649 255,084 (106,253)
More than 3 years 7,277,367 189,464 (156,659)
72,300,792 1,110,543 (910,452)
Interest rate derivatives
Interest rate swaps 243,180,308 2,676,238 (2,306,442)
Up to 1 year 32,606,090 85,636 (60,632)
More than 1 year to 3 years 131,899,720 1,010,775 (1,050,691)
More than 3 years 78,674,498 1,579,827 (1,195,119)
Interest rate futures 11,930,771 31,861 (2,279)
Up to 1 year 5,734,380 10,485 (2,279)
More than 1 year to 3 years 4,844,425 17,375
More than 3 years 1,351,966 4,001
Interest rate options 150,000 10,407 (4,549)
More than 1 year to 3 years 100,000 9,730 (4,542)
More than 3 years 50,000 677 (7)
255,261,079 2,718,506 (2,313,270)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

082

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group
Principal Fair values
amount Assets Liabilities
RM000 RM000 RM000
Restated Restated Restated

Equity related derivatives

Index futures 17,121 1 (132)
Up to 1 year 17,121 1 (132)
Equity options 8,651,175 60,008 (392,563)
Up to 1 year 1,839,406 50,392 (290,103)
More than 1 year to 3 years 3,087,134 351 (69,162)
More than 3 years 3,724,635 9,265 (33,298)
Equity swaps 525,927 416 (385)
More than 3 years 525,927 416 (385)
9,194,223 60,425 (393,080)
Commodity related derivatives
Commodity options 203,200 48,048 (48,048)
Up to 1 year 34,947 10,075 (10,075)
More than 1 year to 3 years 168,253 37,973 (37,973)
Commodity swaps 80,961 4,456 (5,498)
Up to 1 year 44,312 3,730 (3,663)
More than 1 year to 3 years 36,649 726 (1,835)
Commodity futures 39,642 782 (863)
Up to 1 year 38,235 684 (845)
More than 1 year to 3 years 1,407 98 (18)
323,803 53,286 (54,409)
Credit related contract
Credit default swaps 1,755,333 31,642 (38,577)
Up to 1 year 158,850 24
More than 1 year to 3 years 839,249 3,613 (10,290)
More than 3 years 757,234 28,005 (28,287)

Hedging derivatives
Interest rate swaps 14,221,710 257,182 (472,290)
Up to 1 year 20,911 318 (329)
More than 1 year to 3 years 1,163,570 32,874 (10,503)
More than 3 years 13,037,229 223,990 (461,458)
Cross currency interest rate swaps 71,131 (597)
More than 3 years 71,131 (597)
14,292,841 257,182 (472,887)
Total derivative assets/(liabilities) 353,128,071 4,231,584 (4,182,675)
 INTO A NEW ERA

083

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

(i) Fair value hedges

Fair value hedges are used by the Group and the Company to protect it against the changes in fair value of financial assets and financial
liabilities due to movements in market interest rates. The Group and the Company use interest rate swaps and cross-currency interest rate
swaps to hedge against interest rate risk of loans, subordinated obligations, negotiable instruments of deposits issued and bonds. For
designated and qualifying fair value hedges, the changes in fair value of derivative and item in relation to the hedged risk are recognised
in the statement of income. If the hedge relationship is terminated, the cumulative adjustment to the carrying amount of the hedged item
is amortised in the statement of income based on recalculated effective interest rate over the residual period to maturity, unless the hedged
item has been derecognised, in which case, it is released to the statement of income immediately.

Included in the net non-interest income is the net gains and losses arising from fair value hedges during the financial year as follows:

The Group The Company

31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Gain/(Loss) on hedging instruments 75,671 (45,817) (869) (2,957)

(Loss)/Gain on the hedged items attributable to the hedged risk (121,507) 18,905 (2,663) 3,020

(ii) Net investment hedge

Foreign exchange swaps and non derivative financial liabilities are used to hedge the Groups exposure to foreign exchange risk on net
investments in foreign operations. Gains or losses on retranslation of the foreign exchange swaps are transferred to equity to offset any
gains or losses on translation of the net investment in foreign operations. The fair value changes of the hedging instruments attributable
to the risk not designated as hedged in the hedging relationship was recognised in the statement of income during the year for the Group
of RM33,607,842 (2012: RM10,722,676). No amounts were withdrawn from equity during the financial year as there was no disposal of
foreign operations.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

084

7 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

(iii) Cash flows hedge

Cash flow hedges are used by the Group to protect against exposure to variability in future cash flows attributable to movements in foreign
exchange rates of financial assets and financial liabilities. The Group hedges cash flows from held-to-maturity debt securities against foreign
exchange risk using currency swaps. During the financial year ended 31 December 2012, the Group has ceased cash flow hedge
accounting with cumulative gain of RM134,657 (2012: RM180,525) remaining in equity as at 31 December 2013.

In 2013, the Group also hedge senior bonds issued and inter-bank lending against foreign exchange and interest rate risks by using cross
currency interst rate swaps. The notional amount of the outstanding cross currency interest rate swaps as at 31 December 2013 was
RM1,436,275,900. The fixed interest rate vary from 1.09% to 5.125%. Gain and losses of cross currency interest rate swaps recognised
in the hedging reserve will be reclassified from equity to statement of income when the hedged forecast cash flows affect profit or loss.
Total gain of RM1,855,500 was recognised in the statement of income for the financial year ended 31 December 2013 due to hedge
ineffectiveness from cash flow hedges.

Table below shows the periods when the hedged cash flows are expected to occur and when they are expected to affect profit or loss
as at 31 December 2013:

The Group
Up to 1 > 1-3 > 3-6 > 6-12 > 1-5
month months months months years
RM000 RM000 RM000 RM000 RM000

Cash inflows (assets) 657 5,768 3,272 10,249 58,428

Cash outflows (liabilities) (841) (1,156) (2,211) (10,102) (29,738)

Net cash (outflows)/inflows (184) 4,612 1,061 147 28,690

 INTO A NEW ERA

085

8 LOANS, ADVANCES AND FINANCING

(i) By type
The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Overdrafts 5,659,427 5,981,019

Term loans/financing
Housing loans/financing 56,905,328 52,299,880
Syndicated term loans 13,911,828 9,288,422
Hire purchase receivables 14,428,652 12,772,502
Lease receivables 142,147 205,565
Factoring receivables 22,312 19,007
Other term loans/financing 88,843,150 79,003,082
Bills receivable 9,239,224 3,720,725
Trust receipts 2,077,961 2,389,242
Claims on customers under acceptance credits 4,942,558 5,010,728
Staff loans [of which RM8,409,959 756,729 685,699 71 95
(2012: RM2,275,218) are to Directors]
Credit card receivables 6,440,933 5,690,695
Revolving credits 28,830,969 28,966,355
Share margin financing 2,354,659 2,309,686
Other loans 1,665 432

Gross loans, advances and financing 234,557,542 208,343,039 71 95

Fair value changes arising from fair value hedge 140,453 360,979

234,697,995 208,704,018 71 95
Less: Allowance for impairment losses

Individual impairment allowance (3,005,066) (3,270,343)

Portfolio impairment allowance (3,261,224) (3,295,857)

(6,266,290) (6,566,200)

Total net loans, advances and financing 228,431,705 202,137,818 71 95

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

086

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(i) By type (Continued)

(a) Included in the Groups loans, advances and financing balances are RM56,586,000 (2012: RM63,591,000) of reinstated loans which
were previously impaired and written off prior to 2005. The reinstatement of these loans has been approved by BNM on 5 February
2010 and was done selectively on the basis of either full settlement of arrears or upon regularised payments of rescheduled loan
repayments.

(b) The Group has undertaken a fair value hedge on the interest rate risk of RM8,181,776,000 (2012: RM7,869,471,000) loans, advances
and financing using interest rate swaps.

31 December 31 December
2013 2012
RM000 RM000

Gross loans hedged 8,181,776 7,869,471

Fair value changes arising from fair value hedges 140,453 360,979

8,322,229 8,230,450

The fair value loss of interest rate swaps in the hedge transaction as at 31 December 2013 was RM100,531,414 (2012:
RM311,304,935).
 INTO A NEW ERA

087

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(ii) By type of customer:

The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Domestic banking financial institutions 1,078,983 1,321,349

Domestic nonbank financial institutions
Stockbroking companies 10,210 10,009
Others 2,572,679 1,807,723
Domestic business enterprises
Small medium enterprises 31,258,050 29,702,223
Others 48,095,116 48,220,165
Government and statutory bodies 11,885,181 12,883,567
Individuals 111,963,768 96,771,514 71 95
Other domestic entities 2,020,750 2,661,053
Foreign entities 25,672,805 14,965,436

Gross loans, advances and financing 234,557,542 208,343,039 71 95

(iii) By interest/profit rate sensitivity:

The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Fixed rate
Housing loans 1,786,148 1,944,961
Hirepurchase receivables 14,414,027 12,765,401
Other fixed rate loans 41,358,703 41,206,674 71 95

Variable rate
BLR plus 109,822,385 101,437,673
Cost plus 31,039,295 25,595,375
Other variable rates 36,136,984 25,392,955

Gross loans, advances and financing 234,557,542 208,343,039 71 95

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

088

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(iv) By economic purposes:

The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Personal use 8,441,137 7,242,619 4 6

Credit card 6,440,933 5,690,695
Purchase of consumer durables 170,550 25,342
Construction 8,023,104 7,276,301
Residential property (Housing) 57,390,465 52,491,785 66 76
Non-residential property 17,866,777 15,963,686
Purchase of fixed assets other than land 14,251,738 14,901,632
and building
Mergers and acquisitions 5,410,650 1,987,139
Purchase of securities 15,139,766 12,214,573
Purchase of transport vehicles 19,742,044 18,720,872 1 13
Working capital 65,766,696 54,674,264
Other purpose 15,913,682 17,154,131

Gross loans, advances and financing 234,557,542 208,343,039 71 95

(v) By geographical distribution:

The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Malaysia 140,865,041 125,727,508 71 95

Indonesia 44,738,818 48,347,157
Thailand 18,534,877 15,243,168
Singapore 19,599,409 13,423,878
United Kingdom 1,195,767 934,931
Hong Kong 693,400 1,119,775
Other countries 8,930,230 3,546,622

Gross loans, advances and financing 234,557,542 208,343,039 71 95

 INTO A NEW ERA

089

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(vi) By residual contractual maturity:

The Group The Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Within one year 61,219,942 49,322,168 1 9

One year to less than three years 23,303,174 28,500,116 4 10
Three years to less than five years 31,614,934 23,576,875 20 25
Five years and more 118,419,492 106,943,880 46 51

Gross loans, advances and financing 234,557,542 208,343,039 71 95

(vii) Impaired loans, advances and financing by economic purpose:

The Group
31 December 31 December
2013 2012
RM000 RM000

Personal use 252,938 244,752

Credit card 94,765 39,687
Purchase of consumer durables 289 204
Construction 1,180,289 1,226,694
Residential property (Housing) 1,540,293 1,645,152
Non-residential property 258,780 338,853
Purchase of fixed assets other than land and building 438,895 416,280
Purchase of securities 186,441 193,583
Purchase of transport vehicles 314,470 338,661
Working capital 2,373,246 2,678,973
Other purpose 752,863 804,978

Gross impaired loans 7,393,269 7,927,817

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

090

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(viii) Impaired loans, advances and financing by geographical distribution:

The Group
31 December 31 December
2013 2012
RM000 RM000

Malaysia 4,452,536 5,078,112

Indonesia 1,458,612 1,335,882
Thailand 1,219,287 1,225,674
Singapore 58,585 45,764
United Kingdom 3,636 2,310
Other countries 200,613 240,075

Gross impaired loans 7,393,269 7,927,817

(ix) Movements in the impaired loans, advances and financing are as follows:
The Group
2013 2012
RM000 RM000

At 1 January 7,927,817 9,804,681

Classified as impaired during the financial year 3,451,780 3,111,369
Reclassified as not impaired during the financial year (1,591,922) (1,818,922)
Amount written back in respect of recoveries (1,223,557) (1,263,113)
Amount written off (1,239,233) (2,129,372)
Reclassified from unwinding income 50,870 210,839
Loans converted to securities (13,219)
Exchange fluctuation 17,514 25,554

At 31 December 7,393,269 7,927,817

Ratio of gross impaired loans to gross loans, advances and financing 3.15% 3.81%
 INTO A NEW ERA

091

8 LOANS, ADVANCES AND FINANCING (CONTINUED)

(x) Movements in the allowance for impaired loans, advances and financing are as follows:
The Group
2013 2012
RM000 RM000

Individual impairment allowance

At 1 January 3,270,343 3,988,345

Net allowance made during the financial year 179,523 164,322
Amount written off (440,126) (895,452)
Allowance (written back)/made and charged to deferred assets (959) 1,221
Amount transferred from/(to) portfolio impairment allowance 1,043 22,111
Loans converted to securities (13,219)
Unwinding income 46,595 85,234
Exchange fluctuation (51,353) (82,219)

At 31 December 3,005,066 3,270,343

Portfolio impairment allowance

At 1 January 3,295,857 3,964,876

Net allowance made during the financial year 858,902 600,195
Amount transferred from individual impairment allowance (1,043) (22,111)
Amount transferred to allowance for impairment losses on other receivables (28,786)
Amount written off (735,157) (1,221,111)
Allowance made/(written back) and charged to deferred assets 258 (1,510)
Unwinding income (31,518) 69,404
Exchange fluctuation (126,075) (65,100)

At 31 December 3,261,224 3,295,857

Portfolio impairment allowance (inclusive of regulatory reserve)

as % of gross loans, advances and financing less individual impairment allowance 2.28% 2.32%
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

092

9 OTHER ASSETS
The Group The Company
Note 31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
RM000 RM000 RM000 RM000 RM000
Restated Restated

Due from brokers and clients net of

allowance for impairment losses of
RM21,650,373 (31 December 2012:
RM23,597,004; 1 January 2012:
RM15,676,179) (a) 2,044,742 1,905,758 1,352,950

Other debtors, deposits and prepayments

net of allowance for doubtful debts of
RM94,204,197 (31 December 2012:
RM70,881,427; 1 January 2013:
RM67,499,762) (b) 3,163,529 2,775,848 2,438,275 35,006 554

Due from insurers, brokers and reinsurers 26,026 33,271 28,716

Option premium receivable 193,721 246,723 249,461

Deferred assets (c) 83,018 103,524 131,204

Foreclosed properties net of allowance

for impairment losses of RM51,683,569
(31 December 2012: RM53,645,409;
1 January 2012: RM57,153,448) (d) 187,787 178,713 167,765

Collateral pledged for derivative transactions 1,232,059 309,889 293,188 10,266 1,905

Due from joint venture (e) 1,059,473 1,285,914 1,371,367

7,990,355 6,839,640 6,032,926 45,272 2,459

 INTO A NEW ERA

093

9 OTHER ASSETS (CONTINUED)

(a) Movements of allowance for impairment losses on amount due from brokers and clients are as follows:

The Group
2013 2012
Individual Portfolio Individual Portfolio
impairment impairment impairment impairment
allowance allowance Total allowance allowance Total
RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 14,494 9,103 23,597 7,174 8,502 15,676

Net allowance made/(write back)
during the financial year 481 (1,599) (1,118) 562 623 1,185
Acquisition of subsidiary 6,856 6,856
Write off (84) (84)
Exchange fluctuation (209) (619) (828) (14) (22) (36)

At 31 December 14,766 6,885 21,651 14,494 9,103 23,597

(b) Movements of allowance for doubtful debts on other debtors, deposits and prepayments are as follows:

The Group
2013 2012
Individual Individual
impairment impairment
allowance allowance
RM000 RM000

At 1 January 70,881 67,500

Allowance made during the financial year 25,310 36,339
Write back during the financial year (5,352)
Recoveries (348)
Write off (284) (23,909)
Exchange fluctuation (1,355) (3,697)

At 31 December 94,204 70,881

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

094

9 OTHER ASSETS (CONTINUED)

(c) Deferred assets comprise mainly the carrying value of the excess of liabilities over assets of Common Forge Berhad (now known as
Southeast Asia Special Asset Management Berhad) taken over by SBB Berhad in 2000 and will be reduced progressively by a scheme
of arrangement which has been agreed by Bank Negara Malaysia. Movements in deferred assets during the financial year are as follows:

The Group
2013 2012
RM000 RM000

At 1 January 103,524 131,204

Recovered during the financial year (19,806) (27,391)
Individual impairment allowance made (700) (289)

At 31 December 83,018 103,524

(d) Foreclosed properties are stated at lower of carrying amount and fair value less cost to sell. Independent valuation of the foreclosed
properties was performed by valuers to determine the fair value of the foreclosed properties as at 31 December 2013. The fair values are
within level 2 of the fair value hierarchy. The fair values have been derived using the sales comparison approach. Sales prices of comparable
land and buildings in close proximity are adjusted for differences in key attributes such as property size.

(e) These comprise hire-purchase receivables belonging to PCSB that were de-recognised from the Groups loans, advances and financing
as the risks and rewards relating to the cash flows of these hire-purchase receivables have been substantially transferred to PCSB. The
derecognised hire-purchase receivables are regarded as amount due from joint ventures.
 INTO A NEW ERA

095

10 DEFERRED TAXATION

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when the deferred taxes relate to the same tax authority. The following amounts are shown in the statements of financial position, after
offsetting:

The Group The Company

31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Deferred tax assets 357,250 110,344

Deferred tax liabilities (50,327) (132,682) (1,998) (2,127)

306,923 (22,338) (1,998) (2,127)

The gross movements on the deferred taxation account are as follows:

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000

At 1 January (22,338) (131,477) (2,127) (2,122)

Credited/(charged) to profit or loss (Note 39)
Loans, advances and financing 41,520 (23,399)
Unutilised tax losses 8,430 42,033
Excess of capital allowance over depreciation (46,201) (14,807) 30
Intangible assets 35,314 62,241
Provision for accrued expenses 25,707 2,174
Post employment benefits obligation 23,894 25,213
Other temporary differences 70,507 (19,840) 129 (23)

159,171 73,615 129 7

over accrual in prior years (29,961) (6,825) (12)

129,210 66,790 129 (5)

Disposal of subsidiaries 2,729 (141)
Transferred to equity
Revaluation reserve financial investments available-for-sale 194,369 42,490
Hedging reserve cash flow hedge 2,953

At 31 December 306,923 (22,338) (1,998) (2,127)

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

096

10 DEFERRED TAXATION (CONTINUED)

The components of deferred tax assets and liabilities during the financial year prior to offsetting of balances within the same tax jurisdiction are
as follows:

The Group The Company

31 December 31 December 31 December 31 December
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Deferred tax assets (before offsetting)

Loans, advances and financing 107,014 65,494
Financial investments available-for-sale 81,782
Unutilised tax losses 56,352 47,922
Post employment benefits obligations 49,107 25,213
Provision for accrued expenses 344,373 318,666 3 284
Cash flow hedge 2,953
Other temporary differences 81,445 70,494

723,026 527,789 3 284

Offsetting (365,776) (417,445) (3) (284)

Deferred tax assets (after offsetting) 357,250 110,344

Deferred tax liabilities (before offsetting)

Property, plant and equipment (132,580) (86,379) (321) (16)
Financial investments available-for-sale (73,258) (185,845)
Intangible assets (198,599) (233,913)
Other temporary differences (11,666) (43,990) (1,680) (2,395)

(416,103) (550,127) (2,001) (2,411)

Offsetting 365,776 417,445 3 284

Deferred tax liabilities (after offsetting) (350,327) (132,682) (1,998) (2,127)

11 STATUTORY DEPOSITS WITH CENTRAL BANKS

The non-interest bearing statutory deposits are maintained by certain subsidiaries with Bank Negara Malaysia in compliance with Section 26(2)
(c) of the Central Bank of Malaysia Act, 2009, the amounts of which are determined at set percentages of total eligible liabilities. The non-interest
bearing statutory deposits of a foreign subsidiary and foreign branches of the bank subsidiary are maintained with respective central banks in
compliance with the applicable legislation.
 INTO A NEW ERA

097

12 INVESTMENT IN SUBSIDIARIES
The Company
31 December 31 December
2013 2012
RM000 RM000

Ordinary shares 7,336,383 7,336,383

Redeemable preference shares* 13,384,331 11,595,114

20,720,714 18,931,497
Less: Allowance for impairment loss of a subsidiary (1,275) (1,275)

20,719,439 18,930,222

* Classified as cost of investment in subsidiaries due to the terms of the instruments

(a) Information about principal subsidiaries:

The direct subsidiaries of the Company are:
Percentage of equity held
31 December 31 December
2013 2012
Name of Subsidiary Principal activities % %

CIMB Berhad Investment holding 100 100

CIMB Group Sdn. Bhd. Investment holding 99.9 99.9
Commerce MGI Sdn. Bhd. Dormant 51 51
Commerce Asset Realty Sdn. Bhd. Holding of properties for letting to a related company 100 100
iCIMB (MSC) Sdn. Bhd. Provision of management and outsourcing services 100 100
SBB Berhad Dormant 100 100
CIMB Foundation Charitable foundation
Premier Fidelity Sdn. Bhd. Dormant 100
SP Charitable Trust Fund Special purpose vehicle
SP Charitable Trust Fund 2 Special purpose vehicle

Consolidated in the Group as the substance of the relationship between the entities and the Company indicates that the entities are
controlled by the Company

The subsidiaries held through CIMB Berhad are:

Percentage of equity held
Directly by CIMB Berhad Indirectly by the Company
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMB Islamic Trustee Berhad Trustee services 20 20 100 100

CIMB Commerce Trustee Berhad Trustee services 20 20 100 100
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

098

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMB Group Sdn Bhd (CIMBG) are:
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMB Bank Berhad (CIMB Bank) Commercial banking and related 99.9 99.9
financial services

CIMB Investment Bank Berhad Investment banking and the 100 100
(CIMB Investment Bank) provision of related financial
services

PT Bank CIMB Niaga Tbk + Commercial banking and related 96.9 96.9 1.0 1.0
(Incorporated in the Republic of Indonesia) financial services

PT Commerce Kapital # Investment holding 99.0 99.0 1.0 1.0

(Incorporated in the Republic of Indonesia)

CIMB SI Sdn. Bhd. Trading in securities and direct 100 100

principal investments

CIMB SI I Sdn. Bhd. Investment holding 100 100

CIMB SI II Sdn. Bhd. Investment holding 100 100

CIMB Private Equity Sdn. Bhd. Investment holding 100 100

&
CIMB Private Equity 1 Sdn. Bhd. Investment holding 28.2 28.2
&
Ekuiti Erasama Sdn. Bhd. Investment holding 19.7 19.7

Bigbite Ventures Sdn. Bhd.& Investment holding 20.1 20.1

Investment management
Big Ship Sdn. Bhd.& 20.1 20.1
company

Eagle Eye Capital Sdn. Bhd.& Investment holding 14.1 14.1

^&
Silverbell Capital Sdn. Bhd. Investment holding 28.2

Silverbell Investment Pte. Ltd.&

(Incorporated in the Republic of Singapore) Investment holding 28.2 28.2

Top Sigma Sdn. Bhd.& Investment holding 20.1 20.1

Maju Uni Concept Sdn. Bhd. Investment holding 100 100

Mutiara Makmur Ventures Sdn. Bhd. Investment holding 100 100

 INTO A NEW ERA

099

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMB Group Sdn Bhd (CIMBG) are: (continued):

Percentage of equity held

Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

Semantan Investment Holdings Ltd Investment holding 100 100

(Incorporated in the Federal Territory of Labuan)

Papyrus Capital Sdn. Bhd. ^ Investment holding 100

Armada Investment Holdings Ltd Investment holding 84.8 84.8

(Incorporated in the Federal Territory of Labuan)

CIMB General Partner Limited Investment holding 100 100

(Incorporated in the Federal Territory of Labuan)

CIMB Securities International Pte. Ltd.+ Investment holding 100 100

(Incorporated in the Republic of Singapore)

CIMB Research Pte. Ltd. + Investment research 100 100

(Incorporated in the Republic of Singapore)

CIMB Securities (UK) Ltd + Securities related business 100 100

(Incorporated in the United Kingdom)

CIMB Securities (USA) Inc # Dormant 100 100

(Incoporated in the United States of America)

CIMB Securities Ltd + Securities broking, dealing 100 100

(Incorporated in Hong Kong) and trading

CIMB Securities (HK) Nominees Ltd + Nominee services 100 100

(Incorporated in Hong Kong)

PT CIMB Securities Indonesia + Stockbroking 100 100

(Incorporated in the Republic of Indonesia)

CIMB-GK Securities (Thailand) Ltd+^ Dormant 99.9

(Incorporated in the Kingdom of Thailand)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

100

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBG are (Continued):
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMB Real Estate Sdn. Bhd. Real estate investment 100 100

CIMB-Mapletree Management Sdn. Bhd. Real estate fund management 60 60

CIMB-Principal Asset Management Berhad Establishment and management 60 60

of unit trust fund and fund
management business

CIMB-Principal Asset Management Investment and fund management 60 60

Company Limited + and other related services
(Incorporated in the Kingdom of Thailand)
+
Sathorn Asset Management Company Limited Asset Management 99.9 99.9
(Incorporated in the Kingdom of Thailand)
+
CIMB Principal Asset Management (S) Pte. Ltd. Provision of management and 60 60
(Incorporated in the Republic of Singapore) investment analysis services

PT CIMB-Principal Asset Management + Establishment and management 60.4 60.4

(Incorporated in the Republic of Indonesia) of unit trust fund and fund
management business

CIMB Wealth Advisors Berhad Distribution of unit trust funds 60 60

i-Wealth Advisors Sdn. Bhd. Provision of management 60 60

services and distribution of
products and services

CIMB Strategic Assets Sdn. Bhd. Investment holding 100 100

CIMB Private Equity Advisors Sdn. Bhd. Investment advisory and private 100 100
equity management

CIMB Capital Pte. Ltd.+ Investment holding 100

CIG Berhad Insurance holding company 100 100

CIMB Insurance Brokers Sdn. Bhd. Insurance broking 100 100

PT CIMB Sun Life + Life assurance business 51 51

(Incorporated in the Republic of Indonesia)
 INTO A NEW ERA

101

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBG are (Continued):
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

Commerce Asset Ventures Sdn. Bhd. (CAV) Investment holding company 100 100

Southeast Asia Special Asset To invest in, purchase or 100 100

Management Berhad otherwise acquire and deal with
non-performing loans, credit
and financing facilities or debts
^
Kibaru Manufacturing Sdn. Bhd. Manufacturing of rubber 64.1
components

CAV Private Equity Management Sdn. Bhd. Providing management and 100 100
advisory services

Commerce Technology Ventures Sdn. Bhd. Investment holding company 100 100

VC Prestige Sdn. Bhd. Investment holding company 33.3 33.3

Commerce Agro Ventures Sdn. Bhd. Investment holding company 33.3 33.3

CAV BAT Sdn. Bhd. Investment holding company 100 100

Commerce Growth Sdn. Bhd. Investment holding company 100 100

Prima Special Sdn. Bhd.^ Investment holding company 30

Edufuture Sdn. Bhd. Investment holding company 30 30

Metro Bumimas Sdn. Bhd. Investment holding company 33.3 33.3

Sedia Fajar Sdn. Bhd. Investment holding company 33.3 33.3

Peranan Dinamik Sdn. Bhd. Investment holding company 33.3 33.3

&
Trace Tracker Malaysia Sdn. Bhd. Provider of traceability services 9.67 9.67

Pesat Dinamik Sdn. Bhd. Investment holding company 33.3 33.3

Prima Mahawangsa Sdn. Bhd. Investment holding company 33.3 33.3

Tetap Fajar Sdn. Bhd. Investment holding company 33.3 33.3

Primabaguz Sdn. Bhd.^ Manufacturing and distribution 19.3

of halal meat based products
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

102

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBG are (Continued):
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %
#
Titan Setup Sdn. Bhd. Investment holding company 100 100

Commerce-KPF Ventures Sdn. Bhd. Investment holding company 30 30

Touch 'n Go Sdn. Bhd. Establishment, operation and 32.2 32.2

management of an electronic
collection system for toll and
transport operators

Commerce KNB Agro Teroka Sdn. Bhd..& Investment holding company 33.3 33.3
&
Kota Bumimas Sdn. Bhd. Investment holding company 33.3 33.3

Jernih Hartamas Sdn. Bhd.& Investment holding company 33.3 33.3

Limpahan Suria Sdn. Bhd.& Investment holding company 33.3 33.3

#
Goodmaid Chemical Corporation Sdn. Bhd. Manufacturing of household 99.6 99.6
care products
#
Goodmaid Marketing Sdn. Bhd. Trading and marketing of 100 100
household care products
#
Goodmaid Industrial Supplies Sdn. Bhd. Trading of industrial chemical 100 100
products
#
EQ Industry Supplies Sdn. Bhd. Trading and marketing of 100 100
industrial chemicals
#^
Itopia Sdn. Bhd. Provision of telephony 49
infrastructure, products and
services
CIMB Middle East BSC + Islamic investment 99 99 1 1
(Incorporated in the Kingdom of Bahrain)
#
CIMB-Trustcapital Advisors Singapore Pte. Ltd. Real estate management and 63 67
(Incorporated in the Republic of Singapore) advisory

CIMB-TCA Australia Pty. Ltd.+ Investment management company 63

(Incorporated in Australia) for investment holding Trusts
 INTO A NEW ERA

103

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBG are (Continued):
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMBTCA Pty. Ltd.+ Investment holding company 63

(Incorporated in Australia)

CIMBTCA3 Pty. Ltd.+ Investment holding company 63

(Incorporated in Australia)

CIMBTCA Bravo Pty. Ltd.+ Real estate ownership 63

(Incorporated in Australia)

CIMBTCA Lima Pty. Ltd.+ Real estate ownership 63

(Incorporated in Australia)

CIMB-Trustcapital AOF1 GP Pte. Ltd. # Property fund management 100 100

(Incorporated in the Republic of Singapore) (including REIT manager)

CIMB Southeast Asia Research Sdn. Bhd. (CARI) Public advocacy through research, 100 100
publication and events

PT CIMB ASEAN Research # Public advocacy through research, 100 100

(Incorporated in the Republic of Indonesia) publication and events

CIMB Securities (Thailand) Co., Ltd. + Stock and share broking 99.99 99.99
(Incorporated in the Kingdom of Thailand)

CIMB Securities International (Thailand) Stock and share broking 99.6 99.6
Public Company Ltd +
(Incorporated in the Kingdom of Thailand)

CIMB Advisory (Thailand) Company Limited+ Dormant 99.6 99.6

(Incorporated in the Kingdom of Thailand)

CIMB Securities International (Australia) Pty. Ltd.+ Investment holding company and 100 100
(Incorporated in Australia) providing services to related
entities

CIMB Securities (Australia) Limited+ Stock and share broking 100 100
(Incorporated in Australia)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

104

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBG are (Continued):
Percentage of equity held
Through CIMBGs
Directly by CIMBG subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMB Corporate Finance (Australia) Limited+ Corporate finance and advisory 100 100
(Incorporated in Australia) services

CIMB Capital Markets (Australia) Limited+ Equity capital markets business 100 100
(Incorporated in Australia)

Fleet Nominess Pty. Ltd.+ Nominee services 100 100

Quinambo Nominess Pty. Ltd.+ Nominee services 100 100

+
Wanford Nominees Pty. Ltd. Nominee services 100 100

CIMB Corporate Finance (India) Private Limited+ Corporate finance and advisory 99.99 99.99
(Incorporated in India) services

CIMB Securities (India) Private Limited+ Stock and share broking 75 75

(Incorporated in India)

CSI Investment Limited + Investment holding company 100

(Incorporated in the Republic of Singapore)

MinorCap Pte. Ltd. + Dormant 100

(Incorporated in the Republic of Singapore)

& Deemed a subsidiary by virtue of board control over the companys financial and operating policies
# Audited by a firm other than member firms of PricewaterhouseCoopers International Limited
+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from
PricewaterhouseCoopers, Malaysia
^ Disposed/strike off during the financial year

All the above subsidiaries, unless otherwise stated, are incorporated in Malaysia.
 INTO A NEW ERA

105

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBGs direct subsidiary, CIMB Investment Bank are:
Percentage of equity held
Directly by CIMB Through CIMB Investment
Investment Bank Bank's
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

CIMB Holdings Sdn. Bhd. Investment holding 100 100

CIMSEC Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

CIMSEC Nominees (Asing) Sdn. Bhd. Nominee services 100 100

CIMB EOP Management Sdn. Bhd. Nominee services 100 100

CIMB Futures Sdn. Bhd. Futures broking 100 100

CIMB Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

CIMB Nominees (Asing) Sdn. Bhd. Nominee services 100 100

CIMB Discount House Berhad^ Dormant 100

CIMB Commerce Trustee Berhad Trustee services 20 20

CIMB Islamic Trustee Berhad Trustee services 20 20

^ Strike off during the financial year

All the above subsidiaries, unless otherwise stated, are incorporated in Malaysia.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

106

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBGs direct subsidiary, CIMB Bank are:
Percentage of equity held
Through CIMB Banks
Directly by CIMB Bank subsidiary
31 December 31 December 31 December 31 December
Name of Subsidiary Principal activities 2013 2012 2013 2012
% % % %

CIMB FactorLease Bhd. Leasing, hire purchase 100 100

financing, debt factoring, loan
management and property
management

CIMB Islamic Trustee Berhad Trustee services 20 20 40 40

CIMB Bank (L) Limited Offshore banking 100 100

(Incorporated in the Federal Territory of Labuan)

Mutiara Aset Berhad Dormant 100 100

iCIMB (Malaysia) Sdn. Bhd. Provision of management 100 100

and outsourcing services

CIMB Group Nominees Sdn. Bhd. Nominee services 100 100

CIMB Group Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

CIMB Group Nominees (Asing) Sdn. Bhd. Nominee services 100 100

Semerak Services Sdn. Bhd. Service company 100 100

CIMB Islamic Bank Berhad Islamic banking and 100 100

related financial services

CIMB Trust Ltd. Trustee services 100 100

(Incorporated in the Federal Territory of Labuan)

Bumiputra-Commerce Corporate Services Limited Nominee services 100 100

(Incorporated in the Federal Territory of Labuan)

BC Management Services Limited Nominee services 100 100

(Incorporated in the Federal Territory of Labuan)

CIMB Private Equity General Partner Limited Fund management 100 100
(Incorporated in the Federal Territory of Labuan)
 INTO A NEW ERA

107

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBGs direct subsidiary, CIMB Bank are (Continued):
Percentage of equity held
Through CIMB Banks
Directly by CIMB Bank subsidiary
31 December 31 December 31 December 31 December
Name of Subsidiary Principal activities 2013 2012 2013 2012
% % % %

CIMB Mezzanine General Partner Limited Fund management 100 100

(Incorporated in the Federal Territory of Labuan)

Mezzanine Capital Ltd. Investment holding 100

(Incorporated in the Federal Territory of Labuan)

CIMB Islamic Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

CIMB Islamic Nominees (Asing) Sdn. Bhd. Nominee services 100 100

S.B. Venture Capital Corporation Sdn. Bhd. Investment holding and 100 100
provision of management
services

BHLB Properties Sdn. Bhd. Property ownership and 100 100

management

SBB Nominees (Tempatan) Sdn. Bhd. Nominee services 100 100

SBB Nominees (Asing) Sdn. Bhd. Nominee services 100 100

CIMB Nominees (S) Pte. Ltd. + Nominee services 100 100

(Incorporated in the Republic of Singapore)

SBB Capital Corporation Special purpose vehicle 100 100

SFB Auto Berhad Dormant 100 100

Premier Fidelity Berhad Dormant 100

CIMB Bank PLC + Commercial banking and 100 100

(Incorporated in Cambodia) related financial services

Perdana Visi Hartanah Sdn. Bhd. Property investment 100 100

SBB Capital Markets Sdn. Bhd. Investment holding 100 100

CIMB Commerce Trustee Berhad Trustee services 20 20 40 40

S.B. Properties Sdn. Bhd. Property ownership and 100 100

management
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

108

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through CIMBGs direct subsidiary, CIMB Bank are (Continued):
Percentage of equity held
Through CIMB Banks
Directly by CIMB Bank subsidiary
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Name of Subsidiary Principal activities % % % %

SFB Development Sdn. Bhd. Property investment 100 100

SIBB Berhad Dormant 80 80

Perdana Nominees (Tempatan) Sdn. Bhd. Nominee services 80 80

Commerce Returns Berhad Special purpose vehicle
+
CIMB Thai Bank Public Company Limited Banking 93.7 93.7
(Incorporated in the Kingdom of Thailand)

Merdeka Kapital Berhad** Engaged in the purchase fro

multi originators of receivables
and the raising of funds
and related activities

** Consolidation of the silo of Merdeka Kapital Berhad

In 2011, CIMB Bank obtained funding through securitisation of its hire purchase receivables to Merdeka Kapital Berhad (MKB), a
special purpose vehicle set up to undertake multi securitisation transactions. Arising from the adoption of MFRS 10 Consolidated
Financial Statements in 2013, CIMB Bank has consolidated the silo of MKB in relation to CIMB Banks hire purchase receivables, as
this silo has been legally ring-fenced for this transaction. The adoption of MFRS 10 has been applied retrospectively; refer to Note 54
for the impact of the adoption of MFRS 10 to the comparatives.

+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from
PricewaterhouseCoopers, Malaysia
Consolidated in the Group as the substance of the relationship between the entities and the Company indicates that the entities are
controlled by the Company

All the above subsidiaries, unless otherwise stated, are incorporated in Malaysia.
 INTO A NEW ERA

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12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(a) Information about principal subsidiaries (continued):

The subsidiaries held through PT Bank CIMB Niaga Tbk are:
Percentage of equity held
31 December 31 December
2013 2012
Name of Subsidiary Principal activities % %

PT CIMB Niaga Auto Finance + Financing services 99.9 99.9

(Incorporated in the Republic of Indonesia)

PT Kencana Internusa Artha Finance + Financing services 51 51

(Incorporated in the Republic of Indonesia)

The subsidiaries held through CIMB Thai Bank Public Company Limited are:
Percentage of equity held
31 December 31 December
2013 2012
Name of Subsidiary Principal activities % %

CT Coll Co., Ltd. + Debt Collection Service 99.99 99.99

(Incorporated in the Kingdom of Thailand)

Center Auto Lease Co.,Ltd. + Leasing/hire purchase 99.99 99.99

(Incorporated in the Kingdom of Thailand)

Worldlease Co., Ltd. + Hire purchase of motorcycles 99.99 99.99

(Incorporated in the Kingdom of Thailand)

+ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from
PricewaterhouseCoopers Malaysia
The substance of the relationship between CIMB Bank and the special purpose entity indicates that the entity is controlled by CIMB
Bank
^ Disposed/Strike off during the financial year

All the subsidiaries, unless otherwise stated, are incorporated in Malaysia.

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

110

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(b) Details of subsidiaries that have material non-controlling interests:

Set out below are the Groups subsidiaries that have material non-controlling interests (NCI):

Proportion of ownership
interests and voting rights
held by non-controlling Profit allocated to non- Accumulated non-
Name of subsidiaries interests controlling interests controlling interests
31 December 31 December 31 December 31 December 31 December 31 December
2013 2012 2013 2012 2013 2012
% % RM000 RM000 RM000 RM000
CIMB Thai Bank Public Company
Limited Group (incorporated in the
Kingdom of Thailand) 6.3 6.3 17,904 10,753 320,466 304,905

CIMB-Principal Asset
Management Berhad Group 40.0 40.0 18,806 15,392 250,777 236,954

PT Bank CIMB Niaga Tbk Group

(Incorporated in the Republic of Indonesia) 2.1 2.1 22,565 23,213 177,535 181,297

Touch 'n Go Sdn. Bhd. 47.8 47.8 7,725 7,462 42,182 35,587

Individually immaterial subsidiaries with non-controlling interests (33,498) 14,582

757,462 773,325
 INTO A NEW ERA

111

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(b) Details of subsidiaries that have material non-controlling interests (Continued):

Summarised financial information for each subsidiary that has non-controlling interests that are material to the Group is set out below. The
summarised financial information below represents amounts before inter-company eliminations.

CIMB-Principal
CIMB Thai Bank Public Asset Management PT Bank CIMB Niaga Touch n Go
Company Limited Group Berhad Group Tbk Group Sdn Bhd
As at 31 December As at 31 December As at 31 December As at 31 December
(RM000) 2013 2012 2013 2012 2013 2012 2013 2012

Total assets 27,966,946 20,038,036 930,131 803,824 58,687,619 62,662,930 432,326 414,693
Total liabilities (25,743,790) (18,173,231) (302,544) (210,975) (51,739,264) (55,501,826) (340,803) (339,337)

Net assets 2,223,156 1,864,805 627,587 592,849 6,948,355 7,161,104 91,523 75,356

Equity attributable to owners

of the Company (2,223,156) (1,864,805) (512,811) (496,879) (6,922,887) (7,134,398) (91,523) (75,356)
Non-controlling interests (NCI) (114,776) (95,970) (25,468) (26,706)

Year ended 31 December Year ended 31 December Year ended 31 December Year ended 31 December

(RM000) 2013 2012 2013 2012 2013 2012 2013 2012

Revenue 1,101,145 912,040 185,793 161,566 4,090,726 4,254,775 86,421 76,020

Profit before taxation 277,458 197,861 64,638 53,777 1,765,760 1,905,596 21,244 23,078
Taxation 8,473 (7,792) (17,623) (15,298) (465,014) (506,145) (5,077) (7,460)
Other comprehensive (expense)/
income (29,678) (23,492) (456) 2,100 (1,453,511) (602,542)

Total comprehensive (expense)/

income 256,253 166,577 46,559 40,579 (152,766) 796,909 16,167 15,618

Net cash (used in)/generated

from investing activities (1,028,680) (896,937) 50,479 27,178 867,131 2,421,313 8,682 52,046
Net cash generated from/
(used in) financing activities (475,964) (742,200) 42,457 (10,940) (1,920,014) (998,624) (21,055) 73
Net increase/(decrease) in cash
and cash equivalents 1,800,091 1,444,627 (53,296) (1,787) 1,081,602 1,066,002 3,000 (2,000

Net cash (used in)/generated

from operating activities 295,447 (194,510) 39,640 14,451 28,719 2,488,691 (9,373) 50,119

Profit allocated to
NCI of the Group 17,985 10,753 18,806 15,392 22,565 23,213 7,725 7,462
Dividends paid to NCI
of the Group 666 4,800
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

112

12 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(c) Effects of changes in ownership interests in subsidiaries that do not result in loss of control
2012
On 11 April 2012, the Group acquired an additional 15.31% equity interest in CIMB Securities International (Thailand) Public Company
Limited (formerly known as SICCO Securities Public Company Limited (SSEC) for a cash consideration of RM16,669,000. As a result of
this acquisition, the Groups equity interest in SSEC was increased to 97.37%. The carrying value of the net assets of SICCO as at 11
April 2012 was RM95,305,000 and the carrying value of the additional interest acquired was approximately RM14,591,000. The difference
of RM2,078,000 between the carrying value and the additional interest acquired has been recognised within retained earnings.

On 12 September 2012, the Group acquired an additional 2.22% equity interest in SSEC for a cash consideration of RM2,358,000. As a
result of this acquisition, the Groups equity interest in SSEC was increased to 99.59%. The carrying value of the net assets of SSEC as
at 12 September 2012 was RM93,030,000 and the carrying value of the additional interest acquired was approximately RM2,068,000. The
difference of RM290,000 between the carrying value and the additional interest acquired has been recognised within retained earnings.

The following summarises the effect of the change in the Groups ownership interest in SSEC on the equity attributable to owners of the
Group arising from the two acquisitions identified above:

11 April 12 September
2012 2012 Total
RM000 RM000 RM000

Consideration paid for acquisition of non-controlling interests 16,669 2,358 19,027

Decrease in equity attributable to non-controlling interests (14,591) (2,068) (16,659)

Decrease in equity attributable to owners of the Group 2,078 290 2,368

 INTO A NEW ERA

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13 INVESTMENT IN ASSOCIATES
The Group
Note 31 December 31 December
2013 2012
RM000 RM000

At 1 January, as previously reported 689,212 1,165,159

Effect of adopting MFRS 11 (99,305) (138,177)

At 1 January, as restated 589,907 1,026,982

Share of profits for the financial year ^ 306,268 137,750
Additional investment in associates 23,274 5,921
Share of other comprehensive expense for the financial year (725)
Disposal of certain percentage in associates (4,047)
Transfer to non-current assets held for sale 53 (556,754)
Allowance made for impairment losses 37 (403) (2,229)
Dividend payment (210,326) (21,763)

At 31 December 703,948 589,907

^ Include share of profits of associates from discontinuing operations

^^ Dividend payment in specie recieved from an associate for the financial year ended 31 December 2013, dividend payment received in cash
from an associate for the financial year ended 31 December 2012

The Company
31 December 31 December
2013 2012
RM000 RM000

Unquoted shares, at cost 3,834 3,834

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

114

13 INVESTMENT IN ASSOCIATES

(a) Information about associates:

The principal place of business and country of incorporation of the associates is Malaysia unless stated otherwise. All associates are
measured using the equity method. There are no available quoted market prices of the associates.

The direct associate of the Company is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Touch 'n Go Sdn. Bhd. * Establishment, operation and management 20 20 20

of an electronic collection system for toll
and transport operators

IHS Innovations Sdn. Bhd. Provider and consultant specialising in reliability 20 20 20

testing systems, vision and imaging systems

Evermal Resources Sdn. Bhd. Investment holding company 20.5

* Consolidated in the Group as the associate is a subsidiary to the Group.

The associates held through CAVs subsidiary, Commerce-KPF are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

In-fusion Solutions Sdn. Bhd.# Provision of educational and training related 6 6 6

solutions and services to various
government bodies and private institutions

Delphax Sdn. Bhd. Manufacturer of reconstructive & spinal 7.0 7.0 7.0
implants, trauma & related orthopaedic
surgical products
 INTO A NEW ERA

115

13 INVESTMENT IN ASSOCIATES (CONTINUED)

(a) Information about associates: (Continued)

The associates held through CAVs subsidiary, Commerce Agro Ventures Sdn Bhd are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Landas Bina Aquaventures Aquaculture 13.3 13.3 13.3

Sdn. Bhd.

Kejmukda Co. Ltd. ^ Investment holding company 16.3 16.3

The associates held through CAVs subsidiary, Commerce Technology Ventures Sdn Bhd are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Sesama Equilab Sdn. Bhd. Dormant 29 29 29

Consolidated Liquid Eggs Dormant 30 30 30

Sdn. Bhd.

Explorium (M) Sdn. Bhd. Provider for customer and marketing management 30 30 30
services, e-learning, brand experience

In-fusion Solutions Sdn. Bhd.# Provision of educational and training related 20.3 20.3 20.3
solutions and services to various government
bodies and private institutions

CMnet DotCom Sdn. Bhd. Dormant 36.5 36.5 36.5

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

116

13 INVESTMENT IN ASSOCIATES (CONTINUED)

(a) Information about associates (Continued):

The associates held through CAVs subsidiary, Commerce KNB Agro Teroka Sdn Bhd are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Manjung Aquatic Sdn. Bhd. Dealer in business of merchant and 16.3 16.3 16.3
dealer in marine products and its by products

Dragon Power Plantations Growing and selling vegetables of all 13.3 13.3 13.3
Sdn. Bhd. kinds and descriptions

PS Fresh Sdn. Bhd. Distribution of farm products 10.0 10.0 10.0

The associate held through CIMB Bank is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Bank of Yingkou Co. Ltd. Banking 20 20 20

(Incorporated in the Peoples
Republic of China)

The associate held through CIMBGs subsidiary, CIMB SI I Sdn Bhd is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Engage Media Sdn. Bhd. ^ Operates out of home digital media network 35 35

The associate held through CIMBGs subsidiary, CIMB SI II Sdn Bhd is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Tune Money Sdn. Bhd. Online financial services 27 25 25

 INTO A NEW ERA

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13 INVESTMENT IN ASSOCIATES (CONTINUED)

(a) Information about associates (Continued):

The associate held through CIMBGs subsidiary, CIG is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

CIMB Aviva Assurance Berhad ^ Life assurance business 51 51

CIMB Aviva Takaful Berhad ^ Takaful Business 51 51

The associates held through CIMBGs subsidiary, CIMB Private Equity Sdn Bhd is:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Mezzanine Holdings Sdn. Bhd. Investment holding 18.5 18.5 18.5

The associates held through CIMBGs subsidiary, CIMB Real Estate Sdn Bhd are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

CMREF 1 Sdn. Bhd. Investment holding 24.9 24.9 24.9

Eleven Section Sixteen Sdn. Bhd. Property investment and management 24.9 24.9 24.9

Dynamic Concept One Sdn. Bhd. Property investment 24.9 24.9 24.9

Jaya Section Fourteen Sdn. Bhd. Property investment and management 24.9 24.9 24.9

Project Asia City Sdn. Bhd. Property investment and 24.9 24.9 24.9
management

Forward Wealth Advisors Property management services 24.9 24.9 24.9

Sdn. Bhd.

Sentral Parc City Sdn. Bhd. Property investment 24.9 24.9 24.9

Lot A Sentral Sdn. Bhd. Property investment 14.1 14.9 14.9

CMREF2 Shariah Sdn. Bhd. Real estate fund management 14.29

Green Transformation Sdn. Bhd. Dormant 14.29

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FINANCIAL STATEMENTS

118

13 INVESTMENT IN ASSOCIATES (CONTINUED)

(a) Information about associates (Continued):

The associates held through CIMBGs subsidiary, CIMB Strategic Assets Sdn Bhd are:

Percentage of equity held

31 December 31 December 1 January
Name of Associate Principal activities 2013 2012 2012
% % %

Capital Advisors Partners Asia Sdn. Bhd. Investment advisory services 40 40

Capital Advisors Partners Asia Pte. Ltd. Investment advisory services 40 40
(Incorporated in the Republic of Singapore)
Capasia Islamic Infrastructure Fund Managing private fund 40 40
(General Partner) Limited
(Incorporated in the Federal Territory of Labuan)
Capasia Asean Infrastructure Fund III General Partner of The CapAsia 40 40
(General Partner) Limited Asean Infrastructure Fund III L.P
(Incorporated in the Federal Territory of Labuan)
PT Cap Asia Indonesia Business management 40
(Incorporated in the Republic of Indonesia) consultancy services

# Classified as held-for-sale during the financial year

^ Disposed during the financial year

(b) The summarised financial information below represents amounts shown in the material associates Financial Statements
prepared in accordance with MFRSs (adjusted by the Group for equity accounting purposes).

Bank of Yingkou
As at 31 December
2013 2012
RM000 RM000

Total assets 38,559,039 31,185,660

Total liabilities (35,466,900) (28,573,240)
Net assets 3,092,139 2,612,420

Year ended 31 December

2013 2012
RM000 RM000

Revenue 1,082,508 1,082,508

Profit for the year 479,719 447,903
Dividends paid by the associate during the year 108,815
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13 INVESTMENT IN ASSOCIATES (CONTINUED)

(c) Reconciliation of the summarised financial information to the carrying amount of the interest in the associate recognised in
the consolidated financial statements:

Bank of Yingkou
As at 31 December
2013 2012
RM000 RM000

Opening net assets 1 January 2,612,420 2,273,332

Profit for the financial year 479,719 447,903
Dividend paid (108,815)

Closing net assets 3,092,139 2,612,420

Interest in associates (%) 20% 20%

Interest in associates (RM000) 618,428 522,484
Goodwill 7,797 7,797

Carrying value 626,225 530,281

(d) Aggregate information of associates that are not individually material:

31 December 31 December
2013 2012
RM000 RM000

The Groups share of profit for the financial year 210,324 12,305
The Groups share of other comprehensive expense for the financial year (725)

The Group shares of total comprehensive income for the financial year 209,599 (12,305)
Aggregate carrying amount of the Groups interest in these associates 85,519 67,423
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FINANCIAL STATEMENTS

120

14 INVESTMENT IN JOINT VENTURES

The Group
31 December 31 December
2013 2012
RM000 RM000

At 1 January, as previously reported 204,504 188,479

Effect of adopting MFRS 11 101,339 140,211

At 1 January, as restated 305,843 328,690

Share of profit for the year 55,170 19,743
Share of other comprehensive income for the financial year (5,742) (13,505)
Additional investment in joint ventures 1,623
Capital Repayment (47,336)
Disposal of interest in joint ventures (29,085)
Exchange fluctuation (23)

At 31 December 309,535 305,843

(a) Details of joint ventures

The principal place of business and country of incorporation of the joint ventures is Malaysia unless stated otherwise. All joint ventures are
measured using the equity method. There are no available quoted market prices of the joint ventures.

Percentage of equity held

through subsidiary company
31 December 31 December 1 January
Name Principal activities 2013 2012 2012
% % %

Proton Commerce Sdn. Bhd. Financing of vehicles 50 50 50

Alam-PE Holdings (L) Inc Owning and chartering offshore 51 51 51

(Incorporated in the Federal Territory supply vessels
of Labuan)

CIMB-Principal Islamic Asset Establishment and management of unit 50 50 50

Management Sdn. Bhd. trust fund and fund management
business in accordance with
shariah principles

The South East Asian Strategic Invest in equity and equity related securities 25.1 25.1 31.9
Assets Fund LP of entities operating in infrastructure,
(Incorporated in the Cayman Islands) energy and natural resources and
their associated industries

SEASAF Power Sdn. Bhd. Investment holding 25.1 25.1 31.9

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14 INVESTMENT IN JOINT VENTURES

(a) Details of joint venture (continued):

Percentage of equity held
through subsidiary company
31 December 31 December 1 January
Name Principal activities 2013 2012 2012
% % %

SEASAF Highway Sdn. Bhd. Investment holding 25.1 25.1 31.9

SEASAF Education Sdn. Bhd. Investment holding 25.1 25.1 31.9

SEASAF Sdn Bhd Investment holding 31.9

SEASAF 1 Resources Pte. Ltd. Investment holding 25.1 25.1 31.9

(Incorporated in the Republic
of Singapore)

Bangsar Capital Holdings (L) Limited Investment holding 50

(Incorporated in the Federal Territory
of Labuan)

Tanjung Pinang Villas Sdn. Bhd. Investment holding 50 50 50

Capasia South East Asian Strategic Investment advisory services 60 60 60

Asset Fund (General Partner)
Ltd (Incorporated in the Cayman Islands)

(b) Details of material joint venture:

Proton Commerce Sdn. Bhd.
On 22 October 2003, Bumiputra-Commerce Finance Berhad (BCF) (now known as Mutiara Aset Berhad) entered into a joint venture
agreement with Proton Edar Sdn Bhd (PESB) for the purposes of building and operating a competitive vehicle financing business in
Malaysia for vehicles distributed by PESB. Subsequently, a joint ventures was incorporated under the name of Proton Commerce Sdn.
Bhd. (PCSB) which is 50%:50% owned by BCF and PESB respectively. PCSB is primarily responsible for developing, managing and
marketing hire purchase loans for vehicles sold to the customers of PESB. Pursuant to the joint venture, BCF issued RM200 million
Perpetual Preference Shares (PPS) which were fully subscribed by PCSB. Pursuant to the vesting of the finance company business and
the related assets and liabilities of BCF to CIMB Bank and the subsequent capital reduction exercise undertaken by BCF, the BCF PPS
were cancelled, and CIMB Bank issued RM200 million PPS to PCSB.
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FINANCIAL STATEMENTS

122

14 INVESTMENT IN JOINT VENTURES

(c) The summarised financial information below represents amounts shown in the material joint venturess Financial Statements
prepared in accordance with MFRSs (adjusted by the Group for equity accounting purposes).

PCSB
As at 31 December
2013 2012
RM000 RM000

Non-current assets 1,616,285 1,588,974

Current assets 136,964 301,092
Current liabilities (non-trade) (1,151,620) (1,581,740)
Non-current liabilities (non-trade) (285,015) (1,214)

Net assets 316,614 307,112

The above amounts of assets and liabilities include the following:

Cash and cash equivalents 42,213 15,554

Year ended 31 December

2013 2012
Revenue 91,134 103,797
Profit for the financial year/Total comprehensive income for the financial year 9,500 8,698

The above profit for the financial year include the following:
Interest income 88,671 101,223
Interest expense (37,293) (44,958)
Taxation (3,610) (3,721)
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14 INVESTMENT IN JOINT VENTURES (CONTINUED)

(c) Reconciliation of the summarised financial information to the carrying amount of the interest in the material joint ventures
recognised in the consolidated financial statements:

PCSB
As at 31 December
2013 2012
RM000 RM000

Opening net assets 1 January 307,114 298,416

Profit for the financial year 9,500 8,698

Closing net assets as at 31 December 316,614 307,114

Interest in jointly ventures (%) 50% 50%

Interest in jointly ventures (RM000) 158,307 153,557

(d) Aggregate information of joint ventures that are not individually material:

31 December 31 December
2013 2012
RM000 RM000

The Group shares of profit for financial year from continuing operations 50,420 15,394
The Group shares of total comprehensive income for the financial year 50,420 15,394
Aggregate carrying amount of the Groups interest in these joint ventures 151,228 152,286
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FINANCIAL STATEMENTS

124

15 PROPERTY, PLANT AND EQUIPMENT

Buildings on Buildings on Renovations, Computer
Leasehold Leasehold leasehold leasehold office Computer equipment
land 50 land less Buildings on land land equipment, equipment and
Freehold years or than 50 freehold 50 years less than furniture and software Motor
The Group land more years land or more 50 years and fixtures hardware under lease vehicles Total
2013 Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Cost
At 1 January 69,789 33,933 1,804 368,216 93,085 349,143 1,889,631 986,113 46,259 182,287 4,020,260
Additions 117 50,857 293,629 133,803 756 29,592 508,754
Disposals/written off (3,136) (5,700) (29,585) (11,368) (7,594) (175,639) (44,690) (1,481) (27,494) (306,687)
Transfer/reclassifications (4,813) 4,813
Reclassified to intangible
assets 19 53 (445) (392)
Reclassified to non-current
assets held for sale 53 (456) (870) (1,686) (25,760) (28,772)
Exchange fluctuation (21,972) (196) 1,601 (49,615) (110,228) 2,660 426 (819) (178,143)

At 31 December 44,342 27,363 1,804 336,749 57,558 342,844 1,892,135 1,082,699 45,960 183,566 4,015,020

Accumulated depreciation
and impairment loss
At 1 January 8,767 9,716 1,004 120,354 45,454 228,091 1,257,139 703,467 36,761 75,166 2,485,919
Charge for the financial year 783 4,809 2,148 23,921 182,043 108,878 3,998 16,783 343,363
Disposals/written off (2,808) (8,063) (8,379) (5,249) (153,919) (40,598) (1,538) (21,855) (242,409)
Reclassified to non-current
asset held for sale 53 (286) (816) (11,639) (12,741)
Exchange fluctuation (9) (172) 327 (32,287) (74,990) 1,661 223 (648) (105,895)

At 31 December 8,758 7,405 1,004 116,112 27,911 214,476 1,210,273 773,408 39,444 69,446 2,468,237

Net book value at

31 December 2013 35,584 19,958 800 220,637 29,647 128,368 681,862 309,291 6,516 114,120 1,546,783
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15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Buildings on Buildings on Renovations, Computer
Leasehold Leasehold leasehold leasehold office Computer equipment
land 50 land less Buildings on land land equipment, equipment and
Freehold years or than 50 freehold 50 years less than furniture and software Motor
The Group land more years land or more 50 years and fixtures hardware under lease vehicles Total
2012 Note RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Cost
At 1 January 87,450 34,512 1,804 381,091 100,334 330,646 1,856,428 857,544 63,217 146,114 3,859,140
Additions 8 31 940 48,633 199,988 191,418 5,311 61,580 507,909
Arising from acquisition
of subsidiaries 51(b)(i) 5,018 10,125 1,448 16,591
Disposals/written off (2,675) (3,578) (3,162) (91,611) (69,726) (22,271) (26,356) (219,379)
Transfer/reclassifications (10,640) 10,681 (41)
Reclassified to intangible
assets 19 (3,466) (13,807) (17,273)
Reclassified to prepaid
lease payments 17 (203) (203)
Reclassified to investment
properties 16 (6,700) (6,700)
Reclassified to non-current
assets held for sale 53 (467) (579) (8,010) (1,560) (295) (10,911)
Exchange fluctuation (14,527) (1,318) 71 (26,679) (65,883) (122) 43 (499) (108,914)

At 31 December 69,789 33,933 1,804 368,216 93,085 349,143 1,889,631 986,113 46,259 182,287 4,020,260

Accumulated depreciation
and impairment loss
At 1 January 8,830 9,221 978 119,874 45,281 226,986 1,196,880 669,655 55,231 67,804 2,400,740
Charge for the financial year 806 26 5,173 2,650 22,706 184,051 100,107 2,829 27,315 345,663
Arising from acquisition
of subsidiaries 51(b)(i) 3,412 8,764 944 13,120
Disposals/written off (2,272) (2,690) (82,222) (67,072) (21,364) (20,585) (196,205)
Reclassified to intangible
assets 19 (1,262) (7,713) (8,975)
Reclassified to investment
properties 16 (1,763) (1,763)
Reclassified to non-current
asset held for sale 53 (311) (1,936) (708) (236) (3,191)
Exchange fluctuation (63) (485) (6) (18,675) (43,720) (274) 65 (312) (63,470)

At 31 December 8,767 9,716 1,004 120,354 45,454 228,091 1,257,139 703,467 36,761 75,166 2,485,919

Net book value at

31 December 2012 61,022 24,217 800 247,862 47,631 121,052 632,492 282,646 9,498 107,121 1,534,341
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

126

15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Renovations,
Leasehold office Computer
land 50 Buildings Buildings on equipment, equipment
years or on freehold leasehold furniture and and Motor
The Company more land land fixtures hardware vehicles Total
2013 Note RM000 RM000 RM000 RM000 RM000 RM000 RM000

Cost
At 1 January 6,792 31 45,687 5,377 161 1,644 59,692
Additions 793 793
Disposals (5,700) (22,421) (150) (28,271)
Reclassified to non-current
assets held for sale 53 (439) (14,707) (15,146)

At 31 December 653 31 8,559 5,377 161 2,287 17,068

Accumulate depreciation
At 1 January 2,930 31 23,756 2,676 158 1,424 30,975
Charge for the financial year 144 1,326 444 3 (125) 1,792
Disposals (2,808) (12,921) (150) (15,879)
Reclassified to non-current
assets held for sale 53 (187) (7,097) (7,284)

At 31 December 79 31 5,064 3,120 161 1,149 9,604

Net book value at

31 December 2013 574 3,495 2,257 1,138 7,464
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15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Buildings on Renovations,
Leasehold leasehold office Computer
land 50 Buildings on land equipment, equipment
years freehold 50 years or furniture and and Motor
The Company or more land more fixtures hardware vehicles Total
2012 RM000 RM000 RM000 RM000 RM000 RM000

Cost
At 1 January 6,792 31 45,687 5,585 161 2,635 60,891
Additions 40 40
Disposals (248) (991) (1,239)

At 31 December 6,792 31 45,687 5,377 161 1,644 59,692

Accumulated depreciation
At 1 January 2,760 31 22,264 2,251 155 1,823 29,284
Charge for the financial year 170 1,492 425 3 255 2,345
Disposals (654) (654)

At 31 December 2,930 31 23,756 2,676 158 1,424 30,975

Net book value at

31 December 2012 3,862 21,931 2,701 3 220 28,717
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FINANCIAL STATEMENTS

128

16 INVESTMENT PROPERTIES
Buildings on Buildings on
Buildings leasehold land leasehold land
Freehold on freehold less than 50 years
land land 50 years or more Total
The Group Note RM000 RM000 RM000 RM000 RM000

2013
At 1 January 27 6,423 5 10,996 17,451
Reclassified to non-current assets
held for sale 53 (27) (6,375) (4) (7,556) (13,962)
Disposals (510) (510)
Fair value adjustments 462 (1) 560 1,021

At 31 December 4,000 4,000

2012
At 1 January 437 5,922 2,211 83 8,653
Reclassification (2,212) 2,212
Reclassified from property, plant and
equipment 15 4,937 4,937
Reclassified to prepaid lease payment 17 6 6
Reclassified to non-current assets
held for sale 53 (200) (200)
Disposals (700) (700)
Fair value adjustments (410) 1,201 3,964 4,755

At 31 December 27 6,423 5 10,996 17,451

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16 INVESTMENT PROPERTIES (CONTINUED)

Freehold land Buildings on Total
freehold land
The Company RM000 RM000 RM000

2013
Cost
At 1 January / 31 December 235 561 796

Accumulated depreciation
At 1 January 288 288
Charge for the financial year 18 18

At 31 December 306 306

Net book value at 31 December 2013 235 255 490

Fair value as at 31 December 2013 675 835 1,510

2012
Cost
At 1 January / 31 December 235 561 796

Accumulated depreciation
At 1 January 269 269
Charge for the financial year 19 19

At 31 December 288 288

Net book value at 31 December 2012 235 273 508

Fair value as at 31 December 2012 675 835 1,510

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FINANCIAL STATEMENTS

130

16 INVESTMENT PROPERTIES (CONTINUED)

The investment properties are valued annually at fair value based on market values determined by independent qualified valuers. The fair values
are within level 2 of the fair value hierarchy. The fair values have been derived using the sales comparison approach. Sales prices of comparable
land and buildings in close proximity are adjusted for differences in key attributes such as property size.

The following amounts have been reflected in the statement of income:

The Group
2013 2012
RM000 RM000

Rental income 197 236

Operating expenses arising from investment properties that generated the rental income (104) 72

17 PREPAID LEASE PAYMENTS

Leasehold land
less than
50 years Total
The Group Note RM000 RM000

2013
Cost
At 1 January 290,853 290,853
Additions 92 92
Disposals/write-off (20) (20)
Exchange fluctuation (12) (12)

At 31 December 290,913 290,913

Amortisation and impairment loss

At 1 January 131,240 131,240
Amortisation during the financial year 11,802 11,802
Disposals/write-off (13) (13)
Exchange fluctuation (17) (17)

At 31 December 143,012 143,012

Net book value at 31 December 2013 147,901 147,901

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17 PREPAID LEASE PAYMENTS (CONTINUED)

Leasehold land
less than
50 years Total
The Group Note RM000 RM000

2012
Cost
At 1 January 289,193 289,193
Arising from acquisition of a subsidiary 1,345 1,345
Additions 161 161
Reclassified to investment properties 16 (13) (13)
Reclassified from property, plant and equipment 15 203 203
Exchange fluctuation (36) (36)

At 31 December 290,853 290,853

Amortisation and impairment loss

At 1 January 118,629 118,629
Amortisation during the financial year 12,642 12,642
Reclassified to investment properties 16 (7) (7)
Exchange fluctuation (24) (24)

At 31 December 131,240 131,240

Net book value at 31 December 2012 159,613 159,613

Future amortisation of prepaid land lease is as follows:

31 December 31 December
2013 2012
Leasehold Leasehold
land land
less than less than
50 years 50 years
RM000 RM000

The Group
Not later than one year 11,802 12,642
Later than one year and not later than five years 47,208 50,567
More than five years 88,891 96,404

147,901 159,613
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

132

18 GOODWILL
The Group
2013 2012
Note RM000 RM000

Cost

At 1 January 8,227,051 8,278,712

Goodwill arising from business combinations: 26,435 164,417

Acquisition of SICCO Securities Public Company Limited 51(b)(i) 12,033

Arising from initial accounting for the acquisition of selected RBS businesses
(i) Asia Pacific (excluding Taiwan) 51(a)(i) 152,384
(ii) Taiwan 51(a)(i) 26,435

Exchange fluctuation (329,558) (216,078)

At 31 December 7,923,928 8,227,051

Impairment
At 1 January (46,465) (36,223)
Impairment charge during the financial year (10,242)

At 31 December (46,465) (46,465)

Net book value at 31 December 7,877,463 8,180,586

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18 GOODWILL (CONTINUED)

Allocation of goodwill to cash-generating-units

Goodwill has been allocated to the following cash-generating-units (CGUs). These CGUs do not carry any intangible assets with indefinite
useful lives:

31 December 31 December
2013 2012
CGU RM000 RM000

Investment Banking
Investment Banking * 205,907
Retail and Institutional Equity 328,445 130,090
Financial Advisories, Underwriting and Other Fees 56,281 22,294

Asset Management 281,772 281,772

Consumer Banking
Retail Finance Services 1,101,075 1,101,075
Commercial Banking 911,000 911,000
Corporate Banking 419,000 419,000
Islamic Banking 136,000 136,000
Direct Banking Group 587,000 587,000

Treasury 537,000 537,000

Foreign Banking Operations
Indonesia 2,578,349 2,578,349
Thailand 1,199,277 1,199,277

Others
Insurance 1,500 1,500
Touch 'n Go 51,082 51,082
Exchange fluctuation (310,318) 19,240

7,877,463 8,180,586

* During the financial year, the Group had reallocated the Investment Banking CGU to the Retail and Institutional Equity and Financial
Advisories, Underwriting and Other Fees CGUs.
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FINANCIAL STATEMENTS

134

18 GOODWILL (CONTINUED)

Impairment test for goodwill

Value-in-use
The recoverable amount of CGU is determined based on the value-in-use calculations. These calculations use pre-tax cash flow projections
based on the 2014 financial budgets approved by the Board of Directors, projected for five years based on the average historical Gross
Domestic Product (GDP) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond the
five year period are extrapolated using the estimated growth rates and discounted using pre-tax discount rates which reflect the specific risks
relating to the CGU. The cash flow projections are derived based on a number of key factors including the past performance and managements
expectation of market developments.

The estimated growth rates and discount rates used for value-in-use calculations are as follows:

31 December 2013 31 December 2012

Growth rate Discount rate Growth rate Discount rate

Investment Banking N/A N/A 2.00%-5.00% 4.50%-11.15%

Retail and Institutional Equity 2.00% 11.64% N/A N/A
Financial Advisories, Underwriting and Other Fees 2.00% 11.64% N/A N/A
Asset Management 5.00% 6.55% 5.00% 7.10%
Consumer Banking 5.00% 6.55% 5.00% 7.10%
Treasury 5.00% 6.55% 5.00% 7.10%
Foreign banking operations 2.00% 9.78%-10.63% 2.00% 9.50%-10.86%
Others 2.00-5.00% 6.55% 2.00-5.00% 7.10%

Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any CGU to exceed
its recoverable amount.

Impairment charge
During financial year ended 31 December 2012, the impairment charge of RM10.2 million arises from asset management. The impairment charge
arose as the recoverable amount of the CGU was less than the carrying value of the CGU.
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19 INTANGIBLE ASSETS
Securities License and Insurance
Customer Core stockbroking Computer club broker
relationship deposits license software debentures license* Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000

2013
Cost
At 1 January 211,772 1,348,558 31,418 1,475,305 11,513 899 3,079,465
Additions during the
financial year 363,426 4,440 367,866
Disposals during the
financial year (33,297) (33,297)
Reclassified from property,
plant and equipment 15 392 392
Exchange fluctuation (1) 1,089 3,647 428 5,163

At 31 December 211,771 1,348,558 32,507 1,809,473 16,381 899 3,419,589

Accumulated amortisation
and impairment
At 1 January 126,381 538,418 31,418 705,238 490 1,401,945
Amortisation during the
financial year 23,365 110,903 142,884 153 277,305
Disposals during the
financial year (22,102) (22,102)
Exchange fluctuation (1) 1,089 1,379 (251) 2,216

At 31 December 149,745 649,321 32,507 827,399 392 1,659,364

Net book value at

31 December 2013 62,026 699,237 982,074 15,989 899 1,760,225

* Insurance broker license are not amortised as they have an infinite life. They are assessed for impairment on an annual basis.
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FINANCIAL STATEMENTS

136

19 INTANGIBLE ASSETS (CONTINUED)

Securities License and Insurance
Customer Core stockbroking Computer club broker
relationship deposits license software debentures license* Total
The Group Note RM000 RM000 RM000 RM000 RM000 RM000 RM000

2012
Cost
At 1 January 211,795 1,348,558 30,939 1,150,823 2,007 899 2,745,021
Arising from acquisition
of a subsidiary 51(b)(i) 941 941
Additions during the
financial year 309,977 9,695 319,672
Disposals during the
financial year (256) (3,001) (3,257)
Reclassified from property,
plant and equipment 15 17,273 17,273
Exchange fluctuation (23) 735 (708) (189) (185)

At 31 December 211,772 1,348,558 31,418 1,475,305 11,513 899 3,079,465

Accumulated amortisation
and impairment
At 1 January 103,343 427,646 30,788 570,716 649 1,133,142
Amortisation during the
financial year 23,060 110,772 128,249 31 262,112
Disposals during the
financial year (105) (2,414) (2,519)
Reclassified from property,
plant and equipment 15 8,975 8,975
Exchange fluctuation (22) 735 (288) (190) 235

At 31 December 126,381 538,418 31,418 705,238 490 1,401,945

Net book value at

31 December 2012 85,391 810,140 770,067 11,023 899 1,677,520

* Insurance broker license are not amortised as they have an infinite life. They are assessed for impairment on an annual basis.

The above intangible assets include software under construction at cost of RM502,114,781 (2012: RM452,343,695).
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137

19 INTANGIBLE ASSETS (CONTINUED)

The valuation of customer relationship was determined through the sum of the discounted future excess earnings attributable to existing
customers over the remaining life span of the customer relationships. Income from existing credit card, revolving credit, overdraft and trade
finance loan base was projected, adjusted for expected attrition and taking into account applicable costs to determine future excess earnings.
The discount rate used in the valuation of customer relationships was 9.9%-10%, which is arrived at using the weighted average cost of capital
adjusted for the risk premium after taking into consideration the average market cost of equity.

The valuation of core deposits acquired in a business combination was derived by discounting the anticipated future benefits in the form of net
interest savings from core deposits. The discount rate used was 8.0%-8.4%, which was derived from the average of the weighted average cost
of capital and the cost of equity, reflecting the lower risk premium for core deposit intangibles compared with equity returns.

The remaining amortisation period of the intangible assets with finite life is as follows:

Customer relationships:
Credit card 4.5 years
Overdraft 1 2 years
Core deposits 0.5 15 years
Computer software 1 14 years
Club debentures 7 9 years

20 DEPOSITS FROM CUSTOMERS

(i) By type of deposit

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Demand deposits 60,469,052 56,596,258 51,191,447

Savings deposits 30,209,802 29,196,454 25,380,012
Fixed deposits 110,777,319 113,966,142 98,257,823
Negotiable instruments of deposit 6,419,989 3,371,484 3,020,467
Others 55,128,140 44,164,701 44,045,711

263,004,302 247,295,039 221,895,460

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FINANCIAL STATEMENTS

138

20 DEPOSITS FROM CUSTOMERS (CONTINUED)

(i) By type of deposit (Continued)

The maturity structure of fixed deposits and negotiable instruments of deposit is as follows:

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Due within six months 97,933,973 103,547,709 87,378,439

Six months to one year 15,849,808 10,501,677 10,628,247
One year to three years 1,850,649 1,562,580 1,338,243
Three years to five years 1,234,394 891,283 1,583,660
More than five years 328,484 834,377 349,701

117,197,308 117,337,626 101,278,290

(ii) By type of customer

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Government and statutory bodies 8,681,578 11,507,833 12,579,786

Business enterprises 107,210,108 100,978,106 96,535,916
Individuals 92,638,301 92,727,823 84,078,467
Others 54,474,315 42,081,277 28,701,291

263,004,302 247,295,039 221,895,460

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139

21 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
restated restated

Licensed banks 16,745,660 10,147,812 6,418,399

Licensed finance companies 223,121 405,675 129,555
Licensed investment banks 755,900 437,756 200,041
Bank Negara Malaysia 795,996 1,988,428 372,677
Other financial institutions 2,207,168 2,542,920 3,712,329

20,727,845 15,522,591 10,833,001

The Group has undertaken a fair value hedge on the interest rate risk of the negotiable instruments of deposit amounting to RM126,971,000
(31 December 2012: RM97,000,000; 1 January 2012: RM70,000,000) using interest rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
restated restated

Negotiable instruments of deposit 126,971 97,000 70,000

Fair value changes arising from fair value hedges (3,267) (2,141) 721

123,704 94,859 70,721

The fair value loss of the interest rate swaps in this hedge transaction as at 31 December 2013 was RM2,384,445 (31 December 2012: fair
value loss of RM2,287,177; 1 January 2012: fair value gain of RM3,577,351).
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

140

22 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE

The Group
31 December 31 December
2013 2012
RM000 RM000

Deposits from customers structured investments 2,132,170

The Group has issued structured investments, and has designated them at fair value in accordance with MFRS139. The Group has the ability
to do this when designating these instruments at fair value reduces an accounting mismatch, is managed by the Group on the basis of its fair
value, or includes terms that have substantive derivative characteristics.

Included in the above are individual and domestic other non bank financial institution customers deposits with contractual amount due on
maturity amounting to RM2,253,559,000 and RM151,118,000 respectively.

The carrying amount of the Group at 31 December 2013 of financial liabilities designated at fair value were RM272,507,000 lower than the
contractual amount at maturity. The fair value changes of the financial liabilities that are attributable to the changes in own credit risk are not
significant.
 INTO A NEW ERA

141

23 OTHER LIABILITIES
The Group The Company
31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
Note RM000 RM000 RM000 RM000 RM000
Restated Restated

Due to brokers and clients 1,904,117 1,730,672 1,275,520

Expenditure payable 2,000,789 1,849,179 1,530,272 5,015 1,404
Provision for legal claims 82,783 86,801 128,254
Sundry creditors 1,054,029 809,560 881,454 4 4
Insurance fund life and takaful
insurance business 54,894 51,277 45,397
Allowance for commitments
and contingencies (a) 16,823 17,711 33,061
Post employment benefit obligations 24 279,160 337,922 343,369
Credit card expenditure payable 16,823 222,557 125,537
Call deposit borrowing 279,160 456,832 436,242
Others 2,873,461 2,002,339 1,615,184 8

8,562,039 7,564,850 6,414,290 5,027 1,408

(a) The movements in the allowance for commitments and contingencies are as follows:

The Group
2013 2012
RM000 RM000

At 1 January 17,711 33,061

Allowance written back during the financial year (1,334) (13,473)
Exchange fluctuation 446 (1,877)

At 31 December 16,823 17,711

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

142

24 POST EMPLOYMENT BENEFIT OBLIGATIONS

The Group
31 December 31 December 1 January
2013 2012 2012
Note RM000 RM000 RM000
Restated Restated

Defined contribution plan EPF (a) 26,034 30,271 28,713

Defined benefit plans (b) 253,126 307,651 314,656

279,160 337,922 343,369

(a) Defined contribution plan

Group companies incorporated in Malaysia contribute to the Employees Provident Fund (EPF), the national defined contribution plan. Once
the contributions have been paid, the Group and the Company have no further payment obligations.

(b) Defined benefit plans

The Group operates final salary defined benefit plans for its employees in Indonesia and Thailand under Labor Law of respectively countries,
the assets of which are held in separate trustee-administered funds that are governed by local authorities and practice in each country.
The plan calls for benefits to be paid to eligible employee at retirement or when the employees resign. The level of benefits provided
depends on members length of service and their salary in the final years leading up to retirement. The majority of benefits payments are
from trustee-administrated funds; however, there are also a number of unfunded plans where the company meets the benefit payment
obligation as it falls due.

The latest actuarial valuations of the plans in Indonesia and Thailand were carried out in 2013.

The amount recognised in the statements of financial position in respect of defined benefit plans is as follows:

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Present Value of Funded obligation 399,979 606,252 553,716

Fair value of plan assets (269,439) (331,268) (301,522)

Status of funded plan 130,540 274,984 252,194

Present value of unfunded oblingations 115,485 32,667 61,011

Status of defined benefits person plans 246,025 307,651 313,205

Impact of minimum funding requirement/asset ceiling 7,101 1,451

Liability in statments of financial position 253,126 307,651 314,656

 INTO A NEW ERA

143

24 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued)

The movements in the defined benefit obligation over the financial year are as follows:

Impact of
minimum
funding
Present value Fair value requirement/
The Group of obligation of plan assets Total asset ceiling Total
RM000 RM000 RM000 RM000 RM000

At 1 January 2013 638,919 (331,268) 307,651 307,651

Current service costs 53,231 53,231 53,231
Overprovision in prior year (10,527) (10,527) (10,527)
Interest expense/(income) 35,324 (24,955) 10,369 10,369

Components of defined benefits costs recognised

in statements of income 78,028 (24,955) 53,073 53,073

Remeasurement:
Return on plan assets, excluding amounts
included in interest expense 18,783 18,783 18,783
Loss from changes in demographic assumptions 5,752 5,752 5,752
Gain from changes in financial assumptions (108,824) (108,824) (108,824)
Experience losses 1,885 1,885 1,885
Change in asset ceiling, excluding amounts included
in interest expense 7,991 7,991

Components of defined benefits costs recognised

in statements of comprehensive income (101,187) 18,783 (82,404) 7,991 (74,413)

Exchange fluctuation (69,007) 48,724 (20,283) (890) (21,173)

Contributions:
Plan participant 540 540 540
Payments from plans benefits paid (31,289) 18,737 (12,552) (12,552)

At 31 December 2013 515,464 (269,439) 246,025 7,101 253,126

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

144

24 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued)

The movements in the defined benefit obligation over the financial year are as follows (Continued):

Impact of
minimum
funding
Present value Fair value requirement/
The Group of obligation of plan assets Total asset ceiling Total
RM000 RM000 RM000 RM000 RM000

At 1 January 2012 (Restated) 614,727 (301,522) 313,205 1,451 314,656

Current service costs 47,392 47,392 47,392
Interest expense/(income) 35,990 (24,927) 11,063 820 11,883

Components of defined benefits costs recognised

in statement of income 83,382 (24,927) 58,455 820 59,275

Remeasurement:
Return on plan assets, excluding amounts
included in interest income (11,338) (11,338) (11,338)
Loss from changes in financial assumptions 45,852 45,852 45,852
Change in asset ceiling, excluding amounts included
in interest expense (1,863) (1,863)

Components of defined benefits costs recognised

in statements of comprehensive income 45,852 (11,338) 34,514 (1,863) 32,651

Exchange fluctuation (56,014) 28,419 (27,595) (408) (28,003)

Contributions:
Plan participant (42,415) (42,415) (42,415)
Payments from plans benefits paid (49,028) 20,515 (28,513) (28,513)

At 31 December 2012 (Restated) 638,919 (331,268) 307,651 307,651

 INTO A NEW ERA

145

24 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued)

To develop the expected long-term rate of return on assets assumption, the Group considered the current level of expected returns on
risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which
the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then
weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

The principal actuarial assumptions used in respect of the Groups defined benefit plans are as follows:

31 December 2013 31 December 2012 1 January 2012

The Group Thailand Indonesia Thailand Indonesia Thailand Indonesia
% % % % % %

Discount rates 4.00 9.25 3.50 6.30 3.50 7.30

Expected return on plan assets N/A 9.25 N/A 9.00 N/A 11.00
Future salary increases 5.00 8.00 5.00 8.00 5.00 8.00
Rate of price inflation other fixed allowance 2.50 N/A 2.50 N/A 2.50 N/A

The sensitivity of defined benefit obligation to changes in the weighted principal assumption is:

Impact on defined benefit obligation

Change in assumption Increase in assumption Decrease in assumption

Discount rates 0.5% 1% Decreased by 9.5% Increased by 10.5%

Expected return on plan assets 1.0% Decreased by 1.0% Increased by 1.0%
Future salary increases 1.0% Increased by 14.1% Decreased by 12.1%

Projected unit credit method is used in calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is
unlikely to occur, and changes in some of the assumptions may be correlated.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

146

24 POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

(b) Defined benefit plans (Continued)

The Groups plan assets are comprised as follows:

The Group
31 December 2013 31 December 2012 1 January 2012
Quoted Unquoted Total Quoted Unquoted Total Quoted Unquoted Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Equity instruments (by geography)

Indonesia 58,650 58,650 74,854 74,854 73,478 73,478
Debt instruments (by type)
Government bonds 37,117 37,117 53,770 53,770 63,048 63,048
Corporate bonds (invertment grade) 42,132 42,132 51,698 51,698 47,330 47,330
Cash and cash equivalent 82,130 82,130 94,286 94,286 45,155 45,155
Mutual funds 34,722 34,722 38,663 38,663 44,222 44,222
Others 14,688 14,688 18,006 18,006 28,289 28,289

172,621 96,818 269,439 218,976 112,292 331,268 228,078 73,444, 301,522

The expected contribution to post employment benefits plan for the financial year ending 31 December 2014 is RM5,723,000 to the Group.

The weighted average duration of the defined benefit obligation is 9.7 years.

Expected maturity analysis of undiscounted defined benefits plans:

Less than Between Between Over 5

a year 1-2 years 2-5 years years Total
At 31 December 2013 RM000 RM000 RM000 RM000 RM000

Defined benefits plan 18,758 23,030 99,964 2,631,065 2,772,817

18,758 23,030 99,964 2,631,065 2,772,817

 INTO A NEW ERA

147

25 BONDS AND DEBENTURES

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

IDR1,500,000 million bonds (a) 403,125 640,018 521,225

HKD462 million notes (b) 198,266 188,499
USD350 million notes (c) 1,141,492 1,079,268
IDR2,000,000 million bonds (d) 543,047 475,123
THB Structured debentures (e) 514,082 121,489
THB Short term debenture (f) 2,116,464 656,153
IDR600,000 million bonds (g) 121,334 189,949
HKD171 million notes (h) 72,495
HKD430 million notes (i) 182,157
USD45 million notes (j) 147,711
IDR600,000 million notes (k) 163,700
HKD350 million notes (l) 147,993
SGD20 million notes (m) 51,121
USD20 million notes (n) 65,704
IDR1,450,000 million bonds (o) 391,979
HKD775 million notes (p) 327,820
HKD950 million notes (q) 401,694
RM500 million bonds (r) 500,081 500,161 500,477

7,490,265 3,850,660 1,021,702

(a) IDR1,500,000 million bonds

In 2011, CIMB Niaga, an indirect subsidiary of the Company, issued unsecured IDR1,500,000 million bonds with fixed interest rates. The
bonds are divided into two series:

(i) Series A Bond

The nominal value of the bonds amounted to IDR180,000 million with a tenor of 3 years which will mature on 23 December 2014.
It bears fixed interest rate of 7.375% per annum.

(ii) Series B Bond

The nominal value of the bonds amounted to IDR1,320,000 million with a tenor of 5 years which will mature on 23 December 2016.
It bears fixed interest rate of 8.30% per annum.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

148

25 BONDS AND DEBENTURES (CONTINUED)

(b) HKD462 million notes

On 8 May 2012, CIMB Bank Berhad, an indirect subsidiary of the Company, acting through its Labuan Offshore Branch, issued a HKD
462 million 5-year senior unsecured notes under its USD1 billion Euro Medium Term Note Programme established on 27 January 2011.
The notes will mature on 8 May 2017. It bears a coupon rate of 2.55% per annum payable annually in arrears.

CIMB Bank has undertaken fair value hedge on the interest rate risk and foreign exchange risk of the HKD462 million notes using cross
currency interest rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

HKD462 million notes, at cost 180,462 180,462

Fair value changes arising from fair value hedges (216) 3,116
Foreign exchange translations and interest payables 18,020 4,921

198,266 188,499

The fair value gain of cross currency interest rate swaps in this hedge transaction as at 31 December 2013 were RM2,345,539 (31
December 2012: fair value gain of RM5,457,587; 1 January 2012: Nil).

(c) USD350 million notes

On 26 July 2012, CIMB Bank Berhad issued a USD350 million 5-year senior unsecured notes under its USD1 billion Euro Medium Term
Note Programme established on 27 January 2011. The notes will mature on 26 July 2017. It bears a coupon rate of 2.375% per annum
payable semi-annually in arrears.

CIMB Bank has undertaken fair value hedge on the interest rate risk of the USD350 million notes using interest rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

USD350 million notes, at cost 1,103,725 1,103,725

Fair value changes arising from fair value hedges (11,539) 3,630
Foreign exchange translations, interest payables and accretion of discount 49,306 (28,087)

1,141,492 1,079,268

The fair value loss of interest rate swaps in this hedge transaction as at 31 December 2013 were RM5,047,779 (31 December 2012: fair
value gain of RM10,764,183; 1 January 2012: Nil).
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149

25 BONDS AND DEBENTURES (CONTINUED)

(d) IDR2,000,000 million bonds

On 30 October 2012, CIMB Niaga issued unsecured IDR2,000,000 million bonds with fixed interest rates. The bonds are divided into two
series:

(i) Series A Bond

The nominal value of the bonds amounted to IDR600,000 million with a tenor of 3 years which will mature on 30 October 2015. It
bears fixed interest rate of 7.35% per annum.

(ii) Series B Bond

The nominal value of the bonds amounted to IDR1,400,000 million with a tenor of 5 years which will mature on 30 October 2017. It
bears fixed interest rate of 7.75% per annum.

(e) THB Structured debentures

During the financial year, CIMB Thai issued various unsecured structured debentures amounted to THB5.1 billion (31 December 2012:
THB1.2 billion) with embedded callable range accrual swaps. The debentures will mature in five years from respective issuance dates. The
debentures bear interest rates ranges from 0 5.2% per annum (31 December 2012: 0.5% per annum) variable to index of THBFIX 6
months, payable semi annually. CIMB Thai has the option to early redeem the above structured debentures on any coupon dates.

During the financial year, CIMB Thai has early redeemed structured debentures amounted to THB1,298 million.

(f) THB Short term debentures

During the financial year, CIMB Thai issued various unsecured short term debentures amounted to THB20.7 billion (31 December 2012:
THB6.6 billion), with maturity ranging from 14 days to 9 months (31 December 2012: 12 days to 6 months).

The debentures carry fixed interest rates of 2.44% to 2.99% (31 December 2012: 2.76% to 2.95%) payable at respective maturity dates.

(g) IDR600,000 million bonds

On 22 November 2012, PT CIMB Niaga Auto Finance, a wholly-owned subsidiary of CIMB Niaga, has issued an unsecured IDR600,000
million bond with fixed interest rates. The bonds are divided in 2 series:

(i) Series 1
The nominal value of the bonds amounted to IDR152,000 million with a tenor of 1 year which had matured on 22 November 2013
and was redeemed on its maturity date. It bears fixed interest rate of 7.00% per annum.

(ii) Series 2
The nominal value of the bonds amounted to IDR448,000 million with a tenor of 3 year which will mature on 22 November 2015. It
bears fixed interest rate of 8.10% per annum.

(h) HKD171 million notes

On 22 January 2013, CIMB Bank a HKD171 million 5-year senior unsecured Fixed Rate Notes under its USD1 billion Euro Medium Term
Note Programme established on 27 January 2011. The notes will mature on 22 January 2018. It bears a coupon rate of 1.60% per annum
payable quarterly in arrears.
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FINANCIAL STATEMENTS

150

25 BONDS AND DEBENTURES (CONTINUED)

(i) HKD430 million notes

On 22 January 2013, CIMB Bank issued a HKD430 million 3-year senior unsecured Fixed Rate Notes under its USD1 billion Euro Medium
Term Note Programme established on 27 January 2011. The notes will mature on 22 January 2016. It bears a coupon rate of 1.20% per
annum payable quarterly in arrears.

(j) USD45 million notes

On 29 January 2013, CIMB Bank issued 2-year USD45 million senior unsecured floating rate notes under its USD1 billion Euro Medium
Term Note Programme established on 27 January 2011. The notes will mature on the interest payment date falling in or nearest to January
2015. The coupon rate is calculated based on the 3-month U.S.$ LIBOR plus a margin of 0.70% per annum and coupon is payable
quarterly in arrears.

(k) IDR600,000 million notes

PT CIMB Niaga Auto Finance has issued a 3-year IDR200,000 million and IDR400,000 million Monetary Term Notes on 15 February 2013
and 16 April 2013 respectively. The notes are unsecured and will mature on 15 February 2016 and 16 April 2016 respectively. It bears
fixed interest rate of 8.50% per annum and 8.20% per annum.

(l) HKD350 million notes

CIMB Bank issued HKD350 million 3-year senior unsecured notes under its USD1 billion nominal value Euro Medium Term Note Programme
established on 27 January 2011. The notes were issued on 14 March 2013 and will mature on 14 March 2016 (subject to adjustment in
accordance with the modified following business day convention). The notes bear a coupon rate of 1.09% per annum payable quarterly
in arrears.

(m) SGD20 million notes

On 22 March 2013, CIMB Bank Berhad, acting through its Singapore Branch, issued SGD20 million 5-year senior unsecured notes under
its USD1 billion nominal value Euro Medium Term Note Programme established on 27 January 2011. The notes will mature on 22 March
2018 (subject to adjustment in accordance with the modified following business day convention). The notes bear a coupon rate of 1.67%
per annum payable semi-annually in arrears.

CIMB Bank has undertaken fair value hedge on the interest rate risk of the SGD20 million notes using interest rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

SGD20 million notes, at cost 49,826

Fair value changes arising from fair value hedges (910)
Foreign exchange translations and interest payables 2,205

51,121

The fair value loss of interest rate swaps in this hedge transaction as at 31 December 2013 were RM893,430 (31 December 2012: Nil).
 INTO A NEW ERA

151

25 BONDS AND DEBENTURES (CONTINUED)

(n) USD20 million notes

On 8 April 2013, CIMB Bank acting through its Labuan Offshore Branch, issued USD20 million 3-year senior unsecured notes under its
USD1 billion nominal value Euro Medium Term Note Programme established on 27 January 2011. The notes will mature on 8 April 2016.
The notes bear a floating coupon rate of 3 month U.S.$ LIBOR plus 79 basis points per annum payable quarterly in arrears.

(o) IDR1,450,000 million bonds

CIMB Niaga, has issued 2-year Series A, 3-year Series B and 5-year Series C Senior Bond of IDR285 billion, IDR315 billion and IDR850
billion respectively, totalling IDR1.450 trillion on 20 November 2013. The bonds will mature on 20 November 2015, 20 November 2016
and 20 November 2018 for Series A, Series B and Series C respectively. The bonds bear fixed coupon rate of 8.75% per annum, 9.15%
per annum and 9.75% per annum for Series A, Series B and Series C respectively payable quarterly in arrears from the date of issuance.

(p) HKD775 million notes

On 29 August 2013, CIMB Bank issued HKD775 million 3-year senior unsecured notes under its USD1 billion nominal value Euro Medium
Term Note Programme established on 27 January 2011. The notes will mature on 29 August 2016 (subject to adjustment in accordance
with the modified following business convention). The notes bear a floating coupon rate of 3 month HIBOR plus 56 basis points per annum
payable quarterly in arrears.

(q) HKD950 million notes

On 20 December 2013, CIMB Bank Berhad issued HKD950 million 3-year senior unsecured notes under its USD1 billion nominal value
Euro Medium Term Note Programme established on 27 January 2011. The notes will mature on 20 December 2016. It bears a fixed
coupon rate of 1.45% per annum payable annually in arrears.

(r) RM500 million bonds

In 2011, CIMB Bank obtained funding through securitisation of its hire purchase receivables to Merdeka Kapital Berhad (MKB), a special
purpose vehicle set up to undertake multi securitisation transactions. Arising from the adoption of MFRS 10 Consolidated Financial
Statements in 2013, the Group has consolidated the silo of MKB in relation to CIMB Banks hire purchase receivables, as this silo has
been legally ring-fenced for this transaction. As a result, the RM500 million funding received by CIMB Bank from MKB is recognised as
bonds by the Group. The adoption of MFRS 10 has been applied retrospectively; refer to Note 54 for the impact of the adoption of MFRS
10 to the comparatives.

1st tranche of RM180 million is raised for an effective interest rate of 2.80% per annum, payable on monthly basis with coupon payment
due on every 28th of the month, and will mature on 28 October 2016.

2nd tranche of RM320 million is raised for an effective interest rate of 3.00% per annum, payable on monthly basis with coupon payment
due on every 28th of the month, and will mature on 28 October 2016.

The Group has undertaken cash flow hedge on the notes issued under item (h), (i), (l), (p) and (q).
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

152

26 OTHER BORROWINGS
The Group The Company
31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
Note RM000 RM000 RM000 RM000 RM000
Restated Restated

Syndicated term loan

USD100 million (a) 306,164 318,052 306,164
Commercial Papers/Medium Term Notes (b) 1,197,193 917,196 861,382 1,197,193 1,002,575
Term loan (c) 3,978,904 4,236,834 4,431,950 2,626,662 2,493,826
Others (d) 2,596,630 2,180,166 1,381,236

7,772,727 7,640,360 6,992,620 3,823,855 3,802,565

(a) In 2010, the Company secured an unsecured syndicated term loan amounting to USD100 million which matured on 2 December 2013. It
bears floating interest rate of LIBOR + 0.80% per annum.

(b) The Conventional Commercial Papers (CPs), Conventional Medium Term Notes (MTNs) and Islamic Medium Term Notes (iMTNs) were
issued by the Company.

The CPs, MTNs and iMTNs are unsecured. The aggregate outstanding nominal value of the CPs, MTN, and iMTN at any point in time
shall not exceed RM6 billion.

The main features of the CPs are as follows:

(i) In 2011, the Company issued RM100 million CPs, and had matured on 27 January 2012. The Commercial Papers carry an interest
rate of 3.40%.

(ii) In 2012, the Company issued RM150 million CPs, and had matured on 28 February 2013. The CPs carry an interest rate of 3.4%.

(iii) In 2013, the Company issued the following CPs:

RM150 million issued on 28 February 2013 and had matured on 28 May 2013. The CPs carry an interest rate of 3.4%.

3 months CPs and 6 months CPs of RM300 million and RM400 million respectively issued on 28 November 2013. The CPs carry
an interest of 3.4% and 3.55% respectively.

The main features of the MTNs and iMTNs are as follows:

(i) The MTNs and iMTNs were issued at par. The MTNs carry a fixed interest rate of 4.20% per annum and the iMTNs carry a fixed
dividend rate of 5.05% per annum;

(ii) On 30 May 2008, the Company issued RM350 million of iMTNs which had matured on 30 May 2013.

(iii) In 2011, the Company issued RM500 million MTNs which will mature on 14 April 2016. The MTNs carry an interest rate of 4.20%
per annum.
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26 OTHER BORROWINGS (CONTINUED)

(b) The Conventional Commercial Papers (CPs), Conventional Medium Term Notes (MTNs) and Islamic Medium Term Notes (iMTNs) were
issued by the Company. (Continued)

(iv) In 2009, the Company has undertaken a fair value hedge on the profit rate risk amounting to RM150 million of the RM350 million
iMTNs using profit rate swaps. The fair value hedge was terminated in 2013 upon maturity of iMTNs.

The Company
31 December 31 December
2013 2012
RM000 RM000

Islamic Medium Term Notes, at cost 150,000

Fair value changes arising from fair value hedge (2,663)

147,337

In 2012, the fair value gain of profit rate swaps in these hedge transactions was RM1,313,881 (1 January 2012: RM4,270,816).

(c) In 2009, the Company secured an unsecured term loan amounting to RM1.0 billion to refinance its existing borrowings. The term loan is
repayable in full at the end of three years on 26 June 2015 and bears a floating interest rate of 3.69% (2011: 3.73%) per annum.

In 2011, the Company secured another unsecured term loan amounting to RM1.0 billion. The term loan is repayable in full at the end of
three years on 27 October 2014 and bears a floating interest rate of 3.36% per annum.

In 2012, the Company secured a term loan amounting to USD190 million from its subsidiary which bears a floating rate of 1.2% plus USD
Cost of fund per annum. The term loan is secured by shares of its subsidiaries. The term loan is partially drawdown upto USD160.5 million
as of 31 December 2013. The term loan will mature on 30 October 2017.

In 2009, CIMB Niaga secured an unsecured term loan amounting to USD45 million which will mature on 2012. It bears a floating interest
rate of 1.01% per annum.

On 27 December 2011, STAMC secured an unsecured term loan amounting to THB2,500,000,000 which had matured on 29 December
2012. It bears a floating interest rate of 0.85% per annum.

Include in term loans are term loans of RM1,968,211,000 (31 December 2012: RM2,235,865,000; 1 January 2012: RM2,131,380,000)
undertaken by CIMB Bank Berhad from various financial institutions for working capital purposes. The loans have maturities ranging
between 25 March 2014 being the earliest to mature and 29 March 2019 being the longest to mature. Interest rates charged are between
0.64% to 1.26% per annum.

(d) Included in other are short term and long borrowing of RM1,592,603,000 (31 December 2012: RM1,223,413,000; 1 January 2012:
RM751,676,000) undertaken by CIMB Niaga and its subsidiaries. The maturity dates ranges from 1 to 5 years (31 December 2012: 1 to
5 years; 1 January 2012: 1 to 10 years), with interest rates charged ranging from 0.95% to 12.75% per annum (31 December 2012:
8.50% to 12.00% per annum; 1 January 2012: 9.83% to 13.86% per annum).
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

154

27 SUBORDINATED OBLIGATIONS
The Group The Company
31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
Note RM000 RM000 RM000 RM000 RM000
Restated Restated

Subordinated Notes 2010/2017 IDR1,380,000 million (a) 377,946 466,949 496,607

Subordinated Notes 2010/2020 IDR1,600,000 million (b) 429,837 506,917 568,762
Subordinated Bonds 2008/2018 RM1.5 billion,
callable with step-up in 2013 (c) 1,510,496 1,520,952
Subordinated Bonds 2008/2038 RM1.0 billion,
callable with step up-in 2018 (d) 1,015,786 1,015,603 1,015,786
Subordinated Bonds 2008/2058 RM1.0 billion,
optional redemption in 2018 (e) 980,009 994,303 991,868
Subordinated Notes 2007/2017 USD40 million,
callable with step-up in 2012 (f) 133,734
Subordinated Notes THB544 million (g) 54,392 54,450 54,843
Subordinated Sukuk RM850 million
(1st tranche due in 2024, optional redemption in 2019;
2nd tranche due in 2021, optional redemption in 2016;
2nd tranche due in 2022, optional redemption in 2017) (h) 660,370 658,806 360,613
Subordinated Debt 2010/2020 RM1 billion,
callable in 2015 (i) 1,010,663 1,018,754 1,027,297
Subordinated Debt 2010/2025 RM1 billion,
callable in 2020 (i) 1,027,377 1,061,704 1,066,054
Subordinated Notes 2009/2059 RM1.38 billion,
optional redemption in 2019 (j) 1,380,552 1,380,276 1,380,552 1,380,552 1,380,276
Subordinated Notes 2010/2060 RM150 million,
callable with step-up in 2015 (k) 151,873 146,857 146,857 151,873 151,917
Subordinated Notes 2010/2060 RM600 million,
callable with step-up in 2020 (k) 485,870 459,486 437,002 608,977 609,185
Subordinated Debt RM1.5 billion
(1st tranche due in 2021, callable in 2016;
2nd tranche due in 2026, callable in 2021) (l) 1,407,973 1,415,676 1,415,094
Subordinated Notes 2011/2021 THB3 billion,
optional redemption in 2016 (m) 307,191 238,072 309,735
Subordinated Notes 2012/2022 THB3 billion,
optional redemption in 2017 (n) 301,769 302,091
Subordinated Debt 2012/2022 RM1.5 billion,
callable in 2017 (o) 1,404,940 1,429,411
Subordinated Notes 2013/2023 RM1.05 billion (p) 1,063,868
Hybrid 2009/2019 THB2.5 billion,
callable with step-up in 2014 (q) 6,284

12,066,700 12,659,851 10,925,756 2,141,402 2,141,378

 INTO A NEW ERA

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27 SUBORDINATED OBLIGATIONS (CONTINUED)

(a) Subordinated Notes 2010/2017 IDR1,380,000 million

The unsecured Subordinated Notes 2010/2017 IDR1,380,000 million (the Notes) were issued by CIMB Niaga on 8 July 2010. The Notes
were issued at scriptless, with term of 7 years from the emission date and with fixed interest rate of 11.30% per annum. The Notes were
listed on the Indonesia Stock Exchange on 9 July 2010.

(b) Subordinated Notes 2010/2020 IDR1,600,000 million

The unsecured Subordinated Notes 2010/2020 IDR1,600,000 million (the Notes) were issued by CIMB Niaga on 23 December 2010. The
Notes were issued at scriptless, with term of 10 years from the emission date and with fixed interest rate of 10.85% per annum. The
Notes were listed on the Indonesia Stock Exchange on 27 December 2010.

(c) Subordinated Bonds 2008/2018 RM1.5 billion

The RM1.5 billion unsecured 10-year subordinated bonds (the RM1.5 billion Bonds) were issued by CIMB Bank on 28 March 2008. The
Bonds were issued at par and are callable with step-up in 2013. The Bonds bear an interest rate of 4.9% per annum payable semi-annually
in arrears for the first 5 years, after which interest rate will be reset to 5.9% per annum until maturity date.

The RM1.5 billion Bonds qualify as Tier-2 Capital for the purpose of the RWCR computation (subject to the gradual phrase-out treatment
under Basel 3).

CIMB Bank has exercised the option to redeem the RM1.5 billion 10-year subordinated bonds with callable maturity on 28 March 2013.

CIMB Bank has undertaken a fair value hedge on the interest rate risk amounting to RM600 million of the RM1.5 billion Bonds using
interest rate swaps. This hedge was discontinued in 2013 due to the full redemption of the RM1.5 billion Bonds.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated bonds, at cost 600,000 600,000

Fair value changes arising from fair value hedges (8,634) 1,821
Interest payables 7,652 7,652

599,018 609,473

The fair value gain of interest rate swaps in this hedge transaction as at 31 December 2012 was RM4,598,938 (1 January 2012:
RM14,993,302).
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FINANCIAL STATEMENTS

156

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(d) Subordinated Bonds 2008/2038 RM1.0 billion

The RM1.0 billion unsecured subordinated bonds (the RM1.0 billion Bonds) were issued by CIMB Bank at par on 7 October 2008 under
the Innovative Tier-1 Capital Securities Programme (T-1 Issue) which was approved by the Securities Commission on 24 September 2008.
The RM1.0 billion Bonds are due on 7 October 2038 callable with step-up on 7 October 2018. The RM1.0 billion Bonds bear an interest
rate of 6.7% per annum payable semi-annually in arrears for the first ten years, after which the interest rate will be reset at a rate per
annum equal to the 3-month KLIBOR plus 2.98%.

CIMB Bank may at its option, subject to the prior approval of BNM, redeem the RM1.0 billion subordinated bonds in whole but not in
part, on 7 October 2018 or any interest payment date thereafter, at their principal amount plus accrued interest.

The RM1.0 billion Bonds qualify as Tier-1 Capital for the purpose of the RWCR computation (subject to the gradual phase-out treatment
under Basel 3).

(e) Subordinated Bonds 2008/2058 RM1.0 billion

The RM1.0 billion unsecured subordinated bonds (the Bonds) is part of the Non-Innovative Tier-1 Stapled Securities Issuance Programme
(the programme) which was approved by the Securities Commission on 17 December 2008. Under the programme, CIMB Bank is
allowed to raise Non-Innovative Tier 1 Capital of up to RM4.0 billion in nominal value outstanding at any one time comprising:

(i) Non-Cumulative Perpetual Capital Securities issued by CIMB Bank; and

(ii) Subordinated Notes issued by Commerce Returns Berhad, a wholly-owned subsidiary of CIMB Bank.

The Bonds under the first issuance were issued at par on 26 December 2008 and are due on 26 December 2058, with optional
redemption on 26 December 2018 or any distribution payment date thereafter. The Bonds bear an interest rate of 7.2% per annum payable
semi-annually in arrears.

Subject to the prior approval of BNM, CIMB Bank shall redeem the RM1.0 billion subordinated bonds in whole but not in part, on 26
December 2018 or any distribution payment date thereafter, at their principal amount plus accrued interest.

The Bonds qualify as Tier I Capital for the purpose of the total capital ratio computation (subject to the gradual phase-out treatment under
Basel 3).
 INTO A NEW ERA

157

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(e) Subordinated Bonds 2008/2058 RM1.0 billion (Continued)

CIMB Bank has undertaken fair value hedge on the interest rate risk amounting to RM800 million of the RM1.0 billion Bonds using interest
rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000

Subordinated notes, at cost 800,000 800,000 800,000

Fair value changes arising from fair value hedges (21,175) (6,880) (9,119)
Interest payables 947 947 789

779,772 794,067 791,670

The fair value loss of interest rate swaps in these hedge transactions as at 31 December 2013 was RM23,889,116 (31 December 2012:
RM9,589,359; 1 January 2012: RM11,841,284).

(f) Subordinated Notes 2007/2017 USD40 million

On 16 February 2007, CIMB Thai issued 400 unit unsecured 10-year subordinated notes (the USD40 million Notes). The USD40 million
Notes were issued at a price of USD100,000 per unit and are callable with step-up in 2012. The USD40 million Notes bear an interest
rate at six-month LIBOR plus 3.5% for the first 5 years payable semi-annually on 20 February and 20 August, after which interest rate will
be reset at a rate per annum equal to the six-month LIBOR plus 5.25%.

CIMB Thai may at its option, subject to the prior approval of Bank of Thailand, redeem the USD40 million Notes in whole but not in part,
on 20 February 2012 at their principal amount plus accrued interest.

The USD40 million Notes will mature on 20 February 2017 and qualify as Tier-2 Capital for the purpose of the RWCR computation. On
21 February 2012, CIMB Thai Bank had fully settled the USD40 million Notes.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

158

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(g) Subordinated Notes THB544 million

The THB 544 million subordinated notes (the THB544 million Notes) represent CIMB Thais obligation with regards to the promissory
notes previously issued by few financial institutions before a series of merger. The promissory notes, which are guaranteed by Financial
Institutions Development Fund (FIDF) have been recalled as FIDF is of the opinion that CIMB Thai has no obligations in respect to the
related liabilities. However, CIMB Thai has yet to return the promissory notes to FIDF in order to retain its right to claim compensation
from FIDF should CIMB Thai need to undertake any responsibility for any obligations in the future.

(h) Subordinated Sukuk RM850 million

The RM850 million unsecured subordinated Sukuk (the Sukuk) is part of the Tier-2 Junior Sukuk programme by the Companys indirect
subsidiary, CIMB Islamic Bank Berhad (CIMB Islamic), which was approved by the Securities Commission on 22 May 2009. Under the
programme, CIMB Islamic is allowed to raise Tier-2 capital of up to RM2.0 billion in nominal value outstanding at any one time.

The first tranche of the Sukuk of RM300 million was issued at par on 25 September 2009 and are due on 25 September 2024, with
optional redemption on 25 September 2019 or any periodic payment date thereafter. The Sukuk bears a profit rate of 5.85% per annum
payable semi-annually in arrears. Included in the RM300 million subordinated Sukuk was RM162.20 million (31 December 2012: RM170.15
million: 1 January 2012: RM182.15 million) subordinated Sukuk which was held by subsidiaries of the Company, hence the amount was
eliminated at consolidated level.

On 21 April 2011, the second tranche of the Sukuk of RM250 million was issued at par and is due on 21 April 2021, with optional
redemption on 21 April 2016 or any periodic payment date thereafter. The Sukuk bears a profit rate of 4.20% per annum, payable semi-
annually in arrears.

CIMB Islamic has undertaken fair value hedge on the profit rate risk of the RM250 million subordinated Sukuk using Islamic profit rate
swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated Sukuk, at cost 250,000 250,000 250,000

Fair value changes arising from fair value hedges 2,436 5,628 7,959
Interest payables 2,077 2,048 2,043

254,513 257,676 260,002

 INTO A NEW ERA

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27 SUBORDINATED OBLIGATIONS (CONTINUED)

(h) Subordinated Sukuk RM850 million (Continued)

The fair value gain of Islamic profit rate swaps in these hedge transactions as at 31 December 2013 was RM2,881,581 (31 December
2012: RM5,932,760; 1 January 2012: RM8,194,538).

On 18 September 2012, the third tranche of the Sukuk of RM300 million was issued at par and is due on 15 September 2022, with
optional redemption on 18 September 2017 or any periodic payment date thereafter. The Sukuk bears a profit rate of 4.00% per annum,
payable semi-annually in arrears.

CIMB Islamic has undertaken fair value hedge on the profit rate risk of the RM300 million subordinated Sukuk using Islamic profit rate
swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated Sukuk, at cost 270,000 270,000

Fair value changes arising from fair value hedges (6,023) (2,351)
Interest payables 3,039 3,061

267,016 270,710

Included in the RM300 million subordinated Sukuk was RM30 million (31 December 2012: RM30 million) subordinated Sukuk which was
held by subsidiaries of the Company, hence the amount was eliminated at consolidated level.

The fair value loss of Islamic profit rate swaps in this hedge transaction as at 31 December 2013 was RM5,864,579 (31 December 2012:
RM2,302,664; 1 January 2012: nil).

The RM850 million Sukuk qualify as Tier II Capital for the purpose of the total capital ratio computation of CIMB Islamic (subject to the
gradual phase-out treatment under Basel 3).
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

160

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(i) Subordinated Debts RM2 billion

CIMB Bank has on 23 December 2010 completed the issuance of RM2.0 billion unsecured Subordinated Debt.

The RM2.0 billion Subordinated Debt issuance was issued under the RM5.0 billion Subordinated Debt Programme which was approved
by the Securities Commission on 2 March 2009 and 24 September 2010 (for certain variation of terms).

The Subordinated Debt was issued in 2 separate tranches, a RM1.0 billion tranche with a maturity of 10 years callable at the end of year
5 and on each subsequent coupon payment dates thereafter (10 years tranche), and another RM1.0 billion tranche with a maturity of
15 years callable at the end of year 10 and on each subsequent coupon payment dates thereafter (15 years tranche). Redemption of
the Subordinated Debt on the call dates shall be subject to Bank Negara Malaysias approval.

The coupon rate for the Subordinated Debt is 4.3% and 4.8% for the 10 years tranche and the 15 years tranche respectively. There is
no step up coupon after call dates. Proceeds from the issue will be used for CIMB Banks working capital purposes.

The RM2.0 billion subordinated debts qualify as Tier II Capital for the purpose of the total capital ratio computation (subject to the gradual
phase-out treatment under Basel 3).

In 2012, CIMB Bank has undertaken fair value hedge on the interest rate risk of the RM1 billion subordinated debts (maturity of 10 years)
and RM1 billion subordinated debts (maturity of 15 years) using interest rate swaps. The fair value hedge was discontinued in 2013.

Subordinated debts with maturity of 10 years

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated debts, at cost 1,000,000 1,000,000 1,000,000

Fair value changes arising from fair value hedges 17,811 26,237
Unamortised fair value adjustments 9,603
Interest payables 1,060 943 1,060

1,010,663 1,018,754 1,027,297

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2012 was RM15,087,833 (1 January 2012:
RM23,117,414).
 INTO A NEW ERA

161

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(i) Subordinated Debts RM2 billion (Continued)

Subordinated debts with maturity of 15 years

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated debts, at cost 1,000,000 1,000,000 1,000,000

Fair value changes arising from fair value hedges 60,652 64,870
Unamortised fair value adjustments 26,193
Interest payables 1,184 1,052 1,184

1,027,377 1,061,704 1,066,054

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2012 was RM51,449,507 (1 January 2012:
RM55,268,434).

(j) Subordinated Notes 2009/2059 RM1.38 billion

The RM1.38 billion unsecured subordinated fixed rate notes (the RM1.38 billion Notes) is part of the Subordinated Notes Programme
which was approved by the Securities Commission on 12 June 2009. Under the programme, the Company is allowed to issue subordinated
fixed rate notes of up to RM3.0 billion in nominal value.

The RM1.38 billion Notes under the first issuance were issued at par on 30 June 2009 and are due on 30 June 2059, with optional
redemption on 30 June 2019 or any periodic payment date thereafter. It bears an interest rate of 7.30% per annum payable semi-annually
in arrears for the first ten years, after which the interest rate will be reset at a rate per annum equal to the 6 months KLIBOR + 1% plus
original credit spread. The original credit spread is calculated as 7.3% less the 10 year swap rate as per the 11 am BNM fixing rate on
23 June 2009.

(k) Subordinated Notes 2010/2060 RM150 million and RM600 million

The RM750 million unsecured Cumulative Subordinated Fixed Rate Notes (the RM750 million Notes) issued by the Company on 5 April
2010, comprising a callable 5 year tranche and 10 year tranche, amounting to RM150 million and RM600 million respectively, was part of
the Subordinated Notes Programme which was approved by the Securities Commission on 12 June 2009. Under the programme, the
Company is allowed to issue subordinated fixed rate notes of up to RM3.0 billion in nominal value.

Included in the RM600 million subordinated notes was RM119,575,000 (31 December 2012: RM138,003,000 million; 1 January 2012:
RM152,550,000) subordinated notes which was held by subsidiaries of the Company, hence the amount was eliminated at consolidated
level.

Both tranches have a maturity of 50 years, with call option for the Issuer to redeem at year 5 and on each subsequent coupon payment
date, and year 10 and on each subsequent coupon payment date respectively. The 5 year Tranche pays a semi annual coupon rate of
5.3% per annum whilst the 10 year Tranche pays a coupon of 6.35% per annum. The coupon will be stepped up by 2.0% in the event
the Company does not redeem the RM750 million Notes on the respective first call date.
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FINANCIAL STATEMENTS

162

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(l) Subordinated Debt 2011/2021 RM1.5 billion

CIMB Bank has on 8 August 2011 completed the issuance of RM1.5 billion unsecured Subordinated Debt.

The RM1.5 billion Subordinated Debt issuance was the second issuance under the RM5.0 billion Subordinated Debt Programme which
was approved by the Securities Commission on 2 March 2009 and 24 September 2010 (for certain variation of terms).

The Subordinated Debt was issued in 2 separate tranches, a RM1.35 billion tranche with a maturity of 10 years callable at the end of
year 5 and on each subsequent coupon payment dates thereafter (Tranche 1), and another RM150 million tranche with a maturity of 15
years callable at the end of year 10 and on each subsequent coupon payment dates thereafter (Tranche 2). Redemption of the
Subordinated Debt on the call dates shall be subject to Bank Negara Malaysias approval.

The coupon rate for the Subordinated Debt is 4.15% and 4.70% for Tranche 1 and Tranche 2 respectively. There is no step up coupon
after call dates. Proceeds from the issue will be used for CIMB Banks working capital purposes.

The RM1.5 billion Subordinated Debt qualifies as Tier II Capital for the purpose of the total capital ratio computation (subject to the gradual
phase-out treatment under Basel 3).

CIMB Bank has undertaken fair value hedge on the interest rate risk of the RM1.35 billion and RM150 million subordinated debts using
interest rate swaps.

RM1.35 billion Subordinated debt

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
restated restated

Subordinated debts, at cost 1,226,900 1,210,435 1,200,000

Fair value changes arising from fair value hedges 8,669 26,142 35,936
Interest payables 19,988 20,461 20,081

1,255,557 1,257,038 1,256,017

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163

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(l) Subordinated Debt 2011/2021 RM1.5 billion (Continued)

Included in the RM1.35 billion subordinated debt was RM123,100 million (31 December 2012: RM139,565 million; 1 January 2012: RM150,000
million) subordinated debt which was held by subsidiaries of the Company, hence the amount was eliminated at consolidated level.

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2013 was RM12,339,335 (31 December 2012:
RM29,818,318; 1 January 2012: RM38,756,075).

RM150 million Subordinated debt

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
restated restated

Subordinated debts, at cost 150,000 150,000 150,000

Fair value changes arising from fair value hedges (327) 5,819 6,257
Interest payables 2,743 2,819 2,820

152,416 158,638 159,077

The fair value gain of interest rate swaps in these hedge transactions as at 31 December 2013 was RM320,673 (31 December 2012:
RM6,478,919; 1 January 2012: RM6,820,237).

(m) Subordinated Notes 2011/2021 THB3 billion

On 14 July 2011, CIMB Thai issued 3,000,000 units unsecured 10-year subordinated notes (the THB 3 billion Notes). The THB3 billion
Notes were issued at a price of THB1,000 per unit. The THB3 billion Notes carry constant interest rate of 5.35% per annum payable every
6 months on 14 July and 14 January.

The THB3 billion Notes will mature on 14 July 2021. CIMB Thai Bank may exercise its right to early redeem the subordinated notes after
5 years subject to approval by the Bank of Thailand.

(n) Subordinated Notes 2012/2022 THB3 billion

On 9 November 2012, CIMB Thai issued 3,000,000 units unsecured 10-year subordinated notes (the THB3 billion Notes). The THB3
billion Notes were issued at a price of THB1,000 per unit. The THB3 billion Notes carry fixed interest rate of 4.80% per annum payable
semi annually on 9 November and 9 May.

The THB3 billion Notes will mature on 9 November 2022. CIMB Thai Bank may exercise its right to early redeem the subordinated notes
after 5 years subject to approval by the Bank of Thailand.
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164

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(o) Subordinated Debt 2012/2022 RM1.5 billion

CIMB Bank has on 30 November 2012 completed the issuance of RM1.5 billion unsecured subordinated debt.

The RM1.5 billion subordinated debt issuance was the third issuance under the RM5.0 billion Subordinated Debt Programme which was
approved by the Securities Commission on 2 March 2009 and 24 September 2010 (for certain variation of terms).

The subordinated debt was issued as a single tranche of RM1.5 billion tranche with a maturity of 10 years callable at the end of year 5
and on each subsequent coupon payment dates thereafter. Redemption of the subordinated debt on the call dates shall be subject to
Bank Negara Malaysias approval.

The coupon rate for the subordinated debt is 4.15% per annum. There is no step up coupon after call dates. Proceeds from the issue
will be used for CIMB Banks working capital purposes.

The RM1.5 billion Subordinated Debt qualifies as Tier II Capital for the purpose of the total capital ratio computation (subject to the gradual
phase-out treatment under Basel 3).

During the financial year, CIMB Bank has undertaken fair value hedge on the interest rate risk of the RM1.5 billion subordinated debt using
interest rate swaps.

The Group
31 December 31 December 1 January
2013 2012 2012
RM000 RM000 RM000
Restated Restated

Subordinated debts, at cost 1,427,050 1,425,000

Fair value changes arising from fair value hedges (26,666)
Interest payables 4,556 4,411

1,404,940 1,429,411

Included in the RM1.5 billion subordinated debt was RM72,950 million (31 December 2012: RM75,000 million) subordinated debt which
was held by subsidiaries of the Company, hence the amount was eliminated at consolidated level.

The fair value loss of interest rate swaps in this hedge transaction as at 31 December 2013 was RM19,938,421 (2012: Nil).
 INTO A NEW ERA

165

27 SUBORDINATED OBLIGATIONS (CONTINUED)

(p) Subordinated Debts 2013/2023 RM1.05 billion

On 1 August 2013 CIMB Bank has successfully set up a Basel 3 Compliant Tier 2 Subordinated Debt Issuance Programme of up to
RM10.0 Billion in nominal value (Basel 3 Subordinated Debt Programme). The Basel 3 Subordinated Debt Programme was approved by
Securities Commission on 10 June 2013.

CIMB Bank has on 13 September 2013 completed the inaugural issuance of a RM750 million Subordinated Debt under the Basel 3
Subordinated Debt Programme. The Subordinated Debt was issued as a single tranche of RM750 million tranche at 4.80% per annum
with a maturity of 10 years non-callable at the end of year 5.

CIMB Bank has on 16 October 2013 completed the second issuance of a RM300 million Subordinated Debt under the Basel 3
Subordinated Debt Programme. The Subordinated Debt was issued as a single tranche of RM300 million at 4.77% per annum with a
maturity of 10 years non-callable at the end of year 5.

Redemption of the Subordinated Debts on the call dates shall be subject to Bank Negara Malaysia (BNM)s approval. There is no step
up coupon after call dates. The proceeds of the Subordinated Debts shall be made available to CIMB Bank, without limitation for its
working capital, general banking and other corporate purposes and/or if required, the refinancing of any existing subordinated debt
previously issued by the Issuer under other programmes established by CIMB Bank.

The RM1.05 billion Subordinated Debt qualifies as Tier II capital for the purpose of the total capital ratio computation.

(q) Hybrid 2009/2019 THB2.5 billion

On 27 March 2009, CIMB Thai issued 2,500,000 units cumulative hybrid instruments with a face value of THB1,000 each, or a total of
THB2,500 million. The notes have a tenor of 10 years, maturing on 27 March 2019, with an early redemption call option 5 years after the
issue date. They bear interest at 5.25% per annum, for the first 5 years, and 6.75% per annum for years 6-10. Interest is due every 27
March and 27 September (under the specified conditions).

There is a call option in the following two cases:

i. If there are significant changes in tax laws that increase the tax liabilities of the issuer
ii. If the notes cannot be counted as hybrid Tier II debts of CIMB Thai

In both cases, early redemption must be pre-approved by the Bank of Thailand.

Prior to 2013, the whole THB2,500 million notes were held by another wholly-owned subsidiary of CIMB Bank, and hence the whole
amount were eliminated at consolidated level. In 2013, THB60 million was held by third party.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

166

28 SHARE CAPITAL
The Group and the Company
2013 2012
RM000 RM000

Ordinary shares of RM1.00 each:

Authorised:
At 1 January/31 December 10,000,000 10,000,000

Issued and fully paid shares of RM1.00 each:

At 1 January 7,432,775 7,432,775
Issued during the financial year:
Dividend reinvestment scheme issued on:
(i) 8 May 2013 183,076
(ii) 30 October 2013 113,495

At 31 December 7,729,346 7,432,775

(a) Increase in issued and paid-up capital

During the financial year, the Company increased its issued and paid-up capital from RM7,432,774,646 to RM7,729,345,939 via:

(i) Issuance of new ordinary shares of RM1.00 each arising from the Dividend Reinvestment Scheme relating to electable portion of the
second interim dividend of 18.38 sen in respect of financial year ended 31 December 2012, as disclosed in Note 41(a);

(ii) Issuance of 113,495,493 new ordinary shares of RM1.00 each arising from the Dividend Reinvestment Scheme relating to electable
portion of the first interim dividend of 12.82 sen in respect of financial year ended 31 December 2013, as disclosed in Note 41(b).

(b) Dividend Reinvestment Scheme

On 18 January 2013 the Company announced the proposal to put in place a dividend reinvestment scheme that would allow the
shareholders of the Company (Shareholders) to have the option to elect to reinvest their cash dividends in new ordinary shares (New
CIMB Shares)(Dividend Reinvestment Scheme).

The Dividend Reinvestment Scheme has received the necessary approval from Bursa Securities on 5 February 2013, its shareholders via
an Extraordinary General Meeting held on 25 February 2013 and from Bank Negara Malaysia on 25 March 2013.
 INTO A NEW ERA

167

28 SHARE CAPITAL (CONTINUED)

(b) Dividend Reinvestment Scheme (Continued)

The scheme would allow the Board, at its absolute discretion, to offer either the Dividend Reinvestment Scheme or full cash for the Groups
dividends as and when it deems appropriate vis--vis the Groups capital strategy and plans.

The rationale of the Dividend Reinvestment Scheme are as follows:

(i) CIMBs capital management strategy

As part of the Companys capital management strategy, the Dividend Reinvestment Scheme would provide the Company additional
flexibility in managing its capital position.

(ii) Enhancing shareholder value with reasonable dividend yield

The Dividend Reinvestment Scheme will provide an opportunity for shareholders to enjoy dividend yield while preserving capital for the
Company.

Since the announcement of Basel III, many global banks have taken a cautious stance in capital management including that of
reducing dividend payments. Whilst this stance will improve a banks capital ratios, such actions may result in lower dividend yields
and may eventually reduce investors interest in the banking industry.

The Dividend Reinvestment Scheme provides an alternative for banks to balance the demand of its investors and its capital objective.

(iii) Alternative mode of payment of Dividends

The implementation of the Dividend Reinvestment Scheme will provide an avenue for shareholders to elect to exercise the option to
reinvest all or part of their dividends into New CIMB Shares in lieu of receiving cash dividend.

The shareholders shall have the following options in respect of an option to reinvest announced by the Board under the Dividend
Reinvestment Scheme:

(i) to elect to participate by reinvesting the whole or part of the Electable Portion at the issue price for New CIMB Shares.

In the event that only part of the Electable Portion is reinvested, the shareholders shall receive cash for the remaining portion of the
Electable Portion not reinvested; or

(ii) to elect not to participate in the option to reinvest and thereby receive the entire dividend entitlement wholly in cash.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

168

29 PREFERENCE SHARES
The Group
31 December 31 December
2013 2012
Note RM000 RM000

Liability
Non-cumulative guaranteed preference shares 29(a) 719,251 703,724
Redeemable prefence shares 29(b) 128,196 128,196

847,447 831,920

Equity
Perpetual preference shares 29(c) 200,000 200,000

(a) Non-cumulative guaranteed preference shares

The Group
2013 2012
RM000 RM000

Authorised
Non-cumulative guaranteed preference shares of USD0.01 each

At 1 January/31 December 8 8

The Group
31 December 31 December
2013 2012
RM000 RM000

Issued and fully paid

Non-cumulative guaranteed preference shares of USD0.01 each

Non-cumulative guaranteed preference shares 728,250 728,250

 INTO A NEW ERA

169

29 PREFERENCE SHARES (CONTINUED)

(a) Non-cumulative guaranteed preference shares (Continued)
The Group has undertaken fair value hedge on the interest rate risk of the USD200 million non-cumulative guaranteed preference shares
using interest rate swaps.

The Group
31 December 31 December
2013 2012
RM000 RM000

Non-cumulative guaranteed preference shares, at cost 728,250 728,250

Fair value changes arising from fair value hedges 60,099 91,556
Foreign exchange translations and interest payables (69,098) (116,082)

719,251 703,724

The fair value gain of interest rate swaps in this hedge transaction as at 31 December 2013 was RM60,765,255 (2012: RM83,329,063).

The USD200 million 6.62% Non-cumulative Guaranteed Preference Shares of USD0.01 each at a premium of USD999.99 per share were
issued on 2 November 2005 by SBB Capital Corporation (SCC), a wholly-owned subsidiary company of CIMB Bank incorporated in
Labuan. The main features of the SCC Preference Shares are as follows:

(i) The SCC Preference Shares are entitled to dividends which are payable in arrears on 2 May and 2 November up to and including
2 November 2015 at a fixed rate of 6.62% per annum.

(ii) On 2 November 2015 (First Optional Redemption Date) and on each dividend date thereafter, SCC may at its option, subject to the
prior approval of BNM, redeem the SCC Preference Shares in whole but not in part, at their principal amount plus accrued but unpaid
dividends. If the SCC Preference Shares are not called on 2 November 2015, dividends will be reset at a floating rate per annum
equal to three-month LIBOR plus 2.53%, payable quarterly on 2 February, 2 May, 2 August and 2 November.

(iii) The SCC Preference Shares will not be convertible into ordinary shares.

(iv) The SCC Preference Shares are guaranteed by CIMB Bank on a subordinated basis. If the SCC Preference Shares have not been
redeemed in full on or prior to 2 November 2055, CIMB Bank shall cause the substitution of the SCC Preference Shares with
Preference Shares issued by CIMB Bank (Substitute Preference Shares) and the SCC Preference Shares shall be mandatory
exchanged for such Substitute Preference Shares having economic terms which are in all material aspects equivalent to those of the
SCC Preference Share.

The SCC Preference Shares were admitted to the Official List of the Singapore Exchange Securities Trading Limited and Labuan
International Financial Exchange Inc on 4 November 2005 and 24 November 2005 respectively, and qualify as Tier-1 Capital for the purpose
of the RWCR computation, subject to the limit as prescribed in the Guidelines on Innovative Tier 1 Capital Instruments issued by Bank
Negara Malaysia on 24 December 2004.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

170

29 PREFERENCE SHARES (CONTINUED)

(b) Redeemable preference shares

The Group
2013 2012
RM000 RM000

Authorised
Redeemable preference shares of RM0.01 each
At 1 January/31 December (i) 1,000 1,000

Redeemable preference shares of RM0.01 each

At 1 January/31 December (ii) 350 350

Issued and fully paid

Redeemable preference shares of RM0.01 each
At 1 January/31 December (i) 100,000 100,000

Redeemable preference shares of RM0.01 each

At 1 January 28,196 39,587
Redeemed during the financial year (11,391)

At 31 December (ii) 28,196 28,196

 INTO A NEW ERA

171

29 PREFERENCE SHARES (CONTINUED)

(b) Redeemable preference shares (Continued)

(i) On 2 October 2006, a subsidiary, Commerce Agro Ventures Sdn Bhd (CAgV), has allotted and issued redeemable preference shares
(RPS) to an external party amounting to RM100,000,000, comprising RM1,000,000 at nominal value and RM99,000,000 at premium.

The main features of the RPS are as follows:

The RPS does not carry any fixed dividends.

The maturity date of the RPS is either the date corresponding to the 15th anniversary of the issue date or such other date as
the Board may resolve.

In the event of winding-up of CAgV or other repayment of capital, the RPS carries the rights to have the surplus assets applied
first in paying off the RPS holders.

The RPS rank pari passu in all aspects among themselves.

Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

(ii) On 20 February 2006, a subsidiary, Commerce-KPF Ventures Sdn Bhd (CKPF), has allotted and issued redeemable preference
shares (RPS) to an external party amounting to RM35,000,000, comprising RM350,000 at nominal value and RM34,650,000 at
premium.

The main features of the RPS are as follows:

The RPS carries a fixed cumulative dividend of 5% per annum.

The maturity date of the RPS is either:-

(i) the date corresponding to the 5th anniversary of the issue date; or

(ii) the date corresponding to the 7th anniversary of the issue date; or

(iii) such other date as the Board may resolve.

Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.

Subsequently, CKPF has allotted and issued RPS to an external party amounting to RM17,500,000, comprising RM175,000 at nominal
value and RM17,325,000 at premium.

The main features of the RPS are as follows:

The RPS carries a fixed cumulative dividend of 5% per annum.

The maturity date of the RPS is either:-

(i) the date corresponding to the 5th anniversary of the issue date; or

(ii) the date corresponding to the 7th anniversary of the issue date; or

(iii) such other date as the Board may resolve.

Each RPS shall be liable to be redeemed at the option of the holders at any time after the issue date at the redemption price.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

172

29 PREFERENCE SHARES (CONTINUED)

(c) Perpetual preference shares

The Group
2013 2012
RM000 RM000

Authorised
Perpetual preference shares of RM1.00 each
At 1 January/31 December 500,000 500,000

Issued and fully paid

Perpetual preference shares of RM1.00 each
At 1 January/31 December 200,000 200,000

The main features of the perpetual preference shares (PPS) are as follows:

(i) The PPS has no right to dividends.

(ii) In the event of liquidation, dissolution or winding-up of CIMB Bank, PCSB as holder of the PPS will be entitled to receive full
repayment of the capital paid up on the PPS in priority to any payments to be made to the ordinary shareholders of CIMB Bank.

(iii) The PPS rank pari passu in all aspects among themselves.

(iv) CIMB Bank must not redeem or buy back any portion of the PPS and the PPS will be perpetual except for any capital reduction
exercise permitted by the Companies Act, 1965 and as approved by Bank Negara Malaysia.
 INTO A NEW ERA

173

30 RESERVES
The Group The Company
31 December 31 December 1 January 31 December 31 December
2013 2012 2012 2013 2012
Note RM000 RM000 RM000 RM000 RM000
Restated Restated

Share premium ordinary shares 5,832,520 4,192,596 4,192,596 5,832,520 4,192,596

Statutory reserves (a) 4,933,045 4,306,464 4,103,591
Regulatory reserve (b) 1,743,883 1,173,577 490,627
Capital reserve 137,104 137,104 137,104 55,982 55,982
Exchange fluctuation reserves (c) (2,106,977) (876,172) 174,989
Revaluation reserve
Financial investments available-for-sale (d) (42,709) 800,965 729,551
Retained earnings (e) 12,215,358 11,216,265 8,540,608 1,306,058 1,521,610
Share-based payment reserve (f) 101,642 59,459 374,332
Other reserves
Hedging reserve net investment hedge (g) (94,195) 36,109 (46,254)
Hedging reserve cash flow hedge (h) (11,314)
EOP reserve-shares purchased pending (i) (168,683) (111,810) (65,388)
release
Defined benefits reserves (j) 2,682 (73,743) (41,092)

22,542,356 20,860,814 18,590,664 7,194,560 5,770,188

(a) The statutory reserves of the Group are maintained by the banking subsidiaries in Malaysia in compliance with the BNM guidelines and
include a reserve maintained by a subsidiary in compliance with the Bursa Malaysia Securities Berhad Rules and Regulations. These
reserves are not distributable by way of cash dividends.

(b) Regulatory reserve of the Group is maintained by the banking subsidiaries in Malaysia as an additional credit risk absorbent to ensure
robustness on the loan impairment assessment methodology with the adoption of MFRS 139 beginning 1 January 2010.

(c) Exchange translation differences have arisen from translation of net assets of Labuan offshore subsidiaries, foreign branches and foreign
subsidiaries. These translation differences are shown under exchange fluctuation reserves.

(d) Movement of the revaluation reserve of financial investments available-for-sale is shown in the statements of comprehensive income.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

174

30 RESERVES (CONTINUED)
(e) Pursuant to the Finance Act, 2007 which was gazetted on 28 December 2007, dividends paid, credited or distributed to shareholders are
not tax deductible by the Company, but are exempted from tax in the hands of the shareholders (single tier system). As at 31 December
2013, the Company has sufficient tax exempt account balances to pay tax exempt dividends of up to RM477,522,037 (31 December
2012: RM477,522,037; 1 January 2012: RM467,522,037) out of its retained earnings.

(f) The Share-based payment reserve arose from the Management Equity Scheme (MES) and Equity Ownership Plan (EOP), the Groups
share-based compensation benefit. The management Equity Scheme lapsed in 2012.

(g) Hedging reserve arises from net investment hedge activities undertaken by the Group on overseas operations and foreign subsidiaries. The
reserve is non-distributable and is reversed to the statement of income when the foreign operations and subsidiaries are partially or fully
disposed.

(h) Hedging reserve arises from cash flow hedge activities undertaken by the Group to hedge held to maturity securities, senior bonds issued
and inter-bank lending against foreign exchange risk. The reserve is non-distributable and is reversed to the statement of income when
the hedged items affect the statement of income or termination of the cash flow hedge.

(i) EOP reserve reflects the Groups shares purchased for EOP under share-based compensation benefits, pending release to its employees.

(j) Defined benefit reserves relate to the cumulative actuarial gains and losses on defined benefit plans.

31 SHARES HELD UNDER TRUST AND TREASURY SHARES

(a) Shares held under trust

The Group
2013 2012
RM000 RM000

At 1 January/31 December 563 563

As an integral part of the CIMBBs restructuring exercise in 2005, the then existing CIMBBs ESOS and Employee Equity Scheme (EES)
ceased to have any value pursuant to the delisting from Bursa Malaysia Securities Berhad. Accordingly, consistent with the fair treatment
to all Executive Employees and the spirit of continuity of the scheme in existence, the schemes were modified with terms and conditions
remaining and subsequently called the Modified EESOS. For the EES, the remaining options were accelerated and exercised prior to the
completion of the CIMBBs restructuring.

The CIMBB restructuring exercise and the schemes were approved by the shareholders of the Company during the Extraordinary General
Meeting held on 8 September 2005. The modified schemes entailed the following:

(i) The setting up of a trust to subscribe for all the remaining CIMBB shares under the unexercisable tranches under the CIMBB ESOS
(ESOS Trust) prior to the implementation of the CIMBB restructuring. The subscription was facilitated through an accelerated vesting
of the unexercisable options. The funding for the subscription for the CIMBB shares by the trustee for both Trusts was provided by
the Company by way of a loan.
 INTO A NEW ERA

175

31 SHARES HELD UNDER TRUST AND TREASURY SHARES (CONTINUED)

(a) Shares held under trust (Continued)

(ii) Under the CIMBB restructuring exercise, both trustees have opted for new shares of the Company at the ratio of approximately 1.146
of the Companys shares for one CIMBB share. The Executive Employees or the CEO are entitled to instruct the trustee as to the
sale, subject to a minimum market price that is higher than a price to be determined by dividing the existing adjusted exercise price
by the ratio of approximately 1.146, plus transaction costs and any income tax liability, if applicable, of such shares of the Company
in the manner as previously provided under the CIMBB ESOS.

(iii) The number of the Companys shares subject to such instruction per annum will be in the same proportion as per the adjusted total
outstanding number under the previous CIMBB ESOS multiplied by the ratio approximately 1.146.

(iv) If the Executive Employee or CEO opt to instruct the trustee to transfer or sell in the market, upon such instruction under the Modified
EESOS and Modified CEO Option, a proportion of the proceeds received by the Trustee, plus any income tax, if applicable, will be
retained by the Trustee and used to offset the Loan and the excess (net of transaction costs) will be payable to the Executive
Employee or CEO.

As at 31 December 2013, there are 258,000 (2012: 258,000) units remain unexercised.

(b) Treasury shares, at cost

The Group and the Company
2013 2012
Units Units
000 RM000 000 RM000

At 1 January 4 32 3 30
Purchased during the year 1 9 1 2

At 31 December 5 41 4 32

The shareholders of the Company, via an ordinary resolution passed at the Annual General Meeting held on 17 April 2013, approved the
Companys plan and mandate to authorise the Directors of the Company to buy back its own shares up to 10% of existing total paid-up
share capital. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the
share buyback can be applied in the best interests of the Company and its shareholders.

During the financial year, the Company bought back 1,199 (2012: 205) of its issued share capital at an average price of RM7.41 per share
(2012: RM7.61 per share), from the open market. As at the reporting date, there were 4,408 ordinary shares held as treasury shares (2012:
3,209). The total consideration paid for the share buyback during the financial year, including transaction costs is RM9,000 (2012: RM1,783)
and was financed by internally generated funds. Treasury shares have no rights to vote, dividends and participation in other distribution.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

176

32 INTEREST INCOME
The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Loans, advances and financing

interest income other than recoveries 11,614,486 10,809,389 2 5
unwinding income ^ 97,301 140,015
Money at call and deposits with financial institutions 619,485 571,901 19,786 9,619
Reverse repurchase agreements 323,632 157,942
Financial assets held for trading 485,227 342,539
Financial investments available-for-sale 1,142,158 896,330
Financial investments held-to-maturity 350,604 390,585
Others 13,199 16,317 251 271

14,646,092 13,325,018 20,039 9,895

Accretion of discounts less amortisation of premiums 31,208 215,587

14,677,300 13,540,605 20,039 9,895

^ Unwinding income is interest income earned on impaired financial assets

33 INTEREST EXPENSE
The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Deposits and placements of banks and other financial institutions 160,130 144,367
Deposits from other customers 5,040,837 4,835,399
Repurchase agreements 189,930 32,085
Bonds and debentures 200,468 79,037
Subordinated obligations 582,840 564,087 146,790 147,192
Financial liabilities designated at fair value 40,368
Negotiable certificates of deposits 127,430 99,960
Other borrowings 304,877 270,061 121,796 113,209
Others 76,274 119,729

6,723,154 6,144,725 268,586 260,401

 INTO A NEW ERA

177

34 NET NON-INTEREST INCOME

The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Net fee and commission income:

Commissions 581,786 517,216
Fee on loans, advances and financing 479,267 463,879
Portfolio management fees 31,688 20,948
Service charges and fees 555,634 528,455
Corporate advisory fees 118,135 143,695
Guarantee fees 67,043 48,880
Other fee income 310,390 289,795
Placement fees 68,924 96,053
Underwriting commission 82,775 35,168

Fee and commission income 2,295,642 2,144,089

Fee and commission expense (427,359) (415,647)

Net fee and commission income 1,868,283 1,728,442

Gross dividend income from:

In Malaysia
- Subsidiaries 2,427,649 1,882,314
- Financial assets held for trading 30,422 33,785
- Financial investments available-for-sale 12,834 14,437

Outside Malaysia
- Financial assets held for trading 2,080 1,664
- Financial investments available-for-sale 17,072 11,760

62,408 61,646 2,427,649 1,882,314

Net gain/(loss) arising from financial assets held for trading

Realised (114,909) 60,820

Unrealised (205,092) 38,944

(320,001) 99,764
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

178

34 NET NON-INTEREST INCOME (CONTINUED)

The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Net gain/(loss) arising from derivative financial instruments

Realised 807,702 841,896 10,181 (4,316)
Unrealised (262,947) (217,480) (5,458) (17,950)

544,755 624,416 4,723 (22,266)

Net gain/(loss) arising from fair value liability through

profit or loss
Realised (36,089)
Unrealised 263,975

227,886

Net loss arising from hedging derivatives (36,839) (26,912) (3,532) 63

Net gain from sale of financial investments available-for-sale 280,508 388,868

Net gain from redemption/maturity of financial investments 126,917 35,581

held-to-maturity

Income from assets management and securities services 206,414 181,992

Brokerage income 534,010 385,959

 INTO A NEW ERA

179

34 NET NON-INTEREST INCOME (CONTINUED)

The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Other non-interest income:

Foreign exchange gain/(loss):
Realised 213,096 145,386 (14,646) 2
Unrealised 273,933 157,352 (42,572) 10,749
Share of gain from recovery of impaired loans 113,190 133,464
Gain on deemed disposal/disposal of interests in subsidiaries 10,139 2,567
Rental income 11,908 9,597 2,018 2,491
Gain on disposal of property, plant and equipment/assets held for sale 38,300 14,868 23,556 104
Gain on disposal of leased assets 38 168
Gain on disposal of associates 515,063 445
Gain on revaluation of investment properties 1,021 4,755
Other non-operating income 472,066 460,878 21
Underwriting surplus before management expenses (Note (a)) 22,558 9,753
Loss on disposal of foreclosed properties (40,827) (9,387)

1,630,485 929,846 (31,644) 13,367

5,124,826 4,409,602 2,397,196 1,873,478

(a) Underwriting surplus before management expenses is as follows:

The Group
2013 2012
RM000 RM000

Insurance premium earned 219,440 148,369

Net claims incurred (174,417) (117,522)
Net commissions (22,465) (21,094)

22,558 9,753
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

180

35 OVERHEADS
The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Personnel costs
Salaries, allowances and bonus 3,642,831 3,285,005 (181)
Pension costs (defined contribution plan) 225,220 202,039 (37)
Pension costs (defined benefit plans (Note 24(b)) 53,073 59,275
Overtime 33,170 32,157 4
Staff incentives and other staff payments 171,035 182,813 4
Medical expenses 95,878 88,648 6 3
Mutual seperation scheme 217,164
Termination benefits 12,107 2,854
Others 518,669 463,836 23 12
Establishment costs
Depreciation of property, plant and equipment 343,360 345,663 1,792 2,345
Depreciation of investment properties 18 19
Amortisation of prepaid lease payments 11,802 12,642
Rental 380,127 333,261 4
Repair and maintenance 404,443 309,778 269 323
Outsourced services 176,961 215,782 7
Security expenses 103,929 95,943
Others 242,072 218,739 2,400 678
Marketing expenses
Sales commission 9,718 15,844
Advertisement 290,215 268,810 4 117
Others 95,594 71,739 101
Administration and general expenses
Amortisation of intangible assets 277,305 262,112
Legal and professional fees 157,564 178,418 8,113 329
Stationery 80,080 82,921 5
Communication 150,038 154,339 41 40
Incidental expenses on banking operations 36,206 39,875
Insurance 208,494 179,975
Others 520,815 509,631 3,539 6,222

8,457,870 7,612,099 16,310 9,890

 INTO A NEW ERA

181

35 OVERHEADS (CONTINUED)

The above expenditure includes the following statutory disclosures:

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000

Directors remuneration (Note 38) 13,454 14,588 1,511 1,955

Rental of premises 238,291 224,183
Hire of equipment 11,110 9,088 3
Lease rental 52,285 31,986
Auditors remuneration
Audit
Statutory audit (PricewaterhouseCoopers Malaysia*) 4,183 3,443 488 176
Statutory audit (other member firms of PricewaterhouseCoopers
International Limited*) 4,096 5,140
Limited review (PricewaterhouseCoopers Malaysia*) 758 710
Limited review (other member firms of PricewaterhouseCoopers
International Limited*) 702 810
Other audit related (PricewaterhouseCoopers Malaysia*) 403 160 73
Other audit related (other member firms of PricewaterhouseCoopers
International Limited*) 249 274
Non-audit
Non-audit services (PricewaterhouseCoopers Malaysia*) 1,709 905 844 31
Non-audit services (other member firms of PricewaterhouseCoopers
International Limited*) 1,112 511
Other auditors remuneration
Statutory audit 361
Non-audit services 110
Property, plant and equipment written off 3,949 731

* PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate and independent
legal entities.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

182

36 ALLOWANCE MADE FOR IMPAIRMENT LOSSES ON LOANS, ADVANCES AND FINANCING

The Group
2013 2012
RM000 RM000

Net allowance made during the financial year

Individual impairment allowance 179,523 164,322
Portfolio impairment allowance 858,902 600,195

Impaired loans and financing

Recovered (403,839) (442,195)
Written Off 26,021 6,776

660,607 329,098

37 ALLOWANCE MADE/(WRITTEN BACK) FOR IMPAIRMENT LOSSES

The Group
2013 2012
RM000 RM000

Financial investments available-for-sale:

Net allowance made during the financial year 41,568 5,749

Financial investments held-to-maturity:

Net allowance written back during the financial year (2,056) (2,906)

Goodwill:
Impaired during the financial year 10,242

Associates:
Net allowance made during the financial year 403 2,229

39,915 15,314
 INTO A NEW ERA

183

38 DIRECTORS REMUNERATION

The Directors of the Company in office during the financial year are as follows:

Executive Directors
Dato Sri Mohamed Nazir bin Abdul Razak

Non-Executive Directors
Tan Sri Dato Md Nor bin Md Yusof
Dato Zainal Abidin bin Putih
Dato Hamzah bin Bakar
Datuk Dr Syed Muhamad bin Syed Abdul Kadir
Dato Robert Cheim Dau Meng
Glenn Muhammad Surya Yusuf
Watanaa Petersik
Katsumi Hatao
Cezar Peralta Consing (resigned on 23 January 2013)

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000

Executive Directors
Salary and other remuneration 5,135^ 6,037^
Benefits-in-kind 3,865 3,963

9,000 10,000

Non-Executive Directors
Fees 1,262 1,303 804 885
Other remuneration 2,922^ 3,180^ 685 1,070
Benefits-in-kind 270 105 22

4,454 4,588 1,511 1,955

13,454 14,588 1,511 1,955

^ These salary and other remuneration include bonus accruals in relation to the directorship of certain Directors in certain subsidiaries excluding
Bank CIMB Niaga. The Directors bonus for the financial year 2013 will be paid in tranches, spread over financial year 2014, while for
financial year 2012, it will be paid in tranches, spread over financial year 2013. A similar condition is also imposed on the bonus for certain
key personnel.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

184

38 DIRECTORS REMUNERATION (CONTINUED)

Salary and/ The Salary and/ The
or other Benefits- Group or other Benefits- Company
Fees remuneration In-kind Total Fees remuneration In-kind Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

2013
Executive Directors
Dato Sri Mohamed Nazir bin Abdul
Razak 5,135 3,865 9,000

5,135 3,865 9,000

Non-Executive Directors
Tan Sri Dato Md Nor bin Md Yusof 126 405 23 554 102 400 22 524
Dato Zainal Abidin bin Putih 300 547 37 884 126 72 198
Dato Hamzah bin Bakar 186 291 21 498 126 56 182
Dato Robert Cheim Dau Meng 766 121 887
Datuk Dr Syed Muhamad
bin Syed Abdul Kadir 270 549 26 845 126 59 185
Cezar Peralta Consing 7 7 6 6
Glenn Muhammad Surya Yusuf 145 126 42 313 114 36 150
Watanan Petersik 114 206 320 102 34 136
Katsumi Hatao 114 32 146 102 28 130

1,262 2,922 270 4,454 804 685 22 1,511

1,262 8,057 4,135 13,454 804 685 22 1,511

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38 DIRECTORS REMUNERATION (CONTINUED)

Salary and/ The Salary and/ The
or other Benefits- Group or other Benefits- Company
Fees remuneration In-kind Total Fees remuneration In-kind Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

2012
Executive Directors
Dato Sri Mohamed Nazir
bin Abdul Razak 6,037 3,963 10,000

6,037 3,963 10,000

Non-Executive Directors
Tan Sri Dato Md Nor bin Md Yusof 126 762 888 102 758 860
Dato Zainal Abidin bin Putih 270 520 790 126 68 194
Dato Hamzah bin Bakar 186 299 485 126 58 184
Datuk Dr Syed Muhamad
bin Syed Abdul Kadir 270 519 789 126 58 184
Dato Robert Cheim Dau Meng 806 94 900
Hiroyuki Kudo 134 11 145
Cezar Peralta Consing 114 32 146 102 30 132
Glenn Muhammad Surya Yusuf 126 47 173 114 43 157
Watanan Petersik 114 36 150 102 32 134
Katsumi Hatao 97 25 122 87 23 110

1,303 3,180 105 4,588 885 1,070 1,955

1,303 9,217 4,068 14,588 885 1,070 1,955

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FINANCIAL STATEMENTS

186

39 TAXATION
The Group The Company
2013 2012 2013 2012
RM000 RM000 RM000 RM000

Taxation based on the profit for the financial year:

Malaysian income tax 893,225 914,156 5,525 258,422

Foreign tax 514,214 523,329

1,407,439 1,437,485 5,525 258,422

Deferred tax (Note 10) (159,171) (73,615) (129) (7)

(Over)/Under accrual in prior years (7,861) (82,784) 12

1,240,407 1,281,086 5,396 258,427

Reconciliation between tax charge and the Malaysian tax rate:

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000

Profit before taxation 5,849,229 5,638,311 2,132,339 1,613,082

Tax calculated at a rate of 25% 1,462,307 1,409,578 533,085 403,271

Income not subject to tax (276,247) (121,592) (593,873) (177,285)
Effects of different tax rates in other countries (179,303) (101,747)
Effects of change in tax rates (226)
Expenses not deductible for tax purposes 303,517 229,122 66,184 32,429
Utilisation of previously unrecognised tax losses (61,780) (51,491)
(Over)/Under accrual in prior years (7,861) (82,784) 12

Tax charge of current year 1,240,407 1,281,086 5,396 258,427

In 2012, deferred tax assets arising from unabsorbed tax losses amounted to RM152,170,000 have not been recognised in the Groups financial
statements. The unabsorbed tax losses will expire in 2013.
 INTO A NEW ERA

187

40 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share of the Group are calculated by dividing the net profit attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the financial year.

2013 2012

Net profit for the financial year (RM000)

From continuing operations 4,540,403 4,305,194
From discontinuing operations 39,582

4,540,403 4,344,776

Weighted average number of ordinary shares in issue (000) 7,570,924 7,432,772

Basic earnings per share (expressed in sen per share)
From continuing operations 60.0 58.0
From discontinuing operations 0.5

60.0 58.5

(b) Diluted earnings per share

The Group has no dilution in its earnings per ordinary share in the current and previous financial year as there are no dilutive potential
ordinary shares.

41 DIVIDENDS PER ORDINARY SHARE

The Group and the Company
2013 2012
Amount Amount
Gross of dividend Gross of dividend
per share net of tax per share net of tax
sen RM000 sen RM000

Interim dividend 18.38 1,366,143 a 10.0 743,277

Interim dividend 12.82 976,352 b 5.0 371,639

31.20 2,342,495 15.0 1,114,916

(a) The dividend consists of electable portion of 18.38 sen per ordinary shares, of which 15.52 sen per ordinary was reinvested in new ordinary
shares in accordance with the DRS and a total of RM212,765,822 cash dividend was paid on 8 May 2013.

(b) The dividend consists of electable portion of 12.82 sen per ordinary shares, of which 10.28 sen per ordinary was reinvested in new ordinary
shares in accordance with the DRS and a total of RM193,232,679 cash dividend was paid on 30 October 2013.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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188

41 DIVIDENDS PER ORDINARY SHARE (CONTINUED)

Dividends recognised as distributions to owners:

The single tier second-interim dividend for the previous financial year were approved by the Board of Directors on 17 January 2013 and paid
in the current financial year. This is shown as a deduction from the retained earnings in the statements of changes in equity in the current
financial year.

The Directors have declared a single-tier interim dividend of 12.82 sen per ordinary share on 7,615,847,038 ordinary shares amounting to
RM976,351,590 for the financial year ended 31 December 2013 under Dividend Reinvestment Scheme (DRS). The interim dividend of 12.82
sen per ordinary share was approved by the Board of Directors on 30 July 2013 and paid on 30 October 2013.

The Directors have proposed a second interim single-tier dividend of 10.33^ sen per ordinary share, on 8,299,341,531^ ordinary shares
amounting to RM850 million in respect of the financial year ended 31 December 2013, to be paid in 2014. The single-tier second interim
dividend was approved by the Board of Directors on 11 February 2014. The proposed dividend consists of an electable portion of 10.33^ sen
which can be elected to be reinvested in new ordinary shares in accordance with the DRS.

The Financial Statements for the current financial year do not reflect this proposed dividend. Such dividend will be accounted for in equity as
an appropriation of retained earnings in the next financial year ending 31 December 2014.

The Directors do not recommend the payment of any final dividend for the financial year ended 2013.

^ On 25 February 2014 the Company announced a single-tier interim dividend of 11.00 sen per ordinary share based on the share capital as at 31 December 2013 of 7,729,341,531
ordinary shares. Pursuant to the completion of the private placement in January 2014 of 500 million new ordinary shares which increased the share capital to 8,229,341,531 ordinary
shares, the single-tier second interim dividend translates to 10.33 sen per ordinary share.

42 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

(a) The related parties of, and their relationship with the Company, are as follows:

Related parties Relationship

Subsidiaries of the Company as disclosed in Note 12 Subsidiaries

Associates of the Company as disclosed in Note 13 Associates
Joint ventures as disclosed in Note 14 Joint ventures
Key management personnel See below

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of
the Group and the Company either directly or indirectly. The key management personnel of the Group and the Company include all the
Directors of the Company and employees of the Group who make certain critical decisions in relation to the strategic direction of the Group.
 INTO A NEW ERA

189

42 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(b) Related party transactions

In addition to related party disclosures mentioned elsewhere in the Financial Statements, set out below are other significant related party
transactions. Interest rates on fixed and short-term deposits were at normal commercial rates.

Subsidiaries Associates and joint venture Key management personnel

2013 2012 2013 2012 2013 2012
RM000 RM000 RM000 RM000 RM000 RM000

Related party transactions

The Group
Income earned
Interest on deposits and placements
with financial institutions 81 132
Interest on loans, advances
and financing 181 55
Brokerage income 86 73
Others 51,073 59,988

Expenditure incurred
Interest on deposits from customers
and securities sold under
repurchase agreements 321 367 874 1,946

The Company
Income earned
Interest on fixed deposits and
money market 19,786 9,619
Interest on collateral pledged for
derivative transactions 251 271
Dividend income 2,427,649 1,882,314
Rental income 2,018 2,491

Expenditure incurred
Interest on IMTN 1,878 5,017
Interest on term loan 16,780 1,887
Facility fees and commitment fees 74 2,440
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

190

42 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(c) Related party balances

Subsidiaries Associates Key management personnel
2013 2012 2013 2012 2013 2012
RM000 RM000 RM000 RM000 RM000 RM000

Related party balances

The Group
Amount due from
Current accounts, deposits and
placements with banks and other
financial institutions 9,831 19,884
Loans, advances and financing 17,687 9,889
Others 1,059,473 1,285,914

Amount due to
Deposits from customers and
securities sold under repurchase
agreements 5,450 187 68,859 99,360
Others 86,563 280,151

The Company
Amount due from
Demand deposits, savings
and fixed deposits 69,573 135,075
Derivatives financial instruments 3,940 9,398
Others 11,054 6,143

Amount due to
Amount due to CIMB Bank Berhad 1,917 81,306
Amount due to
CIMB Islamic Bank Berhad 20,105
Derivatives financial instruments 8,892
Term loans from
CIMB Bank Berhad 625,970 492,856
Others 222

Other inter-company balances are unsecured, non-interest bearing and repayable on demand.
 INTO A NEW ERA

191

42 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(d) Key management personnel

Key management compensation

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000

Salaries and other employee benefits 110,962 106,420 11,400 15,006

Shares of the Company (units) 4,969,772 3,383,529 381,828 406,936

Included in the above table is the Executive Directors compensation which is disclosed in Note 38. The share options and shares granted
are on the same terms and conditions as those offered to other employees of the Group and the Company as disclosed in Note 43 to
the Financial Statements.

Excluded in the above table are bonus accruals for financial year 2013 and 2012, in relation to the key management personnel in CIMB
Niaga, which is subject to approval from the shareholders of CIMB Niaga at their Annual General Meeting.

Loans made to other key management personnel of the Group and the Company are on similar terms and conditions generally available
to other employees within the Group. No individual impairment allowance has been required in 2013 and 2012 for the loans, advances
and financing made to the key management personnel.

(e) Credit transactions and exposures with connected parties

Credit exposures with connected parties as per BNMs revised Guidelines on Credit Transactions and Exposures with Connected Parties
which became effective in 2008 are as follows:

The Group
31 December 31 December
2013 2012
RM000 RM000

Outstanding credit exposures with connected parties 9,815,718 14,386,434

Percentage of outstanding credit exposures to connected
parties as a proportion of total credit exposures 3.24% 5.29%
Percentage of outstanding credit exposures to connected
parties which is impaired or in default 0.00% 0.00%
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

192

42 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

(f) Transactions with shareholders and Government

Khazanah Nasional Berhad (KNB), the major shareholder of the Company, owns 30% of the issued share capital of the Company (2012:
29%). KNB is an entity controlled by the Malaysian Government. The Group considers that, for the purpose of MFRS 124 Related Party
Disclosures, KNB and the Malaysian Government is in the position to exercise significant influence over it. As a result, the Malaysian
Government and Malaysian Government controlled bodies (collectively referred to as government-related entities) are related parties of the
Group and the Company.

Apart from the individually significant transactions as disclosed in Note 9(c), Note 43(a) and Note 48(b) to the Financial Statements, the
Group and the Company have collectively, but not individually, significant transactions with other government-related entities which include
but not limited to the following:

Purchase of securities issued by government-related entities

Lending to government-related entities
Deposit placing with and deposit taking from government-related entities

These transactions are conducted in the ordinary course of the Groups business on commercial rates and consistently applied in
accordance with the Groups internal policies and processes. These rates do not depend on whether the counterparties are government-
related entities or not.

43 EMPLOYEE BENEFITS

(a) Management Equity Scheme (MES or the Scheme)

This scheme was initiated as part of a performance linked compensation scheme by a substantial shareholder of the Company, whereby
share options are granted to selected employees of the Group. The scheme was initially launched on 1 March 2004 and the expiry date
of scheme was extended from 28 February 2012 to 31 May 2012. The Scheme lapsed thereafter.

The eligibility for participation in the scheme shall be at the discretion of the Nomination and Remuneration Committee of the Company.
Entitlements of eligible members of senior management are non-assignable and non-transferable whereby the Nomination and Remuneration
Committee of the Company administers the scheme on behalf of the substantial shareholder. The entitlements granted vest in proportions
across various exercised periods.

As the Group does not have an obligation to settle the transaction with its employees, the Group has accounted for transaction as equity
settled in accordance with MFRS 2.

The weighted average fair value of the entitlements granted, determined using the Binomial Valuation Model was RM6.60 each. The
significant inputs into the model were as follows:

Valuation assumptions
Expected volatility 33.9%
Expected dividend yield 1.8%
Expected option life 0.16 year
Weighted average share price at grant date RM9.98
Weighted average risk-free interest rate 3.10%
 INTO A NEW ERA

193

43 EMPLOYEE BENEFITS (CONTINUED)

(a) Management Equity Scheme (MES or the Scheme) (Continued)

The volatility measured at the standard deviation of on daily share price returns was based on statistical analysis of daily prices over the
last two years.

The total share-based payment expenses recognised in relation to the Scheme during the current financial year amounted Nil (2012: Nil).
The shares were exercisable 2 years from the grant date. The shares were exercisable 2 years from the grant date.

Details of the movement in the number of entitlements outstanding are as follows:

Options (units 000) 2012

At 1 January 17,707
Exercised (17,707)

At 31 December

The weighted average share price at the time of exercise was RM7.39. There is no weighted average remaining contractual life as at
31 December 2012.

(b) Equity Ownership Plan (EOP)

The EOP was introduced on 1 April 2011 by the Group where the Group will grant ordinary shares of the Company to selected employees
in the Group. Under the EOP, earmarked portions of variable remuneration of the selected employees of the Group will be utilised to
purchase ordinary shares of the Company from the open market. The purchased shares will be released progressively to the eligible
employees at various dates subsequent to the purchase date, subject to continued employment. A subsidiary company will act on behalf
of the Group to administer the EOP and to hold the shares in trust up to the pre-determined transfer date. The eligibility of participation
in the EOP shall be at the discretion of the Group Compensation Review Committee of the Group.

Upon termination of employment other than retirement, disability or death, any unreleased shares will be disposed at market price and
proceeds received will be donated to CIMB Foundation on behalf of the employees. In the event of retirement, disability or death of the
eligible employee, the release of shares will be accelerated to the date of termination of employment and the shares will be assigned to
the designated beneficiary.

The total share-based payment expenses recognised in statement of income during the financial year amounted to RM97,493,000 (2012:
RM87,962,000).

The weighted average fair value of shares awarded under EOP which were purchased over a period of 10 trading days was RM7.73 per
ordinary share (2012: RM7.70), based on observable market price.
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194

43 EMPLOYEE BENEFITS (CONTINUED)

(b) Equity Ownership Plan (EOP)

Movements in the number of the Companys ordinary shares awarded are as follows:
2013 2012
Total Total
Shares Shares
(units 000) (units 000)

At 1 January 15,671 7,807

Awarded 15,022 16,381
Released (9,018) (8,517)

At 31 December 21,675 15,671

44 CAPITAL COMMITMENTS

Capital expenditure approved by Directors but not provided for in the Financial Statements are as follows:

The Group
31 December 31 December
2013 2012
RM000 RM000

Capital expenditure:
Authorised and contracted for 427,279 421,403
Authorised but not contracted for 779,549 519,196

1,206,828 940,599

Analysed as follows:
The Group
31 December 31 December
2013 2012
RM000 RM000

Property, plant and equipment 778,748 569,098

Subscription for investments 56,840 57,986
Bank guarantee 77,306 96,506
Software development 24,104 9,100
Computer software 124,271 69,638
Others 145,559 138,271

1,206,828 940,599
 INTO A NEW ERA

195

45 LEASE COMMITMENTS

The lease commitments are in respect of rented premises and hired equipment, all of which are classified as operating leases. A summary of
the non-cancellable long-term commitments is as follows:

The Group
31 December 31 December
2013 2012
RM000 RM000

Within one year 205,262 197,302

One year to less than five years 473,487 550,144
Five years and more 517,915 471,178

46 COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group and the Company enter into various commitments and incur certain contingent liabilities with legal
recourse to their customers. No material losses are anticipated as a result of these transactions and hence, they are not provided for in the
Financial Statements.

These commitments and contingencies are not secured over the assets of the Group and the Company, except for certain financial assets held
for trading being pledged as credit support assets for certain over-the-counter derivative contracts.

Treasury related derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in
Derivative Financial Instruments Assets and Liabilities respectively. Refer to Note 7.
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196

46 COMMITMENTS AND CONTINGENCIES (CONTINUED)

The notional or principal amount of the credit-related commitments and contingencies constitute the following:

31 December 31 December 1 January

2013 2012 2012
Principal Principal Principal
RM000 RM000 RM000
Restated Restated

The Group
Credit-related
Direct credit substitutes 5,558,842 4,466,153 4,159,637
Certain transaction-related contingent items 5,673,446 6,084,990 5,464,748
Short-term self-liquidating trade-related contingencies 4,027,282 2,597,320 2,549,245
Obligations under underwriting agreement 163,500 226,887
Irrevocable commitments to extend credit:
maturity not exceeding one year 52,400,282 47,395,370 36,370,852
maturity exceeding one year 8,617,352 5,834,498 6,710,863
Miscellaneous commitments and contingencies 2,413,685 1,462,735 4,617,704

Total credit-related commitments and contingencies 78,854,389 67,841,066 60,099,936

Total treasury-related commitments and contingencies (Note 7) 443,635,072 392,709,087 353,128,071

522,489,461 460,550,153 413,228,007

The Company
Total treasury-related commitments and contingencies (Note 7) 500,000 965,000 965,000

500,000 965,000 965,000

CIMB Bank has given a continuing guarantee to Bank Negara Malaysia to meet the liabilities and financial obligations and requirements of its
subsidiary, CIMB Bank (L) Limited, arising from its offshore banking business in the Federal Territory of Labuan.

The Group is providing a contingency funding line to its subsidiary, CIMB Thai Bank Plc (CIMB Thai), in the event of liquidity crisis in CIMB
Thai.
 INTO A NEW ERA

197

47 SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an
entity. The Group has determined the Group Management Committee as its chief operating decision-maker.

Segment information is presented in respect of the Groups business segment and geographical segment.

The business segment results are prepared based on the Groups internal management reporting, which reflect the organisations management
reporting structure.

(a) Business segment reporting

Definition of segments
The Group is organised into the following five major operating divisions. The divisions form the basis on which the Group reports its
segment information.

(i) Consumer Banking

Consumer Banking provides full-fledged financial services to individuals and commercial customers. It encompasses the banking
services across the Groups main operating markets of Malaysia, Indonesia, Singapore, Thailand and Cambodia. The divisions which
make up the Consumer Banking are Consumer Sales & Distribution, Retail Financial Services, Commercial Banking, Group Cards &
Personal Financing and Group Insurance.

Consumer Sales & Distribution oversees the Groups sales network including branches and mobile sales teams.
Retail Financial Services is responsible for most of the products and services to individuals and micro enterprise customers. It
offers products covering lending, deposits, wealth management, remittance and other services.
Commercial Banking is responsible for the development of products and services for small and medium-scale enterprise (SMEs)
and mid-sized corporations.
Group Cards & Personal Financing is responsible for the Groups credit card business and personal loans portfolio.
Group Insurance is responsible of manufacturing and distribution of life and takaful insurance products.

(ii) Wholesale Banking

Wholesale Banking comprises Investment Banking and Corporate Banking, Treasury & Markets.

Investment Banking includes client coverage, advisory, equities and asset management businesses. Client coverage focuses on
marketing and delivering solutions to corporate and institutional clients.

Advisory offers financial advisory services to corporations, advising issuance of equity-linked products, debts restructuring, mergers
and acquisitions, initial public offerings, secondary offerings and general corporate advisory. Equities, provides services including
acting as underwriter, global co-ordinator, book runner or lead manager for equity and equity-linked transactions, originating,
structuring, pricing and executing equity and equity-linked issues and executing programme trades, block trades and market
making, as well as provides nominee services and stock broking services to retail and corporate clients.

Asset management comprises wholesale fund management and unit trust.

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198

47 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

(ii) Wholesale Banking (Continued)
Corporate Banking, Treasury and Markets (CBTM) is responsible for corporate lending and deposit taking, transaction banking,
treasury and markets activities. Treasury focuses on treasury activities and services which include foreign exchange, money market,
derivatives and trading of capital market instruments. It includes the Groups equity derivatives which develops and issues new
equity derivatives instruments such as structured warrants and over-the-counter options to provide investors with alternative
instrument avenues.

(iii) Investments
Investments focus on Group Strategy and Strategic Investments (GSSI) including funding operations for the Group. GSSI consists of
Group Strategy, Private Equity and Strategies Investment which focus in defining and formulating strategies at the corporate and
business unit levels, oversees the Groups strategic, private equity fund management and strategic investments. It also invests in the
Groups proprietary capital.

(iv) Support and others

Support services comprise all middle and back-office processes, cost centres and non-profit generating divisions of companies in the
Group. Other business segments in the Group include investment holding, property management and other related services, whose
results are not material to the Group.
 INTO A NEW ERA

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47 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)
31 December 2013
Consumer Wholesale Banking Investments Support and Total
Banking Others
Corporate
Banking,
Investment Treasury
Banking and Markets
RM000 RM000 RM000 RM000 RM000 RM000

Group
Continuing operations
Net interest income
External income/(expense) 5,337,867 45,239 2,211,567 363,052 (3,579) 7,954,146
Inter-segment income (296,480) 55,960 93,188 168,807 (21,475)

5,041,387 101,199 2,304,755 531,859 (25,054) 7,954,146

Non-interest income 1,865,656 993,297 1,140,454 1,108,430 16,989 5,124,826
Income from Islamic banking operations 887,234 41,831 572,715 83,813 7,270 1,592,863

7,794,277 1,136,327 4,017,924 1,724,102 (795) 14,671,835

Overheads of which: (4,939,727) (926,711) (1,330,488) (1,199,119) (61,825) (8,457,870)

Depreciation of property, plant and equipment (248,725) (42,762) (39,823) (9,747) (2,303) (343,360)
Amortisation of prepaid lease payments (318) (147) (19) (11,315) (3) (11,802)
Amortisation of intangible assets (111,218) (10,555) (17,678) (136,494) (1,360) (277,305)

Profit/(Loss) before allowances 2,854,550 209,616 2,687,436 524,983 (62,620) 6,213,965

Allowance (made)/written back for impairment losses
on loans, advances and financing (554,593) (915) (106,581) 3,180 (1,698) (660,607)
Allowance made for losses on other receivables (20,541) (7,517) (1,090) (7,321) (2,449) (38,918)
Allowance made for losses on other receivables 1,334 1,334
Recoveries from investment management
and securities services 11,932 11,932
Allowance written back/(made)
for other impairment losses 22 4,328 (44,572) 307 (39,915)
Segment results 2,279,416 201,206 2,585,427 488,202 (66,460) 5,487,791
Share of results of joint ventures 4,750 504 49,916 55,170
Share of results of associates 649 305,619 306,268

Profit/(loss) before taxation 2,284,166 202,359 2,585,427 843,737 (66,460) 5,849,229

Taxation (1,240,407)

Profit for the financial year for continuing

operations/profit for the financial year 4,608,822
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200

47 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

31 December 2013
Consumer Wholesale Banking Investment Support and Total
Banking Others
Corporate
Banking,
Investment Treasury and
Banking Markets
RM000 RM000 RM000 RM000 RM000 RM000

Group
Segment assets 158,218,637 8,385,303 164,604,277 23,730,533 2,257,392 357,196,142
Investment in associates and joint ventures 158,307 14,210 835,797 5,168 1,013,482

158,376,944 8,399,513 164,604,277 24,566,330 2,262,560 358,209,624

Unallocated assets 12,703,173

Total assets 158,376,944 8,399,513 164,604,277 24,566,330 2,262,560 370,912,797

Segment liabilities 147,808,940 8,047,357 153,635,835 11,780,227 12,551,777 333,824,136

Unallocated liabilities 5,860,101

Total liabilities 147,808,940 8,047,357 153,635,835 11,780,227 12,551,777 339,684,237

Other segment items

Incurred capital expenditure 467,804 132,866 70,479 32,016 173,547 876,712
Investment in joint ventures 158,306 4,149 147,080 309,535
Investment in associates 10,062 688,715 5,170 703,947
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47 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

31 December 2012
Consumer Wholesale Banking Investment Support and Total
Banking Others
Corporate
Banking,
Investment Treasury and
Banking Markets
RM000 RM000 RM000 RM000 RM000 RM000

Group
Continuing operations
Net interest income
External income/(expense) 4,930,324 (8,678) 2,238,149 228,612 7,473 7,395,880
Inter-segment income (173,123) 71,275 (23,526) 158,389 (33,015)
4,757,201 62,597 2,214,623 387,001 (25,542) 7,395,880
Non-interest income 1,578,469 962,982 1,317,711 474,855 75,585 4,409,602
Income from Islamic banking operations 829,626 140,873 679,584 54,191 (14,931) 1,689,343
7,165,296 1,166,452 4,211,918 916,047 35,112 13,494,825
Overheads of which: (4,960,849) (862,215) (1,245,149) (411,714) (132,172) (7,612,099)
Depreciation of property,
plant and equipment (211,636) (43,990) (37,272) (9,702) (43,063) (345,663)
Amortisation of prepaid lease payments (34) (90) (12,220) (298) (12,642)
Amortisation of intangible assets (130,535) (5,600) (13,893) (89,944) (22,140) (262,112)
Profit/(loss) before allowances 2,204,447 304,237 2,966,769 504,333 (97,060) 5,882,726
Allowance (made)/written back for impairment losses
on loans, advances and financing (147,281) 2,628 (175,188) (9,762) 505 (329,098)
Allowance made for losses on other receivables (20,811) (1,920) 693 (2,765) (6,584) (31,387)
Allowance written back/(made) for commitments
and contingencies 14,507 (1,330) 296 13,473
Allowance written back/(made) for
other impairment losses 16 (830) (17,461) 2,961 (15,314)
Segment results 2,050,878 304,945 2,790,114 474,641 (100,178) 5,520,400
Share of results of joint ventures 4,349 (1,126) 16,520 19,743
Share of results of associates 602 97,566 98,168
Profit/(loss) before taxation 2,055,227 304,421 2,790,114 588,727 (100,178) 5,638,311
Taxation (1,281,086)
Profit for the year for continuing operations 4,357,225

Discontinuing operations
Share of results of associates from discontinuing
operations 39,582 39,582

Profit for the financial year 4,396,807

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47 SEGMENT REPORTING (CONTINUED)

(a) Business segment reporting (Continued)

31 December 2012
Consumer Wholesale Banking Investment Support and Total
Banking Others
Corporate
Banking,
Investment Treasury and
Banking Markets
RM000 RM000 RM000 RM000 RM000 RM000

Group
Segment assets 139,499,694 7,071,918 154,347,328 22,436,466 764,555 324,119,961
Investment in associates and joint ventures 153,557 6,615 731,060 4,518 895,750

139,653,251 7,078,533 154,347,328 23,167,526 769,073 325,015,711

Unallocated assets 11,445,449

Total assets 139,653,251 7,078,533 154,347,328 23,167,526 769,073 336,461,160

Segment liabilities 144,974,579 4,630,196 133,303,326 12,517,548 6,360,110 301,785,759

Unallocated liabilities 5,409,082

Total liabilities 144,974,579 4,630,196 133,303,326 12,517,548 6,360,110 307,194,841

Other segment items

Incurred capital expenditure 465,038 119,767 38,556 12,697 191,684 827,742
Investment in joint ventures 153,557 1,989 150,297 305,843
Investment in associates 4,626 580,761 4,520 589,907

Basis of pricing for inter-segment transfers:

Intersegmental charges are computed principally based on the interest-bearing assets and liabilities of each business segment with
appropriate rates applied.
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47 SEGMENT REPORTING (CONTINUED)

(b) Geographical segment reporting

The Groups business segments are managed on a worldwide basis and they operate mainly in four main geographical areas:

Malaysia, the home country of the Group, which includes all the areas of operations in the business segments.

Indonesia, the areas of operation in this country include all the business segments of a subsidiary bank, PT Bank CIMB Niaga Tbk.

Thailand, the areas of operation in this country include all the business segments of a subsidiary bank, CIMB Thai Bank.

Other countries include branch and subsidiary operations in Singapore, United Kingdom, United States of America, Australia, China,
Cambodia, and Hong Kong. The overseas operations involved mainly in corporate lending and borrowing, and stockbroking activities.
With the exception of Malaysia, Indonesia and Thailand, no other individual country contributed more than 10% of the consolidated net
interest income or assets.

Total
Net interest non-current Total Total Capital
income assets assets liabilities expenditure
The Group RM000 RM000 RM000 RM000 RM000

31 December 2013
Malaysia 3,831,806 16,036,502 243,033,176 223,624,208 633,288
Indonesia 2,930,743 478,763 59,397,392 52,303,730 162,611
Thailand 760,385 572,165 28,145,463 25,822,209 27,591
Other countries 431,212 1,738,367 40,336,766 37,934,090 53,222

7,954,146 18,825,797 370,912,797 339,684,237 876,712

31 December 2012
Malaysia 3,426,503 16,043,860 224,794,351 207,105,649 488,908
Indonesia 3,080,791 592,443 63,372,647 56,049,147 174,144
Thailand 591,583 575,226 20,288,173 18,336,857 39,781
Other countries 297,003 1,191,637 28,005,989 25,703,188 124,909

7,395,880 18,403,166 336,461,160 307,194,841 827,742

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204

48 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) Acquisition of Royal Bank of Scotland Asia Pacific (RBS) Taiwan

In 2012, CIMB Group Sdn Bhd (CIMBG), a wholly-owned subsidiary of the Group, has entered into a Sale and Purchase Agreement with
the RBS for the acquisition of selected cash equities business in Australia, China, Hong Kong, India and Taiwan, equity capital markets
business and M&A corporate finance business in Australia, China (excluding any activities carried on by Hua Ying Securities Co., Ltd.),
Hong Kong, India, Indonesia, Malaysia, Singapore, Taiwan and Thailand for a total cash consideration of GBP88.4 million (or equivalent to
approximately RM425.2 million) (Proposed Acquisition).

The acquisition of selected cash equities business, equity capital markets business and M&A corporate finance business in China, Hong
Kong and Australia had been completed in 2012. The proposed acquisition in India had been terminated due to an unexpected legal issue
in July 2012.

The acquisition of the RBS business in Taiwan was completed on 28 March 2013, thus completing the acquisition of RBS in 2013.

See Note 51 for the effect of the acquisition on the Financial Statements of the Group.

(b) Disposal of stake in insurance associates

CIG Berhad (CIG), a wholly-owned subsidiary of the Group, has entered into an implementation agreement (the Agreement) dated 17
January 2013 in relation to the proposed disposal of CIGs and its affiliates (collectively, the Seller) and Aviva International Holdings
Limiteds stakes in both CIMB Aviva Assurance Berhad (CAAB) and both CIMB Aviva Takaful Berhad (CATB) to Renggis Ventures Sdn
Bhd (RVSB), a wholly-owned subsidiary of Khazanah Nasional Berhad and Sun Life Assurance Company of Canada respectively
(Proposed Transaction).

Under the Agreement, the understanding is for the Seller to dispose its stake in CAAB and CATB to RVSB, upon receipt of the relevant
regulatory approvals, for a purchase consideration of RM1,110.0 million, of which RM1,066.5 million shall be satisfied in cash and RM43.5
million in ordinary shares of RVSB. As a result, CIMB Group will maintain an indirect interest of 2% interest in CAAB and CATB.

The application in respect of the Proposed Transaction has also been submitted to Bank Negara Malaysia on 17 January 2013 and
approval obtained on 28 March 2013.

CIG had subsequently entered into a sale and purchase agreement dated 29 March 2013 with RVSB in respect of the proposed disposal
of the Sellers stake in CAAB and CATB (Proposed Disposal). The Proposed Disposal had been completed on 12 April 2013. The disposal
of stake in CAAB and CATB has resulted in a gain of RM515 million recognised in the Consolidated Statement of Income for the year
ended 31 December 2013.

(c) Termination of acquisition of stake in Bank of Commerce in Philippines

On 8 May 2012, CIMB Bank entered into sale and purchase agreements (SPA) with San Miguel Properties, Inc., San Miguel Corporation
Retirement Plan, Q-Tech Alliance Holdings, Inc. and various minority shareholders in relation to the proposed acquisition of 59.98% of the
total issued and paid-up share capital of Bank of Commerce (Proposed Acquisition).

However, on 21 June 2013 it was announced that the SPAs in relation to the Proposed Acquisition have lapsed. The parties to the SPAs
have been engaged in negotiations since the lapse of the SPAs, but have not been able to reach an agreement on new terms in relation
to the Proposed Acquisition. As such, the parties did not proceed with the Proposed Acquisition.
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48 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(d) Strategic alliance corporate advisory and capital markets services

CIMB Securities International (Australia) Pty Limited, a wholly-owned indirect subsidiary of the Group had on 10 May 2013, entered into a
strategic alliance agreement with RBS Morgans Holdings Pty Limited for the provision of research reports and cooperation on corporate
advisory and capital markets work in Australia.

(e) Disposal of CIMB-GK Securities (Thailand) Ltd

CIMB Securities International Pte Ltd, a wholly-owned indirect subsidiary of CIMB Group, has on 6 June 2013 disposed its 99.99%
shareholding in CIMB-GK Securities (Thailand) Ltd (CIMB-GK) (Disposal) to a third party.

Thereafter, CIMB-GK, a dormant company, shall cease to be an indirect subsidiary of CIMB Group. The Disposal was completed on 6
June 2013.

(f) Joint venture in Labuan for private equity fund

On 28 June 2013, CIMB Strategic Assets Sdn Bhd (CIMBSA), a wholly-owned subsidiary of the Group has entered into a joint venture
with HLFG Principal Investments (L) Limited (HLFGPI), a wholly-owned subsidiary of Hong Leong Financial Group Berhad (HLFG), in
respect of their 50%: 50% shareholding respectively of Bangsar Capital Holdings (L) Limited (Bangsar Capital) (the Joint-Venture).

The Joint-Venture will be incorporated in Labuan and will act as an investment holding company dedicated to establishing and managing
a private equity fund.

(g) Dividend Reinvestment Scheme

On 18 January 2013, the Group had announced its proposal to put in place a dividend reinvestment scheme that will allow its shareholders
the option to elect to reinvest their cash dividend in new ordinary share (New CIMB Shares) (Dividend Reinvestment Scheme). The
Dividend Reinvestment Scheme (DRS) has received the necessary approval from Bursa Securities on 5 February 2013, its shareholders
via an Extraordinary General Meeting held on 25 February 2013 and from Bank Negara Malaysia on 25 March 2013. See Note 28(b).

(h) Issuance of HKD951 million senior unsecured Fixed Rate Notes

CIMB Bank issued HKD951 million senior unsecured Fixed Rate Notes (the Notes) under its USD1 billion Euro Medium Term Note
Programme established on 27 January 2011 as follows:

HKD430 million 3-year senior unsecured Fixed Rate Notes (the Notes) on 22 January 2013. The Notes will mature on 22 January
2016. It bears a coupon rate of 1.20% per annum payable quarterly in arrears.

HKD171 million 5-year senior unsecured Fixed Rate Notes (the Notes) issued on 22 January 2013. The Notes will mature on 22
January 2018. It bears a coupon rate of 1.60% per annum payable quarterly in arrears.

HKD350 million 3-year senior unsecured Fixed Rate Notes (the Notes) issued on 14 March 2013. The Notes will mature on 14 March
2016 (subject to adjustments in accordance with the modified following business day convention). It bears a coupon rate of 1.09% per
annum payable quarterly in arrears.
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FINANCIAL STATEMENTS

206

48 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)

(i) Issuance of USD45 million senior unsecured Floating Rate Notes

On 29 January 2013, CIMB Bank Berhad issued USD45 million 2-year senior unsecured Floating Rate Notes (the Notes) under its USD
1 billion Euro Medium Term Note Programme established on 27 January 2011. The Notes will mature on the interest payment date falling
in or nearest to January 2015. The coupon rate is calculated based on the 3 month U.S.$ LIBOR plus a margin of 0.70% per annum
and coupon is payable quarterly in arrears.

(j) Issuance of IDR600,000 million Monetary Term Notes

PT CIMB Niaga Auto Finance, a wholly-owned subsidiary of CIMB Niaga, has issued a IDR200,000 million and IDR400,000 million 3-year
Monetary Term Notes (the MTN) on 15 February 2013 and 16 April 2013 respectively. The MTN is unsecured and will be matured on
15 February 2016 and 16 April 2016 respectively. It bears fixed interest rate of 8.50% per annum and 8.20% per annum.

(k) Redemption of RM1.5 billion 10-year subordinated notes

CIMB Bank has redeemed its RM1.5 billion 10-year subordinated bonds with callable maturity date on 28 March 2013.

(l) Issuance of SGD20 million senior unsecured notes

CIMB Bank Berhad, acting through its Singapore Branch, issued SGD20 million nominal value 5-year senior unsecured notes (the Notes)
under its USD1 billion nominal value Euro Medium Term Note Programme established on 27 January 2011. The Notes were issued on 22
March 2013 and will mature on 22 March 2018 (subject to adjustment in accordance with the modified following business day convention).
The Notes bear a coupon rate of 1.67% per annum payable semi-annually in arrears.

(m) Issuance of USD20 million senior unsecured notes

CIMB Bank Berhad, acting through its Labuan Offshore Branch, issued USD20 million nominal value 3-year senior unsecured notes (the
Notes) under its USD1 billion nominal value Euro Medium Term Note Programme established on 27 January 2011. The Notes were issued
on 8 April 2013 and will mature on 8 April 2016. The Notes bear a floating coupon rate of 3 month U.S.$ LIBOR plus 79 basis points
per annum payable quarterly in arrears.

(n) Issuance of THB unsecured structured debentures

During the financial year, CIMB Thai Bank issued various unsecured structured debentures amounted to THB5.1 billion with embedded
callable range accrual swaps. The debentures will mature in five years from respective issuance dates. The debentures bear interest rates
ranges from 0 5.2% per annum variable to index of THBFIX 6 months, payable semi annually.
 INTO A NEW ERA

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49 SIGNIFICANT EVENTS SUBSEQUENT TO THE FINANCIAL YEAR END

(a) Disposal of CIMB Securities International (Thailand) Public Company Limited (CSIT)
In 2013, CIMB Securities International Pte Ltd, a wholly-owned indirect subsidiary of CIMB Group, has disposed its 99.6% shareholding
in CSIT (Disposal) to a third party. The Disposal was completed on 22 January 2014. The Groups investment in CSIT has been presented
as held for sale as at 31 December 2013.

(b) Private placement of 500 million new shares of the Company (CIMBGH shares)
On 13 January 2014, the Group undertaken a private placement pursuant to the shareholders mandate for the issuance of CIMBGH
Shares under Section 132D of the Companies Act, 1965 obtained at the Groups Annual General Meeting held on 17 April 2013. Pursuant
to the private placement, 500 million new CIMBGH shares were issued, representing 6.08% of the enlarged issued and paid-up share
capital of the Group as at 31 December 2013, to domestic and foreign investors. The private placement was completed on 23 January
2014 and successfully raised gross proceeds of RM3.55 billion.

(c) Capital injection of HKD189 million to CIMB Securities Limited

On 17 January 2014, CIMB Securities International Pte. Ltd. (CSI), a wholly-owned indirect subsidiary of CIMB Group, has made a capital
injection of HKD189 million to CIMB Securities Limited.

(d) Subscription of 95% ordinary shares of PT CIMB Future Indonesia

On 17 January 2014, CSI subscribed for 95% ordinary shares of PT CIMB Future Indonesia for cash consideration of IDR4,750 million
(the Investment). Following the investment, PT CIMB Future Indonesia becomes a subsidiary of the Group, subject to regulators approval.

(e) Issuance and redemption of THB structured debentures

Subsequent to financial year, CIMB Thai Bank issued various unsecured structured debentures amounting to THB2,426 million with
embedded callable range accrual swaps. The debentures will mature in five years from respective issuance dates. The debentures bear
interest rates ranges from 0% 5.0% per annum variable to index of THBFIX 6 months, payable semi annually. CIMB Thai has the option
to early redeem the above structured debentures on any coupon dates.

Subsequent to financial year, CIMB Thai Bank has early redeemed structured debentures amounting to THB2,091 million.

50 CAPITAL ADEQUACY

The key driving principles of the Groups capital management policies are to diversify its sources of capital to allocate capital efficiently, and
achieve and maintain an optimal and efficient capital structure of the Group, with the objective of balancing the need to meet the requirements
of all key constituencies, including regulators, shareholders and rating agencies.

This is supported by the Capital Management Plan which is centrally supervised by the Group EXCO who periodically assesses and reviews
the capital requirements and source of capital across the Group, taking into account all on-going and future activities that consume or create
capital, and ensuring that the minimum target for capital adequacy is met. Quarterly updates on capital position of the Group are also provided
to the Board of Directors.

The capital adequacy ratios of the banking subsidiaries of the Group are computed as follows:
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

208

50 CAPITAL ADEQUACY (CONTINUED)

For 2013, Bank Negara Malaysia (BNM) and Bank of Thailand (BOT) issued revised guidelines on the capital adequacy framework on 28
November 2012 and 8 November 2012 respectively, of which both took effect beginning 1 January 2013. The revised guidelines set out the
regulatory capital requirements concerning capital adequacy ratios and components of eligible regulatory capital in compliance with Basel III.

The risk-weighted assets of the CIMB Bank Group (other than CIMB Thai Bank and CIMB Bank PLC), CIMB Bank and CIMB Islamic Bank are
computed in accordance with the Capital Adequacy Framework (Basel II Risk-Weighted Assets). The IRB Approach is applied for the major
credit exposures with retail exposures on Advanced IRB approach and non-retail exposures on Foundation IRB approach. The remaining credit
exposures and Market Risk are on the Standardised Approach while Operational Risk is based on Basic Indicator Approach. The comparative
capital adequacy ratios as at 31 December 2012 were based on BNMs Risk-Weighted Capital Adequacy Framework (RWCAF) which has
regulatory capital requirements concerning capital adequacy ratios and components of eligible regulatory capital in compliance with Basel II.

The risk-weighted assets of CIMB Investment Bank Group are computed in accordance with the Capital Adequacy Framework (Basel II Risk
Weighted Assets). The Standardised approach (SA approach) is applied for Credit Risk and Market Risk while Operational Risk is based on Basic
Indicator Approach. The components of eligible regulatory capital are based on the Capital Adequacy Framework (Capital Components). The
comparative capital adequacy ratios as at December 2012 were based on BNMs Risk-Weighted Capital Adequacy Framework (RWCAF) which
has regulatory capital requirements concerning capital adequacy ratios and components of eligible regulatory capital in compliance with Basel II.

The risk weighted assets of CIMB Thai Bank is based on Bank of Thailand (BOT) requirements and are computed in accordance with the
revised Notification of The BOT. No. SoNoRSor. 87/2551 The supervisory capital funds of commercial banks. Credit Risk and Market Risk
are based on Standardised Approach (SA) approach while Operational Risk is based on Basic Indicator Approach. The comparative capital
adequacy ratios as at 31 December 2012 were based on Notification of The BOT. No. SoNoRSor. 12/2555 The supervisory capital funds
of commercial banks.

The capital adequacy ratios of Bank CIMB Niaga is based on Bank Indonesia requirements. The approach for Credit Risk and Market Risk is
Standardised Approach (SA approach). Operational Risk is based on Basic Indicator Approach.

The regulatory compliance ratios of CIMB Bank PLC refers to Solvency Ratio. This ratio is computed in accordance with Prakas B7-00-46,
B7-04-206 and B7-07-135 issued by the National Bank of Cambodia. This ratio is derived at CIMB Bank PLCs net worth divided by its risk-
weighted assets.

Capital Structure and Adequacy

The table below sets out the summary of the sources of capital and the capital adequacy ratios of the Group as at 31 December 2013. The
banking subsidiaries issue various capital instruments pursuant to the respective regulatory guidelines, that qualify as capital pursuant to the
RWCAF and Capital Adequacy Framework for Islamic Banks (CAFIB) issued by BNM.
 INTO A NEW ERA

209

50 CAPITAL ADEQUACY (CONTINUED)

(a) The total capital base and capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited), CIMB Bank Group,
CIMB Investment Bank, CIMB Islamic Bank, Bank CIMB Niaga, CIMB Thai and CIMB Bank PLC for the financial year ended 31 December
2013 are as follows. The individual entities within the Group and the Group complied with all externally imposed capital requirements to
which they are subject to.

CIMB
CIMB CIMB CIMB Investment Bank CIMB CIMB
CIMB Bank Islamic Bank Thai Bank Bank Group Bank Group Niaga Bank PLC*
31 December 2013 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Before deducting proposed dividends

Common equity tier 1 ratio 10.215% ^ 9.905% 9.907% 8.704% ^ 25.300% N/A N/A
Tier 1 ratio 12.117% ^ 10.201% 9.907% 10.180% ^ 25.300% 12.993% N/A
Total capital ratio 13.475% ^ 14.020% 14.082% 13.498% ^ 25.300% 15.378% 20.045%

After deducting proposed dividends

Common equity tier 1 ratio 9.649% ^ 9.905% 9.907% 8.274% ^ 25.300% N/A N/A
Tier 1 ratio 11.552% ^ 10.201% 9.907% 9.750% ^ 25.300% 12.993% N/A
Total capital ratio 12.910% ^ 14.020% 14.082% 13.068% ^ 25.300% 15.378% 20.045%

The breakdown of risk-weighted

assets (RWA) by each major
risk category are as follows:

Credit risk 109,355,392 18,769,614 17,250,730 145,845,320 1,208,453 41,585,173 638,964

Market risk 12,107,705 620,945 1,363,788 13,826,815 58,618 410,116
Operational risk 11,115,336 1,866,592 1,168,022 14,615,092 758,001 5,028,579
Large exposure risk 423,320 423,320

133,001,753 21,257,151 19,782,540 174,710,547 2,025,072 47,023,868 638,964

^ CIMB Group Holdings Berhad (CIMBGH) recently completed its second Dividend Reinvestment Scheme (DRS) of which RM783
million was reinvested into new CIMBGH shares. Pursuant to the completion of DRS, CIMBGH reinvested cash dividend surplus of
RM400 million and additional cash of RM735 million into CIMB Bank via rights issue which was completed on 30 December 2013.

CIMBGH proposed to continue with DRS implementation for the second interim dividend in respect of the financial year ended 2013.
Pursuant to the completion of DRS, CIMBGH intend to reinvest the excess cash dividend into the Bank which would increase the
capital adequacy ratio of the Group and the Bank above those stated above. The second interim dividend was approved by the Board
and Bank Negara Malaysia on 11 February 2014 and 21 February 2014 respectively.
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210

50 CAPITAL ADEQUACY (CONTINUED)

(b) Components of Tier I and Tier II capital for the financial year ended 31 December 2013 are as follows:

CIMB
CIMB Islamic CIMB Thai CIMB Bank Investment Bank CIMB CIMB Bank
CIMB Bank Bank Bank Group Bank Group Niaga PLC*
31 December 2013 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Tier I capital
Ordinary shares 4,131,410 1,000,000 1,053,119 4,131,410 100,000 433,774 147,465
Other reserves 15,810,362 1,600,902 998,423 18,954,705 469,418 5,723,758 (21,440)
Qualifying non-controlling interests 243,991

Common Equity Tier I capital before

regulatory adjustments 19,941,772 2,600,902 2,051,542 23,330,106 569,418 6,157,532 126,025

Less: Regulatory adjustments

Goodwill (3,555,075) (136,000) (4,890,179) (964)
Intangible assets (852,787) (11,080) (874,518) (1,613)
Deferred tax assets (212,431) (25,566) (91,698) (263,926) (48,914)
Investment in capital instruments
of unconsolidated (47,931)
Deduction in excess of Tier 2 capital (6,921)
Shortfall of eligible provisions to
expected losses (151,434) (282,726)
Others (1,584,536) (322,814) (1,811,720) (271) (710)

Common Equity Tier I capital after

regulatory adjustments 13,585,509 2,105,442 1,959,844 15,207,037 512,348 6,109,601 123,702

Additional Tier I capital

Perpetual preference shares 180,000 63,000 180,000
Non-innovative Tier I Capital 900,000 900,000
Innovative Tier I Capital 1,450,620 1,450,620
Qualifying capital instruments
held by third parties 48,180

Additional Tier I capital before

and after regulatory adjustments 2,530,620 63,000 2,578,800

Total Tier I Capital 16,116,129 2,168,442 1,959,844 17,785,837 512,348 6,109,601 123,702
 INTO A NEW ERA

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50 CAPITAL ADEQUACY (CONTINUED)

(b) Components of Tier I and Tier II capital for the financial year ended 31 December 2013 are as follows (Continued):

CIMB
CIMB Islamic CIMB Thai CIMB Bank Investment Bank CIMB CIMB Bank
CIMB Bank Bank Bank Group Bank Group Niaga PLC*
31 December 2013 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Tier II capital
Subordinated notes 6,050,000 765,000 539,424 6,050,000 691,874
Redeemable preference shares 29,740 29,740 9
Surplus of eligible provision over
expected loss
Qualifying capital instruments
held by third parties 30,471
Portfolio impairment allowance &
Regulatory reserve 207,315 46,857 61,837 486,766 1,996 446,988 4,380
Others 224,760 30,887

Tier II capital before regulatory adjustments 6,287,055 811,857 826,021 6,596,977 2,005 1,169,749 4,380

Less: Regulatory adjustments

Investment in capital instruments of
unconsolidated financial and insurance/
takaful entities (4,480,601) (800,439) (8,926) (47,931)

Total Tier II capital 1,806,454 811,857 826,021 5,796,538 1,121,818 4,380

Total capital base 17,922,583 2,980,299 2,785,865 23,582,375 512,348 7,231,419 128,082

Less:
Proposed dividends (752,000) (752,000)

Total capital base

(net of proposed dividend) 17,170,583 2,980,299 2,785,865 22,830,375 512,348 7,231,419 128,082

The capital base of CIMB Bank Group, CIMB Bank and CIMB Islamic Bank as at 31 December 2013 have excluded portfolio
impairment allowance on impaired loans restricted from Tier II capital of RM245 million, RM220 million and RM25 million respectively.

* The amount presented here is the Solvency Ratio of CIMB Bank Plc, which is the nearest equivalent regulatory compliance ratio. This
ratio is computed in accordance with Prakas B7-00-46, B7-04-206 and B7-07-135 issued by the National Bank of Cambodia. This
ratio is derived at CIMB Bank Plcs net worth divided by its risk-weighted assets.
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50 CAPITAL ADEQUACY (CONTINUED)

(c) The capital adequacy ratios of CIMB Bank (including the operations of CIMB Bank (L) Limited), CIMB Investment Bank, CIMB Islamic Bank,
Bank CIMB Niaga and CIMB Thai Bank for the financial year ended 31 December 2012 are as follows:

CIMB
CIMB Islamic CIMB Thai CIMB Bank Investment Bank CIMB CIMB Bank
CIMB Bank Bank Bank Group Bank Group Niaga PLC*
31 December 2012 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Before deducting proposed dividends

Core capital ratio 13.16% 8.69% 10.27% 10.47% 20.98% 12.25% N/A
Risk-weighted capital ratio 16.34% 13.27% 16.21% 16.19% 21.02% 15.08% 26.82%

After deducting proposed dividends

Core capital ratio 12.35% ^ 8.69% 10.27% 9.86% ^ 18.58% 12.25% N/A
Risk-weighted capital ratio 15.53% ^ 13.27% 16.21% 15.58% ^ 18.63% 15.08% 26.82%

The breakdown of risk-weighted assets

(RWA) by each major risk category
are as follows:

Credit risk 94,244,713 19,554,311 15,042,700 126,983,208 1,387,711 43,728,549 353,503

Market risk 13,283,095 913,826 563,332 14,568,174 126,634 365,323
Operational risk 10,528,945 1,678,915 990,901 13,560,253 823,010 5,062,114
Large exposure risk 397,786 397,786

118,454,539 22,147,052 16,596,933 155,509,421 2,337,355 49,155,986 353,503

* The amount presented here is the Solvency Ratio of CIMB Bank Plc, which is the nearest equivalent regulatory compliance ratio. This
ratio is computed in accordance with Prakas B7-00-46, B7-04-206 and B7-07-135 issued by the National Bank of Cambodia. This
ratio is derived at CIMB Bank Plcs net worth divided by its risk-weighted assets.

^ The Board of Directors of CIMB Group Holdings Berhad (CIMBGH), has in December 2012 approved the Dividend Reinvestment
Scheme (DRS) for the second interim dividend in respect of the financial year ended 2012. Pursuant to the DRS, CIMBGH intends
to reinvest the excess cash dividend into the Bank, which will increase the capital adequacy ratios of CIMB Bank Group and CIMB
Bank higher than those stated above. The DRS of CIMBGH had received the necessary approvals from Bursa Securities and from
its shareholders via an Extraordinary General Meeting held on 25 February 2013. The DRS is approved by Bank Negara Malaysia on
25 March 2013.
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50 CAPITAL ADEQUACY (CONTINUED)

(d) Components of Tier I and Tier II capital for the financial year ended 31 December 2012 are as follows:

CIMB
CIMB Islamic CIMB Thai CIMB Bank Investment Bank CIMB CIMB Bank
CIMB Bank Bank Bank Group Bank Group Niaga PLC*
31 December 2012 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Tier I capital
Paid-up capital 3,764,469 1,000,000 1,054,244 3,764,469 100,000 511,740 113,183
Perpetual preference shares 200,000 70,000 200,000
Non-innovative Tier I Capital 1,000,000 1,000,000
Innovative Tier I Capital 1,611,800 1,611,800
Share premium 5,033,633 386,774 5,033,633 2,571,266
Other reserves 7,679,028 1,008,841 262,722 9,408,892 433,319 2,996,653 (17,717)
Non-controlling interests 306,905
Less:
Investment in subsidiaries and holding of
other banking institutions capital (56,105)
Deferred tax assets (140,439) (18,057) (146,237) (42,998)
Intangible assets (3,260)
Goodwill (3,555,075) (136,000) (4,891,433)

Total Tier I capital 15,593,416 1,924,784 1,703,740 16,288,029 490,321 6,023,554 92,206

Tier II capital
Redeemable preference shares 29,740 29,740 10
Subordinated notes 6,500,000 850,000 600,000 7,881,400
Subordinated loans 924,728
Revaluation reserve 74,037
Regulatory reserve 930,953 242,624 1,173,577
Portfolio impairment allowance 133,220 45,257 54,567 278,012 1,115 486,464 2,587
Surplus of total eligible provision over
expected loss under the
IRB approach 250,350 (122,870) 91,670
Others 257,410 36,439

Total eligible Tier II capital 7,844,263 1,015,011 986,014 9,454,399 1,125 1,447,631 2,587
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50 CAPITAL ADEQUACY (CONTINUED)

(d) Components of Tier I and Tier II capital for the financial year ended 31 December 2012 are as follows (Continued):

CIMB
CIMB Islamic CIMB Thai CIMB Bank Investment Bank CIMB CIMB Bank
CIMB Bank Bank Bank Group Bank Group Niaga PLC*
31 December 2012 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Total eligible Tier II capital 7,844,263 1,015,011 986,014 9,454,399 1,125 1,447,631 2,587
Less:
Investment in subsidiaries and holding
of other banking institutions capital (3,716,715) (186,901) (50) (56,105)
Securitisation exposures subject to
deductions** (65,621) (65,621)
Investment in associates (305,584) (305,584)

Total Eligible Tier II capital 3,756,343 1,015,011 986,014 8,896,293 1,075 1,391,526 2,587

Total Capital base 19,349,759 2,939,795 2,689,754 25,184,322 491,396 7,415,080 94,793

Less:
Proposed dividends (959,000) (959,000) (56,000)

18,390,759 2,939,795 2,689,754 24,225,322 435,396 7,415,080 94,793

** Financing of hire purchase under PCSB (excluding those securitised) is included in the computation of RWA under the AIRB approach;
The investment in owners note is accounted in accordance with Securitisation Framework under Risk Weighted Capital Adequacy
Framework (Basel II Risk Weighted Assets Computation) Guideline dated 31 December 2009.

The capital base of CIMB Bank Group, CIMB Bank and CIMB Islamic Bank as at 31 December 2013 have excluded portfolio
impairment allowance on impaired loans restricted from Tier II capital of RM339,039,051, RM322,557,239 and RM16,481,812
respectively.
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51 BUSINESS COMBINATIONS

(a) Acquisitions during the financial year

(i) Acquisition of Royal Bank of Scotland Asia Pacific (RBS)
As allowed by MFRS 3 Business Combinations, the Group had previously accounted for the acquisition of the RBS businesses
using the provisional fair values for the financial year ended 31 December 2012.

During the financial year, the Group has completed the acquisition of selected cash equities, equity capital markets and M&A corporate
finance businesses in Taiwan. Refer to Note 48(a). With this completion, the Group has completed its allocation of cost of business
combination for the whole RBS acquisition to the assets acquired and liabilities and contingent liabilities assumed. The fair value
adjustments on acquisition are based on finalised purchase price allocation and fair value exercise. There is no fair value adjustment
identified to the prior years provisional fair value.

The fair values of assets and liabilities arising from the acquisition of RBS are set out as follows:

Fair RBS Final

value Taiwan fair value
RM000 RM000 RM000

Cash and short-term funds 258,254 258,254

Other assets 118,464 118,464
Other liabilities (130,356) (130,356)

Net assets 246,362 246,362

Goodwill 152,384 26,435 178,819

Purchase consideration satisfied via cash 398,746 26,435 425,181

Less: Cash and cash equivalents acquired (258,254) (258,254)

Cash outflow on acquisition 140,492 26,435 166,927

Acquisition-related costs
Acquisition-related costs for RBS Taiwan amounting to RM328,000 (2012: RM16,714,000 for other RBS business excluding Taiwan)
have been incurred during the financial year ended 31 December 2013 and are included in administration and general expenses in
the consolidated statement of comprehensive income.

Acquired receivables
The fair value of receivables acquired in 2012 amounted to RM118,464,000, which is expected to be fully collectible.

Goodwill
The goodwill of RM178,819,000 arising from the acquisition of the RBS business is attributable to the expected strengthening of the
Groups Investment Banking operations in the Asia Pacific region, and the expected synergies amongst the relevant entities of the Group.
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51 BUSINESS COMBINATIONS (CONTINUED)

(a) Acquisitions during the financial year (Continued)
(i) Acquisition of Royal Bank of Scotland Asia Pacific (RBS) (Continued)
Revenue and profit contribution
The acquisition of RBS Taiwan contributed revenue of RM1,187,000 and net loss of RM23,122,000 to the Group for the period from
1 April 2013 to 31 December 2013.

Had RBS Taiwan been consolidated from 1 January 2013, consolidated revenue and consolidated profit for the year ended 31
December 2013 would have been RM14,672,006,000 and RM4,596,675,000 respectively.

The acquisition of the RBS business in 2012 contributed revenue of RM7,029,000. Had the other RBS business acquired in 2012
been consolidated from 1 January 2012, consolidated revenue and consolidated profit for the year ended 31 December 2012 would
have been RM13,548,816,000 and RM4,292,514,000 respectively.

(b) Acquisitions in prior year

(i) CIMB Securities International (Thailand) Public Company Limited (formerly known as SICCO Securities Public Company
Limited) (SSEC)
The Group has completed the acquisition of SSEC on 15 February 2012 and its allocation of the cost of business combination to
the assets acquired and liabilities assumed. The fair value adjustments and intangible assets identified on acquisition are based on
finalised purchase allocation and fair value exercise.

As required by MFRS 3, the fair values of assets and liabilities arising from the acquisition of SSEC on 15 February 2012 are set out
as below:
Fair value
RM000

Cash and cash equivalents 20,119

Deposits and placements with banks and other financial institution 254
Financial assets at fair value through profit or loss 6,419
Loans, advances and financing 63,743
Other assets 48,226
Other long term investments carried at cost 1,161
Intangible assets 941
Prepaid lease payments 1,345
Property, plant and equipment 3,471
Trade and other payables (50,162)
Current tax liabilities (622)

Net assets 94,895

Less: Non-controlling interest (17,025)

Net assets acquired 77,870

Goodwill 12,033

Purchase consideration satisfied via cash 89,903

Less: Cash and cash equivalents acquired (20,373)

Cash outflow on acquisition 69,530

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51 BUSINESS COMBINATIONS (CONTINUED)

(b) Acquisitions in prior year (Continued)

(i) CIMB Securities International (Thailand) Public Company Limited (formerly known as SICCO Securities Public Company
Limited) (SSEC) (Continued)

Acquisition related costs

Acquisition related costs during the financial year ended 31 December 2012 amounting to RM4,921,000 (2011: RM346,000) have
been incurred and are included in administration and general expenses in the consolidated statements of income.

Acquired receivables
The fair value of receivables acquired amounted to RM107,806,000 comprising of balances in loans, advances and financing of
RM63,743,000 and balances in other assets of RM44,063,000. The gross contractual amount for receivables balances in other assets
is RM51,069,000 of which RM7,006,000 is expected to be uncollectible.

Goodwill
The goodwill of RM12,033,000 arising from the acquisition is attributable to the expected synergies from combining the operations of
SSEC with that of the Group in Thailand and the value of strengthening the Groups securities business in Thailand.

Non-controlling interests
The Group has chosen to recognise the 17.94% non-controlling interest based on the non-controlling interests proportionate share
in the net assets of SSEC.

Revenue and profit contribution

The acquired business contributed revenue of RM28,350,000 and net profit of RM1,273,000 to the Group for the period from 15
February 2012 to 31 December 2012.

Had SSEC been consolidated from 1 January 2012, consolidated revenue and consolidated profit for the year ended 31 December
2012 would have been RM13,497,513,000 and RM4,396,953,000 respectively.

Acquisition of non-controlling interests

During financial year 2012, the Group acquired additional equity interests in SSEC from its non-controlling interests in two separate
transactions as described below:

On 11 April 2012, the Group acquired an additional 15.31% equity interest in SSEC for a cash consideration of RM16,669,000. As
a result of this acquisition, the Groups equity interest in SSEC was increased to 97.37%. The carrying value of the net assets of
SICCO as at 11 April 2012 was RM95,305,000 and the carrying value of the additional interest acquired was approximately
RM14,591,000. The difference of RM2,078,000 between the carrying value and the additional interest acquired has been recognised
within retained earnings.
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51 BUSINESS COMBINATIONS (CONTINUED)

(b) Acquisitions in prior year (Continued)

(i) CIMB Securities International (Thailand) Public Company Limited (formerly known as SICCO Securities Public Company
Limited) (SSEC) (Continued)

Acquisition of non-controlling interests (Continued)

On 12 September 2012, the Group acquired an additional 2.22% equity interest in SSEC for a cash consideration of RM2,358,000. As
a result of this acquisition, the Groups equity interest in SSEC was increased to 99.59%. The carrying value of the net assets of SSEC
as at 12 September 2012 was RM93,030,000 and the carrying value of the additional interest acquired was approximately RM2,068,000.
The difference of RM290,000. between the carrying value and the additional interest acquired has been recognised within retained earnings.

The following summarises the effect of the change in the Groups ownership interest in SSEC on the equity attributable to owners of
the Group arising from the two acquisitions identified above:

11 April 12 September
2012 2012 Total
RM000 RM000 RM000

Consideration paid for acquisition of non-controlling interests 16,669 2,358 19,027

Decrease in equity attributable to non-controlling interests (14,591) (2,068) (16,659)

Decrease in equity attributable to owners of the Group 2,078 290 2,368

52 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have
material impact to the Groups and the Companys results and financial position are tested for sensitivity to changes in the underlying
parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year are outlined below:

(a) Impairment of available-for-sale equity investments

The Group and the Company determine that available-for-sale equity investments are impaired when there has been a significant or
prolonged decline in the fair value below its costs. This determination of what is significant or prolonged required judgement. The Group
and the Company evaluate, among other factors, the duration and extent to which the fair value of the investment is less than cost; and
the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, changes
in technology and operational and financial cash flow.

(b) Impairment losses on loans, advances and financing

The Group and the Company make allowance for losses on loans, advances and financing based on assessment of recoverability. Whilst
management is guided by the accounting standards, management makes judgement on the future and other key factors in respect of the
estimation of the amount and timing of the cash flows in assessing allowance for impairment of loans, advances and financing. Among
the factors considered are the Groups aggregate exposure to the borrowers, the net realisable value of the underlying collateral value, the
viability of the customers business model, the capacity to generate sufficient cash flow to service debt obligations and the aggregate
amount and ranking of all other creditor claims.
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52 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (CONTINUED)

(c) Goodwill impairment

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in Note M (a) of
the Summary of Significant Group Accounting Policies.

The first step of the impairment review process requires the identification of independent operating units, dividing the Groups business
into the various business segments. The goodwill is then allocated to these various business segments. The first element of this allocation
is based on the areas of the business expected to benefit from the synergies derived from the acquisition. The second element reflects
the allocation of the net assets acquired and the difference between the consideration paid for those net assets and their fair value. This
allocation is reviewed following business reorganisation.

The carrying value of the business segment, including the allocated goodwill, is compared to the higher of fair value less cost to sell and
value in use to determine whether any impairment exists. Detailed calculations may need to be carried out taking into consideration
changes in market in which a business operates. In the absence of readily available market price data, this calculation is usually based
upon discounting expected pre-tax cash flows at the Groups cost of capital, which requires exercise of judgement. Refer to Note 18 for
details of these assumptions and the potential impact of changes to the assumptions.

Changes to the assumptions used by management, particularly the discount rate and the terminal growth rate, may significantly affect the
results of the impairment.

(d) Fair value of financial instruments

The majority of the Groups financial instruments reported at fair value are based on quoted and observable market prices. Where the fair
values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they
are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are derived
from observable market data where possible, but where observable market data are not available, judgment is required to establish fair
values. The judgments include considerations of liquidity and model inputs such as volatility for longer dated derivatives and discount rates,
prepayment rates and default rate assumptions for asset backed securities. The valuation of financial instruments is described in more
detail in Note 55.4.

53 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUING OPERATIONS

The Group The Company
31 December 31 December 31 December 31 December
Note 2013 2012 2013 2012
RM000 RM000 RM000 RM000

Non-current assets held for sale:

property, plant and equipment (Note 15) (a) 16,031 7,720 7,862
investment properties (Note 16) (a) 13,962 200
Investment in associates (b) 11,849 556,754
Investment in subsidiaires (c) 7,876

Total non-current assets held for sale 49,718 564,674 7,862

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53 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUING OPERATIONS (CONTINUED)

(a) Property, plant and equipment and investment properties of the Group where deposits have been received from buyers of the properties and
where a definitive buyer has been identified have been classified as held for sale. The disposals are expected to be completed in 2014.

Fair value of property, plant and equipment and investment properties held for sale
In accordance with MFRS 5, the non-current assets held for sales were stated at the lower of carring amount and fair value less cost to
sell. As at 31 December 2013, the property, plant and equipment and investment properties held for sales that were stated at fair value
less cost to sell was RM21,598,000 (2012: Nil). This is a non-recarring fair value which has been measured using observable inputs under
sales comparison approach performed by independent valuers. Sales prices of comparable land and building in close proximity are adjusted
for differences in key attributes such as property size. Therefore, It is witten level 2 of the fair value hierarchy.

(b) The Groups investment is In-fusion Solutions Sdn. Bhd. has been presented as held for sale as at 31 December 2013 as the group has
committed to a plan to dispose their entire equity interest in the associate.

The Groups investments in CAAB and CATB (part of the consumer banking segment) have been presented as held for sale as at
31 December 2012 following the Group reaching an understanding with Khazanah Nasional Berhad to sell its entire equity interest in CAAB
and CATB. The dispose was completed in March 2013. Refer to Note 48(b).

(c) The Groups investment in CIMB Securities International Pte. Ltd. (CSIT) has been presented as held for sale as the Group has disposed
its 99.6% shareholding in CSIT in 2013. Refer to Note 49(a).

54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES

(a) Changes in accounting policies

(i) MFRS 10, Consolidated Financial Statements and MFRS 11, Joint Arrangements
MFRS 10 replaces all the guidance on control and consolidation in MFRS 127, Consolidated and Separate Financial Statements and
IC Interpretation 112, Consolidation Special Purpose Entities. MFRS 11 requires a party to a joint arrangement in which it is
involved by assessing its right and obligations arising from the arrangement, rather that its legal form. Upon adoption of the two new
MFRSs, the Group has reviewed the relationships with its investments in other entities to assess whether the conclusion to consolidate
is different under MFRS 10 than under MFRS 127, and noted no material differences were found for any of the investments except
for the following:
(i) CIMB Bank now consolidates the silo of Merdeka Kapital Berhad, arising from the securitisation transaction on CIMB Banks hire
purchases receivables to Merdeka Kapital Berhad; and
(ii) The Group now consolidates special purposes vehicles SP Charitable Trust and SP Charitable Trust Two.

Certain investments of the Group have also been reclassified from associates and subsidiaries to joint ventures in accordance with
MFRS 11 principles.

As required under MFRS 10 and MFRS 11, the change in policy has been applied retrospectively.

The impact to the Group in adopting MFRS 10 and MFRS 11 is disclosed in Note 54 (c).

(ii) Amendment to MFRS 119, Employee Benefits

Amendment to MFRS 119 Employee benefits makes significant changes to the recognition and measurement of defined benefit
pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer
be deferred using the corridor approach.

The impact to the Group in adopting the amendment to MFRS 119 is disclosed in Note 54 (c).
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(a) Changes in accounting policies (Continued)

(iii) MFRS 12, Disclosures of Interests in Other Entities
MFRS 12 sets out the required disclosures for entities reporting under the two new standards, MFRS 10 and MFRS 11 Joint
Arrangements, and replaces the disclosure requirements currently found in MFRS 128, Investments in Associates. It requires entities
to disclose information that helps financial statements readers to evaluate the nature, risks and financial effects associated with the
entitys interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities.

The required disclosures under MFRS 12 are presented in Note 12, Note 13 and Note 14.

(iv) MFRS 13 Fair value measurement

MFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements for use across MFRS. The requirements do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The
enhanced disclosure requirements are similar to those in MFRS 7 Financial instruments: Disclosures, but apply to all assets and
liabilities measured at fair value, not just financial ones.

The enhanced disclosures are shown in Note 55.4.

(v) Amendment to MFRS 7 Financial instruments: Disclosures

Amendment to MFRS 7 requires more extensive disclosures focusing on quantitative information about recognised financial instruments
that are offset in the statement of financial position and those that are subject to master netting or similar arrangements irrespective
of whether they are offset.

The enhanced disclosures are shown in Note 55.1.2.

(vi) Amendment to MFRS 101 Presentation of items of other comprehensive income

Amendment to MFRS 101 requires entities to separate items presented in other comprehensive income (OCI) in the statement of
comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments
do not address which items are presented in OCI. The Statement of Comprehensive Income of the Group and the Company for the
financial year ended 31 December 2012 have been re-presented to conform to the current financial year presentation.

(b) Change in other reclassification

Certain comparatives were restated to conform to the current financial years presentation. There was no significant impact to the financial
performance and ratios in relation to the financial year ended 31 December 2013.
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows:
(i) Impact on the Groups consolidated statements of financial position as at 31 December 2012 and 1 January 2012

Balances as at 31 December 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting Other
reported and 11 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Assets
Cash and short term funds 30,763,061 (3,162) 30,759,899
Derivatives financial instruments 4,125,907 (41,938) 4,083,969
Other assets 7,392,298 (552,658) 6,839,640
Investment in associates 689,212 (99,305) 589,907
Investment in joint ventures 204,504 101,339 305,843
Total assets 337,056,884 (595,724) 336,461,160

Liabilities
Deposits from customers 243,970,307 (319,570) 3,644,302 247,295,039
Deposits and placements of banks
and other financial institutions 21,402,758 (5,880,167) 15,522,591
Derivative financial instruments 4,083,366 (34,174) 4,049,192
Other liabilities 7,479,226 1,626 83,998 7,564,850
Bonds and debentures 3,350,499 500,161 3,850,660
Other borrowings 5,586,698 (182,203) 2,235,865 7,640,360
Subordinated obligations 13,220,286 (560,435) 12,659,851
Total liabilities 307,705,438 (594,595) 83,998 307,194,841

Equity
Reserves 20,944,487 325 (83,998) 20,860,814
Non-controlling interests 774,779 (1,454) 773,325

Off-balance sheet
Commitments and contingencies 461,648,463 (1,098,310) 460,550,153
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(i) Impact on the Groups consolidated statements of financial position as at 31 December 2012 and 1 January 2012 (Continued)

Balances as at 1 January 2012

Effect of
adopting Effect of
As previously MFRS10 adopting Other
reported and 11 MFRS119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Assets
Cash and short term funds 34,203,978 (2,010) 34,201,968
Derivative fianncial instruments 4,274,073 (42,489) 4,231,584
Other assets 6,518,355 (485,429) 6,032,926
Investment in associates 1,165,159 (138,177) 1,026,982
Investment in joint ventures 188,479 140,211 328,690
Total assets 299,948,838 (527,894) 299,420,944

Liabilities
Deposits from customers 221,933,142 (37,682) 221,895,460
Deposits and placements of banks
and other financial institutions 12,964,309 (2,131,308) 10,833,001
Derivative financial instruments 4,217,291 (34,616) 4,182,675
Other liabilities 6,362,943 51,347 6,414,290
Bonds and debentures 521,225 500,477 1,021,702
Other borrowings 5,324,032 (462,720) 2,131,308 6,992,620
Subordinated obligations 11,417,980 (492,224) 10,925,756
Total liabilities 272,950,541 (526,765) 51,347 272,475,123

Equity
Reserves 18,641,686 325 (51,347) 18,590,664
Non-controlling interests 724,429 (1,454) 722,975

Off-balance sheet
Commitments and contingencies 414,197,407 (969,400) 413,228,007
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(ii) Impact on the Groups consolidated statement of changes in equity for the year ended 31 December 2012 and 1 January 2012

Balances as at 31 December 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting
reported and 11 MFRS 119 As restated
RM000 RM000 RM000 RM000

Exchange fluctuation reserves (876,497) 325 (876,172)

Other reserves (75,701) (73,743) (149,444)
Retained earnings 11,226,520 (10,255) 11,216,265
Non-controlling interests 774,779 (1,454) 773,325

Balances as at 1 January 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting
reported and 11 MFRS 119 As restated
RM000 RM000 RM000 RM000

Exchange fluctuation reserves 174,664 325 174,989

Other reserves (111,642) (41,092) (152,734)
Retained earnings 8,550,863 (10,255) 8,540,608
Non-controlling interests 724,429 (1,454) 722,975

(iii) Impact on the Groups consolidated statements of comprehensive income for the year ended 31 December 2012

Amount for the financial year ended

31 December 2012
Effect of
As previously adopting
reported MFRS 119 As restated
RM000 RM000 RM000

Items that will not be reclassified to profit or loss

Remeasurement of post employment benefits obligation (32,651) (32,651)
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(iii) Impact on the Groups consolidated statement of cash flows for the year ended 31 December 2012

Balances as at 31 December 2012

Effect of
adopting
As previously MFRS 10 Other
reported and 11 reclassification As restated
RM000 RM000 RM000 RM000

Cash flows generated from operations 3,473,125 (317,699) (29,856) 3,125,570

Net cash flows generated from/(used in) operating activities 2,021,706 (317,699) (29,856) 1,674,151
Net cash flows generated from financing activities 3,789,830 316,547 (15,071) 4,091,306
Net decrease in cash and short-term funds
during the financial year (1,889,876) (1,152) (1,891,028)
Cash and short-term funds at beginning of the financial year 34,203,978 (2,010) 34,201,968
Cash and short-term funds at end of the financial year 30,763,061 (3,162) 30,759,899

(iv) Impact on the notes to consolidated statements of financial position the year ended 31 December 2012 and 1 January 2012

Balances as at 31 December 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting Other
Group reported and 11 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Note 2
Cash and balances with banks and other
financial institutions 10,284,370 (3,162) 10,281,208

Note 7
Interest rate derivatives
Interest rate swaps Principal
Up to 1 year 38,432,806 (2,000,000) 36,432,806
More than 3 years 54,884,169 (1,236,836) 53,647,333

Interest rate swaps Fair value assets

More than 3 years 1,323,121 (19,216) 1,303,905

Interest rate swaps Fair value liabilities

More than 3 years (946,583) 19,216 (927,367)
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(iv) Impact on the notes to statements of financial position the year ended 31 December 2012 and 1 January 2012 (Continued)

Balances as at 31 December 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting Other
Group reported and 11 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Note 7 (Continued)
Credit related contract
Credit default swaps Principal
Up to 1 year 445,962 2,000,000 2,445,962
More than 3 years 657,095 (1,098,310) 1,236,836 795,621

Credit default swaps Fair value assets

More than 3 years 27,296 (41,938) 19,216 4,574

Credit default swaps Fair value liabilities

More than 3 years (30,315) 34,174 (19,216) (15,357)

Note 9
Collateral pledged for derivative transactions 862,547 (552,658) 309,889

Note 13
Investment in associates 689,212 (99,305) 589,907

Note 14
Investment in joint ventures 204,504 101,339 305,843

Note 20(i)
Demand deposits 57,438,752 (842,494) 56,596,258
Savings deposits 28,178,314 1,018,140 29,196,454
Fixed deposits 110,497,486 3,468,656 113,966,142
Others 44,484,271 (319,570) 44,164,701

Note 21
Licensed banks 12,383,677 (2,235,865) 10,147,812
Licensed finance companies 405,825 (150) 405,675
Other financial institutions 6,187,072 (3,644,152) 2,542,920
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(iv) Impact on the notes to consolidated statements of financial position the year ended 31 December 2012 and 1 January 2012 (Continued)

Balances as at 31 December 2012

Effect of Effect of
As previously adopting adopting Other
Group reported MFRS 10 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Note 23
Allowance for commitments and contingencies 46,497 (28,786) 17,711
Post employment benefit obligations 253,924 83,998 337,922
Others 1,971,927 1,626 28,786 2,002,339

Note 25
RM500 million bonds 500,161 500,161

Note 26
Term loan 2,000,969 2,235,865 4,236,834
Others 2,362,369 (182,203) 2,180,166

Note 27
(h) Subordinated Sukuk RM850 million 861,751 (202,945) 658,806
(k) Subordinated Notes 2010/2060
RM600 million 599,415 (139,929) 459,486
(l) Subordinated Debt RM1.5 billion 1,557,190 (141,514) 1,415,676
(o) Subordinated Debt 2012/2022
RM1.5 billion 1,505,458 (76,047) 1,429,411

Note 30
Exchange fluctuation reserves (876,497) 325 (876,172)
Retained earnings 11,226,520 (10,255) 11,216,265
Other reserves defined benefits reserves (73,743) (73,743)

Note 46
Credit-related
Direct credit substitutes 6,091,247 (1,625,094) 4,466,153
Miscellaneous commitments and contingencies 2,183,684 (720,949) 1,462,735
Total treasury-related commitments and
contingencies 391,461,354 (1,098,310) 2,346,043 392,709,087
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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(iv) Impact on the notes to statements of financial position the year ended 31 December 2012 and 1 January 2012 (Continued)

Balances as at 1 January 2012

Effect of Effect of
As previously adopting adopting Other
Group reported MFRS 10 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Note 2
Cash and balances with banks
and other financial institutions 9,183,261 (2,010) 9,181,251

Note 7
Interest rate derivatives
Interest rate swaps Principal
More than 3 years 80,055,213 (1,380,715) 78,674,498

Interest rate swaps Fair value assets

More than 3 years 1,615,584 (35,757) 1,579,827

Interest rate swaps Fair value liabilities

More than 3 years (1,227,568) 32,449 (1,195,119)

Credit related contract

Credit default swaps Principal
More than 3 years 345,919 (969,400) 1,380,715 757,234

Credit default swaps Fair value assets

More than 3 years 34,737 (42,489) 35,757 28,005

Credit default swaps Fair value liabilities

More than 3 years (30,454) 34,616 (32,449) (28,287)

Note 9
Other debtors, deposits and prepayments
net of allowance for doubtful debts 2,438,201 74 2,438,275
Collateral pledged for derivative transactions 778,691 (485,503) 293,188

Note 13
Investment in associates 1,165,159 (1,381,177) 1,026,982

Note 14
Investment in joint ventures 188,479 140,211 328,690
 INTO A NEW ERA

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54 CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTINUED)

(c) The impact of the above on the Financial Statements of the Group are set out as follows (Continued):
(iv) Impact on the notes to statements of financial position the year ended 31 December 2012 and 1 January 2012 (continued)

Balances as at 1 January 2012

Effect of
adopting Effect of
As previously MFRS 10 adopting Other
Group reported and 11 MFRS 119 reclassification As restated
RM000 RM000 RM000 RM000 RM000

Note 20(i)
Others 44,083,393 (37,682) 44,045,711

Note 21
Licensed banks 8,549,707 (2,131,308) 6,418,399

Note 24
Post employment benefit obligations 292,022 51,347 343,369

Note 25
RM500 million bonds 500,477 500,477

Note 26
Term loan 2,300,642 2,131,308 4,431,950
Others 1,843,956 (462,720) 1,381,236

Note 27
(h) Subordinated Sukuk RM850 million 545,590 (184,977) 360,613
(k) Subordinated 2010/2060
Notes RM600 million 591,921 (154,919) 437,002
(l) Subordinated Debt RM1.5 billion 1,567,422 (152,328) 1,415,094

Note 30
Retained earnings 8,550,863 (10,255) 8,540,608
Other reserves defined benefits reserves (41,092) (41,092)

Note 46
Credit-related
Direct credit substitutes 5,255,701 (1,096,064) 4,159,637
Miscellaneous commitments and contingencies 4,941,508 (323,804) 4,617,704
Total treasury-related commitments and
contingencies 352,677,603 (969,400) 1,419,868 353,128,071
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55 FINANCIAL RISK MANAGEMENT

(a) Financial risk management objectives and policies

The Group embraces risk management as an integral component of the Groups business, operations and decision-making process. In
ensuring that the Group achieves optimum returns whilst operating within a sound business environment, the risk management teams are
involved at the early stage of the risk taking process by providing independent inputs including relevant valuations, credit evaluations, new
product assessments and quantification of capital requirements. These inputs enable the business units to assess the risk-vs-reward value
of their propositions and thus enable risk to be priced appropriately in relation to the return.

The objectives of the Groups risk management activities are to:

Identify the various risk exposures and capital requirements;
Ensure risk taking activities are consistent with risk policies and the aggregated risk position are within the risk appetite as approved
by the Board; and
Create shareholders value through proper allocation of capital and facilitate development of new businesses.

(b) Enterprise Wide Risk Management Framework (EWRM)

The Group employs an EWRM framework as a standardised approach to manage its risk and opportunity effectively. The EWRM framework
provides the Board and management with a tool to anticipate and manage both the existing and potential risks, taking into consideration
changing risk profiles as dictated by changes in business strategies, operating and regulatory environment and functional activities.

The key components of the Groups EWRM framework are represented in the diagram below:

RISK APPETITE STATEMENT

GOVERNANCE

COMPREHENSIVE RISK RISK MEASUREMENT MONITORING AND ANALYTICS

ASSESSMENT CONTROL AND REPORTING

SOUND CAPITAL MANAGEMENT

RISK BASED PERFORMANCE MEASUREMENT

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Enterprise Wide Risk Management Framework (EWRM) (Continued)

The design of the EWRM framework involves a complementary top-down strategic and bottom-up tactical risk management approach
with formal policies and procedures addressing all areas of significant risks for the Group.

(a) Risk Appetite Statement

Risk appetite defines the amount and type of risks that the Group is able and willing to accept in pursuit of its strategic and business
objectives. In CIMB Group, the risk appetite is linked to strategy development and business and capital management plans. It takes
into account not only growth, revenue and commercial aspirations, but also the capital and liquidity positions and risk management
capabilities and strengths, including risk systems, processes and people. Going forward, risk appetite statements will be formulated
for key business units as well as incorporate stress testing.

CIMB Group has a dedicated team that facilitates the risk appetite setting process including reviewing, monitoring and reporting. Board
Risk Committee (BRC) and Group Risk Committee (GRC) receive monthly reports on compliance with the risk appetite.

(b) Governance
A strong risk governance structure is what binds the EWRM framework together. The Board of Directors is ultimately responsible for
the Groups risk management activities, and provides strategic direction through the Risk Appetite Statement and relevant risk
management frameworks for the Group.

The implementation and administration of the EWRM framework are effected through the three lines of defence model with oversight
by the risk governance structure which consists of various risk committees, as described below. Group Risk Division (GRD) is
principally tasked to assist the various risk committees and undertakes the performance of independent risk management, monitoring
and reporting functions of the EWRM. The implementation of the EWRM is also subjected to the independent assurance and
assessment by Group Internal Audit Division.

(c) Comprehensive Risk Assessment

Comprehensive Risk Assessment provides the process for the identification of the Groups material risks, from the perspectives of
impact on the Groups financial standing and reputation. Apart from the annual comprehensive risk assessment exercise, the Groups
material risks are identified on an on-going basis as well as part of the consideration for any strategic projects, including new product
development.

(d) Risk Measurement

Consistent and common methodologies of Risk Measurement allow for the Group to aggregate and compare risks across business
units, geographies and risk types. Further, it provides a tool for the Board and Senior Management to assess the sufficiency of its
liquidity surplus and reserves, and health of its capital position under various economic and financial situations.

(e) Monitoring and Control

Various risk management tools are employed to Monitoring and Control the risk taking activities within the Group, these include limit
monitoring, hedging strategies and clearly documented control processes. These controls are regularly monitored and reviewed in the
face of changing business needs, market conditions and regulatory changes.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Enterprise Wide Risk Management Framework (Continued)

(f) Analytics and Reporting
Timely reporting and meaningful analysis of risk positions are critical to enable the Board and Senior Management to exercise control
over material exposures and make informed business decisions.

(g) Sound Capital Management

The Groups capital resources are continuously assessed and managed to undertake its day-to-day business operations and risk-
taking activities, including considerations for its business expansion and growth. Each year internal capital targets will be set and
capital will be allocated to each business units based on the respective business plans, budgeted profit and targeted Risk Adjusted
Return on Capital (RAROC).

(h) Risk Based Performance Measurement

Business units economic profitability will be measured having considered both its risks and capital consumption. The adoption of a
risk-based performance measurement allows for performance and profitability of different business units to be compared on a common
yardstick.

(c) Risk Governance

In the year under review, the Board of Directors approved a revision to the Groups risk governance structure with the establishment of
several risk committees and elevation of the existing Basel Steering Committee as a risk committee reporting to the GRC. The revised risk
governance structure allows for thorough deliberations and clear accountability of each of the committees.

At the apex of the governance structure are the respective Boards, which decides on the entitys Risk Appetite corresponding to its
business strategies. In accordance to the Groups risk management structure, the BRC reports directly into each Board and assumes
responsibility on behalf of the Board for the supervision of risk management and control activities. The BRC determines the Groups risk
strategies, policies and methodologies, keeping them aligned with the principles within the Risk Appetite Statement. The BRC also oversees
the implementation of the EWRM framework and provides strategic guidance and reviews the decisions of the GRC.

In order to facilitate the effective implementation of the EWRM framework, the BRC has established various risk committees within the
Group with distinct lines of responsibilities and functions, which are clearly defined in the terms of reference. The composition of the
committees includes senior management and individuals from business divisions as well as divisions which are independent from the
business units.

The responsibility of the supervision of the risk management functions is delegated to the GRC, which reports directly to the BRC. The
GRC performs the oversight function on overall risks undertaken by the Group in delivering its business plan vis--vis the stated risk
appetite of the Group. The GRC is further supported by specialised risk committees, namely Group Credit Policy & Portfolio Risk
Committee, Group Market Risk Committee, Group Operational Risk Committee, Group Asset Liability Management Committee and Basel
Steering Committee, with each committee providing oversight and responsibility for specific risk areas namely, credit risk, market risk,
operational risk, liquidity risk and capital risk.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued)

The revised structure of the Groups Risk Committees and an overview of the respective committees roles and responsibilities are as
follows:

BOARD OF DIRECTORS

BOARD RISK COMMITTEE BOARD SHARIAH COMMITTEE

Determine the Groups risk strategies, policies and methodologies Oversee all Shariah matters of the Group
Oversee implementation of the EWRM framework, provide strategic guidance
and review the decisions of the GRC

GROUP RISK COMMITTEE

Ensure effectiveness of risk management across the Group
Ensure adherence to the Board approved risk appetite
Outline key risks and strategies to improve risk management across the Group

Group Asset Liability Management Group Credit Policy & Portfolio Risk
Group Operational Risk Committee
Committee Committee
Review key operational risks impacting or potentially Oversee management of the Groups overall Ensure adherence to the Board approved
impacting the Group balance sheet, net interest income/margin, credit risk appetite
Review the appropriateness of the framework to manage liquidity risk and interest rate risk in the Ensure effectiveness of credit risk
the risk banking book management
Review on-going or planned remediation for known risks Ensure risk prole is kept within the Articulate key credit risk and its mitigating
established risk appetite/limits controls
Review all events leading material non-compliance
including Shariah non-compliance

Group Wholesale Bank Risk Committee Regional Credit Committee Consumer Bank Credit Committee
Review and approve or concur primary and Review and approve or concur with credit Credit approving authority for Malaysian and
secondary market deals for debt and equity applications from non-Malaysian centric non-Malaysian centric customer groups
instruments for the Group customer groups exposures
Credit approving authority for primarily Ensure Group overall loan portfolio/nancing Ensure Groups overall loan portfolio/
Malaysian centric customer groups meets regulatory guidelines and approved nancing meets regulatory guidelines and
exposures internal policies and procedures approved internal policies and procedures
Review and approve Global Banking Review and approve or concur with all non-
Institution Limits for Malaysian centric Malaysian Inter-Bank Limits, Global Financial
banking institutions Institutions Counterparty Limits and Global
Country Limits

Group Market Risk Committee Basel Steering Committee

Ensure effectiveness of risk management Oversee implementation of Basel
across the Group regulations in the banking entities under
Ensure adherence to the Board approved the Group
market risk appetite
Articulate key market risks and the
corresponding mitigating controls
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued)

Similar risk committees are set-up in each of the Groups overseas subsidiaries in their respective jurisdictions.Whilst recognising the
autonomy of the local jurisdiction and compliance to local requirements, the Group also strives to ensure a consistent and standardised
approach in its risk governance process. As such, the relevant Group and Regional committees have consultative and advisory
responsibilities on regional matters across the Group. This structure increases the regional communication, sharing of technical knowledge
and support towards managing and responding to risk management issues, thus allowing the Board to have a comprehensive view of the
activities in the Group.

Three-Lines of Defence
The Groups risk management approach is based on the three-lines of defence concept whereby risks are managed from the point of
risk-taking activities. This is to ensure clear accountability of risks across the Group and risk management as an enabler of the business
units. As a first line of defence, the line management, including all business units and units which undertake client facing activities, are
primarily responsible for risk management on a day-to-day basis by taking appropriate actions to mitigate risks through effective controls.
The second line of defence provides oversight functions, performs independent monitoring of business activities and reports to management
to ensure that the Group is conducting business and operating within the approved appetite and in compliance to regulations. The third
line of defence is Group Internal Audit Division which provides independent assurance to the Boards that the internal controls and risk
management activities are functioning effectively.

The Roles of Group Chief Risk Officer (CRO) and Group Risk Division (GRD)
Within the second line of defence is GRD, a function independent of business units that assists the Groups management and various risk
committees in the monitoring and controlling of the Groups risk exposures.

The organisational structure of GRD is made of two major components, namely the Chief Risk Officers and the Risk Centres of Excellence.
GRD is headed by the Group CRO who is appointed by the Board to spearhead risk management functions and implementation of the
Enterprise-Wide Risk Management. The CRO:

(a) Actively engages the Board and senior management on risk management issues and initiatives.
(b) Maintains an oversight on risk management functions across all entities within the Group. In each country of operations, there is a
local Chief Risk Officer or a Country Risk Lead Officer, whose main function is to assess and manage the enterprise risk and
regulators in the respective country.

The GRD teams are organised into several Risk Centres of Excellence in order to facilitate the implementation of the Groups EWRM
framework. The Risk Centres of Excellence consisting of Risk Analytics & Infrastructure, Market Risk, Operational Risk, Asset Liability
Management, Credit Risk and Shariah Risk Centres of Excellence are specialised teams of risk officers responsible for the active oversight
of group-wide functional risk management.
 INTO A NEW ERA

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued)

The Roles of Group Chief Risk Officer (CRO) and Group Risk Division (GRD) (Continued)
(a) Risk Analytics & Infrastructure Centre of Excellence
Risk Analytics & Infrastructure Centre of Excellence spearheads the Groups efforts towards Basel II implementation. In this regard, it
develops and implements all internal rating and scoring models and closely monitors the performance of the rating and scoring models
to ensure relevance to current market conditions and integrity of ratings. It also computes and aggregates the risk-weighted assets
for credit risk for monthly regulatory reporting as well as projects the capital requirements for credit risk to support capital management
planning and analysis. Risk Analytics & Infrastructure Centre of Excellence monitors the non-retail credit risk profile of risk-taking
activities in terms of asset quality, rating distribution and credit concentrations. In addition, it initiates and/or proposes its risk policies,
risk measurement methodologies and risk limits to the Board for approval.

(b) Market Risk Centre of Excellence

In propagating and ensuring compliance to the market risk framework, the Market Risk Centre of Excellence reviews treasury trading
strategies, analyses positions and activities vis--vis changes in the financial market and performs mark-to-market valuation. It also
coordinates capital market product deployments.

(c) Operational Risk Centre of Excellence

The Operational Risk Centre of Excellence provides the methodology and process for the identification, assessment, reporting,
mitigation and control of operational risks by the respective risk owners across the Group.

(d) Asset Liability Management Centre of Excellence

It is primarily responsible for the independent monitoring and assessment of the Groups asset and liability management process
governing liquidity risk and interest/benchmark rate risk as well as recommending policies and methodologies to manage the said
risks.

(e) Credit Risk Centre of Excellence

The Credit Risk Centre of Excellence is dedicated to the assessment, measurement, management and monitoring of credit risk of
CIMB Group. It ensures a homogenous and consistent approach to:
Credit Risk Policies and Procedures;
Credit Risk Models;
Credit Risk Methodologies; and
Portfolio Analytics,
as well as a holistic and integrated approach to identification, assessment, decision-making and reporting of credit risk of the Group.

(f) Shariah Risk Centre of Excellence

The Shariah Risk Centre of Excellence formulates Shariah Risk Management Framework and provides guidance and training on the
Shariah Risk Management to enable the first line of defence to identify, assess, monitor and control Shariah risk in their Islamic
business operations and activities.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

(c) Risk Governance (Continued)

The Roles of Group Chief Risk Officer (CRO) and Group Risk Division (GRD) (Continued)
(f) Shariah Risk Centre of Excellence (Continued)
In addition to the above Risk Centres of Excellence, Regional Risk was established with the objective of overseeing the risk
management functions of the regional offices as well as the Groups unit trust and Non-Malaysian securities businesses. Regional Risk
also houses the validation team.

The regional offices and the respective teams in risk management units within the unit trust business and Non-Malaysian securities
businesses identify, analyse, monitor, review and report the relevant material risk exposures of each individual country and/or
businesses.

The Validation Team is independent from the risk taking units and model development team, and reports to Regional Risk. The
function of this unit is to perform validation, as guided by regulatory guidelines and industry best practices on rating systems, estimates
of the risk components, and the processes by which the internal ratings are obtained and used. The unit provides recommendations
to the model development team and the business users. The unit reports its findings and recommendations to GRC and BRC.

In ensuring a standardised approach to risk management across the Group, all risk management teams within the Group are required
to conform to the Groups EWRM framework, subject to necessary adjustments required for local regulations. For branches and
subsidiaries without any risk management department, all risk management activities will be centralised at relevant Risk Centres of
Excellence. Otherwise, the risk management activities will be performed by the local risk management team with matrix reporting line
to respective Risk Centres of Excellence.

Strategies and Processes for Various Risk Management

These information are available in later sections for each Credit Risk, Market Risk and Liquidity Risk.

55.1 Credit risk

Credit risk is defined as from the possibility of losses due to the obligor, market counterparty or issuer of securities or other instruments
held, failing to perform its contractual obligations to the Group. It arises primarily from traditional financing activities through conventional
loans, financing facilities, trade finance as well as commitments to support clients obligations to third parties, i.e. guarantees or kafalah
contracts. In sales and trading activities, credit risk arises from the possibility that the Groups counterparties will not be able or willing to
fulfil their obligation on transactions on or before settlement date. In derivative activities, credit risk arises when counterparties to derivative
contracts, such as interest/profit rate swaps, are not able to or willing to fulfil their obligation to pay the positive fair value or receivable
resulting from the execution of contract terms. Credit risk may also arise where the downgrading of an entitys rating causes the fair value
of the Groups investment in that entitys financial instruments to fall.

Credit Risk Management

The purpose of credit risk management is to keep credit risk exposure to an acceptable level vis--vis the capital, and to ensure the
returns commensurate with risks.

Consistent with the three-lines of defence model on risk management where risks are managed from the point of risk-taking activities, our
Group implemented the Risk-based Delegated Authority Framework. This Framework promotes clarity of risk accountability whereby the
business unit, being the first line of defence, manages risk in a proactive manner with GRD as a function independent from the business
units as the second line of defence. This enhances the collaboration between GRD and the business units.
 INTO A NEW ERA

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

Credit Risk Management (Continued)
The Framework encompass the introduction of Joint Delegated Authority, enhanced credit approval process and a clear set of policies and
procedures that defines the limits and types of authority designated to the specific individuals. Our Group adopts a multi-tiered credit
approving authority spanning from the delegated authorities at business level, joint delegated authorities holders between business units
and GRD, to the various credit committees. The credit approving committees are set up to enhance the efficiency and effectiveness of the
credit oversight as well as the credit approval process for all credit applications originating from the business units. Credit applications are
independently evaluated by the Credit Risk Centre of Excellence team prior to submission to the relevant committees for approval.

The Group Credit Policy & Portfolio Risk Committee with the support of Group Wholesale Bank Risk Committee, Regional Credit Committee,
Consumer Bank Credit Committee and GRD is responsible for ensuring adherence to the Board approved credit risk appetite as well as
the effectiveness of credit risk management. This amongst others includes the reviewing and analysing of portfolio trends, asset quality,
watch-list reporting and policy review. It is also responsible for articulating key credit risks and mitigating controls.

Approaches or mitigating controls adopted to address concentration risk to any large sector/industry, or to a particular counterparty group
or individual include adherence to and compliance with single customer, country and global counterparty limits as well as the assessment
of the quality of collateral.

Adherence to established credit limits is monitored daily by GRD, which combines all exposures for each counterparty or group, including
off balance sheet items and potential exposures. Limits are also monitored based on rating classification of the obligor and/or counterparty.

It is a policy of the Group that all exposures must be rated or scored based on the appropriate internal rating models, where available.
Retail exposures are managed on a portfolio basis and the risk rating models are designed to assess the credit worthiness and the
likelihood of the obligors to repay their debts, performed by way of statistical analysis from credit bureau and demographic information of
the obligors. The risk rating models for non-retail exposures are designed to assess the credit worthiness of the corporations or entities
in paying their obligations, derived from risk factors such as financial history and demographics or company profile. These rating models
are developed and implemented to standardise and enhance the credit underwriting and decision-making process for the Groups retail
and non-retail exposures.

Credit reviews and rating are conducted on the credit exposures on at least an annual basis and more frequently when material information
on the obligor or other external factors come to light.

The exposures are actively monitored, reviewed on a regular basis and reported regularly to Group Credit Policy & Portfolio Risk Committee,
GRC and BRC so that deteriorating exposures are identified, analysed and discussed with the relevant business units for appropriate
remedial actions including recovery actions, if required.

In addition to the above, the Group also employs VaR to measure credit concentration risk. The Group adopted the Monte Carlo simulation
approach in the generation of possible portfolio scenarios to obtain the standalone and portfolio VaR. This approach takes into account
the credit concentration risk and the correlation between obligors/counterparties and industries.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)
Credit Risk Mitigation
The employment of various credit risk mitigation techniques such as appropriate credit structuring, and posting of collateral and/or third
party support form an integral part of the credit risk management process. Credit risk mitigants are taken where possible and is considered
secondary recourse to the obligor for the credit risk underwritten.

(i) Collaterals/Securities
All extension of credit in so far as deemed prudent, must be appropriately and adequately secured. A credit proposal is considered
secured only when the entire proposal is fully covered by approved collateral/securities within their approved margins as set out in
the relevant credit policy guides. GWBRC/RCC is empowered to approve any inclusion of new acceptable collaterals/securities.

Recognised collaterals include both financial and physical assets. Financial collaterals consist of mainly cash deposits, shares, unit
trusts and debt securities, while physical collateral includes land and buildings and vehicles. Guarantors accepted are in line with
BNMs CAF (Basel II Risk-Weighted Assets) and CAFIB (Risk-Weighted Assets) guidelines. Eligible credit protection is also used to
mitigate credit losses in the event that the obligor/counterparty defaults.

(ii) Collateral Valuation and Management

The Group has in place policies which govern the determination of eligibility of various collaterals including credit protection, to be
considered for credit risk mitigation which includes the minimum operational requirements that are required for the specific collateral
to be considered as effective risk mitigants.

The collateral is valued periodically ranging from daily to annually, depending on the type of collateral. Specifically for real estate
properties, a framework for valuation of real estate properties is established to ensure adequate policies and procedures are in place
for efficient and proper conduct of valuation of real estate properties and other related activities in relation to the interpretation,
monitoring and management of valuation of real estate properties.

(iii) Netting
In mitigating the credit risks in swaps and derivative transactions, the Group enters into master agreements that provide for closeout
and settlement netting arrangements with counterparties, whenever possible. A master agreement that governs all transactions
between two parties, creates the greatest legal certainty that credit exposure will be netted. In effect, it enables the netting of
outstanding obligations upon termination of outstanding transactions if an event of default occurs.

(iv) Concentrations within risk mitigation

CIMB Group avoids unwanted credit or market risk concentrations by diversifying its portfolios through a number of measures.
Amongst others, there are guidelines in place relating to maximum exposure to any counterparty, sectors and country.

Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR)

Off-Balance Sheet exposures are exposures such as derivatives, trade facilities and undrawn commitments. The Group adopts the Current
Exposure method to compute the capital requirement for CCR under BNMs guidelines on CAF (Basel II Risk-Weighted Assets) and
CAFIB (Risk-Weighted Assets).

(i) Credit Risk Mitigation

For credit derivatives and swaps transactions, the Group enters into master agreement with counterparties, whenever possible. Further,
the Group may also enter into CSA with counterparties. The net credit exposure with each counterparty is monitored and the Group
may request for additional margin for any exposures above the agreed threshold, in accordance with the terms specified in the relevant
CSA or the master agreement. The eligibility of collaterals and frequency calls are negotiated with the counterparty and endorsed by
GWBRC and/or RCC.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

Off-Balance Sheet Exposures and Counterparty Credit Risk (CCR) (Continued)
(ii) Treatment of Rating Downgrade
In the event of a one-notch downgrade of rating, based on the terms of the existing CSA and exposure as at 31 December 2013,
there was no requirement for additional collateral to be posted.

On the other hand, counterparty rating is being monitored and in the event of a rating downgrade, remedial actions such as revision
of the counterparty credit limit, suspension of the limit or the request for additional collateral may be taken.

55.1.1 Maximum exposure to credit risk (without taking into account any collateral held or other credit enhancements)
For financial assets reflected in the statement of financial position, the exposure to credit risk equals their carrying amount. For
financial guarantees and similar contract granted, it is the maximum amount that the Group and the Company would have to
pay if the guarantees were called upon. For credit related commitments and contingents that are irrevocable over the life of the
respective facilities, it is generally the full amount of the committed facilities.

The Group
Maximum exposure
31 December 31 December
2013 2013
RM000 RM000

Financial guarantees 6,104,901 4,653,443

Credit related commitments and contingencies 63,304,668 57,383,909

69,409,569 62,037,352

The financial effect of collateral (quantification to the extent to which collateral and other credit enhancements mitigate credit risk)
held for net loans, advances and financing for the Group is 78% (2012: 76%) while the financial effect of collateral for derivatives
for the Group is 76% (2012: 66%). The financial effect of collateral held for the remaining financial assets are insignificant.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

240

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.2 Offsetting financial assets and financial liabilities
(a) Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements by type

The Group The Company

Related amounts not set off in Related amounts not set off in
the statement of financial the statement of financial
position position
Gross amounts Gross amounts
of recognised of recognised
financial financial
liabilities Gross liabilities
Gross amounts in the amounts in the
of recognised statement of Net amounts Financial of recognised statement of Net amounts Financial
financial financial of financial Financial collateral financial financial of financial Financial collateral
assets position assets instruments received Net amount assets position assets instruments received Net amount
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Financial assets
31 December 2013
Derivatives 5,020,453 5,020,453 (2,796,554) (666,903) 1,556,996 3,940 3,940 3,940
Reverse repurchase agreements 8,260,504 8,260,504 (1,526,380) (6,667,026) 67,098

Total 13,280,957 13,280,957 (4,322,934) (7,333,929) 1,624,094 3,940 3,940 3,940

31 December 2012
Derivatives 4,083,969 4,083,969 (2,582,911) (401,234) 1,099,744 10,712 10,712 (8,892) 1,820
Reverse repurchase agreements 5,594,278 5,594,278 (2,017,421) (3,252,848) 50,495

Total 9,678,297 9,678,297 (4,600,412) (3,927,596) 1,150,239 10,712 10,712 (8,892) 1,820
 INTO A NEW ERA

241

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.2 Offsetting financial assets and financial liabilities (Continued)
(b) Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements by type

The Group The Company

Related amounts not set off in Related amounts not set off in
the statement of financial the statement of financial
position position

Gross amounts Gross amounts

of recognised of recognised
financial financial
assets Gross assets
Gross amounts in the amounts in the
of recognised statement of Net amounts Financial of recognised statement of Net amounts Financial
financial financial of financial Financial collaterals financial financial of financial Financial collateral
liabilities position liabilities instruments pledged Net amount assets position lialibilities instruments pledged Net amount
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Financial liabilities
31 December 2013
Derivatives 6,009,608 - 6,009,608 (2,613,900) (645,300) 2,750,408 - - - - - -
Repurchase agreements 5,922,788 - 5,922,788 (5,891,608) (799) 30,381 - - - - - -

Total 11,932,396 - 11,932,396 (8,505,508) (398,229) 2,780,789 - - - - - -

31 December 2012
Derivatives 4,049,192 - 4,049,192 (2,214,293) (112,929) 1,411,747 8,892 - 8,892 (8,892) - -
Repurchase agreements 3,068,039 - 3,068,039 (2,314,181) - 4,094 - - - - - -

Total 7,117,231 - 7,117,231 (4,528,472) (112,929) 1,415,841 8,892 - 8,892 (8,892) - -

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

242

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure
A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic
characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or
other conditions.
(a) Geographical sectors
The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements)
based on the location of the counterparty as at 31 December 2013, 31 December 2012 are as follows:

The Group
31 December 2013
United
Malaysia Indonesia Thailand Singapore United States Kingdom Hong Kong Others Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Cash and short-term funds 16,949,292 5,490,129 32,304 1,080,160 1,585,914 1,714,045 374,675 2,470,748 29,697,267
Reverse repurchase agreements 4,906,389 68,133 2,671,693 315,413 - 179,964 62,411 56,501 8,260,504
Deposits and placements with banks and other financial institutions 1,693,437 479,583 78,366 274,746 - 110,383 - 1,152,504 3,789,019
- Financial assets held for trading
- Money market instruments 6,889,126 35,353 - 4,032,527 129,638 - - - 11,086,644
- Quoted securities - 943,696 1,029,154 - - - - - 1,972,850
- Unquoted securities 5,362,595 167,053 399,513 605,413 53,087 35,749 524,527 968,077 8,116,014
Financial investments available-for-sale
- Money market instruments 3,737,735 195,893 - - - 27,052 - 58,142 4,018,822
- Quoted securities - 3,573,503 2,618,858 - - - - - 6,192,361
- Unquoted securities 13,519,079 360,735 391,105 1,578,093 59,712 229,247 1,114,137 990,088 18,314,916
Financial investments held-to-maturity
- Money market instruments 1,848,462 - - 512,890 263,486 - - - 2,624,838
- Quoted securities - 903,343 1,628,612 - 62,668 - - 8,077 2,602,700
- Unquoted securities 4,473,214 - 881 839,165 6,235 - 25,978 248,450 5,593,953
Derivative financial instruments
- Trading derivatives 2,002,213 323,727 854,526 301,818 220,292 554,791 33,406 522,559 4,833,332
- Hedging derivatives 126,204 605 - 13,751 2,789 41,777 1,995 187,121
Loans, advances and financing
- Overdrafts 4,039,263 4,052 757,747 83,700 52 951 298 154,384 5,040,447
- Term loans/financing 117,525,961 21,833,046 12,504,249 15,206,168 168,036 991,578 635,906 2,026,322 170,891,266
- Bills receivable 547,590 448 2,807,424 479,684 - 24,340 28,830 5,244,225 9,132,541
- Trust receipts 274,004 80,092 1,233,784 272,608 - - - 14,796 1,875,284
- Claim on customers under acceptance credit 3,209,185 253,011 40,303 543,025 168,045 43,746 56,639 336,422 4,650,376
- Credit card receivables 4,245,765 1,071,480 - 988,117 - - - - 6,305,362
- Revolving credit 6,490,169 19,486,761 87,273 1,520,365 - 253,223 - 396,389 28,234,180
- Share margin financing 715,200 850,166 128,614 595,838 - - - 11,649 2,301,467
- Other loans - - 782 - - - - - 782
Other assets 3,869,092 367,317 778,233 639,111 23,681 104,890 431,235 245,026 6,458,585

Financial guarantees 1,839,595 945,032 290,312 1,912,513 147,465 65,959 76,074 827,951 6,104,901
Credit related commitments and contingencies 52,698,048 4,188,862 1,200,345 3,874,894 - 14,899 231,146 1,096,474 63,304,668
Total credit exposures 256,053,648 61,622,020 29,534,078 35,669,999 2,891,100 4,104,928 3,595,262 16,830,779 411,589,480
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243

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(a) Geographical sectors (Continued)
The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements)
based on the location of the counterparty as at 31 December 2013 and 31 December 2012 are as follows (Continued):

The Group
31 December 2012
United
Malaysia Indonesia Thailand Singapore United States Kingdom Hong Kong Others Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Cash and short-term funds 15,092,128 3,384,833 89,907 1,535,563 3,362,685 1,202,070 1,038,272 1,197,572 26,903,030
Reverse repurchase agreements 4,836,131 63,870 200,060 311,143 - 45,329 131,378 6,367 5,594,278
Deposits and placements with banks and other financial institutions 1,179,332 1,922,479 73,478 889,925 - 191,103 462,489 271,525 4,990,331
Financial assets held for trading
- Money market instruments 12,484,412 48,553 7 3,417,579 108,193 - - - 16,058,744
- Quoted securities - 679,172 330,052 - - - - - 1,009,224
- Unquoted securities 4,817,505 67,798 211,324 545,629 57,835 52,684 152,058 803,996 6,708,829
Financial investments available-for-sale
- Money market instruments 5,539,772 104,099 - - - 49,398 - - 5,693,269
- Quoted securities - 3,218,291 1,199,552 - - - - - 4,417,843
- Unquoted securities 14,303,264 261,276 349,303 760,810 61,205 216,705 805,733 939,037 17,697,333
Financial investments held-to-maturity
- Money market instruments 35,333 - - 491,633 252,911 - - - 779,877
- Quoted securities - 630,334 2,178,903 - 58,189 - - 30,089 2,897,515
- Unquoted securities 3,567,562 - 279,735 1,155,606 - 25,321 25,107 254,568 5,307,899
Derivative financial instruments
- Trading derivatives 1,712,346 77,405 214,633 624,272 518,113 193,488 127,192 361,830 3,829,279
- Hedging derivatives 114,522 24,660 - 94,914 17,655 - - 2,939 254,690
Loans, advances and financing
- Overdrafts 4,287,464 513 727,112 93,394 23 965 - 108,243 5,217,714
- Term loans/financing 103,533,029 22,784,979 9,460,988 10,358,562 196,190 675,343 890,495 2,385,109 150,284,695
- Bills receivable 442,493 - 2,554,447 593,658 1,257 - - 26,231 3,618,086
- Trust receipts 323,083 77,445 1,546,795 225,523 - - 9,868 3,070 2,185,784
- Claim on customers under acceptance credit 3,647,030 984,346 989 - - - - - 4,632,365
- Credit card receivables 3,848,906 1,122,656 - 630,601 - - - - 5,602,163
- Revolving credit 4,945,458 21,225,899 63,778 1,030,706 - 354,376 218,496 516,722 28,355,435
- Share margin financing 691,687 987,181 127,380 421,754 - - - 13,574 2,241,576
Other assets 3,361,668 660,265 465,911 658,298 52,681 28,007 292,203 70,638 5,589,671
Financial guarantees 1,134,686 838,060 275,994 1,954,324 138,029 5,487 82,908 223,955 4,653,443
Credit related commitments and contingencies 45,712,889 4,531,011 1,131,084 5,608,069 757 27,338 19,784 352,977 57,383,909
Total credit exposures 235,610,700 63,695,125 21,481,432 31,401,963 4,825,723 3,067,614 4,255,983 7,568,442 371,906,982
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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244

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(a) Geographical sectors (Continued)
The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements)
based on the location of the counterparty as at 31 December 2013 and 31 December 2012 are as follows (Continued):

The Company
31 December 2013
Malaysia Indonesia Total
RM000 RM000 RM000

Cash and short-term funds 69,570 3 69,573

Derivative financial instruments
- Hedging derivatives 3,940 3,940
Loans, advances and financing
- Term loans/financing 71 71
Other assets 44,883 44,883
Amount owing by subsidiaries 788 788

119,252 3 119,255

31 December 2012
Cash and short-term funds 135,071 4 135,075
Derivative financial instruments
- Hedging derivatives 10,712 10,712
Loans, advances and financing 1,314 1,314
- Term loans/financing 95 95
Other assets 1,910 1,910
Amount owing by subsidiaries 4,238 4,238

153,340 4 153,344
 INTO A NEW ERA

245

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors
The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) for
items recognised in the statements of financial position as at 31 December 2013 and 31 December 2012 based on the
industry sectors of the counterparty are as follows:

The Group
31 December 2013
Deposits and
placements Financial Financial
with banks investments investments Derivative financial Loans,
Reverse and other Financial available- held-to- instruments advances and Other Total
Cash and short repurchase financial asset held for-sale maturity Trading Hedging financing financial credit
term funds agreements institutions for trading (i) (i) (i) derivatives derivatives (ii) assets exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture 79,086 156,915 3,466 6,717,450 81 6,956,998
Mining and quarrying 197,564 181,476 10,855 3,339,609 317 3,729,821
Manufacturing 7,406 333,967 627,558 428,048 69,192 15,515,300 477 16,981,948
Electricity, gas and water 2,923 573,020 1,970,583 377,545 14,370 1,100 1,947,664 16,647 4,903,852
Construction 459,646 1,288,875 403,022 15,428 5,554,423 939 7,722,333
Transport, storage and communications 368,098 2,393,621 892,358 105,517 8,044,510 4,240 11,808,344
Education and health 12,543 19,680 3,700,749 3,732,972
Trade and hospitality 4,328 7,290,852 8,632 7,303,812
Finance, insurance, real estate business:
Finance, insurance and business services 10,933,246 607,276 3,685,998 11,726,274 10,127,003 4,181,229 3,913,925 186,021 23,316,420 3,467,348 72,144,740
Real estate 20,182 24,194 227,559 676 11,352,260 4,053 11,628,924
Others:
Purchase of landed property
- Residential 52,542,437 52 52,542,489
- Non-residential 12,165,915 12,165,915
General commerce 28,296 481,045 491,966 55,103 6,315 14,111,022 52,213 15,225,960
Government and government agencies 18,460,469 6,920,606 54,652 6,001,486 8,329,538 3,730,993 76,073 11,869,343 540,019 55,983,179
Purchase of securities 165,533 440,296 12,044,509 1,981,844 14,632,182
Purchase of transport vehicles 17,270,643 17,270,643
Consumption credit 14,782,765 14,782,765
Others 138,019 229,191 48,369 918,585 2,710,605 753,193 617,515 6,865,834 381,723 12,663,034
29,697,267 8,260,504 3,789,019 21,175,508 28,525,379 10,821,491 4,833,332 187,121 228,431,705 6,458,585 342,179,911
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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246

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors

The Group
31 December 2012
Deposits and
placements Financial Financial
with banks investments investments Derivative financial Loans,
Reverse and other Financial available- held-to- instruments advances and Other Total
Cash and short repurchase financial assets held for-sale maturity Trading Hedging financing financial credit
term funds agreements institutions for trading (i) (i) (i) derivatives derivatives (ii) assets exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture - - - 59,352 211,590 102,858 1,390 - 6,009,633 - 6,384,823
Mining and quarrying - - - 152,059 163,090 - 11,940 - 4,298,855 1,072 4,627,016
Manufacturing - - - 376,530 440,800 10,942 18,277 - 15,544,167 30,972 16,421,688
Electricity, gas and water - - - 458,803 2,431,999 211,665 52,964 - 1,717,729 5,634 4,878,794
Construction - - - 248,110 1,121,998 154,425 21,185 - 4,636,771 3,560 6,186,049
Transport, storage and communications - - - 907,633 2,691,819 1,989,947 298,081 - 7,165,340 16,762 13,069,582
Education and health - - - - 5,685 - - - 2,962,871 3,547 2,972,103
Trade and hospitality - - - 7,390 - - - - 4,776,784 - 4,784,174
Finance, insurance, real estate business:
Finance, insurance and business services 16,822,233 403,509 4,935,521 10,512,890 8,713,333 3,195,862 3,143,739 254,690 15,410,751 3,450,799 66,885,265
Real estate - 11,654 - 10,200 585,284 - 315 - 10,734,423 12,620 11,354,496
Others:
Purchase of landed property
- Residential - - - - - - 37 - 52,187,431 388 52,187,856
- Non-residential - - - - - - - - 11,267,194 3,220 11,270,414
General commerce - - - 8,388 79,162 189,401 6,392 - 13,396,978 176,553 13,856,874
Government and government agencies 10,062,690 4,894,739 54,810 10,565,530 10,146,642 3,088,184 14,195 - 12,818,225 414,841 52,059,856
Purchase of securities - 168,024 - - - - - - 8,054,841 1,425,750 9,648,615
Purchase of transport vehicles - - - - - - - - 13,988,992 - 13,988,992
Consumption credit - - - - - - - - 9,639,230 - 9,639,230
Others 18,107 116,352 - 469,912 1,217,043 42,007 218,826 - 7,527,603 43,953 9,653,803
26,903,030 5,594,278 4,990,331 23,776,797 27,808,445 8,985,291 3,829,279 254,690 202,137,818 5,589,671 309,869,630
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247

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
(i) Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments
held-to-maturity are further analysed by types of securities as follows:

The Group
31 December 2013
Financial assets held
for trading Financial investments available-for-sale Financial investments held-to-maturity
Money Money Money
market Quoted Unquoted market Quoted Unquoted market Quoted Unquoted Total credit
instruments securities securities instruments securities securities instruments securities securities exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture 79,086 156,915 236,001
Mining and quarrying 7,249 190,315 68,499 112,977 379,040
Manufacturing 89,640 244,327 627,558 428,048 1,389,573
Electricity, gas and water 58,889 49,831 464,301 9,542 133,161 1,827,880 48,785 328,760 2,921,149
Construction 7,487 452,159 32,205 1,256,670 403,022 2,151,543
Transport, storage and
communications 115,910 252,188 673,936 1,719,685 226,021 666,337 3,645,077
Education and health 12,543 19,680 32,223
Finance, insurance, real estate
business:
Finance, insurance and business
services 6,045,807 1,004,110 4,676,357 284,465 2,765,652 7,076,886 171,827 1,592,711 2,416,690 26,034,505
Real estate 305 23,889 25,147 202,413 251,754
Others:
Purchase of landed property
Residential
General commerce 5,548 475,497 20,466 32,364 439,136 55,103 1,028,114
Government and government
agencies 4,882,970 764,309 354,208 3,704,349 2,396,153 2,229,036 2,453,011 670,967 607,015 18,062,018
Purchase of transport vehicles
Consumption credit
Others 9,338 5,558 903,687 45,564 2,665,040 64,216 688,978 4,382,381
11,086,644 1,972,850 8,116,014 4,018,822 6,192,361 18,314,196 2,624,838 2,602,700 5,593,953 60,522,378
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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248

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
(i) Financial investments at fair value through profit or loss, financial investments available-for-sale and financial investments
held-to-maturity are further analysed by types of securities as follows (Continued):

The Group
31 December 2012
Financial assets held for trading Financial investments available-for-sale Financial investments held-to-maturity
Money Money Money
market Quoted Unquoted market Quoted Unquoted market Quoted Unquoted Total credit
instruments securities securities instruments securities securities instruments securities securities exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture - 8,737 50,616 - - 211,590 - - 102,858 373,801
Mining and quarrying - - 152,059 - 70,624 92,466 - - - 315,149
Manufacturing - 5,026 371,504 - - 440,800 - - 10,942 828,272
Electricity, gas and water 70,907 9,288 378,608 - 126,509 2,305,490 - 186,297 25,368 3,102,467
Construction 19,886 1,431 226,793 - 24,854 1,097,144 - - 154,425 1,524,533
Transport, storage and - 346,622 561,011 - 271,517 2,420,302 - 278,468 1,711,479 5,589,399
communications
Education and health - - - - 5,685 - - - - 5,685
Trade and hospitality - 7,390 - - - - - - - 7,390
Finance, insurance, real estate
business:
Finance, insurance and business 6,149,496 106,618 4,256,775 430,916 1,497,307 6,785,112 14,689 445,031 2,736,141 22,422,085
services
Real estate - - 10,200 - 1,017 584,266 - - - 595,483
Others:
General commerce - - 8,388 - 20,403 58,759 - - 189,401 276,951
Government and government 9,781,258 522,606 261,666 5,242,609 2,369,958 2,534,075 765,188 1,987,719 335,277 23,800,356
agencies
Others 37,197 1,506 431,209 19,744 29,969 1,167,329 - - 42,008 1,728,962
16,058,744 1,009,224 6,708,829 5,693,269 4,417,843 17,697,333 779,877 2,897,515 5,307,899 60,570,533
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249

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
(ii) Loans, advances and financing are further analysed by product types as follows:

The Group
31 December 2013
Claim on
customers
Term under Credit Share Total
loans/ Bills Trust acceptance card Revolving margin Other credit
Overdrafts financing receivable receipts credit receivables credit financing loan exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture 229,835 4,057,417 25,609 20,819 174,229 - 2,195,585 13,956 - 6,717,450
Mining and quarrying 42,000 2,685,696 2,013 - 7,022 - 602,878 - - 3,339,609
Manufacturing 637,264 5,176,636 1,922,916 870,483 1,381,844 - 5,511,304 14,853 - 15,515,300
Electricity, gas and water 10,236 1,685,108 - 21,847 1,143 - 224,128 5,202 - 1,947,664
Construction 535,506 2,799,291 62,826 59,034 155,821 - 1,939,457 2,488 - 5,554,423
Transport, storage and
communications 163,904 6,267,590 68,057 30,253 19,755 - 1,439,102 55,849 - 8,044,510
Education and health 111,107 3,431,758 15,131 1,353 3,372 - 138,028 - - 3,700,749
Trade and hospitality 822,258 4,036,105 49,466 155,598 1,426,049 - 801,376 - - 7,290,852
Finance, insurance, real estate
business:
Finance, insurance and business
services 339,591 11,580,767 5,810,431 37,997 1,477,296 - 4,047,589 22,749 - 23,316,420
Real estate 190,995 8,195,821 95,827 48 2,862 - 2,859,153 7,554 - 11,352,260
Others:
Purchase of landed property
- Residential 23,183 52,519,254 - - - - - - - 52,542,437
- Non-residential 105,059 12,060,856 - - - - - - - 12,165,915
General commerce 28,749 7,676,109 208,546 120,552 - - 5,428,113 648,953 - 14,111,022
Government and government
agencies - 11,869,343 - - - - - - - 11,869,343
Purchase of securities 13,556 10,606,084 - - - - - 1,424,087 782 12,044,509
Purchase of transport vehicles - 16,521,290 - - - - 749,353 - - 17,270,643
Consumption credit 1,503,038 6,596,437 3,085 - - 6,305,362 363,454 11,389 - 14,782,765
Others 284,166 3,125,704 868,634 557,300 983 - 1,934,660 94,387 - 6,865,834
5,040,447 170,891,266 9,132,541 1,875,284 4,650,376 6,305,362 28,234,180 2,301,467 782 228,431,705
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250

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
(ii) Loans, advances and financing are further analysed by product types as follows (Continued):

The Group
31 December 2012
Claim on
customers
under Credit Share Total
Term loans/ Bills Trust acceptance card Revolving margin credit
Overdrafts financing receivable receipts credit receivables credit financing exposures
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Agriculture 236,604 3,348,180 19,862 3,410 130,941 - 2,242,391 28,245 6,009,633
Mining and quarrying 32,380 2,907,557 18,485 36 6,363 - 1,334,034 - 4,298,855
Manufacturing 670,026 4,587,312 1,701,711 748,523 1,868,537 - 5,925,601 42,457 15,544,167
Electricity, gas and water 10,050 1,350,572 - 5,391 3,742 - 347,280 694 1,717,729
Construction 525,729 2,018,249 44,488 52,109 152,398 - 1,830,567 13,231 4,636,771
Transport, storage and
communications 188,908 4,821,354 30,841 6,216 9,103 - 2,039,454 69,464 7,165,340
Education and health 136,691 2,572,462 - 337 45,589 - 207,792 - 2,962,871
Trade and hospitality 637,513 1,951,021 50,918 149,298 1,364,690 - 623,344 - 4,776,784
Finance, insurance, real estate
business:
Finance, insurance and business
services 321,559 10,961,428 420,818 73,879 1,027,070 - 2,590,559 15,438 15,410,751
Real estate 200,334 7,058,610 779,138 238,707 692 - 2,446,849 10,093 10,734,423
Others:
Purchase of landed property
- Residential 22,562 52,164,869 - - - - - - 52,187,431
- Non-residential 114,836 11,152,358 - - - - - - 11,267,194
General commerce 41,317 6,994,315 - 12,290 - - 5,692,101 656,955 13,396,978
Government and government agencies - 12,818,225 - - - - - - 12,818,225
Purchase of securities 16,149 6,724,330 - - - - - 1,314,362 8,054,841
Purchase of transport vehicles - 13,120,501 - - - - 868,491 - 13,988,992
Consumption credit 1,783,436 2,057,222 1,788 - - 5,602,163 194,621 - 9,639,230
Others 279,620 3,676,130 550,037 895,588 23,240 - 2,012,351 90,637 7,527,603
5,217,714 150,284,695 3,618,086 2,185,784 4,632,365 5,602,163 28,355,435 2,241,576 202,137,818
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
The analysis of credit risk concentrations (without taking into account any collateral held or other credit enhancements) for
the following financial assets based on the industry sectors of the counterparty are as follows:

The Company
31 December 2013
Cash and Derivative Loans, Other Total
short term financial advances and financial credit
funds instruments * financing ** assets *** exposures
RM000 RM000 RM000 RM000 RM000

Finance, insurance, real estate

business:
Finance, insurance and business 69,573 3,940 - 11,053 84,566
services
Others:
Others - - 71 34,618 34,689

69,573 3,940 71 45,671 119,255

The Company
31 December 2012
Cash and Derivative Loans, Other Total
short term financial advances and financial credit
funds instruments * financing ** assets *** exposures
RM000 RM000 RM000 RM000 RM000

Finance, insurance, real estate

business:
Finance, insurance and business
services 135,075 10,712 - 6,143 151,930
Others:
Others - - 95 5 100

135,075 10,712 95 6,148 152,030

* Relates to trading and hedging derivatives

** Relates to term loans
*** Other financial assets include amount owing by subsidiaries and other financial assets
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

252

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.3 Concentration of risks of financial assets with credit risk exposure (Continued)
(b) Industry sectors (Continued)
The analysis of credit risk concentrations for financial guarantees and credit related commitments and contingencies based
on the industry sectors of the counterparty are as follows:
The Group
Credit related Credit related
commitments commitments
Financial and Financial and
guarantees contingencies guarantees contingencies
31 December 31 December 31 December 31 December
2013 2013 2012 2012
RM000 RM000 RM000 RM000

Agriculture 10,695 842,473 9,789 701,722

Mining and quarrying 70,028 593,894 64,303 1,218,860
Manufacturing 289,695 5,161,199 316,393 5,186,178
Electricity, gas and water 79,536 682,612 57,464 563,390
Construction 343,366 5,678,849 390,142 4,680,657
Transport, storage and communications 87,375 972,112 95,588 1,257,410
Education and health 39,012 2,721,177 32,685 2,355,874
Trade and hospitality 219,407 5,466,393 96,469 3,942,664
Finance, insurance, real estate business:
Finance, insurance and business services 4,463,196 14,055,057 3,422,127 10,654,180
Real estate 36,256 205,250 10,394 838,069
Others:
Purchase of landed property
- Residential 49 6,936 - 5,423
General commerce 27,277 669,406 121,647 850,389
Purchase of transport vehicles - - - -
Consumption credit 428,002 2,105,208 4,211 3,528,324
Others 11,007 24,144,102 32,231 21,600,769

6,104,901 63,304,668 4,653,443 57,383,909

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)
55.1.4 Credit quality of financial assets
Financial assets are required under MFRS 7, to be categorised into neither past due nor impaired, past due but not impaired
or impaired.
(a) Loans, advances and financing
Loans, advances and financing of the Group are summarised as follows:

The Group
31 December 2013 Neither past
due nor Past due but
impaired not impaired Impaired Total gross
(i) (ii) (iii) amount
RM000 RM000 RM000 RM000

Overdrafts 4,717,536 451,150 490,366 5,659,052

Term loans/financing 155,926,670 13,968,937 5,263,850 175,159,457
Bills receivable 9,074,307 14,395 147,584 9,236,286
Trust receipts 1,841,491 33,349 198,040 2,072,880
Claim on customers under acceptance credit 4,599,495 3,194 339,405 4,942,094
Credit card receivables 5,958,400 388,124 94,409 6,440,933
Revolving credit 27,865,748 165,332 799,889 28,830,969
Share margin financing 2,190,942 104,874 58,843 2,354,659
Other loans 782 - 883 1,665

Total 212,175,371 15,129,355 7,393,269 234,697,995

Less: Impairment allowances * (6,266,290)

Total net amount 228,431,705

31 December 2012
Overdrafts 4,724,121 643,963 612,691 5,980,775
Term loans/financing 136,752,560 12,195,273 5,697,592 154,645,425
Bills receivable 3,616,915 5,384 94,611 3,716,910
Trust receipts 2,167,232 4,874 211,559 2,383,665
Claim on customers under acceptance credit 4,557,673 4,937 447,465 5,010,075
Credit card receivables 5,265,601 384,961 40,133 5,690,695
Revolving credit 28,088,491 118,215 759,649 28,966,355
Share margin financing 2,021,034 224,967 63,685 2,309,686
Other loans - - 432 432
Total 187,193,627 13,582,574 7,927,817 208,704,018

Less: Impairment allowances * (6,566,200)

Total net amount 202,137,818

* Impairment allowances include allowances against financial assets that have been impaired and those subject to portfolio
impairment
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

254

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
Financial assets are required under MFRS 7, to be categorised into neither past due nor impaired, past due but not impaired
or impaired.
(a) Loans, advances and financing (Continued)
Loans, advances and financing of the Company as at 31 December 2013 of RM95,000 (31 December 2012: RM930,000)
are categorised as neither past due nor impaired.

The credit quality of loans, advances and financing that are neither past due nor impaired can be assessed by reference
to the internal rating system adopted by the Group and the Company.

The Group
31 December 2013 Good Satisfactory No rating Total
RM000 RM000 RM000 RM000

Overdrafts 1,868,435 162,460 2,686,641 4,717,536

Term loans/financing 61,864,704 2,738,453 91,323,513 155,926,670
Bills receivable 8,517,814 48,499 507,994 9,074,307
Trust receipts 1,612,155 74,579 154,757 1,841,491
Claim on customers under acceptance credit 3,479,478 45,213 1,074,804 4,599,495
Credit card receivables 1,007,136 - 4,951,264 5,958,400
Revolving credit 26,332,283 13,894 1,519,571 27,865,748
Share margin financing 711,101 140,262 1,339,579 2,190,942
Other loans - 782 - 782

Total 105,393,106 3,224,142 103,558,123 213,173,791

31 December 2012

Overdrafts 1,604,625 407,943 2,711,553 4,724,121

Term loans/financing 53,989,783 5,831,902 76,930,875 136,752,560
Bills receivable 2,312,241 851,650 453,024 3,616,915
Trust receipts 1,505,668 521,928 139,636 2,167,232
Claim on customers under acceptance credit 3,260,457 42,808 1,254,408 4,557,673
Credit card receivables 1,043,761 - 4,221,840 5,265,601
Revolving credit 26,297,554 491,280 1,299,657 28,088,491
Share margin financing 719,149 - 1,301,885 2,021,034

Total 90,733,238 8,147,511 88,312,878 187,193,627

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255

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(a) Loans, advances and financing (Continued)
(i) Loans, advances and financing that are neither past due nor impaired Continued)
The credit quality of loans, advances and financing that are neither past due nor impaired can be assessed by
reference to the internal rating system adopted by the Group and the Company.

The Company
31 December 2013 31 December 2012
No rating Total No rating Total
RM000 RM000 RM000 RM000

Term loans/financing 71 71 95 95

Total 71 71 95 95

Credit quality description can be summarised as follows:

Good There is a high likelihood of the asset being recovered in full and therefore, of no cause for concern to the
Group and the Company.

Satisfactory There is concern over the counterpartys ability to make payments when due. However, these have not
yet converted to actual delinquency and the counterparty is continuing to make payments when due and is expected
to settle all outstanding amounts of principal and interest.

No rating Refers to counterparties that do not satisfy the criteria to be rated internally. These include sovereigns,
individuals, schools, non-government organisations, cooperatives and others.

(ii) Loans, advances and financing that are past due but not impaired
The Group considers an asset as past due when any payment due under strict contractual terms is received late or
missed. However, loans, advances and financing which are less than 90 days past due, are not yet considered to be
impaired unless there are impairment triggers available to indicate otherwise.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

256

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(a) Loans, advances and financing (Continued)
(ii) Loans, advances and financing that are past due but not impaired (Continued)
An age analysis of loans, advances and financing that are past due but not impaired is set out below:

The Group
31 December 2013 Up to 1 >1 to 3
month months Total
RM000 RM000 RM000

Overdrafts 388,454 62,696 451,150

Term loans/financing 9,840,257 4,128,680 13,968,937
Bills receivable 14,291 104 14,395
Trust receipts 29,267 4,082 33,349
Claim on customers under acceptance credit 3,194 - 3,194
Credit card receivables 338,395 49,729 388,124
Revolving credit 35,996 129,336 165,332
Share margin financing 104,874 - 104,874

Total 10,754,728 4,374,627 15,129,355

31 December 2012

Overdrafts 559,438 84,525 643,963

Term loans/financing 8,477,125 3,718,148 12,195,273
Bills receivable - 5,384 5,384
Trust receipts 62 4,812 4,874
Claim on customers under acceptance credit 2,619 2,318 4,937
Credit card receivables 331,064 53,897 384,961
Revolving credit 50,831 67,384 118,215
Share margin financing 223,348 1,619 224,967

Total 9,644,487 3,938,087 13,582,574

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257

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(a) Loans, advances and financing (Continued)
(iii) Impaired loans, advances and financing

The Group
31 December 31 December
2013 2012
RM000 RM000

Total gross impaired loans 7,393,269 7,927,817

Less: Impairment allowances (3,856,820) (3,939,272)

Total net impaired loans 3,536,449 3,988,545

Refer to Note 8(vii) and Note 8(viii) for analysis of impaired loans, advances and financing by economic purpose and
geographical distribution.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

258

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(b) Financial investments
Financial assets held for trading, financial investments available-for-sale and financial investments held-to-maturity are
summarised as follows:

The Group
31 December 2013 Neither past
due nor
impaired Total gross
(i) Impaired amount
RM000 RM000 RM000

Financial assets held for trading

- Money market instruments 11,086,647 - 11,086,647
- Quoted securities 1,972,850 - 1,972,850
- Unquoted securities 8,116,014 8,000 8,124,014
Financial investments available-for-sale
- Money market instruments 4,018,822 - 4,018,822
- Quoted securities 6,198,011 - 6,198,011
- Unquoted securities 18,314,194 77,543 18,391,737
Financial investments held-to-maturity
- Money market instruments 2,624,838 - 2,624,838
- Quoted securities 2,604,017 4,036 2,608,053
- Unquoted securities 5,593,071 28,400 5,621,471

Total 60,528,464 117,979 60,646,443

Less: Impairment allowance * (124,065)

Total net amount 60,522,378

* Impairment allowance represents allowance made against financial assets that have been impaired
 INTO A NEW ERA

259

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(b) Financial investments (Continued)
Financial assets held for trading, financial investments available-for-sale and financial investments held-to-maturity are
summarised as follows (Continued):

The Group
31 December 2012 Neither past
due nor
impaired Total gross
(i) Impaired amount
RM000 RM000 RM000

Financial assets held for trading

- Money market instruments 16,058,744 16,058,744
- Quoted securities 1,009,224 1,009,224
- Unquoted securities 6,708,829 8,000 6,716,829
Financial investments available-for-sale
- Money market instruments 5,693,269 5,693,269
- Quoted securities 4,424,515 4,424,515
- Unquoted securities 17,347,057 482,303 17,829,360
Financial investments held-to-maturity
- Money market instruments 779,877 779,877
- Quoted securities 2,899,733 4,761 2,904,494
- Unquoted securities 5,281,616 60,633 5,342,249

Total 60,202,864 555,697 60,758,561

Less: Impairment allowance * (188,028)

Total net amount 60,570,533

* Impairment allowance represents allowance made against financial assets that have been impaired

There were no financial investments held for trading, financial investments available-for-sale and financial investments held-
to-maturity that are past due but not impaired as at 31 December 2013 and 31 December for the Group.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

260

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(b) Financial investments (Continued)
Financial assets held for trading, financial investments available-for-sale and financial investments held-to-maturity are
summarised as follows (Continued):
(i) Financial investments that are neither past due nor impaired
The table below presents an analysis of financial assets held for trading, financial investments available-for-sale and
financial investments held-to-maturity that are neither past due nor impaired, based on rating by major credit rating
agencies:

The Group
31 December 2013 Non
Investment investment
grade grade
Sovereign (AAA to (BB+
(no rating) BBB-) and below) No rating Total
RM000 RM000 RM000 RM000 RM000

Financial assets held for trading

- Money market instruments 8,440,147 2,646,496 4 11,086,647
- Quoted securities 1,647,189 325,661 1,972,850
- Unquoted securities 389,814 4,795,983 396,057 2,534,160 8,116,014
Financial investments available-
for-sale
- Money market instruments 3,693,893 530,929 4,018,822
- Quoted securities 4,611,523 1,586,488 6,198,011
- Unquoted securities 3,702,248 12,577,889 428,760 1,605,297 18,589,004
Financial investments held-to-
maturity
- Money market instruments 2,390,323 234,515 2,624,838
- Quoted securities 2,245,303 358,714 2,604,017
- Unquoted securities 645,719 2,449,495 2,497,857 5,593,071

Total 27,766,159 25,300,170 824,817 6,637,318 60,528,464

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261

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(b) Financial investments
Financial assets held for trading, financial investments available-for-sale and financial investments held-to-maturity are
summarised as follows (Continued):
(i) Financial investments that are neither past due nor impaired (Continued)
The table below presents an analysis of financial assets held for trading, financial investments available-for-sale and
financial investments held-to-maturity that are neither past due nor impaired, based on rating by major credit rating
agencies (Continued):

The Group
31 December 2012 Non
Investment investment
grade grade
(AAA to (BB+
Sovereign BBB-) and below) No rating Total
RM000 RM000 RM000 RM000 RM000

Financial assets held for trading

- Money market instruments 12,105,268 3,904,895 48,553 28 16,058,744
- Quoted securities 621,390 387,834 - - 1,009,224
- Unquoted securities 852,726 3,598,839 114,553 2,142,711 6,708,829
Financial investments available-
for-sale
- Money market instruments 4,681,492 897,679 104,099 9,999 5,693,269
- Quoted securities 3,211,801 1,212,714 - - 4,424,515
- Unquoted securities 3,413,279 12,459,228 184,932 1,289,618 17,347,057
Financial investments held-to-
maturity
- Money market instruments 295,044 484,833 - - 779,877
- Quoted securities 2,509,738 389,995 - - 2,899,733
- Unquoted securities 428,425 2,863,941 154,425 1,834,825 5,281,616

Total 28,119,163 26,199,958 606,562 5,277,181 60,202,864

The Securities with no ratings mainly consist of private debt securities

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

262

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(c) Other financial assets
Other financial assets of the Group and the Company are summarised as follows:

The Group
31 December 2013 Neither past
due nor Past due but
impaired not impaired Total gross
(i) (ii) Impaired amount
RM000 RM000 RM000 RM000

Cash and short term funds 29,697,267 - - 29,697,267

Reverse repurchase agreements 8,260,504 - - 8,260,504
Deposits and placements with banks and
other financial institutions 3,789,019 - - 3,789,019
Other assets 6,248,875 185,973 118,131 6,552,978
Derivative financial instruments 5,020,453 - - 5,020,453

Total 53,016,118 185,973 118,131 53,320,222

Less: Impairment allowance * (115,853)

Total net amount 53,204,369

31 December 2012

Cash and short term funds 26,905,274 - - 26,905,274

Reverse repurchase agreements 5,594,278 - - 5,594,278
Deposits and placements with banks and
other financial institutions 4,990,331 - - 4,990,331
Other assets 5,401,657 168,683 113,811 5,684,151
Derivative financial instruments 4,083,969 - - 4,083,969

Total 46,975,509 168,683 113,811 47,258,003

Less: Impairment allowance * (96,724)

Total net amount 47,161,279

* Impairment allowance represents allowance made against financial assets that have been impaired
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263

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(c) Other financial assets (Continued)
Other financial assets of the Group and the Company are summarised as follows:

The Company
31 December 2013 Neither past
due nor
impaired Total gross
(i) Impaired amount
RM000 RM000 RM000

Cash and short term funds 69,573 - 69,573

Other assets 44,729 - 44,729
Derivative financial instruments 3,940 - 3,940
Amount owing by subsidiaries 788 2,225 3,013

Total 119,030 2,225 121,255

Less: Impairment allowance * (2,225)

Total net amount 119,030

31 December 2012

Cash and short term funds 135,075 - 135,075

Other assets 1,910 - 1,910
Derivative financial instruments 10,712 - 10,712
Amount owing by subsidiaries 4,238 775 5,013

Total 151,935 775 152,710

Less: Impairment allowance * (775)

Total net amount 151,935

* Impairment allowance represents allowance made against financial assets that have been impaired

There were no other credit risk financial assets that are past due but not impaired as at 31 December 2013 and
31 December 2012 for the Company.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

264

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(c) Other financial assets (Continued)
(i) Other financial assets that are neither past due nor impaired
The tables below present an analysis of other financial assets that are neither past due nor impaired, based on rating
by major credit rating agencies:

The Group
31 December 2013 Non
Investment investment
grade grade
(AAA to (BB+ and
Sovereign BBB-) below) No rating Total
RM000 RM000 RM000 RM000 RM000

Cash and short term funds 18,595,695 10,541,054 5,864 554,654 29,697,267
Reverse repurchase agreements 6,226,777 743,096 882 1,289,749 8,260,504
Deposits and placements with
banks and other financial
institutions 706,261 2,964,934 3,277 114,547 3,789,019
Other assets 451,061 2,030,678 - 3,767,136 6,248,875
Derivative financial instruments 162,633 3,618,156 372,311 867,353 5,020,453

Total 26,142,427 19,897,918 382,334 6,593,439 53,016,118

31 December 2012

Cash and short term funds 17,038,705 9,606,604 39,328 220,637 26,905,274
Reverse repurchase agreements 4,933,870 660,408 - - 5,594,278
Deposits and placements with
banks and other financial
institutions 2,165,961 2,798,840 - 25,530 4,990,331
Other assets 166,664 538,375 - 4,696,618 5,401,657
Derivative financial instruments 75,242 3,364,431 379,269 265,027 4,083,969

Total 24,380,442 16,968,658 418,597 5,207,812 46,975,509

The Securities with no ratings mainly consist of private debt securities

 INTO A NEW ERA

265

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(c) Other financial assets (Continued)
(i) Other financial assets that are neither past due nor impaired (Continued)

The Company
31 December 2013 Investment
grade
(AAA to
BBB-) No rating Total
RM000 RM000 RM000

Cash and short term funds 69,573 - 69,573

Other assets 10,266 34,618 44,884
Derivative financial instruments 3,940 - 3,940
Amount owing by subsidiaries - 788 788

Total 83,779 35,406 119,185

31 December 2012

Cash and short term funds 135,075 - 135,075

Other assets 1,905 5 1,910
Derivative financial instruments 10,712 - 10,712
Amount owing by subsidiaries - 4,238 4,238

Total 147,692 4,243 151,935

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266

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.1 Credit risk (Continued)

55.1.4 Credit quality of financial assets (Continued)
(c) Other financial assets (Continued)
(ii) Other financial assets that are past due but not impaired
An age analysis of the other financial assets of the Group that are past due but not impaired as at 31 December
2013 and 31 December 2012 are set out as below.

The Group
31 December 2013 Past due but not impaired
Up to 1 >1 to 3
month months Total
RM000 RM000 RM000

Other assets 88,415 97,558 185,973

31 December 2012

Other assets 127,774 40,909 168,683

55.1.5 Repossessed collateral

The Group obtained assets by taking possession of collateral held as security as at 31 December 2013 and 31 December 2012
are as follows:

The Group
Carrying
31 December 2013 amount
Nature of assets RM000

Industrial and residential properties and development land 187,787

31 December 2012
Nature of assets

Industrial and residential properties and development land 178,713

Repossessed collaterals are sold as soon as practicable. The Group does not utilise the repossessed collaterals for its
business use.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk

Market risk is defined as any fluctuation in the market value of a trading or investment exposure arising from changes to market risk factors
such as interest rates/benchmark rates, currency exchange rates, credit spreads, equity prices, commodities prices and their associated
volatility.

Market risk is inherent in the business activities of an institution that trades and invests in securities, derivatives and other structured
financial products. Market risk may arise from the trading book and investment activities in the banking book. For the trading book, it can
arise from customer-related businesses or from the Groups proprietary positions. As for investment activities in the banking book, the
Group holds the investment portfolio to meet liquidity and statutory reserves requirement and for investment purposes.

Market Risk Management (MRM)

Market risk is evaluated by considering the risk/reward relationship and market exposures across a variety of dimensions such as volatility,
concentration/diversification and maturity. The GRC with the support of Group Market Risk Committee ensures that the risk exposures
undertaken by the Group is within the risk appetite approved by the Board. GRC and Group Market Risk Committee, supported by the
Market Risk Centre of Excellence in GRD function in GRM is responsible to measure and control market risk of the Group through robust
measurement and the setting of limits while facilitating business growth within a controlled and transparent risk management framework.

The Group employs the VaR framework to measure market risk where VaR represents the worst expected loss in portfolio value under
normal market conditions over a specific time interval at a given confidence level. The Group has adopted a historical simulation approach
to compute VaR. This approach assesses potential loss in portfolio value based on the last 500 daily historical movements of relevant
market parameters and 99% confidence level at 1-day holding period.

Broadly, the Group is exposed to four major types of market risk namely equity risk, interest/benchmark rate risk, foreign exchange risk
and commodity risk. Each business unit is allocated VaR limits for each type of market risk undertaken for effective risk monitoring and
control. These limits are approved by the GRC and utilisation of limits is monitored on a daily basis. Daily risk reports are sent to the
relevant traders and Group Treasurys Market Risk Analytics Team. The head of each business unit is accountable for all market risk under
his/her purview. Any excess in limit will be escalated to management in accordance to the Groups exception management procedures.

In addition to daily monitoring of VaR usage, on a monthly basis, all market exposures and VaR of the Group will be summarised and
submitted to Group Market Risk Committee, GRC and BRC for its perusal.

Although historical simulation provides a reasonable estimate of market risk, this approach relies heavily on historical daily price movements
of the market parameter of interest. Hence, the resulting market VaR is exposed to the danger that price and rate changes over the
stipulated time horizon might not be typical. Example, if the past 500 daily price movements were observed over a period of exceptionally
low volatility, then the VaR computed would understate the risk of the portfolio and vice versa.

In order to ensure historical simulation gives an adequate estimation of market VaR, backtesting of the historical simulation approach is
performed annually. Backtesting involves comparing the derived 1-day VaR against the hypothetical change in portfolio value assuming
end-of-day positions in the portfolio were to remain unchanged. The number of exceptions would be the number of times the difference
in hypothetical value exceeds the computed 1-day VaR.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk

Market Risk Management (MRM) (Continued)
The Group also complements VaR with stress testing exercises to capture event risk that are not observed in the historical time period
selected to compute VaR. Stress testing exercise at the group-wide level involves assessing potential losses to the Groups market risk
exposures under pre-specified scenarios. This type of scenario analysis is performed twice yearly. Scenarios are designed in collaboration
with the Regional Research Team to reflect extreme and yet plausible stress scenarios. Stress test results are presented to the Group
Market Risk Committee, GRC to provide senior management with an overview of the impact to the Group if such stress scenarios were
to materialise.

In addition to the above, Market Risk Centre of Excellence undertakes the monitoring and oversight process at Group Treasury and Equity
Derivatives Group trading floors, which include reviewing treasury trading strategy, analysing positions and activities vis--vis changes in
the financial markets, monitoring limits usage, assessing limits adequacy and verifying transaction prices.

The Market Risk Centre of Excellence also provides accurate and timely valuation of the Groups position on a daily basis. Exposures are
valued using market price (Mark-to-Market) or a pricing model (Mark-to-Model) (collectively known as MTM) where appropriate. The MTM
process is carried out on all positions classified as Held for Trading as well as Available for Sale on a daily basis for the purpose of meeting
independent price verification requirements, calculation of profits/losses as well as to confirm that margins required are met.

Treasury products approval processes will be led by Market Risk Centre of Excellence to ensure operational readiness before launching.
All new products are assessed by components and in totality to ensure financial risks are accurately identified, monitored and effectively
managed.

All valuation methods and models used are documented and validated by the quantitative analysts to assess its applicability to market
conditions. The process includes verification of rate sources, parameters, assumptions in modelling approach and its implementation.
Existing valuation models are reviewed periodically to ensure that they remain relevant to changing market conditions. Back-testing of newly
approved or revised models may be conducted to assess the appropriateness of the model and input data used.

Capital Treatment for Market Risk

At present, the Group adopts the Standardised Approach to compute market risk capital requirement under BNMs guidelines on Capital
Adequacy Framework (CAF) (Basel II Risk Weighted Assets) and Capital Adequacy Framework for Islamic Banks (CAFIB) (Risk-Weighted
Assets).
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.1 VaR
The usage of market VaR by risk type based on 1-day holding period of the Groups trading exposures are set out as below:

The Group
31 December 31 December
2013 2012
RM000 RM000

Foreign exchange risk 3,601 4,680

Interest rate risk 16,322 18,440
Equity risk 9,553 6,754
Commodity risk 6 -

Total 29,482 29,874

Total shareholder's fund 30,271,098 28,292,994

Percentage of shareholder's fund 0.10% 0.11%
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk
Interest rate risk relates to the potential adverse impact on net interest income arising from changes in market rates. One of the
primary sources of interest rate risk is the repricing mismatches between interest earning assets and interest bearing liabilities.
Interest rate risk is measured and reported at various levels through various techniques including Earnings-at-Risk (EaR).

(a) The table below summarise the Groups and the Companys financial assets and financial liabilities at their full carrying
amounts, analysed by the earlier of contractual repricing or maturity dates.

The Group
31 December 2013 Non-trading book
Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest Trading
Note month months months months years years sensitive book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 26,779,718 1,643,404 379 1,498 - - 5,253,883 - 33,678,882
Reverse repurchase
agreements 5,135,399 3,067,566 26,244 11,252 - - 20,043 - 8,260,504
Deposits and placements
with banks and other
financial institutions 1,797,277 1,711,705 48,449 57,532 15,000 - 159,056 - 3,789,019
Financial assets held for
trading - - - - - - - 23,403,280 23,403,280
Financial investments
available-for-sale (i) 72,422 498,061 644,224 1,304,057 10,033,826 15,774,527 2,006,941 - 30,334,058
Financial investments
held-to-maturity (i) 66,026 132,292 140,393 537,009 5,930,836 3,906,672 108,265 - 10,821,493
Derivative financial
instruments
- Trading derivatives - - - - - - - 4,833,332 4,833,332
- Hedging derivatives 1,102 14 26 - 116,412 69,567 - - 187,121
Loans, advances and
financing (i) 140,304,106 19,756,172 8,350,788 6,686,606 29,145,193 24,186,376 2,464 - 228,431,705
Other assets 476,423 - 82,115 - 110,153 - 5,768,433 - 6,437,124
Total financial assets 174,632,473 26,809,214 9,292,618 8,597,954 45,351,420 43,937,142 13,319,085 28,236,612 350,176,518
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)
(a) The table below summarise the Groups and the Companys financial assets and financial liabilities at their full carrying
amounts, analysed by the earlier of contractual repricing or maturity dates. (Continue)

The Group Non-trading book

31 December 2013 Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest Trading
month months months months years years sensitive book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial liabilities
Deposits from customers 155,249,914 31,636,533 19,083,754 16,919,427 3,625,749 2,254,539 34,234,386 - 263,004,302
Deposits and placements of banks and other
financial institutions 9,058,545 6,765,586 2,374,698 1,409,037 391,191 627,319 101,469 - 20,727,845
Repurchase agreements 2,888,316 2,201,210 47,659 - 775,418 - 10,185 - 5,922,788
Derivative financial instruments
- Trading derivatives - - - - - - - 5,741,386 5,741,386
- Hedging derivatives 1 15 15,339 4,536 131,642 112,043 4,646 - 268,222
Bills and acceptances payable 1,657,117 1,553,198 532,560 10,349 74,843 82,412 802,740 - 4,713,219
Financial liabilities designated at fair value - - - - 1,355,543 1,049,134 - (272,507) 2,132,170
Other liabilities 162,142 195 - - - - 7,578,158 - 7,740,495
Other borrowings 830,214 1,454,617 598,979 1,358,355 2,489,818 1,017,806 22,938 - 7,772,727
Subordinated obligations - - - - 4,115,458 7,794,896 156,346 - 12,066,700
Bonds and debentures 1,292,420 474,993 350,197 48,347 5,278,919 - 45,389 - 7,490,265
Non-cumulative guaranteed and redeemable
preference shares - 130,020 - - 712,140 - 5,287 - 847,447
Total financial liabilities 171,138,669 44,216,367 23,003,186 19,750,051 18,950,721 12,938,149 42,961,544 5,468,879 338,427,566
Net interest sensitivity gap 3,493,804 (17,407,153) (13,710,568) (11,152,097) 26,400,699 30,998,993 22,767,733

Financial guarantees and commitments

and contingencies
Financial guarantees - - - - - - 6,104,901 - 6,104,901
Credit related commitments and contingencies - - - - - - 63,304,668 - 63,304,668
Treasury related commitments and
contingencies (hedging) 504 193,105 259,483 85,947 14,435,613 6,775,525 - - 21,750,177
Net interest sensitivity gap 504 193,105 259,483 85,947 14,435,613 6,775,525 69,409,569 - 91,159,746
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)

The Group
31 December 2012 Note Non-trading book
Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest
month months months months years years sensitive Trading book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 26,457,442 - - - - - 4,302,457 - 30,759,899
Reverse repurchase agreements 2,530,176 1,729,721 564,668 752,915 - - 16,798 - 5,594,278
Deposits and placements with banks and
other financial institutions 2,000,718 1,832,362 335,015 666,398 - 15,000 140,838 - 4,990,331
Financial assets held for trading - - - - - - - 25,383,276 25,383,276
Financial investments available-for-sale (i) 781,281 296,979 476,101 1,077,703 8,715,304 15,971,914 1,888,240 - 29,207,522
Financial investments held-to-maturity (i) 1,826,850 649,612 660,249 687,508 3,101,757 1,988,848 70,470 - 8,985,294
Derivative financial instruments
- Trading derivatives - - - - - - - 3,829,279 3,829,279
- Hedging derivatives - 6,009 1,681 1,357 232,867 11,259 1,517 - 254,690
Loans, advances and financing (i) 117,111,750 16,790,615 6,650,929 5,183,680 30,477,725 25,923,119 - - 202,137,818
Other assets 265,891 - 80,493 55,000 112,053 - 5,076,234 - 5,589,671
Total financial assets 150,974,108 21,305,298 8,769,136 8,424,561 42,639,706 43,910,140 11,496,554 29,212,555 316,732,058
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)

The Group Non-trading book

31 December 2012 Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest Trading
month months months months years years sensitive book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial liabilities
Deposits from customers 155,694,704 28,339,784 14,355,700 10,944,073 5,979,627 1,822,459 30,158,692 - 247,295,039
Deposits and placements of banks and other
financial institutions 10,022,945 2,993,838 1,221,639 281,773 437,957 511,461 52,978 - 15,522,591
Repurchase agreements 1,065,987 999,326 239,406 752,915 - - 10,405 - 3,068,039
Derivative financial instruments
- Trading derivatives - - - - - - - 3,652,476 3,652,476
- Hedging derivatives - 1,439 421 481 110,851 283,524 - - 396,716
Bills and acceptances payable 2,025,677 873,365 440,332 24,339 61,219 49,968 782,357 - 4,257,257
Other liabilities 1,220 148 - - - - 6,693,453 5,738 6,700,559
Other borrowings 795,425 680,526 378,044 389,121 4,337,084 1,024,765 35,395 - 7,640,360
Subordinated obligations - 1,491,366 - - 2,643,953 8,356,876 167,656 - 12,659,851
Bonds and debentures 294,500 219,850 326,268 - 1,879,369 1,115,141 15,532 - 3,850,660
Non-cumulative guaranteed and redeemable
preference shares - 128,196 - - 697,086 - 6,638 - 831,920
Total financial liabilities 169,900,458 35,727,838 16,961,810 12,392,702 16,147,146 13,164,194 37,923,106 3,658,214 305,875,468
Net interest sensitivity gap (18,926,350) (14,422,540) (8,192,674) (3,968,141) 26,492,560 30,745,946 25,554,341

Financial guarantees and commitments

and contingencies
Financial guarantees - - - - - - 4,653,443 - 4,653,443
Credit related commitments and contingencies - - - - - - 57,383,909 - 57,383,909
Treasury related commitments and contingencies
(hedging) - 92,146 182,534 814,031 17,914,859 685,466 - - 19,689,036
Net interest sensitivity gap - 92,146 182,534 814,031 17,914,859 685,466 62,037,352 - 81,726,388
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)
(i) The interest rate risk for financial investments available-for-sale, financial investments held-to-maturity and loans, advances
and financing of the Group are further analysed by classes of financial assets as follows:

The Group Non-trading book

31 December 2013 Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest
month months months months years years sensitive Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial investments available-for-sale
- Money market instruments - 90,135 137,470 184,102 724,261 2,853,386 29,468 4,018,822
- Quoted securities 57,564 145,047 187,337 298,234 3,774,810 1,701,372 484,053 6,648,417
- Unquoted securities 14,858 262,879 319,417 821,721 5,534,755 11,219,769 1,493,420 19,666,819
Financial investments held-to-maturity
- Money market instruments - - 21,816 9,845 1,278,670 1,288,899 25,608 2,624,838
- Quoted securities 66,025 132,292 118,563 327,163 1,605,895 323,473 29,289 2,602,700
- Unquoted securities 1 - 14 200,001 3,046,271 2,294,300 53,368 5,593,955
Loans, advances and financing
- Overdrafts 5,040,449 - - - - - - 5,040,449
- Term loans/financing 112,864,270 10,029,200 1,558,112 1,264,222 23,372,481 21,801,374 1,601 170,891,260
- Bills receivable 2,856,950 2,308,571 2,401,200 1,564,923 896 - - 9,132,540
- Trust receipts 556,841 868,942 441,783 4,991 2,728 - - 1,875,285
- Claim on customers under acceptance credit 1,203,078 2,167,371 905,042 374,886 - - - 4,650,377
- Credit card receivables 6,305,364 - - - - - - 6,305,364
- Revolving credit 9,990,670 4,381,748 3,044,123 3,471,764 5,070,422 2,275,453 - 28,234,180
- Share margin financing 1,485,702 340 528 5,820 698,666 109,549 863 2,301,468
- Other loans 782 - - - - - - 782
Total 140,442,554 20,386,525 9,135,405 8,527,672 45,109,855 43,867,575 2,117,670 269,587,256
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)

The Group Non-trading book

31 December 2012 Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest
month months months months years years sensitive Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial investments available-for-sale
- Money market instruments 309,999 - 246,784 525,840 1,232,746 3,335,168 42,732 5,693,269
- Quoted securities 19,251 56,805 120,418 265,921 1,844,759 2,073,023 471,221 4,851,398
- Unquoted securities 452,031 240,174 108,899 285,942 5,637,799 10,563,723 1,374,287 18,662,855
Financial investments held-to-maturity
- Money market instruments 744,545 - - 9,719 4,953 20,380 281 779,878
- Quoted securities - 512,269 132,383 401,870 1,484,753 331,922 34,318 2,897,515
- Unquoted securities 1,082,305 137,343 527,866 275,919 1,612,051 1,636,546 35,871 5,307,901
Loans, advances and financing
- Overdrafts 5,217,716 - - - - - - 5,217,716
- Term loans/financing 92,119,853 7,565,484 1,686,592 1,662,592 23,657,188 23,592,135 - 150,283,844
- Bills receivable 2,276,226 931,102 399,018 11,742 - - - 3,618,088
- Trust receipts 765,200 919,957 488,684 10,215 1,728 - - 2,185,784
- Claim on customers under acceptance credit 1,603,579 1,869,555 1,133,103 26,127 - - - 4,632,364
- Credit card receivables 5,602,165 - - - - - - 5,602,165
- Revolving credit 8,209,834 5,476,698 2,942,387 3,451,050 6,029,497 2,245,967 - 28,355,433
- Share margin financing 1,317,177 27,819 1,145 21,954 788,464 85,017 - 2,241,576
- Other loans - - - - 848 - - 848
Total 119,719,881 17,737,206 7,787,279 6,948,891 42,294,786 43,883,881 1,958,710 240,330,634
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)

The Company
31 December 2013 Non-trading book
Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest Trading
month months months months years years sensitive book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 69,536 - - - - - 37 - 69,573
Derivative financial instruments
- Trading derivatives - - - - - - - 3,940 3,940
Loans, advances and financing
- Term loans/financing - - 1 - 25 45 - - 71
Other assets - - - - - - 44,729 - 44,729
Amount due from subsidiaries - - - - - - 788 - 788
Total financial assets 69,536 - 1 - 25 45 45,554 3,940 119,101

Financial liabilities
Other liabilities - - - - - - 5,027 - 5,027
Other borrowings - 297,430 392,958 1,000,000 2,122,629 - 10,838 - 3,823,855
Subordinated obligations - - - - - 1,980,000 11,402 - 2,141,402
Amount owing to subsidiaries - - - - - - 222 - 150,222
Total financial liabilities - 297,430 392,958 1,000,000 2,122,629 1,980,000 27,489 - 5,970,506
Net interest sensitivity gap 69,536 (297,430) (392,957) (1,000,000) (2,122,604) (1,979,955) 3,940
Net interest sensitivity gap
Treasury related commitments and contingencies - - - - - - - - -
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)

The Company
31 December 2012 Non-trading book
Up to 1 >13 >36 > 6 12 >15 Over 5 Non-interest Trading
month months months months years years sensitive book Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 128,503 - - - - - 6,572 - 135,075
Derivative financial instruments
- Trading derivatives - - - - - - - 9,398 9,398
- Hedging derivatives - - - - - - 1,314 - 1,314
Loans, advances and financing
- Term loans/financing - - 9 - 36 50 - - 95
Other assets - - - - 1,900 - 10 - 1,910
Amount due from subsidiaries - - - - - - 4,238 - 4,238
Total financial assets 128,503 - 9 - 1,936 50 12,134 9,398 152,030

Financial liabilities
Derivative financial instruments
- Trading derivatives - - - - - - - - -
Other liabilities - - - - - - 5,019 - 5,019
Other borrowings - 297,430 392,958 1,000,000 2,122,629 - 10,838 - 3,823,855
Subordinated obligations - - - - - 1,980,000 11,401 - 1,991,401
Total financial liabilities - 297,430 392,958 1,000,000 2,122,629 1,980,000 27,258 - 5,820,275
Net interest sensitivity gap 128,503 (297,430) (392,949) (1,000,000) (2,270,693) (1,979,950) 9,398
Net interest sensitivity gap
Treasury related commitments and contingencies - - - - - - - - -
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)
(b) Sensitivity of profit
The table below shows the sensitivity of the Group and the Companys banking book to movement in interest rates:

31 December 2013 The Group The Company

+100 basis -100 basis +100 basis -100 basis
points points points points
RM000 RM000 RM000 RM000

Impact to profit (after tax) (177,403) 177,403 (5,076) 5,076

31 December 2012

Impact to profit (after tax) (280,857) 280,857 (2,430) 2,430

Sensitivity is measured using the EaR methodology. The treatments and assumptions applied are based on the contractual
repricing and remaining maturity of the products,whichever is earlier. Items with indefinite repricing maturity are treated based
on the earliest possible repricing date. The actual dates may vary from the repricing profile allocated due to factors such
as pre-mature withdrawals, prepayment and others.

A 100 bps parallel rate movement is applied to the yield curve to model the potential impact on profit in the next 12 months
from policy rate change.

The projection assumes that interest rates of all maturities move by the same amount and, therefore, do not reflect the
potential impact on profit of some rates changing while others remain unchanged. The projections also assume that all other
variables are held constant and are based on a constant reporting date position and that all positions run to maturity.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.2 Interest rate risk (Continued)
(c) Sensitivity of reserves
The table below shows the sensitivity of the Groups banking book to movement in interest rates:

The Group +100 basis -100 basis +100 basis -100 basis
points points points points
31 December 31 December 31 December 31 December
2013 2013 2012 2012
RM000 RM000 RM000 RM000

Impact to revaluation reserve-financial investments

available-for-sale (1,474,570) 1,474,570 (1,524,053) 1,524,053

A 100 bps parallel rate movement is applied to the yield curve to model the potential impact on reserves in the next 12
months from changes in risk free rates. The impact on reserves arises from changes in valuation of financial investments
available-for-sale following movements in risk free rates.

The projection assumes that all other variables are held constant. It also assumes a constant reporting date position and
that all positions run to maturity.

The above sensitivities of profit and reserves do not take into account the effects of hedging and do not incorporate actions
that the Group would take to mitigate the impact of this interest rate risk. In practice, the Group proactively seeks to mitigate
the effect of prospective interest movements.

55.2.3 Foreign exchange risk

The Group and Company are exposed to transactional foreign exchange exposures which are exposures on assets and liabilities
denominated in currencies other than the functional currency of the transacting entity.

The Group and the Company take minimal exposure to the effects of fluctuations in the prevailing foreign currency exchange
rates on its financial position and cash flows. The Group manage its exposure to foreign exchange currencies at each entity level.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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280

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)
(a) The table below summarises the financial assets, financial liabilities and net open position by currency of the Group and the
Company.

The Group
31 December 2013 Total Grand
MYR IDR THB SGD USD AUD GBP JPY Others non-MYR total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 15,950,557 4,080,370 610,489 602,169 9,152,129 373,993 468,835 167,957 2,272,383 17,728,325 33,678,882
Reverse repurchase agreements 4,673,724 67,160 2,671,693 520,406 282,203 19,963 13,316 - 12,039 3,586,780 8,260,504
Deposits and placements with banks and other
financial institutions 1,775,386 529,026 78,366 314 1,343,143 9,938 - - 52,846 2,013,633 3,789,019
Financial assets held for trading
- Money market instruments 6,839,298 - - 4,032,529 214,820 - - - - 4,247,349 11,086,647
- Quoted securities 794,075 1,455,814 1,038,598 60,711 437,705 149,297 - - 181,979 3,324,104 4,118,179
- Unquoted securities 4,822,800 - 9,393 624,278 2,477,071 3,371 171,485 - 90,056 3,375,654 8,198,454
Financial investments available-for-sale
- Money market instruments 3,640,727 - - - 292,901 - 85,194 - - 378,095 4,018,822
- Quoted securities 369,617 3,573,503 2,691,216 27 14,054 - - - - 6,278,800 6,648,417
- Unquoted securities 13,647,029 36,470 29,496 1,186,778 4,308,381 55,860 - - 492,805 6,019,790 19,666,819
Financial investments held-to-maturity
- Money market instruments 1,848,462 - - 512,890 263,486 - - - - 776,376 2,624,838
- Quoted securities - 757,546 1,628,612 - 208,464 - - - 8,078 2,602,700 2,602,700
- Unquoted securities 4,342,338 - 881 1,250,736 - - - - - 1,251,617 5,593,955
Derivative financial instruments
- Trading derivatives 2,372,066 275,488 241,619 105,118 1,638,932 18,776 - 38,947 122,386 2,461,266 4,833,332
- Hedging derivatives 44,079 605 - 2,155 137,602 - 715 - 1,965 143,042 187,121
Loans, advances and financing
- Overdrafts 4,057,516 - 744,222 93,274 145,436 1 - - - 982,933 5,040,449
- Term loans/financing 115,092,773 17,862,864 11,592,749 10,628,780 12,677,781 371,320 1,663,084 258,866 743,043 55,798,487 170,891,260
- Bills receivable 85,200 2,609 2,711,540 115,809 2,234,026 - 2,327 7,781 3,973,248 9,047,340 9,132,540
- Trust receipts 274,004 - 865,278 - 609,616 - 17,902 11,233 21,283 1,601,281 1,875,285
- Claim on customers under acceptance credit 3,193,259 192,065 932 6,054 1,232,609 - - 11,105 14,353 1,457,118 4,650,377
- Staff loans - -
- Credit card receivables 4,245,767 1,071,480 - 988,117 - - - - - 2,059,597 6,305,364
- Revolving credit 5,711,957 15,067,662 81,549 1,225,890 5,655,605 17,633 377,707 51,594 44,583 22,522,223 28,234,180
- Share margin financing 715,199 850,052 140,262 593,966 1,989 - - - - 1,586,269 2,301,468
- Other loans - - 782 - - - - - - 782 782
Other assets 3,381,468 288,607 606,594 176,557 1,342,211 213,609 6,384 25,540 396,154 3,055,656 6,437,124
197,877,301 46,111,321 25,744,271 22,802,527 44,670,164 1,233,761 2,806,949 593,023 8,337,201 152,299,217 350,176,518
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)

The Group
31 December 2013 Total Grand
MYR IDR THB SGD USD AUD GBP JPY Others non-MYR total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial liabilities
Deposits from customers 158,915,839 33,189,466 15,220,268 21,700,685 29,194,987 1,510,803 1,182,617 281,896 1,807,741 104,088,463 263,004,302
Deposits and placements of banks and other
financial institutions 6,591,448 189,696 289,109 843,653 9,871,055 477,947 577,357 640,607 1,246,973 14,136,397 20,727,845
Repurchase agreements 1,010,452 - 3,646,636 776,546 417,753 - - - 71,401 4,912,336 5,922,788
Financial liabilities designated at fair value 1,979,716 - - 152,454 - - - - - 152,454 2,132,170
Derivatives financial instruments
- Trading derivatives 2,767,903 284,529 222,841 177,214 1,913,901 162,094 2,902 37,133 172,869 2,973,483 5,741,386
- Hedging derivatives 163,868 1,067 288 9,902 87,784 - 1,491 - 3,822 104,354 268,222
Bills and acceptances payable 1,828,261 190,260 1,260,597 6,054 1,340,697 59,876 17 11,105 16,352 2,884,958 4,713,219
Other liabilities 4,146,649 1,479,190 520,283 (163,430) 896,700 242,289 15,547 5,598 597,669 3,593,846 7,740,495
Other borrowings 3,215,941 1,452,455 64,961 644,924 2,384,040 - 1,625 327 8,454 4,556,786 7,772,727
Bonds and debentures 500,079 1,623,187 2,630,547 51,121 1,354,902 - - - 1,330,429 6,990,186 7,490,265
Subordinated obligations 10,589,280 807,784 669,636 - - - - - - 1,477,420 12,066,700
Non-cumulative guaranteed and redeemable
preference shares 847,447 - - - - - - - - - 847,447
192,556,883 39,217,634 24,525,166 24,199,123 47,461,819 2,453,009 1,781,556 976,666 5,255,710 145,870,683 338,427,566

Financial guarantees 1,278,211 201,412 260,312 1,864,220 2,107,498 - 101,640 13,952 277,656 4,826,690 6,104,901
Credit related commitments and contingencies 48,959,038 3,153,631 913,258 3,897,300 5,174,492 3,265 786,222 311,680 105,782 14,345,630 63,304,668
50,237,249 3,355,043 1,173,570 5,761,520 7,281,990 3,265 887,862 325,632 383,438 19,172,320 69,409,569
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)

The Group
31 December 2012 Total Grand
MYR IDR THB SGD USD AUD GBP JPY Others non-MYR total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial assets
Cash and short-term funds 15,083,564 5,888,272 332,126 622,383 5,875,658 444,758 921,563 552,804 1,038,771 15,676,335 30,759,899
Reverse repurchase agreements 4,373,057 63,870 200,060 549,305 407,986 - - - - 1,221,221 5,594,278
Deposits and placements with banks and other
financial institutions 480,388 1,980,435 73,478 476,738 1,712,088 50,405 99,298 - 117,501 4,509,943 4,990,331
Financial assets held for trading
- Money market instruments 12,420,325 - 9,981 3,417,579 210,859 - - - - 3,638,419 16,058,744
- Quoted securities 620,282 1,114,678 341,151 22,465 421,471 7,162 - - 12,685 1,919,612 2,539,894
- Unquoted securities 4,533,296 338 9,496 582,251 1,597,089 16,660 - - 45,508 2,251,342 6,784,638
Financial investments available-for-sale
- Money market instruments 5,382,129 104,099 - - 157,644 - 49,397 - - 311,140 5,693,269
- Quoted securities 140,537 3,218,291 1,490,527 289 - - - - - 4,709,107 4,849,644
- Unquoted securities 13,965,822 53,974 81,915 548,141 3,643,619 59,950 - - 311,188 4,698,787 18,664,609
Financial investments held-to-maturity
- Money market instruments 35,333 - - 491,634 252,911 - - - - 744,545 779,878
- Quoted securities - 511,704 2,208,994 - 176,817 - - - - 2,897,515 2,897,515
- Unquoted securities 4,224,906 - 689 1,082,306 - - - - - 1,082,995 5,307,901
Derivative financial instruments
- Trading derivatives 2,285,209 76,117 87,436 50,441 1,237,045 24,221 108 7,633 61,069 1,544,070 3,829,279
- Hedging derivatives 74,502 24,660 - 3,273 142,515 - 637 - 9,103 180,188 254,690
Loans, advances and financing
- Overdrafts 4,301,337 - 716,496 99,071 100,772 - - - 40 916,379 5,217,716
- Term loans/financing 102,141,929 19,417,157 9,139,236 8,265,568 8,608,761 392,526 1,657,128 156,514 505,025 48,141,915 150,283,844
- Bills receivable 28,019 - 2,505,825 81,905 886,061 - - 9,955 106,323 3,590,069 3,618,088
- Trust receipts 323,083 - 1,292,484 59,563 478,087 - 2,926 3,592 26,049 1,862,701 2,185,784
- Claim on customers under acceptance credit 3,647,030 157,301 989 2,959 792,522 - - 16,089 15,474 985,334 4,632,364
- Credit card receivables 3,848,910 1,122,656 - 630,599 - - - - - 1,753,255 5,602,165
- Revolving credit 4,325,183 16,789,979 63,778 1,019,735 5,662,394 17,861 450,069 - 26,434 24,030,250 28,355,433
- Share margin financing 691,687 984,931 140,954 421,754 2,250 - - - - 1,549,889 2,241,576
- Other loans - - 848 - - - - - - 848 848
Other assets 3,161,479 709,134 533,275 444,086 462,117 44,680 18,489 7,866 208,545 2,428,192 5,589,671
186,088,007 52,217,596 19,229,738 18,872,045 32,828,666 1,058,223 3,199,615 754,453 2,483,715 130,644,051 316,732,058
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)

The Group
31 December 2012 Total Grand
MYR IDR THB SGD USD AUD GBP JPY Others non-MYR total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Financial liabilities
Deposits from customers 148,515,239 37,792,889 13,175,421 15,604,788 28,850,315 674,043 863,484 229,515 1,589,345 98,779,800 247,295,039
Deposits and placements of banks and other
financial institutions 5,324,923 993,605 447,367 1,230,036 5,516,702 418,938 632,640 154,141 804,239 10,197,668 15,522,591
Repurchase agreements 2,017,420 - 300,091 750,528 - - - - - 1,050,619 3,068,039
Derivatives financial instruments
- Trading derivatives 2,108,036 39,050 100,999 103,084 1,200,052 22,057 39 3,225 75,934 1,544,440 3,652,476
- Hedging derivatives 253,637 25,432 1,356 2,334 103,768 - 3,043 - 7,146 143,079 396,716
Bills and acceptances payable 1,797,734 138,458 1,450,603 48,273 790,610 - 16 16,089 15,474 2,459,523 4,257,257
Other liabilities 3,460,734 1,780,466 458,685 445,849 217,395 92,160 12,378 9,758 223,134 3,239,825 6,700,559
Other borrowings 2,944,254 1,224,999 155,065 529,040 2,780,429 2,227 - - 4,346 4,696,106 7,640,360
Bonds and debentures 500,161 1,305,091 777,641 - 1,079,268 - - - 188,499 3,350,499 3,850,660
Subordinated obligations 11,091,372 973,867 594,612 - - - - - - 1,568,479 12,659,851
Non-cumulative guaranteed and redeemable
preference shares 831,920 - - - - - - - - - 831,920
178,845,430 44,273,857 17,461,840 18,713,932 40,538,539 1,209,425 1,511,600 412,728 2,908,117 127,030,038 305,875,468

Financial guarantees 807,775 130,241 275,994 1,967,988 1,034,939 - 138,363 12,731 285,412 3,845,668 4,653,443
Credit related commitments and contingencies 42,481,242 4,114,972 906,641 5,776,419 3,362,268 1,362 282,614 98,341 360,050 14,902,667 57,383,909
43,289,017 4,245,213 1,182,635 7,744,407 4,397,207 1,362 420,977 111,072 645,462 18,748,335 62,037,352
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)

The Company
31 December 2013 Total Grand
MYR IDR USD non-MYR total
RM000 RM000 RM000 RM000 RM000

Financial assets
Cash and short-term funds 69,023 3 547 550 69,573
Derivative financial instruments
- Trading derivatives 3,940 - - - 3,940
- Hedging derivatives - - - - -
Loans, advances and financing
- Term loans/financing 71 - - - 71
Other assets 44,729 - - - 44,729
Amount due from subsidiaries 788 - - - 788

118,551 3 547 550 119,101

Financial liabilities
Derivatives financial instruments
- Trading derivatives - - - - -
Other liabilities 5,027 - - - 5,027
Other borrowings 3,201,225 - 622,630 622,630 3,823,855
Subordinated notes 2,141,402 - - - 2,141,402

5,347,659 - 622,630 622,630 5,970,284

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)

The Company
31 December 2012 Total Grand
MYR IDR USD non-MYR total
RM000 RM000 RM000 RM000 RM000

Financial assets
Cash and short-term funds 134,569 4 502 506 135,075
Derivative financial instruments
- Trading derivatives 9,398 - - - 9,398
- Hedging derivatives 1,314 - - - 1,314
Loans, advances and financing
- Term loans/financing 95 - - - 95
Other assets 1,910 - - - 1,910
Amount due from subsidiaries 4,238 - - - 4,238

151,524 4 502 506 152,030

Financial liabilities
Derivatives financial instruments
- Trading derivatives - - 8,892 8,892 8,892
Other liabilities 1,408 - - - 1,408
Other borrowings 3,003,545 - 799,020 799,020 3,802,565
Subordinated notes 2,141,378 - - - 2,141,378

5,146,331 - 807,912 807,912 5,954,243

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.2 Market risk (Continued)

55.2.3 Foreign exchange risk (Continued)
(b) Sensitivity of profit and reserves
The table below shows the sensitivity of the Group and the Companys profit and reserves to movement in foreign
exchange rates:

31 December 2013 The Group The Company

1% 1% 1% 1%
appreciation depreciation appreciation depreciation
RM000 RM000 RM000 RM000

Impact to profit (after tax) 3,159 (3,159) (4,691) 4,691

Impact to reserves (26,759) 26,759 - -

31 December 2012

Impact to profit (after tax) 2,554 (2,554) (6,781) 6,781

Impact to reserves (22,069) 22,069 - -

The impact on profit arises from transactional exposures while the impact on reserves arises from net investment hedge
from parallel shifts in foreign exchange rates.

The projection assumes that foreign exchange rates move by the same amount and, therefore, do not reflect the potential
impact on profit and reserves of some rates changing while others remain unchanged. The projections also assume that all
other variables are held constant and are based on a constant reporting date position and that all positions run to maturity.

55.3 Liquidity risk

Liquidity risk is defined as the current and prospective risk to earnings, shareholders fund or the reputation arising from the Groups inability
to efficiently meet its present and future (both anticipated and unanticipated) funding needs or regulatory obligations when they come due,
which may adversely affect its daily operations and incur unacceptable losses. Liquidity risk primarily arises from mismatches in the timing
of cash flows.

The objective of the Groups liquidity risk management is to ensure that the Group can meet its cash obligations in a timely and cost-
effective manner. To this end, the Groups liquidity risk management policy is to maintain high quality and well diversified portfolios of liquid
assets and sources of funds under both normal business and stress conditions. Due to its large delivery network and marketing focus,
the Group is able to maintain a diversified core deposit base comprising savings, demand, and fixed deposits. This provides the Group a
stable large funding base.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

Liquidity risk management at CIMB is managed on Group basis. The day-to-day responsibility for liquidity risk management and control is
delegated to the respective Country Asset Liability Management Committee (Country ALCO) which subsequently report to Group ALCO
(GALCO). GALCO meets at least once a month to discuss the liquidity risk and funding profile of the Group and each individual entity
under the Group. The Asset-Liability Management function, which is responsible for the independent monitoring of the Group liquidity risk
profile, works closely with Group Treasury in its surveillance on market conditions. Business units are responsible for establishing and
maintaining strong business relations with their respective depositors and key providers of funds. Overseas branches and subsidiaries
should seek to be self-sufficient in funding at all times. Group Treasury only acts as a global provider of funds on a need-to or contingency
basis. Each entity has to prudently manage its liquidity position to meet its daily operating needs. To take account of the differences in
market and regulatory environments, each entity measures and forecasts its respective cash flows arising from the maturity profiles of
assets, liabilities, off-balance sheet commitments and derivatives over a variety of time horizons under normal business and stress
conditions on a regular basis.

Liquidity risk undertaken by the Group is governed by a set of established risk tolerance levels. Management action triggers have been
established to alert management to potential and emerging liquidity pressures. The Group Liquidity Risk Management Policy is subject to
annual review while the assumptions and the thresholds levels are regularly reviewed in response to regulatory changes and changing
business needs and market conditions.

Liquidity positions are monitored on a daily basis for compliance with internal risk thresholds. The Groups contingency funding plan is in
place to alert and to enable the management to act effectively and efficiently during a liquidity crisis and under adverse market conditions.
The plan consists of two key components: an early warning system and a funding crisis management team. The early warning system is
designed to alert the Groups management whenever the Groups liquidity position may be at risk. It provides the Group with the analytical
framework to detect a likely liquidity problem and to evaluate the Groups funding needs and strategies in advance of a liquidity crisis. The
early warning system is made up of a set of indicators (monitored against pre-determined thresholds) that can reliably signal the financial
strength and stability of the Group.

The Group performs liquidity risk stress testing on a monthly basis to identify vulnerable areas in its portfolio, gauge the financial impact
and enable management to take pre-emptive actions. The stress tests are modeled based on three scenarios namely Group specific crisis,
market wide crisis and combined crisis. The assumptions used includes run-off rates on deposits, draw down rates on undrawn
commitments, and hair cuts for marketable securities are documented and the test results are submitted to the Country and Group ALCOs,
the GRC and BRC/Board of Directors of the Group. The test results to date have indicated that the Group does possess sufficient liquidity
capacity to meet the liquidity requirements under various stress test conditions. In addition, the Group computes Basel III liquidity ratios
namely Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) at least on quarterly basis, in line with BNM observation period
for Basel III liquidity ratios which started in June 2012.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities
The table below analyses assets and liabilities of the Group and the Company based on the remaining period at the end of the
reporting period to the contractual maturity date in accordance with the requirement of BNM GP8:

The Group
31 December 2013 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Assets
Cash and short-term funds 33,678,882 33,678,882
Reverse repurchase agreements 5,166,460 3,082,792 11,252 8,260,504
Deposits and placements with banks and other
financial institutions 1,453,865 2,162,113 123,004 34,960 15,077 3,789,019
Financial assets held for trading 4,583,776 5,678,004 1,349,090 984,583 6,076,378 2,503,677 2,227,772 23,403,280
Financial investments available-for-sale 311,697 498,292 646,422 1,314,571 10,076,790 15,793,563 1,692,723 30,334,058
Financial investments held-to-maturity 140,642 141,305 142,451 543,361 5,882,003 3,971,731 10,821,493
Derivatives financial instruments 1,090,044 296,515 222,148 228,297 2,015,218 1,168,231 5,020,453
Loans, advances and financing 25,653,758 13,774,243 9,333,071 10,529,186 53,529,464 115,611,983 228,431,705
Other assets 6,570,562 13,671 14,993 8,700 145,572 1,048,423 188,434 7,990,355
Taxation recoverable 64,578 64,578
Deferred tax assets 357,250 357,250
Statutory deposits with central banks 6,361,648 6,361,648
Investment in associates 703,947 703,947
Investment in joint ventures 309,535 309,535
Property, plant and equipment 1,546,783 1,546,783
Investment properties 4,000 4,000
Prepaid lease payment 147,901 147,901
Goodwill 7,877,463 7,877,463
Intangible assets 1,760,225 1,760,225
Non-current assets held for sale 49,718 49,718

Total assets 101,800,931 25,646,935 11,842,431 13,643,658 77,740,502 140,097,608 23,227,399 370,912,797
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities (Continued)

The Group
31 December 2013 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Liabilities
Deposits from customers 189,453,561 31,607,109 19,113,331 16,945,607 3,630,055 2,254,639 263,004,302
Deposits and placements of banks and other
financial institutions 9,099,477 6,788,703 2,404,567 1,414,464 393,313 627,321 20,727,845
Repurchase agreements 2,896,591 2,201,858 47,794 776,545 5,922,788
Derivatives financial instruments 2,510,100 290,673 190,876 290,247 1,581,043 1,146,669 6,009,608
Bills and acceptances payable 2,459,315 1,553,198 532,562 10,349 74,843 82,952 4,713,219
Other liabilities 7,488,769 170,531 37,806 104,332 44,318 123,569 592,714 8,562,039
Deferred tax liabilities 50,327 50,327
Current tax liabilities 384,800 384,800
Bonds and debentures 1,303,618 478,771 352,900 48,426 5,306,550 7,490,265
Other borrowings 835,486 1,164,175 210,917 981,433 3,561,962 1,018,754 7,772,727
Subordinated obligations 135,442 83 13,491 7,101,393 4,816,291 12,066,700
Non-cumulative guaranteed and redeemable
preference shares 7,111 742,160 98,176 847,447

Total liabilities 216,574,270 44,255,101 22,904,244 19,794,858 23,212,182 10,168,371 643,041 337,552,067

Net liquidity gap (114,779,476) (18,552,059) (11,046,120) (6,158,265) 54,951,610 106,542,085 22,402,955 33,360,730
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290

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities (Continued)

The Group
31 December 2012 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Assets
Cash and short-term funds 30,759,899 30,759,899
Reverse repurchase agreements 2,546,933 1,729,762 564,668 752,915 5,594,278
Deposits and placements with banks and
other financial institutions 1,550,333 2,835,521 337,736 251,665 15,076 4,990,331
Financial investments at fair value through
profit or loss 4,461,892 7,002,324 3,905,671 1,368,585 5,091,217 1,939,965 1,613,622 25,383,276
Financial investments available-for-sale 583,558 298,810 476,681 1,355,906 8,934,139 16,137,889 1,420,539 29,207,522
Financial investments held-to-maturity 62,424 638,143 584,929 680,665 4,827,562 2,191,571 8,985,294
Derivatives financial instruments 451,908 282,366 171,100 363,064 1,559,297 1,256,234 4,083,969
Loans, advances and financing 21,765,761 10,403,818 7,267,899 7,917,968 50,474,203 104,308,169 202,137,818
Other assets 5,706,315 7,861 87,006 61,661 122,033 733,528 121,236 6,839,640
Taxation recoverable 73,934 73,934
Deferred tax assets 110,344 110,344
Statutory deposits with central banks 5,264,920 5,264,920
Investment in associates 589,907 589,907
Investment in jointly controlled entities 305,843 305,843
Property, plant and equipment 1,534,341 1,534,341
Investment properties 17,451 17,451
Prepaid lease payment 159,613 159,613
Goodwill 8,180,586 8,180,586
Intangible assets 1,677,520 1,677,520
Non-current assets/disposal groups held
for sale 564,674 564,674

Total assets 67,962,957 23,198,605 13,395,690 12,752,429 71,008,451 126,582,432 21,560,596 336,461,160
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities (Continued)

The Group
31 December 2012 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Liabilities
Deposits from customers 185,800,465 28,361,235 14,373,773 10,953,785 5,982,849 1,822,932 247,295,039
Deposits and placements of banks and other
financial institutions 9,872,356 2,998,467 1,221,792 282,561 635,954 511,461 15,522,591
Repurchase agreements 310,407 999,326 254,866 752,915 750,525 3,068,039
Derivatives financial instruments 852,865 298,218 191,288 334,730 1,615,067 757,024 4,049,192
Bills and acceptances payable 2,807,221 873,479 440,415 24,339 61,222 50,581 4,257,257
Other liabilities 6,348,723 464,003 8,465 38,350 16,425 677,709 11,175 7,564,850
Deferred tax liabilities 132,682 132,682
Current tax liabilities 322,400 322,400
Bonds and debentures 308,926 220,253 326,971 2,994,510 3,850,660
Other borrowings 392,280 766,344 433,305 760,715 4,256,467 1,031,249 7,640,360
Subordinated obligations 141,551 1,491,366 13,469 6,726,072 4,287,393 12,659,851
Non-cumulative guaranteed and redeemable
preference shares 6,638 28,196 697,086 100,000 831,920

Total liabilities 207,163,832 36,500,887 17,264,344 13,147,395 23,736,177 9,238,349 143,857 307,194,841

Net liquidity gap (139,200,875) (13,302,282) (3,868,654) (394,966) 47,272,274 117,344,083 21,416,739 29,266,319
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities (Continued)

The Company
31 December 2013 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Assets
Cash and short-term funds 69,573 69,573
Derivatives financial instruments 3,940 3,940
Loans, advances and financing 1 56 14 71
Other assets 34,295 10,266 711 45,272
Taxation recoverable 37,636 37,636
Investment in subsidiaries 20,719,439 20,719,439
Amount owing from subsidiaries 788 788
Investment in associates 3,834 3,834
Property, plant and equipment 7,464 7,464
Investment properties 490 490
Non-current assets/disposal groups held for sale 7,862 7,862

Total assets 141,504 1 788 14,262 14 20,739,800 20,896,369

Liabilities
Other liabilities 5,027 5,027
Deferred tax liabilities 1,998 1,998
Other borrowings 692 5,601 4,545 622,630 3,190,387 3,823,855
Subordinated obligations 11,402 2,130,000 2,141,402

Total liabilities 5,719 5,601 15,947 622,630 5,320,387 1,998 5,972,282

Net liquidity gap 135,785 (5,601) (15,946) (621,842) (5,306,125) 14 20,737,802 14,924,087
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.1 Contractual maturity of financial assets and liabilities

The Company
31 December 2012 Up to 1 >1-3 >3-6 > 6 - 12 >1-5 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Assets
Cash and short-term funds 135,075 135,075
Derivatives financial instruments 1,314 9,398 10,712
Loans, advances and financing 9 36 50 95
Other assets 4 1,905 550 2,459
Taxation recoverable 43,441 43,441
Investment in subsidiaries 18,930,222 18,930,222
Amount owing from subsidiaries 1,450 2,000 788 4,238
Investment in associates 3,834 3,834
Property, plant and equipment 28,717 28,717
Investment properties 508 508

Total assets 179,970 1,323 2,000 12,127 50 18,963,831 19,159,301

Liabilities
Derivatives financial instruments 8,892 8,892
Other liabilities 1,408 1,408
Deferred tax liabilities 2,127 2,127
Other borrowings 2,856 149,452 353,387 305,900 2,990,970 3,802,565
Subordinated obligations 11,378 2,130,000 2,141,378

Total liabilities 4,264 149,452 364,765 314,792 5,120,970 2,127 5,956,370

Net liquidity gap 175,706 (149,452) (363,442) (312,792) (5,108,843) 50 18,961,704 13,202,931
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294

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Non-derivatives financial liabilities
The tables below present the cash flows payable by the Group and the Company under non-derivatives financial liabilities by
remaining contractual maturities at the end of the reporting period. The amounts disclosed in the table are the contractual
undiscounted cash flow.

The Group
31 December 2013 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Non-derivative financial liabilities

Deposits from customers 189,843,512 31,771,954 19,275,064 17,107,066 3,896,782 2,335,793 264,230,171
Deposits and placements of banks and other
financial institutions 9,165,741 6,803,305 2,428,271, 1,446,,910 394,279 647,353 20,865,859
Repurchase agreements 2,901,020 2,204,646 50,119 3,447 795,890 5,955,122
Bills and acceptances payable 2,459,804 1,553,198 532,562 10,349 74,843 106,570 4,737,326
Amount due to Cagamas Berhad 13,132 20,071 26,502 57,078 1,440,667 1,970,359 3,527,809
Other liabilities 7,155,548 198,584 39,523 108,575 73,854 134,445 60,607 7,771,136
Other borrowings 843,612 1,455,817 600,246 1,389,841 2,565,194 1,051,926 7,906,636
Bonds 1,307,166 496,119 389,711 122,315 5,806,206 8,121,517
Subordinated obligations 148,274 75,108 263,907 397,470 7,657,493 7,866,417 16,408,669
Non-cumulative guaranteed and redeemable
preference shares 7,111 30,020 712,140 100,000 849,271
Financial guarantees 2,575,497 700,250 360,578 265,736 117,281 2,085,559 6,104,901
Credit related commitments and contingencies 52,459,721 761,258 512,122 2,717,727 2,583,780 4,270,060 63,304,668

268,880,138 46,070,330 25,478,605 23,626,514 26,118,409 18,462,923 2,146,166 409,783,085

 INTO A NEW ERA

295

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Non-derivatives financial liabilities (Continued)

The Group
31 December 2012 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Non-derivatives financial liabilities

Deposits from customers 183,850,541 27,605,248 14,220,702 11,128,994 6,206,179 1,916,570 244,928,234
Deposits and placements of banks and other
financial institutions 13,106,326 3,944,239 1,580,859 509,941 2,862,293 1,370,896 23,374,554
Repurchase agreements 1,079,458 988,788 257,882 769,466 3,095,594
Bills and acceptances payable 2,809,071 880,067 447,138 24,373 61,222 50,613 4,272,484
Other liabilities 5,302,550 48,097 5,718 41,716 34,043 90,994 5,523,118
Other borrowings 740,079 781,396 475,527 491,133 4,901,759 271,155 7,661,049
Bonds 325,904 239,249 345,400 56,349 2,663,186 3,630,088
Subordinated obligations 151,106 1,599,341 281,091 372,062 8,722,301 6,853,812 17,979,713
Non-cumulative guaranteed and redeemable
preference shares 6,638 28,196 20,027 20,027 697,086 100,000 871,974
Financial guarantees 3,380,963 403,622 136,579 311,086 420,541 652 4,653,443
Credit related commitments and contingencies 41,219,262 3,823,165 1,129,492 3,769,126 3,390,377 4,052,487 57,383,909

251,971,898 40,341,408 18,900,415 17,494,273 29,958,987 14,707,179 373,374,160

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

296

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Non-derivatives financial liabilities (Continued)

The Company
31 December 2013 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Non-derivatives financial liabilities

Other liabilities 5,019 5,019
Other borrowings 8,577 296,429 392,959 1,028,471 2,187,045 3,914,481
Subordinated obligations 11,405 54,345 92,445 713,310 2,156,940 3,028,442

24,998 296,429 447,304 1,120,916 2,900,355 2,156,940 6,947,942

The Company
31 December 2012 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Non-derivatives financial liabilities

Other liabilities 1,408 1,408
Other borrowings 9,406 162,581 391,341 360,930 3,180,037 4,104,295
Subordinated obligations 72,918 73,596 717,274 2,226,170 3,089,958

10,814 162,581 464,259 434,526 3,897,311 2,226,170 7,195,661

 INTO A NEW ERA

297

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Derivatives financial liabilities
The table below analyses the Groups trading derivatives financial liabilities and hedging derivative financial liabilities that will be
settled on a net basis.

All trading derivatives, whether net or gross settled are analysed based on the expected maturity as the contractual maturity is
not considered to be essential to the understanding of the timing of the cash flows. The amounts disclosed in respect of such
contracts are the fair values.

Hedging derivatives are disclosed based on remaining contractual maturities as the contractual maturities of such contracts are
essential for an understanding of the timing of the cash flows. The amounts disclosed in respect of such contracts are the
contractual undiscounted cash flows.

The Group
31 December 2013 Up to 1 > 1 3 > 3 6 > 6 12 > 1 5 Over 5
month months months months years years Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000

Derivatives financial liabilities

Trading derivatives
- Foreign exchange derivatives 2,374,028 2,374,028
- Interest rate derivatives 1,549,137 1,549,137
- Equity related derivatives 1,574,988 1,574,988
- Commodity related derivatives 154,057 154,057
- Credit related contracts 89,176 89,176

Hedging derivatives
- Interest rate derivatives 9,624 401 310 19,910 196,117 24,514 250,876

5,751,010 401 310 19,910 196,117 24,514 5,992,262

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

298

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Derivative financial liabilities (Continued)

The Group
31 December 2012 Up to 1 > 1 3 > 3 6 > 6 12 > 1 5 Over 5
month months months months years years Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000

Derivatives financial liabilities

Trading derivatives
- Foreign exchange derivatives 715,101 715,101
- Interest rate derivatives 1,710,095 1,710,095
- Equity related derivatives 1,000,082 1,000,082
- Commodity related derivatives 161,622 161,622
- Credit related contracts 99,750 99,750

Hedging derivatives
- Interest rate derivatives 6,146 (44,967) 127,553 91,007 654,946 357,456 1,192,141

3,692,796 (44,967) 127,553 91,007 654,946 357,456 4,878,791

 INTO A NEW ERA

299

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Derivatives financial liabilities (Continued)
The Groups and the Companys derivatives that will be settled on a gross basis include foreign exchange derivatives, such as
currency forward, currency swap, currency options and cross currency interest rate swaps.

The table below analyses the Groups and the Companys derivative financial liabilities that will be settled on a gross basis into
relevant maturity groupings by expected maturities at the end of the reporting period. The amounts disclosed in the table are
the contractual undiscounted cash flow.

The Group
31 December 2013 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Derivatives financial liabilities

Trading derivatives
Foreign exchange derivatives 659,809 659,809

Hedging derivatives
Cross currency interest rate
derivatives
- Outflow (657) (4,813) (281,800) (89,190) (1,432,719) (1,809,179)
- Inflow 1,176 6,149 261,516 88,357 1,413,298 1,770,496

660,328 1,336 (20,284) (833) (19,421) 621,126

The Group
31 December 2012 Up to 1 >13 >36 > 6 12 >15 Over 5 No-specific
month months months months years years maturity Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Derivatives financial liabilities

Trading derivatives
Foreign exchange derivatives 7,905,092 7,905,092

Hedging derivatives
Cross currency interest rate
derivatives
- Outflow (3,692) (5,979) (4,204) (10,719) (533,211) (467) (247,789) (806,061)
- Inflow 2,702 5,038 5,188 9,753 518,707 431 233,887 775,706

7,904,102 (941) 984 (966) (14,504) (36) (13,902) 7,874,737

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

300

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.3 Liquidity risk (Continued)

55.3.2 Contractual maturity of financial liabilities on an undiscounted basis (Continued)
Derivatives financial liabilities (Continued)

The Company
31 December 2013 Up to 1 > 1 3 > 3 6 > 6 12 > 1 5
month months months months years Total
RM000 RM000 RM000 RM000 RM000 RM000

Derivatives financial liabilities

Trading derivatives
- Foreign exchange derivatives

31 December 2012 Up to 1 > 1 3 > 3 6 > 6 12 > 1 5

month months months months years Total
RM000 RM000 RM000 RM000 RM000 RM000

Derivative financial liabilities

Trading derivatives
- Foreign exchange derivatives 8,892 8,892

8,892 8,892
 INTO A NEW ERA

301

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.

55.4.1 Determination of fair value and fair value hierarchy

Valuation Model Review and Approval
Mark-to-Model process shall be carried out by Market Risk Management within Group Risk. Group Risk Management
Quantitative Analysts are responsible for independent evaluation and validation of the Groups financial models used for
valuation. The validation includes an assessment of the stability of models in terms of performance over a variety of conditions
and back-testing of the model outputs;

Valuation methodologies for the purpose of determining Mark-to-Market prices will be verified by Group Risk Management
Quantitative Analysts before submitting to Group Risk Committee and Board for approval;

Market Risk Management is mandated to perform mark-to-market, mark-to-model and rate reasonableness verification;

Any material uncertainty arising from the modeling and market inputs shall be disclosed to the Group Risk Committee;

Market rate sources and model inputs for the purpose of Mark-to-Model must be verified by Group Risk Management
Quantitative Analysts and approved by Chief Risk Officer or/and Group Risk Committee;

Group Risk Management Quantitative Analysts are the guardian of the financial models and valuation methodology. Group
Risk Management Quantitative Analysts shall perform model verification at least once a year. The Groups policy is to
recognise transfer into and transfer out of fair value hierarchy level as of the date of the event or change in circumstances
that caused the transfer;

Model risk and unobservable parameter reserve must be considered to provide for the uncertainty of the model assumptions;

Independent price verification process shall be carried out by Market Risk Management to ensure that financial assets/liabilities
are recorded at fair value; and

Back testing of valuation models to assess the accuracy of the models is to be carried out for a period of one year or where
250 data points have been collected, whichever is later.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

302

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.1 Determination of fair value and fair value hierarchy (Continued)
The fair value hierarchy has the following levels:

Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active
markets.

Level 2 Inputs to the valuation methodology include:

Quoted prices for similar assets and liabilities in active markets; or
Quoted prices for identical or similar assets and liabilities in non-active markets; or
Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of
the financial instrument.

Level 3 One or more inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets/liabilities are classified as Level 1 when the valuation is based on quoted prices for identical assets or liabilities in active
markets.

Assets/liabilities are regarded as being quoted in an active market if the prices are readily available from a published and reliable
source and those prices represent actual and regularly occurring market transactions on an arms length basis.

When fair value is determined using quoted prices of similar assets/liabilities in active markets or quoted prices of identical or
similar assets and liabilities in non-active markets, such assets/liabilities are classified as Level 2. In cases where quoted prices
are generally not available, the Group determines fair value based upon valuation techniques that use market parameters as
inputs. Most valuation techniques employ observable market data, including but not limited to yield curves, equity prices,
volatilities and foreign exchange rates.

Assets/liabilities are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market
data. Such inputs are determined based on observable inputs of a similar nature, historical observations or other analytical
techniques.

If prices or quotes are not available for an instrument or a similar instrument, fair value will be established by using valuation
techniques or Mark-to-Model. Judgment may be required to assess the need for valuation adjustments to appropriately reflect
unobservable parameters. The valuation models shall also consider relevant transaction data such as maturity. The inputs are
then benchmarked and extrapolated to derive the fair value.
 INTO A NEW ERA

303

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.1 Determination of fair value and fair value hierarchy (Continued)
The following table represents assets and liabilities measured at fair value and classified by level with the following fair value
hierarchy:

The Group The Company

Fair Value Fair Value

Quoted Significant Quoted Significant

market Observable unobservable market Observable unobservable
Carrying prices inputs inputs Carrying prices inputs inputs
amount (Level 1) (Level 2) (Level 3) Total amount (Level 1) (Level 2) (Level 3) Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

31 December 2013
Recurring fair value measurements
Financial assets
Financial assets held for trading
- Money market instruments 11,086,647 11,086,647 11,086,647
- Quoted securities 4,118,179 2,155,444 1,962,735 4,118,179
- Unquoted securities 8,198,454 8,125,406 73,048 8,198,454
Financial investments available-for-sale
- Money market instruments 4,018,822 4,018,822 4,018,822
- Quoted securities 6,648,417 456,056 6,192,361 6,648,417
- Unquoted securities 19,664,798 18,387,885 1,276,913 19,664,798
Derivative financial instruments
- Trading derivatives 4,833,332 12,418 4,771,239 49,675 4,833,332 3,940 3,940 3,940
- Hedging derivatives 187,121 187,121 187,121

Total 58,755,770 2,623,918 54,732,216 1,399,636 58,755,770 3,940 3,940 3,940

Recurring fair value measurements

Financial liabilities
Derivative financial instruments
- Trading derivatives 5,741,386 2,314 4,795,921 943,151 5,741,386
- Hedging derivatives 268,222 268,222 268,222
Financial liabilities designated at fair value 2,132,168 2,132,168 2,132,168

Total 8,141,776 2,314 7,196,311 943,151 8,141,776

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

304

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.1 Determination of fair value and fair value hierarchy (Continued)
The following table represents financial assets and liabilities measured at fair value and classified by level with the following fair
value hierarchy:

The Group The Company

Fair Value Fair Value

Quoted Significant Quoted Significant

market Observable unobservable market Observable unobservable
Carrying prices inputs inputs Carrying prices inputs inputs
amount (Level 1) (Level 2) (Level 3) Total amount (Level 1) (Level 2) (Level 3) Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

31 December 2012
Financial assets
Financial assets held for trading
- Money market instruments 16,058,744 16,058,744 16,058,744
- Quoted securities 2,539,894 1,533,704 1,006,190 2,539,894
- Unquoted securities 6,784,638 6,718,325 66,313 6,784,638
Financial investments available-for-sale
- Money market instruments 5,693,269 5,693,269 5,693,269
- Quoted securities 4,851,401 434,000 4,417,401 4,851,401
- Unquoted securities 18,609,847 17,436,664 1,173,183 18,609,847
Derivative financial instruments
- Trading derivatives 3,829,279 20,587 3,808,692 3,829,279 9,398 9,398 9,398
- Hedging derivatives 254,690 254,690 254,690 1,314 1,314 1,314

Total 58,621,762 1,988,291 55,393,975 1,239,496 58,621,762 10,712 10,712 10,712

Financial liabilities
Derivative financial instruments
- Trading derivatives 3,652,476 618 3,651,858 3,652,476 8,892 8,892 8,892
- Hedging derivatives 396,716 396,716 396,716

Total 4,049,192 618 4,048,574 4,049,192 8,892 8,892 8,892

 INTO A NEW ERA

305

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.1 Determination of fair value and fair value hierarchy (Continued)
The following represents the changes in Level 3 instruments for the financial year ended 31 December 2013 and 31 December
2012 for the Group:

The Group Financial Assets Financial Liabilities

31 December 2013
Financial
Financial investments Derivative Derivative
assets held available- financial financial
for trading for-sale instruments Total instruments Total
Unquoted Unquoted
securities securities
RM000 RM000 RM000 RM000 RM000 RM000

At 1 January 66,313 1,173,183 1,239,496

Total gains recognised in statement of income 2,387 (41,647) 251 (39,009) 195 195
Total losses recognised in other comprehensive
income 74,075 74,075
Purchases 77,553 49,424 126,977 943,051 943,051
Sales (19,966) (19,966) (95) (95)
Settlements (4,270) (4,270)
Transfers out of Level 3 to Level 1 (5,780) (5,780)
Exchange fluctuation 4,348 23,765 28,113

At 31 December 73,048 1,276,913 49,675 1,399,636 943,151 943,151

Total gains recognised in Statement of Income

relating to assets held on 31 December under
"net non-interest income" 2,612 (22,504) 251 (19,641) 195 195

Total gains recognised in Other Comprehensive

Income relating to assets held on 31 December
under "revaluation reserves" 71,530 71,530

Change in unrealised gain/loss recognised in profit

or loss relating to assets held on 31 December
under "net non-interest income" 2,387 251 2,637 195 195

During the year, the transfer out of Level 3 of RM5,780,387 to Level 1 was due to the conversion of convertible notes to quoted
shares in active markets.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

306

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.1 Determination of fair value and fair value hierarchy (Continued)
The following represents the changes in Level 3 instruments for the financial year ended 31 December 2013 and 31 December
2012 for the Group (Continued):

The Group Financial Assets

31 December 2012 Financial

Financial investments
assets held available-
for trading for-sale
Unquoted Unquoted
securities securities Total
RM000 RM000 RM000

At 1 January 207,382 1,076,056 1,283,438

Total gains recognised in statement of income 5,449 3,460 8,909
Total losses recognised in other comprehensive income 22,308 22,308
Purchases 101,821 101,821
Sales (144,357) (21,206) (165,563)
Exchange fluctuation (2,161) (9,256) (11,417)

At 31 December 66,313 1,173,183 1,239,496

Total gains recognised in statement of income relating

to assets held on 31 December 4,299 10,980 15,279

Total gains recognised in other comprehensive income

relating to assets held on 31 December 26,244 26,244
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307

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed
The following table analyses within the fair value hierarchy the Groups financial assets and liabilities not measured at fair value
at 31 December 2013 but for which fair value is disclosed:

The Group The Company

Carrying Carrying
amount Fair Value amount Fair Value
RM000 RM000 RM000 RM000

2013
Financial assets
Cash and short-term funds 29,697,267 29,697,267 69,573 69,573
Reverse repurchase agreements 8,260,504 8,260,504
Deposits and placements with banks and other
financial institutions 3,789,019 3,788,770
Financial investments held-to-maturity 10,821,493 10,780,194
Loans, advances and financing 228,431,705 233,059,974 71 67
Other assets 6,437,126 6,441,163 44,729 44,729
Statutory deposits with central banks 6,361,648 6,361,648
Amount owing by subsidiaries net of allowance
for doubtful debts 788 788

Financial liabilities
Deposits from customers 263,004,302 262,874,691
Deposits and placements of banks and other
financial institutions 20,727,846 20,658,968
Repurchase agreements 5,922,788 5,922,788
Bills and acceptances payable 4,713,219 4,713,219
Other liabilities 7,740,495 7,740,495 5,027 5,027
Bonds and debentures 7,490,265 7,327,424
Other borrowings 7,772,727 7,658,998 3,823,855 3,826,230
Subordinated obligations 12,066,700 12,033,241 2,141,402 2,359,529
Non-cumulative guaranteed and redeemable
preference shares 847,447 847,447
Amount owing to subsidiaries 222 222
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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308

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed (Continued)
The following table analyses within the fair value hierarchy the Groups financial assets and liabilities not measured at fair value
at 31 December 2013 but for which fair value is disclosed (Continued):

31 December 2013 The Group The Company

Fair Value Fair Value

Quoted Significant Quoted Significant
market Observable unobservable market Observable unobservable
prices inputs inputs prices inputs inputs
(Level 1) (Level 2) (Level 3) Total (Level 1) (Level 2) (Level 3) Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

Financial assets
Cash and short-term funds 29,697,267 29,697,267 69,573 69,573
Reverse repurchase agreements 8,260,504 8,260,504
Deposits and placement with banks and
other financial institutions 3,788,770 3,788,770
Financial investments held-to-maturity 10,780,194 10,780,194
Loans, advances and financing 223,059,974 233,059,974 67 67
Other assets 6,441,163 6,441,163 44,729 44,729
Amount owing by subsidiaries 788 788

Total 29,697,267 252,330,605 282,027,872 69,573 45.584 115,157

Financial liabilities
Deposits from customers 262,937,122 262,937,122
Deposits and placements of banks
and other financial institutions 20,658,968 20,658,968
Repurchase agreements 5,922,788 5,922,788
Bills and acceptances payable 4,713,219 4,713,219
Other liabilities 7,740,495 770,495 5,027 5,027
Bonds and debentures 7,327,424 7,327,424
Other borrowings 7,658,998 7,658,998 3,826,230 3,826,230
Subordinated obligations 12,033,241 12,033,241 2,359,529 2,359,529
Non-cumulative guaranteed and
redeemable preference shares 847,447 847,447
Amount owing to subsidiaries 222 222

Total 329,839,702 329,839,702 6,191,008 6,191,008

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed (Continued)
The total fair value of each financial assets and liabilities presented on the statements of financial position as at year ended
31 December 2012 of the Group and the Company approximates the total carrying value as at the reporting date, except for
the following:

The Group The Company

Carrying Fair Carrying Fair

amount Value amount Value
RM000 RM000 RM000 RM000

2012
Financial assets
Deposits and placements with banks and other
financial institutions 4,990,331 5,167,762
Financial investments held-to-maturity 8,985,294 9,328,236
Loans, advances and financing 202,137,818 202,849,612 95 91
Other assets 5,587,427 5,570,634

Financial liabilities
Deposits from customers 247,295,039 246,931,642
Deposits and placements of banks and other
financial institutions 15,522,591 15,630,811
Bonds and debentures 3,850,660 3,827,716
Other borrowings 7,640,360 7,644,855 3,802,565 3,812,678
Subordinated obligations 12,659,851 12,874,553 2,141,378 2,425,660
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
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310

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed (Continued)
The fair values are based on the following methodologies and assumptions:

Short-term funds and placements with financial institutions

For short-term funds, placements with financial institutions and reverse repurchase agreements with maturities of less than six
months, the carrying value is a reasonable estimate of fair value. For deposits and placements with maturities of six months and
above, the estimated fair value is based on discounted cash flows using prevailing money market interest rates at which similar
deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity.

Financial investments held-to-maturity

The estimated fair value is generally based on quoted and observable market prices. Where there is no ready market in certain
securities, the Group and the Company establishes fair value by using valuation techniques. These include the use of recent
arms length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used
by market participants.

Other assets
The fair value of other assets approximates the carrying value less impairment allowance at the statement of financial position
date.

Loans, advances and financing

For floating rate loans, the carrying value is generally a reasonable estimate of fair value.

For fixed rate loans with maturities of six months or more, the fair value is estimated by discounting the estimated future cash
flows using the prevailing market rates of loans with similar credit risks and maturities.

The fair values of impaired floating and fixed rate loans are represented by their carrying value, net of individual impairment
allowance/specific allowance, being the expected recoverable amount.
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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed (Continued)
Amount due (to)/from subsidiaries and related companies
The estimated fair values of the amount due (to)/from subsidiaries and related companies approximate the carrying values as the
balances are either recallable on demand or are based on the current rates for such similar loans.

Deposits from customers

For deposits from customers with maturities of less than six months, the carrying amounts are a reasonable estimate of their fair
value. For deposit with maturities of six months or more, fair values are estimated using discounted cash flows based on
prevailing market rates for similar deposits from customers.

Deposits and placements of banks and other financial institutions

The estimated fair values of deposits and placements of banks and other financial institutions with maturities of less than six
months approximate the carrying values. For deposits and placements with maturities of six months or more, the fair values are
estimated based on discounted cash flows using prevailing money market interest rates for deposits and placements with similar
remaining period to maturities.

Obligations on securities sold under repurchase agreements

The estimated fair values of obligations on securities sold under repurchase agreements with maturities of less than six months
approximate the carrying values. For obligations on securities sold under repurchase agreements with maturities of six months
or more, the fair values are estimated based on discounted cash flows using prevailing money market interest rates with similar
remaining period to maturity.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

312

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.2 Financial instruments not measured at fair value but for which fair value is disclosed (Continued)
Bills and acceptances payable
The estimated fair values of bills and acceptances payable with maturities of less than six months approximate the carrying
values. For bills and acceptance payable with maturities of six months or more, the fair values are estimated based on discounted
cash flows using prevailing money market interest rates for bills and acceptance payable with similar remaining period to maturity.

Other liabilities
The fair value of other liabilities approximates the carrying value at the statement of financial position date.

Other borrowings
The estimated fair values of other borrowings with maturities of less than six months approximate the carrying values. For other
borrowings with maturities six months or more, the fair values are estimated based on discounted cash flows using prevailing
market rates for borrowings with similar risk profile.

Subordinated notes
The fair values for the quoted subordinated notes are obtained from quoted market prices while the fair values for unquoted
subordinated notes are estimated based on discounted cash flow models.

Redeemable preference shares

The estimated fair value of redeemable preference shares (RPS) approximates the carrying value based on Directors estimate
as the effective interest rate of the RPS is a reflection of the current rate for such similar instrument.

Credit related commitment and contingencies

The net fair value of these items was not calculated as estimated fair values are not readily ascertainable. These financial
instruments generally relate to credit risks and attract fees in line with market prices for similar arrangements. They are not
presently sold nor traded. The fair value may be represented by the present value of fees expected to be received, less
associated costs.
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313

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.3 Quantitative information about fair value measurements using significant unobservable inputs (level 3)
Certain credit derivatives products where market rate inputs are unobservable are valued using simulation approach comprising
statistical models that interact with each other. These models describe the default process and other market random variables
like interest rates and foreign currency (FX) rates in a mathematically and theoretically consistent framework. These statistical
models are the usual market standard when it comes to modeling rates, FX and credit. Credit derivatives inputs include:
Observable Credit default swap (CDS) spreads
Loss given default or loss severity
Credit correlation between the underlying debt instruments (models are structured on a transaction basis and calibrated to
liquid benchmark indices)
Correlation between Credit and FX
Credit spread and FX volatility
Actual transactions, where available, are used to regularly recalibrate unobservable parameters

For the purpose of Model Reserve, the following ranges (where applicable) are proposed to be used for performing sensitivity
analysis to determine such reserves:
Credit correlation
1. Long correlation positions will be shocked with lower correlation
2. Short correlation positions will be shocked with higher correlation

Credit & FX correlation

1. Short Quanto CDS position shocked with larger negative correlation
2. Long Quanto CDS position shocked with larger positive correlation

FX Volatility
1. Long volatility shocked with lower volatility
2. Short volatility shocked with higher volatility

Equity derivatives which primarily include over-the-counter options on individual or basket of shares or market indices are valued
using option pricing models such as Black-Scholes and Monte Carlo Simulations. These models are calibrated with the inputs
which include underlying spot prices, dividend and yield curves. A Level 3 input for equity options is historical volatility i.e. volatility
derived from the shares historical prices. The magnitude and direction of the impact to the fair value depend on whether the
Group is long or short the exposure.
Higher volatility will result in higher fair value for net long positions.
Higher volatility will result in lower fair value for net short positions.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

314

55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.3 Quantitative information about fair value measurements using significant unobservable inputs (level 3) (Continued)
(a) Financial instruments carried at fair value

Fair value Fair value Range Inter-relationship between

Assets (Liabilities) Valuation Unobservable (Weighted significant unobservable inputs
Description RM000 RM000 technique(s) input average) and fair value measurement

Derivative 9,649 (12,396) Discounted Cash Credit spread 5 bps 650 bps Increase in credit spread would
financial Flow, Stochastic result in a decrease in fair value
instruments Default and measurement
- Trading Foreign Exchange
Loss severity 60% 80% Increase in the loss severity, in
derivatives Correlation Model
isolation, would result in a
Credit derivatives
decrease in a fair value
measurement

Credit/foreign -55% +10% Given a short correlation position,

exchange an increase in correlation, in
correlation isolation, would generally result in
a decrease in fair value
measurement

Equity derivatives 40,026 (930,755) Option pricing Equity Volatility 6.72% 77.69% Higher volatility results in higher
fair value

Financial assets 73,048 Not Net tangible Net tangible Not applicable Higher net tangible assets results
held for trading applicable assets assets in higher fair value
Unquoted shares

Financial 1,276,913 Not Net tangible Net tangible Not applicable Higher net tangible assets results
investments applicable assets assets in higher fair value
available-for-sale
Unquoted shares
 INTO A NEW ERA

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55 FINANCIAL RISK MANAGEMENT (CONTINUED)

55.4 Fair value estimation (Continued)

55.4.3 Quantitative information about fair value measurements using significant unobservable inputs (level 3) (Continued)
(a) Financial instruments carried at fair value (Continued)
Sensitivity analysis for level 3

The Group Effect of reasonably possible alternative assumptions to:

2013
Sensitivity of Profit or loss Other comprehensive income
significant
unobservable Favourable Unfavourable Favourable Unfavourable
input changes changes changes changes
RM000 RM000 RM000 RM000

Financial assets
Derivative financial instruments Trading
- Credit derivatives 5%10% (494)
- Equity derivatives +25% (322)
25% 242

Total 242 (816)

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

316

56 THE OPERATIONS OF ISLAMIC BANKING

Statement of Financial Position as at 31 December 2013

31 December 31 December
2013 2012
Note RM000 RM000

Assets
Cash and short-term funds (a) 8,558,114 7,418,491
Reverse repurchase agreements 18,645
Deposits and placements with banks and other financial institutions (b) 730,415 873,775
Financial assets held for trading (c) 3,329,824 6,252,944
Islamic derivative financial instruments (d) 271,201 261,629
Financial investments available-for-sale (e) 1,783,107 3,296,450
Financial investments held-to-maturity (f) 1,040,933 1,075,590
Financing, advances and other financing/loans (g) 37,851,664 36,002,810
Deferred tax assets (h) 25,241 11,070
Amount due from conventional operations 3,391,843 1,932,621
Statutory deposits with Bank Negara Malaysia (i) 1,436,747 1,104,097
Property, plant and equipment (j) 9,485 10,680
Other assets (k) 588,654 524,408
Goodwill (l) 136,000 136,000
Intangible assets (m) 14,225 7,328

Total assets 59,186,098 58,907,893

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statement of Financial Position as at 31 December 2013 (Continued)

31 December 31 December
2013 2012
Note RM000 RM000

Liabilities
Deposits from customers (n) 41,186,141 38,903,965
Deposits and placements of banks and other financial institutions (o) 7,296,029 11,428,893
Islamic derivative financial instruments (d) 294,760 382,290
Amount due from conventional operations 786,600 868,493
Provision for taxation and Zakat (p) 17,978 138,568
Other liabilities (q) 4,181,097 2,452,580
Financial liabilities designated at fair value (r) 146,216
Subordinated Sukuk (s) 856,722 863,557

Total liabilities 54,765,543 55,038,346

Equity
Islamic banking funds 55,250 55,250
Ordinary share capital (t) 1,000,000 1,000,000
Perpetual preference shares (t) 70,000 70,000
Reserves (u) 3,285,874 2,735,080

4,411,124 3,860,330
Non-controlling interests 9,431 9,217

Total equity 4,420,555 3,869,547

Total equity and liabilities 59,186,098 58,907,893

Commitments and contingencies (d) (ii) 27,950,457 28,404,477

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

318

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statement of Income for the financial year ended 31 December 2013

2013 2012
Note RM000 RM000

Income derived from investment of depositors funds and others (v) 2,312,485 2,143,277
Net income derived from investment of shareholders funds (w) 331,899 462,277
Allowance made for impairment losses on financing, advances and other financing/loans (x) (147,768) (90,179)
Allowance (made)/written back for impairment losses on other receivables (565) 217

Total distributable income 2,496,051 2,515,592

Income attributable to depositors (y) (1,051,521) (916,211)

Total net income 1,444,530 1,599,381

Personnel expenses (z) (111,956) (103,793)
Other overheads and expenditures (aa) (468,545) (422,936)

Profit before allowances 864,029 1,072,652

Allowance made for impairment losses (3,024) (16)

Profit before taxation (861,005) 1,072,636

Taxation (ab) (205,422) (255,418)

Profit after taxation (655,583) 817,218

Profit attributable to:

Owners of the Parent 655,278 815,796
Non-controlling interests 305 1,422

655,583 817,218
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statement of Comprehensive Income for the financial year ended 31 December 2013

2013 2012
RM000 RM000

Net profit after taxation 655,583 817,218

Other comprehensive income:
Revaluation reserve-financial investments available-for-sale (40,545) 17,630
- Net (loss)/gain from change in fair value (35,825) 27,000
- Realised gain transferred to statement of income on disposal and impairment (20,303) (6,815)
- Income tax effects 15,583 (2,555)
Exchange fluctuation reserve (8,301) (2,763)

Other comprehensive income, net of tax (48,846) 14,867

Total comprehensive income for the financial year 606,737 832,085

Total comprehensive income attributable to:

Owners of the Parent 606,828 834,335
Non-controlling interests (91) (2,250)

606,737 832,085

Income from Islamic Banking operations:

Total net income 1,444,530 1,599,381
Add: Allowance made for impairment losses on financing, advances and other financing/loans 147,768 90,179
Add: Allowance made/(written back) for impairment losses on other receivables 565 (217)

1,592,863 1,689,343
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

320

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statements of changes in equity for the financial year ended 31 December 2013

Revaluation
reserve-
financial
Perpetual Islamic investments Exchange Non-
Share preference Banking Statutory available- fluctuation Regulatory Share-based Retained controlling
capital shares funds reserve for-sale reserve reserve payment earnings Total interests Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

2013
At 1 January 2013 1,000,000 70,000 55,250 671,625 26,605 6,130 242,624 335 1,787,761 3,860,330 9,217 3,869,547
Net profit for the financial year 655,278 655,278 305 655,583
Other comprehensive income
(net of tax) (40,545) (8,210) (48,755) (91) (48,846)
Financial investments available-for-sale (40,545) (40,545) (40,545)
Currency translation difference (8,210) (8,210) (91) (8,301)
Total comprehensive income for the
financial year (40,545) (8,210) 655,278 606,523 214 606,737
Dividend for the financial year ended
31 December 2012 (56,000) (56,000) (56,000)
Share-based payment expense 591 591 591
Transfer to statutory reserve 91,390 (91,390)
Transfer to regulatory reserve (12,536) 12,536
Shares released under Equity
Ownership Plan (320) (320) (320)

At 31 December 2013 1,000,000 70,000 55,250 763,015 (13,940) (2,080) 230,088 606 2,308,185 4,411,124 9,431 4,420,555
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statements of changes in equity for the financial year ended 31 December 2013 (Continued)

Revaluation
reserve-
financial
Perpetual Islamic investments Exchange Non-
Share preference Banking Statutory available- fluctuation Regulatory Share-based Retained controlling
capital shares funds reserve for-sale reserve reserve payment earnings Total interests Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000

2012
At 1 January 2012 1,000,000 70,000 55,000 471,090 8,975 6,643 59,113 16,499 1,339,732 3,027,052 10,045 3,037,097
Net profit for the financial year 815,796 815,796 1,422 817,218
Other comprehensive income
(net of tax) 17,630 (513) 17,117 (2,250) 14,867
Financial investments available-for-sale 17,630 17,630 17,630
Currency translation difference (513) (513) (2,250) (2,763)
Total comprehensive income for the
financial year 17,630 (513) 815,796 832,913 (828) 832,085
Expiry of Management Equity Scheme (16,279) 16,279
Share-based payment expense 571 571 571
Transfer to statutory reserve 200,535 (200,535)
Transfer to regulatory reserve 183,511 (183,511)
Shares released under Equity
Ownership Plan (456) (456) (456)
Issue of share capital during the year 250 250 250

At 31 December 2012 1,000,000 70,000 55,250 671,625 26,605 6,130 242,624 335 1,787,761 3,860,330 9,217 3,869,547
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

322

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statements of Cash Flows for the financial year ended 31 December 2013

2013 2012
RM000 RM000

Operating activities
Profit before taxation 861,005 1,072,636
Add/(less) adjustments:
Depreciation of property, plant and equipment 3,553 3,691
Written off property, plant and equipment 35 116
Amortisation of intangible assets 3,150 2,811
Net unrealised (gain)/loss on revaluation of financial assets held for trading 8,452 (444)
Net unrealised (gain)/loss on derivatives 8,275 (9,842)
Accretion of discount less amortisation of premium (17,676) (42,479)
Net gain from sale of financial investments available-for-sale (20,303) (6,815)
Profit income from financial investments held-to-maturity (49,867) (69,021)
Profit income from financial investments available-for-sale (109,722) (84,224)
Profit expense on Subordinated Sukuk 38,010 28,740
Share-based payment expense 591 571
Net gain from sale of financial investment held-to-maturity (286) (1,245)
Unrealised gain from financial liabilities designated at fair value (8,464)
Net loss from foreign exchange transactions 117,044 47,261
Net loss/(gain) from hedging derivatives 4,760 (2,002)
Shares vested under Equity Ownership Plan (321)
Net loss from hedging derivatives 4,760 (2,002)
Impairment losses on securities 3,538 16
Allowance for impairment losses on other receivables 565 (217)
Allowance for impairment losses on financing, advances and other financing/loans 195,263 146,262

1,037,923 1,085,815
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statements of Cash Flows for the financial year ended 31 December 2013 (Continued)

2013 2012
RM000 RM000

(Increase)/decrease in operating assets

Reverse repurchase agreements (18,645)
Deposits and placements with banks and other financial institutions 143,360 563,682
Financial assets held for trading 2,936,884 (3,293,121)
Islamic derivative financial instruments (105,377) (72,910)
Financing, advances and other financing/loans (2,051,043) (6,657,703)
Statutory deposits with Bank Negara Malaysia (332,650) (6,300)
Other assets ( 197,591) 15,609
Amount due from conventional operations (1,525,221) (1,394,429)

(1,150,283) (10,845,172)
Increase/(decrease) in operating liabilities
Deposits from customers 2,282,176 7,338,150
Deposits and placements of banks and other financial institutions (4,132,864) 975,933
Other liabilities 1,611,472 1,396,349
Financial liabilities designated at fair value 154,680
Amount due to conventional operations (88,757) 464,894

(173,293) 10,175,326

Cash flows generated from operations (285,653) 415,969

Taxation paid (126,655) (146,361)

Net cash flows generated from operating activities (412,308) 269,608

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

324

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

Statements of Cash Flows for the financial year ended 31 December 2013 (Continued)

Note 2013 2012

RM000 RM000

Investing activities
Net proceeds from purchase of financial investments available-for-sale 1,449,964 (1,813,170)
Purchase of property, plant and equipment (3,049) (5,499)
Purchase of intangible assets (10,014) (5,824)
Net proceeds from sale of financial investments held-to-maturity 34,692 322,391
Profit income from financial investments held-to-maturity 50,118 68,631
Profit income from financial investments available-for-sale 124,439 58,758

Net cash flows generated from/(used in) investing activities 1,646,150 (1,374,713)

Financing activities
Issuance of Subordinated Sukuk 300,000
Profit expense paid on Subordinated Sukuk (37,981) (25,180)
Dividend paid (56,000)
Issuance of share capital 250
Net cash flows (used in)/generated from financing activities (93,981) 275,070

Net increase/(decrease) in cash and cash equivalents 1,139,861 (830,035)

Cash and cash equivalents at beginning of financial year 7,418,491 8,238,796
Effect of exchange rate changes (238) 9,730

Cash and cash equivalents at end of financial year 8,558,114 7,418,491

Cash and cash equivalents comprise:

Cash and short-term funds (a) 8,558,114 7,418,491
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

31 December 31 December
2013 2012
RM000 RM000

(a) Cash and short-term funds

Cash and balances with banks and other financial institutions 977,947 846,726
Money at call and deposit placements maturing within one month 7,580,167 6,571,765

8,558,114 7,418,491

(b) Deposits and placements with banks and other

financial institutions
Licensed banks 730,415 717,377
Licensed investment banks 146,362
Other financial institutions 10,036

730,415 873,775

(c) Financial assets held for trading

Money market instruments:
Unquoted:
Government Investment Issues 27,647 251,804
Malaysian Government treasury bills 68,456
Bank Negara Malaysia monetary notes 2,184,341 3,540,897
Islamic accepted bills 150,202
Other Government securities 100,262
Islamic negotiable instruments of deposits 748,368 1,656,985

2,960,356 5,768,606
Quoted securities:
Outside Malaysia
Private debt securities 47696
Sukuk 77,770

125,466
Unquoted securities:
In Malaysia
Private debt securities 221,440 461,627
Outside Malaysia
Islamic debt securities 22,562 22,711

244,002 484,338

3,329,824 6,252,944
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

326

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies

(i) Islamic derivative financial instruments
The following tables summarise the contractual or underlying principal amounts of trading derivative and financial instruments held for
hedging purposes. The principal or contractual amounts of these instruments reflect the volume of transactions outstanding at
statements of financial position date, and do not represent amounts at risk. In the financial statements, trading derivative financial
instruments are revalued on a gross position basis and the unrealised gains or losses are reflected in Islamic derivative financial
instruments Assets and Liabilities respectively.

31 December 2013

Principal Asset Liability

RM000 RM000 RM000

Trading derivatives
Foreign exchange derivatives
Currency forwards 1,311,116 30,226 (5,215)

- Less than 1 year 650,332 21,019 (3,922)

- 1 year to 3 years 1,787 32
- More than 3 years 658,997 9,175 (1,293)

Currency swaps 2,961,169 31,757 (29,390)

- Less than 1 year 2,961,169 31,757 (29,390)

Currency spots 8,625 10 (5)

- Less than 1 year 8,625 10 (5)

Currency options 27,230 93 (93)

- Less than 1 year 27,230 93 (93)

Cross currency profit rate swaps 834,259 37,105 (36,600)

- Less than 1 year 93,859 4,878 (4,878)

- More than 3 years 740,400 32,227 (31,722)

Profit rate derivatives

Islamic profit rate swaps 8,846,909 113,256 (94,931)

- Less than 1 year 450,001 839 (455)

- 1 year to 3 years 1,335,090 3,993 (3,457)
- More than 3 years 7,061,818 108,424 (91,019)
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies (Continued)

(i) Islamic derivative financial instruments (Continued)

31 December 2013

Principal Asset Liability

RM000 RM000 RM000

Trading derivatives (Continued)

Equity derivatives
Equity options 909,075 13,513 (13,513)

- 1 year to 3 years 119,822 3,043 (3,043)

- More than 3 years 789,253 10,470 (10,470)

Credit related contracts

Total return swaps 115,960 586 (586)

- More than 3 years 115,960 586 (586)

Held for hedging derivatives

Islamic profit rate swaps 6,930,427 44,655 (114,427)

- 1 year to 3 years 265,304 2,882 (320)

- More than 3 years 6,665,123 41,773 (114,107)

Total derivative assets/(liabilities) 21,944,770 271,201 (294,760)

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

328

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies (Continued)

(i) Islamic derivative financial instruments (Continued)
31 December 2012
Principal Asset Liability
RM000 RM000 RM000
Trading derivatives
Foreign exchange derivatives
Currency forwards 1,579,365 33,775 (31,665)
- Less than 1 year 858,428 10,507 (17,666)
- 1 year to 3 years 60,153 1,167 (1,011)
- More than 3 years 660,784 22,101 (12,988)
Currency swaps 2,803,898 17,819 (8,780)
- Less than 1 year 2,803,898 17,819 (8,780)
Currency spots 1,604 1 (1)
- Less than 1 year 1,604 1 (1)
Currency options 92,114 297 (297)
- Less than 1 year 92,114 297 (297)
Cross currency profit rate swaps 331,784 17,994 (17,994)
- 1 year to 3 years 91,384 5,480 (5,480)
- More than 3 years 240,400 12,514 (12,514)

Profit rate derivatives

Islamic profit rate swaps 8,931,122 164,711 (52,312)
- Less than 1 year 1,370,107 8,400 (193)
- 1 year to 3 years 1,527,680 9,391 (7,377)
- More than 3 years 6,033,335 146,920 (44,742)

Equity derivatives
Equity options 1,949,304 16,024 (16,024)
- Less than 1 year 925,607 2,615 (2,615)
- 1 year to 3 years 151,964 2,556 (2,556)
- More than 3 years 871,733 10,853 (10,853)

Credit related contracts

Total return swaps 121,760 1,634 (1,634)
- More than 3 years 121,760 1,634 (1,634)

Held for hedging derivatives

Islamic profit rate swaps 7,078,403 9,374 (253,583)
- 1 year to 3 years 7,078,403 9,374 (253,583)

Total derivative assets/(liabilities) 22,889,354 261,629 (382,290)

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(d) Islamic derivative financial instruments, commitments and contingencies (Continued)

(ii) Commitments and contingencies
In the normal course of business, the Group makes various commitments and incur certain contingent liabilities with legal recourse
to their customers. No material losses are anticipated as a result of these transactions.

Treasury related derivative financial instruments are revalued on a gross position basis and the unrealised gains or losses are reflected
in Derivative Financial Instruments Assets and Liabilities respectively.

The notional or principal amount of the commitments and contingencies constitute the following:

31 December 31 December
2013 2012
Principal Principal
RM000 RM000

Credit related
Direct credit substitutes 153,960 195,449
Certain transaction-related contingent items 390,323 434,554
Short-term self-liquidating trade-related contingencies 19,725 85,180
Irrevocable commitments to extend credit:
- Maturity less than one year 4,383,087 3,852,873
- Maturity exceeding one year 868,416 901,637
Miscellaneous commitments and contingencies:
- Shariah-compliant equity option 190,176 45,430

Total credit-related commitments and contingencies 6,005,687 5,515,123

Total treasury-related commitments and contingencies (Note 56(d)(i)) 21,944,770 22,889,354

Total commitments and contingencies 27,950,457 28,404,477

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330

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

31 December 31 December
2013 2012
RM000 RM000

(e) Financial investments available-for-sale

Money market instruments:
Unquoted:
Government Investment Issues 377,791 1,140,378
Islamic Cagamas bonds 25,491 20,764
Malaysian Government Securities 34,793 99,200
Khazanah bonds 54,240

438,075 1,314,582

Quoted securities:
Outside Malaysia
Private debt securities 11,533 8,142
Government bonds 100,144 71,494

111,677 79,636

Unquoted securities:
In Malaysia
Private debt securities 873,751 1,547,118
Placements with Islamic Banking and Finance Institute Malaysia 575 575

Outside Malaysia
Private debt securities 335,405 340,844
Private equity funds 23,624 13,695

1,233,355 1,902,232

1,783,107 3,296,450
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

31 December 31 December
2013 2012
RM000 RM000

(f) Financial investments held-to-maturity

Quoted securities:
Outside Malaysia
Islamic bonds 22,932 18,519
Bank Indonesia Certificates 89,510 89,356

112,442 107,875

Unquoted securities:
In Malaysia
Private debt securities 602,177 778,948

Outside Malaysia
Private debt securities 326,446 188,991

928,623 967,939

Amortisation of premium less accretion of discount (65) (40)

Less: Allowance for impairment loss (67) (184)

1,040,933 1,075,590
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FINANCIAL STATEMENTS

332

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans

31 December 31 December
2013 2012
RM000 RM000

(i) By type:
Cash line 478,132 471,590
Term financing
- House financing 9,506,746 8,647,391
- Syndicated financing 502,996 422,285
- Hire purchase receivables 7,074,809 7,651,197
- Other term financing 17,521,614 16,727,879
Bills receivable 2,885 3,766
Trust receipts 66,615 80,151
Claims on customers under acceptance credits 370,754 340,687
Staff financing 2 3
Revolving credits 2,393,009 1,575,218
Credit card receivables 121,966 112,543
Share purchase financing 200,937 182,099
Other financing/loans 33,551 72,641

Gross financing, advances and other financing/loans 38,274,016 36,287,450

Fair value changes arising from fair value hedge 40,548 222,909

38,314,564 36,510,359
Less: Allowance for impairment losses

- Individual impairment allowance (48,093) (127,290)

- Portfolio impairment allowance (414,807) (380,259)

(462,900) (507,549)

Net financing, advances and other financing/loans 37,851,664 36,002,810

(a) Included in financing, advances and other financing/loans are exposures to Restricted Profit Sharing Investment Accounts
(RPSIA), as part of an arrangement between CIMB Islamic and CIMB Bank. CIMB Bank is exposed to risks and rewards on
RPSIA financing and will account for all the allowances for impairment losses for bad and doubtful debts arising thereon.

As at 31 December 2013, the gross exposures to RPSIA financing is RM2,476 million (31 December 2012: RM988 million) and
the portfolio impairment allowance relating to this RPSIA amounting to RM11.3 million (31 December 2012: RM3.5 million) is
recognised in the Financial Statements of CIMB Bank. There was no individual impairment provided on this RPSIA financing.
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

(i) (b) During the financial year, the Group has undertaken fair value hedges on RM6,350 million (31 December 2012: RM6,500 million)
financing using Islamic profit rate swaps.

31 December 31 December
2013 2012
RM000 RM000

Gross financing hedged 6,350,000 6,500,000

Fair value changes from fair value hedges 40,548 222,909

6,390,548 6,722,909

The fair value loss on Islamic profit rate swaps in this hedge transaction as at 31 December 2013 was RM67 million (31 December
2012: RM247 million).

31 December 31 December
2013 2012
RM000 RM000

(ii) By contract:
Bai' Bithaman Ajil (Deferred payment sale) 13,754,515 12,957,557
Murabahah (Cost Plus Sale) 2,862,118 3,119,959
Ijarah Muntahia Bittamlik/AITAB (Lease Ending With Ownership) 7,577,297 7,346,892
Bai' al-'inah (Sale and repurchase) 11,806,734 12,455,612
Others 2,273,352 407,430

38,274,016 36,287,450

(iii) By type of customers:

Domestic non-bank financial institutions 1,505,087 574,212
Domestic business enterprises
- Small medium enterprises 2,541,769 2,168,026
- Others 5,180,126 5,245,295
Government and statutory bodies 6,746,098 6,747,294
Individuals 21,092,572 20,766,552
Other domestic entities 31,022 16,981
Foreign entities 1,177,342 769,090

38,274,016 36,287,450
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

334

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

31 December 31 December
2013 2012
RM000 RM000

(iv) By profit sensitivity:

Fixed rate
- House financing 565,911 732,222
- Hire purchase receivables 7,074,809 7,651,197
- Other fixed rate financing 12,857,952 12,887,863
Variable rate
- House financing 8,940,835 7,915,170
- Others 8,834,509 7,100,998

38,274,016 36,287,450

(v) By economic purposes:

Personal use 3,194,892 3,250,913
Credit card 121,965 112,543
Purchase of consumer durables 17,995 11,584
Construction 1,930,087 1,970,429
Residential property 9,555,442 8,689,174
Non-residential property 3,206,670 2,573,888
Purchase of fixed assets other than land and building 270,074 360,709
Purchase of securities 21,839 35,648
Purchase of transport vehicles 7,132,059 7,668,152
Working capital 8,733,774 7,936,945
Other purpose 4,089,219 3,677,465

38,274,016 36,287,450

(vi) By geographical distribution:

Malaysia 35,523,792 33,312,865
Indonesia 1,847,307 2,495,884
Singapore 902,917 386,429
Other countries 92,272

38,274,016 36,287,450
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

31 December 31 December
2013 2012
RM000 RM000

(vii) By residual contractual maturity:

Within one year 3,777,017 3,396,462
One year to less than three years 2,120,729 1,633,898
Three years to less than five years 6,300,584 4,171,901
Five years and more 26,075,686 27,085,189

38,274,016 36,287,450

(viii) Impaired financing, advances and other financing/loans by economic purposes:

Personal use 25,081 15,570
Credit cards 2,285 419
Residential property 97,844 108,014
Non-residential property 29,202 35,148
Purchase of fixed assets other than land and building 1,682 1,966
Construction 1,312 894
Purchase of securities 223 10
Purchase of transport vehicles 100,454 87,913
Working capital 109,100 186,303
Other purpose 8,245 7,436

375,428 443,673

(ix) Impaired financing, advances and other financing/loans by geographical

distribution:
Malaysia 310,151 304,128
Indonesia 65,277 47,274
Other countries 92,271

375,428 443,673
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

336

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

31 December 31 December
2013 2012
RM000 RM000

(x) Movements in impaired financing, advances and other financing/loans:

At 1 January 443,673 472,632
Classified as impaired during the financial year 493,410 411,956
Reclassified as not impaired during the financial year (192,703) (159,073)
Reclassification from unwinding income 10,109
Amount recovered (127,800) (73,013)
Amount written off (237,366) (211,891)
Exchange fluctuation (3,786) (7,047)

At 31 December 375,428 443,673

Ratio of gross impaired financing, advances and other financing/loans

to gross financing, advances and other financing/loans 0.98% 1.22%

* Represents restatement of income-in-suspense and financing previously classified as performing.

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(g) Financing, advances and other financing/loans (Continued)

(xi) Movements in allowance for impaired financing, advances and other financing/loans:
2013 2012
RM000 RM000

Individual impairment allowance

At 1 January 127,290 139,775
Allowance made during the financial year (12,569) 34,150
Amount written off (100,377) (50,675)
Unwinding income 4,090
Exchange fluctuation 33,749 (50)

At 31 December 48,093 127,290

Portfolio impairment allowance

At 1 January 380,259 428,666
Allowance made during the financial year 205,711 112,112
Amount written off (136,989) (162,602)
Unwinding income 6,019
Allowance transferred from conventional operations 2,715
Exchange fluctuation (36,889) (3,936)

At 31 December 414,807 380,259

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FINANCIAL STATEMENTS

338

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(h) Deferred taxation

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown
in the statements of financial position:

31 December 31 December
2013 2012
RM000 RM000

Portfolio impairment allowance for bad and doubtful financing 45 78

Accelerated tax depreciation (3,821) (2,234)
Revaluation reserve financial investments available-for-sale 8,596 (6,987)
Other temporary differences 20,421 20,213

Deferred tax assets 25,241 11,070

The movements in deferred tax assets and liabilities during the financial year comprise the following:

Portfolio
impairment
allowance/
general
allowance for Financial
bad and Accelerated investments Other
doubtful tax available- temporary
Deferred tax assets/(liabilities) Note financing depreciation for-sale differences Total
RM000 RM000 RM000 RM000 RM000

2013
At 1 January 78 (2,234) (6,987) 20,213 11,070
Credited/(charged) to statement of income (ab) (33) (1,247) - 208 (1,072)
Under provision in prior year - (340) - - (340)
Transferred from equity - - 15,583 - 15,583

At 31 December 2013 45 (3,821) 8,596 20,421 25,241

2012
At 1 January 27 (839) (4,432) 11,603 6,359
Credited/(charged) to statement of income (ab) 51 (1,336) - 8,893 7,608
Under provision in prior year - (59) - (283) (342)
Transferred to equity - - (2,555) - (2,555)

At 31 December 2012 78 (2,234) (6,987) 20,213 11,070

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(i) Statutory deposits with Bank Negara Malaysia

The statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act,
2009, the amounts of which are determined at set percentages of total eligible liabilities.

(j) Property, plant and equipment

Renovations,
office Computer
equipment, equipment
furniture and Motor and software
fittings vehicles under lease Total
Note RM000 RM000 RM000 RM000

2013
Cost
At 1 January 12,246 3,384 7,215 22,845
Additions 2,109 393 547 3,049
Reclassified to intangible assets (m) (33) - - (33)
Written off - (82) - (82)
Exchange fluctuation (985) (3) (1,079) (2,067)

At 31 December 13,337 3,692 6,683 23,712

Accumulated depreciation
At 1 January 6,592 951 4,622 12,165
Charge for the financial year 2,186 446 921 3,553
Written off - (47) - (47)
Exchange fluctuation (660) (1) (783) (1,444)

At 31 December 8,118 1,349 4,760 14,227

Net book value at 31 December 5,219 2,343 1,923 9,485

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FINANCIAL STATEMENTS

340

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(j) Property, plant and equipment

Renovations,
office Computer
equipment, equipment
furniture and Motor and software
fittings vehicles under lease Total
Note RM000 RM000 RM000 RM000

2012
Cost
At 1 January 15,079 2,589 7,063 24,731
Additions 3,561 1,157 781 5,499
Reclassified to intangible assets (m) (1,407) - - (1,407)
Written off (4,472) (360) (10) (4,842)
Exchange fluctuation (515) (2) (619) (1,136)

At 31 December 12,246 3,384 7,215 22,845

Accumulated depreciation
At 1 January 10,729 645 3,790 15,164
Charge for the financial year 1,878 571 1,242 3,691
Reclassified to intangible assets (m) (1,262) - - (1,262)
Written off (4,453) (263) (10) (4,726)
Exchange fluctuation (300) (2) (400) (702)

At 31 December 6,592 951 4,622 12,165

Net book value at 31 December 5,654 2,433 2,593 10,680

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(k) Other assets

31 December 31 December
2013 2012
RM000 RM000

Deposits and prepayments 20,832 100

Clearing accounts 184,092 170,309
Collateral pledged for derivative transactions 221,233 61,430
Sundry debtors 162,497 292,569

588,654 524,408

(l) Goodwill

At 1 January/31 December 136,000 136,000

Goodwill is wholly allocated to the retail banking cash-generating unit (CGU).

The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections
based on the 2014 financial budgets approved by management, projected for 5 years based on the average to year historical Gross
Domestic Product (GDP) growth of the country covering a five year period, revised for current economic conditions. Cash flows beyond
the five year period are extrapolated using an estimated growth rate of 5.00% (31 December 2012: 5.00%). The cash flow projections are
derived based on a number of key factors including the past performance and managements expectation of market developments. The
discount rate is 6.55% (31 December 2012: 7.10%) which reflects the specific risks relating to the CGU.

Management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of any CGU to
exceed its recoverable amount.
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FINANCIAL STATEMENTS

342

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(m) Intangible assets

31 December 31 December
2013 2012
Note RM000 RM000

Computer software
Cost
At 1 January 24,373 17,142
Additions 10,014 5,824
Reclassified from property, plant and equipment (j) 33 1,407

At 31 December 34,420 24,373

Accumulated amortisation
At 1 January 17,045 12,972
Charge for the financial year 3,150 2,811
Reclassified from property, plant and equipment (j) - 1,262

At 31 December 20,195 17,045

Net book value at 31 December 14,225 7,328

The above intangible assets include computer software under construction at cost of RM249,457 (31 December 2012: RM247,332).

The remaining amortisation period of the intangible assets are as follows:

Computer software 1 13 years

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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(n) Deposits from customers

31 December 31 Dicember
2013 2012
RM000 RM000

(i) By type of deposits

Savings deposits
Wadiah 1,734,338 1,527,782
Mudharabah 711,650 634,512

2,445,988 2,162,294

Demand deposit
Wadiah 3,439,690 3,638,360
Qard 11,854 1,875
Mudharabah 4,793,196 4,240,189

8,244,740 7,880,424

Term deposit
Commodity Murabahah 5,652,819 7,685,855
Negotiable Islamic Debt Certificate (NIDC) 5,934,040 3,481,754
Mudharabah 414,592 1,111,567
Hybrid (Bai Bithamin Ajil (BBA) and Bai Al-Dayn) 5,519,448 2,370,187

Short term money market deposit-i 15,344,867 13,447,095

Wakalah 14,841,946 13,327,631
Wadiah 502,921 119,464

General investment account 3,200,189 3,721,959

Mudharabah 3,200,189 3,721,959

Specific investment account 338,070 483,823

Mudharabah 337,655 483,823
Murabahah 415 -

30,469,985 28,820,486
Others 25,428 40,761
Qard 25,428 40,761

41,186,141 38,903,965
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FINANCIAL STATEMENTS

344

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

31 December 31 December
2013 2012
RM000 RM000

(n) Deposits from customers (Continued)

(i) By type of deposits (Continued)
The maturity structure of term deposit is as follows:

Due within six months 29,055,401 26,691,764

Six months to one year 628,554 1,057,691
One year to three years 68,248 189,331
Three years to five years 383,128 434,327
More than five years 334,654 447,373

30,469,985 28,820,486

(ii) By type of customer

Government and statutory bodies 4,881,479 6,547,784
Business enterprises 17,828,677 14,616,989
Individuals 5,388,521 6,225,821
Others 13,087,464 11,513,371

41,186,141 38,903,965
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

31 December 31 December
2013 2012
RM000 RM000

(o) Deposits and placements of banks and other financial institutions

Licensed banks 6,816,280 10,037,011
Licensed investment banks 230 998,659
Other financial institutions 479,519 393,223

7,296,029 11,428,893

(p) Provision for taxation and Zakat

Taxation 17,523 137,173

Zakat 455 1,395

17,978 138,568

(q) Other liabilities

Clearing accounts 2,975,794 1,828,337

Due to brokers 6,446 237
Accruals and other payables 1,198,857 624,006

4,181,097 2,452,580

(r) Financial liabilities designated at fair value

Deposits from customers - structured investments 146,216 -

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FINANCIAL STATEMENTS

346

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(r) Financial liabilities designated at fair value (Continued)

The Group has issued structured investments, and have designated them at fair value in accordance with MFRS139. The Group and the
Bank have the ability to do this when designating these instruments at fair value reduces an accounting mismatch, is managed by the
Group and the Bank on the basis of its fair value, or includes terms that have substantive derivative characteristics.

Included in the above are individual and domestic other non-bank financial institution customers deposits with contractual amount due on
maturity amounting to RM3,562,000 and RM151,118,000 respectively.

The carrying amount of the Group as at 31 December 2013 of financial liabilities designated at fair value were RM8,464,000 lower than
the contractual amount at maturity. The fair value changes of the financial liabilities that are attributable to the changes in own credit risk
are not significant.

(s) Subordinated Sukuk

The RM850 million subordinated Sukuk (the Sukuk) is part of the Tier-2 Junior Sukuk programme which was approved by the Securities
Commission on 22 May 2009. Under the programme, CIMB Islamic Bank is allowed to raise Tier-2 capital of up to RM2.0 billion in nominal
value outstanding at any one time.

The first tranche of the Sukuk of RM300 million was issued at par on 25 September 2009 and is due on 25 September 2024, with optional
redemption on 25 September 2019 or any periodic payment date thereafter. The Sukuk bears a profit rate of 5.85% per annum payable
semi-annually in arrears.

On 21 April 2011, the second tranche of the Sukuk of RM250 million was issued at par and is due on 21 April 2021, with optional
redemption on 21 April 2016 or any periodic payment date threafter. The Sukuk bears a profit rate of 4.20% per annum payable semi-
annually in arrears.

On 18 September 2012, the third tranche of the Sukuk of RM300 million was issued at par and is due on 18 September 2022, with
optional redemption on 18 September 2017 or any periodic payment date thereafter. The Sukuk bears a profit rate of 4.00% per annum,
payable semi-annually in arrears.

The RM850 million Sukuk qualify as Tier-II capital for the purpose of the total capital ratio computation (subject to the general phase-out
treatment under Basel III).
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56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(t) Ordinary share capital and perpetual preference shares

31 December 31 December
2013 2012
RM000 RM000

Authorised
Ordinary shares of RM1.00 each:
At 1 January/31 December 1,500,000 1,500,000

Issued and fully paid

Ordinary shares of RM1.00 each:
At 1 January/31 December 1,000,000 1,000,000

Perpetual preference shares

Authorised
Perpetual preference shares of RM1.00 each:
At 1 January/31 December 100,000 100,000

Issued and fully paid

Perpetual preference shares of RM1.00 each:
At 1 January/31 December 70,000 70,000

(u) Reserves
(a) The statutory reserve is maintained in compliance with Section 15 of the Islamic Banking Act, 1983 and is not distributable as cash
dividends.

(b) Regulatory reserves are maintained as an additional credit risk absorbent to ensure robustness on the financing impairment assessment
methodology with the adoption of FRS 139 beginning 1 January 2010.

(c) The Share-based payment reserve arose from the Management Equity Scheme (MES) and Employee Ownership Plan (EOP), the
Groups share-based compensation benefits.
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FINANCIAL STATEMENTS

348

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(v) Income derived from investment of depositors funds and others
2013 2012
RM000 RM000

Income derived from investment of:

(i) General investment deposits 1,236,393 1,053,521
(ii) Specific investment deposits 89,121 97,510
(iii) Other deposits 986,971 992,246

2,312,485 2,143,277

(i) Income derived from investment of general investment deposits

Finance income and hibah:
Financing, advances and other financing/loans
- Income other than recoveries 1,023,862 871,374
- Unwinding income* 3,360 2,762
Financial assets held for trading 18,595 14,514
Financial investments available-for-sale 51,116 38,955
Financial investments held-to-maturity 22,584 26,650
Money at call and deposit with financial institutions 115,647 76,191
Securities purchased under resale agreement 501
Others 7,823

1,243,488 1,030,446

Accretion of discount less amortisation of premium 8,120 18,664

1,251,608 1,049,110

Other operating income:

Net loss from foreign exchange transactions (52,424) (26,199)
Net gain from sale of financial investments available-for-sale 13,414 3,591
Net gain from sale of financial investments held-to-maturity 135 528
Net gain/(loss) from financial assets held for trading
- Realised 18,722 9,578
- Unrealised (6,516) 558

(26,669) (11,944)

Fees and commission income:

Fee on financing and advances 6,398 7,544
Guarantee fees 1,831 2,785
Service charges and fees 1,667 5,439

9,896 15,768

Other income:
Sundry income 1,558 587

1,236,393 1,053,521

* Unwinding income is income earned on impaired financial assets

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349

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(v) Income derived from investment of depositors funds and others (Continued)
2013 2012
RM000 RM000

(ii) Income derived from investment of specific investment deposits

Finance income and hibah:
Financing, advances and other financing/loans
- Income other than recoveries 64,763 60,404
Money at call and deposit with banks and other financial institutions 24,358 37,106

89,121 97,510

(iii) Income derived from investment of other deposits

Finance income and hibah:
Financing, advances and other financing/loans
- Income other than recoveries 832,248 809,175
- Unwinding income* 3,302 2,641
Financial assets held for trading 17,347 15,508
Financial investments available-for-sale 46,358 37,861
Financial investments held-to-maturity 15,156 22,613
Money at call and deposit with banks and other financial institutions 92,213 83,449

1,006,624 971,247
Accretion of discount less amortisation of premium 8,733 21,919

1,015,357 993,166

Other operating income:

Net gain from sale of financial investments available-for-sale 9,473 2,967
Net gain/(loss) from financial assets held for trading
- Realised 20,579 11,397
- Unrealised (1,699) (112)
Net gain from sale of financial investments held-to-maturity 137 661
Net loss from foreign exchange transactions (58,880) (19,222)

(30,390) (4,309)

Fees and commission income:

Guarantee fees 2,004 3,389

986,971 992,246

* Unwinding income is income earned on impaired financial assets

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

350

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(w) Net income derived from investment of shareholders funds

2013 2012
RM000 RM000

Finance income and hibah:

Financing, advances and other financing/loans
- Income other than recoveries 81,417 84,161
- Unwinding income * 313 229
Financial investments available-for-sale 12,248 7,408
Financial assets held for trading 1,674 1,361
Financial investments held-to-maturity 12,127 19,758
Money at call and deposit with financial institutions 23,794 49,833

131,573 162,750
Accretion of discount less amortisation of premium 823 1,896

132,396 164,646

Other operating income:

Net gain/(loss) from financial assets held for trading
- Realised 2,013 964
- Unrealised (237) (2)
Net (loss)/gain from sale of financial investments available-for-sale (2,584) 257
Net gain/(loss) from sale of financial investments held-to-maturity 14 56
Net gain/(loss) from Islamic derivative financial instruments
- Realised 100,665 47,187
- Unrealised (8,275) 9,842
Net (loss)/gain arising from financial liabilities designated at fair value
- Realised (1,572)
- Unrealised 8,464
Net loss from foreign exchange transactions (5,740) (1,840)
Net (loss)/gain from hedging derivatives (4,760) 2,002

87,988 58,466
 INTO A NEW ERA

351

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(w) Net income derived from investment of shareholders funds (Continued)

2013 2012
RM000 RM000

Net fees and commission income:

Advisory fees 2,898 62
Guarantee fees 13,422 13,533
Service charges and fees 43,707 81,385
Placement fees 20,385 110,859
Underwriting commission 3,147 12,577
Others 24,370 9,576

Fee and commission income 107,929 227,992

Fee and commission expense (1,417) (1,909)

Net fees and commission income 106,512 226,083

Sundry income 5,003 13,082

331,899 462,277

* Unwinding income is income earned on impaired financial assets

(x) Allowance for impairment losses on financing, advances and other financing/loans

2013 2012
RM000 RM000

(i) Individual impairment allowance

- Made during the financial year (12,569) 34,150

(ii) Portfolio impairment allowance

- Made during the financial year 205,711 112,112

Bad debts on financing:

- Recovered (47,495) (56,102)
- Written-off 2,121 19

147,768 90,179
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

352

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(y) Income attributable to depositors

2013 2012
RM000 RM000

Deposits from customers

- Mudharabah 263,200 238,407
- Non-Mudharabah 650,539 559,646
- Financial liabilities designated at fair value 4,518
Deposits and placements of banks and other financial institutions
- Mudharabah 58,624 61,290
- Non-Mudharabah 32,460 27,355
Others 42,180 29,513

1,051,521 916,211

(z) Personnel expenses

2013 2012
RM000 RM000

- Salaries, allowances and bonuses 92,698 91,405

- Others 19,258 12,388

111,956 103,793

Included in the personnel costs are fees paid to the Shariah Committee members amounting to RM605,984 (2012: RM802,070).
 INTO A NEW ERA

353

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(aa) Other overheads and expenditures

2013 2012
RM000 RM000

Establishment costs
- Rental 3,279 3,361
- Depreciation of property, plant and equipment 3,553 3,691
- Others 7,700 16,995

14,532 24,047

Marketing expenses
- Advertisement and publicity 8,571 9,725
- Others 2,161 2,603

10,732 12,328

Administration and general expenses

- Legal and professional fees 4,953 2,555
- Amortisation of intangible assets 3,150 2,811
- Others 39,820 33,360

47,923 38,726

Shared service cost

Personnel expenses 241,375 208,662
Establishment 107,921 95,478
Promotion 13,611 10,097
General expenses 32,451 33,598

395,358 347,835

468,545 422,936
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

354

56 THE OPERATIONS OF ISLAMIC BANKING (CONTINUED)

(ab) Taxation

(i) Tax expense for the financial year

2013 2012
Note RM000 RM000

Current year tax

- Malaysian income tax 204,174 262,684
Deferred taxation (h) 1,072 (7,608)
Under accrual in prior year 176 342

205,422 255,418

(ii) Numerical reconciliation of income tax expense

The explanation on the relationship between tax expense and profit before taxation
is as follows:
2013 2012
RM000 RM000

Profit before taxation 861,005 1,072,636

Tax calculated at tax rate of 25% 215,251 268,159

- Effect of different tax rates 950 1,829
- Income not subject to tax (14,409) (16,076)
- Expenses not deductible for tax purposes 3,454 1,164
Under accrual in prior year 176 342

205,422 255,418

57 CLIENT TRUST ACCOUNTS

As at 31 December 2013, cash held in trust for clients by the Group amounted to RM962,855,000 (31 December 2012: RM486,594,000,
1 January 2012: RM464,867,000). These amounts are not recognised in the financial statements as the Group held them in a fiduciary capacity.

58 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The Financial Statements have been authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 7
March 2014.
 INTO A NEW ERA

355

59 REALISED AND UNREALISED PROFITS

The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised
Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian
Institute of Accountants on 20 December 2010 and the directive of Bursa Malaysia Securities Berhad.

The marked-to-market gains and losses on derivative contracts and financial investments at fair value through profit or loss that remain
outstanding in the financial statements of the Group as at 31 December 2013 and 31 December 2012 are deemed unrealised and should be
read together as it reflects the nature of the transactions and financial positon of the Group. In addition, the unrealised retained earnings of the
Group as disclosed above excludes the translation gains and losses on monetary items denominated in a currency other than the functional
currency, as these gains and losses are incurred in the ordinary course of business of the Group, and are hence deemed as realised.

The Group The Company

2013 2012 2013 2012
RM000 RM000 RM000 RM000
Restated

Total retained earnings of the Group and subsidiaries

- Realised 12,070,506 9,835,615 1,032,415 1,511,685
- Unrealised 182,063 330,623 273,643 9,925

12,252,569 10,166,238 1,306,058 1,521,610

Total share of retained earnings from associates

- Realised 627,592 322,064
- Unrealised 1,290 550

Total share of retained earnings from joint ventures

- Realised 101,803 46,633
- Unrealised 1 1

12,983,255 10,535,486 1,306,058 1,521,610

Consolidation adjustments (767,897) 680,779

Total group retained earnings as per consolidated financial statements 12,215,358 11,216,265 1,306,058 1,521,610
This page has been intentionally left blank.
 BASEL II PILLAR 3 DISCLOSURE
CONTENTS Abbreviations
Overview of Basel II and Pillar 3
.........................
.........................
358
360
Risk Management Overview ......................... 361
Shariah Governance Disclosure ......................... 367
Capital Management ......................... 368
Credit Risk ......................... 387
Securitisation ......................... 445
Market Risk ......................... 455
Operational Risk ......................... 457
Equity Exposures in Banking Book ......................... 459
Interest Rate Risk/Rate of
Return Risk in the Banking Book ......................... 461
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

358 Basel II Pillar 3 Disclosure

ABBREVIATIONS

A-IRB Approach : Advanced Internal Ratings Based Approach

BI : Banking Institutions
BNM : Bank Negara Malaysia
BRC : Board Risk Committee
CAF : Capital Adequacy Framework and, in some instances referred to as the Risk-Weighted Capital Adequacy Framework
CAFIB : Capital Adequacy Framework for Islamic Banks
CAR : Capital Adequacy Ratio and, in some instances referred to as the Risk Weighted Capital Ratio
CBSM : Capital and Balance Sheet Management
CBTM : Corporate Banking, Treasury and Markets
CCR : Counterparty Credit Risk
CIMBBG : CIMB Bank, CIMBISLG, CIMBTH, CIMB Bank PLC (Cambodia), CIMB Factorlease Berhad and non-nancial subsidiaries
CIMBISLG : CIMB Islamic Bank Berhad, CIMB Islamic Nominees (Asing) Sdn Bhd and CIMB Islamic Nominees (Tempatan) Sdn Bhd
CIMBIBG : CIMB Investment Bank Berhad, CIMB Futures Sdn Bhd and non-nancial subsidiaries
CIMBGH Group : Group of Companies under CIMB Group Holdings Berhad
CIMBTH : CIMB Thai Bank Public Company Ltd and its subsidiaries
CIMB Bank : CIMB Bank Berhad and CIMB Bank (L) Ltd (as determined under the CAF (Capital Components) and CAFIB (Capital Components)
to include its wholly owned offshore banking subsidiary company)
CIMB Group or
the Group : Collectively CIMBBG, CIMBIBG and CIMBISLG as described within this disclosure
CIMB IB : CIMB Investment Bank Berhad
CIMB Islamic : CIMB Islamic Bank Berhad
CRM : Credit Risk Mitigants
CRO : Group Chief Risk Ofcer
CSA : Credit Support Annexes, International Swaps and Derivatives Association Agreement
DFIs : Development Financial Institutions
EAD : Exposure At Default
EaR : Earnings-at-Risk
ECAIs : External Credit Assessment Institutions
EL : Expected Loss
EP : Eligible Provision
EVE : Economic Value of Equity
EWRM : Enterprise Wide Risk Management
Group EXCO : Group Executive Committee
F-IRB Approach : Foundation Internal Ratings Based Approach
Fitch : Fitch Ratings
 INTO A NEW ERA

359

ABBREVIATIONS (CONTINUED)

GRC : Group Risk Committee

GRD : Group Risk Division
GWBRC : Group Wholesale Bank Risk Committee
HPE : Hire Purchase Exposures
IRB Approach : Internal Ratings Based Approach
IRRBB : Interest Rate Risk in the Banking Book
KRI : Key Risk Indicators
LGD : Loss Given Default
MARC : Malaysian Rating Corporation Berhad
MDBs : Multilateral Development Banks
Moodys : Moodys Investors Service
MTM : Mark-to-Market and/or Mark-to-Model
ORM : Operational Risk Management
ORMF : Operational Risk Management Framework
OTC : Over the Counter
PD : Probability of Default
PSEs : Non-Federal Government Public Sector Entities
PSIA : Prot Sharing Investment Accounts
QRRE : Qualifying Revolving Retail Exposures
R&I : Rating and Investment Information, Inc
RAM : RAM Rating Services Berhad
RAROC : Risk Adjusted Return on Capital
RCC : Regional Credit Committee
RORBB : Rate of Return Risk in the Banking Book
RRE : Residential Real Estate
RWA : Risk-Weighted Assets
RWCAF : Risk-Weighted Capital Adequacy Framework and, in some instances referred to as the Capital Adequacy Framework
RWCR : Risk-Weighted Capital Ratio and, in some instances referred to as the Capital Adequacy Ratio
S&P : Standard & Poors
SA : Standardised Approach
SCF : Shariah Compliance Framework
SMEs : Small and Medium Enterprises
VaR : Value at Risk
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

360

OVERVIEW OF BASEL II AND PILLAR 3

The International Convergence of Capital Measurement and Capital Standards: A Revised Framework or commonly known as Basel II issued by the Bank
of International Settlements, as adopted by BNM seeks to increase the risk sensitivity in capital computations and prescribed a number of different
approaches to risk calculation that allows the use of internal models to calculate regulatory capital. The particular approach selected must commensurate
with the nancial institutions risk management capabilities. The Basel II requirements are stipulated within three broad Pillars or sections.

Pillar 1 focuses on the minimum capital measurement methodologies and their respective qualifying criteria to use specied approaches available to calculate
the RWA for credit, market and operational risks. CIMB Bank and its subsidiaries including CIMBISLG which offers Islamic banking nancial services
(collectively known as CIMBBG); apply the IRB Approach for its major credit exposures. The IRB Approach prescribes two approaches, the F-IRB Approach
and A-IRB Approach. Under F-IRB Approach, the Group applies its own PD and the regulator prescribed LGD, whereas under the A-IRB Approach, the
Group applies its own risk estimates of PD, LGD and EAD. The remaining credit exposures are on the SA and where relevant, will progressively migrate to
the IRB Approach. CIMB IB and its subsidiaries (CIMBIBG) adopt the SA for credit risk. CIMBBG, CIMBISLG and CIMBIBG (collectively known as CIMB
Group or the Group) adopt the SA for market risk and BIA for operational risk.

Pillar 2 focuses on how sound risk management practices should be implemented from the Supervisory Review perspective. It requires nancial institutions
to make their own assessments of capital adequacy in light of their risk prole and to have a strategy in place for maintaining their capital levels.

Pillar 3 complements Pillar 1 and Pillar 2 by presenting disclosure requirements aimed to encourage market discipline in a sense that every market participant
can assess key pieces of information attributed to the capital adequacy framework of nancial institutions.

Frequency of Disclosure
The qualitative disclosures contained herein are required to be updated on an annual basis and more frequently if signicant changes to policies are made.
The capital structure and adequacy disclosures are published on a quarterly basis. All other quantitative disclosures are published semi-annually in conjunction
with the Groups half yearly reporting cycles.

Medium and Location of Disclosure

These disclosures are also available on CIMBGH Groups corporate website (www.cimb.com). The individual disclosures for CIMB Bank, CIMB Islamic and
CIMB IB are also available at the CIMBGH Groups corporate website.

Basis of Disclosure
These disclosures herein are formulated in accordance with the requirements of BNMs guidelines on RWCAF (Basel II) Disclosure Requirements (Pillar 3)
and CAFIB Disclosure Requirements (Pillar 3). These disclosures published are for the year ended 31 December 2013.

Pursuant to paragraph 7.2 of BNMs guidelines on CAFIB Disclosure Requirements (Pillar 3), the Group has applied the provision in whereby the Group
has been exempted from disclosing comparative information as a rst time adoption of this requirement for CIMBISLG.
 INTO A NEW ERA

361

OVERVIEW OF BASEL II AND PILLAR 3 (CONTINUED)

Basis of Disclosure (continued)

The basis of consolidation for nancial accounting purposes is described in the 2013 nancial statements. The capital requirements are generally based on
the principles of consolidation adopted in the preparation of nancial statements. During the nancial year, the Group did not experience any impediments
in the distribution of dividends. There were also no capital deciencies in any subsidiaries that are not included in the consolidation for regulatory purposes.

The term credit exposure as used in this disclosure is a prescribed denition by BNM based on the RWCAF (Basel II) Disclosure Requirements (Pillar 3)
and CAFIB Disclosure Requirements (Pillar 3). Credit exposure is dened as the estimated maximum amount a banking institution may be exposed to a
counterparty in the event of a default or EAD. This differs with similar terms applied in the 2013 nancial statements as the credit risk exposure denition
within the ambit of accounting standards represent the balance outstanding as at balance sheet date and do not take into account the expected undrawn
contractual commitments. Therefore, information within this disclosure is not directly comparable to that of the 2013 nancial statements.

Any discrepancies between the totals and sum of the components in the tables contained in this disclosure are due to actual summation method and then
rounded up to the nearest thousands.

These disclosures have been reviewed and veried by internal auditors and approved by the Board of Directors of CIMBGH Group.

RISK MANAGEMENT OVERVIEW

The Group embraces risk management as an integral component of the Groups business, operations and decision-making process. In ensuring that the
Group achieves optimum returns whilst operating within a sound business environment, the risk management teams are involved at the early stage of the
risk taking process by providing independent inputs including relevant valuations, credit evaluations, new product assessments and quantication of capital
requirements. These inputs enable the business units to assess the risk-vs-reward value of their propositions and thus enable risk to be priced appropriately
in relation to the return.

The objectives of CIMB Groups risk management activities are to:

Identify the various risk exposures and capital requirements;

Ensure risk taking activities are consistent with risk policies and the aggregated risk position are within the risk appetite as approved by the Board; and

Create shareholder value through proper allocation of capital and facilitate development of new businesses.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

362

RISK MANAGEMENT OVERVIEW (CONTINUED)

Enterprise Wide Risk Management Framework

CIMB Group employs an EWRM framework as a standardised approach to manage its risk and opportunity effectively. The EWRM framework provides the
Board and management with a tool to anticipate and manage both the existing and potential risks, taking into consideration changing risk proles as dictated
by changes in business strategies, operating and regulatory environment and functional activities.

The key components of the Groups EWRM framework are represented in the diagram below:

RISK APPETITE STATEMENT

GOVERNANCE

COMPREHENSIVE RISK MONITORING ANALYTICS AND

RISK ASSESSMENT MEASUREMENT AND CONTROL REPORTING

SOUND CAPITAL MANAGEMENT

RISK BASED PERFORMANCE MEASUREMENT

The design of the EWRM framework involves a complementary top-down strategic and bottom-up tactical risk management approach with formal policies
and procedures addressing all areas of signicant risks for the Group.

a) Risk Appetite Statement

Risk appetite denes the amount and type of risks that the Group is able and willing to accept in pursuit of its strategic and business objectives. In CIMB
Group, the risk appetite is linked to strategy development and business and capital management plans. It takes into account not only growth, revenue
and commercial aspirations, but also the capital and liquidity positions and risk management capabilities and strengths, including risk systems,
processes and people. Going forward, risk appetite statements will be formulated for key business units as well as incorporate stress testing.

CIMB Group has a dedicated team that facilitates the risk appetite setting process including reviewing, monitoring and reporting. BRC and GRC receive
monthly reports on compliance with the risk appetite.

b) Governance
A strong risk governance structure is what binds the EWRM framework together. The Board of Directors is ultimately responsible for the Groups risk
management activities, and provides strategic direction through the Risk Appetite Statement and relevant risk management frameworks for the Group.

The implementation and administration of the EWRM framework are effected through the three lines of defence model with oversight by the risk
governance structure which consists of various risk committees, as described below. GRD is principally tasked to assist the various risk committees
and undertakes the performance of independent risk management, monitoring and reporting functions of the EWRM. The implementation of the EWRM
is also subjected to the independent assurance and assessment by Group Internal Audit Division.
 INTO A NEW ERA

363

RISK MANAGEMENT OVERVIEW (CONTINUED)

Enterprise Wide Risk Management Framework (continued)

c) Comprehensive Risk Assessment
Comprehensive Risk Assessment provides the process for the identication of the Groups material risks, from the perspectives of impact on the
Groups nancial standing and reputation. Apart from the annual comprehensive risk assessment exercise, the Groups material risks are identied on
an on-going basis as well as part of the consideration for any strategic projects, including new product development.

d) Risk Measurement
Consistent and common methodologies of Risk Measurement allow for the Group to aggregate and compare risks across business units, geographies
and risk types. Further, it provides a tool for the Board and Senior Management to assess the sufciency of its liquidity surplus and reserves, and health
of its capital position under various economic and nancial situations.

e) Monitoring and Control

Various risk management tools are employed to Monitoring and Control the risk taking activities within the Group. These include limit monitoring,
hedging strategies and clearly documented control processes. These controls are regularly monitored and reviewed in the face of changing business
needs, market conditions and regulatory changes.

f) Analytics and Reporting

Timely reporting and meaningful analysis of risk positions are critical to enable the Board and Senior Management to exercise control over material
exposures and make informed business decisions.

g) Sound Capital Management

The Groups capital resources are continuously assessed and managed to undertake its day-to-day business operations and risk-taking activities,
including considerations for its business expansion and growth. Each year internal capital targets will be set and capital will be allocated to each
business units based on the respective business plans, budgeted prot and targeted Risk Adjusted Return on Capital (RAROC).

h) Risk Based Performance Measurement

Business units economic protability will be measured having considered both its risks and capital consumption. The adoption of a risk-based
performance measurement allows for performance and protability of different business units to be compared on a common yardstick.

Risk Governance
In the year under review, the Board of Directors approved a revision to the Groups risk governance structure with the establishment of several risk
committees and elevation of the existing Basel Steering Committee as a risk committee reporting to the GRC. The revised risk governance structure allows
for thorough deliberations and clear accountability of each of the committees.

At the apex of the governance structure are the respective Boards, which decides on the entitys Risk Appetite corresponding to its business strategies. In
accordance to the Groups risk management structure, the BRC reports directly into each Board and assumes responsibility on behalf of the Board for the
supervision of risk management and control activities. The BRC determines the Groups risk strategies, policies and methodologies, keeping them aligned
with the principles within the Risk Appetite Statement. The BRC also oversees the implementation of the EWRM framework and provides strategic guidance
and reviews the decisions of the GRC.

In order to facilitate the effective implementation of the EWRM framework, the BRC has established various risk committees within the Group with distinct
lines of responsibilities and functions, which are clearly dened in the terms of reference. The composition of the committees includes senior management
and individuals from business divisions as well as divisions which are independent from the business units.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

364 BOARD OF DIRECTORS

Board Risk Committee Board Shariah Committee

Determine the Groups risk strategies, policies and Oversee all Shariah matters of
methodologies the Group
Oversee implementation of the EWRM framework, provide
RISK MANAGEMENT OVERVIEW strategic guidance and review the decisions of the GRC
(CONTINUED)
Group Risk Committee
Risk Governance (continued)
Ensure effectiveness of risk management across the Group
The responsibility of the supervision of the Ensure adherence to the Board approved risk appetite
risk management functions is delegated to Outline key risks and strategies to improve risk management
the GRC, which reports directly to the BRC. across the Group
The GRC performs the oversight function on
overall risks undertaken by the Group in Group Operational Risk Committee
delivering its business plan vis--vis the Review key operational risks impacting or potentially impacting the Group
stated risk appetite of the Group. The GRC Review the appropriateness of the framework to manage the risk
is further supported by specialised risk Review on-going or planned remediation for known risks
committees, namely Group Credit Policy & Review all events leading material non-compliance including Shariah non-compliance
Portfolio Risk Committee, Group Market
Group Asset Liability Management Committee
Risk Committee, Group Operational Risk
Oversee management of the Groups overall balance sheet, net interest income/margin,
Committee, Group Asset Liability liquidity risk and interest rate risk in the banking book
Management Committee and Basel Steering Ensure risk prole is kept within the established risk appetite/limits
Committee, with each committee providing
oversight and responsibility for specic risk Group Credit Policy & Portfolio Risk Committee
areas namely, credit risk, market risk, Ensure adherence to the Board approved credit risk appetite
operational risk, liquidity risk and capital risk. Ensure effectiveness of credit risk management
Articulate key credit risk and its mitigating controls
The revised structure of the Groups Risk
Group Wholesale Bank Risk Committee
Committees and an overview of the
Review and approve or concur primary and secondary market deals for debt and
respective committees roles and
equity instruments for the Group
responsibilities are as follows:
Credit approving authority for primarily Malaysian centric customer groups exposures
Review and approve Global Banking Institution Limits for Malaysian centric banking
institutions

Regional Credit Committee

Review and approve or concur with credit applications from non-Malaysian centric
customer groups
Ensure Group overall loan portfolio/nancing meets regulatory guidelines and
approved internal policies and procedures
Review and approve or concur with all non-Malaysian Inter-Bank Limits, Global
Financial Institutions Counterparty Limits and Global Country Limits

Consumer Bank Credit Committee

Credit approving authority for Malaysian and non-Malaysian centric customer groups
exposures
Ensure Group overall loan portfolio/nancing meets regulatory guidelines and
approved internal policies and procedures

Group Market Risk Committee

Ensure effectiveness of risk management across the Group
Ensure adherence to the Board approved market risk appetite
Articulate key market risks and the corresponding mitigating controls

Basel Steering Committee

Oversee implementation of Basel regulations in the banking entities under the Group
 INTO A NEW ERA

365

RISK MANAGEMENT OVERVIEW (CONTINUED)

Risk Governance (continued)

Similar risk committees are set-up in each of the Groups overseas subsidiaries in their respective jurisdictions. Whilst recognising the autonomy of the local
jurisdiction and compliance to local requirements, the Group also strives to ensure a consistent and standardised approach in its risk governance process.
As such, the relevant Group and Regional committees have consultative and advisory responsibilities on regional matters across the Group. This structure
increases the regional communication, sharing of technical knowledge and support towards managing and responding to risk management issues, thus
allowing the Board to have a comprehensive view of the activities in the Group.

Three-Lines of Defence
The Groups risk management approach is based on the three-lines of defence concept whereby risks are managed from the point of risk-taking activities.
This is to ensure clear accountability of risks across the Group and risk management as an enabler of the business units. As a rst line of defence, the line
management, including all business units and units which undertake client facing activities, are primarily responsible for risk management on a day-to-day
basis by taking appropriate actions to mitigate risks through effective controls. The second line of defence provides oversight functions, performs independent
monitoring of business activities and reports to management to ensure that the Group is conducting business and operating within the approved appetite
and in compliance to regulations. The third line of defence is Group Internal Audit Division which provides independent assurance to the Boards that the
internal controls and risk management activities are functioning effectively.

The Roles of CRO and Group Risk Division

Within the second line of defence is GRD, a function independent of business units that assists the Groups management and various risk committees in the
monitoring and controlling of the Groups risk exposures.

The organisational structure of GRD is made of two major components, namely the Chief Risk Ofcers and the Risk Centres of Excellence. GRD is headed
by the Group Chief Risk Ofcer who is appointed by the Board to spearhead risk management functions and implementation of the Enterprise-Wide Risk
Management. The CRO:

a) Actively engages the Board and senior management on risk management issues and initiatives.

b) Maintains an oversight on risk management functions across all entities within the Group. In each country of operations, there is a local Chief Risk
Ofcer or a Country Risk Lead Ofcer, whose main function is to assess and manage the enterprise risk and regulators in the respective country.

The GRD teams are organised into several Risk Centres of Excellence in order to facilitate the implementation of the Groups EWRM framework. The Risk
Centres of Excellence consisting of Risk Analytics & Infrastructure, Market Risk, Operational Risk, Asset Liability Management, Credit Risk and Shariah Risk
Centres of Excellence are specialised teams of risk ofcers responsible for the active oversight of group-wide functional risk management.

a) Risk Analytics & Infrastructure Centre of Excellence

Risk AnaIytics & Infrastructure Centre of Excellence spearheads the Groups efforts towards Basel II implementation. In this regard, it develops and
implements all internal rating and scoring models and closely monitors the performance of the rating and scoring models to ensure relevance to current
market conditions and integrity of ratings. It also computes and aggregates the risk-weighted assets for credit risk for monthly regulatory reporting as
well as projects the capital requirements for credit risk to support capital management planning and analysis. Risk AnaIytics & Infrastructure Centre of
Excellence monitors the non-retail credit risk prole of risk-taking activities in terms of asset quality, rating distribution and credit concentrations. In
addition, it initiates and/or proposes its risk policies, risk measurement methodologies and risk limits to the Board for approval.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

366

RISK MANAGEMENT OVERVIEW (CONTINUED)

The Roles of CRO and Group Risk Division (continued)

b) Market Risk Centre of Excellence
In propagating and ensuring compliance to the market risk framework, the Market Risk Centre of Excellence reviews treasury trading strategies,
analyses positions and activities vis--vis changes in the nancial market and performs mark-to-market valuation. It also coordinates capital market
product deployments.

c) Operational Risk Centre of Excellence

The Operational Risk Centre of Excellence provides the methodology and process for the identication, assessment, reporting, mitigation and control
of operational risks by the respective risk owners across the Group.

d) Asset Liability Management Centre of Excellence

It is primarily responsible for the independent monitoring and assessment of the Groups asset and liability management process governing liquidity risk
and interest/benchmark rate risk as well as recommending policies and methodologies to manage the said risks.

e) Credit Risk Centre of Excellence

The Credit Risk Centre of Excellence is dedicated to the assessment, measurement, management and monitoring of credit risk of CIMB Group. It
ensures a homogenous and consistent approach to:
Credit Risk Policies and Procedures;
Credit Risk Models;
Credit Risk Methodologies; and
Portfolio Analytics,
as well as a holistic and integrated approach to identication, assessment, decision-making and reporting of credit risk of the Group.

f) Shariah Risk Centre of Excellence

The Shariah Risk Centre of Excellence formulates Shariah Risk Framework and provides guidance and training on the Shariah Risk Management to
enable the rst line of defence to identify, assess, monitor and control Shariah risk in their Islamic business operations and activities.

In addition to the above Risk Centres of Excellence, Regional Risk was established with the objective of overseeing the risk management functions of the
regional ofces as well as the Groups unit trust and Non-Malaysian securities businesses. Regional Risk also houses the validation team.

The regional ofces and the respective teams in risk management units within the unit trust business and Non-Malaysian securities businesses identify,
analyse, monitor, review and report the relevant material risk exposures of each individual country and/or businesses.

The Validation Team is independent from the risk taking units and model development team, and reports to Regional Risk. The function of this unit is to
perform validation, as guided by regulatory guidelines and industry best practices on rating systems, estimates of the risk components, and the processes
by which the internal ratings are obtained and used. The unit provides recommendations to the model development team and the business users. The unit
reports its ndings and recommendations to GRC and BRC.

In ensuring a standardised approach to risk management across the Group, all risk management teams within the Group are required to conform to the
Groups EWRM framework, subject to necessary adjustments required for local regulations. For branches and subsidiaries without any risk management
department, all risk management activities will be centralised at relevant Risk Centres of Excellence. Otherwise, the risk management activities will be
performed by the local risk management team with matrix reporting line to respective Risk Centres of Excellence.
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RISK MANAGEMENT OVERVIEW (CONTINUED)

Strategies and Processes for Various Risk Management

Information on strategies and processes for Credit Risk, Market Risk, Operational Risk and Interest Rate Risk/Rate of Return Risk in the Banking Book are
available in the later sections.

SHARIAH GOVERNANCE DISCLOSURE

The Islamic business in CIMB Group is managed and overseen by the Group Islamic Banking Division (GIBD). Its products and services are managed in strict
compliance with Shariah under the guidance of CIMB Group Shariah Committee.

The Board of Directors of CIMB Group, CIMB Investment Bank Berhad, and CIMB Bank Berhad delegate and empower CIMB Islamic Banks Board of
Directors to undertake the overall oversight function of the Islamic businesses and operations of the whole CIMB Group, which in turn delegates the Shariah
governance functions to the Group Shariah Committee established under CIMB Islamic Bank.

Whilst the Board of Directors is accountable for the overall Shariah governance and compliance of the Islamic businesses in CIMB Group, the day-to-day
running of Shariah management is performed by the Group CEO and Head of Group Islamic Banking.

Shariah Department which is basically a component of the Management serves as a coordinator and manager of the overall Shariah governance and
compliance of the Islamic businesses in CIMB. In performing its role, the department is complemented by the roles of the Shariah Compliance Functions/
Units consisting of Shariah Review, Shariah Audit, Shariah Risk Management and Shariah Research.

The Group operates on a dual banking leverage model that utilises the full resources and infrastructure of CIMB Group. Accordingly, all divisions and staff of
CIMB Group are responsible for complying with Shariah in their respective Islamic business activities.

Monitoring of Shariah compliance and Shariah governance process is carried out through Shariah Review and Shariah Audit functions, supported by Shariah
Risk Management control process and internal Shariah Research capacity. In CIMB Group, the Shariah Review, Shariah Audit and Shariah Risk Management
functions reside in Group Compliance, Group Internal Audit Division and GRD respectively, supported by Shariah Department.

In summary, the ownership of the whole Shariah governance framework is under the purview of GIBD with the nexus of its oversight function residing under
Shariah Department. The implementation of the various component of the Shariah governance framework therefore falls within the purview of GRD, Group
Internal Audit Division, Group Compliance and Shariah Research (under Shariah Department) and it is looked at jointly and severally by the four divisions/
departments.

Rectication process of non-Shariah compliant income occurring during the year

During the year ended 31 December 2013, an amount of RM366,144.90 was recorded as non-Shariah compliant income. For the purpose of rectication,
the stated amount will be channelled to the approved charitable bodies accordingly.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

368

CAPITAL MANAGEMENT

Key Capital Management Principles

The key driving principles of CIMBGH Groups capital management policies are to diversify its sources of capital to allocate capital efciently, and achieve
and maintain an optimal and efcient capital structure of the CIMBGH Group, with the objective of balancing the need to meet the requirements of all key
constituencies, including regulators, shareholders and rating agencies.

This is supported by the Capital Management Plan which is centrally supervised by the Group EXCO who periodically assess and review the capital
requirements and source of capital across the Group, taking into account all on-going and future activities that consume or create capital, and ensuring that
the minimum target for capital adequacy is met. Quarterly updates on capital position of the Group are also provided to the Board of Directors.

Included in the annual Capital Management Plan is the establishment of the internal minimum capital adequacy target which is substantially above the
minimum regulatory requirement. In establishing this internal capital adequacy target, the Group considers many critical factors, including, amongst others,
phasing-in of the capital adequacy requirement and capital buffer requirements, credit rating implication, current and future operating environment and peers
comparisons.

Capital Structure and Adequacy

The relevant entities under the Group has issued various capital instruments pursuant to the respective regulatory guidelines, including Tier 2 subordinated
debt, innovative and non-innovative tier 1 hybrid securities that qualify as capital pursuant to the RWCAF and CAFIB issued by BNM. However, with the
implementation of Basel III under the Capital Adequacy Framework (Capital Components) beginning 1 January 2013, these capital instruments are subject
to a gradual phase-out treatment which will eventually result in a full derecognition by 1 January 2022. Therefore, in order for the Group to maintain adequate
capital it has issued a few Basel III compliant instruments during the nancial year and will continually review potential future issuances under the Capital
Management Plan. Notes 26 to 28 in CIMBGH Financial Statement show the summary information of terms and conditions of the main features of capital
instruments.

In addition to the above mentioned capital issuance, the Group has also increased CIMB Banks common equity tier 1 capital via right subscriptions. This
exercise was part of the reinvestment of excess cash dividend surplus arising pursuant to the implementation of Dividend Reinvestment Scheme at CIMBGH.
The Dividend Reinvestment Scheme was announced by the Group on 18 January 2013.

The components of eligible regulatory capital as at 31 December 2013 are based on the Capital Adequacy Framework (Capital Components). The comparative
capital adequacy ratios as at 31 December 2012 were based on BNMs Risk-Weighted Capital Adequacy Framework (RWCAF). The minimum regulatory
capital adequacy requirement for the total capital ratio is 8%.
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369

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

The tables below present the Capital Position of CIMBBG, CIMBISLG and CIMBIBG:

Table 1(a): Capital Position for CIMBBG

(RM000) CIMBBG
2013

Common Equity Tier 1 capital

Ordinary shares 4,131,410
Other reserves 18,954,705
Qualifying non-controlling interests 243,991
Less Proposed dividend (752,000)
Common Equity Tier 1 capital before regulatory adjustments 22,578,106

Less: Regulatory adjustments

Goodwill (4,890,179)
Intangible assets (874,518)
Deferred Tax Assets (263,926)
Deductions in excess of Tier 2 capital
Others (2,094,446)

Common equity Tier 1 capital after regulatory adjustments 14,455,037

Additional Tier 1 capital

Perpetual preference shares 180,000
Non-innovative Tier 1 capital 900,000
Innovative Tier 1 Capital 1,450,620
Qualifying capital instruments held by third parties 48,180
Additional Tier 1 capital before regulatory adjustments 2,578,800

Less: Regulatory adjustments

Investments in Additional Tier 1 capital instruments of unconsolidated nancial and insurance/takaful entities

Additional Tier 1 capital after regulatory adjustments 2,578,800

Total Tier 1 capital after regulatory adjustments 17,033,837

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FINANCIAL STATEMENTS

370

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(a): Capital Position for CIMBBG (continued)

(RM000) CIMBBG
2013

Tier 2 Capital
Subordinated notes 6,050,000
Redeemable Preference Shares 29,740
Surplus eligible provisions over expected losses
Qualifying capital instruments held by third parties 30,471
Portfolio impairment allowance and regulatory reserves 486,766
Tier 2 capital before regulatory adjustments 6,596,977

Less: Regulatory adjustments

Investments in capital instruments of unconsolidated nancial and insurance/takaful entities (800,439)

Total Tier 2 Capital 5,796,538

Total Capital 22,830,375

RWA
Credit risk 145,845,320
Market risk 13,826,815
Operational risk 14,615,092
Large Exposure risk requirement 423,320

Total RWA 174,710,547

Capital Adequacy Ratios

Common Equity Tier 1 Ratio 8.274%
Tier 1 ratio 9.750%
Total capital ratio 13.068%
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371

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(a): Capital Position for CIMBBG (continued)

(RM000) CIMBBG
2012

Tier 1 Capital
Paid-up share capital + Share Premium 8,798,102
Non-Innovative Tier 1 instruments 1,200,000
Innovative Tier 1 instruments 1,611,800
Statutory Reserve 4,223,657
Retained Earnings/Prots 5,015,661
General Reserve Fund 23,337
Interim Dividend
Minority Interest 306,905

Less: Deductions from Tier 1 Capital

Goodwill (4,891,433)

Eligible Tier 1 Capital 16,288,029

Tier 2 Capital
Subordinated Debt Capital 7,881,400
Cumulative Preference Shares 29,740
General Provision 1,451,589
Surplus of EP over EL 91,670

Tier 2 Capital Subject to Limits 9,454,399

Less: Deductions from Tier 2 capital

Investment in subsidiaries (158,742)
Investment in capital instruments of other BI (333,743)
Other Deductions (65,621)

Eligible Tier 2 Capital 8,896,293

Total Eligible Capital 25,184,322

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

372

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(a): Capital Position for CIMBBG (continued)

(RM000) CIMBBG
2012

RWA
Credit 126,983,208
Credit RWA Absorbed by PSIA
Market 14,568,174
Operational 13,560,253
Large Exposure for Equity Holdings 397,786

Total RWA 155,509,421

Capital Adequacy Ratios

Core Capital Ratio 10.47%
RWCR 16.19%

Proposed Dividends (959,000)

Capital Adequacy Ratios After Dividends

Core Capital Ratio 9.86%
RWCR 15.58%

The increase in Credit RWA around RM18.9 billion between December 2012 and December 2013 was mainly due to large drawdown by Corporate
customers and growth in Retail portfolio which is partially offsetted by the savings in RWA arising from migration of the Business Premises Loan/Financing
portfolio from SA to IRB Approach. The drop in Market RWA by RM741.4 million between December 2012 and December 2013 mainly due to (i) lower
interest rate risk attributed to additional pay xed MYR IRS and USD IRS that reduced the net interest rate exposure, which was partially offset by disposal
of Government Investment Issues, Bank Negara Monetary Notes, MYR Sukuk and Negotiable Instrument Deposits by CIMB Islamic; and (ii) lower equity risk
following decline in EUR equity swap positions.
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373

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(b): Capital Position for CIMBISLG

(RM000) CIMBISLG
2013

Common Equity Tier 1 capital

Ordinary shares 1,000,000
Other reserves 1,600,928
Qualifying non-controlling interests
Common Equity Tier 1 capital before regulatory adjustments 2,600,928

Less: Regulatory adjustments

Goodwill (136,000)
Intangible assets (11,080)
Deferred Tax Assets (25,566)
Deductions in excess of Tier 2 capital
Others (322,811)

Common equity Tier 1 capital after regulatory adjustments 2,105,471

Additional Tier 1 capital

Perpetual preference shares 63,000
Non-innovative Tier 1 capital
Innovative Tier 1 Capital
Qualifying capital instruments held by third parties
Additional Tier 1 capital before regulatory adjustments 63,000

Less: Regulatory adjustments

Investments in Additional Tier 1 capital instruments of unconsolidated nancial and insurance/takaful entities

Additional Tier 1 capital after regulatory adjustments 63,000

Total Tier 1 capital after regulatory adjustments 2,168,471

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

374

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(b): Capital Position for CIMBISLG (continued)

(RM000) CIMBISLG
2013

Tier 2 Capital
Subordinated notes 765,000
Redeemable Preference Shares
Surplus eligible provisions over expected losses
Qualifying capital instruments held by third parties
Portfolio impairment allowance and regulatory reserves 46,854
Tier 2 capital before regulatory adjustments 811,854

Less: Regulatory adjustments

Investments in capital instruments of unconsolidated nancial and insurance/takaful entities

Total Tier 2 Capital 811,854

Total Capital 2,980,325

RWA
Credit risk 18,769,386
Market risk 620,945
Operational risk 1,866,607
Large Exposure risk requirement

Total RWA 21,256,938

Capital Adequacy Ratios

Common Equity Tier 1 Ratio 9.905%
Tier 1 ratio 10.201%
Total capital ratio 14.020%
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375

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(c): Capital Position for CIMBIBG

(RM000) CIMBIBG
2013

Common Equity Tier 1 capital

Ordinary shares 100,000
Other reserves 469,418
Qualifying non-controlling interests
Common Equity Tier 1 capital before regulatory adjustments 569,418

Less: Regulatory adjustments

Goodwill (964)
Intangible assets
Deferred Tax Assets (48,914)
Deductions in excess of Tier 2 capital (6,921)
Others (271)

Common equity Tier 1 capital after regulatory adjustments 512,348

Additional Tier 1 capital

Perpetual preference shares
Non-innovative Tier 1 capital
Innovative Tier 1 Capital
Qualifying capital instruments held by third parties
Additional Tier 1 capital before regulatory adjustments

Less: Regulatory adjustments

Investments in Additional Tier 1 capital instruments of unconsolidated nancial and insurance/takaful entities

Additional Tier 1 capital after regulatory adjustments

Total Tier 1 capital after regulatory adjustments 512,348

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

376

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(c): Capital Position for CIMBIBG (continued)

(RM000) CIMBIBG
2013

Tier 2 Capital
Subordinated notes
Redeemable Preference Shares 9
Surplus eligible provisions over expected losses
Qualifying capital instruments held by third parties
Portfolio impairment allowance and regulatory reserves 1,996
Tier 2 capital before regulatory adjustments 2,005

Less: Regulatory adjustments

Investments in capital instruments of unconsolidated nancial and insurance/takaful entities (8,926)

Total Tier 2 Capital

Total Capital 512,348

RWA
Credit risk 1,208,453
Market risk 58,618
Operational risk 758,001
Large Exposure risk requirement

Total RWA 2,025,072

Capital Adequacy Ratios

Common Equity Tier 1 Ratio 25.300%
Tier 1 ratio 25.300%
Total capital ratio 25.300%
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377

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(c): Capital Position for CIMBIBG (continued)

(RM000) CIMBIBG
2012

Tier 1 Capital
Paid-up share capital + Share Premium 100,000
Non-Innovative Tier 1 instruments
Innovative Tier 1 instruments
Statutory Reserve 155,175
Retained Earnings/Prots 216,548
General Reserve Fund 18,598
Interim Dividend
Minority Interest

Less: Deductions from Tier 1 Capital

Goodwill

Eligible Tier 1 Capital 490,321

Tier 2 Capital
Subordinated Debt Capital
Cumulative Preference Shares 10
General Provision 1,115
Surplus of EP over EL

Tier 2 Capital Subject to Limits 1,125

Less: Deductions from Tier 2 capital

Investment in subsidiaries (50)
Investment in capital instruments of other BI
Other Deductions

Eligible Tier 2 Capital 1,075

Total Eligible Capital 491,396

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

378

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 1(c): Capital Position for CIMBIBG (continued)

(RM000) CIMBIBG
2012

RWA
Credit 1,387,711
Credit RWA Absorbed by PSIA
Market 126,634
Operational 823,010
Large Exposure for Equity Holdings

Total RWA 2,337,355

Capital Adequacy Ratios

Core Capital Ratio 20.98%
RWCR 21.02%

Proposed Dividends (56,000)

Capital Adequacy Ratios After Dividends

Core Capital Ratio 18.58%
RWCR 18.63%

The decrease in the Credit RWA of around RM179 million between December 2012 and December 2013 was mainly due to decrease in interbank lending
with CIMB Bank and CIMB Islamic Bank. The decrease in Market RWA by RM69 million between December 2012 and December 2013 was mainly due to:
(i) lower interest rate risk mainly due to exclusion of afliate bonds holding under the Basel 3 guidelines effective from January 2013; and (ii) lower FX risk due
to lower exposure to USD.
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379

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

The tables below show the RWA under various exposure classes under the relevant approach and applying the minimum regulatory capital requirement at
8% to establish the minimum capital required for each of the exposure classes:

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG
2013 CIMBBG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Credit Risk
Exposures under the SA
Sovereign/Central Banks 42,873,661 42,873,661 19,402 19,402 1,552
Public Sector Entities 3,400,296 2,288,450 20,490 20,490 1,639
Banks, DFIs & MDBs 6,996,517 6,996,517 619,243 619,243 49,539
Insurance Cos/Takaful Operators, Securities Firms &
Fund Managers 1,662,262 1,577,923 921,884 921,884 73,751
Corporate 16,329,361 15,507,423 16,296,451 16,296,451 1,303,716
Regulatory Retail 28,276,065 17,243,562 14,951,135 14,951,135 1,196,091
Residential Mortgages/RRE Financing 3,922,320 3,922,320 1,525,871 1,525,871 122,070
Higher Risk Assets 1,098,029 1,098,029 1,647,043 1,647,043 131,763
Other Assets 6,796,373 6,834,960 2,607,731 2,607,731 208,618
Securitisation 815,187 815,187 331,994 331,994 26,559

Total for SA 112,170,069 99,158,032 38,941,243 38,941,243 3,115,299

Exposures under the IRB Approach

Sovereign/Central Banks 1,974,001 1,974,001 279,845 279,845 22,388
Public Sector Entities
Banks, DFIs & MDBs 27,886,979 27,886,979 6,774,574 6,774,574 541,966
Insurance Cos/Takaful Operators, Securities Firms &
Fund Managers
Corporate 88,843,244 88,843,244 53,161,663 53,161,663 4,252,933
Residential Mortgages/RRE Financing 48,820,074 48,820,074 17,250,917 17,250,917 1,380,073
Qualifying Revolving Retail 11,344,007 11,344,007 7,426,464 7,426,464 594,117
Hire Purchase 12,991,519 12,991,519 8,564,077 8,564,077 685,126
Other Retail 19,715,940 19,715,940 7,395,364 7,395,364 591,629
Securitisation
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380

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG (continued)

2013 CIMBBG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Total for IRB Approach 211,575,763 211,575,763 100,852,903 100,852,903 8,068,232

Total Credit Risk (Exempted Exposures and

Exposures under the IRB Approach After
Scaling Factor) 323,745,831 310,733,795 145,845,320 145,845,320 11,667,626

Large Exposure Risk Requirement 423,320 423,320 423,320 423,320 33,866

Market Risk (SA)

Interest Rate Risk/Benchmark Rate Risk 11,849,121 11,849,121 947,930
Foreign Currency Risk 540,181 540,181 43,214
Equity Risk 463,907 463,907 37,113
Commodity Risk
Options Risk 973,607 973,607 77,889

Total Market Risk 13,826,815 13,826,815 1,106,145

Operational Risk (BIA) 14,615,092 14,615,092 1,169,207

Total RWA and Capital Requirement 174,710,548 174,710,548 13,976,844

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381

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG (continued)

2012 CIMBBG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Credit Risk
Exposures under the SA
Sovereign/Central Banks 41,972,488 41,972,488 32,226 32,226 2,578
Public Sector Entities 1,641,480 1,559,107 386,790 386,790 30,943
Banks, DFIs & MDBs 1,291,895 871,439 240,962 240,962 19,277
Insurance Cos/Takaful Operators, Securities Firms &
Fund Managers 2,488 2,484 1,242 1,242 99
Corporate 16,505,140 14,068,255 13,813,939 13,813,939 1,105,115
Regulatory Retail 33,223,424 25,866,278 20,138,993 20,138,993 1,611,119
Residential Mortgages/RRE Financing 5,736,745 5,736,745 2,117,986 2,117,986 169,439
Higher Risk Assets 1,200,956 1,200,956 1,801,434 1,801,434 144,115
Other Assets 6,928,071 6,928,071 3,562,947 3,562,947 285,036
Securitisation 787,605 787,605 151,339 151,339 12,107

Total for SA 109,290,293 98,993,427 42,247,860 42,247,860 3,379,829

Exposures under the IRB Approach

Sovereign/Central Banks 875,586 875,586 209,095 209,095 16,728
Public Sector Entities
Banks, DFIs & MDBs 20,986,172 20,986,172 4,927,490 4,927,490 394,199
Insurance Cos/Takaful Operators, Securities Firms &
Fund Managers
Corporate 77,296,942 77,296,942 43,140,692 43,140,692 3,451,255
Residential Mortgages/RRE Financing 40,889,486 40,889,486 15,074,936 15,074,936 1,205,995
Qualifying Revolving Retail 8,325,262 8,325,262 5,631,892 5,631,892 450,551
Hire Purchase 11,476,260 11,476,260 7,856,050 7,856,050 628,484
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

382

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(a): Disclosure on Total RWA and Minimum Capital Requirement for CIMBBG (continued)

2012 CIMBBG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Other Retail 4,625,334 4,625,334 3,098,853 3,098,853 247,908

Securitisation

Total for IRB Approach 164,475,042 164,475,042 79,939,008 79,939,008 6,395,121

Total Credit Risk (Exempted Exposures and

Exposures under the IRB Approach After
Scaling Factor) 273,765,335 263,468,470 126,983,208 126,983,208 10,158,657

Large Exposure Risk Requirement 397,786 397,786 397,786 397,786 31,823

Market Risk (SA)

Interest Rate Risk/Benchmark Rate Risk 12,346,842 12,346,842 987,747
Foreign Currency Risk 535,315 535,315 42,825
Equity Risk 1,033,695 1,033,695 82,696
Commodity Risk
Options Risk 652,322 652,322 52,186

Total Market Risk 14,568,174 14,568,174 1,165,454

Operational Risk (BIA) 13,560,253 13,560,253 1,084,820

Total RWA and Capital Requirement 155,509,421 155,509,421 12,440,754

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(b): Disclosure on Total RWA and Minimum Capital Requirement for CIMBISLG

2013 CIMBISLG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Credit Risk
Exposures under the SA
Sovereign/Central Banks 13,695,774 13,695,774 6,959 6,959 557
Public Sector Entities
Banks, DFIs & MDBs 91,894 91,894 39,447 39,447 3,156
Takaful Operators, Securities Firms & Fund Managers 450
Corporate 244,876 236,014 156,996 156,996 12,560
Regulatory Retail 4,312,222 4,272,303 3,491,536 3,491,536 279,323
RRE Financing
Higher Risk Assets 575 575 863 863 69
Other Assets 48,408 48,408 48,408 48,408 3,873
Securitisation 20,466 20,466 4,093 4,093 327

Total for SA 18,414,666 18,365,435 3,748,302 3,748,302 299,864

Exposures under the IRB Approach

Sovereign/Central Banks
Public Sector Entities
Banks, DFIs & MDBs 2,427,898 2,427,898 519,390 519,390 41,551
Takaful Operators, Securities Firms & Fund Managers
Corporate 11,929,952 11,929,952 7,180,059 5,976,921 478,154
RRE Financing 8,292,858 8,292,858 2,767,897 2,767,897 221,432
Qualifying Revolving Retail 190,285 190,285 148,958 148,958 11,917
Hire Purchase 6,213,282 6,213,282 3,962,010 3,962,010 316,961
Other Retail 2,140,757 2,140,757 795,658 795,658 63,653
Securitisation

Total for IRB Approach 31,195,032 31,195,032 15,373,973 14,170,834 1,133,667

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FINANCIAL STATEMENTS

384

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(b): Disclosure on Total RWA and Minimum Capital Requirement for CIMBISLG (continued)

2013 CIMBISLG

Gross Net
Exposure Exposure Minimum
before after Total RWA capital
(RM000) CRM (SA)/ CRM (SA)/ after effects requirement
Exposure Class EAD (IRB) EAD (IRB) RWA of PSIA at 8%

Total Credit Risk (Exempted Exposures and

Exposures under the IRB Approach After
Scaling Factor) 49,609,698 49,560,467 20,044,713 18,769,386 1,501,551

Large Exposure Risk Requirement

Market Risk (SA)

Benchmark Rate Risk 385,827 385,827 30,866
Foreign Currency Risk 235,118 235,118 18,809
Equity Risk
Commodity Risk
Options Risk

Total Market Risk 620,945 620,945 49,676

Operational Risk (BIA) 1,866,607 1,866,607 149,329

Total RWA and Capital Requirement 22,532,265 21,256,939 1,700,555

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CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(c): Disclosure on Total RWA and Minimum Capital Requirement for CIMBIBG

2013 CIMBIBG

Gross Net Minimum

Exposure Exposure Total RWA capital
(RM000) before after after effects requirement
Exposure Class CRM (SA) CRM (SA) RWA of PSIA at 8%

Credit Risk (SA)

Sovereign/Central Banks 1,450,913 1,450,913
Public Sector Entities
Banks, DFIs & MDBs 1,110,351 1,110,351 544,474 544,474 43,558
Insurance Cos, Securities Firms & Fund Managers
Corporate 50,154 50,154 50,154 50,154 4,012
Regulatory Retail 53,036 53,036 52,150 52,150 4,172
Residential Mortgages 57,807 57,807 32,408 32,408 2,593
Higher Risk Assets 1,083 1,083 1,624 1,624 130
Other Assets 527,691 527,691 527,641 527,641 42,211
Securitisation

Total Credit Risk 3,251,034 3,251,034 1,208,453 1,208,453 96,676

Large Exposure Risk Requirement

Market Risk (SA)

Interest Rate Risk 24,368 24,368 1,949
Foreign Currency Risk 31,184 31,184 2,495
Equity Risk 3,066 3,066 245
Commodity Risk
Options Risk

Total Market Risk 58,618 58,618 4,689

Operational Risk (BIA) 758,001 758,001 60,640

Total RWA and Capital Requirement 2,025,072 2,025,072 162,006

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

386

CAPITAL MANAGEMENT (CONTINUED)

Capital Structure and Adequacy (continued)

Table 2(c): Disclosure on Total RWA and Minimum Capital Requirement for CIMBIBG (continued)

2012 CIMBIBG

Gross Net Minimum

Exposure Exposure Total RWA capital
(RM000) before after after effects requirement
Exposure Class CRM (SA) CRM (SA) RWA of PSIA at 8%

Credit Risk (SA)

Sovereign/Central Banks 151,798 151,798
Public Sector Entities
Banks, DFIs & MDBs 2,699,115 2,699,115 853,982 853,982 68,319
Insurance Cos, Securities Firms & Fund Managers
Corporate 42,760 42,760 42,760 42,760 3,421
Regulatory Retail 44,676 44,676 33,740 33,740 2,699
Residential Mortgages 19,474 19,474 7,352 7,352 588
Higher Risk Assets 2,946 2,946 4,418 4,418 353
Other Assets 445,507 445,507 445,459 445,459 35,637
Securitisation

Total Credit Risk 3,406,275 3,406,275 1,387,711 1,387,711 111,017

Large Exposure Risk Requirement

Market Risk (SA)

Interest Rate Risk 71,801 71,801 5,744
Foreign Currency Risk 54,325 54,325 4,346
Equity Risk 508 508 41
Commodity Risk
Options Risk

Total Market Risk 126,634 126,634 10,131

Operational Risk (BIA) 823,010 823,010 65,841

Total RWA and Capital Requirement 2,337,355 2,337,355 186,988

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387

CAPITAL MANAGEMENT (CONTINUED)

Internal Capital Adequacy Assessment Process (ICAAP)

The Group has in place an EWRM framework that aligns ICAAP requirements into the Groups risk management and control activities. The coverage of
ICAAP includes the following:

a) Assessing the risk prole of the bank.

b) Assessing the capital adequacy and capital management strategies.

c) Monitoring compliance with regulatory requirement on capital adequacy.

d) Reporting to management and regulator on ICAAP.

e) Governance and independent review.

The full ICAAP cycle, from initial planning to regulatory submission and independent review, involves close coordination among the risk, capital and nance
functions together and business and support divisions. In line with BNMs guidelines on RWCAF (Basel II) ICAAP (Pillar 2) and CAFIB ICAAP (Pillar 2), the
Group has submitted its Board-approved ICAAP report to BNM by 31 March 2013. The next ICAAP report submission which will outline updates to the
ICAAP is due on 31 March 2014.

ICAAP will be implemented in phases to the overseas subsidiaries over the next few years. In 2013, risk-adjusted performance measurement was implemented
at the Group. These measures will be linked to key performance indicators and compensation of the business units in 2014 and it is expected that business
strategy, pricing and business decisions would incorporate risk and capital considerations.

CREDIT RISK

Credit risk, is dened as the possibility of losses due to the obligor, market counterparty or issuer of securities or other instruments held, failing to perform
its contractual obligations to the Group.

It arises primarily from traditional nancing activities through conventional loans, nancing facilities, trade nance as well as commitments to support
customers obligation to third parties, e.g. guarantees or kafalah contracts. In sales and trading activities, credit risk arises from the possibility that the
Groups counterparties will not be able or willing to full their obligation on transactions on or before settlement date. In derivative activities, credit risk arises
when counterparties to derivative contracts, such as interest/prot rate swaps, are not able to or willing to full their obligation to pay the positive fair value
or receivable resulting from the execution of contract terms. Credit risk may also arise where the downgrading of an entitys rating causes the fair value of
the Groups investment in that entitys nancial instruments to fall.

Credit Risk Management

The purpose of credit risk management is to keep credit risk exposure to an acceptable level vis--vis the capital, and to ensure the returns commensurate
with risks.

Consistent with the three-lines of defence model on risk management where risks are managed from the point of risk-taking activities, our Group implemented
the Risk-based Delegated Authority Framework. This Framework promotes clarity of risk accountability whereby the business unit, being the rst line of
defence, manages risk in a proactive manner with GRD as a function independent from the business units as the second line of defence. This enhances the
collaboration between GRD and the business units.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

388

CREDIT RISK (CONTINUED)

Credit Risk Management (continued)

The Framework encompass the introduction of Joint Delegated Authority, enhanced credit approval process and a clear set of policies and procedures that
denes the limits and types of authority designated to the specic individuals. Our Group adopts a multi-tiered credit approving authority spanning from the
delegated authorities at business level, joint delegated authorities holders between business units and GRD, to the various credit committees. The credit
approving committees are set up to enhance the efciency and effectiveness of the credit oversight as well as the credit approval process for all credit
applications originating from the business units. Credit applications are independently evaluated by the Credit Risk Centre of Excellence team prior to
submission to the relevant committees for approval.

The Group Credit Policy & Portfolio Risk Committee with the support of Group Wholesale Bank Risk Committee, Regional Credit Committee, Consumer
Bank Credit Committee and GRD is responsible for ensuring adherence to the Board approved credit risk appetite as well as the effectiveness of credit risk
management. This amongst others includes the reviewing and analysing of portfolio trends, asset quality, watch-list reporting and policy review. It is also
responsible for articulating key credit risks and mitigating controls.

Approaches or mitigating controls adopted to address concentration risk to any large sector/industry, or to a particular counterparty group or individual
include adherence to and compliance with single customer, country and global counterparty limits as well as the assessment of the quality of collateral.

Adherence to established credit limits is monitored daily by GRD, which combines all exposures for each counterparty or group, including off balance sheet
items and potential exposures. Limits are also monitored based on rating classication of the obligor and/or counterparty.

It is a policy of the Group that all exposures must be rated or scored based on the appropriate internal rating models, where available. Retail exposures are
managed on a portfolio basis and the risk rating models are designed to assess the credit worthiness and the likelihood of the obligors to repay their debts,
performed by way of statistical analysis from credit bureau and demographic information of the obligors. The risk rating models for non-retail exposures are
designed to assess the credit worthiness of the corporations or entities in paying their obligations, derived from risk factors such as nancial history and
demographics or company prole. These rating models are developed and implemented to standardise and enhance the credit underwriting and decision-
making process for the Groups retail and non-retail exposures.

Credit reviews and rating are conducted on the credit exposures at least on an annual basis and more frequently when material information on the obligor
or other external factors come to light.

The exposures are actively monitored, reviewed on a regular basis and reported regularly to Group Credit Policy & Portfolio Risk Committee, GRC and BRC
so that deteriorating exposures are identied, analysed and discussed with the relevant business units for appropriate remedial actions including recovery
actions, if required.

In addition to the above, the Group also employs VaR to measure credit concentration risk. The Group adopted the Monte Carlo simulation approach in the
generation of possible portfolio scenarios to obtain the standalone and portfolio VaR. This approach takes into account the credit concentration risk and the
correlation between obligors/counterparties and industries.
 INTO A NEW ERA

389

CREDIT RISK (CONTINUED)

Summary of Credit Exposures

i) Gross Credit Exposures by Geographic Distribution
The geographic distribution is based on the country in which the portfolio is geographically managed. The following tables represent the Groups credit
exposures by geographic region:

Table 3(a): Geographic distribution of credit exposures for CIMBBG

CIMBBG
(RM000) Other
Exposure Class Malaysia Singapore Thailand Countries Total

2013
Sovereign 40,834,479 1,742,875 2,182,756 87,552 44,847,661
Bank 17,472,157 8,955,640 9,915,690 1,940,304 38,283,791
Corporate 76,110,064 17,477,728 11,445,259 1,801,816 106,834,867
Mortgage/RRE Financing 46,117,316 3,103,393 3,521,684 52,742,394
HPE 12,991,519 12,991,519
QRRE 8,968,985 2,375,022 11,344,007
Other Retail 41,615,176 2,182,338 4,095,447 99,044 47,992,005
Other Exposures 5,650,895 265,186 2,679,463 114,045 8,709,589

Total Gross Credit Exposure 249,760,592 36,102,181 33,840,299 4,042,760 323,745,831

2012
Sovereign 39,050,666 1,386,419 2,361,264 49,724 42,848,074
Bank 15,221,163 4,499,010 2,732,804 1,469,057 23,922,035
Corporate 70,789,128 11,182,256 10,631,103 1,199,596 93,802,083
Mortgage/RRE Financing 41,199,869 2,943,799 2,482,563 46,626,231
HPE 11,476,260 11,476,260
QRRE 8,325,262 8,325,262
Other Retail 31,424,826 3,208,150 3,172,755 43,027 37,848,759
Other Exposures 6,803,392 341,826 1,542,288 229,126 8,916,632

Total Gross Credit Exposure 224,290,567 23,561,460 22,922,777 2,990,531 273,765,335

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

390

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

i) Gross Credit Exposures by Geographic Distribution (continued)
Table 3(b): Geographic Distribution of Credit Exposures for CIMBISLG

CIMBISLG
(RM000) Other
Exposure Class Malaysia Singapore Thailand Countries Total

2013
Sovereign 13,695,774 13,695,774
Bank 2,519,792 2,519,792
Corporate 12,175,278 12,175,278
RRE Financing 8,292,858 8,292,858
HPE 6,213,282 6,213,282
QRRE 190,285 190,285
Other Retail 6,452,979 6,452,979
Other Exposures 69,449 69,449

Total Gross Credit Exposure 49,609,698 49,609,698

 INTO A NEW ERA

391

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

i) Gross Credit Exposures by Geographic Distribution (continued)
Table 3(c): Geographic Distribution of Credit Exposures for CIMBIBG

CIMBIBG
(RM000) Other
Exposure Class Malaysia Singapore Thailand Countries Total

2013
Sovereign 1,450,913 1,450,913
Bank 1,110,351 1,110,351
Corporate 50,154 50,154
Mortgage 57,807 57,807
HPE
QRRE
Other Retail 53,036 53,036
Other Exposures 528,773 528,773

Total Gross Credit Exposure 3,251,034 3,251,034

2012
Sovereign 151,798 151,798
Bank 2,699,115 2,699,115
Corporate 42,760 42,760
Mortgage 19,474 19,474
HPE
QRRE
Other Retail 44,676 44,676
Other Exposures 448,452 448,452

Total Gross Credit Exposure 3,406,275 3,406,275

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

392

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

ii) Gross Credit Exposures by Sector
The following tables represent the Groups credit exposure analysed by sector:

Table 4(a): Distribution of Credit Exposures by Sector for CIMBBG

CIMBBG
Finance,
Insurance/
Wholesale Transport, Takaful,
Electricity, and Retail Storage Real Estate
(RM000) Gas and Trade, and and and Education,
Exposure Primary Mining and Manufac- Water Construc- Restaurants Communi- Business Health and
Class Agriculture Quarrying turing Supply tion and Hotels cation Activities Others Household Others* Total

2013
Sovereign 344,623 725,777 563,184 1,527,712 1,482,504 40,203,761 100 44,847,661
Bank 37,833,142 450,649 38,283,791
Corporate 4,022,383 3,366,997 11,679,944 4,462,384 10,372,167 13,313,985 13,522,634 30,520,584 5,085,992 2,264,028 8,223,770 106,834,867
Mortgage/
RRE Financing 52,742,394 52,742,394
HPE 12,991,519 12,991,519
QRRE 11,344,007 11,344,007
Other Retail 367,852 24,337 783,392 18,855 542,510 1,338,654 131,648 1,572,147 3,389,534 39,817,798 5,279 47,986,725
Other Exposures 1,490 1,109 513,119 432,593 7,761,279 8,709,589

Total Gross
Credit Exposure 4,734,858 3,391,333 12,463,335 5,208,505 11,477,861 14,653,748 15,181,994 71,921,495 49,562,528 119,159,745 15,990,428 323,745,832

2012
Sovereign 548,848 1,139,000 7,698,116 33,226,580 235,529 42,848,074
Bank 23,920,596 1,439 23,922,035
Corporate 3,673,876 2,786,316 12,304,940 4,297,874 8,877,530 10,131,588 10,879,473 25,138,241 4,666,265 11,045,979 93,802,083
Mortgage/
RRE Financing 46,626,231 46,626,231
HPE 11,476,260 11,476,260
QRRE 8,325,262 8,325,262
Other Retail 373,364 14,205 630,685 10,652 434,199 1,171,497 106,377 2,874,148 2,163,674 30,069,958 37,848,759
Other Exposures 1,491 1,122 6,566,157 2,347,862 8,916,632

Total Gross
Credit Exposure 4,047,241 2,800,521 12,935,625 4,858,866 9,311,729 11,304,206 12,124,850 66,197,258 40,057,959 96,497,711 13,629,370 273,765,335

*Others are exposures which are not elsewhere classied.

 INTO A NEW ERA

393

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

ii) Gross Credit Exposures by Sector (continued)
Table 4(b): Distribution of Credit Exposures by Sector for CIMBISLG

CIMBISLG
Islamic
Finance,
Wholesale Transport, Takaful,
Electricity, and Retail Storage Real Estate
(RM000) Gas and Trade, and and and Education,
Exposure Primary Mining and Manufac- Water Construc- Restaurants Communi- Business Health and
Class Agriculture Quarrying turing Supply tion and Hotels cation Activities Others Household Others* Total

2013
Sovereign 53,950 20,139 116,962 30,141 13,474,583 13,695,774
Bank 2,519,792 2,519,792
Corporate 713,510 30,462 1,144,072 100,446 3,262,071 705,600 1,482,718 3,855,904 646,960 18,707 214,828 12,175,278
RRE Financing 8,292,858 8,292,858
HPE 6,213,282 6,213,282
QRRE 190,285 190,285
Other Retail 16,049 2,373 65,974 1,952 78,415 157,293 7,731 222,437 57,891 5,799,918 42,948 6,452,979
Other Exposures 20,466 48,983 69,449

Total Gross
Credit Exposure 783,508 32,835 1,210,045 122,537 3,457,449 862,893 1,520,589 6,598,133 14,199,900 20,515,050 306,759 49,609,698

Note: All sectors above are Shariah compliant.

*Others are exposures which are not elsewhere classied.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

394

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

ii) Gross Credit Exposures by Sector (continued)
Table 4(c): Distribution of Credit Exposures by Sector for CIMBIBG

CIMBIBG
Finance,
Wholesale Transport, Insurance/
Electricity, and Retail Storage Real Estate
(RM000) Gas and Trade, and and and Education,
Exposure Primary Mining and Manufac- Water Construc- Restaurants Communi- Business Health and
Class Agriculture Quarrying turing Supply tion and Hotels cation Activities Others Household Others* Total

2013
Sovereign 1,450,913 1,450,913
Bank 1,110,351 1,110,351
Corporate 1 662 198 31,666 17,628 50,154
Mortgage 57,807 57,807
HPE
QRRE
Other Retail 53,036 53,036
Other Exposures 528,773 528,773

Total Gross
Credit Exposure 1 1,111,013 1,451,111 142,508 546,401 3,251,034

2012
Sovereign 1,176 150,622 151,798
Bank 2,699,115 2,699,115
Corporate 628 42,131 42,760
Mortgage 19,474 19,474
HPE
QRRE
Other Retail 44,676 44,676
Other Exposures 448,452 448,452

Total Gross
Credit Exposure 2,700,920 150,622 64,151 490,583 3,406,275

*Others are exposures which are not elsewhere classied.

 INTO A NEW ERA

395

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

iii) Gross Credit Exposures by Residual Contractual Maturity
The following tables represent the Groups credit exposure analysed by residual contractual maturity:

Table 5(a): Distribution of Credit Exposures by Residual Contractual Maturity for CIMBBG

CIMBBG

(RM000) Less than 1 to More than

Exposure Class 1 year 5 years 5 years Total

2013
Sovereign 18,886,456 7,592,634 18,368,572 44,847,661
Bank 27,034,362 8,438,567 2,810,862 38,283,791
Corporate 34,830,560 42,624,014 29,380,293 106,834,867
Mortgage/RRE Financing 24,457 496,008 52,221,928 52,742,394
HPE 181,625 3,582,495 9,227,398 12,991,519
QRRE 11,344,007 11,344,007
Other Retail 3,051,765 5,540,652 39,399,587 47,992,005
Other Exposures 136,371 575,545 7,997,672 8,709,589

Total Gross Credit Exposure 95,489,604 68,849,916 159,406,312 323,745,831

2012
Sovereign 16,080,841 7,174,237 19,592,995 42,848,074
Bank 15,931,154 6,730,953 1,259,928 23,922,035
Corporate 35,964,456 31,480,429 26,357,197 93,802,083
Mortgage/RRE Financing 22,800 522,170 46,081,261 46,626,231
HPE 157,114 3,524,582 7,794,564 11,476,260
QRRE 8,325,262 8,325,262
Other Retail 6,922,147 2,648,677 28,277,935 37,848,759
Other Exposures 15,702 638,410 8,262,520 8,916,632

Total Gross Credit Exposure 83,419,477 52,719,459 137,626,399 273,765,335

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

396

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

iii) Gross Credit Exposures by Residual Contractual Maturity (continued)
Table 5(b): Distribution of Credit Exposures by Residual Contractual Maturity for CIMBISLG

CIMBISLG

(RM000) Less than 1 to More than

Exposure Class 1 year 5 years 5 years Total

2013
Sovereign 5,118,254 2,073,749 6,503,771 13,695,774
Bank 2,043,418 397,525 78,849 2,519,792
Corporate 5,020,781 2,996,092 4,158,404 12,175,278
RRE Financing 2,536 42,427 8,247,895 8,292,858
HPE 49,226 1,761,313 4,402,743 6,213,282
QRRE 190,285 190,285
Other Retail 73,001 539,863 5,840,116 6,452,979
Other Exposures 20,466 48,983 69,449

Total Gross Credit Exposure 12,497,503 7,831,435 29,280,761 49,609,698

 INTO A NEW ERA

397

CREDIT RISK (CONTINUED)

Summary of Credit Exposures (continued)

iii) Gross Credit Exposures by Residual Contractual Maturity (continued)
Table 5(c): Distribution of Credit Exposures Residual Contractual Maturity for CIMBIBG

CIMBIBG

(RM000) Less than 1 to More than

Exposure Class 1 year 5 years 5 years Total

2013
Sovereign 1,448,353 2,560 1,450,913
Bank 1,088,435 8,033 13,883 1,110,351
Corporate 3 1,202 48,949 50,154
Mortgage 3 779 57,025 57,807
HPE
QRRE
Other Retail 109 7,382 45,545 53,036
Other Exposures 3,253 525,521 528,773

Total Gross Credit Exposure 2,540,155 17,396 693,482 3,251,034

2012
Sovereign 150,622 1,176 151,798
Bank 2,424,912 12,245 261,959 2,699,115
Corporate 11 6,579 36,170 42,760
Mortgage 5 671 18,798 19,474
HPE
QRRE
Other Retail 186 2,652 41,838 44,676
Other Exposures 305 448,147 448,452

Total Gross Credit Exposure 2,576,041 22,146 808,088 3,406,275

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

398

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing

i) Past Due But Not Impaired
A loan/nancing is considered past due when any payment due under strict contractual terms is received late or missed. Late processing and other
administrative delays on the side of the borrower/customer can lead to a nancial asset being past due but not impaired. Therefore, loans/nancings
and advances less than 90 days past due are not usually considered impaired, unless other information is available to indicate the contrary. For the
purposes of this analysis, an asset is considered past due and included below when any payment due under strict contractual terms is received late or
missed. The amount included is the entire nancial asset, not just the payment, of principal or interest/prot or both, overdue.

The following tables provide an analysis of the outstanding balances as at 31 December 2013 and 31 December 2012 which were past due but not
impaired by sector and geographical respectively:

Table 6(a): Past Due but Not Impaired Loans, Advances and Financing by Sector

CIMBBG

(RM000) 2013 2012

Primary Agriculture 33,452 32,743

Mining and Quarrying 2,489 729
Manufacturing 103,455 170,891
Electricity, Gas and Water Supply 4,060 2,143
Construction 133,417 149,465
Wholesale and Retail Trade, and Restaurants and Hotels 284,185 193,533
Transport, Storage and Communication 25,923 71,478
Finance, Insurance/Takaful, Real Estate and Business Activities 162,592 392,515
Education, Health and Others 56,720 49,413
Household 12,013,328 11,368,787
Others* 445,437 313,553

Total 13,265,058 12,745,250

*Others are exposures which are not elsewhere classied.

 INTO A NEW ERA

399

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

i) Past Due But Not Impaired (continued)
Table 6(a): Past Due but Not Impaired Loans, Advances and Financing by Sector (continued)

CIMBISLG

(RM000) 2013

Primary Agriculture 18,293

Mining and Quarrying 1
Manufacturing 6,618
Electricity, Gas and Water Supply 3
Construction 32,590
Wholesale and Retail Trade, and Restaurants and Hotels 15,432
Transport, Storage and Communication 1,752
Islamic Finance, Takaful, Real Estate and Business Activities 23,091
Education, Health and Others 7,563
Household 1,831,454
Others* 1,149

Total 1,937,946

Note: All sectors above are Shariah compliant.

*Others are exposures which are not elsewhere classied.

CIMBIBG

(RM000) 2013 2012

Primary Agriculture
Mining and Quarrying
Manufacturing
Electricity, Gas and Water Supply
Construction
Wholesale and Retail Trade, and Restaurants and Hotels
Transport, Storage and Communication
Finance, Insurance, Real Estate and Business Activities
Education, Health and Others
Household
Others*

Total

*Others are exposures which are not elsewhere classied.

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

400

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

i) Past Due But Not Impaired (continued)
Table 6(b): Past Due but Not Impaired Loans, Advances and Financing by Geographic Distribution

CIMBBG

(RM000) 2013 2012

Malaysia 12,205,982 12,110, 382

Singapore 43,828 44,075
Thailand 1,011,271 588,896
Other Countries 3,977 1,897

Total 13,265,058 12,745,250

CIMBISLG

(RM000) 2013

Malaysia 1,937,946
Singapore
Thailand
Other Countries

Total 1,937,946

CIMBIBG

(RM000) 2013 2012

Malaysia
Singapore
Thailand
Other Countries

Total
 INTO A NEW ERA

401

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings
The Group deems a nancial asset or a group of nancial asset to be impaired if, and only if, there is objective evidence of impairment as a result of one
or more events that has occurred after the initial recognition of the asset (an incurred loss event) and that loss event (or events) has an impact on the
estimated future cash ows of the nancial asset or the group of nancial assets that can be reliably estimated.

Impairment losses are calculated on individual loans/nancings and on loans/nancings assessed collectively.

Losses for impaired loans/nancings are recognised promptly when there is objective evidence that impairment of a portfolio of loans/nancings has
occurred. Evidence of impairment may include indications that the borrower/customer or a group of borrowers/customers is experiencing signicant
nancial difculty, the probability that they will enter bankruptcy or other nancial reorganisation, default of delinquency in interest/prot or principal
payments and where observable data indicates that there is a measurable decrease in the estimated future cash ows, such as changes in arrears or
economic conditions that correlate with defaults.

The Group assesses individually whether objective evidence of impairment exists for all assets deemed to be individually signicant. If there is objective
evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and
the present value of estimated future cash ows. The carrying amount of the asset is reduced through the individual impairment allowance account and
the amount of the loss is recognised in the statements of comprehensive income. Interest/prot income continues to be accrued on the reduced
carrying amount and is accrued using the rate of interest/prot used to discount the future cash ows for the purpose of measuring the impairment
loss. The interest/prot income is recorded as part of interest/prot income.

Loans/Financings that have not been individually assessed are grouped together for portfolio impairment assessment. These loans/nancings are
grouped according to their credit risk characteristics for the purposes of calculating an estimated collective loss. Future cash ows on a group of
nancial assets that are collectively assessed for impairment are estimated on the basis of historical loss experience for assets with credit risk
characteristics similar to those in the group.

The following tables provide an analysis of the outstanding balances as at 31 December 2013 and 31 December 2012 which were impaired by sector
and geographical respectively:
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

402

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 7(a): Impaired Loans, Advances and Financing by Sector

CIMBBG

(RM000) 2013 2012

Primary Agriculture 109,562 34,894

Mining and Quarrying 46,579 33,327
Manufacturing 642,168 808,291
Electricity, Gas and Water Supply 2,453 767
Construction 239,592 338,688
Wholesale and Retail Trade, and Restaurants and Hotels 435,950 411,725
Transport, Storage and Communication 983,040 981,740
Finance, Insurance/Takaful, Real Estate and Business Activities 179,017 277,694
Education, Health and Others 29,207 60,865
Household 1,426,693 1,403,447
Others* 180,682 177,193

Total 4,274,943 4,528,631

*Others are exposures which are not elsewhere classied.

CIMBISLG

(RM000) 2013

Primary Agriculture 4,961

Mining and Quarrying
Manufacturing 9,152
Electricity, Gas and Water Supply 572
Construction 35,747
Wholesale and Retail Trade, and Restaurants and Hotels 25,329
Transport, Storage and Communication 1,861
Islamic Finance, Takaful, Real Estate and Business Activities 7,218
Education, Health and Others 8,975
Household 216,217
Others* 119

Total 310,151

Note: All sectors above are Shariah compliant.

*Others are exposures which are not elsewhere classied.
 INTO A NEW ERA

403

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 7(a): Impaired Loans, Advances and Financing by Sector (continued)

CIMBIBG

(RM000) 2013 2012

Primary Agriculture
Mining and Quarrying
Manufacturing
Electricity, Gas and Water Supply
Construction
Wholesale and Retail Trade, and Restaurants and Hotels
Transport, Storage and Communication
Finance, Insurance, Real Estate and Business Activities
Education, Health and Others
Household 883 432
Others*

Total 883 432

*Others are exposures which are not elsewhere classied.

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

404

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 7(b): Impaired Loans, Advances and Financing by Geographic Distribution

CIMBBG

(RM000) 2013 2012

Malaysia 3,622,893 4,008,279

Singapore 36,027 20,855
Thailand 597,943 499,497
Other Countries 18,080

Total 4,274,943 4,528,631

CIMBISLG

(RM000) 2013

Malaysia 310,150
Singapore
Thailand
Other Countries

Total 310,150

CIMBIBG

(RM000) 2013 2012

Malaysia 883 432

Singapore
Thailand
Other Countries

Total 883 432

 INTO A NEW ERA

405

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 8: Individual Impairment and Portfolio Impairment Allowances by Sector

CIMBBG

2013 2012

Individual Portfolio Individual Portfolio

Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Primary Agriculture 28,006 23,184 14,256 24,780

Mining and Quarrying 34,574 7,090 28,426 7,253
Manufacturing 455,255 103,587 557,043 112,140
Electricity, Gas and Water Supply 1,234 5,034 5,141
Construction 133,515 73,492 201,697 78,264
Wholesale and Retail Trade, and Restaurants and Hotels 191,549 183,936 177,703 197,438
Transport, Storage and Communication 720,478 34,792 636,492 38,486
Finance, Insurance/Takaful, Real Estate and Business Activities 42,704 110,219 110,659 94,828
Education, Health and Others 7,370 27,251 20,819 24,059
Household 21,039 1,267,280 27,501 1,172,305
Others* 131,506 97,687 125,697 86,531

Total 1,767,230 1,933,552 1,900,293 1,841,225

*Others are exposures which are not elsewhere classied.

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

406

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 8: Individual Impairment and Portfolio Impairment Allowances by Sector (continued)

CIMBISLG
2013

Individual Portfolio
Impairment Impairment
(RM000) Allowance Allowance

Primary Agriculture 1,431 8,564

Mining and Quarrying 277
Manufacturing 3,029 9,018
Electricity, Gas and Water Supply 930
Construction 8,646 13,381
Wholesale and Retail Trade, and Restaurants and Hotels 11,030 10,916
Transport, Storage and Communication 1,722 3,338
Islamic Finance, Takaful, Real Estate and Business Activities 3,180 18,011
Education, Health and Others 763 5,307
Household 306,173
Others* 934

Total 29,801 376,849

Note: All sectors above are Shariah compliant.

*Others are exposures which are not elsewhere classied.
 INTO A NEW ERA

407

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 8: Individual Impairment and Portfolio Impairment Allowances by Sector (continued)

CIMBIBG
2013 2012

Individual Portfolio Individual Portfolio

Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Primary Agriculture
Mining and Quarrying
Manufacturing
Electricity, Gas and Water Supply
Construction
Wholesale and Retail Trade, and Restaurants and Hotels
Transport, Storage and Communication
Finance, Insurance, Real Estate and Business Activities
Education, Health and Others
Household 883 1,996 432 1,115
Others*

Total 883 1,996 432 1,115

*Others are exposures which are not elsewhere classied.

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

408

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)
ii) Impaired Loans/Financings (continued)
Table 9: Individual Impairment and Portfolio Impairment Allowances by Geographic Distribution
CIMBBG
2013 2012
Individual Portfolio Individual Portfolio
Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Malaysia 1,548,843 1,597,387 1,714,403 1,600,173

Singapore 13,740 32,350 16,087 16,415
Thailand 204,486 299,161 169,803 222,050
Other Countries 161 4,654 2,587

Total 1,767,230 1,933,552 1,900,293 1,841,225

CIMBISLG
2013
Individual Portfolio
Impairment Impairment
(RM000) Allowance Allowance

Malaysia 29,801 376,849

Singapore
Thailand
Other Countries

Total 29,801 376,849

CIMBIBG
2013 2012
Individual Portfolio Individual Portfolio
Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Malaysia 883 1,996 432 1,115

Singapore
Thailand
Other Countries

Total 883 1,996 432 1,115

 INTO A NEW ERA

409

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)
ii) Impaired Loans/Financings (continued)
Table 10: Charges for Individual Impairment Provision and Write Offs During the Year
CIMBBG
2013 2012
Charges/ Charges/
(RM000) (Write Back) Write-Off (Write Back) Write-Off

Primary Agriculture 15,553 2,268 (1,072)

Mining and Quarrying 4,694 (129) 79
Manufacturing (25,137) 98,123 61,382 86,472
Electricity, Gas and Water Supply 1,266 (5,313) 73
Construction (34,430) 31,470 (26,880) 62,086
Wholesale and Retail Trade, and Restaurants and Hotels 23,148 50,387 28,751 104,139
Transport, Storage and Communication 87,485 9,971 12,644 1,564
Finance, Insurance/Takaful, Real Estate and Business Activities 4,977 74,204 10,607 49,746
Education, Health and Others 30,610 9,061 (1,715) 2,158
Household 310 6,748 (20,186) 4,297
Others* (889) 2,372 93,883 19,615

Total 107,587 284,604 151,972 330,229

*Others are exposures which are not elsewhere classied.

CIMBISLG
2013
Charges/
(RM000) (Write Back) Write-Off

Primary Agriculture 114 2,268

Mining and Quarrying
Manufacturing (13,393)
Electricity, Gas and Water Supply
Construction (13,078)
Wholesale and Retail Trade, and Restaurants and Hotels 6,560 3,163
Transport, Storage and Communication 1
Islamic Finance, Takaful, Real Estate and Business Activities (282) 58
Education, Health and Others (1)
Household (665) 4,891
Others*

Total (20,774) 10,380

Note: All sectors above are Shariah compliant.

*Others are exposures which are not elsewhere classied.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

410

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 10: Charges for Individual Impairment Provision and Write Offs During the Year (continued)

CIMBIBG
2013 2012

Charges/ Charges/
(RM000) (Write Back) Write-Off (Write Back) Write-Off

Primary Agriculture
Mining and Quarrying
Manufacturing
Electricity, Gas and Water Supply
Construction
Wholesale and Retail Trade, and Restaurants and Hotels
Transport, Storage and Communication
Finance, Insurance, Real Estate and Business Activities
Education, Health and Others
Household 451 15 474
Others*

Total 451 15 474

*Others are exposures which are not elsewhere classied.

 INTO A NEW ERA

411

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)
ii) Impaired Loans/Financings (continued)
Table 11: Analysis of movement for Loan/Financing Impairment Allowances for the Year Ended 31 December 2013 and 31 December 2012
CIMBBG
2013 2012
Individual Portfolio Individual Portfolio
Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Balance as at 1 January 1,900,293 1,841,225 2,060,895 2,197,899

Allowance made during the nancial period/year 131,282 652,951 161,836 316,497
Amount transferred to portfolio impairment allowance 1,043 (1,043) 9,598 (9,598)
Amount written back in respect of recoveries (23,695) (9,864)
Allowance made and charged to deferred assets (959) 258 1,221 (1,510)
Amount written off (284,604) (557,542) (330,229) (723,895)
Transfer(to)/from intercompany (56,608) (1,553)
Disposal of subsidiary (2,429)
Unwinding income 21,266 82,096 65,105
Exchange uctuation 22,604 (2,297) (16,223) (1,719)

Total 1,767,230 1,933,552 1,900,293 1,841,225

CIMBISLG
2013
Individual Portfolio
Impairment Impairment
(RM000) Allowance Allowance

Balance as at 1 January 60,925 347,704

Allowance made during the nancial period/year 163,420
Amount transferred to portfolio impairment allowance
Amount written back in respect of recoveries (20,744)
Allowance made and charged to deferred assets
Allowance made in relation to jointly controlled entity
Amount written off (10,380) (136,989)
Transfer(to)/from intercompany 2,714
Disposal of subsidiary
Unwinding income
Exchange uctuation

Total 29,801 376,849

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

412

CREDIT RISK (CONTINUED)

Credit Quality of Loans, Advances & Financing (continued)

ii) Impaired Loans/Financings (continued)
Table 11: Analysis of movement for Loan/Financing Impairment Allowances for the Year Ended 31 December 2013 and 31 December
2012 (continued)

CIMBIBG
2013 2012

Individual Portfolio Individual Portfolio

Impairment Impairment Impairment Impairment
(RM000) Allowance Allowance Allowance Allowance

Balance as at 1 January 432 1,115 891 623

Allowance made during the nancial period/year 592 881 174 492
Amount transferred to portfolio impairment allowance
Amount written back in respect of recoveries (141) (159)
Allowance made and charged to deferred assets
Allowance made in relation to jointly controlled entity
Amount written off (474)
Transfer(to)/from intercompany
Disposal of subsidiary
Unwinding income
Exchange uctuation

Total 883 1,996 432 1,115

Capital Treatment for Credit Risk

Details on RWA and capital requirements related to Credit Risk are disclosed separately for CIMBBG, CIMBISLG and CIMBIBG in Tables 2 (a), (b) and (c).
Details on the disclosure for portfolios under the SA and the IRB Approach are in the sections that followed.

Credit Risk Disclosure for Portfolios under the SA

Credit exposures under SA are mainly exposures where the IRB Approach is not applicable or exposures that will eventually adopt the IRB Approach. Under
SA, the regulator prescribes the risk weights for all asset types.

Exposures which are rated externally relate to sovereign and central banks while the unrated exposures relate to personal nancing and other exposures.
The Group applies external ratings for credit exposures under SA from S&P, Moodys, Fitch, RAM, MARC and R&I. CIMB Group follows the process
prescribed under BNMs guidelines on CAF (Basel II - Risk-Weighted Assets) and CAFIB (Risk-Weighted Assets) to map the ratings to the relevant risk
weights for computation of regulatory capital.

The following tables present the credit exposures by risk weights and after credit risk mitigation:
 INTO A NEW ERA

413

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 12(a): Disclosure by Risk Weight under SA for CIMBBG

2013 CIMBBG
Insurance
Cos/Takaful Total
Operators, Exposures
Securities Residential after
Sovereign/ Banks, Firms Mortgages/ Higher Netting and Total Risk
(RM000) Central MDBs & Fund Regulatory RRE Risk Other Securiti- Credit Risk Weighted
Risk Weights Banks PSEs and DFIs Managers Corporate Retail Financing Assets Assets sation* Mitigation* Assets

0% 42,776,653 2,212,988 13,000 4,114,576 49,117,216

6% 6,517,171 6,517,171 401,292
20% 97,008 57,472 50,739 263,971 95 140,816 801,451 1,411,552 282,310
35% 3,518,074 3,518,074 1,231,326
50% 17,990 415,607 923,902 182,283 1,229,436 124,471 2,893,690 1,446,845
75% 9,263,308 189,863 9,453,170 7,089,878
100% 355,874 3,266,203 5,568,050 89,913 2,579,568 11,859,607 11,859,607
100% < RW < 1250% 34,176 12,058,937 1,182,673 1,098,029 14,373,815 16,458,281
1250% 13,736 13,736 171,703

Total 42,873,661 2,288,450 6,996,517 1,577,923 15,507,423 17,243,562 3,922,320 1,098,029 6,834,960 815,187 99,158,032 38,941,243

Average Risk Weight 1% 9% 58% 105% 76% 39% 150% 38% 41% 37%

Deduction from Capital Base

*The total includes the portion which is deducted from Capital Base, if any.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

414

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 12(a): Disclosure by Risk Weight under SA for CIMBBG (continued)

2012 CIMBBG
Insurance
Cos/Takaful Total
Operators, Exposures
Securities Residential after
Sovereign/ Banks, Firms Mortgages/ Higher Netting and Total Risk
(RM000) Central MDBs & Fund Regulatory RRE Risk Other Securiti- Credit Risk Weighted
Risk Weights Banks PSEs and DFIs Managers Corporate Retail Financing Assets Assets sation* Mitigation* Assets

0% 41,811,358 3,024,856 44,836,214

20% 161,130 1,418,048 734,079 140,130 965 425,334 719,459 3,599,146 719,829
35% 5,436,321 5,436,321 1,902,712
50% 75,756 86,975 2,484 494,537 1,565,021 94,943 2,319,716 1,159,858
75% 19,924,983 150,714 20,075,697 15,056,773
100% 65,302 49,836 13,223,476 4,300,821 54,767 3,477,880 21,172,083 21,172,083
150% 548 210,112 74,488 1,200,956 1,486,104 2,229,156
>150% 2,525 2,525 7,448

Total 41,972,488 1,559,107 871,439 2,484 14,068,255 25,866,278 5,736,745 1,200,956 6,928,071 787,605 98,993,427 42,247,859

Average Risk Weight 25% 28% 50% 98% 78% 37% 150% 51% 19% 43%

Deduction from Capital Base 65,621

*The total includes the portion which is deducted from Capital Base, if any.
 INTO A NEW ERA

415

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 12(b): Disclosure by Risk Weight under SA for CIMBISLG

2013 CIMBISLG
Takaful Total
Operators, Exposures
Securities after
Sovereign/ Banks, Firms Higher Netting and Total Risk
(RM000) Central MDBs & Fund Regulatory RRE Risk Other Securiti- Credit Risk Weighted
Risk Weights Banks PSEs and DFIs Managers Corporate Retail Financing Assets Assets sation* Mitigation* Assets

0% 13,660,982 13,000 13,673,982

20% 34,793 20,466 55,259 11,052
35%
50% 78,894 158,235 1,184,891 1,422,020 711,010
75% 756,031 756,031 567,023
100% 77,580 2,330,008 48,408 2,455,996 2,455,996
100% < RW < 1250% 199 1,373 575 2,147 3,221
1250%

Total 13,695,774 91,894 236,014 4,272,303 575 48,408 20,466 18,365,435 3,748,302

Average Risk Weight 43% 67% 82% 150% 100% 20% 20%

Deduction from Capital Base

*The total includes the portion which is deducted from Capital Base, if any.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

416

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 12(c): Disclosure by Risk Weight under SA for CIMBIBG

2013 CIMBIBG
Insurance Total
Cos, Exposures
Securities after
Sovereign/ Banks, Firms Higher Netting and Total Risk
(RM000) Central MDBs & Fund Regulatory Residential Risk Other Securiti- Credit Risk Weighted
Risk Weights Banks PSEs and DFIs Managers Corporate Retail Mortgages Assets Assets sation* Mitigation* Assets

0% 1,450,913 49 1,450,962
20% 35,670 35,670 7,134
35% 32,547 32,547 11,391
50% 1,074,681 8,247 1,082,928 541,464
75% 3,540 478 4,019 3,014
100% 50,154 49,495 16,535 527,641 643,825 643,825
100% < RW < 1250% 1,083 1,083 1,624
1250%

Total 1,450,913 1,110,351 50,154 53,036 57,807 1,083 527,691 3,251,034 1,208,453

Average Risk Weight 49% 100% 98% 56% 150% 100% 37%

Deduction from Capital Base

*The total includes the portion which is deducted from Capital Base, if any.
 INTO A NEW ERA

417

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 12(c): Disclosure by Risk Weight under SA for CIMBIBG (continued)

2012 CIMBIBG
Insurance Total
Cos, Exposures
Securities after
Sovereign/ Banks, Firms Higher Netting and Total Risk
(RM000) Central MDBs & Fund Regulatory Residential Risk Other Securiti- Credit Risk Weighted
Risk Weights Banks PSEs and DFIs Managers Corporate Retail Mortgages Assets Assets sation* Mitigation* Assets

0% 151,798 48 151,846
20% 1,652,818 1,652,818 330,564
35% 17,320 17,320 6,062
50% 1,045,757 29 1,304 1,047,090 523,545
75% 43,687 850 44,537 33,403
100% 540 42,760 960 445,459 489,719 489,719
150% 2,946 2,946 4,418

Total 151,798 2,699,115 42,760 44,676 19,474 2,946 445,507 3,406,275 1,387,711

Average Risk Weight 32% 100% 76% 38% 150% 100% 41%

Deduction from Capital Base

*The total includes the portion which is deducted from Capital Base, if any.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

418

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

The following tables present the non-retail credit exposures before the effect of credit risk mitigation, according to ratings by ECAIs:

Table 13(a): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBBG

CIMBBG
Non
(RM000) Investment Investment
Exposure Class Grade Grade No Rating Total

2013
On and Off-Balance-Sheet Exposures
Public Sector Entities 3,025,268 375,027 3,400,296
Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 1,242,571 34,176 385,515 1,662,262
Corporate 355,471 15,973,890 16,329,361
Sovereign/Central Banks 6,076,870 36,796,791 42,873,661
Banks, MDBs and DFIs 6,776,436 26 220,055 6,996,517

Total 17,121,145 389,673 53,751,278 71,262,095

2012
On and Off-Balance-Sheet Exposures
Public Sector Entities 1,572,493 68,987 1,641,480
Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 2,488 2,488
Corporate 526,823 64,908 15,913,410 16,505,140
Sovereign/Central Banks 4,295,869 146,570 37,530,049 41,972,488
Banks, MDBs and DFIs 1,046,773 245,122 1,291,895

Total 7,444,445 211,479 53,757,568 61,413,491

 INTO A NEW ERA

419

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)
Table 13(b): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBISLG
CIMBISLG
Non
(RM000) Investment Investment
Exposure Class Grade Grade No Rating Total

2013
On and Off-Balance-Sheet Exposures
Public Sector Entities
Takaful Operators, Securities Firms & Fund Managers 450 450
Corporate 244,876 244,876
Sovereign/Central Banks 433,026 13,262,748 13,695,774
Banks, MDBs and DFIs 78,849 13,045 91,894

Total 511,875 13,521,120 14,032,995

Table 13(c): Disclosures of Rated and Unrated Non-Retail Exposures under SA according to Ratings by ECAIs for CIMBIBG
CIMBIBG
Non
(RM000) Investment Investment
Exposure Class Grade Grade No Rating Total

2013
On and Off-Balance-Sheet Exposures
Public Sector Entities
Insurance Cos, Securities Firms & Fund Managers
Corporate 50,154 50,154
Sovereign/Central Banks 1,450,913 1,450,913
Banks, MDBs and DFIs 1,110,340 10 1,110,351

Total 1,110,340 1,501,077 2,611,418

2012
On and Off-Balance-Sheet Exposures
Public Sector Entities
Insurance Cos, Securities Firms & Fund Managers
Corporate 42,760 42,760
Sovereign/Central Banks 151,798 151,798
Banks, MDBs and DFIs 2,441,026 258,089 2,699,115

Total 2,441,026 452,646 2,893,673

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

420

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the SA (continued)

Table 14(a): Disclosures of Securitisation under SA according to Ratings by ECAIs for CIMBBG

CIMBBG

Non
(RM000) Investment Investment
Exposure Class Grade Grade No Rating Total

2013
On and Off-Balance-Sheet Exposures
Securitisation 801,451 13,736 815,187

2012
On and Off-Balance-Sheet Exposures
Securitisation 719,459 68,146 787,605

Table 14(b): Disclosures of Securitisation under SA according to Ratings by ECAIs for CIMBISLG

CIMBISLG

Non
(RM000) Investment Investment
Exposure Class Grade Grade No Rating Total

2013
On and Off-Balance-Sheet Exposures
Securitisation 20,466 20,466

As at 31 December 2013 and 31 December 2012, there is no Securitisation under SA according to Ratings by ECAIs for CIMBIBG.
 INTO A NEW ERA

421

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach

CIMBBG and CIMBISLG adopt the A-IRB Approach for its retail exposures and F-IRB Approach for its non-retail exposures. The IRB Approach allows
CIMBBG and CIMBISLG to adopt various rating systems to measure its credit risk to both retail and non-retail exposures. The internal risk rating systems
are used not only for regulatory capital purposes, but also for credit approval and risk management reporting.

For retail exposures, application scorecards are integral to the credit approval process. Credit ofcers use scorecard outputs in the determination of approval
of a credit application. Behavioural scorecards are used to determine the future conduct of the account for collection and limit management purposes.

For non-retail exposures, internal ratings are used to assist the approving committees in making informed decisions of the credit application. Product owners
consult GRD for input on internal rating for consideration on pricing of product.

The models used in the internal rating systems are subject to strict governance and controls. The models are developed and maintained by GRD with input
from business units to ensure that material risks are captured. Before the models are implemented, they are subject to approval by GRC and subsequently
BRC. After implementation, the models are subject to regular performance monitoring to ensure that they continue to perform as expected and the risk
parameters remain appropriate.

New models are assessed by a validation team, which is independent from the development team, to ensure robustness of the model development process,
completeness of the documentation, and accuracy of the risk estimates. The validation exercise also ensures that the models meet regulatory standards.
Existing models are assessed on an annual basis by the validation team to ensure that the models continue to be appropriate and the risk estimates continue
to be accurate.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

422

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Retail Exposures
Retail exposures are portfolio in large numbers of similarly managed exposures due to homogeneous characteristics. This applies to both exposures to
individuals as well as exposures to small businesses which are managed on a pooled basis. The exposure of a single retail facility is typically low and usually
referred as program lending.

Retail exposures covered under the A-IRB Approach include credit cards, auto loans/nancing, personal nancing, residential mortgages and business
premises loans/nancing. The PDs of these exposures are typically estimated from the outputs of application scorecards for newer customers and behavioural
scorecards for older customers. The models deployed for retail portfolio include application and behavioural scorecards or application and behavioural
models, PD, LGD and EAD segmentation.

a) PD, LGD and EAD Segmentation Models for Retail Exposures

The risk estimates are generally developed based on internal historical data and complies with BNM guidelines on CAF (Basel II - Risk-Weighted Assets)
and CAFIB (Risk-Weighted Assets). However, in instances of insufcient historical data, the respective models risk estimate is developed based on
expert judgment or aligned to available industry data with margins of conservatism applied.

PD Calibration
PD is dened as the probability of a borrower/customer defaulting within a one year time horizon.
PD estimated for each pool must be representative of long term average. In the event the internal historical data is not sufcient to cover an
economic cycle, appropriate adjustment (via Cycle Scaling Factor) will be incorporated based on proxy data which are relevant and of longer history
to derive the long term average PD, which is normally referred to as Central Tendency.

EAD Estimation
EAD represents the expected level of usage of the facility when default occurs.
The EAD for retail exposures is generally based on the respective portfolios summed outstanding exposure including any undrawn balances, and
for revolving exposures such as credit card receivables, each loans/nancings EAD estimation includes the estimated net additional drawings for
loans/nancings defaulting over the next 12 months.

LGD Estimation
LGD is the estimated amount of loss expected if a loan defaults, calculated as a percentage of EAD. The value depends on the collateral (if any) and
other factors (internal, external, direct and indirect costs associated with recoveries).
LGD for retail exposures is estimated based on historical internal data and the following sources of recoveries are incorporated into the estimation:
(i) Regularisation of defaulted accounts.
(ii) Sale proceeds from physical collaterals.
(iii) Cash receipts from borrowers/customers.
 INTO A NEW ERA

423

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Retail Exposures (continued)
The following tables summarise the retail credit exposures measured under A-IRB Approach as at 31 December 2013 and 31 December 2012:
Table 15(a): Retail Credit Exposures by PD Band for CIMBBG
CIMBBG
(RM000) 0% PD < 2% PD < 100% Or
PD Range of Retail Exposures 2% 100% Default Total

2013
Total Retail Exposure 77,988,671 12,945,825 1,937,043 92,871,539
Residential Mortgage/RRE Financing 44,163,030 3,676,056 980,988 48,820,074
QRRE 7,191,601 4,081,811 70,594 11,344,007
Hire Purchase 9,587,747 3,177,554 226,218 12,991,519
Other Retail 17,046,293 2,010,405 659,242 19,715,940

Exposure Weighted Average LGD

Residential Mortgage/RRE Financing 23% 25% 34%
QRRE 89% 89% 89%
Hire Purchase 51% 53% 58%
Other Retail 28% 36% 65%

Exposure Weighted Average Risk Weight

Residential Mortgage/RRE Financing 30% 89% 54%
QRRE 30% 127% 121%
Hire Purchase 52% 96% 237%
Other Retail 29% 61% 196%

2012
Total Retail Exposure 52,788,638 10,654,445 1,873,259 65,316,342
Residential Mortgage/RRE Financing 36,044,249 3,716,506 1,128,731 40,889,486
QRRE 5,202,094 3,109,340 13,828 8,325,262
Hire Purchase 8,299,856 2,952,771 223,633 11,476,260
Other Retail 3,242,440 875,828 507,066 4,625,334

Exposure Weighted Average LGD

Residential Mortgage/RRE Financing 24% 25% 35%
QRRE 90% 90% 90%
Hire Purchase 51% 31% 58%
Other Retail 29% 105% 69%

Exposure Weighted Average Risk Weight

Residential Mortgage/RRE Financing 31% 87% 51%
QRRE 32% 128% 3%
Hire Purchase 54% 96% 250%
Other Retail 31% 71% 289%
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

424

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Retail Exposures (continued)
Table 15(b): Retail Credit Exposures by PD Band for CIMBISLG
CIMBISLG
(RM000) 0% PD < 2% PD < 100% Or
PD Range of Retail Exposures 2% 100% Default Total

2013
Total Retail Exposure 14,844,289 1,791,748 201,146 16,837,182
RRE Financing 7,886,442 336,082 70,333 8,292,858
QRRE 92,174 95,771 2,341 190,285
Hire Purchase 5,032,606 1,084,596 96,081 6,213,282
Other Retail 1,833,067 275,299 32,391 2,140,757

Exposure Weighted Average LGD

RRE Financing 24% 24% 34%
QRRE 90% 90% 90%
Hire Purchase 51% 54% 57%
Other Retail 25% 58% 59%

Exposure Weighted Average Risk Weight

RRE Financing 30% 98% 49%
QRRE 35% 122%
Hire Purchase 52% 104% 241%
Other Retail 25% 108% 119%
 INTO A NEW ERA

425

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Retail Exposures (continued)
Table 16(a): Retail Exposures under the IRB Approach by Expected Loss Range for CIMBBG

CIMBBG

(RM000) 1% < EL <

EL Range of Retail Exposures EL 1% 100% EL = 100% Total

2013
Total Retail Exposure 78,604,509 14,056,547 210,483 92,871,539
Residential Mortgage/RRE Financing 45,758,950 2,947,412 113,711 48,820,074
QRRE 5,513,573 5,830,433 11,344,007
Hire Purchase 9,521,764 3,462,455 7,300 12,991,519
Other Retail 17,810,221 1,816,246 89,472 19,715,940

Exposure Weighted Average LGD

Residential Mortgage/RRE Financing 23% 28% 40%
QRRE 89% 89%
Hire Purchase 51% 54% 52%
Other Retail 28% 48% 65%

2012
Total Retail Exposure 53,485,064 11,651,360 179,918 65,316,342
Residential Mortgage/RRE Financing 37,739,198 3,013,668 136,621 40,889,486
QRRE 3,767,358 4,557,904 8,325,262
Hire Purchase 8,188,318 3,283,268 4,674 11,476,260
Other Retail 3,790,191 796,520 38,624 4,625,334

Exposure Weighted Average LGD

Residential Mortgage/RRE Financing 24% 28% 40%
QRRE 90% 90%
Hire Purchase 51% 54% 53%
Other Retail 31% 63% 73%
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

426

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Retail Exposures (continued)
Table 16(b): Retail Exposures under the IRB Approach by Expected Loss Range for CIMBISLG

CIMBISLG

(RM000) 1% < EL <

EL Range of Retail Exposures EL 1% 100% EL = 100% Total

2013
Total Retail Exposure 14,938,845 1,890,357 7,981 16,837,182
RRE Financing 7,993,046 297,914 1,897 8,292,858
QRRE 54,091 136,194 190,285
Hire Purchase 5,016,093 1,194,839 2,350 6,213,282
Other Retail 1,875,614 261,410 3,733 2,140,757

Exposure Weighted Average LGD

RRE Financing 24% 27% 38%
QRRE 90% 90%
Hire Purchase 51% 54% 50%
Other Retail 25% 63% 60%

Non-retail Exposures
Non-retail exposures covered under the F-IRB Approach include foreign sovereigns, corporates (Specialised Lending/Financing uses supervisory slotting
criteria), SMEs and banks. The PDs of these exposures are estimated from internal ratings assigned across a spectrum of risk levels on a master scale. Each
internal rating has a corresponding 1-year average PD and a likely corresponding regulatory loan/nancing classication. The LGDs of these exposures are
assigned as per the CAF (Basel II Risk-Weighted Assets) and CAFIB (Risk-Weighted Assets); that is an LGD of 45% for senior exposures and 75% for
subordinated exposures, with appropriate adjustments for eligible collateral.

The process by which an internal rating is assigned to an obligor is governed by the Obligor Risk Rating framework. Firstly, a risk model uses a weighted
combination of quantitative and qualitative risk factors to generate an initial rating. The quantitative risk factors and weights are derived through statistical
techniques and the qualitative risk factors and weights are derived through deliberation with credit experts. The initial rating may subsequently be upgraded
or downgraded based on a predened set of criteria, such as quality of nancial statements and support from a parent entity. Finally, an approving authority
deliberates before deciding on a nal rating. If a facility is guaranteed by one or more corporate guarantors, then the framework recognises the credit risk
mitigation by substituting the obligor rating with the corporate guarantors rating.

For sovereign exposures, the Group applies the shadow rating approach.
 INTO A NEW ERA

427

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Non-retail Exposures (continued)
The following tables summarise the Groups non-retail credit exposures measured under F-IRB Approach as at 31 December 2013 and 31 December 2012:

Table 17(a): Credit Exposures Subject to Supervisory Risk Weight under IRB Approach for CIMBBG

CIMBBG

(RM000)
Supervisory Categories Strong Good Satisfactory Weak Default Total

2013
Project Finance 143,361 1,071,156 208,147 1,147,666 2,570,331
Object Finance 8,489 48,670 120,886 178,046
Commodities Finance
Income Producing Real Estate 2,414,842 3,523,389 450,464 168,028 87,156 6,643,879

RWA 1,444,403 3,883,434 896,422 420,071 6,644,331

2012
Project Finance 868,805 160,518 516,979 1,075,950 2,622,253
Object Finance 19,161 10,744 275,661 56,839 362,405
Commodities Finance
Income Producing Real Estate 880,127 1,330,181 1,162,769 7,053 42,116 3,422,247

RWA 1,153,024 1,218,486 2,248,722 159,730 4,779,961

Table 17(b): Credit Exposures Subject to Supervisory Risk Weight under IRB Approach for CIMBISLG

CIMBISLG
(RM000)
Supervisory Categories Strong Good Satisfactory Weak Default Total

2013
Project Finance 143,361 358 143,719
Object Finance 104,663 104,663
Commodities Finance
Income Producing Real Estate 116,803 462,802 29,261 6,046 614,911

RWA 182,114 392,769 154,013 15,114 744,010

CIMBBG and CIMBISLG have no exposure to High Volatility Commercial Real Estate and Equities under the Simple Risk Weight Approach.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

428

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Non-retail Exposures (continued)
Table 18(a): Non Retail Exposures under IRB Approach by Risk Grades for CIMBBG

CIMBBG

(RM000)
Internal Risk Grading 13 49 10 13 Default Total

2013
Total Non-Retail Exposure 41,692,587 50,122,568 15,225,230 2,271,583 109,311,968
Sovereign/Central Banks 1,742,875 231,126 1,974,001
Bank 24,057,858 3,794,741 34,194 185 27,886,979
Corporate (excluding Specialised Lending/Financing) 15,891,853 46,096,702 15,191,036 2,271,398 79,450,989

Exposure Weighted Average LGD

Sovereign/Central Banks 45% 45%
Bank 44% 40% 45% 45%
Corporate (excluding Specialised Lending/Financing) 45% 38% 37% 43%

Exposure Weighted Average Risk Weight

Sovereign/Central Banks 6% 74%
Bank 20% 50% 246%
Corporate (excluding Specialised Lending/Financing) 17% 59% 109%

2012
Total Non-Retail Exposure 38,546,223 41,532,325 9,752,631 2,920,617 92,751,796
Sovereign/Central Banks 729,015 146,570 875,586
Bank 18,272,499 2,566,653 53,539 93,481 20,986,172
Corporate (excluding Specialised Lending/Financing) 19,544,709 38,819,102 9,699,092 2,827,136 70,890,038

Exposure Weighted Average LGD

Sovereign/Central Banks 45% 45%
Bank 44% 47% 45% 45%
Corporate (excluding Specialised Lending/Financing) 45% 38% 32% 41%

Exposure Weighted Average Risk Weight

Sovereign/Central Banks 14% 71%
Bank 18% 61% 242%
Corporate (excluding Specialised Lending/Financing) 18% 61% 116%
 INTO A NEW ERA

429

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Non-retail Exposures (continued)
Table 18(b): Non Retail Exposures under IRB Approach by Risk Grades for CIMBISLG

CIMBISLG

(RM000)
Internal Risk Grading 13 49 10 13 Default Total

2013
Total Non-Retail Exposure 3,674,865 7,749,581 1,964,461 105,650 13,494,557
Bank 2,380,727 47,040 131 2,427,898
Corporate (excluding Specialised Financing) 1,294,138 7,702,540 1,964,330 105,650 11,066,658

Exposure Weighted Average LGD

Bank 45% 45% 45%
Corporate (excluding Specialised Financing) 45% 43% 38% 39%

Exposure Weighted Average Risk Weight

Bank 21% 58% 150%
Corporate (excluding Specialised Financing) 12% 54% 109%
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

430

CREDIT RISK (CONTINUED)

Credit Risk Disclosure for Portfolios under the IRB Approach (continued)
Expected Losses versus Actual Losses by Portfolio Types
The following table summarises the expected losses versus actual losses by portfolio type:

Table 19: Analysis of Expected Loss versus Actual Losses by Portfolio Types for CIMBBG

CIMBBG
2013 2012

Regulatory Actual Regulatory Actual

Expected Losses for the Expected Losses for the
Losses as at year ended Losses as at year ended
(RM000) 31 December 31 December 31 December 31 December
Exposure Class 2012 2013 2011 2012

Sovereign 454
Bank 17,568 6,048 117,598 (20,706)
Corporate 642,954 134,790 717,770 179,924
Mortgage/RRE Financing 171,458 40,759 168,112 30,887
HPE 276,336 168,125 361,050 157,079
QRRE 299,673 164,656 268,734 145,473
Other Retail 45,745 53,955 56,748 22,401

Total 1,454,187 568,332 1,690,011 515,059

Note: The actual losses for the year ended 31 December 2013 and the EL as at 31 December 2012 in the above table exclude exposures or portfolios which migrated from SA to IRB Approach in
year 2013.

Actual loss refers to impairment provisions and direct write-offs, if any during the year.

On the other hand, EL measures the loss expected from non-defaulted exposures at the start of the year. It is computed based on the risk parameters of
the adopted IRB Approach. While a comparison of actual losses and EL provides some insight of the predictive power of the IRB Approach models used by
the Group, the two metrics are not directly comparable due to the differences in methodology.
 INTO A NEW ERA

431

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR

Off-Balance Sheet exposures are exposures such as derivatives, trade facilities and undrawn commitments. The Group adopts the Current Exposure
method to compute the capital requirement for CCR under BNMs guidelines on CAF (Basel II - Risk-Weighted Assets) and CAFIB (Risk-Weighted Assets).

i) Credit Risk Mitigation

For credit derivatives and swaps transactions, the Group enters into master agreement with counterparties, whenever possible. Further, the Group may
also enter into CSA with counterparties. The net credit exposure with each counterparty is monitored and the Group may request for additional margin
for any exposures above the agreed threshold, in accordance with the terms specied in the relevant CSA or the master agreement. The eligibility of
collaterals and frequency calls are negotiated with the counterparty and endorsed by GWBRC and/or RCC.

ii) Treatment of Rating Downgrade

In the event of a one-notch downgrade of rating, based on the terms of the existing CSA and exposure as at 31 December 2013, there was no
requirement for additional collateral to be posted. As at 31 December 2012, the additional collateral to be posted was RM32,286,742.

On the other hand, counterparty rating is being monitored and in the event of a rating downgrade, remedial actions such as revision of the counterparty
credit limit, suspension of the limit or the request for additional collateral may be taken.

The following tables disclose the Off-Balance Sheet exposures and CCR as at 31 December 2013 and 31 December 2012:
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

432

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

Table 20(a): Disclosure on Off-Balance Sheet Exposures and CCR for CIMBBG

CIMBBG

Positive
Fair Value of Credit Risk
(RM000) Principal Derivative Equivalent Weighted
Description Amount Contracts Amount Assets

2013
Direct Credit Substitutes 2,556,354 2,556,354 1,902,057
Transaction Related Contingent Items 4,417,745 2,194,931 1,397,495
Short Term Self Liquidating Trade Related Contingencies 3,507,642 701,528 359,156
Assets Sold With Recourse
Forward Asset Purchases
Obligations under an On-going Underwriting Agreement 163,500 81,750 40,875
Lending of banks securities or the posting of securities as collateral
by banks, including instances where these arise out of repo-style
transactions (i.e. repurchase/reverse repurchase and securities
lending/borrowing transactions)/Commitments to buy back Islamic
securities under Sales and Buy Back Agreement 3,703,883 3,706,887 81,213
Foreign Exchange Related Contracts
One year or less 178,626 2,679 548
Over one year to ve years
Over ve years
OTC derivative transactions and credit derivative contracts subject
to valid bilateral netting agreements 421,565,760 2,441,554 8,455,855 3,779,601
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of over one year 29,446,925 23,951,518 12,166,138
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of up to one year 3,065,936 1,015,004 760,475
Any commitments that are unconditionally cancellable at any time by the
bank without prior notice or that effectively provide for automatic
cancellation due to deterioration in a borrowers/customers creditworthiness 70,164,530
Unutilised credit card lines 19,360,167 6,112,981 2,982,345
Off-balance sheet items for securitisation exposures
Off-balance sheet exposures due to early amortisation provisions

Total 558,131,069 2,441,554 48,779,487 23,469,903

 INTO A NEW ERA

433

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

Table 20(a): Disclosure on Off-Balance Sheet Exposures and CCR for CIMBBG (continued)

CIMBBG

Positive
Fair Value of Credit Risk
(RM000) Principal Derivative Equivalent Weighted
Description Amount Contracts Amount Assets

2012
Direct Credit Substitutes 1,794,218 1,794,218 1,151,987
Transaction Related Contingent Items 4,525,681 2,262,841 1,161,068
Short Term Self Liquidating Trade Related Contingencies 2,681,817 536,363 170,567
Assets Sold With Recourse
Forward Asset Purchases
Obligations under an On-going Underwriting Agreement
Lending of banks securities or the posting of securities as collateral
by banks, including instances where these arise out of repo-style
transactions (i.e. repurchase/reverse repurchase and securities
lending/borrowing transactions) /Commitments to buy back Islamic
securities under Sales and Buy Back Agreement 303,004 303,004 601
Foreign Exchange Related Contracts
One year or less 298,781 4,482 2,001
Over one year to ve years
Over ve years
OTC derivative transactions and credit derivative contracts subject
to valid bilateral netting agreements 356,177,513 1,312,783 6,435,790 2,660,647
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of over one year 24,329,014 17,788,401 14,272,794
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of up to one year 5,358,618 1,425,223 1,204,416
Any commitments that are unconditionally cancellable at any time by the
bank without prior notice or that effectively provide for automatic
cancellation due to deterioration in a borrowers creditworthiness 45,005,752
Unutilised credit card lines 16,774,775 5,678,457 3,004,295
Off-balance sheet items for securitisation exposures 5,050 2,525 7,448
Off-balance sheet exposures due to early amortisation provisions

Total 457,254,223 1,312,783 36,231,304 23,635,822

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

434

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CRR (continued)

Table 20(b): Disclosure on Off-Balance Sheet Exposures and CCR for CIMBISLG

CIMBISLG

Positive
Fair Value of Credit Risk
(RM000) Principal Derivative Equivalent Weighted
Description Amount Contracts Amount Assets

2013
Direct Credit Substitutes 187,910 187,910 137,715
Transaction Related Contingent Items 348,215 174,107 127,404
Short Term Self Liquidating Trade Related Contingencies 14,252 2,850 1,816
Assets Sold With Recourse
Forward Asset Purchases
Obligations under an On-going Underwriting Agreement
Commitments to buy back Islamic securities under Sales and
Buy Back agreement
Foreign Exchange Related Contracts
One year or less
Over one year to ve years
Over ve years
OTC derivative transactions and credit derivative contracts subject to valid
bilateral netting agreements 20,126,595 50,748 429,961 99,847
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of over one year 3,582,223 2,713,771 1,233,258
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of up to one year 24,219 18,154 16,748
Any commitments that are unconditionally cancellable at any time by the
bank without prior notice or that effectively provide for automatic
cancellation due to deterioration in a customers creditworthiness 1,568,191
Unutilised credit card lines 193,822 85,822 55,820
Off-balance sheet items for securitisation exposures

Total 26,045,427 50,748 3,612,576 1,672,606

 INTO A NEW ERA

435

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

Table 20(c): Disclosure on Off-Balance Sheet Exposures and CCR for CIMBIBG

CIMBIBG

Positive
Fair Value of Credit Risk
(RM000) Principal Derivative Equivalent Weighted
Description Amount Contracts Amount Assets

2013
Direct Credit Substitutes 955,793 955,793 477,896
Transaction Related Contingent Items
Short Term Self Liquidating Trade Related Contingencies
Assets Sold With Recourse
Forward Asset Purchases
Obligations under an On-going Underwriting Agreement
Lending of banks securities or the posting of securities as collateral
by banks, including instances where these arise out of repo-style
transactions (i.e. repurchase/reverse repurchase and securities
lending/borrowing transactions)
Foreign Exchange Related Contracts
One year or less
Over one year to ve years
Over ve years
OTC derivative transactions and credit derivative contracts subject
to valid bilateral netting agreements 296,076 25,525 21,509
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of over one year 13,285 6,643 6,630
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of up to one year
Any commitments that are unconditionally cancellable at any time by
the bank without prior notice or that effectively provide for automatic
cancellation due to deterioration in a borrowers creditworthiness
Unutilised credit card lines
Off-balance sheet items for securitisation exposures
Off-balance sheet exposures due to early amortisation provisions

Total 1,265,154 987,961 506,036

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

436

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

Table 20(c): Disclosure on Off-Balance Sheet Exposures and CCR for CIMBIBG (continued)

CIMBIBG

Positive
Fair Value of Credit Risk
(RM000) Principal Derivative Equivalent Weighted
Description Amount Contracts Amount Assets

2012
Direct Credit Substitutes 616,553 616,553 308,276
Transaction Related Contingent Items
Short Term Self Liquidating Trade Related Contingencies
Assets Sold With Recourse
Forward Asset Purchases
Obligations under an On-going Underwriting Agreement
Lending of banks securities or the posting of securities as collateral
by banks, including instances where these arise out of repo-style
transactions (i.e. repurchase/reverse repurchase and securities
lending/borrowing transactions)
Foreign Exchange Related Contracts
One year or less
Over one year to ve years
Over ve years
OTC derivative transactions and credit derivative contracts subject
to valid bilateral netting agreements 547,535 38,334 32,212
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of over one year 5,533 2,767 7,939
Other commitments, such as formal standby facilities and credit lines,
with an original maturity of up to one year
Any commitments that are unconditionally cancellable at any time by
the bank without prior notice or that effectively provide for automatic
cancellation due to deterioration in a borrowers creditworthiness
Unutilised credit card lines
Off-balance sheet items for securitisation exposures
Off-balance sheet exposures due to early amortisation provisions

Total 1,169,621 657,654 348,427

 INTO A NEW ERA

437

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

The tables below show the credit derivative transactions that create exposures to CCR (notional value) segregated between own use and client intermediation
activities:

Table 21(a): Disclosure on Credit Derivative Transactions for CIMBBG

CIMBBG
2013 2012
Notional of Credit Derivatives

Protection Protection Protection Protection

(RM000) Bought Sold Bought Sold

Own Credit Portfolio 2,857,690 2,748,435 1,140,746 1,625,094

Client Intermediation Activities 27,980 535,805 30,880 409,885

Total 2,885,670 3,284,240 1,171,626 2,034,979

Credit Default Swaps 2,857,690 2,748,435 1,140,746 1,625,094

Total Return Swaps 27,980 535,805 30,880 409,885

Total 2,885,670 3,284,240 1,171,626 2,034,979

Table 21(b): Disclosure on Credit Derivative Transactions for CIMBISLG

CIMBISLG
2013
Notional of Credit Derivatives

Protection Protection
(RM000) Bought Sold

Own Credit Portfolio

Client Intermediation Activities 57,980

Total 57,980

Total Return Swaps 57,980

Total 57,980
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

438

CREDIT RISK (CONTINUED)

Off-Balance Sheet Exposures and CCR (continued)

Table 21(c): Disclosure on Credit Derivative Transactions for CIMBIBG

CIMBIBG
2013 2012
Notional of Credit Derivatives

Protection Protection Protection Protection

(RM000) Bought Sold Bought Sold

Own Credit Portfolio

Client Intermediation Activities 162,200 170,150

Total 162,200 170,150

Credit Default Swaps

Total Return Swaps 162,200 170,150

Total 162,200 170,150

 INTO A NEW ERA

439

CREDIT RISK (CONTINUED)

Credit Risk Mitigation

The employment of various credit risk mitigation techniques such as appropriate credit structuring, and posting of collateral and/or third party support form
an integral part of the credit risk management process. Credit risk mitigants are taken where possible and is considered secondary recourse to the obligor
for the credit risk underwritten.

i) Collaterals/Securities
All extension of credit in so far as deemed prudent, should be appropriately and adequately secured. A credit proposal is considered secured only when
the entire proposal is fully covered by approved collateral/securities within their approved margins as set out in the relevant credit policy guides.
GWBRC/RCC is empowered to approve any inclusion of new acceptable collaterals/securities.

Recognised collaterals include both nancial and physical assets. Financial collaterals consist of mainly cash deposits, shares, unit trusts and debt
securities, while physical collateral includes land and buildings and vehicles. Guarantors accepted are in line with BNMs CAF (Basel II - Risk-Weighted
Assets) and CAFIB (Risk-Weighted Assets) guidelines. Eligible credit protection is also used to mitigate credit losses in the event that the obligor/
counterparty defaults.

ii) Collateral Valuation and Management

The Group has in place policies which govern the determination of eligibility of various collaterals including credit protection, to be considered for credit
risk mitigation which includes the minimum operational requirements that are required for the specic collateral to be considered as effective risk
mitigants.

The collateral is valued periodically ranging from daily to annually, depending on the type of collateral. Specically for real estate properties, a framework
for valuation of real estate properties is established to ensure adequate policies and procedures are in place for efcient and proper conduct of valuation
of real estate properties and other related activities in relation to the interpretation, monitoring and management of valuation of real estate properties.

iii) Netting
In mitigating the credit risks in swaps and derivative transactions, the Group enters into master agreements that provide for closeout and settlement
netting arrangements with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the
greatest legal certainty that credit exposure will be netted. In effect, it enables the netting of outstanding obligations upon termination of outstanding
transactions if an event of default occurs.

iv) Concentrations within risk mitigation

CIMB Group avoids unwanted credit or market risk concentrations by diversifying its portfolios through a number of measures. Amongst others, there
are guidelines in place relating to maximum exposure to any counterparty, sectors and country.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

440

CREDIT RISK (CONTINUED)

Credit Risk Mitigation (continued)

The following tables summarise the extent of which exposures are covered by eligible credit risk mitigants as at 31 December 2013 and 31 December 2012:

Table 22(a): Disclosure on Credit Risk Mitigation for CIMBBG

CIMBBG
Exposures Exposures Exposures
Covered by Covered Covered
Guarantees/ by Eligible by Other
(RM000) Exposures Credit Financial Eligible
Exposure Class before CRM Derivatives Collateral Collateral

2013
Performing Exposures
Sovereign/Central Banks 44,847,661
Public Sector Entities 3,400,296 2,212,988 690,430
Banks, DFIs & MDBs 36,498,432 6,811,218
Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 1,662,262 3,000 83,958
Corporate 101,528,992 3,445,181 9,016,286 10,935,568
Residential Mortgages/RRE Financing 51,677,564
Qualifying Revolving Retail 11,280,221
Hire Purchase 12,765,301
Other Retail 47,227,468 95 10,650,290
Securitisation 815,187
Higher Risk Assets 1,098,029
Other Assets 6,796,373

Defaulted Exposures 2,606,688 219 34,872 423,398

Total Exposures 322,204,474 5,661,482 27,287,054 11,358,966

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed
by the guidelines. For assets under SA, only nancial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, nancial collateral and other eligible collateral are recognised.
For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.
 INTO A NEW ERA

441

CREDIT RISK (CONTINUED)

Credit Risk Mitigation (continued)

Table 22(a): Disclosure on Credit Risk Mitigation for CIMBBG (continued)

CIMBBG

Exposures Exposures Exposures

Covered by Covered Covered
Guarantees/ by Eligible by Other
(RM000) Exposures Credit Financial Eligible
Exposure Class before CRM Derivatives Collateral Collateral

2012
Performing Exposures
Sovereign/Central Banks 42,848,074
Public Sector Entities 1,641,480 82,374
Banks, DFIs & MDBs 22,184,586 1,477,159
Insurance Cos/Takaful Operators, Securities Firms & Fund Managers 2,488 3
Corporate 89,563,850 1,975,198 8,215,484 10,165,167
Residential Mortgages/RRE Financing 45,438,809
Qualifying Revolving Retail 8,311,434
Hire Purchase 11,252,626
Other Retail 37,177,485 965 7,350,478
Securitisation 721,984
Higher Risk Assets 1,200,956
Other Assets 6,928,071

Defaulted Exposures 2,714,044 29,960 158,720 554,130

Total Exposures 269,985,886 2,006,123 17,284,218 10,719,297

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed
by the guidelines. For assets under SA, only nancial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, nancial collateral and other eligible collateral are recognised.
For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

442

CREDIT RISK (CONTINUED)

Credit Risk Mitigation (continued)

Table 22(b): Disclosure on Credit Risk Mitigation for CIMBISLG

CIMBISLG

Exposures Exposures Exposures

Covered by Covered Covered
Guarantees/ by Eligible by Other
(RM000) Exposures Credit Financial Eligible
Exposure Class before CRM Derivatives Collateral Collateral

2013
Performing Exposures
Sovereign/Central Banks 13,695,774
Public Sector Entities
Banks, DFIs & MDBs 2,519,792
Takaful Operators, Securities Firms & Fund Managers 450 450
Corporate 12,066,910 1,310,630 181,103 2,209,540
RRE Financing 8,222,525
Qualifying Revolving Retail 187,945
Hire Purchase 6,117,201
Other Retail 6,418,384 38,977
Securitisation 20,466
Higher Risk Assets 575
Other Assets 48,408

Defaulted Exposures 166,480 219 2,094 58,989

Total Exposures 49,464,910 1,310,848 222,624 2,268,530

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed
by the guidelines. For assets under SA, only nancial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, nancial collateral and other eligible collateral are recognised.
For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.
 INTO A NEW ERA

443

CREDIT RISK (CONTINUED)

Credit Risk Mitigation (continued)

Table 22(c): Disclosure on Credit Risk Mitigation for CIMBIBG

CIMBIBG

Exposures Exposures Exposures

Covered by Covered Covered
Guarantees/ by Eligible by Other
(RM000) Exposures Credit Financial Eligible
Exposure Class before CRM Derivatives Collateral Collateral

2013
Performing Exposures
Sovereign/Central Banks 1,450,913
Public Sector Entities
Banks, DFIs & MDBs 1,110,351
Insurance Cos, Securities Firms & Fund Managers
Corporate 50,154
Residential Mortgages 57,807
Qualifying Revolving Retail
Hire Purchase
Other Retail 53,036
Securitisation
Higher Risk Assets 1,083
Other Assets 527,691

Defaulted Exposures

Total Exposures 3,251,034

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed
by the guidelines. For assets under SA, only nancial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, nancial collateral and other eligible collateral are recognised.
For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

444

CREDIT RISK (CONTINUED)

Credit Risk Mitigation (continued)

Table 22(c): Disclosure on Credit Risk Mitigation for CIMBIBG (continued)

CIMBIBG

Exposures Exposures Exposures

Covered by Covered Covered
Guarantees/ by Eligible by Other
(RM000) Exposures Credit Financial Eligible
Exposure Class before CRM Derivatives Collateral Collateral

2012
Performing Exposures
Sovereign/Central Banks 151,798
Public Sector Entities
Banks, DFIs & MDBs 2,699,115
Insurance Cos, Securities Firms & Fund Managers
Corporate 42,760
Residential Mortgages 19,474
Qualifying Revolving Retail
Hire Purchase
Other Retail 44,648
Securitisation
Higher Risk Assets 2,946
Other Assets 445,507

Defaulted Exposures 29

Total Exposures 3,406,275

The type of collateral recognised in each asset class is in accordance to the approach adopted in computing the RWA. The CRM shown is computed after taking into account the haircut as prescribed
by the guidelines. For assets under SA, only nancial collateral and guarantee are recognised. For assets under F-IRB Approach, guarantee, nancial collateral and other eligible collateral are recognised.
For assets under A-IRB Approach, the collateral has been taken into consideration in the computation of LGD, hence, excluded from the CRM disclosure.
 INTO A NEW ERA

445

SECURITISATION

The Role CIMB Plays in the Securitisation Process

In the course of its business, CIMB Group has undertaken securitisations of its own originated assets, as well as advised on securitisations of third party
assets as part of its debt capital markets services for external clients.

The Group securitises its own assets in order to, amongst others, manage credit risk and its capital position and to manage term funding for the Groups
balance sheet.

Typically, CIMB Group undertakes the following roles in the securitisation activities (either singularly or in combination):
Originator and servicer of securitised assets
Asset-backed securities marketing, syndication and trading
Provider of liquidity facilities to self-originated and third-party transactions
Investor of third-party securitisations (where CIMB is not originator or sponsor)

Up to end-2013, the Group has completed securitisations of corporate bonds and auto hire purchase receivables for its own account, and auto hire
purchase receivables originated by a joint-venture company, in funded traditional securitisations. CIMB Group does not maintain or act as sponsor of any
conduit for the securitisation of third-party receivables.

CIMBs Involvement in Securitisation in 2013

In 4Q 2013, the Group undertook a securitisation of auto hire purchase receivables for a joint-venture company raising just under RM300 million. The Group
also arranged and managed the seventh securitisation issuance via Premium Commerce Berhad, a bankruptcy-remote special purpose vehicle established
in 2005 pursuant to a securitisation programme arranged for the Tan Chong Group.

All transactions involving securitisation of CIMB Groups assets was tabled to the Board of Directors of the relevant entities for deliberation and approval. For
transactions involving the joint venture entity, they were also tabled to and approved by the Board of Directors of CIMB Bank and Proton Commerce Sdn
Bhd.

In securitisations of its own assets, CIMB Bank continues to administer the assets as servicer for the relevant special purpose vehicle and monitors the credit
and market risk inherent in the underlying assets using the same mechanism in place for non-securitised assets.

Summary of Accounting Policies for Securitisation Activities

CIMB has sponsored special purpose vehicles (SPVs) pursuant to securitisation activities involving assets of the Group. Such SPVs are consolidated when
the substance of the relationship between the Group and that entity indicates control. Potential indicators of control include, inter alia, an assessment of the
Groups exposure to the risks and rewards of the assets of the SPV.

Assets that have been transferred wholly or proportionately to an unconsolidated entity will also remain on the Group balance sheet, with a liability recognised
for the proceeds received, unless (a) substantially all risks and rewards associated with the assets have been transferred, in which case, they are derecognised
in full; or (b) if a signicant portion, but not all, of the risks and rewards have been transferred, the asset is derecognised entirely if the transferee has the ability
to sell the nancial asset, otherwise the asset continues to be recognised to the extent of the Groups continuing involvement.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

446

SECURITISATION (CONTINUED)

Summary of Accounting Policies for Securitisation Activities (continued)

Other than (a) or (b) above, securitisations are treated as nancing in the separate nancial statements of these entities.

ECAIs Used For Securitisation Process

CIMB may employ external credit assessment institutions to provide ratings for its asset backed securities. CIMB has used RAM and MARC for securitisations
of its own originated assets as well as securitisations for third-party clients for rated transactions. N.B. there are transactions for which the investor does not
require an external rating and in such instances, the investor performs his own due diligence.

For securitisations of CIMB-originated assets, RAM has rated a securitisation of corporate bonds, and MARC has rated a securitisation of auto-hire purchase
receivables. Both RAM Ratings and MARC have rated a securitisation programme for a joint-venture of auto-hire purchase receivables.

Disclosure on Securitisation for Trading and Banking Book

The following tables show the disclosure on Securitisation for Trading and Banking Book for 31 December 2013 and 31 December 2012:

Table 23: Disclosure on Securitisation for Trading and Banking Book

CIMBBG
Gains/Losses
Total Recognised
(RM000) Exposures during
Underlying Asset Securitised Past Due Impaired the period

2013
TRADITIONAL SECURITISATION (Banking Book)
Non-Originated by the Banking Institution
Hire Purchase Exposure 30,572 8,227 2,541 (365)

Originated by the Banking Institution

Hire Purchase Exposure 197,429 32,560 6,054 (118)

2012
TRADITIONAL SECURITISATION (Banking Book)
Non-Originated by the Banking Institution
Hire Purchase Exposure 81,310 18,414 3,264 (1,711)

Originated by the Banking Institution

Hire Purchase Exposure 402,048 55,909 4,061 1,495

There were no outstanding exposures securitised by CIMBISLG and CIMBIBG as at 31 December 2013 and as at 31 December 2012.
 INTO A NEW ERA

447

SECURITISATION (CONTINUED)

Disclosure on Securitisation under the SA for Banking Book

The tables below represent the disclosure on Securitisation under the SA for Banking Book:

Table 24(a): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBBG

2013 CIMBBG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% 1250% RW Amount Assets

Traditional Securitisation
(Banking Book)
Non-originating Banking
Institution
On-Balance Sheet
Most senior 794,018 794,018 158,804
Mezzanine 7,433 7,433 1,487
First loss
Off-Balance Sheet
Rated eligible liquidity
facilities
Unrated eligible liquidity
facilities (with original
maturity > 1 year)
Unrated eligible liquidity
facilities (with original
maturity < 1 year)
Eligible servicer cash
advance facilities
Eligible underwriting
facilities
Guarantees and credit
derivatives
Other off-balance sheet
securitisation
exposures (excl.
guarantees and
credit derivatives)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

448

SECURITISATION (CONTINUED)

Disclosure on Securitisation under the SA for Banking Book (continued)

Table 24(a): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBBG (continued)

2013 CIMBBG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% 1250% RW Amount Assets

Originating Banking Institution

On-Balance Sheet
Most senior
Mezzanine
First loss 13,736 13,736 171,703
Off-Balance Sheet
Rated eligible liquidity
facilities
Unrated eligible liquidity
facilities (with original
maturity > 1 year)
Unrated eligible liquidity
facilities (with original
maturity < 1 year)
Eligible servicer cash
advance facilities
Eligible underwriting facilities
Guarantees and credit
derivatives
Other off-balance sheet
securitisation exposures
(excl. guarantees and
credit derivatives)

Total Exposures 815,187 801,451 13,736 331,994

 INTO A NEW ERA

449

SECURITISATION (CONTINUED)

Disclosure on Securitisation under the SA for Banking Book (continued)

Table 24(a): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBBG (continued)

2012 CIMBBG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% RW Amount Assets

Traditional Securitisation (Banking Book)

Non-originating Banking Institution
On-Balance Sheet
Most senior 712,102 712,102 142,420
Mezzanine 7,357 7,357 1,471
First loss
Off-Balance Sheet
Rated eligible liquidity facilities
Unrated eligible liquidity facilities
(with original maturity > 1 year)
Unrated eligible liquidity facilities
(with original maturity < 1 year)
Eligible servicer cash advance facilities
Eligible underwriting facilities
Guarantees and credit derivatives
Other off-balance sheet securitisation
exposures (excl. guarantees and
credit derivatives)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

450

SECURITISATION (CONTINUED)

Disclosure on Securitisation under the SA for Banking Book (continued)

Table 24(a): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBBG (continued)

2012 CIMBBG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% RW Amount Assets

Originating Banking Institution

On-Balance Sheet
Most senior
Mezzanine
First loss 65,621 65,621
Off-Balance Sheet
Rated eligible liquidity facilities
Unrated eligible liquidity facilities
(with original maturity > 1 year) 2,525 > 150% 2,525 7,448
Unrated eligible liquidity facilities
(with original maturity < 1 year)
Eligible servicer cash advance facilities
Eligible underwriting facilities
Guarantees and credit derivatives
Other off-balance sheet securitisation
exposures (excl. guarantees and
credit derivatives)

Total Exposures 787,605 65,621 719,459 2,525 151,339

 INTO A NEW ERA

451

SECURITISATION (CONTINUED)

Disclosure on Securitisation under the SA for Banking Book (continued)

Table 24(b): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBISLG

2013 CIMBISLG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% 1250% RW Amount Assets

Traditional Securitisation
(Banking Book)
Non-originating Banking
Institution
On-Balance Sheet
Most senior 20,466 20,466 4,093
Mezzanine
First loss
Off-Balance Sheet
Rated eligible liquidity
facilities
Unrated eligible liquidity
facilities (with original
maturity > 1 year)
Unrated eligible liquidity
facilities (with original
maturity < 1 year)
Eligible servicer cash
advance facilities
Eligible underwriting
facilities
Guarantees and credit
derivatives
Other off-balance sheet
securitisation exposures
(excl. guarantees and
credit derivatives)
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

452

SECURITISATION (CONTINUED)

Securitisation under the SA for Banking Book (continued)

Table 24(b): Disclosure on Securitisation under the SA for Banking Book Exposures for CIMBISLG (continued)

2013 CIMBISLG
Distribution of Exposures after CRM according to Applicable Risk Weights

Rated Securitisation Exposures Unrated (Look Through)

Net Exposures Weighted Risk

(RM000) Exposure subject to Average Exposure Weighted
Exposure Class After CRM deduction 0% 10% 20% 50% 100% 350% 1250% RW Amount Assets

Originating Banking
Institution
On-Balance Sheet
Most senior
Mezzanine
First loss
Off-Balance Sheet
Rated eligible liquidity
facilities
Unrated eligible liquidity
facilities (with original
maturity > 1 year)
Unrated eligible liquidity
facilities (with original
maturity < 1 year)
Eligible servicer cash
advance facilities
Eligible underwriting
facilities
Guarantees and credit
derivatives
Other off-balance sheet
securitisation exposures
(excl. guarantees and
credit derivatives)

Total Exposures 20,466 20,466 4,093

As at 31 December 2013 and 31 December 2012, CIMBIBG has no Securitisation under the SA for Banking Book Exposures.
 INTO A NEW ERA

453

SECURITISATION (CONTINUED)

Securitisation under the SA for Trading Book Exposures subject to Market Risk Capital Charge
The tables below present the Securitisation under the SA for Trading Book Exposures subject to Market Risk Capital Charge:

Table 25: Disclosure on Securitisation under the SA for Trading Book Exposures subject to Market Risk Capital Charge for CIMBBG

CIMBBG
Total Exposure
Value
of Positions Exposures Risk
(RM000) Purchased subject to General Specic Weighted
Securitisation Exposures or Retained deduction Risk Charge Risk Charge Assets

2013
TRADITIONAL SECURITISATION
Originated by Third Party
On-Balance Sheet 65,676 1,770 1,314 38,547
Off-Balance Sheet

Sub-total 65,676 1,770 1,314 38,547

Originated by Banking Institution

On-Balance Sheet
Off-Balance Sheet

Sub-total

Securitisation subject to Early Amortisation

Sellers interest
On-Balance Sheet
Off-Balance Sheet
Investors interest
On-Balance Sheet
Off-Balance Sheet

Sub-total

TOTAL (TRADITIONAL SECURITISATION) 65,676 1,770 1,314 38,547

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

454

SECURITISATION (CONTINUED)

Securitisation under the SA for Trading Book Exposures subject to Market Risk Capital Charge (continued)
Table 25: Disclosure on Securitisation under the SA for Trading Book Exposures subject to Market Risk Capital Charge for CIMBBG (continued)

CIMBBG

Total Exposure
Value
of Positions Exposures Risk
(RM000) Purchased subject to General Specic Weighted
Securitisation Exposures or Retained deduction Risk Charge Risk Charge Assets

2012
TRADITIONAL SECURITISATION
Originated by Third Party
On-Balance Sheet 16,205 630 324 11,923
Off-Balance Sheet

Sub-total 16,205 630 324 11,923

Originated by Banking Institution

On-Balance Sheet
Off-Balance Sheet

Sub-total

Securitisation subject to Early Amortisation

Sellers interest
On-Balance Sheet
Off-Balance Sheet
Investors interest
On-Balance Sheet
Off-Balance Sheet

Sub-total

TOTAL (TRADITIONAL SECURITISATION) 16,205 630 324 11,923

As at 31 December 2013 and 31 December 2012, CIMBISLG and CIMBIBG have no Securitisation under the SA for Trading Book Exposures subject to
Market Risk Capital Charge.
 INTO A NEW ERA

455

MARKET RISK

Market risk is dened as any uctuation in the market value of a trading or investment exposure arising from changes to market risk factors such as interest
rates/benchmark rates, currency exchange rates, credit spreads, equity prices, commodities prices and their associated volatility.

Market risk is inherent in the business activities of an institution that trades and invests in securities, derivatives and other structured nancial products.
Market risk may arise from the trading book and investment activities in the banking book. For the trading book, it can arise from customer-related businesses
or from the Groups proprietary positions. As for investment activities in the banking book, the Group holds the investment portfolio to meet liquidity and
statutory reserves requirement and for investment purposes.

Market Risk Management

Market risk is evaluated by considering the risk/reward relationship and market exposures across a variety of dimensions such as volatility, concentration/
diversication and maturity. The GRC with the support of Group Market Risk Committee ensure that the risk exposures undertaken by the Group is within
the risk appetite approved by the Board. GRC and Group Market Risk Committee, supported by the Market Risk Centre of Excellence in GRD is responsible
to measure and control market risk of the Group through robust measurement and the setting of limits while facilitating business growth within a controlled
and transparent risk management framework.

CIMB Group employs the VaR framework to measure market risk where VaR represents the worst expected loss in portfolio value under normal market
conditions over a specic time interval at a given condence level. The Group has adopted a historical simulation approach to compute VaR. This approach
assesses potential loss in portfolio value based on the last 500 daily historical movements of relevant market parameters and 99% condence level at 1-day
holding period.

Broadly, the Group is exposed to four major types of market risk namely equity risk, interest/benchmark rate risk, foreign exchange risk and commodity risk.
Each business unit is allocated VaR limits for each type of market risk undertaken for effective risk monitoring and control. These limits are approved by the
GRC and utilisation of limits is monitored on a daily basis. Daily risk reports are sent to the relevant traders and Group Treasurys Market Risk Analytics Team.
The head of each business unit is accountable for all market risk under his/her purview. Any excess in limit will be escalated to management in accordance
to the Groups exception management procedures.

In addition to daily monitoring of VaR usage, on a monthly basis, all market exposures and VaR of the Group will be summarised and submitted to Group
Market Risk Committee, GRC and BRC for its perusal.

Although historical simulation provides a reasonable estimate of market risk, this approach relies heavily on historical daily price movements of the market
parameter of interest. Hence, the resulting market VaR is exposed to the danger that price and rate changes over the stipulated time horizon might not be
typical. Example, if the past 500 daily price movements were observed over a period of exceptionally low volatility, then the VaR computed would understate
the risk of the portfolio and vice versa.

In order to ensure historical simulation gives an adequate estimation of market VaR, backtesting of the historical simulation approach is performed annually.
Backtesting involves comparing the derived 1-day VaR against the hypothetical change in portfolio value assuming end-of-day positions in the portfolio were
to remain unchanged. The number of exceptions would be the number of times the difference in hypothetical value exceeds the computed 1-day VaR.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

456

MARKET RISK (CONTINUED)

Market Risk Management (continued)

The Group also complements VaR with stress testing exercises to capture event risk that are not observed in the historical time period selected to compute
VaR. Stress testing exercise at the group-wide level involves assessing potential losses to the Groups market risk exposures under pre-specied scenarios.
This type of scenario analysis is performed twice yearly. Scenarios are designed in collaboration with the Regional Research Team to reect extreme and yet
plausible stress scenarios. Stress test results are presented to the Group Market Risk Committee and GRC to provide senior management with an overview
of the impact to the Group if such stress scenarios were to materialise.

In addition to the above, the Market Risk Centre of Excellence undertakes the monitoring and oversight process at Group Treasury and Equity Derivatives
Group trading oors, which include reviewing treasury trading strategy, analysing positions and activities vis--vis changes in the nancial markets, monitoring
limits usage, assessing limits adequacy and verifying transaction prices.

The Market Risk Centre of Excellence also provides accurate and timely valuation of the Groups position on a daily basis. Exposures are valued using market
price (Mark-to-Market) or a pricing model (Mark-to-Model) (collectively known as MTM) where appropriate. The MTM process is carried out on all positions
classied as Held for Trading as well as Available for Sale on a daily basis for the purpose of meeting independent price verication requirements, calculation
of prots/losses as well as to conrm that margins required are met.

Treasury products approval processes will be led by the Market Risk Centre of Excellence to ensure operational readiness before launching. All new products
are assessed by components and in totality to ensure nancial risks are accurately identied, monitored and effectively managed.

All valuation methods and models used are documented and validated by the quantitative analysts to assess its applicability to market conditions. The
process includes verication of rate sources, parameters, assumptions in modelling approach and its implementation. Existing valuation models are reviewed
periodically to ensure that they remain relevant to changing market conditions. Back-testing of newly approved or revised models may be conducted to
assess the appropriateness of the model and input data used.

Capital Treatment for Market Risk

At present, the Group adopts the Standardised Approach to compute market risk capital requirement under BNMs guidelines on CAF (Basel II - Risk-
Weighted Assets) and CAFIB (Risk-Weighted Assets).

Details on RWA and capital requirements related to Market Risk are disclosed separately for CIMBBG, CIMBISLG and CIMBIBG for the following in Tables
2(a), (b) and (c):
Interest Rate Risk/Benchmark Rate Risk;
Foreign Currency Risk;
Equity Risk;
Commodity Risk; and
Options Risk.
 INTO A NEW ERA

457

OPERATIONAL RISK

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. The denition includes
legal risk but excludes strategic and reputation risks.

Operational Risk Management

CIMB Group recognises that cultivation of an organisational-wide discipline and risk management culture among its staff is the key determinant for a well-
managed universal banking operation. Hence, the Group has deployed a set of tools to identify, assess, monitor and control the operational risk inherent in
the Group.

Operational risks arise from inadequate or failed internal processes, people and systems or from external events. These risks are managed by CIMB Group
through the following key measures:
i) Sound risk management practices in accordance with Basel II and regulatory guidelines;

ii) Board and senior management oversight;

iii) Well-dened responsibilities for all personnel concerned;

iv) Establishment of a risk management culture; and

v) Deployment of ORM tools including:

Loss Event Management;
Risk and Control Self-Assessment; and
Key Risk Indicators.

In pursuit of managing and controlling operational risk, Operational Risk Centre of Excellence is revising the ORM framework to:

i) Provide a consistent approach to ORM across the Group;

ii) Meet and exceed regulatory requirements, including preparation towards the Basel II implementation; and

iii) Provide increased transparency of the operational risks the group faces and to improve mitigation.

The ORMF is premised on a set of pillars of Operational Risk Standards and employs various tools including Risk and Control Self-Assessment, risk event
database management and Key Risk Indicators.

The philosophy of the governance structure in the ORMF recognises the following:

i) Ownership of the risk by the business/support areas (line management);

ii) Oversight by independent functions; and

iii) Independent review by Group Internal Audit Division.

CIMB Group is deploying a core ORM System for capturing the Loss Event Database, Risk and Control Self Assessments and Key Risk Indicators.
In addition, CIMB Group has developed and implemented an e-Learning module on operational risk in order to enhance awareness of ORM amongst
its staff.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

458

OPERATIONAL RISK (CONTINUED)

Operational Risk Management (continued)

CIMB Group has progressively set the various foundations to move towards Basel II Standardised Approach and building its capabilities towards the
Advanced Measurement Approach.

Escalation and reporting processes are well instituted through various management committees notably the Group Operational Risk Committee and GRC
as well as the Board. The responsibilities of the committees and the Board include the following:

i) Oversight and implementation of the ORMF;

ii) Establish risk appetite and provide strategic and specic directions;

iii) Review operational risks reports and proles regularly;

iv) Address operational risk issues; and

v) Ensure compliance to regulatory and internal requirements including disclosures.

Group Internal Audit Division plays its role in ensuring an independent assurance of the implementation of the Framework through their conduct of regular
reviews and report to the Board.

Capital Treatment for Operational Risk

The Group adopts the Basic Indicator Approach to compute operational risk capital requirement under BNMs guidelines on CAF (Basel II - Risk-Weighted
Assets) and CAFIB (Risk-Weighted Assets).

However, the Group is now moving towards the Basel II Standardised Approach where the foundation pillars are in progress. Details on RWA and capital
requirements related to Operational Risk are disclosed separately for CIMBBG, CIMBISLG and CIMBIBG in Tables 2 (a), (b) and (c).
 INTO A NEW ERA

459

EQUITY EXPOSURES IN BANKING BOOK

The Groups banking book equity investments consist of:

i) Strategic stakes in entities held as part of growth initiatives and/or in support of business operations; and

ii) Investments held for yield and/or long-term capital gains.

The Groups and CIMBs banking book equity investments are classied and measured in accordance with Financial Reporting Standards and are categorised
as nancial investments available-for-sale in the 2013 nancial statements.

Details of the Groups and the CIMB Banks investments in nancial investments available-for-sale are also set out in the nancial statements.

Realised and unrealised gains or losses arising from sales and liquidations of equities for CIMBBG for the year ended 31 December 2013 and 31 December
2012 is as follows:

Table 26: Realised Gains/Losses from Sales and Liquidations of Equities for CIMBBG

CIMBBG

(RM000) 2013 2012

Realised gains
Shares, private equity funds and unit trusts 39,999 5,376

Unrealised gains
Shares, private equity funds and unit trusts 531,822 479,044

There were no realised and unrealised gained or losses for equity holdings in banking book for CIMBISLG and CIMBIBG as at 31 December 2013 and
31December 2012.

The following table shows an analysis of equity investments by appropriate equity groupings and risk weighted assets as at 31 December 2013 and
31December 2012 for the Group:

Table 27(a): Analysis of Equity Investments by Grouping and RWA for CIMBBG

CIMBBG
2013 2012

Exposures Exposures
subject to subject to
(RM000) Risk-Weighting RWA Risk-Weighting RWA

Privately held 1,116,572 1,665,586 1,239,626 1,840,104

Publicly traded 59,315 59,315 273,216 60,016

Total 1,175,887 1,724,901 1,512,842 1,900,120

ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

460

EQUITY EXPOSURES IN BANKING BOOK (CONTINUED)

Table 27(b): Analysis of Equity Investments by Grouping and RWA for CIMBISLG

CIMBISLG

Exposures
subject to
(RM000) Risk-Weighting RWA

2013
Privately held 575 863
Publicly traded

Total 575 863

Table 27(c): Analysis of Equity Investments by Grouping and RWA for CIMBIBG
CIMBIBG
2013 2012

Exposures Exposures
subject to subject to
(RM000) Risk-Weighting RWA Risk-Weighting RWA

Privately held 2,946 4,418

Publicly traded

Total 2,946 4,418

 INTO A NEW ERA

461

INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK

IRRBB/RORBB is dened as the current and potential risk to the Groups earnings and economic value arising from movement of interest rates/benchmark
rates. In the context of Pillar 2, this risk is conned to the banking book positions, given that the interest rate risk/rate of return risk in the trading book is
covered under the Pillar 1 market risk regulations.

The material sources of IRRBB/RORBB are repricing risk (which arises from timing differences in the maturity and repricing dates of cash ows), yield curve
risk (which arises from the changes in both the overall interest rates/benchmark rates and the relative level of rates across the yield curve), basis risk (arises
from imperfect correlation between changes in the rates earned and paid on banking book positions), and option risk (arises from interest rate/rate of return
related options embedded in banking book products).

IRRBB/RORBB Management
IRRBB/RORBB undertaken by the Group is governed by an established risk appetite that denes the acceptable level of risk to be assumed by the Group.
The risk appetite is established by the Board. Group Asset Liability Management Committee is a Board delegated Committee which reports to the GRC.
With the support from Asset Liability Management Centre of Excellence and CBSM, the Group Asset Liability Management Committee is responsible for the
review and monitoring of Groups balance sheet, business and hedging strategies, the overall interest rate risk/rate of return risk prole and ensuring that
such risk prole is within the established risk appetite. CBTM is responsible for day-to-day management of exposure and gapping activities, including
execution of hedging strategies.

IRRBB/RORBB is measured by:

Economic Value of Equity (EVE) sensitivity

EVE sensitivity measures the long term impact of sudden interest rate/benchmark rate movement across the full maturity spectrum of the Groups assets
and liabilities. It denes and quanties interest rate risk/rate of return risk as the change in the economic value of equity (e.g. present value of potential
future earnings and capital) as asset portfolio values and liability portfolio values would rise and fall with changes in interest rates/benchmark rates. Such
measure helps the Group to quantify the risk and impact on capital with the focus on current banking book positions.

For the purpose of this disclosure, the impact under an instantaneous 100 bps parallel interest rate/benchmark rate shock is applied. The treatments
and assumptions applied are based on the contractual repricing maturity and remaining maturity of the products, whichever is earlier. Items with indenite
repricing maturity are treated based on the earliest possible repricing date. The actual dates may vary from the repricing prole allocated due to factors
such as pre-mature withdrawals, prepayment and so forth.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

462

INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK (CONTINUED)

IRRBB/RORBB Management (continued)

Economic Value of Equity (EVE) sensitivity (continued)
The tables below illustrate the Groups IRRBB/RORBB under a 100 bps parallel upward interest rate/benchmark rate shock from economic value
perspective:

Table 28(a): IRRBB/RORBB Impact on Economic Value for CIMBBG

CIMBBG

2013 2012
+100bps
Increase (Decline)
(RM000) in Economic Value
Currency (Value in RM Equivalent)

Ringgit Malaysia (918,639) (1,057,557)

US Dollar (135,526) 74, 800
Thai Baht (70,675) (61,860)
Singapore Dollar (136,789) (98,372)
Others (40,209) (22,445)

Total (1,301,838) (1,165,434)

Table 28(b): RORBB Impact on Economic Value for CIMBISLG

CIMBISLG

2013
+100bps
Increase (Decline)
(RM000) in Economic Value
Currency (Value in RM Equivalent)

Ringgit Malaysia (361,439)

US Dollar 514
Thai Baht
Singapore Dollar (503)
Others 75

Total (361,353)
 INTO A NEW ERA

463

INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK (CONTINUED)

IRRBB/RORBB Management (continued)

Economic Value of Equity (EVE) sensitivity (continued)
Table 28(c): IRRBB Impact on Economic Value for CIMBIBG

CIMBIBG

2013 2012
+100bps
Increase (Decline)
(RM000) in Economic Value
Currency (Value in RM Equivalent)

Ringgit Malaysia 1,776 4,832

US Dollar (6)
Thai Baht
Singapore Dollar (2) (5)
Others (3) (1)

Total 1,771 4,820

Earnings at Risk (EaR)

EaR measures the short term impact of sudden interest rate/benchmark rate movement on reported earnings over the next 12 months. It denes and
quanties interest rate risk/rate of return as the change in net interest income/net rate income caused by changes in interest rates/benchmark rates.

For the purpose of this disclosure, the impact under an instantaneous 100 bps parallel interest rate/benchmark rate shock is applied to the static balance
sheet positions. The treatments and assumptions applied are based on the contractual repricing maturity and remaining maturity of the products,
whichever is earlier. Items with indenite repricing maturity are treated based on the earliest possible repricing date. The actual dates may vary from the
repricing prole allocated due to factors such as pre-mature withdrawals, prepayment and so forth.
ANNUAL REPORT 2013 CIMB GROUP HOLDINGS BERHAD
FINANCIAL STATEMENTS

464

INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK (CONTINUED)

IRRBB/RORBB Management (continued)

Earnings at Risk (EaR) (continued)
The tables below illustrate the Groups IRRBB/RORBB under a 100 bps parallel upward interest rate/benchmark rate shock from the earnings perspective:

Table 29(a): IRRBB/RORBB Impact on Earnings for CIMBBG

CIMBBG

2013 2012
+100bps
(RM000) Increase (Decline) in Earnings
Currency (Value in RM Equivalent)

Ringgit Malaysia (17,537) (83,557)

US Dollar (31,219) (29,442)
Thai Baht (14,666) (10,477)
Singapore Dollar (62,630) (59,177)
Others 16,156 (5,895)

Total (109,896) (188,548)

Table 29(b): RORBB Impact on Earnings for CIMBISLG

CIMBISLG
2013
+100bps
Increase (Decline)
(RM000) in Earnings
Currency (Value in RM Equivalent)

Ringgit Malaysia (72,462)

US Dollar (9,906)
Thai Baht
Singapore Dollar (13)
Others (392)

Total (82,773)
 INTO A NEW ERA

465

INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK (CONTINUED)

IRRBB/RORBB Management (continued)

Earnings at Risk (EaR) (continued)
Table 29(c): IRRBB Impact on Earnings for CIMBIBG

CIMBIBG

2013 2012
+100bps
(RM000) Increase (Decline) in Earnings
Currency (Value in RM Equivalent)

Ringgit Malaysia 2,137 2,756

US Dollar 9 140
Thai Baht
Singapore Dollar 50 115
Others 80 26

Total 2,276 3,037

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