C I T I B A N K B E R H A DC I T I B A N K B E R H A D

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Chairman’s Statement

CEO’s Statement

Board Of Directors

Directors’ Profile

Corporate Citizenship At Citi

Valuing Our People

Statement OfCorporate Governance

Risk Management

Statement Of InternalAudit & Internal Control

Management Reports

Ratings Statement

Shariah Committee

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corporateinformation governance

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Directors’ Report

Statement By Directors

Declaration Pursuant

Shariah Committee‘s Report

Independent Auditors’ Report

Statements Of Financial Position

Statements Of Profit Or Loss And OtherComprehensive Income

Statements Of Changes In Equity

Statements Of Cash Flows

Notes To The Financial Statements

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

Date of Incorporation22 April, 1994

AuditorsKPMG

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I am pleased to present to you the Annual Report for

the financial year ended 31 December 2015.

Given the challenging environment of business with

worldwide economic volatility impacting markets,

falling oil prices and currencies, the year 2015 called for

a strategic re- think of operations and efficiencies to

ensure sustainable growth. On behalf of the Board of

Directors, I would like to commend the Chief Executive

Officer Lee Lung Nien and the entire Malaysian team

for the fine effort in recording yet another year of

strong profitability.

Citi has progressed with Malaysia for over five decades

and we remain steadfast in our commitment to be an

enabler of economic progress in this country. As a

global financial services leader, Citi has been the global

bank for leading Malaysian corporates venturing

abroad or with operations outside the country. We are

proud to be the trusted financial partner that has

supported them in their business growth plans. Our

Citigold business has seen at least three generations of

customers in the affluent segment still banking with us.

We look ahead to many more years of providing global

financial solutions in this market.

The financial year in review has brought several

changes to our Board of Directors. I would like to

record our gratitude to Dato’ Dr Thillainathan

Ramasamy who retired from the Board on 9 October

2015. He has served as an Independent Director for 3

years and we will miss his active contribution and

advice given to the Board.

We also welcome Tan Sri Dr Ghauth bin Jasmon who

joined the Board on 14 September 2015 and Mr Philip

Tan Puay Koon who joined the Board on 9 October 2015

as Independent Directors.

Overall, the year has been one of progress for us and

we look forward to even more success and stronger

performance in the year ahead.

Mr Terence Cuddyre

Chairman

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There was much to gain and many insights from the

volatile global economic environment we faced in the

year 2015. As we review the financial year ended 31

December 2015, navigating the uncertainties externally

and ensuring steady progress in our performance

proved challenging. We were resilient in our

determination to grow profitably, optimizing our

resources both locally and regionally to deliver our

promises to our stakeholders in Malaysia.

■ Overview Overview

Despite the economic headwinds last year, Malaysia

showed economic growth of about 5% for the year

2015, reflective of the country’s sound economic

fundamentals that cushioned the challenges of falling

oil prices and a declining Malaysian Ringgit. The

country remained on a sustainable growth path, and

private consumption spend was robust. While public

expenditure and private investment in the oil and gas

sector fell, private investment in manufacturing and

services held steady.

The impact on overall inflation has been cushioned by

lower commodity prices and generally low global

inflation. Overall domestic liquidity conditions hold

stable. The financial system remains sound, with

healthy growth in financing. Financial intermediation

has continued to support the economy.

Malaysia’s diversified sources of economic growth, its

low unemployment level, manageable level of external

indebtedness and well-capitalised banking system

augurs well for the economic future of the country.

■ Performance Review Performance Review

The Bank recorded a higher pre-tax profit of RM755

million for the financial year ended December 31, 2015,

compared to the RM703 million pre-tax profit recorded

in the previous year. The improved performance was

boosted by the Bank’s higher trading income, growth in

personal loans and higher investment sales.

Total post-tax profit was RM569 million in 2015. Net

interest income totalled RM1.10 billion in 2015 while

non-interest income stood at RM748 million. During the

same period, the Bank’s return on equity before tax

was a solid 16.7%. Liquidity continued to be

exceptionally strong, with cash, short-term funds and

placements with financial institutions in excess of

RM10.72 billion. The Bank’s Risk Weighted Capital

Adequacy Ratio stood at a strong 15.3%.

■ Business Highlights Business Highlights

Consumer BankingConsumer Banking

Credit Cards

In 2015, we continued to see heightened competition

among banks in the area of customer acquisition. We

also saw a half-year impact of an industry-wide

reduction in interchange rates that impacted the

overall revenue of our cards business.

Citi’s key focus continued to be on customer

acquisition within our target segment, increasing

card usage by customers, strengthening our digital

offerings, improving process efficiencies, simplifying

our products and expanding the merchant

acquisition business.

Our enhanced unsecured personal loan value

proposition introduced last year showed promising

growth by achieving year-on-year sales growth of

93%. Our commercial cards offerings also contributed

positively with year-on-year growth of 293%.

We received industrywide recognition for our card

marketing campaigns from Advertising & Marketing

Magazine. Citi Malaysia won awards for

■ Excellence in Loyalty Marketing (Gold Award)

■ Excellence in Data-Driven Marketing (Gold Award)

■ Excellence in Consumer Insights/Market Research

(Silver Award)

■ Excellence in Marketing Innovation (Silver Award)

■ Excellence in Shopper Marketing (Bronze Award)

■ Excellence in Customer Engagement (Bronze Award)

■ Largest Payment Volume - Visa Platinum

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■ Largest Payment Volume - Visa Premium

■ Highest Payment Volume Growth - Visa Signature

■ Highest Payment Volume Growth - Visa Commercial

Retail Banking

Our top priority was to help clients maneuver through

an extremely volatile year in markets, by actively

engaging clients and assessing their financial

portfolios. We offered more options for clients to

diversify across multiple asset classes denominated in

different currencies in addition to investment updates

and advice.

Fueled by a 28% year-on-year growth in Investment

Sales, the business achieved a new milestone when

assets under management exceeded RM4.0 billion, the

highest since the start of the business in year 2000.

Our consistent success in this area was recognized

when Citi Malaysia won the CIMB-Principal Investment

AUM Builders Award for the 7th consecutive year.

In line with the direction from Bank Negara Malaysia to

accelerate migration to electronic payments, Citi

introduced multiple e-payment measures to customers

namely JomPay and Instant Transfer (e-IBFT). JomPay

serves as an alternate channel to new bills payment,

while Instant Transfer enables Citi customers to

perform real time online fund transfers to beneficiary

accounts. On the Insurance front, our strategic

partnership with AIA and AXA yielded a 27% growth in

new business premium for face-to-face and

telemarketing channels. We provided a comprehensive

suite of financial and insurance products to help

clients achieve and protect their goals.

As a leading bank in research and advisory services,

we leveraged our expertise to deliver the Citi Wealth

Series of market outlook presentations to Citigold and

investment customers. A total of eight seminars were

held in Kuala Lumpur, Penang and Johor Bahru,

presented by our regional investment strategist.

Mortgages

The introduction of the Base Rate which aims at

promoting a transparent reference rate and the

implementation of the Goods and Services Tax (GST) in

2015 led to uncertainty in the property market. While

residential property was exempted from GST, factors

contributing to property prices, such as labour and

materials costs led to an increase in property prices.

Buyers therefore were more cautious and conservative

in their decisions to purchase property.

Citi continued to partner with top-tier developers and

real estate agents by offering attractive incentives yet

affordable home loan packages to property buyers.

■ Institutional Client Group Institutional Client Group

Treasury and Trade Solutions

Citi played a leading role in driving the digitization

agenda for corporate and institutional clients in

Malaysia.

We tripled our CitiDirect BE Mobile user base. Clients

welcomed the convenience of transacting and

accessing information anywhere, anytime. Our new

analytics services provided clients with better insights

into their corporate payment trends, helping them

identify abnormalities and ensure enhanced controls.

The Liquidity Management and Trade Services

modules gave clients the ability to manage corporate

funding and trade documentation online, with

enhanced flexibility.

Complementing the new services, we organized various

events for clients such as the annual Shared Services

Centre forum and an industry forum for the Energy

sector. A client education series for transaction banking

was also organized in Kuala Lumpur, Penang and Johor

Bahru for more than 300 clients.

We were also proud to celebrate industry recognition

with our corporate clients based on their partnership

with Citi. Sime Darby, our client in payment services

won the Corporate Treasurer award for Best Payment

Strategy in Asia Pacific and The Asset AAA Best Cash

Management Solution in Malaysia.

Securities Services

Despite the challenging market conditions and a

weakened Malaysian Ringgit, Citi’s Securities Services

achieved a successful year with year-on-year growth

in Asset under Custody as well as transaction volume

on the back of additional mandates from new and

existing clients.

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We continued to invest in securities infrastructure in

our Kuala Lumpur Citi Service Centre, demonstrating

our long term commitment and significant service

strengths in the industry.

Global Markets

Citigroup won the top spot in overall results for the

2015 Euromoney FX survey. Citigroup also won Top

Dealer in Global Fixed Income for the 2015 Global Fixed

Income Greenwich Awards.

Citigroup was #1 in the categories of Market Share, Sales

Quality and Trading Quality. This was a first for Citi.

Islamic Banking Division

During the first quarter of 2015, Citi participated in the

USD1.25 billion Petronas Global Sukuk issuance. Citi

Islamic was responsible in getting the relevant Shariah

approval for the structure used for the transaction.

Citi Transaction Services continued to record growth in

cross-border Shariah-compliant services with funds of

more than USD1.2 billion under management for clients

across Citi branches in Asia and Europe. These services

support Islamic investments offshore and multinational

treasury management centres in Malaysia.

Working For and In Community

Citi through grants from Citi Foundation has been in

the forefront of financial education starting with a

pioneering role in developing a curriculum for

preschoolers and teacher training modules for

kindergarten teachers. This education focus has since

diversified to a more strategic contribution of

advocating for a national financial education network

and strategy by providing a common platform for

engagement for all stakeholders in financial education.

Together with Bank Negara Malaysia and ERA

Consumer Malaysia, we hosted a Financial Conference

themed, “Strengthening Financial Resilience of

Malaysian Consumers” which saw over 200

participants from both regulators and industry players

come together to discuss an integrated approach

towards enhancing financial resilience amongst

Malaysian consumers.

We have in the last two years expanded our

community engagement to also cover urban

transformation and youth economic opportunities.

This aligns well with our Citi for Cities initiative

globally of enabling economic progress via financial

and community solutions in leading world cities. We

are in our second year of partnership with Think City,

an entity of Khazanah Nasional.

In the area of youth economic opportunities, our grant

partner, The Edge Education Foundation, developed

‘Money and Me’, a youth economic opportunities

program working closely with the Ministry of

Education. The program is being rolled out to selected

secondary schools in Kuala Lumpur and is focused on

providing financial education and equipping

low-performing students the opportunity to build a

career for themselves in future.

In 2015, more than 3,000 Citi Volunteers joined other

Citi employees worldwide for Citi’s 10th Global

Community Day on 13 June. Malaysia employees

created a ‘first’ for Citi Malaysia when we successfully

raised RM217,914 for the United Nations Children’s

Fund (UNICEF) in aid of the children of Nepal. Citi’s

contribution was the largest any corporate in Malaysia

raised to support UNICEF’s response.

A similar charity carnival was also held in Penang. In

Kuantan, employees came together and took part in

the ‘One State, One River’ program to raise local

community awareness and participation in a river

rehabilitation program. Citi Volunteers in Johor

delivered food and basic necessities to the homeless

community in downtown Johor Bahru.

Our People

Citi is proud of the people who work for us here in

Malaysia. We look for the best and our commitment to

nurturing top talent has seen us partner Talent

Corporation Malaysia in career fairs in the United

Kingdom to recruit bright, young Malaysian talent and

offer them jobs in Malaysia.

This is our way of demonstrating our commitment as a

global financial leader in Malaysia. Citi has been in

Malaysia since 1959 and we have grown significantly

with the country. We have today a workforce of over

2,490 employees.

Our approach in people development as has always

been one of encouraging our employees to manage

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their own career future and progression, leveraging

the comprehensive training opportunities we provide

on the job as well as the global mobility and

international experience we offer them.

We believe in equal opportunity based on merit, mutual

respect and workforce diversity.

■ 2016 Priorities 2016 Priorities

Our mission is to be the best bank in Malaysia, a

trusted financial partner and employer of choice. We

have in the last two years worked hard to ensure we

live up to the standards of a world class franchise. Citi

in Malaysia is built on a solid foundation, one that we

continue to strengthen as we focus on the four main

pillars of our mission namely People, Clients, Controls

and Relationships.

Across the entire franchise, emphasis is on optimizing

our strong global network, delivering customer

services that are remarkable and business excellence

achieved in an organizational environment that has

ethics and business integrity as its priority.

■ Outlook Outlook

It is with cautious optimism that we look ahead to

2016, anticipating the challenges that will come our

way both from the economic pressures of global

volatility as well as the challenges of increasing

competition and margin compressions faced by the

financial services sector in country.

Nevertheless, we will continue to see moderate

economic growth with domestic demand remaining as

the key driver of growth. The financial system remains

sound with financial institutions operating with ample

liquidity buffers. Consequently, the growth of financing

to the private sector continues to be healthy.

As I mentioned earlier, Citi has an entrenched presence

and significant investment in this market. All this

reflects well on the stability of the country’s economy

through the years, the wealth of local talent resources

and the pro-investor stance of the government.

I would like to express my gratitude to our Chairman

and Board of Directors for their wisdom and support

extended to us. My record of appreciation also to the

Management team and all employees for the progress

we gained for the Citi franchise in Malaysia.

Agility is the key in today’s business world. We need to

adapt fast to the changing customer demands arising

from new technology and innovative financial

solutions. We have the right business model and

capabilities worldwide. We look to the future with

confidence, knowing that we have the depth of

experience both globally and locally to serve our

customers and business partners well.

Lee Lung Nien

Chief Executive Officer

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From left to right

■ Mr. Lee Lung Nien , Mr. Terence Cuddyre, Ms. Agnes Liew Yun Chong,

Tan Sri Dr Ghauth bin Jasmon, Company Secretary: Ms. Ho Li Chin

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From left to right

■ Company Secretary: Ms. Tang Wan Chee, Dato’ Siow Kim Lun,

Datuk Ali Bin Tan Sri Abdul Kadir, Mr. Philip Tan Puay Koon

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Mr. Lee Lung Nien was appointed Chief Executive Officer of

Citibank Berhad in October, 2014.

He is a veteran Citibanker with more than 25 years of

experience. Prior to his current appointment, Lung was the

Anti-Money Laundering (AML) Business Head for Asia and

had senior oversight of the AML monitoring hub in Kuala

Lumpur. He was responsible for streamlining the AML

business processes regionally, implementing policy changes

and managing global AML implementations. He was also the

primary AML Contact with Business Leadership, and tasked

with implementing globally consistent AML initiatives to

enhance controls and mitigate AML risk. Together with

Compliance, he developed a regional AML strategy for Asia

Pacific.

Prior to moving to Malaysia in 2013, Lung was the Chief

Operating Officer (“COO”) for Singapore where he was

responsible for driving the Bank’s business results,

implementing the country’s strategy, developing the bank’s

talent pool and executing various cost franchise initiatives.

In addition to his role as COO, Lung was also the Singapore

Markets Manager and worked closely with Singapore

regulators to coordinate compliance and regulatory

processes for the Citi Singapore dealing room.

Lung is a 20 year veteran in Markets. His last posting was

that of Co-Head of Corporate Sales & Structuring for Asia

Pacific in 2007. He was responsible for all foreign exchange,

options and derivatives sales to corporate and institutional

clients in the region. He started his career as a Credit Analyst

in the Bank and has held various key positions including Head

of Singapore Treasury Marketing, Sales and Trading Head for

Malaysia and Regional e- Commerce Head.

He graduated with a Bachelor of Business Administration,

Magna Cum Laude from Chaminade University, USA.

Mr. Terence Cuddyre is Chairman of the Board. He joined

the Board on 14 December 2010 as a Non-Independent

Non-Executive Director. He serves on the Audit Committee,

Nominating Committee and Risk Management Committee of

the Bank.

He was Citigroup Country Officer for Brunei Darussalam

from July 2009 to December 2014. Prior to that, he spent

four years as Asia Pacific Head of Training for the Citi

Centre for Advanced Learning. He also served as Citigroup’s

Country Officer for Thailand from 2002 to 2005. He was the

North Asia Regional Risk Officer from 2000 to 2001.

Mr. Cuddyre joined Citigroup in 2000 after 23 years with

Bank of America where he held numerous international roles

including Country Head of Ireland, Korea, Hong Kong and

China. He also held several risk positions in North America

and Asia.

He was also active in the American Chamber of Commerce,

serving on the boards in Hong Kong, Korea and China. In

Thailand, he served as the Chairman.

Mr. Cuddyre holds a B.A. in Economics from the University

of California, Santa Barbara and a MBA from the Wharton

Business School, University of Pennsylvania.

Mr. Terence K

ent Cuddyre

Mr. Lee Lung N

ien

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Dato’ Siow Kim Lun is currently a board member of

Kumpulan Wang Persaraan, UMW Holdings Berhad, Eita

Resources Berhad, Hong Leong Assurance Berhad, Eco

World International Berhad, Sunway Construction Group

Berhad and MainStreet Advisers Sdn. Bhd. He is also a

member of the Land Public Transport Commission.

From 1993 to 2006, Dato’ Siow was with the Securities

Commission (“SC”), where he has served as the Director of

its Issues and Investment Division and Director of its Market

Supervision Division. Prior joining the SC, Dato’ Siow worked

in the investment banking and financial services industry in

Malaysia for over 12 years.

Dato’ Siow holds an MBA from the Catholic University of

Leuven, Belgium and a Bachelor of Economics (Hons)

from the National University of Malaysia. He has also

attended the Advanced Management Program at Harvard

Business School.

Dato’ Siow has been a director of Citibank Berhad since April

2007. He is currently the Chairman of the Bank‘s Nominating

Committee and a member of the Audit Committee.

Ms. A

gnes Liew

Yun C

hong

Dato’ S

iow K

im Lun

Ms. Agnes Liew Yun Chong was appointed as Non-Independent

Non-Executive Director of the Bank on 1 November 2010. She is

also a member of the Risk Management Committee and

Nominating Committee of Citibank Berhad.

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

Since 2010, Ms Liew has been the Asia Pacific Head of Global

Corporate Banking. The Asia Pacific Corporate Bank is the

coverage organisation that delivers the full spectrum of

product solutions and Citi's extensive global network which

spans over 100 countries, to institutional clients across 16

markets in Asia, including large public and private corporations.

She is also a member of the Global Corporate Banking

Operating Committee (NY) and chairs the Asia Pacific Corporate

Banking Operating Committee.

Ms. Liew joined Citi as a Management Associate in 1982 and

during her career with Citi, has held a number of diverse key

management positions in Risk and Banking in Asia Pacific.

Between 2000 and 2003, she was the Corporate Bank Head of

Singapore. In 2003, she was appointed Country Risk Manager of

the Corporate and Investment Bank, Citi Taiwan. She

subsequently moved into the Regional Risk Management Office

in Asia Pacific and assumed the role of Head of Risk, ASEAN,

Corporate and Investment Bank in 2005.

Between 2007 and 2010, Ms. Liew led Global Subsidiaries Group

in Asia Pacific and was responsible for the relationship coverage

of global multinational subsidiaries across 16 markets. Under her

leadership, the Global Subsidiaries Group in Asia grew to be a

significant pillar of the Global Banking franchise. During that time,

she was also the Global Banking Head of ASEAN (ex Singapore),

responsible for the relationship coverage of large corporate

clients, including financial institutions. Ms. Liew assumed the

position of Asia Pacific Head of Global Corporate Banking in 2010.

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

20 Women in Finance in Asia.

She holds an LL.B (Hons) from the University of Singapore and

is a member of the Supreme Court of Singapore.

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Tan Sri Dr Ghauth bin Jasmon holds a PhD and a First Class

Honors in Bachelor of Science (Engineering) Degree from the

University of London.

He is currently a Fellow of the Institution of Electrical Engineers

UK, Fellow of Institution of Engineers, Australia, Chartered

Engineer UK and Chartered Professional Engineer Australia.

Tan Sri Dr Ghauth is currently the Chairman of the Malaysia

Innovation Hub, BENA Upskilling Sdn Bhd, Puncak Pvt Ltd (Sri

Lanka) and Semesta Trade Ventures Sdn Bhd. He also sits on

the Boards of the International University of Malaya-Wales,

Sunway University, Beaver Entech Ltd as well as several private

limited companies.

Tan Sri Dr Ghauth had worked in the higher education sector for

33 years that commenced with Head of Electrical Engineering

Department in University Malaya in 1986 and culminated in his

appointment as the Vice-Chancellor/CEO of University Malaya

from 2008 till 2013. Over the years, he held various senior

positions including the Founder President/Chief Executive

Officer of Multimedia University from 1996 to 2007 and Chief

Executive Officer of Unity College International in 2008.

He received a number of global awards including World

Education Congress for Excellence in Education, Leadership &

Teaching (2012) and Asia’s Best Business School Awards for

Outstanding Contribution to Education (2011). He has also been

awarded the Honorary Doctorate of Technology

(Loughborough University), Honorary Doctorate of Science

(University of Wales), Honorary Doctorate of Education (MMU),

Excellence Award of Soka University Japan and the Eminent

Scholar Award of the University of Malaya.

Datuk A

li bin Tan Sri A

bdul Kadir

Tan Sri D

r Ghauth bin J

asmon

Datuk Ali bin Tan Sri Abdul Kadir was appointed to the Board on 6 May 2014 as an Independent Non-Executive Director of Citibank Berhad. Datuk Ali is the Chairman of the Audit Committee, and a member of the Nominating Committee of the Bank.

He is a Fellow of the Institute of Chartered Accountants in England and Wales ("ICAEW"), member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. He is also currently Honorary Advisor to ICAEW Malaysia, Honorary Fellow of the Institute of Chartered Secretaries & Administrators (UK) and the Malaysian Institute of Directors. Datuk Ali is currently the Chairman of Jobstreet Corporation Berhad, Privasia Technology Berhad and ENRA Group Berhad. He is a Board Member of Glomac Berhad, Labuan Financial Services Authority, Ekuiti Nasional Berhad and Landskap Malaysia.

Datuk Ali was appointed as Chairman of the Securities Commission of Malaysia on 1 March 1999 and served in that capacity until 29 February 2004. He also served on the Foreign Investment Committee, and the Oversight Committee of National Asset Management Company (Danaharta). Prior to his appointment to the Securities Commission, he was the Executive Chairman and Partner of Ernst & Young and its related firms. He was also the former President of the Malaysian Association (now Institute) of Certified Public Accountants, chairing both its Executive Committee and Insolvency Practices Committee and co-chairing the Company Law Forum. He was a member of the Malaysian Audit Oversight Board. He was appointed as an Adjunct Professor in the Accounting and Business Faculty, University of Malaya in 2008 and retired in August 2011. He was then appointed to the Advisory Board of the same Faculty.

On the international front, Datuk Ali was the Chairman of the International Organisation of Securities Commissions’ (“IOSCO”) Asia Pacific Regional Committee and the Islamic Capital Market Working Group, and a member of IOSCO’s Executive Committee. In addition, he was also a Trustee of the Accounting and Auditing Organisation for Islamic Financial Institutions and Force of Nature Aid Foundation; and the Advisor to the Sri Lanka Securities and Exchange Commission in 2006 for their Capital Market Strategic Plan.

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Mr. Philip Tan was appointed to the Board on 9 October

2015 as an Independent Non- Executive Director of Citibank

Bhd. He is the Chairman of the Risk Management Committee,

and a member of the Nominating Committee of the Bank.

He holds a First Class Honors in Bachelor of Arts (CNAA)

Degree in Business Studies (Accounting and Finance) from

North-East London Polytechnic, United Kingdom.

He is currently an Associate Fellow of the Asian Institute of

Chartered Bankers.

Mr Philip Tan has more than 25 years of experience in the

field of banking and finance, principally in the areas of

Treasury and Risk Management. He was formerly the

Managing Director and Chief Financial Officer of Emerging

Market Sales and Trading, Asia-Pacific of Citibank N.A. He

was also the Financial Markets Head and Country Treasurer

of Citibank Berhad from 1995 to 2001. He was a Director of

Citibank Malaysia (L) Ltd from 2000 to 2001.

Mr Philip Tan currently serves as an Independent Director of

Danajamin Nasional Berhad, Cagamas Berhad, MIDF Amanah

Investment Bank Berhad, SP Setia Bhd and Malaysian

Electronic Clearing Corporation Sendirian Berhad (MyClear).

He is a member of Corporate Debt Restructuring Committee

since his appointment by BNM in 2009.

Mr. P

hilip Tan Puay K

oon

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When people make progress, so does Citi. That’s why at Citi, we

dedicate much of our creativity and innovation to promote

economic progress in communities around the world by

investing in efforts that increase financial inclusion, catalyse job

opportunities for youth and reimagine approaches to building

economically vibrant cities.

As a financial institution and a group, we embrace the challenge

to help reach the 2.5 billion people in the world with no access to

financial services.

In Malaysia, a large aspect of our corporate citizenship focuses

on helping consumers build their own financial capability by

pairing financial education with access to appropriate products

and services so they can save, wisely manage their money and

weather setbacks.

In the last 12 months, Citi Malaysia has included two more focus

areas in its Citizenship efforts – Urban Transformation and

Youth Economic Opportunities. Urban Transformation is in line

with Citi’s commitment to enable urban progress and

strengthening communities in cities worldwide.

Through Citi for Cities we partner with governments, businesses,

citizens and community groups to identify and implement

innovative solutions that drive efficiencies and enhance quality

of life – ultimately supporting the growth of cities around the

world. Citi plays an instrumental role in helping cities realize

their urban vision by harnessing its knowledge, capabilities and

best practices from around the world to deliver practical,

cost-effective and transformational solutions that benefit

citizens, communities and cities.

In 2015, we received a RM903,000 grant from Citi Foundation

and worked with partners to support programs that help people

take control of their finances and leading the agenda of enabling

urban progress.

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“Cities are not just in our name – they are in our DNA. Through our Citi for Cities initiative, we are supporting

innovative projects to improve lives throughout the world’s urban centers.” – Citi CEO Mike Corbat

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“Cities are not just in our name – they are in our DNA. Through our Citi for Cities initiative, we are supporting “Cities are not just in our name – they are in our DNA. Through our Citi for Cities initiative, we are supporting

innovative projects to improve lives throughout the world’s urban centers.” – Citi CEO Mike Corbatinnovative projects to improve lives throughout the world’s urban centers.” – Citi CEO Mike Corbat

■ Think City KL Sustainable Shared Spaces Program Think City KL Sustainable Shared Spaces Program

In 2015, Citi Malaysia started its flagship Urban Transformation program entitled ‘Think City KL Sustainable Shared Spaces’ in collaboration with Think City, wholly-owned subsidiary of Khazanah Nasional Berhad. Think City is a community-based urban regeneration agency with its flagship program in the George Town UNESCO World Heritage Site, Penang. Part of a larger strategy, Think City has decided to make Kuala Lumpur more livable, using its community based urban regeneration formula. This is to strength-en community cooperation.

This program is a three-year initiative, with the first year focused on capacity building via baseline studies for benchmarking of program effectiveness, research to help identify key socio-economic issues and engag-ing local stakeholders.

Together with Dewan Bandaraya Kuala Lumpur, Think City has delivered on urban design and place making training programs to local communities.

In 2015, Think City received a US$100,000 grant from Citi Foundation which was utilized for:

■ Setting the Baseline Study of downtown KL to collect information on profile of residents and businesses in the selected areas to complement their strategy to revitalise Kuala Lumpur.

■ Managed a Urban Planning Workshop organised by Getty Conversation Institute in partnership with Badan Warisan Malaysia, held from 18th – 25th April 2015. The course was attended by 17 participants from the Iskandar Regional Development Authority, JPBD (Town and Country Planning Department), MBPP (Municipal Council of Penang), ECER (East Coast Economic Region), Academics from Universiti Teknologi Mara and Universiti Malaya as well as Dewan Bandaraya Kuala Lumpur.

■ Organised the Tempatan Festival, Buy Nothing Day and Wayang Kulit events at Medan Pasar which saw a total of 32,000 visitors. The visitors consisted of 78 % Malaysians, 18 % migrant workers and 4 % tourists.

■ Completed the KL Pocket Parks Programme for Medan Imbi and Laman Medan Tuanku

– Completed three designs of the Medan Imbi Signature Parks, completed detailed study of the park including usage and traffic flow as well as 2 stakeholder engagement sessions led by Think City and DBKL with local community groups such as Biji Biji Initiative, Pedal Malaysia, Bicycle Kitchen, Free Tree Society, IM4U and traffic and enforcement divisions of DBKL.

■ Completed the adaptive re-use of a heritage building for 3 lots in Medan Pasar.

■ Developed qualitative measurement indicators.

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■ Citi-UPM Financial Empowerment for Mature Citi-UPM Financial Empowerment for Mature

Women Program Phase 2Women Program Phase 2

Citi Foundation provided US$110,000 for Universiti

Putra Malaysia’s Financial Empowerment for Mature

Women Program Phase 2.

Under the program, 80 financial education trainers

delivered a financial education program to 400 low

income mature women in Malaysia. In 2015, the

syllabus for the program included a component on

financial products including Islamic Banking products.

80% of the participants started to preserve assets in a

savings account and 80% of them have also improved

their financial behavior by keeping track of their

personal financial inflow and outflow for at least six

months after the program completion.

There has been new women NGO partners included in

the 2015 program which includes: Bank Negara

Malaysia’s LINK, Persatuan Penerokawati FELDA,

Kumpulan Isteri-Isteri Nelayan (KUNITA), Sahabat

Amanah Ikhtiar Malaysia and the Department of

Agriculture.

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■ Global Community Day Global Community Day

Citi Malaysia employees successfully raised RM217,941

for the United Nations Children’s Fund (UNICEF) in aid

for the children of Nepal for this year’s 10th Global

Community Day (GCD). Citi’s contribution was the

largest any corporate in Malaysia raised to support

UNICEF’s response.

GCD in Kuala Lumpur saw over 30 food and game stalls

set up by Citi volunteers. Departments across all

businesses came up with the capital and manpower to

run charity carnival stalls at Padang Timur, Petaling

Jaya. Celebrity deejays JJ and Jeremy from local radio

station Red FM played host to the Charity Family Day

and kicked off the event with a Mega Match where

representatives from the various departments compet-

ed against each other. A similar Charity Carnival was

also carried out in Penang which was held at the

Penang Botanical Gardens.

The aid to the children of Nepal included:

■ Providing water to 655,000 people and establishing

sanitation facilities for 175,000, stopping sickness

and preventable deaths from water-borne diseases.

■ Vaccinating over 500,000 children for measles,

rubella and polio.

■ Distributing US$7.8 million of supplies.

■ Screening 373,000 children for nutrition issues, and

ensuring an appropriate response – including for

1,328 children with acute malnutrition

■ Providing materials for over 500,000 children and

supporting over 1,500 temporary learning centres.

■ Assessing 55,000 classrooms at 6,300 schools

(sadly 34,500 were unsafe).

■ Setting up 226 ‘child friendly spaces’ and

intercepting over 500 children from trafficking.

■ Working with government to get 400,000 small

cash grants to families affected by the disaster,

allowing them to afford food, shelter and letting

them restart their lives. These grants have been

tested and proven to help people be quickly

self-sufficient in restarting their lives, and also help

to get local economies moving again.

■ Training almost 5,000 in psycho-social counselling

and providing counselling materials to 15,000

teachers.

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In Johor Bahru, more than 150 employees delivered

food to 20 underprivileged homes across Johor Bahru.

Volunteers also distributed food packages and basic

necessities to the homeless in downtown Johor Bahru.

Meanwhile in Kuantan, over 200 Citi Volunteers took

part in the ‘One State, One River’ Program to raise

local community awareness and participants in river

management to rehabilitate Galing River – the most

polluted river flowing through Kuantan city. Employees

worked hard to clean up the riverbank, tossed water

treatment mud-balls and released small fishes into

Galing River. There was also a drawing and colouring

contest for children who participated, a youth in mural

painting contest and naming-the-trees and river

preservation talk by Malaysia Nature Society.

Over 3,000 employees participated in 2015 Global

Community Day.

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valuingour peopleAt Citi, we aim to be an Employer of Choice, offering

our people progressive career paths and an energised

work environment. Our people philosophy centres on

our belief that talent grows talent and it is our

responsibility to facilitate an environment that

supports employees’ professional growth, allows them

to contribute meaningfully to the organisation’s

priorities and develop pride in their work. With Citi’s

geographical reach and the rich diversity of businesses,

we have the ability to equip our employees to

continuously enhance our clients’ lives while having a

lifetime career.

In 2015, we continued our efforts in the talent space.

Our graduate Management Associate (“MA”)

programmes attracted the best talent in the market –

we hired and on-boarded a class of 29 MAs in 2015.

This gives us 79 future leaders hired since 2010 who

continue to grow with us as part of our strategy to

build leadership bench strength. Of this MA pool, 2 of

our Malaysian MAs were selected to be part of a cohort

of just 7 regional MAs for the Post Global Consumer

Banking (“GCB”) MA Development Programme. They

were subsequently given 12 months of off-shore

exposure to strengthen their business knowledge and

to develop the Consumer Banking pipeline across the

region. The seven were selected from the top 20

percent highest performing MAs in the APAC region,

and Malaysia’s nominees making up a quarter of the

cohort speak to the quality of our graduate talent.

Our Leadership Enhancement & Accelerated

Development (“LEAD”) programme, focused on the

development of the top two percent of our best

employees, saw some of our best talent collaborating

on cross-franchise projects driven by business seniors

across the organisation. This exposed them to

products, services and people outside of their normal

day-to-day roles, allowing them an opportunity to

glean insights and to explore other parts of the

organisation they would otherwise not have

experienced. LEAD participants (called LEAD-ers)

attended various customised trainings; Effective

Networking and Conversations, Effective Negotiations,

Power Communication, Discover Your Personal

Branding. LEAD- ers also benefited from exclusive

networking opportunities, panel discussion and

speaker series with regional senior leaders, country

management committee members, and fellow

high-performing LEAD peers.

Leveraging our global presence in 160 countries and

the diversity of our businesses, Citi is second to none in

our ability to provide in-country, regional and global

mobility opportunities. This is evidenced by 502

mobility transfers in 2015, including lateral moves and

promotions as well as our export of talent to Singapore,

Taiwan, Dubai, Hong Kong, India, Poland and

Philippines; and our import of talent from other Citi

franchises including India, Hong Kong, Philippines,

China, Australia, Japan, Singapore, US and Bangladesh.

From a learning and development viewpoint, our

consistent approach to training and development

across the organisation ensures that we have a unified

culture and a set of standards that transcend business,

product and regional lines. In 2015, Citibank Malaysia

rolled out 116 classroom sessions covering 1,980

Citibankers together with 13 leadership programmes

across the franchise covering 180 Citi leaders. Malaysia

was selected as a pilot country for important regional

training initiatives on Respect at Work and Power of

One (delivery of a remarkable experience to our clients

as one bank, one culture and one team).

One of Citi’s key priorities is employee engagement;

striving to ensure Citi is an Employer of Choice for

both our current and future employees. In 2015, in line

with employee lifestyle initiatives, Citi Wellness Hub

was successfully launched in October, which took only

10 months to its completion. In addition to gym

facilities, weekly exercises classes were offered to

members. As a result of various initiatives, Citi

Malaysia’s VOE 2015 scores shows an outstanding

improvement overall in our people front with an

increase in all key indices.

Recognising that a diverse workforce enhances our

ability to maneuver in an increasingly diverse

environment, as part of our commitment to gender

diversity and the advancement of women as leaders

and economic drivers, Citibank also organised

initiatives in conjunction with International Women’s

Day (“IWD”). Franchise-wide programmes connected

Citi women to facilitate their progress personally,

professionally and within the community. One

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particular initiative was Citi’s sponsorship of the Malaysia Women Marathon 10km run, bringing together over 300

Citi Malaysia employees. Many first time runners found the experience rewarding; felt it was a mental challenge

rather than a physical one. They were encouraged to persevere and stay focused and took away these attributes

applying it in their personal and professional endeavors.

A key component to ensure that we are able to keep Citibankers engaged and motivated is to provide a conducive

and nurturing work environment, with focus on mental and physical health. In 2015, Citi’s “Live Well” platform and

Employee Assistance Programme (“EAP”) continued to provide support services such as counselling, wellness talks

and on-site consultations to all Citibankers, with talks covering key health tips, office ergonomics, and suitable food

and exercises. A total of 86 exercise classes were offered and carried out for the benefit of employees across the

franchise.

Citi will continue to focus on building the talent pipeline and developing and implementing relevant programmes,

initiatives, policies and processes to ensure we provide the best that we can for our employees.

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The Bank aspires to achieve the highest standards in ethical conduct by delivering our promise to clients, reporting our financial results accurately and transparently and maintaining full compliance with all laws, rules and regulations governing the Bank‘s business operations. The Bank has also taken the necessary steps to ensure conformity with Bank Negara Malaysia‘s (“BNM”) Guidelines on Corporate Governance for Licensed Institutions (Revised BNM/GP1).

■ Board Composition Board Composition

The Board comprises seven members.

The following is the board line-up:

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

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

Dato’ Siow Kim LunIndependent Non-Executive Director

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

Datuk Ali bin Abdul KadirIndependent Non-Executive Director

Tan Sri Dr Ghauth bin Jasmon Independent Non-Executive Director(appointed on 14 September 2015)

Mr. Philip Tan Puay Koon Independent Non-Executive Director(appointed on 9 October 2015)

Dato’ Dr Thillainathan a/l RamasamyIndependent Non-Executive Director(ceased on 9 October 2015)

The individual profiles of the current directors are set out on pages 14 to 17 of this report.

The composition of the Bank’s Board of Directors fulfils the prescribed requirements by BNM to comprise a majority of independent directors.

The presence of three non-independent non-executive directors and four independent non- executive directors enables the Bank to view all relevant issues objectively and in a balanced manner. This further enhances the accountability of the decision making process within Citibank Berhad.

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

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

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

■ Roles and Responsibilities Roles and Responsibilities

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

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

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

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

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

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

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

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

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■ Frequency and Conduct of Board Meetings and Frequency and Conduct of Board Meetings and

AttendanceAttendance

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

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

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

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

The attendance record for each Board member for the financial year ended 31 December 2015 is as shown below:

Number of Board MeetingsName of Director Held Attended

Mr. Terence Kent Cuddyre (Chairman) 8 8Mr Lee Lung Nien 8 8Dato’ Siow Kim Lun 8 8Ms. Agnes Liew Yun Chong 8 7Datuk Ali bin Abdul Kadir 8 8Tan Sri Dr Ghauth bin Jasmon 1 2* 2Mr. Philip Tan Puay Koon 2 2* 2Dato’ Dr Thillainathan a/l Ramasamy 3 6* 5 1 appointed on 14 September 2015 2 appointed on 9 October 2015 3 ceased on 9 October 2015

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

■ Board Committees Board Committees

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

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

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

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

■ Nominating Committee

■ Remuneration Committee

■ Risk Management Committee

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

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

■ Audit Committee Audit Committee

Composition and Frequency of Meetings

The Audit Committee was established in 1994.

The attendance record for each Audit Committee member for the financial year ended 31 December 2015 is as shown below:

Number of MeetingsName of Audit Committee Member Held Attended

Datuk Ali bin Abdul Kadir (Chairman) 1 4 4Dato’ Siow Kim Lun 4 4Mr. Terence Kent Cuddyre 4 4Tan Sri Dr Ghauth bin Jasmon 2 1* 1Dato’ Dr Thillainathan a/l Ramasamy 3 3* 3 1 appointed as the Chairman of Audit Committee on 27 October 2015 2 appointed as a member of Audit Committee on 27 October 2015 3 ceased on 9 October 2015

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

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

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■ Terms of Reference Terms of Reference

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

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

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

Financial Statement and Disclosure Matters

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

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

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

- Critical accounting policies and practices to be used;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

■ Have direct communication channels with the external auditors.

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

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

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

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

Oversight of Internal Audit

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

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

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

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

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

Compliance, Regulation and Controls Oversight Responsibilities

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

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

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

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

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

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

■ Be able to obtain independent professional or other advice.

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■ Nominating Committee Nominating Committee

Composition and Frequency of Meetings

The Nominating Committee was established in 2006.

The attendance record for each Nominating Committee member for the financial year ended 31 December 2015 is as shown below:

Number of MeetingsName of Nominating Committee Member Held Attended

Dato’ Siow Kim Lun (Chairman) 1 7 7Mr. Lee Lung Nien 7 7Mr. Terence Cuddyre 2 1* 1Ms. Agnes Liew Yun Chong 7 6Datuk Ali bin Abdul Kadir 7 7Mr. Philip Tan Puay Koon 2 1* 1Dato’ Dr Thillainathan a/l Ramasamy 3 5* 3 1 appointed as the Chairman of Nominating Committee on 27 October 20152 appointed as a member of Nominating Committee on 27 October 20153 ceased on 9 October 2015

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

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

■ Terms of Reference Terms of Reference

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

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

The Nominating Committee’s main responsibilities are as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

■ Risk Management Committee Risk Management Committee

Composition and Frequency of Meetings

The Risk Management Committee was established in 2006.

The attendance record for each Risk Management Committee member for the financial yearended 31 December 2015 is as shown below:

Number of MeetingsName of Risk Management Committee Member Held Attended

Mr Philip Tan Puay Koon (Chairman) 1 -* -Mr. Terence Kent Cuddyre 4 4Ms. Agnes Liew Yun Chong 4 4Tan Sri Dr Ghauth bin Jasmon 2 -* -Datuk Ali bin Abdul Kadir 3 4 4Dato’ Siow Kim Lun 3 4 4Dato’ Dr Thillainathan a/l Ramasamy 4 3* 3 1 appointed as the Chairman of Risk Management Committee

on 27 October 20152 appointed as a member of Risk Management Committee on

27 October 20153 ceased as a member of Risk Management Committee on 27 October 20154 ceased on 9 October 2015 * Reflects the number of meetings held during the time the

Director held office.

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

■ Terms of Reference Terms of Reference

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

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

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

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

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

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

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

■ Review periodically management reports on risk exposure, risk portfolio, composition and other risk management activities.

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

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

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

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

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

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

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

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Please refer to Pillar 3 disclosure.

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statement of internal audit

and internal control

statement of internal auditand internal controlCitibank Berhad’s Board of Directors is responsible to

establish and maintain adequate internal control over

financial reporting standards and related issues.

The Bank’s internal control system is designed to

provide reasonable assurance to the company’s

management and Board of Directors regarding the

preparation and fair presentation of published financial

statements in accordance with the provisions under the

Companies Act 1965 and other applicable approved

standards in Malaysia.

All internal control systems no matter how well

designed and implemented have inherent limitations.

In view of the limitations, therefore, even the best of

systems determined to be effective can only provide a

reasonable assurance in relation to the preparation and

presentation of financial statements.

A comprehensive system of controls is maintained to

ensure that all transactions are executed in

accordance with the management’s authorization,

assets are safeguarded and that the financial records

are reliable.

The management also takes relevant steps to see that

information and communication flows are effective and

monitor the performance of internal control

procedures.

Citibank Berhad’s risk management policies, procedures

and practices set out the foundation to the risk

architecture governing its business activities.

The management conducts business monitoring

initiatives and continuously assesses their significant

processes and controls in accordance with the

Manager’s Control Assessment Procedures/Operational

Risk policy for all applicable businesses.

Control system weaknesses resulting in corrective

actions will be documented, escalated to the

management and tracked to closure.

Citibank Berhad’s Internal Audit reports to the Audit

Committee. The role of Internal Audit is to provide

independent, objective, reliable, valued and timely

assurance to the Boards of Directors of Citigroup and

Citibank Berhad, the Audit Committee, senior

management and regulators over the effectiveness of

governance, risk management, and controls that

mitigate current and evolving risks and enhance the

control culture within Citigroup and Citibank Berhad.

The scope of the audit activities are reviewed and

endorsed by the Audit Committee while audits are

carried out on a risk-based approach, to provide an

independent and objective report on operational and

management activities.

The Audit Committee regularly reviews and deliberates

with management on the actions taken on internal

control issues identified in reports prepared by Internal

Audit, the external auditors, regulatory authorities and

the management themselves.

The management of Citibank Berhad has also set up a

Country Coordinating Committee, Business Risk

Compliance and Control Committee, Legal Entity

Management Committee, Asset and Liability

Committee, Country Legal and Compliance Committee

and Management Committee as part of its monitoring

function to ensure effective management and

supervision of the areas under the respective

Committee’s purview.

Citibank Berhad has also adopted the Citi Code of

Conduct which expresses the values that each

employee is expected to appreciate and apply in their

respective working life.

Ethics hotlines are made available to employees who

wish to voice concerns about suspected violations of

law or industry regulation as well as actions that may

fail to live up to the Bank’s high standards of ethical

conduct.

The Bank has an internal policy prohibiting retaliatory

actions against any individual for raising legitimate

concerns or questions regarding ethical matters, or for

reporting suspected violations.

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The pre-set agenda, management reports and other

ad-hoc proposals or applications are circulated to the

Directors prior to the actual Board meetings.

This enables the Board of Directors to assess the overall

performance of the Bank and make sound management

decisions.

Management reports presented to the Board include,

among others, the following:

■ Economic Updates

■ Business Plans

■ Year to date Financial Performance Report

■ Financial performance by major business segments

■ Quarterly Performance Scorecard

■ Semi-annual BNM Stress Tests Results

■ Credit Risk Management Report

■ Liquidity & Market Risk Management Reports

■ Operational Risk

■ Quarterly Derivative Outstanding Report

■ Minutes of Audit Committee meetings

■ Minutes of Risk Management Committee meetings

■ Minutes of Nominating Committee meetings

■ Minutes of Shariah Committee meetings

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ratings statement

RAM Rating Services Berhad (“RAM”) has, on 17 December

2015, reaffirmed the AAA/Stable/P1 financial institution

ratings (“FIR”) of Citibank Berhad.

The stable rating outlook reflects that Citibank's asset

quality will remain stable, and that the Bank will maintain

its sturdy funding and liquidity profile as well as strong

capitalization levels.

■ Bank Rating Symbols and Definitions: Bank Rating Symbols and Definitions:

AAA A financial institution rated AAA has a

superior capacity to meet its financial

obligations. This is the highest long-term FIR

assigned by RAM Ratings.

P1 A financial institution rated P1 has a strong

capacity to meet its short-term financial

obligations. This is the highest short-term FIR

assigned by RAM Ratings.

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shariahcommittee

Citibank Berhad's Shariah Committee is responsible for

the provision of Shariah oversight in relation to

Citibank Berhad‘s Islamic Banking business operations.

The duties and responsibilities of the Shariah

Committee are governed by the Shariah Governance

Framework for Islamic Financial Institution as issued by

the Bank Negara Malaysia (BNM).

For the year 2015, the Shariah Committee convened 10

times. Additionally, individual Shariah Committee

members participated in various business discussions

where Shariah advice was required prior to submission

to the full Shariah Committee.

Citibank Berhad‘s Islamic Banking business operations

were subjected to a full Shariah audit conducted jointly

by Citibank Berhad‘s Internal Audit together with Citi‘s

Global Islamic Control unit. The Shariah Committee

reviewed the findings of the Shariah audit and was

satisfied with the report and its findings.

Citibank Berhad’s Shariah Committee effective from 1

June 2015 included the following distinguished members:

■ Dr. Mat Noor Mat Zain Dr. Mat Noor Mat Zain (Chairman)

Mat Noor Mat Zain is Head of Shariah Department, Faculty

of Islamic Studies, Universiti Kebangsaan Malaysia (UKM).

His specialisation areas are in Fiqh Muamalah, Islamic

Contract and Islamic Family Law. He has extensive

research experience in the area of Fiqh Muamalah and

Islamic Finance such as Instruments of Islamic Hedging,

Term and Condition in Standard Form Contract. He

teaches several courses related to Muamalah and

Islamic Jurisprudence such as Fiqh Muamalat, Islamic

Finance, and Principles of Islamic Jurisprudence.

He has presented many papers related to Islamic

banking and finance at domestic and international level.

He is a consultant for UKM Pakarunding, an expert

speaker for ILIM/JAKIM programmes related to Fiqh

Muamalah and the managing director of Journal of

Contemporary Islamic Law published by Department of

Shariah, Faculty of Islamic Studies, UKM.

He holds a Bachelor of Shariah from Islamic University

of Medina, Saudi Arabia, Master’s Degree in Islamic

Studies (Muamalah) from UKM and PhD in the field of

Islamic Contract from IIUM.

■ Prof. Dr. Abdul Ghafar Ismail Prof. Dr. Abdul Ghafar Ismail

Abdul Ghafar Ismail has been a Professor in Islamic

Banking and Financial Economics, School of

Economics, UKM since 2003. He is currently the Head

of Islamic Economics and Finance Research Division,

Islamic Research and Training Institute (IRTI), Islamic

Development Bank (IDB), Saudi Arabia.

He has published extensively in several refereed

journals among others Journal of Business Ethics;

Review of Islamic Economics; Journal of Islamic

Economics, Banking and Finance; Humanomics;

International Journal of Social Economics; Savings and

Development; Global Journal of Finance and

Economics; Review of Financial Economics; Journal of

Financial Services Marketing; International Journal of

Islamic and Middle Eastern Finance and Management;

Australian Journal of Basics and Applied Sciences;

Research in Financial Qualitative Markets; and

Investment Management and Financial Innovations.

His papers have also been presented in many

international and local conferences, such as

International Seminar on Islamic Economics and

Finance, IRTI International Conference and Malaysia

Finance Association Conference.

He has also published several textbooks among others,

Ar-Rahnu: Islamic Pawnbroking; and Money, Islamic

Banks and Real Economy. His research interests

include learning process and growth theory,

inter-temporal allocation of resources, earning

management, capital adequacy standard for Islamic

banks, and risk management. He has been a lecturer

since 1987 and has been teaching several economics

courses such as money and banking, financial

economics, advanced macroeconomics, money and

capital market in Islam, Islamic economics system,

Islamic economics analysis, and international finance;

risk management in Islamic banking; issues in Islamic

banking; Islamic banking; and money, zakat and real

economy.

He holds a PhD from the University of Southampton,

England.

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■ Dr. Hakimah Hj Yaacob Dr. Hakimah Hj Yaacob

Hakimah Yaacob is the Head of Economic, Finance,

Zakat and Awqaf Division at International Institute of

Advanced Islamic Studies (IAIS). She is also a certified

arbitrator and mediator by the Malaysian Bar Council

and Malaysian Chartered of Arbitration Association

(CIArb).She has written many books such as Alternative

Dispute Resolution (ADR): Expanding Options in Islamic

Finance Dispute.

She is a certified negotiator and drafter in the

International Contract from International Chamber of

Commerce (ICC). She is a professional trainer in Islamic

Finance. She has conducted local and international

trainings in Islamic Finance for government sectors,

government linked companies, statutory bodies and

private entities. She has received the best paper award

and has presented many papers at international level

such as the World Bank Conference in Bahrain,

Accounting and Auditing Organisation of Islamic

Finance (AAOIFI) on International Convention for

Islamic Finance.

She holds Bachelor and Master Degree in Law and PhD

in Victimology and Takaful Justice.

■ En. Mohd Bahroddin Badri En. Mohd Bahroddin Badri

Mohd Bahroddin Badri is currently a researcher at

International Shariah Research Academy for Islamic

Finance (ISRA) cum Shariah Manager at ISRA

Consultancy Sdn Bhd. Prior to joining ISRA, he has

served as a lecturer at the International Islamic

University Malaysia (IIUM).

He is co-author of the world’s first comprehensive

Islamic finance textbook, Islamic Finance: Principles

and Operations (2nd Ed), and has extensively produced

a number of research papers on Shariah and Islamic

Finance. He has also actively presented papers in

numerous local and international conferences. A

number of his articles have been published in

international refereed journals as well as international

magazines including Islamic Finance News (IFN),

General Council for Islamic Banks and Financial

Institutions (CIBAFI), Bloomberg etc.

He has been involved in various ISRA’s high impact

projects; among others are the Shariah Standards of

Central Bank of Malaysia (BNM) and Policy Guidelines

on Shariah based Scheme for Companies Commission

of Malaysia (SSM). At present, he is also Shariah

Consultant for Credit Guarantee Corporation Malaysia

Berhad (CGC Islamic) and closely engaged with

industry players by conducting trainings, advisory and

consultancy services.

He holds Bachelor Degree of Islamic Revealed

Knowledge and Heritage (Fiqh and Usul Fiqh) from

IIUM and Master’s Degree of Shariah in Economics

from University of Malaya.

■ En. Nik Abdul Rahim bin Nik Abdul Ghani En. Nik Abdul Rahim bin Nik Abdul Ghani

Nik Abdul Rahim is a lecturer of Fiqh Muamalat at

Department of Shariah, Faculty of Islamic Studies,

UKM.

He regularly conducts lectures, researches and

presents papers at seminars and conferences, both

locally and internationally on the areas of Fiqh

Muamalat and Usul Fiqh particularly those related to

Islamic banking, Islamic insurance (Takaful) and

current issues of Islamic transaction laws.

He is currently a member of the Research Centre for

Islamic Economics and Finance (EKONIS) or formerly

known as Islamic Economics and Finance Research

Group. He is also a member of the committee of Klinik

Hukum Syarak and Guaman Syarie, Department of

Shariah, and an expert consultant and speaker for

Pusat Islam UKM and Unit Latihan UKM programmes

related to Islamic Law.

He holds a Master’s Degree in Shariah from UKM and

currently is a PhD candidate at International Centre for

Education in Islamic Finance (INCEIF).

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Directors’ Report

Statement By Directors

Declaration Pursuant

Shariah Committee‘s Report

Independent Auditors’ Report

Statements Of Financial Position

Statements Of Profit Or Loss And OtherComprehensive Income

Statements Of Changes In Equity

Statements Of Cash Flows

Notes To The Financial Statements

40434445464748495052

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The Directors have pleasure in submitting their report and the audited financial statements of the Group and the Bank for the financial year ended 31 December 2015.

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

Results Group and Bank

RM’000

Profit before taxation 755,261Tax expense (185,836) Profit for the year 569,425

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

DividendsSince the end of the previous financial year, the Bank paid a single tier ordinary dividend of 329 sen per ordinary share totaling RM400 million in respect of the financial year ended 31 December 2014 on 28 July 2015.

The final ordinary dividend recommended by the Directors in respect of the financial year ended 31 December 2015 is 370 sen per ordinary share totalling RM450 million.

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

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

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

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

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

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

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

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

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

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

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

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

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

For The Year Ended 31 December 2015

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

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

Number of ordinary shares of USD1 each At At 1.1.2015 Bought Sold 31.12.2015Shares in Citigroup Inc. Direct interests Dato’ Siow Kim Lun @ Siow Kim Lin 900 - - 900 Agnes Liew Yun Chong 27,636 7,452 - 35,088 Terence Kent Cuddyre 1,593 1,593 (816) 2,340 Philip Tan Kuay Koon - 916 - 916 Lee Lung Nien 51 - - 51

Number of ordinary shares of USD1 each At At 1.1.2015 Granted Vested 31.12.2015Capital Accumulation Program/ Supplementary CAP/SEA in Citigroup Inc.

Lee Lung Nien 21,591 4,281 (9,995) 15,877 Agnes Liew Yun Chong 16,391 5,771 (7,452) 14,710 Terence Kent Cuddyre 2,001 - (747) 1,254

Number of options over ordinary shares of USD1 each At At 1.1.2015 Granted Forfeited 31.12.2015 Stock Option Plan in Citigroup Inc.

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

None of the other Directors holding office at 31 December 2015 had any interest in the ordinary shares and options over ordinary shares of the Bank and of its related corporations during the financial year.

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

■ Lee Lung Nien■ Datuk Ali Bin Tan Sri Abdul Kadir■ Dato’ Siow Kim Lun @ Siow Kim Lin■ Agnes Liew Yun Chong■ Terence Kent Cuddyre■ Tan Sri Dr. Ghauth bin Jasman (appointed on

14 September 2015)

■ Philip Tan Puay Koon (appointed on 9 October 2015)

■ Dato’ Dr. Thillainathan A/L Ramasamy (resigned on

9 October 2015)

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

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

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

There were no debentures issued during the financial year.

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

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

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

Lee Lung Nien

Datuk Ali Bin Tan Sri Abdul Kadir

Kuala LumpurDate: 24 June 2016

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In the opinion of the Directors, the financial statements set out on pages 47 to 143 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Bank as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended.

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

Lee Lung Nien

Datuk Ali Bin Tan Sri Abdul Kadir

Kuala LumpurDate: 24 June 2016

Pursuant To Section 169(15) Of The Companies Act, 1965

statement by directors

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

Subscribed and solemnly declared by the above named in Kuala Lumpur on 24 June 2016.

Tang Wan Chee

Before me:

Commissioner for Oaths

To Section 169(16) Of The Companies Act, 1965

declaration pursuant

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We, members of Citibank Berhad Shariah Committee hereby confirm that we have reviewed the principles and the contracts relating to the transactions and applications introduced by Citibank Berhad’s Islamic Banking division during the financial year ended 31 December 2015.

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

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

We have assessed the work carried out by Shariah Control Officer and internal Shariah audit which included, but not limited to, examining, on a test basis, each type of transaction, the relevant documentation and procedures adopted by the Citibank Berhad’s Islamic Banking division.

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

In our opinion:

1. the contracts, transactions and dealings entered into by the Citibank Berhad’s Islamic Banking division during the year ended 31 December 2015 that we have reviewed are in compliance with the Shariah principles;

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

3. All earnings that have been realised from sources or by means prohibited by the Shariah principles have been considered for disposal to charitable causes.

We, the members of Citibank Berhad Shariah Committee, do hereby confirm that the operations of the Citibank Berhad’s Islamic Banking division for the year ended 31 December 2015 have been conducted in conformity with the Shariah principles.

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

Wassalamu Alaikum Wa Rahmatullahi Wa Barakatuh.

Dr. Mat Noor Mat Zain Prof. Dr. Abdul Ghafar Ismail Chairman of the Shariah Committee Deputy Chairman of the Shariah Committee

Dr. Hakimah Hj Yaacob Mohd Bahroddin BadriMember of the Shariah Committee Member of the Shariah Committee

Nik Abdul Rahim Nik Abdul Ghani Member of the Shariah Committee

Kuala LumpurDate: 24 June 2016

In The Name Of Allah, The Beneficent, The Merciful

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Report on the Financial StatementsWe have audited the financial statements of Citibank Berhad, which comprise the statements of financial position as at 31 December 2015 of the Group and the Bank, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and the Bank for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 143.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our 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 Bank’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

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

To The Members Of Citibank Berhad

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Group and the Bank as of 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

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

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

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

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

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

KPMG Adrian Lee Lye WangFirm Number: AF 0758 Approval Number: 2679/11/17(J)Chartered Accountants Chartered Accountant

Petaling Jaya, MalaysiaDate: 24 June 2016

independent auditors’ report

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Group Bank

2015 2014 2015 2014

Note RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 3 9,883,187 7,194,881 9,883,167 7,194,861

Deposits and placements with banks and other financial institutions 4 839,489 104,628 839,489 104,628

Securities purchased under resale agreements 145,107 1,079,867 145,107 1,079,867

Financial assets held-for-trading 5 846,298 3,562,669 846,298 3,562,669

Financial investments available-for-sale 6 1,086,935 2,046,945 1,086,935 2,046,945

Loans, advances and financing 7 23,932,917 21,641,546 23,932,917 21,641,546

Other assets 9 1,599,862 1,532,346 1,599,862 1,532,346

Statutory deposits with Bank Negara Malaysia 10 544,910 395,000 544,910 395,000

Deferred tax assets 11 39,510 19,783 39,510 19,783

Investments in subsidiary companies 12 - - 20 20

Plant and equipment 13 44,985 56,413 44,985 56,413

Total assets 38,963,200 37,634,078 38,963,200 37,634,078

Liabilities

Deposits from customers 14 27,353,699 26,176,674 27,353,699 26,176,674

Deposits and placements of banks and other financial institutions 15 4,428,296 4,782,586 4,428,296 4,782,586

Bills and acceptances payable 50,341 47,984 50,341 47,984

Other liabilities 16 2,603,189 2,284,812 2,603,189 2,284,812

Total liabilities 34,435,525 33,292,056 34,435,525 33,292,056

Equity

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

Reserves 18 4,405,978 4,220,325 4,405,978 4,220,325 Total equity attributable to equity holder of the Bank 4,527,675 4,342,022 4,527,675 4,342,022

Total liabilities and equity 38,963,200 37,634,078 38,963,200 37,634,078

Commitments and contingencies 36 77,736,181 78,182,067 77,736,181 78,182,067

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

statements offinancial position

As At 31 December 2015

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Group and Bank

2015 2014

Note RM’000 RM’000

Revenue 2(b) 2,310,509 2,265,523

Interest income 20 1,522,644 1,593,601

Interest expense 21 (426,212) (427,722)

Net interest income 1,096,432 1,165,879

Net income from Islamic banking operations 37(n) 39,455 28,505

Other operating income 22 748,410 643,417

Total net income 1,884,297 1,837,801

Other operating expenses 23 (1,026,892) (1,001,357)

Operating profit 857,405 836,444

Allowance for loans, advances and financing 24 (102,144) (133,693)

Profit before taxation 755,261 702,751

Tax expense 25 (185,836) (178,726)

Profit for the year 569,425 524,025

Other comprehensive income/(expense), net of tax

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

- Net gain/(loss) on revaluation of financial investments available-for-sale 16,400 (6,002)

Items that will not be reclassified subsequently to profit or loss

- Net loss on remeasurement of defined benefit plan (172) (3,585)

Total other comprehensive income/(expense) for the year 16,288 (9,587)

Total comprehensive income for the year 585,653 514,438

Profit for the year attributable to:

Owner of the Bank 569,425 524,025

Total comprehensive income attributable to:

Owner of the Bank 585,653 514,438

Earnings per share - basic (sen) 26 468 431

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

statements of profit or loss andother comprehensive incomeFor The Financial Year Ended 31 December 2015

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

Attributable to owner of the Bank

Non-distributable Distributable

Share Share Statutory Other Retained Total

Note Capital Premium Reserve Reserve Profits Reserves Total

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

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

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

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

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

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

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

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

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

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

Note 17 Note 18

At 1 January 2015 121,697 380,303 121,697 (1,533) 3,719,858 4,220,325 4,342,022

Net gain on revaluation of financial investments available-for-sale - - - 16,400 - 16,400 16,400

Net loss on remeasurement of defined benefit plans - - - (172) - (172) (172)

Total other comprehensive expense for the year - - - 16,228 - 16,228 16,228

Profit for the year - - - - 569,425 569,425 569,425

Total comprehensive income for the year - - - 16,228 569,425 585,653 585,653

Dividends to owner of the Bank 27 - - - - (400,000) (400,000) (400,000)

Total contribution to owner - - - - (400,000) (400,000) (400,000)

At 31 December 2015 121,697 380,303 121,697 14,695 3,889,283 4,405,978 4,527,675

Note 17 Note 18

statements ofchanges in equity

For The Financial Year Ended 31 December 2015

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Group Bank

2015 2014 2015 2014

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before taxation 755,261 702,751 755,261 702,751

Adjustments for:

Amortisation of premium less accretion of discount of financial investments available-for-sale 41,067 105,587 41,067 105,587

Allowance for loans, advances and financing 102,144 133,693 102,144 133,693

Depreciation 20,116 32,219 20,116 32,219

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

Unrealised (gain)/loss from revaluation of financial assets held-for-trading (12,356) 6,838 (12,356) 6,838

Gain from disposal of financial investments available-for-sale (18,026) (4,434) (18,026) (4,434)

Plant and equipment written off 66 579 66 579

(Gain)/Loss on disposal of plant and equipment (75) 266 (75) 266

Operating profit before working capital changes 888,197 977,324 888,197 977,324

Changes in working capital:

Deposits and placements with banks and other financial institutions (734,861) 738,981 (734,861) 738,981

Securities purchased under resale agreements 934,760 (595,236) 934,760 (595,236)

Financial assets held-for-trading 2,728,727 (1,025,930) 2,728,727 (1,025,930)

Loans, advances and financing (2,393,515) (1,276,958) (2,393,515) (1,276,958)

Other assets (89,237) (625,206) (89,237) (625,206)

Statutory deposits with Bank Negara Malaysia (149,910) (36,000) (149,910) (36,000)

Deposits from customers 1,177,025 393,145 1,177,025 393,145

Deposits and placements of banks and other financial institutions (354,290) (1,073,671) (354,290) (1,073,671)

Bills and acceptances payable 2,357 (4,704) 2,357 (4,704)

Other liabilities 298,231 (67,341) 298,231 (67,341)

Cash used in operating activities 2,307,484 (2,595,596) 2,307,484 (2,595,596)

Income taxes paid (163,868) (185,239) (163,868) (185,239)

Net cash generated from/ (used in) operating activities 2,143,616 (2,780,835) 2,143,616 (2,780,835)

For The Financial Year Ended 31 December 2015

statements of cash flows

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statements of cash flow

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Group Bank

2015 2014 2015 2014

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

Dividend from investment securities - 175 - 175

Purchase of plant and equipment (9,243) (10,478) (9,243) (10,478)

Proceeds from disposal of plant and equipment 564 3,734 564 3,734

Purchase of financial investments available-for-sale (1,142,703) (1,554,967) (1,142,703) (1,554,967)

Redemption of financial investments available-for-sale 177,060 634,419 177,060 634,419

Proceeds from disposal of financial investments available-for-sale 1,919,012 555,485 1,919,012 555,485

Net cash generated from/ (used in) investing activities 944,690 (371,632) 944,690 (371,632)

Cash flows from financing activities

Dividend paid to owner (400,000) (500,000) (400,000) (500,000)

Net cash used in financing activities (400,000) (500,000) (400,000) (500,000)

Net increase/ (decrease) in cash and cash equivalents 2,688,306 (3,652,467) 2,688,306 (3,652,467)

Cash and cash equivalents at 1 January 7,194,881 10,847,348 7,194,881 10,847,348

Cash and cash equivalents at

31 December (Note 3) 9,883,187 7,194,881 9,883,187 7,194,881

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

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

45th Floor, Menara Citibank 165 Jalan Ampang50450 Kuala Lumpur

The consolidated financial statements of the Bank as at and for the year ended 31 December 2015 comprise the Bank and its subsidiaries (together referred to as the “Group”).

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

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

The financial statements were authorised for issue by the Board of Directors on 24 June 2016.

1. Basis of preparation

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

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

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

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

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

• MFRS 14, Regulatory Deferral Accounts • Amendments to MFRS 5, Non-current Assets

Held for Sale and Discontinued Operations (Annual Improvements 2012-2014 Cycle)

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

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

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

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

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

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

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

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

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

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018

• MFRS 9, Financial Instruments (2014)

• MFRS 15, Revenue from Contracts with Customers

MFRSs, Interpretations and amendments effective for a date yet to be confirmed

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

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

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

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

notes to the financialstatements

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notes to the financial statements

1. Basis of preparation (continued)

A. Statement of compliance (continued)

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

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

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

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

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

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

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

This standard also specifies the requirements for

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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notes to the financial statements

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

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

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

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

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

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

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

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

Other fees and commission income, including

account servicing fees, investment management fees, sales commission, placement fees and syndication fees – are recognised as the related services are performed. If a loan commitment is not expected to result in the draw-down of a loan, then the related loan commitment fees are recognised on a straight-line basis over the commitment period. When it is probable that a loan commitment will result in a specific lending arrangement, commitment fees are included in the measurement of the effective interest rate.

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

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

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

1. Basis of preparation (continued)

D. Use of estimates and judgements (continued)

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

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

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

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

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

A. Basis of consolidation

i. Subsidiaries Subsidiaries are investees, including

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

The Bank controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Bank also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

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

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

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

B. Revenue Revenue comprises of gross interest income, other

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

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notes to the financial statements

2. Significant accounting policies (continued)

F. Financial assets and financial liabilities

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

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

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

An embedded derivative is recognised

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

ii. Financial instrument categories and subsequent measurement

The Group and the Bank categorise financial instruments as follows:

Financial assets

a. Financial assets at fair value through profit or loss

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

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

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

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

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

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

c. Loans and receivables Loans and receivables category comprises

debt instruments that are not quoted in an active market.

Financial assets categorised as loans and

receivables are subsequently measured at amortised cost using the effective interest method.

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

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

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

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

Financial liabilities

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

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

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

Other financial liabilities categorised as fair

value through profit or loss are subsequently measured at their fair value with the gain or loss recognised in profit or loss.

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notes to the financial statements

2. Significant accounting policies (continued)

F. Financial assets and financial liabilities (continued)

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

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

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

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

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

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

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

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

v. Offsetting Financial assets and liabilities are offset and

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

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

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

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

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

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

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

The value produced by a model or other valuation techniques is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Valuation adjustments are recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the statements of financial position.

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2. Significant accounting policies (continued)

F. Financial assets and financial liabilities (continued)

vi. Fair value measurement (continued)

Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

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

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

Level 3: unobservable inputs for the asset or liability.

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

G. Impairment

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

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

The Group and the Bank assess whether

objective evidence of impairment exists individually for financial assets that are individually significant. For financial assets that are not individually significant, assessment of objective evidence of impairment is done individually or/and collectively.

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

• significant financial difficulty of the issuer or obligor;

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

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

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

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

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

• the disappearance of an active market for a security.

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

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

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

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

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

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

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

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notes to the financial statements

2. Significant accounting policies (continued)

G. Impairment (continued)

i. Financial assets (continued)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

J. Plant and equipment

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

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

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

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notes to the financial statements

2. Significant accounting policies (continued)

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

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

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

ii. Subsequent costs Subsequent expenditure is capitalised only

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

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

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

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

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

• building improvements 8 years - 14 years • furniture and equipment 2 years - 10 years

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

K. Leased assets

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

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

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

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

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

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

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

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

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

M. Foreign currency Transactions in foreign currencies are translated

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

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

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

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

N. Income tax Income tax expense comprises current and

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

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

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2. Significant accounting policies (continued)

N. Income tax (continued)

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

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

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

O. Employee benefits

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

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

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

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

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

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

iii. Defined benefit plan The Bank and certain related companies

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

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

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

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

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notes to the financial statements

2. Significant accounting policies (continued)

O. Employee benefits (continued)

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

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

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

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

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

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

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

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

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

3. Cash and short term funds Group Bank

2015 2014 2015 2014

RM’000 RM’000 RM’000 RM’000 Cash and balances with banks and other financial institutions 55,237 54,280 55,217 54,260

Money at call and deposit placements maturing within one month 9,827,950 7,140,601 9,827,950 7,140,601

9,883,187 7,194,881 9,883,167 7,194,861

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

2015 2014

RM’000 RM’000

Licensed banks 839,489 104,628

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notes to the financial statements

5. Financial assets held-for-trading

Group and Bank

2015 2014

At fair value RM’000 RM’000

Malaysian Government Treasury Bills 3,871 289,131

Malaysian Government Securities 711,712 1,407,797

Malaysian Government Investment Issues 116,635 258,803

Bank Negara Malaysia Bills/Notes 14,080 1,606,938 846,298 3,562,669

6. Financial investments available-for-sale

Group and Bank

2015 2014

At fair value RM’000 RM’000

Malaysian Government Treasury Bills/Securities 857,560 1,258,591

Malaysian Government Investment Issues 222,360 781,205

1,079,920 2,039,796

At cost

Unquoted securities 7,015 7,149

1,086,935 2,046,945

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notes to the financial statements

7. Loans, advances and financing

i. By type Group and Bank

2015 2014

RM’000 RM’000

Overdrafts 512,449 567,511 Term loans/financing

- housing loans/financing 10,931,868 10,383,815

- other term loans/financing 2,632,771 1,530,326

Bills receivable 1,128,282 1,113,626

Claims on customers under acceptance credits 610,526 654,603

Staff loans 62,900 72,803

Share margin financing 188,472 201,816

Credit cards receivables 6,227,797 6,580,185

Revolving credit 2,163,418 1,116,416

24,458,483 22,221,101

Unearned interest and income (14,752) (17,016)

Gross loans, advances and financing 24,443,731 22,204,085 Less: Allowance for impaired loans, advances and financing

- Collective assessment allowance (338,459) (380,755)

- Individual assessment allowance (172,355) (181,784)

Net loans, advances and financing 23,932,917 21,641,546

ii. By type of customer Group and Bank

2015 2014

RM’000 RM’000 Domestic non-bank financial institutions

- others 518,945 246,783

Domestic business enterprises

- small and medium enterprises 562,454 551,274

- others 4,649,189 3,122,053

Individuals 18,181,294 17,853,396

Foreign entities 531,849 430,579

24,443,731 22,204,085

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notes to the financial statements

7. Loans, advances and financing (continued)

iii. By interest/profit rate sensitivity Group and Bank

2015 2014

RM’000 RM’000 Fixed rate

- Housing loans/financing 646,462 679,077

- Other fixed rate loans/financing 11,444,257 10,340,347

Variable rate

- BLR plus 11,046,476 10,487,546

- Cost plus 1,306,536 697,115

24,443,731 22,204,085

iv. By sector Group and Bank

2015 2014

RM’000 RM’000

Primary agriculture 20,079 14,051

Mining and quarrying 470,867 77,367

Manufacturing (including agriculture based) 2,797,497 1,945,793

Electricity, gas and water 1,638 11,921

Construction 27,348 48,797

Wholesale, retail trade, restaurants and hotels 864,126 726,230

Transport, storage and communication 258,292 257,331

Finance, insurance, real estate and business services 659,420 402,342

Social & community services 12,051 23,993

Household

- consumption credit 7,338,127 7,428,929

- residential 10,445,299 10,006,208

- purchase of securities 207,581 201,816

- others 190,287 216,443

Other sectors 1,151,119 842,864

24,443,731 22,204,085

v. By purpose Group and Bank

2015 2014

RM’000 RM’000

Purchase of securities 207,581 201,816

Purchase of landed property 11,217,685 10,712,502

Purchase of fixed assets excluding land and building 783 1,052

Personal use 1,231,405 963,804

Credit card 6,229,389 6,580,185

Construction 7,530 10,705

Working capital 5,529,205 3,682,891

Other purposes 20,153 51,130

24,443,731 22,204,085

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notes to the financial statements

7. Loans, advances and financing (continued)

vi. Residual contractual maturity Group and Bank

2015 2014

RM’000 RM’000

Maturing within one year 12,571,691 10,647,258

One to five years 921,539 743,607

Over 5 years 10,950,501 10,813,220

24,443,731 22,204,085

vii. By geographical distribution Group and Bank

2015 2014

RM’000 RM’000

Within Malaysia 24,443,731 22,204,085

8. Impaired loans, advances and financing

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

2015 2014

RM’000 RM’000

At 1 January 470,101 452,354

Classified as impaired during the year 671,027 601,225

Reclassified as performing during the year (265,785) (287,581)

Amount recovered (182,050) (154,426)

Amount written off (166,107) (141,471)

At 31 December 527,186 470,101

Individual assessment allowance (172,355) (181,784)

Net impaired loans, advances and financing 354,831 288,317

Ratio of net impaired loans and financing to gross loans

and financing less individual assessment allowance 1.46% 1.31%

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notes to the financial statements

8. Impaired loans, advances and financing (continued)

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

Group and Bank 2015 2014 RM’000 RM’000 Collective assessment allowance

At 1 January 380,755 368,381

Allowance (written back)/made during the year, net (42,296) 12,374

At 31 December 338,459 380,755

As % of gross loans, advances and financing less individual assessment allowance 1.39% 1.73%

Individual assessment allowance

At 1 January 181,784 189,531

Allowance made during the period 25,027 17,104

Written back during the year (12,632) (13,455)

Written off during the year (21,824) (11,396)

At 31 December 172,355 181,784

iii. Impaired loans, advances and financing by sector Group and Bank 2015 2014 RM’000 RM’000

Primary agriculture 7,765 7,388

Mining and quarrying 2,709 592

Manufacturing (including agriculture based) 33,041 29,245

Construction 1,433 13,892

Wholesale, retail trade, restaurants and hotels 16,302 14,607

Transport, storage and communication 457 480

Finance, insurance, real estate and business services 3,381 5,078

Household - consumption credit 152,356 103,075

- residential 284,814 275,729

- purchase of securities 19,108 19,308

Other sectors 5,820 707

527,186 470,101

iv. Impaired loans, advances and financing by geographical distribution Group and Bank 2015 2014 RM’000 RM’000

Within Malaysia 527,186 470,101

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notes to the financial statements

9. Other assets Group and Bank

2015 2014

RM’000 RM’000 Interest/Income receivable 23,456 43,774

Other debtors, deposits and prepayments 289,656 546,404

Retirement benefits (Note 19(i)) 4,894 3,697

Derivative assets (Note 30) 1,281,856 916,922

Tax recoverable - 21,549

1,599,862 1,532,346

10. Statutory deposits with Bank Negara Malaysia

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

11. Deferred tax assets

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

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

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

At 1 January 2014 (10,401) 28,078 1,428 - 19,105

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

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

At 31 December 2014/ At 1 January 2015 (5,934) 25,206 3,428 (2,917) 19,783

Recognised in profit or loss 9,197 16,031 - - 25,228

Recognised in other comprehensive income - - (5,467) (34) (5,501)

At 31 December 2015 3,263 41,237 (2,039) (2,951) 39,510

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

assets against current tax liabilities.

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notes to the financial statements

12. Investments in subsidiary companies Group and Bank

2015 2014

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

Effective Country of Ownership Name of subsidiary Principal activity incorporation Interest 2015 2014 % % Citigroup Nominee (Malaysia) Sdn. Bhd. Nominee company Malaysia 100 100 Citigroup Nominees (Tempatan) Sdn. Bhd.* Nominee company Malaysia 100 100 Citigroup Nominees (Asing) Sdn. Bhd.* Nominee company Malaysia 100 100

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

statement of profit or loss and other comprehensive income.

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13. Plant and equipment Furniture Building and Group and Bank improvements equipment Total

Cost RM’000 RM’000 RM’000

At 1 January 2014 111,485 329,473 440,958

Additions 549 9,929 10,478

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

Write-offs (446) (195) (641)

At 31 December 2014/1 January 2015 110,495 329,366 439,861

Additions 3,019 6,224 9,243

Disposals - (1,504) (1,504)

Write-offs (4,741) (6,581) (11,322)

At 31 December 2015 108,773 327,505 436,278

Depreciation

At 1 January 2014 94,871 263,354 358,225

Charge for the year 9,543 22,676 32,219

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

Write-offs - (62) (62)

At 31 December 2014/1 January 2015 103,432 280,016 383,448

Charge for the year 3,138 16,978 20,116

Disposals - (1,015) (1,015)

Write-offs (4,720) (6,536) (11,256)

At 31 December 2015 101,850 289,443 391,293

Carrying amounts

At 1 January 2014 16,614 66,119 82,733

At 31 December 2014/1 January 2015 7,063 49,350 56,413

At 31 December 2015 6,923 38,062 44,985

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14. Deposits from customers

i. By type of deposit Group and Bank

2015 2014

RM’000 RM’000

Demand deposits 13,925,753 12,168,152

Saving deposits 1,460,108 1,141,457

Fixed deposits 8,098,664 8,261,530

Other deposits 3,868,190 4,545,421

Others - cash collateral 984 60,114

27,353,699 26,176,674

ii. Maturity structure of fixed deposits and other deposits are as follows:

Group and Bank

2015 2014

RM’000 RM’000

Due within six months 10,932,131 11,628,796

Six months to one year 1,028,908 1,167,770

One year to three years 5,815 10,385

11,966,854 12,806,951

iii. By type of customer Group and Bank

2015 2014

RM’000 RM’000

Government and statutory bodies 46,729 7,644

Business enterprises 14,428,907 13,414,053

Individuals 12,181,059 11,977,544

Others 697,004 777,433

27,353,699 26,176,674

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15. Deposits and placements of banks and other financial institutions

Group and Bank

2015 2014

RM’000 RM’000

Bank Negara Malaysia 240,485 427,069

Licensed banks 1,793,188 1,866,494

Licensed finance companies 2,394,623 2,489,023

4,428,296 4,782,586

16. Other liabilities Group and Bank

2015 2014

RM’000 RM’000

Interest/Profit payable 42,995 46,683

Provision for taxation 25,647 -

Other creditors and accruals 1,287,825 1,530,954

Derivative liabilities (Note 30) 1,246,722 707,175

2,603,189 2,284,812

17. Share capital Group and Bank

Number Number

Amount of shares Amount of shares

2015 2015 2014 2014

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

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

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

18. Reserves Group and Bank

2015 2014

RM’000 RM’000

Share premium 380,303 380,303

Statutory reserve 121,697 121,697

Retained profits 3,889,283 3,719,858

Other reserve 14,695 (1,533)

- Fair value reserve 6,115 (10,285)

- Defined benefit reserve 8,580 8,752

Total reserves 4,405,978 4,220,325

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

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18. Reserves (continued)

The statutory reserve is maintained in compliance with Section 47(2)(f) of the Financial Services Act 2014 and is not distributable as cash dividends. No transfers were made to the statutory reserve during the year as the Bank has met the reserve requirements.

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

The defined benefit reserve is in respect of remeasurement of the defined benefit plan assets/liabilities.

19. Employee benefits

i. Retirement benefits

The amounts recognised in the statements of financial position are as follows:

Group and Bank

2015 2014

RM’000 RM’000

Fair value of plan assets 20,797 26,554 Present value of the funded obligation (15,903) (22,857)

Total employee benefit assets 4,894 3,697

The Group and the Bank make contributions to a fully funded and separately administrated defined benefit scheme (“Defined Benefit Plan”) for its employees. Under the Defined Benefit Plan, eligible employees are entitled to one and a half month of the final/last drawn salary multiplied by all years of continuous employment with the Group and the Bank, not in excess of 40 upon attainment of the retirement age of 55. For employees who leave before the attainment of the retirement age, the retirement benefit will be computed based on the scale rate stipulated in the rules of the Defined Benefit Plan.

On 1 January 2007, majority of the members’ benefits accrued under the Defined Benefit Plan were converted to the new Defined Contribution Plan. Only those staff who satisfied the criteria below, will continue to be maintained under the Defined Benefit Plan (collectively, Defined Benefit Plan and Defined Contribution Plan are known as “the Plan”).

a. Age as at 31 December 2006: at least 40 years

b. Years of service as at 31 December 2006: at least 5 years

c. Sum of age and years of service as at 31 December 2006: at least 55 years

The Bank intends to wind-up the Plan as at 31 December 2015, subject to regulatory approval. Since the last valuation, the Plan has been frozen as at 31 December 2015, with full accrued benefits amounts to be paid out to member once regulatory approval on the Plan wind-up is received.

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19. Employee benefits (continued)

i. Retirement benefits (continued)

Plan assets comprise: Group and Bank 2015 2014 RM’000 RM’000

Equities 2,225 13,303

Malaysian Government Securities 5,095 7,196

Cash and cash equivalent 9,483 (106)

Others 3,994 6,161

20,797 26,554

Funding Arrangement and Policies Contribution to the Plan take into account the funding valuation results, subject to the local tax effective contribution limit up to 19% of the Plan members’ total remuneration (including the Bank’s contributions to the EPF for the members).

Results from the latest funding valuation recommend a contribution holiday for the 2015 year. The surplus under the Defined Benefit Plan will also be used to fund the contribution requirements of the Defined Contribution Plan. The funding position is reviewed quarterly by the Trustees and the Bank.

Movement in the present value of the defined benefit obligations: Group and Bank 2015 2014 RM’000 RM’000

Defined benefit obligations at 1 January (22,857) (26,661)

Settlements 3,639 5,357

Current service costs and interest (1,920) (2,161)

Plan changes/amendments 4,477 -

Remeasurement/Actuarial gains 758 608

Defined benefit obligations at 31 December (15,903) (22,857)

Movement in the fair value of plan assets: Group and Bank 2015 2014 RM’000 RM’000

Fair value of plan assets at 1 January 26,554 36,889

Contributions paid into the plan* (2,447) (5,301)

Settlements (3,639) (5,357)

Benefits paid from plan assets (892) -

Remeasurement/Actuarial gains - (1,276)

Interest Income 1,221 1,599

Fair value of plan assets at 31 December 20,797 26,554

* Negative employer contributions for the year 2015 and 2014 reflect transfer of funds from the Defined Benefit Plan to the Defined Contribution Plan.

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19. Employee benefits (continued)

i. Retirement benefits (continued)

The amounts recognised in the statements of profit or loss and other comprehensive income are as follows:

Group and Bank 2015 2014 RM’000 RM’000

Current service costs 875 984

Past services cost (4,477) -

Interest cost (176) (486)

Plan administration cost 87 64

Amount included under “personnel costs” (3,691) 562

Actual return on plan assets - -

Movement in the net benefit asset/(liability) recognised in the statements of financial position are as follows:

Group and Bank 2015 2014 RM’000 RM’000

Balance as at 1 January 3,697 10,228

Included in Profit or Loss

- Current service cost (962) (1,048)

- Past service cost 4,477 -

- Interest income 176 486

3,691 (562)

Included in Other Comprehensive Income

Remeasurement loss (135) (668)

Other

Contributions paid by employer (2,359) (5,301)

Balance as at 31 December 4,894 3,697

Note 9 Note 9

The latest valuation of the Defined Benefit Plan as at 31 December 2015 was conducted by Towers Watson (Malaysia) Sdn. Bhd. The unfunded portion of the total liability will continue to be borne by Citibank Berhad. Projected unit credit method is used to calculate the actuarial present value of promised retirement benefits.

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19. Employee benefits (continued)

i. Retirement benefits (continued)

Principal actuarial assumptions used at the reporting date (expressed as weighted averages):

Group and Bank 2015 2014 RM’000 RM’000

Discount rate 5.00% 4.75%

Rate of increase in salary levels 5.00% 5.00%

Price inflation 3.50% 3.50%

Assumptions regarding future mortality are based on published statistics and mortality tables. The average

life expectancy of an individual retiring is at the age of 60 years.

Historical information

Group and Bank 2015 2014 2013 2012 2011

RM’000 RM’000 RM’000 RM’000 RM’000

Fair value of plan assets 20,797 26,554 36,889 38,934 37,343

Present value of the defined benefit obligation (15,903) (22,857) (26,661) (31,391) (35,439)

Surplus in the plan 4,894 3,697 10,228 7,543 1,904

Experience adjustments arising on plan assets - (losses)/gains - (1,276) 2,120 1,168 (833)

Experience adjustments arising on plan liabilities - gains 758 608 1,775 2,866 686

Assumption adjustment on plan liabilities – gains/(losses) - - 2,678 1,155 (484)

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:

Group and Bank Increase Decrease Increase Decrease 2015 2015 2014 2014 RM’000 RM’000 RM’000 RM’000

Defined benefit obligation

Discount rate (1% movement) (703) 753 (1,287) 1,394

Future salary growth (1% movement) - - 2,143 (2,016)

Other assumptions are held constant when quantifying the sensitivity results to a particular assumption.

The sensitivity results above determine their individual impact on the Plan’s end of year defined benefit obligation. In reality, the Plan is subject to multiple external experience items which may move the defined benefit obligation in similar or opposite directions, while the Plan’s sensitivity to such changes can vary over time.

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19. Employee benefits (continued)

ii. Share option plan

The Group and the Bank have a number of stock option programmes for their officers and employees as part of a discretionary award package. Certain stock awards with performance conditions or certain claw back provisions are subject to variable accounting, pursuant to which the associated compensation expense fluctuates with changes in Citigroup’s stock price. Options are granted on Citigroup stock at the market value denominated in US dollar at the time of grant. Compensation cost related to awards granted to employees who meet certain age plus years of service requirements (retirement eligible employees) is accrued in the year prior to the grant date.

Group and Bank

2015 2014

Outstanding at 1 January 53,244 743,304

Exercised (39,617) (26,341)

Transfer in 66 6,373

Lapsed/Cancelled (13,693) (1,118)

Outstanding at 31 December - 532,444

Group and Bank

2015 2014

Details of share options exercised during the year:

Year of expiry 2015 2015

Average exercise price per ordinary share (RM) 229.37 177.85

Aggregated issue proceeds (RM’000) 9,087 4,685

Fair value at date of vesting (RM’000) 9,087 4,685

Terms of the options outstanding at 31 December:

Group and Bank

2015 2014 Expiry dates Exercise price - 532,444

- 532,444

RM 142.66Oct 2015

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notes to the financial statements

19. Employee benefits (continued)

iii. Share capital accumulation plan (CAP)

The Group and the Bank have a number of capital accumulation programmes for the officers and employees. The Core CAP is a discretionary award of restricted shares. The number of CAP shares in a Core CAP award is calculated using a 25% discount from the market price of Citigroup common stock. Supplemental CAP is a discretionary retention award programme composed of an award of CAP shares. The difference between Supplemental CAP award and a Core CAP award is that generally, a Supplementary CAP is given in addition to the discretionary award package and the number of shares awarded will not be based on a discount from the market price of Citigroup common stock. CAP granted in 2015 typically vest 25% each year for four years, with the first vesting date occurring 12 months after the grant date. Shares acquired upon exercise of a CAP option generally may not be sold for two years following the exercise date.

Group and Bank

2015 2014

‘000 ’000

Outstanding at 1 January 42,081 42,979

Granted 14,193 23,281

Vested (21,273) (23,838)

Lapsed/Cancelled - (10,391)

Net transferred out 4,207 10,050

Outstanding at 31 December 39,208 42,081

Details of CAP granted during the year:

Group and Bank

2015 2014

Expiry dates Feb 15, 2019 Feb 18, 2017

Average grant price per ordinary share (RM) 214.99 173.65

Aggregated proceeds if shares are issued (RM’000) 3,051 4,043

Details of CAP vested during the year:

Average exercise price per ordinary share (RM) 243.29 182.96

Aggregated issue proceeds (RM’000) 4,270 3,068

Fair value at date of vesting (RM’000) 5,634 4,361

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20. Interest income Group and Bank 2015 2014 RM’000 RM’000 Loans and advances

- Interest income other than recoveries from impaired loans 1,230,120 1,217,765

- Recoveries from impaired loans 52,145 50,568

Money at call and deposit placements with financial institutions 119,776 169,878

Financial assets held-for-trading 40,372 42,537

Financial investments available-for-sale 57,908 33,962

Securities purchased under resale agreements 17,043 25,841

1,517,364 1,540,551

Accretion of discount 5,280 53,050

Total interest income 1,522,644 1,593,601

21. Interest expense Group and Bank 2015 2014 RM’000 RM’000

Deposits and placements of banks and other financial institutions 59,937 45,974

Deposits from customers 361,966 377,753

Others 4,309 3,995

426,212 427,722

19. Employee benefits (continued)

iii. Share capital accumulation plan (CAP) (continued)

Terms of the CAP outstanding at 31 December:

Group and Bank

2015 2014 Year of expiry Grant price

- 122

- 3,652

1,461 -

4,931 -

- 8,378

12,293 -

- 14,657

- 15,272

6,329 -

14,194 -

39,208 42,081

RM 122.90

RM 175.52

RM 215.53

RM 131.11

RM 106.77

RM 188.62

RM 153.61

RM 173.65

RM 213.23

RM 214.99

Jan 2015

Jan 2015

Jan 2015

Jan 2016

Jan 2016

Feb 2017

Feb 2017

Feb 2018

Feb 2018

Feb 2019

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notes to the financial statements

22. Other operating income Group and Bank 2015 2014 RM’000 RM’000 Fee income:

Commission 54,766 44,613

Service charges and fees 21,470 19,175

Guarantee fees 9,217 6,888

Bankcard fees 292,097 338,292

Insurance premium and referral 47,233 41,109

Other fee income 79,667 66,505

504,450 516,582

Trading income:

Unrealised gain/(loss) from revaluation of financial

assets held-for-trading 12,356 (6,838)

Net gain from sales of securities

- Financial assets held-for-trading 15,649 12,870

- Financial investments available-for-sale 18,026 4,434

Gross dividends from financial investments available-for-sale - 175

46,031 10,641

Other income:

Foreign exchange gain, net 190,545 107,984

(Loss)/Gain from derivatives (18,439) 8,476

Gain/(Loss) on disposal of plant and equipment 75 (266)

Amount recovered from impaired securities 25,748 -

197,929 116,194

748,410 643,417

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notes to the financial statements

23. Other operating expenses Group and Bank

2015 2014

RM’000 RM’000

Personnel costs - Salaries, allowances and bonuses 321,483 331,532

- Contributions to Employees Provident Fund 42,997 42,355

- Staff benefits and other compensations 34,299 41,842

- Others 6,638 4,934

405,417 420,663

Establishment costs

- Depreciation 20,116 32,219

- Rental of premises 26,109 23,304

- Hire of equipments 165 924

- Utilities 4,988 5,516

- Plant and equipment written off 66 579

- Others 13,234 14,651

64,678 77,193

Marketing expenses

- Advertisement and promotional expenses 28,506 33,149

- Others 498 596

29,004 33,745

Administrative and general expenses

- Processing cost 386,348 335,618

- Auditors’ remuneration

- Statutory audit 429 411

- Other services 349 341

- Stationeries and supplies 3,380 4,046

- Communication expenses 18,660 18,184

- Maintenance of office equipment 380 609

- Others 118,247 110,547

527,793 469,756

Total other operating expenses 1,026,892 1,001,357

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notes to the financial statements

23. Other operating expenses (continued) Group and Bank

2015 2014

RM’000 RM’000 i. CEO and Directors’ remuneration

Executive Directors (including CEO) Salary and other remuneration, including meeting allowances 1,972 3,893

Bonuses 2,103 299

Benefits-in-kind 166 326

Share-based payment - 347

Others - 234

Non-executive Directors

Fees 543 298

4,784 5,397

ii. Other key management personnel:

Short-term employee salary and benefits 2,197 2,066

Salary Benefits- and others in- remunerations Fees Bonuses kind Total

RM’000 RM’000 RM’000 RM’000 RM’000

Executive Director and CEO

Lee Lung Nien 1,972 - 2,103 166 4,241

Non-executive Directors

Terence Kent Cuddyre - 125 - - 125

Dato’ Siow Kim Lun @ Siow Kim Lin - 125 - - 125

Agnes Liew Yun Chong - - - - -

Dato’ Dr. Thillainathan A/L Ramasamy - 101 - - 101

Datuk Ali Bin Tan Sri Abdul Kadir - 125 - - 125

Datuk Ali Bin Tan Sri Abdul Kadir - 37 - - 37 Terence Kent Cuddyre - 30 - - 30

1,972 543 2,103 166 4,784

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notes to the financial statements

24. Allowance for loans, advances and financing Group and Bank

2015 2014

RM’000 RM’000 Allowance for loans, advances and financing:

Individual assessment

- allowance made during the year 25,027 17,104

- written back (12,632) (13,455) Collective assessment - allowance made during the year - 12,374

- written back (42,296) - Impaired loans, advances and financing - recovered (87,325) (87,938)

- written off 219,370 205,608

102,144 133,693

25. Tax expense Group and Bank

2015 2014

RM’000 RM’000 Malaysian income tax

- current year 208,643 181,446

- prior year under/(over) provision 2,421 (1,125)

211,064 180,321 Deferred tax expense

- origination and reversal of temporary differences (19,412) (6,914)

- prior year (over)/under provision (5,816) 5,319

185,836 178,726

A reconciliation of the effective tax expense based on the applicable tax rate is as follows:

Group and Bank

2015 2014

RM’000 RM’000

Profit before taxation 755,261 702,751

Income tax using Malaysian tax rate of 25% 188,815 175,688

Non-deductible expenses 461 270

Others (45) (1,426)

189,231 174,532

(Under)/Over provision in prior year (3,395) 4,194

185,836 178,726

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notes to the financial statements

26. Earnings per share

The earnings per ordinary share has been calculated based on the profit for the year of RM569,425,000 (2014 - RM524,025,000) divided by 121,696,972 units of ordinary shares of RM1 each issued during the financial year under review.

27. Dividends Dividends recognised by the Bank are:

Sen Total per share amount Date of RM’000 payment 2015 Final 2014 ordinary - single tier 329 400,000 28 July 2015

2014 Final 2013 ordinary - net of tax 411 500,000 20 June 2014

After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial period upon approval by the equity holder of the Bank.

Sen Total per share amount RM’000

Final 2015 ordinary - single tier 370 450,000

28. Significant related party transactions and balances

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

The related parties of the Group and the Bank are:

(i) Parent companies Parent companies of the Group and the Bank are Citigroup Holdings (Singapore) Pte. Ltd. and Citigroup Inc.

(ii) Other related companies Entities which are related by virtue of having Citigroup Holdings (Singapore) Pte. Ltd. as the holding

company or having Citigroup Inc. as the ultimate holding company.

(iii) Key management personnel Key management personnel are defined as those persons having authority and responsibility for

planning, directing and controlling the activities of the Group or the Bank either directly or indirectly. The key management personnel of the Group or the Bank includes all the Directors and certain members of senior management of the Group or the Bank. Key management personnel compensation is disclosed in Note 23 (i) and (ii).

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notes to the financial statements

28. Significant related party transactions and balances (continued)

Transactions and balances with parent companies and other related companies Group and Bank

Other Other Parent related Parent related companies companies companies companies 2015 2015 2014 2014

RM’000 RM’000 RM’000 RM’000

Income

Interest on interest bearing deposits 1,337 12,141 - 14,267

Other income 11 87,024 6,817 237,375

1,348 99,165 6,817 251,642

Expenditure

Interest on interest bearing deposits 6 4,283 - 5,817

Other expenses 51,990 204,863 114,793 547,602

51,996 209,146 114,793 553,419

Amount due from

Interest bearing deposits - 2,167,969 - 1,935,806

Current account balances 379 1,193,786 375 293,905

Other balances 8 196,833 42,887 132,372

387 3,558,588 43,262 2,362,083

Amount due to

Interest bearing deposits - 296,999 - 1,015,443

Current account balances - 950,648 197,785 624,356

Other balances 15,541 225,938 85,595 433,435

15,541 1,473,585 283,380 2,073,234

All related party transactions are conducted at arm’s length basis and on normal commercial terms which are

not more favourable than those generally available to public.

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notes to the financial statements

29. Credit transactions and exposures with connected parties Group and Bank

2015 2014

RM’000 RM’000 Outstanding credit exposures with connected parties 721,187 876,150

Total credit exposure which is non-performing or in default - -

Total credit exposures 59,671,418 63,555,606

Percentage of outstanding credit exposures to connected parties - as a proportion of total credit exposures 1.21% 1.38%

- as a proportion of capital base 15.20% 18.96%

- which is non-performing or in default 0.00% 0.00%

The disclosure on Credit Transactions and Exposures with Connected Parties above are presented in accordance with para 9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties, which became effective on 1 January 2008.

Based on these guidelines, a connected party refers to the following:

i. Directors of the Bank and their close relatives;

ii. Controlling shareholder and his close relatives;

iii. Executive Officer, being a member of management having authority and responsibility for planning, directing and/or controlling the activities of the Bank, and his close relatives;

iv. Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status of existing credit transactions, either as a member of a committee or individually, and their close relatives;

v. Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv) above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor and their subsidiaries or entities controlled by them;

vi. Any person for whom the persons listed in (i) to (iv) above is a guarantor; and

vii. Subsidiary of or an entity controlled by the Bank and its connected parties.

Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. They also include holdings of equities and private debt securities issued by the connected parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions no more favourable than those entered into with other counterparties with similar circumstances and creditworthiness. Due care has been taken to ensure that the creditworthiness of the connected party is not less than that normally required of other persons.

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notes to the financial statements

30. Derivative financial instruments

Positive Negative

Contract fair fair

amount value value

RM’000 RM’000 RM’000

2015 Foreign exchange related contracts:

- Forwards 45,890,123 686,518 590,725

- Cross currency interest rate swaps 3,986,599 411,420 489,485

- Options 1,955,440 21,884 3,342

Interest rate contracts:

- Swaps 19,151,283 133,713 122,768

- Options 365,064 2,286 -

Equity related contracts 255,542 76 76

Others 155,382 25,959 40,326

71,759,433 1,281,856 1,246,722

Note 9 Note 16

2014 Foreign exchange related contracts:

- Forwards 46,628,915 495,957 322,926

- Cross currency interest rate swaps 3,728,782 190,539 169,379

- Options 3,031,141 34,369 25,038

Interest rate contracts:

- Futures 7,443,000 - -

- Swaps 17,241,705 155,021 138,418

- Options 662,539 3,110 111

Equity related contracts 282,652 14,423 14,423

Others 290,624 23,503 36,880

79,309,358 916,922 707,175

Note 9 Note 16

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31. Financial risk management

The Group’s and the Bank’s risk management framework are designed to monitor, evaluate and manage the principal risk they assume in conducting their activities. These risks include the following:

■ credit risk

■ market risk

■ operational risk

1. Credit Risk

Credit risk is the risk of financial loss to the Group and the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s and the Bank’s loans and advances to customers and other banks, and investment in debt securities and when the Group or the Bank acts as an intermediary on behalf of its clients and other third parties.

The credit risk management process of the Group and the Bank relies on corporate-wide standards to ensure consistency and integrity, with business- specific policies and practices to ensure applicability and ownership. While business managers and independent risk management are jointly responsible for managing risk/return trade offs as well as establishing limits and risk management practices, the origination and approval roles are clearly defined and segregated. In addition to conforming to established corporate standards, independent credit risk management is responsible for establishing policies that comply with local regulations and any other relevant legal requirements.

Independent credit risk management is also responsible for implementing portfolio limits, including obligor limits through risk rating, maturity and business segments limits to ensure diversification of portfolios, monitoring business risk management performance, providing on-going assessment of portfolio credit risk and approving new products.

Continuous monitoring of credit behaviour aided by sophisticated scoring modules, plus portfolio delinquency performance allows independent credit risk management to constantly assess the health of the credit portfolio.

The Group and the Bank secure various forms of collateral to mitigate credit risk exposures. The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows:

■ for residential mortgages - charges over residential properties

■ for commercial property loans - charges over the properties being financed

■ for share margin financing - pledges over quoted securities

■ for other loans - charges over business assets such as premises, inventories, trade receivables or deposits

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31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration

The following tables present the Group’s maximum exposure to credit risk of its on and off balance sheet financial instruments at each reporting dates, by industry and geographical analysis, before taking into account collateral held or other credit enhancements.

i. By Industry analysis

Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Primary Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 5,220,110 - 4,663,077 - - - - - - - - - 9,883,187

Deposits and placements with bank and other financial institutions - - 839,489 - - - - - - - - - 839,489

Securities purchased under resale agreements 145,107 - - - - - - - - - - - 145,107

Financial assets held- for-trading 846,298 - - - - - - - - - - - 846,298

Financial investments available-for-sale 1,079,920 - - - - - - - - - - 7,015 1,086,935

Loans, advances and financing - 18,181,294 659,420 20,079 470,867 2,797,497 1,638 27,348 864,126 258,292 12,051 1,151,119 24,443,731

Other assets - - 1,060,028 2,170 302 133,431 37,916 16 8,974 24,237 8 332,780 1,599,862

Statutory deposits with Bank Negara Malaysia 544,910 - - - - - - - - - - - 544,910

7,826,345 18,181,294 7,222,014 22,249 471,169 2,930,928 39,554 27,364 873,100 282,529 12,059 1,490,914 39,389,519

Contingent liabilities - - 466,214 9,031 993,716 513,088 199,629 36,043 966,298 278,995 979 69,995 3,533,988

Commitments - 23,283,035 1,111,198 42,430 127,844 1,774,203 11,465 13,770 823,456 185,003 695 2,774 27,375,873

Total Credit Exposures 7,836,345 41,464,329 8,799,426 73,710 1,592,729 5,218,219 250,648 77,177 2,662,854 746,527 13,733 1,563,683 70,299,380

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Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Primary Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 2,453,700 - 4,741,181 - - - - - - - - - 7,194,881

Deposits and placements with bank and other financial institutions - - 104,628 - - - - - - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - - - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - - - - - - - - - 3,562,669

Financial investments available-for-sale 2,039,796 - - - - - - - - - - 7,149 2,046,945

Loans, advances and financing - 17,853,396 402,342 14,051 77,367 1,945,793 11,921 48,797 726,230 257,331 23,993 842,864 22,204,085

Other assets - - 1,002,811 4,594 3,354 162,729 22,835 18 23,655 21,396 7 290,947 1,532,346

Statutory deposits with Bank Negara Malaysia 395,000 - - - - - - - - - - - 395,000

9,531,032 17,853,396 6,250,962 18,645 80,721 2,108,522 34,756 48,815 749,885 278,727 24,000 1,140,960 38,120,421

Contingent liabilities - - 1,158,114 5,743 381,797 559,896 141,911 13,767 815,492 327,286 946 525 3,405,477

Commitments - 27,013,393 227,208 494 373,348 1,724,113 45,800 593 304,217 51,881 825 - 29,741,872

Total Credit Exposures 9,531,032 44,866,789 7,636,284 24,882 835,866 4,392,531 222,467 63,175 1,869,594 657,894 25,771 1,141,485 71,267,770

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

i. By Industry analysis (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents deposited by the subsidiaries which were eliminated in the above tables.

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Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 6,133,224 1,371,249 160,294 56,169 74,538 873,712 1,013,004 200,997 9,883,187

Deposits and placements with banks and other financial institutions 800,000 39,489 - - - - - - 839,489

Securities purchased under resale agreements 145,107 - - - - - - - 145,107

Financial assets held- for-trading 846,298 - - - - - - - 846,298

Financial investments available-for-sale 1,086,935 - - - - - - - 1,086,935

Loans, advances and financing 24,443,731 - - - - - - - 24,443,731

Other assets 1,463,130 83,427 59 (1) 704 32,740 20,027 (224) 1,599,862

Statutory deposits with Bank Negara Malaysia 544,910 - - - - - - - 544,910

35,463,335 1,494,165 160,353 56,168 75,242 906,452 1,033,031 200,773 39,389,519

Contingent liabilities 3,335,627 12,125 25,993 28 2,348 46,664 1,719 109,484 3,533,988

Commitments 27,375,873 - - - - - - - 27,375,873

Total Credit Exposures 66,174,835 1,506,290 186,346 56,196 77,590 953,116 1,034,750 310,257 70,299,380

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

ii. By Geographical analysis

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31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

ii. By Geographical analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On-Balance Sheet

Cash and short term funds 4,682,667 1,768,939 97,567 67,960 8,647 390,022 57,001 122,078 7,194,881

Deposits and placements with banks and other financial institutions 984 103,644 - - - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - - - - - 3,562,669

Financial investments available-for-sale 2,046,945 - - - - - - - 2,046,945

Loans, advances and financing 22,204,085 - - - - - - - 22,204,085

Other assets 1,208,543 19,181 - - 1,613 74,145 36,695 192,169 1,532,346

Statutory deposits with Bank Negara Malaysia 395,000 - - - - - - - 395,000

35,180,760 1,891,764 97,567 67,960 10,260 464,167 93,696 314,247 38,120,421

Contingent liabilities 2,964,713 9,775 256,129 - 2,110 21,390 303 151,057 3,405,477

Commitments 29,741,872 - - - - - - - 29,741,872

Total Credit Exposures 67,887,345 1,901,539 353,696 67,960 12,370 485,557 93,999 465,304 71,267,770

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents deposited by the subsidiaries which were eliminated in the above tables.

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31. Financial risk management (continued)

B. Deposits and placements with banks and other financial institutions

i. Deposits and placements with banks and other financial institutions analysis by credit rating Group and Bank

2015 2014

RM’000 RM’000

AAA 200,000 -

A+ to A- - 104,628

BBB+ 639,489 -

839,489 104,628

ii. Deposits and placements with banks and other financial institutions analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

2015 2014

RM’000 RM’000

Malaysia 800,000 984

Other 39,489 103,644

839,489 104,628

C. Other securities Group and Bank

2015 2014

RM’000 RM’000

Financial assets held-for-trading 846,298 3,562,669

Financial investments available-for-sale 1,086,935 2,046,945

1,933,233 5,609,614

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31. Financial risk management (continued)

C. Other securities (continued)

i. Other securities analysis by credit rating

At the reporting date, the credit quality of investment in other securities by designation of an external credit assessment institution is as follows:

Group and Bank

2015 2014

RM’000 RM’000

A+ to A- 1,926,218 5,602,465

Unrated 7,015 7,149

1,933,233 5,609,614

ii. Other securities analysis by geographical location where the credit risk of issuers reside, regardless of where the assets are booked, is as follows:

Group and Bank

2015 2014

RM’000 RM’000

Malaysia 1,933,233 5,609,614

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31. Financial risk management (continued)

D. Credit quality of loans, advances and financing Group and Bank

2015 2014

RM’000 RM’000 Loans, advances and financing

- neither past due nor impaired 22,465,503 20,185,770

- past due but not impaired 1,451,042 1,548,214

- impaired 527,186 470,101

Gross amount 24,443,731 22,204,085

Individual assessment allowance (172,355) (181,784)

Collective assessment allowance (338,459) (380,755)

Carrying amount 23,932,917 21,641,546

Neither past due nor impaired

Included in the total loans, advances and financing of neither past due nor impaired are renegotiated loans. The analysis below represents the carrying amount of loans that would otherwise be past due or impaired if their terms had not been renegotiated. These renegotiated loans are considered neither past due nor impaired after they have been monitored as impaired loans until a minimum number of payments have been received under the new terms.

Group and Bank

2015 2014

RM’000 RM’000

Renegotiated loans 554,933 657,459

Past due but not impaired

Analysis of loans, advances and financing to customers that are past due but not impaired analysed based on aging are as follows:

Group and Bank

2015 2014

RM’000 RM’000

1 - 29 dpd 1,043,674 1,107,760

30 - 59 dpd 289,881 323,688

60 - 89 dpd 117,372 116,766

90 - 119 dpd - -

120 - 180 dpd 5 -

>180 dpd 110 -

1,451,042 1,548,214

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31. Financial risk management (continued)

D. Credit quality of loans, advances and financing (continued)

Impaired

Loans, advances and financing are classified as impaired when they meet one of the following criteria:

i. principal or interest or both are past due for three (3) months or more;

ii. where there is an individual impairment provision on the loan;

iii. impaired loans that have been rescheduled or restructured that have not met the continuous repayment behavior based on the revised rescheduled and/or restructured terms over the observation period.

Loans, advances and financing to customers that are individually impaired analysed by age are as follows:

Group and Bank

2015 2014

RM’000 RM’000

Current 82,110 28,304

1 - 29 dpd 37,038 28,136

30 - 59 dpd 32,854 29,018

60 - 89 dpd 44,112 35,027

90 - 1 19 dpd 65,895 66,570

120 - 180 dpd 89,242 85,519

>180 dpd 175,935 197,527

527,186 470,101

Estimated value of collaterals against past due but not impaired and impaired loans are RM831,032,000 (2014 - RM780,123,000).

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31. Financial risk management (continued) 2. Market Risk

Market risk encompasses price risk and liquidity risk, both arising from the normal course of business operations of the Group and the Bank. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return on risk.

Market risk in the Group and the Bank are managed through corporate-wide standards and business-specific policies and procedures with the help of responsible personnel and committees delegated by the Board of Directors such as the Risk Management Committee, Asset and Liability Committee and Market Risk Management. The business is required to establish risk measures, limits and controls, clearly defining approved risk profiles within the parameters of the Group’s and the Bank’s overall risk appetite and for operating within the established market risk limit framework. Independent market risk management establishes policies and procedures, approves limits and monitors exposures against limits.

Price Risk

Price risk is the risk associated to earnings arising from changes in interest rate, foreign exchange rates, equity and commodity prices and in their implied volatilities. Price risk arises in non-trading as well as trading portfolios. Price risk in non-trading portfolio is measured predominantly through earnings-at-risk and factor sensitivities supplemented with additional tools such as stress testing and cost-to-close analysis. Price risk in trading portfolios is measured through tools such as factor sensitivities, value-at-risk and stress testing.

Interest rate risk primarily results from the timing differences in the repricing of interest bearing assets, liabilities and commitments. It is also related to positions from non-interest bearing liabilities including shareholders’ funds and current accounts, as well as from certain fixed rate loans and liabilities.

The Group and the Bank are exposed to such risks associated with the effects of the fluctuations in the prevailing market interest rates on its financial positions and cash flows.

Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor. For the sensitivity analysis provided in this section, the Group and the Bank have used a 90 basis points movement for interest rates and a 4% movement in foreign exchange rates to measure the impact of these market risk movements on the Group and the Bank.

Interest rate risk – Sensitivity analysis

At 31 December 2015, it is estimated that a general increase of 90 basis points in interest rate, with all other variables held constant, would decrease the Group’s and the Bank’s profit before tax by approximately RM7,100,653 (2014: RM10,696,000) whereas a general decrease of 90 basis points in interest rate, with all other variables held constant, would have an equal but opposite effect.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the reporting date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date and that all other variables, in particular foreign exchange rates, remain constant. The above basis point increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next annual reporting date.

Foreign currency risk – Sensitivity analysis

As at 31 December 2015, it is estimated that a movement of 4% in Ringgit Malaysia (“RM”) against foreign currencies, with all other variables held constant, would result in maximum loss of approximately RM12,369,248 (2014: RM1,924,000).

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to the Group’s and the Bank’s exposure to currency risk for both derivative and non- derivative financial instruments in existence at that date, and that all other variables, in particular interest rate, remains constant. The sensitivity analysis includes balances where the denomination of the balances is in a currency other than the Ringgit Malaysia (“RM”).

The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual reporting date. Results of the analysis represent an aggregation of the effects on the Group’s and the Bank’s profit before tax measured in the respective functional currencies, translated into Ringgit Malaysia (“RM”) at the exchange rate ruling at the reporting date for presentation purposes.

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31. Financial risk management (continued)

2. Market Risk (continued)

Liquidity Risk

Liquidity risk is the risk that the Group and the Bank will not be able to meet its financial commitments when due. Under the Group’s and the Bank’s internal liquidity risk management policy, there is a set of standards for the measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk. Management of liquidity is performed on a daily basis and is monitored by the Treasurer. The Asset and Liability Committee and the Treasurer undertake the joint responsibility of overall liquidity risk management which covers establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and periodic stress tests.

The Group and the Bank include the net cash flow position for derivatives as part of their daily liquidity reports under off-balance sheet items, which are consolidated together with the on-balance sheet items to monitor the overall liquidity position of the Group and the Bank. The daily report prepared to monitor the daily liquidity position is known as the Market Access Report (“MAR”). It is prepared by major currencies and it has maturity analysis ranging from overnight to more than 2 years and limits are set for each tenor bucket. Maturity mismatches are monitored through the daily MAR report for necessary treasury actions on funding and gapping.

Limits are determined by the ultimate holding company and are reviewed as often as on a quarterly basis and is done in conjunction with the liquidity stress testing.

The following table indicates the effective interest rate at the reporting dates and periods in which the financial instruments reprice or mature, whichever is earlier.

i. Interest/profit rate risk

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 8,431,022 - - - - 1,452,165 - 9,883,187 1.54%

Deposits and placements with banks and other financials institutions - 825,779 13,710 - - - - 839,489 3.97%

Securities purchased under resale agreements 145,107 - - - - - - 145,107 3.50%

Financial assets held-for-trading - - - - - - 846,298 846,298 3.37%

Financial investments available-for-sale - - - 980,135 106,800 - - 1,086,935 3.18%

Loans, advances and financing

- performing 2,843,271 1,479,594 7,400,827 754,630 11,438,222 (338,458) - 23,578,086 5.62%

- impaired - - - - - 354,831 - 354,831

Other assets - - - - - 318,006 1,281,856 1,599,862

Statutory deposits with Bank Negara Malaysia - - - - - 544,910 - 544,910

Deferred tax assets - - - - - 39,510 - 39,510

Plant and equipment - - - - - 44,985 - 44,985

Total assets 11,419,400 2,305,373 7,414,537 1,734,765 11,545,022 2,415,949 2,128,154 38,963,200

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and Shareholder‘s Equity

Deposits from customers 24,518,116 1,114,450 1,715,370 5,763 - - - 27,353,699 1.40%

Deposits and placements with banks and other financial institutions 4,197,252 49,144 181,900 - - - - 4,428,296 1.20%

Bills and acceptances payable - - - - - 50,341 - 50,341

Other liabilities - - - - - 1,356,467 1,246,722 2,603,189

Total liabilities 28,715,367 1,163,594 1,897,271 5,763 - 1,406,808 1,246,722 34,435,525

Shareholders’ equity - - - - - 4,527,675 - 4,527,675

Total liabilities and shareholder’s equity 28,715,367 1,163,594 1,897,271 5,763 - 5,934,483 1,246,722 38,963,200

On-balance sheet interest sensitivity gap (17,295,967) 1,141,779 5,517,266 1,729,002 11,545,022 (3,518,534) 881,432

Off-balance sheet interest sensitivity gap 9,654,333 2,018,736 (1,171,215) (10,435,812) 476,518 - -

(7,641,634) 3,160,515 4,346,051 (8,706,810) 12,021,540 (3,518,534) 881,432

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 6,662,319 - - - - 532,562 - 7,194,881 2.00%

Deposits and placements with banks and other financials institutions - 93,229 11,399 - - - - 104,628 2.29%

Securities purchased under resale agreements 1,079,867 - - - - - - 1,079,867 3.48%

Financial assets held-for-trading - - - - - - 3,562,669 3,562,669 3.11%

Financial investments available-for-sale - 10,004 111,737 1,779,441 145,763 - - 2,046,945 3.25%

Loans, advances and financing

- performing 2,624,452 945,210 6,989,701 653,783 10,520,838 (380,755) - 21,353,229 6.05%

- impaired - - - - - 288,317 - 288,317

Other assets - - - - - 615,424 916,922 1,532,346

Statutory deposits with Bank Negara Malaysia - - - - - 395,000 - 395,000

Deferred tax assets - - - - - 19,783 - 19,783

Plant and equipment - - - - - 56,413 - 56,413

Total assets 10,366,638 1,048,443 7,112,837 2,433,224 10,666,601 1,526,744 4,479,591 37,634,078

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31. Financial risk management (continued)

i. Interest/profit rate risk (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents deposited by the subsidiaries which were eliminated in the above tables.

Effective Up to 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading interest Group month months months years years sensitive book Total rate

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Liabilities and Shareholder‘s Equity

Deposits from customers 22,920,990 1,320,711 1,927,067 7,906 - - - 26,176,674 1.53%

Deposits and placements of banks and other financial institutions 4,386,299 26,982 247,703 121,602 - - - 4,782,586 0.87%

Bills and acceptances payable - - - - - 47,984 - 47,984

Other liabilities - - - - - 1,577,637 707,175 2,284,812

Total liabilities 27,307,289 1,347,693 2,174,770 129,508 - 1,625,621 707,175 33,292,056

Shareholder’s equity - - - - - 4,342,022 - 4,342,022

Total liabilities and shareholder’s equity 27,307,289 1,347,693 2,174,770 129,508 - 5,967,643 707,175 37,634,078

On-balance sheet interest sensitivity gap (16,940,651) (299,250) 4,938,067 2,303,716 10,666,601 (4,440,899) 3,772,416

Off-balance sheet interest sensitivity gap 6,426,834 53,848 (1,660,349) (6,436,581) 253,303 - -

(10,513,817) (245,402) 3,277,718 (4,132,865) 10,919,904 (4,440,899) 3,772,416

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31. Financial risk management (continued)

ii. Foreign currency risk

Foreign currency risk results in the Group’s exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The tables below summarise the RM equivalent amount of the Group’s and the Bank’s exposure to foreign currency exchange rate risk as at reporting date:

Group MYR USD JPY Others Total

2015 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 5,598,642 2,326,746 257,191 1,700,608 9,883,187

Deposits and placements with banks and other financial institutions 800,000 12,331 - 27,158 839,489

Securities purchased under resale agreements 145,107 - - - 145,107

Financial assets held-for-trading 846,298 - - - 846,298

Financial investments available-for-sale 1,086,935 - - - 1,086,935

Loans, advances and financing 21,793,672 2,071,222 35,469 32,554 23,932,917

Other assets 375,163 1,163,658 1,017 60,024 1,599,862

Statutory Deposits with Bank Negara Malaysia 544,910 - - - 544,910

Deferred tax assets 39,510 - - - 39,510

Plant and equipment 44,985 - - - 44,985

Total assets 31,275,222 5,573,957 293,677 1,820,344 38,963,200

Liabilities

Deposits from customers 18,482,516 7,500,038 55,013 1,316,132 27,353,699

Deposits and placements of banks and other financial institutions 3,277,054 710,367 222,807 218,068 4,428,296

Bills and acceptances payable 2,079 43,785 810 3,667 50,341

Other liabilities 1,319,882 1,185,404 3,646 94,257 2,603,189

Total liabilities 23,081,531 9,439,594 282,276 1,632,124 34,435,525

Shareholder’s equity 4,527,675 - - - 4,527,675

Total liabilities and shareholder’s equity 27,609,206 9,439,594 282,276 1,632,124 38,963,200

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notes to the financial statements

31. Financial risk management (continued)

ii. Foreign currency risk (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

Group MYR USD JPY Others Total

2014 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 2,567,285 3,703,571 68,354 855,671 7,194,881

Deposits and placements with banks and other financial institutions - 5,794 - 98,834 104,628

Securities purchased under resale agreements 1,079,867 - - - 1,079,867

Financial assets held- for-trading 3,562,669 - - - 3,562,669

Financial investments available-for-sale 2,046,945 - - - 2,046,945

Loans, advances and financing 20,055,478 1,518,205 25,433 42,430 21,641,546

Other assets 696,553 794,470 6,278 35,045 1,532,346

Statutory Deposits with Bank Negara Malaysia 395,000 - - - 395,000

Deferred tax assets 19,783 - - - 19,783

Plant and equipment 56,413 - - - 56,413

Total assets 30,479,993 6,022,040 100,065 1,031,980 37,634,078

Liabilities

Deposits from customers 19,039,767 5,914,331 40,872 1,181,704 26,176,674

Deposits and placements of banks and other financial institutions 3,228,119 1,336,763 4,552 213,152 4,782,586

Bills and acceptances payable 5,923 38,411 706 2,944 47,984

Other liabilities 1,519,674 733,221 1,076 30,841 2,284,812

Total liabilities 23,793,483 8,022,726 47,206 1,428,641 33,292,056

Shareholder’s equity 4,342,022 - - - 4,342,022

Total liabilities and shareholder’s equity 28,135,505 8,022,726 47,206 1,428,641 37,634,078

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notes to the financial statements

No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2015 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 4,842,988 3,588,034 - - - - - - 1,452,165 9,883,187

Deposits and placements with banks and other financial institutions - - 825,779 7,519 6,191 - - - - 839,489

Securities purchased under resale agreements 145,107 - - - - - - - - 145,107

Financial assets held-for-trading - - 24,088 3,871 20,558 179,031 301,628 317,122 - 846,298

Financial investments available-for-sale - - - - - 466,288 513,847 106,800 - 1,086,935

Loans, advances and financing 930,710 1,338,433 1,556,560 593,838 6,991,178 442,650 458,863 11,438,365 182,320 23,932,917

Other assets 197,085 73,182 109,440 311,669 194,732 301,386 227,280 11,014 174,074 1,599,862

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 544,910 544,910

Deferred tax assets - - - - - - - - 39,510 39,510

Plant and equipment - - - - - - - - 44,985 44,985

Total assets 6,115,892 4,999,648 2,515,867 916,897 7,212,659 1,389,355 1,501,618 11,873,301 2,437,963 38,963,200

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity

The following maturity profile is based on the remaining period at the reporting date to the contractual maturity.

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No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2015 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities and shareholder’s funds

Deposits from customers 19,354,033 5,164,083 1,114,450 686,410 1,028,960 5,763 - - - 27,353,699

Deposits and placements of banks and other financial institutions 3,892,529 304,723 49,144 34,445 147,455 - - - - 4,428,296

Bills and acceptances payable 519,404 (180,667) (208,755) (79,641) - - - - - 50,341

Other liabilities 1,125,784 86,893 64,417 224,233 398,744 341,046 69,752 9,019 283,301 2,603,189

Total liabilities 24,891,750 5,375,032 1,019,256 865,447 1,575,159 346,809 69,752 9,019 283,301 34,435,525

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 4,405,978 4,405,978

Total equity attributable to equity holder of the bank - - - - - - - - 4,527,675 4,527,675

Total liabilities and equity 24,891,750 5,375,032 1,019,256 865,447 1,575,159 346,809 69,752 9,019 4,810,976 38,963,200

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity (continued)

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notes to the financial statements

31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity (continued)

No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2014 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Assets

Cash and short term funds 5,664,473 997,846 - - - - - - 532,562 7,194,881

Deposits and placements with banks and other financial institutions - - 93,229 6,158 5,241 - - - - 104,628

Securities purchased under resale agreements 1,079,867 - - - - - - - - 1,079,867

Financial assets held-for-trading 139,640 270,201 863,282 542,485 597,514 687,277 178,745 283,525 - 3,562,669

Financial investments available-for-sale - - 10,004 - 111,737 559,237 1,220,204 145,763 - 2,046,945

Loans, advances and financing 897,097 1,130,623 1,009,255 452,069 6,712,310 470,125 358,596 10,520,838 90,633 21,641,546

Other assets 440,443 93,539 138,861 130,669 218,007 172,029 96,950 17,540 224,308 1,532,346

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 395,000 395,000

Deferred tax assets - - - - - - - - 19,783 19,783

Plant and equipment - - - - - - - - 56,413 56,413

Total assets 8,221,520 2,492,209 2,114,631 1,131,381 7,644,809 1,888,668 1,854,495 10,967,666 1,318,699 37,634,078

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31. Financial risk management (continued)

iii. Analysis of assets and liabilities by remaining maturity (continued)

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific Group 7 days 1 month months months months years years 5 years maturity Total

2014 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities and shareholder’s funds

Deposits from customers 17,412,456 5,508,534 1,320,711 756,817 1,170,250 7,906 - - - 26,176,674

Deposits and placements of banks and other financial institutions 4,315,292 71,007 26,982 15,701 232,002 121,602 - - - 4,782,586

Bills and acceptances payable 564,641 (204,275) (190,669) (121,713) - - - - - 47,984

Other liabilities 1,266,834 88,677 93,487 106,670 82,346 141,102 91,784 17,903 396,009 2,284,812

Total liabilities 23,559,223 5,463,943 1,250,511 757,475 1,484,598 270,610 91,784 17,903 396,009 33,292,056

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 4,220,325 4,220,325

Total equity attributable to equity holder of the bank - - - - - - - - 4,342,022 4,342,022

Total liabilities and equity 23,559,223 5,463,943 1,250,511 757,475 1,484,598 270,610 91,784 17,903 4,738,031 37,634,078

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31. Financial risk management (continued)

iv. Analysis of financial liabilities by contractual undiscounted cash flows

The table below details the remaining contractual maturities at the reporting date of the Group’s financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or if floating, based on current rates at the reporting date) and the earliest date the Group can be required to pay.

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 27,353,699 28,257,734 20,357,268 1,137,995 5,485,656 1,276,815 -

Deposits and placements of banks and other financial institutions 4,428,296 4,432,944 4,197,434 49,388 186,122 - -

Bills and acceptances payable 50,341 50,341 338,737 (208,755) (79,641) - -

Other liabilities 2,603,189 2,603,189 1,495,977 64,417 622,978 410,797 9,020

Total 34,435,525 35,344,208 26,389,416 1,043,045 6,215,115 1,687,612 9,020

Total contractual Over 1 Over 3 Over Carrying undiscounted 1 month month to months to 1 year to Over Group Amount cash flows or less 3 months 1 year 5 years 5 years

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 26,176,674 26,405,824 23,071,972 1,340,968 1,984,621 8,263 -

Deposits and placements of banks and other financial institutions 4,782,586 4,783,737 4,386,516 27,068 248,551 121,602 -

Bills and acceptances payable 47,984 47,984 360,366 (190,669) (121,713) - -

Other liabilities 2,284,812 2,284,812 1,751,520 93,487 189,016 232,886 17,903

Total 33,292,056 33,522,357 29,570,374 1,270,854 2,300,475 362,751 17,903

The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the subsidiaries were eliminated in the above tables.

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31. Financial risk management (continued)

3. Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. It includes reputation and franchise risk associated with business practices or market conduct that the Group and the Bank may undertake and includes the risk of failing to comply with applicable laws, regulations and Citigroup policies.

Operational risk is inherent in the Group’s and the Bank’s business activities and is managed through an overall framework with checks and balances that include recognised ownership of the risk by businesses and independent risk management oversight. The Group and the Bank mitigate their operational risk by setting up its key controls and assessments according to Citigroup’s and Regulators’ standards. They are also evaluated, monitored, and managed by its sound governance structure.

The Group’s and the Bank’s Operational Risk Management clearly defines the Group’s and the Bank’s approach to operational risk management. The objective of the policy is to establish a consistent approach to assessing relevant risks and the overall control environment across the Group and the Bank, to facilitate adherence to regulatory requirements and other corporate initiatives.

32. Financial assets and liabilities

32.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

a. Loans and receivables (“L&R”);

b. Fair value through profit or loss (“FVTPL”):

- Held for trading (“HFT”);

c. Financial investments available-for-sale (“AFS”);

d. Other liabilities (“OL”).

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32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) - HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2015

Financial Assets

Cash and short term funds 9,883,187 9,883,187 - -

Deposits and placements with banks and other financial institutions 839,489 839,489 - -

Securities purchased under resale agreements 145,107 145,107 - -

Financial assets held-for-trading 846,298 - 846,298 -

Financial investments available-for-sale 1,086,935 - - 1,086,935

Loans, advances and financing 23,932,917 23,932,917 - -

Statutory deposits with Bank Negara Malaysia 544,910 544,910 - -

Derivatives financial assets 1,281,856 - 1,281,856 -

Other debtors and deposits 280,606 280,606 - -

Interest/Income receivable 23,456 23,456 - -

Total financial assets 38,864,761 35,649,672 2,128,154 1,086,935

Financial Liabilities

Deposits from customers 27,353,699 27,047,636 306,063 -

Deposits and placements of banks and other financial institutions 4,428,296 4,302,538 125,758 -

Bills and acceptances payable 50,341 50,341 - -

Derivatives financial liabilities 1,246,722 - 1,246,722 -

Other creditors and accruals 1,287,825 1,287,825 - -

Interest/Profit payable 42,995 42,995 - -

Total financial liabilities 34,409,878 32,731,335 1,678,543 -

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32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) - HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2014

Financial Assets

Cash and short-term funds 7,194,881 7,194,881 - -

Deposits and placements with banks and other financial institutions 104,628 104,628 - -

Securities purchased under resale agreements 1,079,867 1,079,867 - -

Financial assets held-for-trading 3,562,669 - 3,562,669 -

Financial investments available-for-sale 2,046,945 - - 2,046,945

Loans, advances and financing 21,641,546 21,641,546 - -

Statutory deposits with Bank Negara Malaysia 395,000 395,000 - -

Derivatives financial assets 916,922 - 916,922 -

Interest/Income receivable 43,774 43,774 - -

Total financial assets 36,986,232 30,459,696 4,479,591 2,046,945

Financial Liabilities

Deposits from customers 26,176,674 25,984,364 192,300 -

Deposits and placements of banks and other financial institutions 4,782,586 4,461,409 321,177 -

Bills and acceptances payable 47,984 47,984 - -

Derivatives financial liabilities 707,175 - 707,175 -

Interest/Profit payable 46,683 46,683 - -

Total financial liabilities 31,761,102 30,540,440 1,220,652 -

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32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy

MFRS 13 Fair Value Measurement requires each class of assets and liabilities measured at fair value in the statements of financial position after initial recognition to be categorised according to hierarchy that reflects the significance of inputs used in making the measurements, in particular, whether the inputs used are observable or unobservable as discussed in note 2(f)(vi).

32.2.1 Financial instruments carried at fair value

Level 1 Level 2 Level 3 Total

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

2015

Financial assets

Financial assets held-for-trading 846,298 - - 846,298

Financial investments available-for-sale 1,079,920 - 7,015 1,086,935

Derivative financial assets - 1,262,815 19,041 1,281,856

1,926,218 1,262,815 26,056 3,215,089

Financial liabilities

Deposits from customers - - 306,063 306,063

Deposits and placements of banks and other financial institutions - - 125,758 125,758

Derivative financial liabilities 1,246,722 - 1,246,722

- 1,246,722 431,821 1,678,543

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Level 1 Level 2 Level 3 Total

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

2014

Financial assets

Financial assets held-for-trading 3,562,669 - - 3,562,669

Financial investments available-for-sale 2,039,796 - 7,149 2,046,945

Derivative financial assets - 916,922 - 916,922

5,602,465 916,922 7,149 6,526,536

Financial liabilities

Deposits from customers - - 192,300 192,300

Deposits and placements of banks and other financial institutions - - 321,177 321,177

Derivative financial liabilities 707,041 134 707,175

- 707,041 513,611 1,220,652

32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy (continued)

32.2.1 Financial instruments carried at fair value (continued)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

Transfers between Level 1 and Level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial year (2014: no transfer in either directions).

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32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy (continued)

32.2.1 Financial instruments carried at fair value (continued)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

Group and Bank

2015 2014

RM’000 RM’000

Financial assets

Balance at 1 January 7,149 10,916

Purchases 19,041 -

Transfer into Level 3 - -

Total losses recognised in profit or loss: Attributable to losses relating to assets that have not been realised (134) (3,767)

Balance at 31 December 26,056 7,149

Financial liabilities

Balance at 1 January 513,611 463,768

Transfer into Level 3 - -

Total gains recognised in profit or loss: Attributable to (gains)/losses relating to assets that have not been realised (81,790) 49,843

Balance at 31 December 431,821 513,611

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32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy (continued)

32.2.1 Financial instruments carried at fair value (continued)

The following shows the valuation techniques used in the determination of fair values within Level 3.

a. Loans, advances and financing

Loans, advances and financing carried at fair value are those structured products (hybrid financial instruments) offered by the Group and the Bank. The fair values are estimated based on expected future cash flows of contractual installment payments and discounted at prevailing rates at the reporting date offered for similar products to new borrowers with similar credit profiles, where applicable. For impaired loans, if any, the fair values are deemed to approximate the carrying values, net of individual assessment allowance for bad and doubtful debts and financing. Collective assessment allowance is excluded from the carrying value.

b. Deposits from customers and deposits and placements of banks and other financial institutions

Deposits from customers and deposits and placements of banks and other financial institutions carried at fair value are those structured products (hybrid financial instruments) offered by the Group and the Bank. The fair values are estimated based on discounted contracted cash flows using rates currently offered for deposits of similar features and remaining maturities. The fair values of Islamic deposits are deemed to approximate their carrying values as at the reporting date as the profit rates are determined at the end of their holding periods based on the profit generated from the assets invested.

c. Derivative financial assets and liabilities

Fair values of financial instrument classified at Level 3 are determined using appropriate valuation technique which, includes the use of mathematical models, such as discounted cash flow models and option pricing models, comparison to similar instruments for which market observable prices exist and other valuation techniques. Valuation techniques used incorporate assumptions regarding discount rates, interest/profit rate yield curves, estimates of future cash flows and other factors, as applicable.

32.2.2 Financial instruments not carried at fair value

In respect of cash and short term funds, deposits and placements with banks and other financial institutions, securities purchased under resale agreements, other assets (excluding derivatives), bills and acceptances payable, and other liabilities (excluding derivatives), the carrying amounts in the statements of financial position approximate their fair values due to the relatively short term/on demand nature of these financial instruments.

The fair values of other financial assets, together with the carrying amounts shown in the statements of financial position, are as follows:

Carrying Level 1 Level 2 Level 3 Total Amount Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000

2015

Financial assets Loans, advances and financing - - 23,913,009 23,913,009 23,932,917

Financial liabilities Deposits from customers - - 27,354,222 27,354,222 27,047,636

Deposits and placement of banks and other financial institution - - 4,428,296 4,428,296 4,302,538

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32. Financial assets and liabilities (continued)

32.2 Determination of fair value and fair value hierarchy (continued)

32.2.2 Financial instruments not carried at fair value (continued)

Carrying Level 1 Level 2 Level 3 Total Amount Group and Bank RM’000 RM’000 RM’000 RM’000 RM’000

2014

Financial assets Loans, advances and financing - - 21,618,988 21,618,988 21,641,546

Financial liabilities Deposits from customers - - 26,176,605 26,176,605 25,984,364

Deposits and placement of banks and other financial institution - - 4,782,586 4,782,586 4,461,409

32.3 Offsetting of financial assets and liabilities

The Group and the Bank enters into derivative transactions under International Swaps and Derivatives Association (“ISDA”) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions are aggregated into a single net amount that is payable by one party to the other. In certain circumstances – e.g. when a credit event such as a default occurs, all outstanding agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.

The ISDA agreements do not meet the criteria for offsetting in the statements of financial position. This is because the Group and the Bank currently do not have any legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as a by the counterparty.

The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values at statements of financial position date. The fair value for loans, advances and financing, deposits from customers and deposit and placement of banks and other financial institutions are estimated with similar methodology as discussed in 32.2.1(a) and (b).

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32. Financial assets and liabilities (continued)

32.3 Offsetting of financial assets and liabilities (continued)

The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.

Related

Gross amount financial

recognized/ instrument

Amount that are not

presented offset but

in the subject to

statements of netting Net

Group and Bank financial position agreement amount

2015 RM’000 RM’000 RM’000

Derivative financial assets

Foreign exchange related contracts 1,119,822 (1,236) 1,118,586

Interest rate contracts 135,999 (30,723) 105,276

Equity related contracts 76 (21) 55

Other contracts 25,959 (776) 25,183

1,281,856 (32,756) 1,249,100

Derivative financial liabilities

Foreign exchange related contracts (1,083,552) 1,236 (1,082,316)

Interest rate contracts (122,768) 30,723 (92,045)

Equity related contracts (76) 21 (55)

Other contracts (40,326) 776 (39,550)

(1,246,722) 32,756 (1,213,966)

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32. Financial assets and liabilities (continued)

32.3 Offsetting of financial assets and liabilities (continued)

Related

Gross amount financial

recognized/ instrument

Amount that are not

presented offset but

in the subject to

statements of netting Net

Group and Bank financial position agreement amount

2014 RM’000 RM’000 RM’000

Derivative financial assets

Foreign exchange related contracts 720,865 (1,651) 719,214

Interest rate contracts 158,131 (42,572) 115,559

Equity related contracts 14,423 - 14,423

Other contracts 23,503 (89) 23,414

916,922 (44,312) 872,610

Derivative financial liabilities

Foreign exchange related contracts (517,343) 16,738 (500,605)

Interest rate contracts (138,529) - (138,529)

Equity related contracts (14,423) 14,829 406

Other contracts (36,880) 12,745 (24,135)

(707,175) 44,312 (662,863)

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33. Lease commitments

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

Group and Bank

2015 2014

RM’000 RM’000

Within 1 year 26,659 7,886

Between 1 and 5 years 28,126 2,911

54,785 10,797

34. Capital commitments Group and Bank

2015 2014

RM’000 RM’000

Capital expenditures:

Authorised and contracted for 2,095 2,410

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35. Capital adequacy

A. The capital adequacy ratios are as follows:

Group and Bank

2015 2014

RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 24,633,029 22,069,051

Total market RWA 3,008,049 2,318,795

Total operational RWA 3,425,132 3,401,571

Total Risk Weighted Asset 31,066,210 27,789,417

Computation of Capital Ratios

Common Equity Tier (I) (“CET I”) Capital 4,479,908 4,318,542

Tier 1 Capital 4,479,908 4,318,542

Total Capital 4,743,600 4,620,357

Before deducting proposed dividends:

CET I Capital ratio 14.421% 15.540%

Total Tier I Capital ratio 14.421% 15.540%

Total capital ratio 15.269% 16.626%

After deducting proposed dividends:

CET I Capital ratio 12.972% 14.101%

Total Tier I Capital ratio 12.972% 14.101%

Total Capital ratio 13.821% 15.187%

Detailed information on the risk exposures above are disclosed in the Pillar 3 disclosures of the annual report as prescribed under BNM’s Risk Weighted Capital Adequacy Framework (Basel II) – Disclosures requirements (Pillar 3).

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) dated 28 November 2012 and 27 June 2014 respectively. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components), the minimum capital adequacy requirement for common equity Tier I capital ratio and Tier I capital ratio are 4.0% and 5.5% respectively for year 2015. The minimum regulatory capital adequacy requirement remains at 8% (2014 – 8.0%) for total capital ratio.

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notes to the financial statements

35. Capital adequacy (continued)

B. The components of CET I, Tier I and Tier II Capital are as follows:

Group and Bank

2015 2014

RM’000 RM’000

Paid up ordinary share capital 121,697 121,697

Share premium 380,303 380,303

Retained profits 3,889,283 3,719,858

Other reserves 136,392 120,164

Less: Deferred tax assets (39,510) (19,783)

Defined benefit pension fund assets (4,894) (3,697)

55% of cumulative gains of AFS financial

instruments (other than financing and receivables) (3,363) -

Total CET I Capital/Tier I Capital 4,479,908 4,318,542

Innovative Tier 1 capital securities - -

Non-innovative Tier 1 stapled securities - -

Qualifying CET 1 and additional Tier 1 capital

instruments held by third parties - -

Total Tier I Capital 4,479,908 4,318,542

Tier II Capital

Collective impairment provisions* 263,692 301,815

Total Tier II Capital 263,692 301,815

Total Eligible Tier II Capital 263,692 301,815

Less: Investments in subsidiary companies - -

Total Capital 4,743,600 4,620,357

* Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM74.7 million (2014: RM78.9 million).

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notes to the financial statements

36. Commitments and contingencies

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows: 2015 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

RM’000 RM’000 RM’000

Nature of item

Direct credit substitutes 2,585,276 2,585,276 2,486,853

Transaction related contingent items 739,121 369,561 336,464

Short term self liquidating trade related contingencies 151,472 30,294 20,627

Forward asset purchases 58,119 58,119 29,060

Foreign exchange related contracts:

One year or less 23,994,873 1,098,214 893,918

Over one year to five years 4,031,535 751,415 331,948

Interest/Profit rate related contracts:

One year or less 3,943,805 12,271 3,819

Over one year to five years 13,333,771 366,412 121,033

Over five years 1,206,239 126,933 88,189

Equity related contracts:

One year or less 178,257 10,690 2,138

Over one year to five years 38,643 3,173 1,600

Debt security contracts and other commodity contracts:

One year or less 97,166 36,466 34,255

Over one year to five years 2,031 (548) 788

Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 950,880 475,440 341,274

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 6,993,398 - -

Unutilised credit card lines 19,431,595 3,886,319 2,929,867

Total 77,736,181 9,810,035 7,621,833

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notes to the financial statements

2014 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

RM’000 RM’000 RM’000

Nature of item

Direct credit substitutes 2,193,693 2,193,693 1,969,729

Transaction related contingent items 651,560 325,780 298,477

Short term self liquidating trade related contingencies 250,663 50,133 28,988

Forward asset purchases 309,561 309,561 50

Foreign exchange related contracts:

One year or less 25,826,352 978,066 688,789

Over one year to five years 2,871,232 398,784 191,752

Over five years - - -

Interest/Profit rate related contracts:

One year or less 4,246,358 16,202 5,044

Over one year to five years 10,572,943 335,688 105,039

Over five years 1,204,188 118,939 76,556

Equity related contracts:

One year or less 74,373 20,438 7,171

Over one year to five years 176,810 12,592 6,430

Over five years - - -

Debt security contracts and other commodity contracts:

One year or less 60,237 29,082 25,283

Over one year to five years 2,225 711 458

Over five years - - -

Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 516,896 103,379 103,379

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,275,523 637,762 468,730

Any commitments that are unconditionally cancelled at any time by the Bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 6,014,307 - -

Unutilised credit card lines 21,935,146 4,387,029 3,293,079

Total 78,182,067 9,917,839 7,268,954

36. Commitments and contingencies (continued)

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notes to the financial statements

37. The operations of Islamic Banking

Statement of financial position as at 31 December 2015

Bank

2015 2014

Note RM’000 RM’000

Assets

Cash and short term funds (a) 2,092,803 936,041

Financial assets held-for-trading (b) - 149,597

Financial investments available-for-sale (c) - 50,005

Financing, advances and other loans (d) 658,898 298,094

Other assets (f) 16,435 197,144

Total assets 2,768,136 1,630,881

Liabilities

Deposits from customers (g) 2,412,532 1,093,957

Deferred tax liabilities 803 1,023

Other liabilities (h) 30,709 226,274

Total liabilities 2,444,044 1,321,254

Islamic banking funds (i) 324,092 309,627

Total liabilities and Islamic banking funds 2,768,136 1,630,881

Commitments and contingencies (s) 476,035 664,359

The notes on pages 150 to 163 are an integral part of these financial statements.

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notes to the financial statements

37. The operations of Islamic Banking (continued)

Statement of profit or loss and other comprehensive income for the financial year ended 31 December 2015

Bank

2015 2014

Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 43,507 28,028

Provision for financing, advances and others (made)/written back (k) (18,978) 70

Total attributable income 24,529 28,098

Income attributable to depositors (l) (7,856) (7,136)

Total attributable to the Bank 16,673 20,962

Income derived from investment of Islamic Banking Funds (m) 3,804 7,613

Total net income 20,477 28,575

Other operating expenses (o) (1,191) (1,544)

Profit before taxation 19,286 27,031

Tax expense (p) (4,820) (9,670)

Profit for the year 14,466 17,361

Other comprehensive loss, net of tax Net loss on revaluation of financial investments available-for-sale (1) (99)

Total comprehensive income for the year 14,465 17,262

Profit for the year attributable to:

Owner of the Bank 14,466 17,361

Total comprehensive income attributable to:

Owner of the Bank 14,465 17,262

The notes on pages 150 to 163 are an integral part of these financial statements.

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notes to the financial statements

37. The operations of Islamic Banking (continued)

Statement of changes in Islamic Banking funds for the financial year ended 31 December 2015

Bank

Capital Fair value Retained

funds reserve profits Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2014 20,000 100 272,265 292,365

Fair value changes on financial investments available-for-sale - (99) - (99)

Total other comprehensive loss for the year - (99) - (99)

Profit for the year - - 17,361 17,361

Total comprehensive income for the year - (99) 17,361 17,262

At 31 December 2014/ 1 January 2015 20,000 1 289,626 309,627

Fair value changes on financial investments available-for-sale - (1) - (1)

Total other comprehensive loss for the year - (1) - (1)

Profit for the year - - 14,466 14,466

Total comprehensive income for the year - (1) 14,466 14,465

At 31 December 2015 20,000 - 304,092 324,092

Note 37(i)

The notes on pages 150 to 163 are an integral part of these financial statements.

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notes to the financial statements

37. The operations of Islamic Banking (continued)

Statement of cash flows for the financial year ended 31 December 2015

Bank

2015 2014

RM’000 RM’000

Cash flows from operating activities

Profit before taxation 19,286 27,031

Adjustments for:

Amortisation of premium less accretion of discount of investment securities (996) (3,522)

Provision for financing, advances and others made/(written back) 18,978 (70)

Mark-to-market gain on financial assets held-for-trading (8) (49)

Loss from sale of financial assets held-for-trading 158 -

Gain from sale of financial assets available-for-sale (41) -

Operating profit before working capital changes 37,377 23,390

Changes in working capital:

Financial assets held-for-trading 149,447 (139,797)

Financing, advances and others (379,782) 47,701

Other assets 175,953 (169,617)

Deposits from customers 1,318,575 99,327

Other liabilities (195,565) 153,165

Cash generated from in operating activities 1,106,005 14,169

Income taxes paid (284) (6,803)

Net cash generated from in operating activities 1,105,721 7,366

Cash flows from investing activities

Purchase of financial investments available-for-sale - (49,081)

Proceeds from disposal of financial investments available-for-sale 51,041 252,540

Net cash generated from/(used in) investing activities 51,041 203,459

Net increase in cash and cash equivalents 1,156,762 210,825

Cash and cash equivalents at 1 January 936,041 725,216

Cash and cash equivalents at 31 December (Note 37(a)) 2,092,803 936,041

The notes on pages 150 to 163 are an integral part of these financial statements.

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notes to the financial statements

37. The operations of Islamic Banking (continued)

a. Cash and short term funds Bank

2015 2014

RM’000 RM’000

Cash and balances with banks and other financial institutions 2,693 3,041

Money at call and deposit placements maturing within one month 2,090,110 933,000

2,092,803 936,041

b. Financial assets held-for-trading Bank

2015 2014

RM’000 RM’000

At fair value

Bank Negara Malaysia Islamic Bills - 149,597

c. Financial investments available-for-sale Bank

2015 2014

RM’000 RM’000

At fair value

Malaysian Government Investment Issues - 50,005

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notes to the financial statements

37. The operations of Islamic Banking (continued)

d. Financing, advances and others

i. By type Bank

2015 2014

RM’000 RM’000

Term financing

- Housing financing 261,916 312,032

- Other term financing 427,806 -

689,722 312,032

Unearned income (10,504) (12,595)

Gross financing, advances and others 679,218 299,437

Less:

Allowance for impaired financing, advances and others

- Collective assessment allowance (19,736) (687)

- Individual assessment allowance (584) (656)

Total net financing, advances and others 658,898 298,094

ii. By contract

Bai’Bithamin Ajil 17,370 20,096

Diminishing Musharakah 234,042 279,341

Murabahah 427,806 -

679,218 299,437

iii. By type of customer

Domestic business enterprises

- Others 428,344 562

Individuals 250,874 298,875

679,218 299,437

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notes to the financial statements

37. The operations of Islamic Banking (continued)

d. Financing, advances and others (continued)

iv. By profit rate sensitivity Bank

2015 2014

RM’000 RM’000

Fixed rate - Housing financing 251,412 299,437

Variable rate - Cost plus 427,806 -

679,218 299,437

v. By sector

Household - residential 250,874 298,875

Mining & quarrying 427,806 -

Other sectors 538 562

679,218 299,437

vi. By purpose

Purchase of landed property 251,412 299,437

Working Capital 427,806 -

679,218 299,437

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notes to the financial statements

37. The operations of Islamic Banking (continued)

e. Impaired financing, advances and others

i. Movements in impaired financing, advances and others are as follows:

Bank

2015 2014

RM’000 RM’000

At 1 January 9,557 10,840

Classified as impaired during the year 7,207 1,821

Reclassified as performing during the year (5,894) -

Amount recovered (1,794) (3,104)

At 31 December 9,076 9,557

Individual assessment allowance (584) (656)

Net impaired financing, advances and others 8,492 8,901

Ratio of net impaired financing, advances and others to total gross financing, advances and others less individual assessment allowance 1.25% 2.98%

ii. Movements in impairment provision for financing, advances and others are as follows:

Bank

2015 2014

RM’000 RM’000

Collective assessment allowance

At 1 January 687 615

Allowance made during the year 19,049 72

At 31 December 19,736 687

As % of gross financing, advances and others less individual assessment allowance 2.91% 0.23%

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notes to the financial statements

37. The operations of Islamic Banking (continued)

e. Impaired financing, advances and others (continued)

ii. Movements in impairment provision for financing, advances and others are as follows (continued):

Bank

2015 2014

RM’000 RM’000

Individual assessment allowance

At 1 January 656 808

Allowance made during the year 28 61

Allowance written back during the year (99) (203)

Amount written off (1) (10)

At 31 December 584 656

iii. Impaired financing, advances and others by sector

Bank

2015 2014

RM’000 RM’000

Household - residential 9,076 9,557

f. Other assets Bank

2015 2014

RM’000 RM’000

Profit receivables 433 957

Other debtors, deposits and prepayments 5,365 178,365

Revaluation gain on profit rate undertaking contracts (Note 37(t)) 5,814 17,755

Taxation 4,823 67

16,435 197,144

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notes to the financial statements

37. The operations of Islamic Banking (continued)

g. Deposits from customers

i. By type of deposit Bank

2015 2014

RM’000 RM’000

Non-Mudharabah Fund

Demand deposits 2,255,858 946,609

Saving deposits 60,318 53,994

Other deposits 10,776 7,071

Mudharabah Fund

General investment deposits - 703

Negotiable Instruments of Deposits 85,580 85,580

2,412,532 1,093,957

ii. By type of customer Bank

2015 2014

RM’000 RM’000

Government and statutory bodies 452,550 722,727

Business enterprises 1,861,441 280,744

Individuals 74,502 60,658

Others 24,039 29,828

2,412,532 1,093,957

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notes to the financial statements

37. The operations of Islamic Banking (continued)

h. Other liabilities Bank

2015 2014

RM’000 RM’000

Profit payable - 13

Other creditors and accruals 24,895 208,506

Revaluation loss on profit rate undertaking contracts (Note 37(t)) 5,814 17,755

30,709 226,274

i. Islamic Banking funds Bank

2015 2014

RM’000 RM’000

Fund allocated 20,000 20,000

Fair value reserve - 1

Retained earnings 304,092 289,626

324,092 309,627

j. Income derived from investment of depositors’ funds and others

Bank

2015 2014

RM’000 RM’000

Income derived from investment of:

(i) General investment deposits 40,588 25,233

(ii) Other deposits 2,919 2,795

43,507 28,028

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notes to the financial statements

37. The operations of Islamic Banking (continued)

j. Income derived from investment of depositors’ funds and others (continued)

i. Income derived from investment of general deposits

Bank

2015 2014

RM’000 RM’000

Finance income and hibah

Financing, advances and others 10,636 10,904

Money at call and placements with financial institutions 27,442 11,447

Income from financial investments available- for-sale 1,736 1,213

39,814 23,564

Accretion of discount less amortisation of premium 762 1,668

Total finance income and hibah 40,576 25,232

Other operating income

Fee income 12 1

Income from general investment deposits 40,588 25,233

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notes to the financial statements

37. The operations of Islamic Banking (continued)

j. Income derived from investment of depositors’ funds and others (continued)

ii. Income derived from investment of other deposits Bank

2015 2014

RM’000 RM’000

Finance income and hibah

Financing, advances and others 765 1,208

Money at call and placements with financial institutions 1,973 1,268

Income from financial investments available- for-sale 125 134

2,863 2,610

Accretion of discount less amortisation of premium 55 185

Total finance income and hibah 2,918 2,795

Other operating income

Fee income 1 -

Income from investment of other deposits 2,919 2,795

k. Provision for financing, advances and others (made)/written back

Bank

2015 2014

RM’000 RM’000

Individual assessment allowance

- made during the year (28) (61)

- written back 99 203

Collective assessment allowance

- made during the year (19,049) (72)

(18,978) 70

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notes to the financial statements

37. The operations of Islamic Banking (continued)

l. Income attributable to depositors

Bank

2015 2014

RM’000 RM’000

Deposits from customers

- Mudharabah Fund 5,235 4,181

- Non-Mudharabah Fund 2,530 2,899

Others 91 56

7,856 7,136

m. Income derived from investment of Islamic Banking funds

Bank

2015 2014

RM’000 RM’000

Financing, advances and others 2,556 3,504

Money at call and placements with financial institutions 6,594 3,679

Income from financial investments available-for-sale 67 390

Income from securities held-for-trading 350 -

9,567 7,573

Accretion of discount less amortisation of premium 180 1,669

Total finance income and hibah 9,747 9,242

Other operating income

(Loss)/Gain from financial assets held-for-trading (150) 49

Gain from financial investments available-for-sale 41 -

Fee income 521 637

(Loss)/Gain from trading activities (6,355) (2,346)

Insurance premium and referral - 31

(5,984) (1,629)

Income from Islamic Banking Capital Funds 3,804 7,613

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notes to the financial statements

37. The operations of Islamic Banking (continued)

n. Income from Islamic banking operations

For consolidation with the conventional operations, income from Islamic Banking operations comprises the following:

Bank

2015 2014

Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 43,507 28,028

Income attributable to depositors (l) (7,856) (7,136)

Income derived from investment of Islamic Banking Funds (m) 3,804 7,613

39,455 28,505

o. Other operating expenses Bank

2015 2014

RM’000 RM’000

Personnel costs

- Staff allowances and benefits 110 32

- Others - 156

Establishment costs

- Rental 20 22

- Others 30 66

Administrative and general expenses

- Others 1,031 1,268

1,191 1,544

Included in other operating expenses is the Shariah Committee’s remuneration of RM257,000 (2014: RM306,000).

p. Taxation Bank

2015 2014

RM’000 RM’000

Current tax expense 5,040 6,869

Deferred tax (income)/expense (220) 2,801

4,820 9,670

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notes to the financial statements

37. The operations of Islamic Banking (continued)

q. Zakat

Zakat is compulsory for business activities. According to the principles of Shariah, the Muslim shareholders of the Bank are obliged to make the payment. Thus, the Bank is not responsible for the collection or payment of zakat on behalf of its Muslim shareholders and depositors as resolved by its Shariah Committee.

As of 31 December 2015, the shareholding of Citibank Berhad is 100% owned by Citigroup Holding Singapore Pte. Ltd., hence no assessment was made on zakat payable.

r. Capital adequacy

i. The capital adequacy ratios are as follows: Bank

2015 2014

RM’000 RM’000

Computation of Total Risk Weighted

Assets (“RWA”)

Total credit RWA 97,830 121,945

Total market RWA 47,722 159,484

Total operational RWA 73,044 73,038

Total Risk Weighted Assets 218,596 354,467

Computation of Capital Ratios

Common Equity Tier (I) (“CET I”) Capital 324,092 309,626

Tier 1 Capital 324,092 309,626

Total Capital 343,590 309,943

CET I Capital Ratio 148.261% 87.350%

Total Tier I Capital Ratio 148.261% 87.350%

Total Capital Ratio 157.180% 87.439%

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components and Basel II – Risk- weighted Assets) dated 28 November 2012 and 27 June 2014 respectively. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components), the minimum capital adequacy requirement for common equity Tier I capital ratio and Tier I capital ratio are 4.0% and 5.5% respectively for year 2015. The minimum regulatory capital adequacy requirement remains at 8.0% (2014 – 8.0%) for total capital ratio.

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notes to the financial statements

37. The operations of Islamic Banking (continued)

r. Capital adequacy (continued)

ii. The components of CET I, Tier I and Tier II Capital are as follows:

Bank

2015 2014

RM’000 RM’000

Fund allocated 20,000 20,000

Retained earnings 304,092 289,626

Other reserves - 1

Less: Deferred tax assets

55% of cumulative gains of AFS financial

instruments (other than financing and

receivables) - (1)

Total CET I Capital/Tier I Capital 324,092 309,626

Tier II Capital

Collective impairment provisions* 19,498 317

Total Tier II Capital 19,498 317

Total Capital 343,590 309,943

* Excludes collective assessment allowance on impaired financing restricted from Tier II Capital by BNM of RM238,000 (2014 – RM370,000).

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37. The operations of Islamic Banking (continued)

s. Commitments and contingencies

The off-balance sheet exposures and their related counterparty credit risk of the Bank for each reporting dates are as follows:

Credit Risk Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

2015

Profit rate related contracts:

One year or less - - -

Over one year to five years 475,000 13,801 2,760

Over five years - - -

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 1,035 518 385

Total 476,035 14,319 3,145

2014

Profit rate related contracts:

One year or less - - -

Over one year to five years 585,000 27,584 5,517

Over five years 75,000 8,321 1,664

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 4,359 2,179 1,579

Total 664,359 38,084 8,760

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Positive Negative

Contract fair fair

amount value value

RM’000 RM’000 RM’000

2015

Islamic profit rate undertaking contracts 950,000 5,814 5,814

2014

Islamic profit rate undertaking contracts 1,420,000 17,755 17,755

Note 37(f) Note 37(h)

37. The operations of Islamic Banking (continued)

t. Derivative financial instruments

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Effective

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

Bank month months months years years sensitive book Total rate

2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 2,090,110 - - - - 2,693 - 2,092,803 2,09%

Financing, advances and others

- performing - 4 118 5,542 664,478 (19,736) - 650,406 3.78%

- impaired - - - - - 8,492 - 8,492

Deferred tax assets - - - - - - - -

Others assets - - - - - 10,621 5,814 16,435

Total assets 2,090,110 4 118 5,542 664,478 2,070 5,814 2,768,136

Liabilities and Islamic Banking funds

Deposits from customers 2,316,176 96,356 - - - - - 2,412,532 0.43%

Deferred tax liabilities - - - - - 80 - 80

Other liabilities - - - - - 24,895 5,814 30,709

Total liabilities 2,316,176 96,356 - - - 25,698 5,814 2,444,044

Islamic Banking funds - - - - - 324,092 - 324,092

Total liabilities and Islamic Banking funds 2,316,176 96,356 - - - 349,790 5,814 2,768,136

On-balance sheet profit

sensitivity gap (226,066) (96,352) 118 5,542 664,478 (347,720) -

37. The operations of Islamic Banking (continued)

u. Profit rate risk

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37. The operations of Islamic Banking (continued)

u. Profit rate risk (continued)

Effective

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

Bank month months months years years sensitive book Total rate

2014 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 933,000 - - - - 3,041 - 936,041 1.75%

Financial assets held-for-trading - - - - - - 149,597 149,597 3.02%

Financial investments available-for-sale - - 50,005 - - - - 50,005 3.44%

Financing, advances and others

- performing 565 33 318 7,071 281,893 (687) - 289,193 4.94%

- impaired - - - - - 8,901 - 8,901

Deferred tax assets - - - - - - - -

Others assets - - - - - 179,389 17,755 197,144

Total assets 933,565 33 50,323 7,071 281,893 190,644 167,352 1,630,881

Liabilities and

Islamic Banking funds

Deposits from customers 1,000,659 416 232 92,650 - - - 1,093,957 0.67%

Deferred tax liabilities - - - - - 1,023 - 1,023

Other liabilities - - - - - 208,519 17,755 226,274

Total liabilities 1,000,659 416 232 92,650 - 209,542 17,755 1,321,254

Islamic Banking funds - - - - - 309,627 - 309,627

Total liabilities and Islamic

Banking funds 1,000,659 416 232 92,650 - 519,169 17,755 1,630,881

On-balance sheet profit sensitivity gap (67,094) (383) 50,091 (85,579) 281,893 (328,525) 149,597

CITIBANK BERHAD (297089M)

45th Floor, Menara Citibank, 165 Jalan Ampang, 50450 Kuala Lumpur

Tel : +603 2383 8585

Fax : +603 2383 6000

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