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CONTENTS

2 Corporate Information

3 Chairman’s Statement

4 CEO’s Statement

9 Board of Directors

10 Board of Directors - Profile

14 Statement of Corporate Governance

19 Risk Management

20 Statement of Internal Audit and

Internal Control

21 Management Reports

22 Shariah Committee

24 Ratings Statement

25 Awards & Accolades

26 Corporate Citizenship at Citi

29 Valuing Our People

32 Directors’ Report

35 Statement by Directors

36 Statutory Declaration

37 Shariah Committee‘s Report

38 Independent Auditors’ Report

39 Statements of Financial Position

40 Statements of Comprehensive Income

4 1 Statements of Changes in Equity

42 Statements of Cash Flows

44 Notes to the Financial Statements

CORPORATEINFORMATIONRegistered office45th FloorMenara Citibank165 Jalan Ampang50450 Kuala Lumpur

Date ofincorporation 22 April 1994

AuditorsKPMG

It is my pleasure to present the Bank's annual report for the financial year ending 31 December 2011 . I would like to thank the members of the board and staff of Citibank for their commitment and support as we further strengthen our position as a leading financial institution in Malaysia. We can look back on 2011 and be proud of a number of achievements.

Our parent company Citigroup reported net income of $11 .1 billion for the full year 2011 , an increase of 4% over 2010. It was a solid full-year performance despite a very challenging fourth quarter due to depressed global market conditions.

In Asia Pacific, our operational model has weathered tough times to deliver revenues of over $15 billion and net income of $4 billion for 2011 . Our revenue was up by 5% over 2010 and we remained the largest regional contributor to global revenue outside North America.

In Malaysia, we operated under stable economic conditions as the fourth quarter of 2011 exceeded our expectations with 5.2% year-on-year GDP growth. Fiscal spending provided an effective buffer against the export slowdown and external supply disruptions. Government consumption growth accelerated to a 12-year high, private consumption remained buoyant and fixed investments growth continued to accelerate, driven by private sector and non-financial public enterprise capital spending.

It is with great sadness that I report we lost one of our longest-serving directors of Citibank Berhad, Allahyarham YBhg Dato’ Haji Syed Sidi Idid who passed away in February 2012. Allahyarham joined Citibank Berhad in 2000 and was also the chairman of the Audit Committee and a member of the Risk Management and Nominating Committees. Apart from his outstanding work with Citibank Berhad, he also proudly worked in the civil service of Malaysia. On behalf of Citibank Berhad, we express our deepest sympathies and sincere condolences to YBhg Datin Noorashikin Abdullah and her family.

C i t i b a n k B e r h a d l 2 0 1 1 A n n u a l R e p o r t 0 0 3

CHAIRMAN’SSTATEMENT

In 2012, the Malaysian Government looks set to continue focusing on domestic demand and spending to maintain economic growth momentum and rebalance risk in response to an uncertain global economy.

One significant development is Bank Negara Malaysia’s Guidelines on Responsible Financing. The Guidelines came into effect on 1 January to promote prudent, responsible and transparent retail financing practices, to ensure the credit market remains resilient, and to curb household debt. Measures include pegging loans to people's disposable net (instead of gross) income and limiting the tenure of car loans. These measures will likely cause the consumer loans sector slowdown to continue as Malaysians adjust their spending habits on big ticket items such as property and cars.

2012 marks Citi's 200th anniversary. This milestone is our golden opportunity to further build trust and confidence in Citi's proud legacy and core principles that have stood us in good stead through two centuries. We will continue to drive excellence by being the bank that connects better - bringing people the best ideas and resources anywhere in an increasingly dynamic world. This means strengthening client relationships, reducing costs while remaining productive and efficient, and delivering the earnings that contribute to our capital strength.

With our world-class team of employees and the right controls in place to protect our brand and reputation, I am confident we will deliver on our goals.

Jonathan Christian LarsenChairman

C i t i b a n k B e r h a d l 2 0 1 1 A n n u a l R e p o r t0 0 4

CEO’SSTATEMENTOverviewIn 2011 , the Malaysian Government responded to the deteriorating external outlook by supporting domestic demand with fiscal policy, with a renewed focus on consumer spending. Bank Negara Malaysia (BNM) took prudent pre-emptive measures to tighten mortgage lending to curb speculative property purchases and risky lending by banks. It also signalled BNM’s concerns over the country’s high household debt. New credit card rules also came into effect for lower-income earners.

The local banking sector demonstrated continued profitability, high levels of capitalisation and healthy growth in the loans sector. Overall, the industry remained relatively unscathed by the global financial crisis and widespread recession due to the strong fundamentals already in place.

The Year in ReviewCitibank registered a positive performance in 2011 . The Bank’s strong performance was contributed by high levels of capital, liquidity and operating cash flows.

For the financial year ended 31 December 2011 , the Bank registered a pre-tax profit of RM855 million, compared with RM834 million achieved the previous year. We focused our initiatives mainly on investing in infrastructure, growing talent and building our brand.

Total net income was RM1.89 billion in 2011 , a marginal increase from 2010. The Bank's return on equity before tax decreased to 22.4% for the financial period ended 31 December 2011 compared with 24.2% in 2010. Our liquidity continues to be exceptionally strong, with cash and short-term funds and placements with financial institutions in excess of RM13.5 billion.

The bank's risk weighted capital adequacy ratio stood at a comfortable 15.3% (before dividend), based on its audited

capital base as at 31 December 2011 . The Bank's net interest income was RM1.20 billion in 2011 while non-interest income increased to RM659 million in 2011 from RM573 million in 2010.

Business Highlights in 2011Citibank achieved many business successes in 2011 despite increased competition following the introduction of more liberalisation measures in the financial industry in 2010.

We continued our relentless drive to implement major innovation and campaigns across our different product lines and financial services that cemented our position as one of the leading foreign banks in the country.

Citi acted as the joint book runner for the multiple award winning Wakala Global Sukuk issued by Government of Malaysia. With a total issuance size of USD 2.0 billion in two separate tranches, the Wakala Global Sukuk is the largest sovereign Sukuk ever issued.

Citibank went live on the Malaysian Electronic Payment System Sdn Bhd (MEPS) network for the first time in February. In addition to 1 .9 million Citibank and Visa ATMs in over 200 countries, customers now enjoy added convenience through access to over 1 1 ,000 ATMs nationwide through 20 MEPS member banks covering 2,000 locations nationwide. This completed the process started in 2005 when Citibank became the first foreign bank in Malaysia to gain complete access to the MEPS Interbank GIRO.

We continued to strengthen the Citibank brand reputation for innovation in customer service with the launch of our first state-of-the-art Smart Banking branch, underlining our commitment to customers and its continued investments in Malaysia. The Citibank Smart Banking branch in Malaysia is also Citi’s largest smart banking branch in the region.

C E O ’ S S TAT E M E N T


For more than 50 years, we have retained our position as one of the leading foreign banks in Malaysia by engaging and listening to our customers and bringing unparalleled value to our Malaysian clients. As a franchise, we strategically leverage on our global reach, expertise and capabilities to adapt, innovate and provide best-in-class financial solutions and services.

We retained our leadership positions in credit cards, FX Options, Government Bond Trading, Securities Clearing & Settlement, and Cash Management. We are also amongst the top three in the Wealth Management segment.

Consumer Banking

Credit CardsCitibank Credit Cards maintained its leadership position in cards usage by enhancing its value proposition in two ways: introducing new products in line with the impact of the economic realities on our customers, and improving existing products to help them get more out of their credit card.

Based on customers’ expectations and needs, we increased our value proposition with the introduction of two timely and relevant market leading products: the Shell Citibank Gold Credit Card and the Giant-Citibank Credit Card. These products have been designed to meet our customers’ increasing price sensitivity and demand for value for money in their shopping habits.

With petrol being a compulsory item in most household budgets, our new Shell Citibank Gold Credit Card helped customers save and stretch their monthly budgets by offering the highest fuel rebate in the market. Malaysian drivers using the card could accumulate up to 8% rebate in savings on Shell fuels and all purchases in Shell Select or Kedai.

We targeted the impact of rising food prices with the launch of the Giant-Citibank Credit Card which set new industry benchmarks with the highest rebates for daily grocery purchases in the market. By consolidating their monthly spend on the Giant-Citibank Credit Card, customers earned up to 5% rebate on purchases made at Giant stores and up to 2% rebate on selected utilities and dining spending. Additional benefits include exclusive member prices, extra rebates during special occasions, festive seasons and new store openings; and discounts and privileges at over 40,000 local and global merchant partners’ outlets.

Citibank also continued our commitment to building lasting credit card partnerships with major Malaysian brands. We started the year by strengthening our long-running partnership with Sen Heng, Malaysia’s leading consumer electrical and electronics retail chain store, with the Sen Heng Double Awards promotion. Through this promotion, Citibank card customers earned 2 to 3 times the number of Rewards Points which helped them obtain other products without spending additional cash.

In May, we celebrated the third anniversary of the AirAsia-Citibank credit card by presenting 10 winners with

10 pairs of flight tickets with Premium Flatbeds to Korea. Another 10 members won Sen Heng vouchers worth a total of RM2,000 while another 10 card members were given 300,000 AirAsia-Citibank Rewards Points.

We kept the benefits our customers expect as part of the Citibank lifestyle coming, starting with giving a pair of exclusive backstage passes each to 4 winners of the Citibank “Meet Maroon 5 Backstage” contest. In Johor Baru, 2 customers won a pair of tickets each to Seoul, Korea as part of the “Citibank Credit Card JB City Square Shopping Campaign Contest”. We partnered with MPH Group Malaysia to offer exclusive deals to our customers at the MPH 2011 Carnival. We also collaborated with group-discount website, “I Love Discounts” on the three-month “Big Deals Thursday” campaign aimed at our customers and Facebook fans.

Launched in conjunction with the year-end holidays and festivities, Citi’s “Year End Rewards” campaign marked the first time Citibank was concurrently present in 9 of the country’s biggest shopping malls in one campaign. Treats included premium gifts; instant redemption of gifts at Citibank booths with discounts of up to 55% at KLCC Suria and Queensbay Mall; and shopping, dining and entertainment offers at over 1 ,360 outlets nationwide. Customers with insufficient Rewards Points could charge the remaining balance to their credit cards to save on cash towards their holiday purchases. New customers who signed up during the campaign collected their card within an hour of application. They also enjoyed a RM150 cash back offer if they signed up for Citibank PremierMiles, Platinum, Cash Back Platinum or Shell Citibank Gold Credit Card.

In recognition of our initiatives and performance in 2011 , Citibank credit cards won 4 awards in the Visa Malaysia Bank Awards. Awards included excellence and innovation in launching new Visa products, effective marketing programmes and campaigns, highest purchase volume growth for both credit and debit products and best Visa programme innovation.

Along with all the business improvements to its customer value proposition, the entire Cards industry had to adapt to significant changes as a result of new regulatory guidelines issued by the central bank. Majority of the changes have already been implemented, and the business is managing the policy changes while ensuring business growth momentum.

Our ongoing leadership position can be attributed to our comprehensive range of payment product suite, innovative value propositions, compelling promotions and discounts, exemplary service, solid brand, strong and talented people as well as our global and regional presence.

Retail BankingIn an increasingly competitive market, we have consistently stayed one step ahead of our competitors through our unparalleled expertise in and commitment to understanding customers’ needs and matching our products to their needs.

We increased our revenue and client base by double digits,

which helped further strengthen our market share and



ranking in the Wealth Management industry. We remain the

market leader for unit trust among the institutional unit

trust agents in the country and we continue to take steps to

enhance our Global Banking capabilities through services

including Global View of Accounts (“GVA”) and Citi Global

Transfer (“CGT”) in order to continue meeting our clients’

needs in this area.

In July, Citigroup First Investment Management Ltd. and

HwangDBS Investment Management Bhd. launched the

HwangDBS China Select Fund. This first-of-its-kind feeder fund

allowed qualified Malaysian investors who were risk tolerant,

seek capital appreciation and have a long-term investment

horizon, to benefit from the expertise of China’s leading asset

management company and the growth opportunities of China

companies listed locally and globally. The HwangDBS China

Select Fund was exclusively distributed by Citibank Berhad

during the initial offer period from 11 July to 31 July.

Our first Smart Banking branch at Menara Citibank redefined

the way we interact with our clients, aligned with our

commitment to be at forefront of innovation leveraging new

technologies to make banking simpler, more informative and

readily accessible when and where customer need or want it.

The Smart Banking branch is equipped with cutting edge

facilities such as the Citi Interactive Media Wall that displays

a diverse range of information; the Citi Work Bench that

allows customers to conduct certain banking transactions

independently; and Citi video conferencing facility that

customers can use to obtain expert opinion from Citibank

specialists. We also built a state-of-the-art Citigold centre with 17

private consultation rooms and dedicated tellers to exclusively

service the wealth management needs of Citigold clients.

MortgageBank Negara’s 2010 introduction of measures to regulate

the mortgage industry with new regulations such as Product

Transparency guidelines and LTV controls to ensure the

mortgage industry stayed relatively healthy, stable and fair.

As the regulators become more conscious about household

debt, we observe prudent lending guidelines slowly being

introduced to the market.

In 2011 , we continued our strategy to focus on cross-selling

of Mortgages into our existing customer base, building

relationship with prime developers, improving the value-added

proposition of our mortgage products and sustaining a high

performing direct sales force.

In October, we celebrated the first anniversary of “LifeStyle”, a

unique value proposition to our Citibank Home Loan customers

that gives home owners opportunities to save, enjoy, meet,

learn, access and manage funds between accounts effectively.

We will continue leveraging on LifeStyle to build customer

loyalty, satisfaction and line usage.

Institutional Clients Group

Global Transaction Services

Treasury and Trade SolutionsCiti’s corporate clients continued to benefit from the operational efficiency, control and security offered by our cash management platforms and solutions. Momentum remained strong and we leveraged our global network and ongoing investment in technology to build and deepen our wallet share across a broad segment of clients including local corporate, multinational corporations and financial institutions. Citi continued to play an important role in the drive to migrate to electronic payment channels, launching new services for SOCSO and Lembaga Hasil Dalam Negeri statutory payments.

Citi experienced significant growth in trade financing volume by facilitating intra-Asia trade for our clients. Citi was able to offer our corporate clients innovative, end-to-end trade solutions which enabled our clients to expand their own sales network and better manage their working capital cycles.

The bank once again won accolades for “Best Foreign Cash Management Bank in Malaysia” by Asiamoney and “Best Domestic Trade Finance Bank” by Euromoney in industry polls conducted by these publications respectively.

Securities ServicesCiti’s Securities and Fund Services (SFS) experienced strong growth in both Asset Under Custody (AUC) and transaction volumes with improved market condition and various local mandates won. SFS continued its success in the public sector which saw 2 more significant deals implemented, elevating Citi’s standing as the preferred custodian in this category.

During the year Citi participated actively in the development of a number of market initiatives, including the Central Matching Facility and Securities Borrowing and Lending Negotiated Transaction program.

On the client service front, Citi was top-rated in the 2011 Global Custodian Emerging Markets survey. Citi was the only Malaysian custodian to achieve top scores in all the client segments (Leading Clients, Cross Border Clients and Domestic Clients) in the survey.

Securities and Banking

Global MarketsThe markets business continued to deliver strong revenues on the back of trade and capital flows in 2011. Market conditions were challenging with the frequent risk-off sentiment triggered by the unravelling of further contagion with the European nations. Local conditions fortunately were for the most part unfazed by the European debt episode and with BNM continued to hike with a 0.25% increase in the OPR rate. FX & bond trading revenues enjoyed the lift from significant foreign portfolio inflows into the Malaysian bond markets, but



our investment book was affected by further narrowing the interest-carry returns for MYR bonds. The bank continued its focus on providing innovative, leading-edge solutions to its clients, both for investments and hedging, resulting in continued healthy growth in derivatives and structured investments.

Notable progress was made in 2011 on structured credit investments, namely credit linked notes which saw promising demand from our institutional investor clients. We continued to help customers in various services and industries manage commodity, FX and interest rate risks through the volatilities and event driven risk that was evident in much of 2011 . Our efforts also entailed affording unparalleled access to our clients to leverage our unique global footprint and harness the prowess of our network and various product platforms as clients considered investment opportunities around the globe across various product classes. Our preeminent position in government bonds and FX services was also reaffirmed by our clients in industry surveys.

Islamic Banking DivisionIn 2011 , Citi acted as the joint book runner for the multiple award winning Wakala Global Sukuk issued by Government of Malaysia. With a total issuance size of USD 2.0 billion in two separate tranches, the Wakala Global Sukuk is the largest sovereign Sukuk ever issued. The offering was well subscribed by investors globally, providing the Government of Malaysia with a diversified and attractive source of funding.

For Global Transaction Services, Citi successfully inducted its first client for its Shariah compliant Custody and Fund Administration Services. It also successfully completed the implementation of a multi country Shariah compliant cash management solution for a Malaysian financial institution, further complementing the Government’s effort to make Malaysia an international centre for Islamic Finance by providing critical support infrastructure to its participants.

Significant Events & AccoladesThe bank achieved several ‘firsts’ and a list of accolades, which is mentioned later in this report on page 25.

The Community We Work and Live InA large aspect of our corporate citizenship in Malaysia 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.

We received an investment in excess of USD200,000 from Citi Foundation and worked with partners to:

• Educate 24 million Malaysians through our Stretching Your Ringgit series of financial infomercials on ASTRO. In addition, we expanded this programme to include workshops on basic financial education for over 500 kindergarten children.

• Introduce 540 high school students from Kuala Lumpur and Penang to the basics of stock market and raise their financial management capabilities along side with investment knowledge through the Citi Stock Challenge.

• Equip low-income families living in poor housing in Kuala Lumpur with practical financial knowledge as part of a home improvement initiative led by Habitat for Humanity.

Our PeopleOur work would not be possible without the strength of a diverse and skilled workforce. Citibank ensures that our people are equipped with the support systems needed to realise their professional growth, make meaningful contributions and develop pride in their work.

Throughout the year, we made good progress on delivering “The Citibanker Differencer” for our employees. The Leadership Enhancement & Accelerated Development (L.E.A.D) programme provided accelerated career development opportunities for 169 top-of-class employees across the board whose performance ranks in the 95th percentile. We hired 14 Management Associates and 27 Graduate Executives as part of our ongoing goal to attract the very best talent. Both mandatory functional and technical training was conducted totalling more than 23,000 training hours for 1,328 employees achieved.

Apart from formal professional development, the success of the VOE programmes held throughout the year led to improvements across the franchise from 77% to 79%.

The distinct perspectives of our employees all bring added value to our clients and customers, and with Citibank’s strong tradition of employee volunteerism ensures that our collective passion and talents are put to use outside the workplace as well.

Key Business Priorities for 2012Our key business priorities are as follows:

• Ensure diligent risk management practices with continuous emphasis on asset quality.

• Focus our investments on driving innovations and relevant value propositions for our customers.

• Drive operational efficiencies.

• Leverage our competitive advantage in global and emerging markets by providing intraregional connectivity through treasury, transactions services and wealth management.

• Strengthen our leadership positions in credit cards, and the affluent segment.

• Build our brand strategy to present our company in a powerful, consistent way and enhance customer delivery, satisfaction and retention.

• Continue to identify, build and develop talent.



Outlook for 2012Strong domestic demand, increased government spending and major projects will be the growth drivers for Malaysia’s economy this year. This is similar to the last three years where the economy had been driven by domestic demand.

Malaysia has not been spared by global developments, especially those in Europe and the US, but with more than 50% of the country’s trade is with Asia, its export demand has been somewhat sustained. Household debt seems to be a more important factor driving rate decisions, as policymakers reiterate that macro-prudential measures will be ineffective if interest rates are not normalised. While headline inflation is expected to moderate in 2012, there is still upside risks to inflation emerging from supply disruptions as well as higher energy and commodity prices.

Private consumption will be supported by stable employment conditions, income growth and public sector measures. Investment activity will be supported by the domestic-oriented industries, the commodity sector and the public sector.

Citi is well-positioned to seize the opportunities rising from the market trends for our client’s benefit and for the overall Malaysian economy. We will continue to maximise the value we already have – such as our unmatched global presence – and by creating new value through investments in people, technology and services.

Sanjeev NanavatiChief Executive Officer

BOARD OF DIRECTORS

From left to right - Ms. Khairatul Ilyana Kamaruddin (Company Secretary), Ms. Tang Wan Chee (Company Secretary),

Mr. Terence Kent Cuddyre, Tan Sri Dato’ Hj Omar B. Ibrahim, Mr. Sanjeev Nanavati, Mr. Jonathan Christian Larsen,

Ms. Agnes Liew Yun Chong, Dato’ Siow Kim Lun and Ms. Ho Li Chin (Company Secretary)


B o a r d o f D i r e c t o r s - P r o f i l e


Mr. Jonathan Larsen is Citi’s Head of Consumer Banking for Asia Pacific. Citibank is Asia Pacific's pre-eminent retail bank and credit card issuer with over 32 million customer accounts and close to 700 branches in Asia Pacific in 14 countries.

In 2011, Citibank reported revenues in its Asia Pacific Consumer Business of US$8 billion, accounting for close to 25% of Citi’s consumer banking revenues globally. Net income was US$1.9 billion, representing over 30% of Citibank’s Consumer Banking net income globally.

Citibank is the leading financial services brand in Asia. It has industry leading positions in credit cards and personal wealth management across the region. Mr Larsen also has oversight of Citi's Local Commercial Banking business covering the small and medium enterprises across Asia Pacific with sales of up to US$500 million. Appointed to his current role in October 2009, Mr Larsen is a member of Citi's Asia Pacific Executive Committee and Citi’s Global Consumer Management Committee.

Mr. Larsen joined Citi in 1998 and has held various leadership roles across Asia Pacific. Prior to his current role, Mr Larsen was the Country Head and Citi Country Officer for Singapore and CEO of Citibank Singapore Limited, with oversight of the Institutional Clients Group, Consumer Banking and Global Wealth Management businesses. He assumed this role in September 2008, and concurrently held the position of Product Head for Consumer Banking in the ASEAN region.

Under Mr Larsen’s leadership, Citi was named the Best Bank in Singapore by Euromoney in 2007 and 2009. During his tenure, Citi in Singapore also won the Best Bank Award from The Asset, the Best Foreign Commercial Bank Award from FinanceAsia and the Best Retail Bank Award from The Asian Banker.

He was appointed in April 2005 as the Country Business Manager and CEO for Citibank Singapore Ltd. In this role, he was instrumental in transforming Citibank’s presence from five customer touch points to over 800 and repositioning Citibank as a mainstream retail bank in Singapore. From August 2007, he assumed the additional role of Head of Citi’s Global Consumer Business across South East Asia. Prior to these roles, he was Head of Retail Banking in Asia Pacific and Head of Business Development. In this latter role he led a number of M&A transactions to expand Citi's business in Korea (acquisition of Koram Bank in 2004), China (investment in and strategic alliance with the Shanghai Pudong Development Bank in 2002) and Japan (acquisition of Diners Club Japan, 2000).

Before joining Citi, Mr. Larsen was a Principal in the Financial Services Group of global management consultancy firm Booz, Allen & Hamilton (now Booz & Co). Mr Larsen spent eight years with Booz, Allen, advising major financial institutions across Asia, Europe and the United States and was a recipient of the firm’s Professional Excellence Award. Mr. Larsen began his career at the insurance and banking operations of the National Mutual Group in Australia and New Zealand (now part of AXA).

Mr. Larsen is Chairman of Citibank Berhad in Malaysia and a Director of Citibank Singapore Limited. He has also served as a member of the Advisory Board of the National University of Singapore Business School. In 2011 Mr Larsen was named by The Asian Banker magazine as Retail Banker of the Year for Asia Pacific.

Mr. Larsen holds a Bachelor of Arts with Honours (First Class) from the University of Melbourne where he was awarded the Enid Derham Prize for 1987.

Mr. JonathanChristian Larsen


Mr. Sanjeev Nanavati was appointed the Bank’s Chief Executive Officer on 5 October 2007. He is responsible for Citi’s retail banking, credit cards, corporate banking, investment banking, global transaction services, equities, fixed income and treasury activities in Malaysia. Prior to this appointment, he was Citi Malaysia’s Country Head for its Institutional Clients Group since 2005.

Before moving to Malaysia, he was Managing Director and Global Head of Citigroup Depository Receipt Services based in New York and Hong Kong, responsible for all aspects of the ADR/GDR product offering globally. Mr. Nanavati joined the Citigroup Depository Receipt Services Management team in July 2001 and strategically repositioned the business, creating a differentiated value proposition for clients. Prior to joining Citigroup, he was the Head of Corporate and Investment Banking for 6 years at one of the largest international banks in India and prior to that worked for 12 years with a major U.S. bank in M&A and Capital Markets, working in the United States and Hong Kong. Mr. Nanavati’s product experience extends across debt and equity capital markets; M&A and advisory; lending, cash management and trade; and more recently securities services.

Mr. Nanavati holds an MBA Degree from Syracuse University in the United States.

At present, he is the President for the American Malaysian Chamber of Commerce and also a Council member of the Association of Banks in Malaysia.


Tan Sri Dato' Hj Omar joined the Bank on 3 May 2000 as an Independent Non Executive Director. He serves as the Chairman of the Nominating Committee and the Audit Committee, and a member of the Risk Management Committee of the Bank.

He is a Non-Executive Director of UEM Group Berhad and UEM Builders Berhad and also serves as a Non-Executive Director on the Board of KLCC (Holdings) Sdn Bhd, Cyberview Sdn Bhd, PNB Commercial Sdn Bhd and Selia Senggara Sdn Bhd.

He has spent more than three decades serving the government as a civil engineer in the Public Works Department (PWD) of Malaysia and during this long tenure, he held many positions in the department, culminating in the position of PWD's Director-General from 1996 to 1999.

Tan Sri Dato' Hj Omar has particular expertise in structural engineering and water supply engineering, his professional work experience has been varied though, including design assignments as well as project management to general management.

He has been the President of The Board of Engineers Malaysia, The Malaysian Water Association and Malaysian Structural Steel Association at various times between 1988 and 1999. Tan Sri Dato' Hj Omar holds a Master of Science from the University of Southampton and a Bachelor of Engineering from the University of Malaya.

He is a Fellow of the Institution of Engineers Malaysia and a professional engineer registered with the Board of Engineers Malaysia.

Mr. SanjeevNanavati

Tan Sri Dato’Hj Omar B. Ibrahim


Dato’ Siow Kim Lun Ms. AgnesLiew Yun Chong


Dato’ Siow Kim Lun is currently a board member of Kumpulan Wang Persaraan, UMW Holdings Berhad, W Z Steel Berhad, Eita Resources Berhad, Hong Leong Assurance 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 the Director of its Market Supervision Division. He has also served as a member of the Listing Committee of Bursa Malaysia Securities Berhad from May 2007 to May 2009. Prior to joining the SC, Dato’ Siow has 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 presently the Chairman of the Bank’s Risk Management Committee and a member of the Nominating Committee and Audit Committee.

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

Ms. Agnes Liew is responsible for the Corporate Bank in Asia Pacific (excluding Japan and India). The Asia Pacific Corporate Bank is the coverage organization that delivers the full spectrum of product solutions and Citi’s extensive global network that spans over 100 countries, to institutional clients in Asia, including large public and private corporations. Ms. Agnes 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. Agnes Liew led Global Subsidiaries Group in Asia Pacific (excluding Japan) and was responsible for the relationship coverage of global multinational subsidiaries across 16 markets. Under her leadership, the Global Subsidiaries Group in Asia has grown 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. Agnes Liew holds an LL.B (Hons) from the University of Singapore and is a member of the Supreme Court of Singapore.

C i t i b a n k b e r h a d l 2 0 1 1 A n n u a l R e p o r t

Mr. TerenceKent Cuddyre



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

He is currently Citigroup Country Officer for Brunei, a position which he assumed on 1 July 2009 and cluster head for Bangladesh, Sri Lanka and Brunei. Prior to that, he spent 4 years as the Head of Training for the Asia Pacific region (Citi Centre for Advanced Learning). He has also served as Citigroup Country Officer for Thailand (2002 – 2005) and was North Asia Regional Risk Officer (2000 – 2001).

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

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

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

S t a t e m e n t o f C o r p o r a t e G o v e r n a n c e


Statement of Corporate Governance 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 CompositionThe Board comprises six members.

The following is the board line-up:

• Mr. Jonathan Christian Larsen

Non-Independent Non-Executive Director/Chairman

• Mr. Sanjeev Nanavati

Non-Independent Executive Director/Chief Executive Officer

• Tan Sri Dato' Hj Omar B. Ibrahim

Independent Non-Executive Director

• Dato' Siow Kim Lun


• Ms. Agnes Liew Yun Chong

Non-Independent Non-Executive Director

• Mr. Terence Kent Cuddyre


The individual profiles of the above mentioned directors are set out on pages 10 to 13 of this report.

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

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

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.

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

Frequency and Conduct ofBoard Meetings and AttendanceThe 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 of the Board member for the

financial year ended 31 December 2011 is as shown below:

Number of Board Meetings

Name of Director Held Attended

Mr. Jonathan Christian Larsen 6 6

Mr. Sanjeev Nanavati 6 6

Tan Sri Dato' Hj Omar B. Ibrahim 6 6

Dato’ Siow Kim Lun 6 6

Ms. Agnes Liew Yun Chong 6 4

Mr. Terence Kent Cuddyre 6 6

Dato' Syed Sidi Idid B. Syed Abdullah Idid (Deceased on 2 February 2012) 6 5

Board CommitteesThe Board of Directors established several ‘Board Committees’

to assist them in the overall management and supervision of

the Bank's business operations.

The committee members shall be appointed by the Board upon

recommendation of the Nominating Committee.

Each committee has its own written charter, clearly outlining

the mission and responsibilities of the respective committee as

well as well-defined terms of reference approved by the Board.

Pursuant to the revised BNM/GP1 guideline, the Board is also

required to establish the following additional committees

besides the existing Audit Committee then:

• Nominating Committee

• Remuneration Committee

• Risk Management Committee

The Bank has since set up the Nominating Committee and Risk

Management Committee.

The Bank submitted an application to BNM for a waiver from

establishing the Remuneration Committee. On 3 May 2006,

BNM granted the Bank approval on the above application.

Audit CommitteeComposition 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 2011 is as shown below:

Number of Meetings

Name of Audit Committee Member Held Attended

Tan Sri Dato’Hj Omar B. Ibrahim (Chairman)

(Appointed as Chairman of Audit Committee

on 1 March 2012) 5 5


Mr. Terence Kent Cuddyre (Appointed as Audit Committee member on 1 March 2011) 4* 3

Mr. Jonathan Christian Larsen (Resigned as Audit Committee member

on 28 February 2012) 5 5

Dato’ Syed Sidi Idid B. Syed Abdullah Idid (Deceased on 2 February 2012) 5 4

* 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.

Terms of ReferenceThe Board has approved the terms of reference for the Audit Committee.

The main objective of the Audit Committee is to review the financial position of Citibank Berhad, its internal controls, performance and findings of the internal and external auditors as well as to recommend appropriate remedial action (if necessary).

The Audit Committee's main responsibilities are as follows:

a. Ensure that the financial accounts are prepared in a timely and accurate manner with frequent reviews on the adequacy of provisions for contingencies, and bad and doubtful debts.

b. Review the balance sheet and profit and loss account for submission to the Board of Directors and ensure the prompt publication of annual accounts.

c. Review the annual financial statements before submission to the Board, focusing on:

1. Compliance with accounting standards and other legal requirements

2. Changes in accounting policies and practices

3. Significant issues and unusual events arising from the audit

4. Going concern assumption

5. Major judgemental areas

d. Conduct a complete review prior to publishing the annual report to ensure compliance with regulatory requirements.

e. Review the effectiveness of internal controls, including the scope of the internal audit programme, its role, resources of the internal audit functions and ensure it has the

necessary authority to carry out its work, internal audit findings as well as recommend action to be taken by management, whenever necessary. The reports of internal auditors and the Audit Committee should not be subject to the clearance of the Board of Directors.

f. Evaluate appointment, performance and provide appraisal and feedback on the remuneration package offered to the chief internal auditor.

g. Leverage on the Bank’s performance management and talent inventory development process in overseeing the performance evaluation of the internal auditors.

h. Review with the external auditors, the scope of their audit plan, internal accounting controls, audit reports, assistance given by the management and its staff to the auditors as well as their findings and recommended action(s) to be taken. Select and recommend external auditors for appointment by the Board annually.

i. Discuss problems and reservations arising from the interim and final external audits, including any matters the external auditors may wish to deliberate (in the absence of management, where necessary).

j. Review external auditor’s letter to management and the latter’s response to the same.

k. Review related party transactions and identify any potential conflict of interest situation(s) that may arise within the Bank including any transactions, procedure or course of conduct which questions the integrity of the management.

l. Review resignation letters from the external auditors of Citibank Berhad.

m. Select external auditors to be appointed by the Board, unless otherwise advised (such as not suitable for re-appointment supported by valid justifications/grounds).

n. Review any external expert’s terms and scope of engagement, working arrangement with the internal auditors and reporting requirements to ensure these are clearly established.

o. Leverage on the oversight provided by Regional Compliance Control or engage any external party to perform assessment on the continuing effectiveness of the internal audit function

Nominating CommitteeComposition 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 2011 is as shown below:

Number of Meetings

Name of Nominating Committee Member Held Attended

Tan Sri Dato’Hj Omar B. Ibrahim (Chairman) 2 2


Mr Sanjeev Nanavati 2 2




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

Terms of ReferenceThe 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:

a. 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.

b. 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.

c. 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.

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

e. 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.

f. 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.

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

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

i. 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.

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

k. 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.

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

m. Assess annually to ensure the directors and key senior management staff are not disqualified under section 56 of the Banking and Financial Institution Act 1989 (BAFIA).

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

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

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

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

Risk Management CommitteeComposition and Frequency of Meetings

The Risk Management Committee was established in 2006.

The attendance record for each Risk Management Committee member for the financial year ended 31 December 2011 is as shown below:

Number of Meetings

Name of Risk Management Committee Member Held Attended

Dato’ Siow Kim Lun (Chairman) 4 4

Tan Sri Dato’Hj Omar B. Ibrahim 4 4


Mr. Terence Kent Cuddyre (Appointed as Audit Committee member

on 1 March 2011) 3* 3



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

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

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

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

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

b. 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.

c. 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.

d. 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.

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

f. 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.

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

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

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






































meetings.



































Number of Meetings




on 1 March 2012) 5 5



































Number of Meetings































Number of Meetings






on 1 March 2011) 3* 3
















R i s k M a n a g e m e n t


Please refer to Pillar 3 disclosure.


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

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

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

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

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

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

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

The management conducts business monitoring initiatives and periodic self-assessment in accordance with the Risk and Control Self-Assessment/Operational Risk policy for all applicable businesses.

Control system weaknesses resulting in corrective actions will be documented and escalated to the management for tracking purposes.

Citibank Berhad's Internal Audit reports to the Audit Committee. It performs regular reviews of the business processes to assess the effectiveness of the control environment and highlights significant risks affecting the company.

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

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

The management of Citibank Berhad has also set up a Country Coordinating Committee, Business Risk Compliance and Control Committee, Legal Vehicle Committee, Asset and

S t a t e m e n t o f I n t e r n a l A u d i t a n d I n t e r n a l C o n t r o l

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.


M a n a g e m e n t R e p o r t s

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 comprise the following:

Economic Updates

Business Plans

Year to date Financial Performance Report

Financial performance by major business segments

Quarterly Performance Scorecard

Comparative analysis of banks

Semi-annual BNM Stress Tests Results

Credit Risk Management Report

Liquidity & Market Risk Management Report

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


S h a r i a h C o m m i t t e e

Citibank Berhad's Shariah Committee is responsible for the provision of Shariah oversight in relation to Citibank Berhad’s Islamic Banking business operations and activities. For the year 2011 , the Shariah Committee met nine times. Additionally, individual Shariah Committee members participated in various business discussions where Shariah advice was required prior to full submission to the Shariah Committee. During the year, the Shariah Committee was expanded to 5 members in order to comply with the requirement of Bank Negara Malaysia’s new Shariah Governance Framework for Islamic Financial Institutions. The Shariah Committee also approved a new Shariah Control Manual in order to incorporate additional requirements of the new framework for Shariah governance. With regards to Shariah compliance review, Citibank Berhad’s Islamic Banking Division was subjected to a full Shariah audit conducted jointly by Citibank Berhad’s Country Compliance and Control unit together with the 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. No major compliance issues were identified. Citibank Berhad’s Shariah Committee effective from 1 June 2011 included the following distinguished members:

Professor Dr. Abdul Ghafar Ismail/Chairman Dr. Abd Ghafar Ismail has been a Professor in the Banking and Finance faculty of Universiti Kebangsaan Malaysia (UKM) since 2003. He is currently the Head of the Research Center for Islamic Economics and Finance and AmBank Group Resident Fellow for Perdana Leadership Foundation. A lecturer since 1987, he has vast experience in teaching Islamic economics courses such as Islamic banking; risk management in Islamic banking; financial economics; advanced macroeconomics; money, Zakat and real economy; money and capital market in Islam; Islamic economic system; Islamic economic analysis; and deposits and the financing operations of Islamic banking institutions. His work has been extensively published in several referred journals, among others, Review of Islamic Economics, Journal of Islamic Economics, Banking and Finance, Humanomics, “International Journal of Islamic and Middle Eastern Finance and Management”, “Journal of Financial Services Marketing”, “International Research Journal of Finance and Economics” and “Qualitative Research in Financial Markets”. His most recent book is Money, Islamic Banks and Real Economy, published by Cengage Learning. His papers have been presented in many international and local conferences including the International Seminar on Islamic Economics and Finance, IRTI International Conference and Malaysia Finance Association Conference. Professor Dr. Abdul Ghafar Ismail’s research interests include the learning process and growth theory, inter-temporal allocation of resources, learning economics from Al-Quran and

Al-Hadith, capital adequacy standard for Islamic Banks, and the workings of monetary policy in a dual banking system.

He holds a Ph.D from the University of Southampton, England.

Professor Dr. Norhashimah Mohd Yasin Dr. Norhashimah Mohd Yasin is a Professor of Comparative Banking Law at the Civil Law department, Ahmad Ibrahim Kulliyah of Law, International Islamic University of Malaysia.

She regularly lectures, researches and presents papers at local and international seminars and conferences on the areas of Islamic Banking, Islamic insurance (Takaful), money laundering and terrorism financing.

She has published articles in national and international

journals. Her articles on Islamic Banking have also appeared in

a book edited by Dato’ Syed Idid called Judicial Decisions Affecting Bankers and Financiers (published by the Malayan Law

Journal). She is the author of two books, Legal Aspects of Money Laundering from the Common Law Perspective (published in

2007 by LexisNexis) and Islamisation/Malaynisation: The Role of Islamic Law in the Economic Development of Malaysia (published

in 1996 by A.S. Noordeen). She is a contributing editor of the

Annotated Statute on Anti-Money Laundering and Anti-Terrorism

Financing Act 2001 and the Takaful Act 1984.

She is a member of the Advocates and Solicitors Disciplinary

Board and also sits on the Board of Trustees for Yayasan

Asnita, a Non Governmental Organisation. She also conducts

training for Bank Negara Malaysia, Labuan Financial Services

Authority, commercial banks, developing financial institutions,

insurance companies and legal firms in Malaysia and Brunei

Darussalam.

Professor Dr. Norhashimah holds a Ph.D in Law from the

University of Warwick, England, and is a qualified Advocate and

Solicitor of the High Court of Malaysia. She is also a certified

legal translator.

Associate Professor Dr. Shofian bin Ahmad Dr. Shofian bin Ahmad is currently an Associate Professor with the Shariah Department at Universiti Kebangsaan Malaysia (UKM) where he specialises in Islamic transactions (Muamalat) and the Islamic economy. He is the Head of the Department of Shariah at the Faculty of Islamic Studies and has served in various administrative positions at the faculty since 1994.

He supervises Ph.D. and Masters candidates at UKM and conducts doctoral and Masters level thesis assessments. He is also actively involved in research and is a Research Fellow at UKM’s Institut Kajian Rantau Asia Barat. He is also extensively involved in publications as an article assessor for several academic journals.

Associate Professor Dr. Shofian holds a Ph.D in Shariah and Law from the University of Malaya, Kuala Lumpur.


S h a r i a h C o m m i t t e e

Mat Noor Mat Zain Mat Noor Mat Zain is a member of the Citibank Berhad’s Shariah Committee where he has contributed his specialist knowledge of Fiqh Muamalah, Islamic contract law and Islamic family law and extensive research experience in the area of Islamic finance since May 2011. He is also a consultant for the Pakarunding initiative at Universiti Kebangsaan Malaysia (UKM) and an expert consultant for the Malaysian Government’s JAWHAR programmes related to the provision of Fidyah and Kafarah manuals. He has presented numerous papers related to Islamic Banking and finance at both domestic and international levels and has been appointed consulting editor for The Journal Of Muamalat And Islamic Finance Research published by the Islamic Science University of Malaysia. In addition to his consulting and editorial work, he is a lecturer at the Department of Shariah at UKM’s Faculty of Islamic Studies. He teaches several courses related to Muamalah and Islamic jurisprudence including “Fiqh Muamalat”, “Islamic Finance”, and “The Principles of Islamic Jurisprudence”. He has a Bachelor’s degree in Shariah Studies from the Islamic University of Medina, Saudi Arabia as well as a Masters in Islamic Studies (specialising in Muamalat) from the Faculty of Islamic Studies at UKM. He is currently pursuing his studies in the field of Islamic Contracts and is researching topics including “Instruments of Islamic Hedging” and “Terms and Conditions in Standard Form Contracts”.

Nik Abdul Rahim bin Nik Abdul Ghani Nik Abdul Rahim Nik Abdul Ghani is a lecturer and former tutor at Universiti Kebangsaan Malaysia (UKM)’s Department of Shariah at the Faculty of Islamic Studies. He is an expert consultant and speaker for the UKM’s Centre for Islam and UKM’s Islamic law-related training programmes. He is also a member of the committee of Klinik Hukum Syarak and Guaman Syarie, Department of Shariah. He is a member of the Research Center for Islamic Economics and Finance and has written in-depth research papers and articles on Shariah issues arising in Islamic Banking and finance. He is a published author featured in national and international journals, seminar proceedings and books. His most recent article, “Maslahah as a Source of Islamic Transactions (Muamalat)” has been recently published in UKM’s Journal of Islamiyyat. He has written books on Islamic teaching and motivation and is a regular columnist for the popular magazine “SOLUSI” by Telaga Biru for which he writes the “Maqasid Syariah” (Objectives of Islamic Law) column. Apart from teaching, research and writing, he is actively involved in religious and academic activities, especially those related to economics and Islamic law, He participates in seminars and discussions conducted by Government agencies and Non Governmental Organisations (NGOs), gives religious speeches in the state of Selangor and appears on religious television programmes by major Malaysian broadcast networks including RTM, Media Prima and ASTRO. He is also a

regular speaker for “Renungan”, a religious programme that airs on THR Gegar radio. Fluent in Arabic, Nik Abdul Rahim bin Nik Abdul Ghani holds a Masters Degree in Shariah from UKM and a B.A (Hons) in Shariah from the Islamic University of Medina, Saudi Arabia. He is currently a doctoral candidate in the field of Islamic Finance at INCEIF.


R a t i n g s S t a t e m e n t

RAM Rating Services Berhad (RAM) has, on 13 February 2012, reaffirmed Citibank Berhad’s respective long and short term financial institution ratings of AAA and P1 with an outlook on the long term ratings remaining stable.

Citibank Berhad’s ratings are premised on its entrenched market position in the consumer banking arena, strong funding and liquidity profile, sturdy profitability, and healthy capitalization.

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.


Aw a r d s a n d A c c o l a d e s

Banking & Payments Asia Trailblazer Awards 2011Product Excellence Awards (Citibank Premier Miles Credit Card)

Trade FinanceBest International Trade Bank in Malaysia (Highly Commended)

Readers’ DigestReaders’ Digest Trusted Brands Award (Cards)

Visa Malaysia Bank Awards 2011Largest Payment Volume – Visa Consumer Credit

Largest Payment Volume – Visa Platinum

Highest Purchase Volume Growth – Visa Platinum

Highest Purchase Volume Growth – Visa Super Premium

Asiamoney Cash Management PollBest Foreign Cash Management Bank for Small Corporates

Best Foreign Cash Management Bank for Medium Corporates

Best Foreign Cash Management Bank for Large Corporates

Asiamoney FX Poll Best for Overall FX Services

Best for Innovative FX Products & Structured Ideas

Best FX Prime Broking Services

Best Single-Bank Electronic Trading Platform

Contact Centre Association of Malaysia & Frost & SullivanBest People Contact Centre (Gold Award)

Best Contact Centre Professional (CPO Aria Putera Kamal)

Best In-House Inbound Contact Centre above 100 seats (Silver Award)

Euromoney Trade Finance SurveyBest Domestic Trade Finance Provider (Malaysia)

2011 Global Custodian Agent Banks in Emerging Markets Survey Top Rated in all 3 client segments (Leading, Cross-Border/Non-Affiliated and Domestic)

Islamic Finance News Award 2011Malaysia Deal of The Year- Wakalah Global Sukuk

Sovereign Deal of The Year-Wakalah Global Sukuk

IFR AsiaIslamic Deal of The Year Award 2011

Finance AsiaFinance Asia’s Best Islamic Financing Award 2011

The following is a list of accolades received by the Bank throughout 2011 :


C o r p o r a t e C i t i z e n s h i p a t C i t i

Managing money and using financial services can be complex and confusing for the average person because people have different financial priorities at different stages of their lives. Nevertheless, financial planning is essential for people who wish to remain financially stable and to build their assets.

As a long-established advocate and practitioner of financial capability programmes, Citibank Berhad’s priorities balance the interests of our stakeholders with the risks and opportunities that affect our business. We continually engage with our stakeholders to keep abreast with their changing needs while keeping a constant watch on local and global economic conditions and concerns. We also collaborate with local partners to design relevant, timely and actionable programmes that offer support and accountability for consumers working towards their financial goals.

In 2011, Citibank Malaysia received a philanthropic investment of US$210,000 from Citi Foundation to continue our efforts to provide free financial education for Malaysians. Our financial education programmes enable Malaysians to make the right financial decisions and develop effective financial habits to maintain and improve their standard of living and the future of their families in the face of rising costs of living.

Stretching Your Ringgit (Season 3)

In 2009, Citi launched our flagship financial education programme, ‘Stretching Your Ringgit’ in collaboration with ERA Consumer Malaysia, “Stretching Your Ringgit is a series of financial infomercials aired on national TV and radio stations which is now in its fourth season.

2011 saw the third season of ‘Stretching Your Ringgit’ focusing on strengthening consumer financial literacy in line with the current global and national economic realities of rising costs of living in relation to stagnated incomes. It covered the basics of smart money management which audiences of previous years identified as priorities. A series of financial infomercials was aired on ASTRO television stations. Topics included Making do in-between Paychecks, Household Budgeting, Other Ways to Earn and Retirement Planning. These episodes were aired for a total of 122 times across eight major channels from August to the end of October to coincide with two festivals - Ramadhan leading up to Hari Raya and Deepavali. The radio infomercials covering Educating Children About Money, Keeping Credit in Check and Making Your Financial Plan were also broadcasted for a total of 164 times on three ASTRO radio channels. In total, ‘Stretching Your Ringgit’ reached nearly 24 million Malaysians in 2011.

A pre and post evaluation survey was conducted. On average, the survey showed an increase of 27.3% in participants’ recognition of the importance of, intent to take action, or positive behavioural change related to the 4 financial topics. Focus group discussions were conducted in several states in Peninsular Malaysia and participants agreed on the importance of financial education and improving their financial knowledge. The issues varied according to demographic groups. For housewives, their priority was inculcating financial literacy in their children. Young workers, on the other hand, worry about the increase in debt and have admitted to spending beyond their means.

This year’s programme also expanded beyond the media campaign to include two additional components aimed at reaching the younger generation. One component was the pilot run of the “My First Ringgit” workshops which provided financial education classes for 598 kindergarten children. After the workshops, the kindergarten teachers facilitated conversations with parents to gauge improvements in their children’s financial behaviour. The post survey showed a 40.5% increase in children's ability to demonstrate basic financial knowledge. 31% of parents also reported an example of their children's improved financial behaviour such as the willingness to start saving.

The second component was aimed at young workers. ERA conducted a baseline survey targeted at 1,002 young working adults to gain insight into the current status of financial literacy and behaviour which may lead them into bankruptcy. The survey results enabled stakeholders to identify opportunities and develop financial literacy programmes targeted at this segment. These programmes will be implemented in 2012.

The survey data showed that many young workers were making choices that led them into financial problems. Some of the key findings from the survey indicated that 30% of the respondents did not save regularly, 70% of the respondents could only sustain for 4 months with their savings if they had to stop working, 37% never thought of retirement, more than 50% of the respondents are not familiar with Credit Counselling and Debt Management Agency (AKPK), Central Bank’s website, and the Financial Mediation Bureau, 47% of the respondents can be considered as in serious debt and only 1 1 % of the respondents acquired financial knowledge from the education system.



Citi Stock Challenge

The Citi Stock Challenge programme is designed to introduce high school students in Malaysia to stock market fundamentals and to increase their financial literacy and investment knowledge. Every year, the Citi Stock Challenge provides hundreds of 16-year-old students with a golden opportunity to role-play as stockbrokers after learning the fundamentals of trading, market trends, and taking positions on counters. Teams of students form ‘brokerage houses’ which use RM1,000 in ‘seed money’ to trade in a simulated stock market comprising 20 stocks in the energy, manufacturing, trade, communications and hospitality sectors.

Sekolah Menengah Kebangsaan Pusat Bandar Puchong from Kuala Lumpur, and Chung Ling High School and Sekolah Menengah Jenis Kebangsaan Convent Datuk Keramat from Penang emerged as the winners of the annual Citi Stock Challenge 2011. The three winning teams out-invested 33 schools and 540 students who participated in this year’s six-day programme held in Kuala Lumpur and Penang.

70% of the 250 students surveyed through the pre and post surveys demonstrated a significant increase in skills and knowledge on how a company operates and provides shares for public purchase, how stock prices change, the impact of news events and business trends on stock prices and the ability to analyse and interpret information when making investment decisions.

Since the launch of Citi Stock Challenge in 2004, over 2,000 students from all over Malaysia have taken part in this challenge. The programme partner was Learning Society, a local non-profit organisation that promotes active learning. We would also like to thank American Chamber of Commerce for assisting us in the enrolment of the schools under their Young Enterprise programme.



The Habitat for Humanity Family Financial Education Programme

Habitat for Humanity Malaysia (HFH Malaysia) has been developing their Family Financial Education programme in partnership with Citi Foundation since 2010. This programme is designed to equip low-income Malaysian families with practical financial knowledge to help improve their home finances.

The goal of HFH Malaysia’s programme is to inculcate two distinct financial capabilities in their target demographic. The first is the ability create and utilise a family and home improvement budget. The second is the ability to plan, save and use credit responsibly. Results from the impact assessment should see a 70% increase in the number of families utilising a family budget and demonstrating a commitment to saving part of their income.

To achieve this goal, HFH Malaysia is leveraging on Citi Foundation’s expertise and guidance to develop a core financial curriculum that is tailor-made for the low-income Malaysian family. HFH Malaysia will then deliver this financial education curriculum to beneficiaries in partner communities.

HFH Malaysia aims to roll out the Family Financial Education programme to their targeted households by the end of 2012. At present, a needs-based assessment is being conducted. A pilot test for a total of 50 families seeking housing improvement in the Klang Valley is also currently underway.

Global Community Day

More than 500 Citi Volunteers went out on streets to feed over 800 homeless citizens around the country in conjunction with Global Community Day on October 21, 2011. In their effort of feeding the poor, our Citi Volunteers together with our community partner Pertiwi collected donations for used clothes to be distributed to the homeless. They were fed hot meals, drinks, snacks and even provided with toiletries and medicine.

Despite the heavy downpour of rain, it was a real eye-opener for the Citi Volunteers as they made way to reach out to the elderly, drug users and even children.

Citi Volunteers from Penang branch partnered with KAWAN that was set up as a drop in center in 2007 to address the pressing needs of the homeless street based community.

C i t i b a n k B e r h a d l 2 0 1 1 A n n u a l R e p o r t

Va l u i n g O u r P e o p l e

Best in Talent, Culture of Innovation, Attractive Rewards, Unparalleled Opportunities and Leading Edge Training – these are the five distinct advantages of “The Citibanker Difference” that have made Citi the Employer of Choice for the best and the brightest. Throughout 2011 , we continued our focus on delivering “The Citibanker Difference” for our employees.

Now in its third year, the Leadership Enhancement & Accelerated Development (L.E.A.D) programme provided accelerated career development opportunities for 169 top-of-class employees across the board whose performance ranks in the 95th percentile. We help these star performers reach their fullest potential by providing unfettered access to mentors, cutting-edge training and development, networking opportunities, cross-functional/cross-business team challenges and personalised guidance from management.

Our Management Associate (MA) and Graduate Executive (GE) programmes, which are designed to build general management and functional leadership pipelines, continue to attract the best talent in the market. This is due to their distinctive edge in ensuring that high potential hires have access to the best-in-class learning opportunities and development. In 2011 , we hired 14 Management Associates and 27 Graduate Executives. The Graduate Executives joined Citibank divisions as diverse as Cards, Customer Experience & Quality, Finance, Marketing, Operations & Technology, Retail Banking and Risk Management.

As a genuine meritocracy, our reward and recognition structure is competitive, transparent, tied to quality of performance and

tailored to the needs of our people. This strategy saw employee turnover in our Cards division decrease in 2011 as a result of an enhanced focus on employee value proposition, hiring, on-boarding and development. 2011 was also the first year non-sales employees at levels G13, Q and R levels received bonuses through the newly implemented Success Sharing plan.

At Citi, our key strengths are our global reach and diversity of businesses. Citibankers have unparalleled opportunities to hone their skills and talents within diverse international settings, making them some of the most versatile and well-rounded professionals in the world. To date, over 500 Malaysian Citibankers have pursued (or are currently pursuing) their careers overseas in various businesses and functions within the Citi world.

In 2011, there were approximately 150 internal employee moves under Citi’s 2+3 policy. Of these moves, one Malaysian Citibanker was placed in Thailand for 6 months in the Mortgage division; Another moved to The Philippines for 6 months to train under the Risk Management division. We also successfully placed two candidates in Operations & Technology’s Leadership Development Program in Dalian, China for their first-year assignment, followed by a move to Singapore for their second assignment. At present, overseas assignments are ongoing for eXcel, Fast-Trax and Tiger programme candidates in Hong Kong and Singapore.

Investing in learning has always been the cornerstone of Citi’s approach to talent development. Citi’s consistent approach to training and development across the company ensures that we

0 2 9

C i t i b a n k b e r h a d l 2 0 1 1 A n n u a l R e p o r t0 3 0

have a unified culture and set of standards that transcend business and product lines. Our developmental framework is driven by 3 core strategies:

i. On-the-Job experiences (70% of learning occurs by doing);ii. Learning from others (20% learning occurs through

relationships/exposure); andiii. Training programs (10% of learning occurs through formal

education)

Citibankers are also encouraged to identify areas for their personal career development through a structured Individual Development Planning (IDP) process. Citi also holds career events such as Career Week which provide information to Citibankers to help them to make informed decisions about their career with us. Citibankers are then furnished with customised training and opportunities in line with their professional needs under Citi’s human resource development framework. In 2011, Citi’s Human Resource department facilitated 102 training programmes totalling 23,448 training hours for 1,328 employees. This is over and above the mandatory functional and technical training that we already provide for all employees.

Apart from formal professional development, Citi culture is about working hard and playing hard. Throughout the year, a committee of dedicated Citibankers, many of whom are “Voice of Employee” (VOE) champions, organise employee engagement activities that strengthen the spirit of camaraderie amongst Citibankers. The popularity of the VOE programme of events is seen as VOE event attendance and involvement improved across the franchise from 77% to 79%.

The 2011 events organised by the VOE were balanced between charitable efforts and social events. Charity projects included The Chariton initiative raised RM25,000 for Down Syndrome kids and Citi’s Breast Cancer Awareness Week raised more than RM10,000 for PRIDE, a NGO campaigning against breast cancer. Social events where Citibankers had the opportunity to show our care and support for each other in a relaxed and fun environment included Staff Appreciation Week, the Sports Carnival and the Treasure Hunt.

At Citi, we do not simply settle for the best. We aim to make the best better.

Va l u i n g O u r P e o p l e

FINANCIAL STATEMENTCONTENTS

32 Directors’ Report

35 Statement by Directors

36 Statutory Declaration

37 Shariah Committee‘s Report

38 Independent Auditors’ Report

39 Statements of Financial Position

40 Statements of Comprehensive Income

4 1 Statements of Changes in Equity

42 Statements of Cash Flows

44 Notes to the Financial Statements

D i r e c t o r s ’ R e p o r tfor the year ended 31 December 2011


The Directors have pleasure in submitting their report and the audited financial statements of the Group and the Bank for the year ended 31 December 2011 .

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 has been no significant change in the nature of these activities during the financial year.

Results Group and Bank

RM’000

Profit before taxation 855,193 Taxation (165,330) Profit after taxation 689,863

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

DividendsSince the end of the previous financial year, the Bank paid a final ordinary dividend of 329 sen per ordinary share less tax at 25% totaling RM300 million (247 sen net per ordinary share) in respect of the year ended 31 December 2010 on 28 June 2011 .

The final ordinary dividend recommended by the Directors in respect of the year ended 31 December 2011 is 329 sen per ordinary share less tax at 25% totaling RM300 million (247 sen net per ordinary share).

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 loans and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate provisions made for impaired loans, advances 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 loans, advances 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 of the Bank that has arisen since the end of the financial year other than 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 likely, in the opinion of the Directors, 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.



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 for Financial Institutions and the Guidelines on Classification and Impairment Provisions for Loans/Financing.

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

• Jonathan Christian Larsen • Sanjeev Nanavati • Tan Sri Dato’ Hj. Omar Bin Ibrahim• Dato’ Siow Kim Lun @ Siow Kim Lin• Agnes Liew Yun Chong• Terence Kent Cuddyre • Dato’ Syed Sidi Idid Bin Syed Abdullah Idid (Deceased on 2 February 2012)

Directors’ interests in sharesThe interests in the ordinary shares and options over shares of the Bank and of its related corporations of those who were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows: Number of ordinary shares of USD1 each At At 1 .1 .2011 * Bought Sold 31.12.2011Shares in Citigroup Inc. Direct interests Sanjeev Nanavati 13,664 8,561 - 22,225 Jonathan Christian Larsen 23,172 ** 17,516 6,730 33,958 Dato’ Siow Kim Lun @ Siow Kim Lin 900 - - 900 Agnes Liew Yun Chong 8,576 1,536 - 10,112 Terence Kent Cuddyre 1,786 ** 199 29 1,956 Deemed interests Jonathan Christian Larsen 38,792 6,730 - 45,522

Number of ordinary shares of USD1 each At At 1.1.2011* Granted Vested 31.12.2011Capital Accumulation Program/ Supplementary CAP/SEA in Citigroup Inc.

Sanjeev Nanavati 4,376 6,972 (8,561) 2,787 Agnes Liew Yun Chong 5,644 9,833 (1,536) 13,941 Terence Kent Cuddyre 193 1,007 114 1,086

Number of options over ordinary shares of USD1 each At At 1.1.2011/ Granted Forfeited 31.12.2011 date of appointment* Stock Option Plan in Citigroup Inc.

Sanjeev Nanavati 6,995 - 268 6,727 Jonathan Christian Larsen 41,082 - - 41,082 Agnes Liew Yun Chong 4,174 - (295) 3,879 Terence Kent Cuddyre 3,078 - 797 2,281

None of the other Directors holding office at 31 December 2011 had any interest in the ordinary shares and options over shares of the Bank and of its related corporations during the financial year.

* Reverse stock split in May 2011 , share numbers divided by 10.** Opening balance has been restated



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) 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:

Sanjeev Nanavati

Tan Sri Dato’ Hj. Omar Bin Ibrahim

Kuala LumpurDate: 1 March 2012


In the opinion of the Directors, the financial statements set out on pages 39 to 133 are drawn up in accordance with the Companies Act, 1965 in Malaysia and Financial Reporting Standards issued by the Malaysian Accounting Standards Board as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and the Bank at 31 December 2011 and of their financial performance and cash flows for the year then ended on that date.

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

Sanjeev Nanavati

Tan Sri Dato’ Hj. Omar Bin Ibrahim


S t a t e m e n t B y D i r e c t o r spursuant to Section 169(15) of the Companies Act, 1965

D e c l a r a t i o n P u r s u a n tto Section 169(16) of the Companies Act, 1965


I, Tang Wan Chee, the officer primarily responsible for the financial management of Citibank Berhad, do solemnly and sincerely declare that the financial statements set out on pages 39 to 133 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 1 March 2012.

Tang Wan Chee

Before me:

Commissioner for Oaths


S h a r i a h C o m m i t t e e ’ s R e p o r tIn the name of Allah, the Beneficent, the Merciful

In compliance with the letter of appointment, we are required to submit the following report:

We have reviewed the principles and the contracts relating to the transactions and applications introduced by Citibank Berhad’s Islamic Banking Division during the year ended 31 December 2011 . We have also conducted our review to form an opinion as to whether the Citibank Berhad’s Islamic Banking Division has complied with the Shariah principles and with the Shariah rulings issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us.

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

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

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

In our opinion:

1. the contracts, transactions and dealings entered into by the Citibank Berhad’s Islamic Banking Division during the year ended 31 December 2011 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;

We, the members of the Shariah Committee of Citibank Berhad’s Islamic Banking Division, do hereby confirm that the operations of the Citibank Berhad’s Islamic Banking Division for the year ended 31 December 2011 have been conducted in conformity with the Shariah principles.

On behalf of the Shariah Committee

Chairman of the Shariah Committee:

Professor Dr. Abdul Ghafar Ismail



I n d e p e n d e n t A u d i t o r s ’ R e p o r tto the members of Citibank Berhad

Report on the Financial StatementsWe have audited the financial statements of Citibank Berhad, which comprise the statements of financial position as at 31 December 2011 of the Group and the Bank, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Bank for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 39 to 133.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the 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 entity’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. OpinionIn our opinion, the financial statements have been properly drawn up in accordance with the Companies Act, 1965 and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and the Bank as of 31 December 2011 and of their financial performance and cash flows for the year then ended.

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

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

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

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

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

KPMG Ahmad Nasri bin Abdul WahabFirm Number: AF 0758 Approval Number: 2919/03/12(J)Chartered Accountants Chartered Accountant

Petaling Jaya, MalaysiaDate: 1 March 2012


S t a t e m e n t s O f F i n a n c i a l P o s i t i o nas at 31 December 2011

Group Bank

2011 2010 2011 2010

Note RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 3 11,968,440 10,481,033 11,968,420 10,481,013

Deposits and placements with banks and other financial institutions 4 1,516,673 811,660 1,516,673 811,660

Securities purchased under resale agreements 1,218,993 404,417 1,218,993 404,417

Financial assets held-for-trading 5 2,336,849 1,852,463 2,336,849 1,852,463

Financial investments available-for-sale 6 5,225,508 3,105,488 5,225,508 3,105,488

Loans, advances and financing 7 20,357,257 19,480,745 20,357,257 19,480,745

Other assets 9 1,306,012 1,317,760 1,306,012 1,317,760

Statutory deposits with Bank Negara Malaysia 10 398,080 - 398,080 -

Deferred tax assets 11 796 59,300 796 59,300

Investments in subsidiary companies 12 - - 20 20

Plant and equipment 13 120,905 108,781 120,905 108,781

Total assets 44,449,513 37,621,647 44,449,513 37,621,647

Liabilities

Deposits from customers 14 30,051,586 28,788,863 30,051,586 28,788,863

Deposits and placements of banks and other financial institutions 15 7,777,097 2,322,925 7,777,097 2,322,925

Bills and acceptances payable 63,761 47,982 63,761 47,982

Other liabilities 16 2,537,714 2,846,402 2,537,714 2,846,402

Total liabilities 40,430,158 34,006,172 40,430,158 34,006,172

Equity

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

Reserves 18 3,897,658 3,493,778 3,897,658 3,493,778

Total equity attributable to equity holder of the Bank 4,019,355 3,615,475 4,019,355 3,615,475

Total liabilities and equity 44,449,513 37,621,647 44,449,513 37,621,647

Off-balance sheet exposures 36 79,632,078 81,239,637 79,632,078 81,239,637

The notes on pages 44 to 133 are an integral part of these financial statements.

Group and Bank

2011 2010

Note RM’000 RM’000

Revenue 2(b) 2,402,424 2,184,681

Interest income 20 1,713,571 1,575,460

Interest expense 21 (514,644) (391,890)

Net interest income 1,198,927 1,183,570

Net income from Islamic banking operations 37(o) 29,670 35,991

Other operating income 22 659,183 573,230

Total net income 1,887,780 1,792,791

Other operating expenses 23 (887,846) (758,190)

Operating profit 999,934 1,034,601

Allowance for loans, advances and financing 24 (144,741) (200,995)

Profit before taxation 855,193 833,606

Tax expense 25 (165,330) (194,353)

Profit for the year 689,863 639,253

Other comprehensive expense, net of income tax

Net profit/(loss) on revaluation of financial investments available-for-sale 14,017 (16,110)

Other comprehensive income/(expense) for the year, net of income tax 14,017 (16,110)

Total comprehensive income for the year 703,880 623,143

Profit for the year attributable to:

Owner of the Bank 689,863 639,253

Total comprehensive income attributable to:

Owner of the Bank 703,880 623,143

Earnings per share - basic (sen) 26 566 525


S t a t e m e n t s O f C o m p r e h e n s i v e I n c o m efor the financial year ended 31 December 2011



S t a t e m e n t s O f C h a n g e s I n E q u i t yfor the financial year ended 31 December 2011

Attributable to owner of the Bank

Non-distributable Distributable

Share Share Statutory Fair Value 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 2010 121,697 380,303 121,697 9,480 2,609,155 3,120,635 3,242,332

Fair value of available-for-sale financial assets - - - (16,110) - (16,110) (16,110)

Total other comprehensive expense for the year - - - (16,110) - (16,110) (16,110)

Profit for the year - - - - 639,253 639,253 639,253

Total comprehensive (expense)/ income for the year - - - (16,110) 639,253 623,143 623,143

Dividends to owner of the Bank 27 - - - - (250,000) (250,000) (250,000)

Total contribution to owner - - - - (250,000) (250,000) (250,000)

At 31 December 2010 121,697 380,303 121,697 (6,630) 2,998,408 3,493,778 3,615,475

At 1 January 2011 121,697 380,303 121,697 (6,630) 2,998,408 3,493,778 3,615,475

Fair value of available-for-sale financial assets - - - 14,017 - 14,017 14,017

Total other comprehensive income for the year - - - 14,017 - 14,017 14,017

Profit for the year - - - - 689,863 689,863 689,863

Total comprehensive income for the year 14,017 689,863 703,880 703,880

Dividends to owner of the Bank - - - - (300,000) (300,000) (300,000)

Total contribution to owner 27 - - - - (300,000) (300,000) (300,000)

At 31 December 2011 121,697 380,303 121,697 7,387 3,388,271 3,897,658 4,019,355

Note 17 Note 18



Group Bank

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before taxation 855,193 833,606 855,193 833,606

Adjustments for:

Amortisation of premium less accretion of discount of financial investments available-for-sale (3,047) (2,095) (3,047) (2,095)

Allowance for bad and doubtful debts

(net of write-back) 144,741 200,995 144,741 200,995

Profit equalisation reserve 3,204 9,164 3,204 9,164

Depreciation 35,713 32,775 35,713 32,775

Dividends from unquoted investment securities (28) (58) (28) (58)

Unrealised gain from revaluation of financial assets held-for-trading (977) (917) (977) (917)

Gain from disposal of financial investments available-for-sale (13,063) (58,470) (13,063) (58,470)

Loss on disposal of plant and equipment 1,023 178 1,023 178

Operating profit before working capital changes 1,022,759 1,015,178 1,022,759 1,015,178

Changes in working capital:

Deposits and placements with banks and other financial institutions (705,013) 516,792 (705,013) 516,792

Securities purchased under resale agreements (814,576) (404,417) (814,576) (404,417)

Financial assets held-for-trading (483,409) 475,226 (483,409) 475,226

Loans, advances and financing (1,021,253) (1,235,317) (1,021,253) (1,235,317)

Other assets 70,252 (251,758) 70,252 (251,758)

Statutory deposits with Bank Negara Malaysia (398,080) 5,200 (398,080) 5,200

Deposits from customers 1,262,723 (1,040,220) 1,262,723 (1,040,220)

Deposits and placements of banks and other financial institutions 5,454,172 (1,371,985) 5,454,172 (1,371,985)

Bills and acceptances payable 15,779 (28) 15,779 (28)

Other liabilities (314,601) 716,483 (314,601) 716,483

Cash generated from/(used in)

operating activities 4,088,753 (1,574,846) 4,088,753 (1,574,846)

Income taxes paid (162,621) (222,611) (162,621) (222,611)

Net cash generated from/(used in) operating activities 3,926,132 (1,797,457) 3,926,132 (1,797,457)

S t a t e m e n t s O f C a s h F l o w sfor the financial year ended 31 December 2011



Group Bank

2011 2010 2011 2010

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

Dividend from investment securities 28 58 28 58

Purchase of plant and equipment (49,183) (79,781) (49,183) (79,781)

Proceeds from disposal of plant and equipment 324 711 324 711

Purchase of financial investments available-for-sale (7,311,535) (7,068,298) (7,311,535) (7,068,298)

Redemption of financial investments available-for-sale 499,387 - 499,387 -

Proceeds from disposal of financial investments available-for-sale 4,722,254 9,361,821 4,722,254 9,361,821

Net cash (used in)/generated from investing activities (2,138,725) 2,214,511 (2,138,725) 2,214,511

Cash flows from financing activities

Dividend paid to owner (300,000) (250,000) (300,000) (250,000)

Repayment of subordinated loan - (400,000) - (400,000)

Net cash used in financing activities (300,000) (650,000) (300,000) (650,000)

Net increase/(decrease) in cash and cash equivalents 1,487,407 (232,946) 1,487,407 (232,946)

Cash and cash equivalents at 1 January 10,481,033 10,713,979 10,481,013 10,713,959

Cash and cash equivalents at

31 December (Note 3) 11,968,440 10,481,033 11,968,420 10,481,013

S t a t e m e n t s O f C a s h F l o w sfor the financial year ended 31 December 2011



N o t e s To T h e F i n a n c i a l S t a t e m e n t s

Citibank Berhad is a public limited liability company, incorporated and domiciled in Malaysia. The address of both its principal place of business and registered office of the Bank 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 2011 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 1 March 2012.

1. Basis of preparation

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

have been prepared in accordance with Financial Reporting Standards (FRS) as modified by Bank Negara Malaysia Guidelines, accounting principles generally accepted and 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 Group and the Bank have not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Bank:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011

• IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments

• Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012

• FRS 124, Related Party Disclosures (revised) • Amendments to FRS 1, First-time Adoption of

Financial Reporting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters

• Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets

• Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012

• Amendments to FRS 101, Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income


• FRS 10, Consolidated Financial Statements • FRS 11, Joint Arrangements • FRS 12, Disclosure of Interests in Other Entities • FRS 13, Fair Value Measurement • FRS 119, Employee Benefits (2011) • FRS 127, Separate Financial Statements (2011) • FRS 128, Investments in Associates and Joint

Ventures (2011) • IC Interpretation 20, Stripping Costs in the

Production Phase of a Surface Mine • Amendments to FRS 7, Financial Instruments:

Disclosures – Offsetting Financial Assets and Financial Liabilities

• Amendments to FRS 7, Financial Instruments: Disclosures – Mandatory Date of FRS 9 and Transition Disclosures


• Amendments to FRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities


• FRS 9, Financial Instruments (2009) • FRS 9, Financial Instruments (2010)

The Group’s and the Bank’s financial statements for annual period beginning on 1 January 2012 will be prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs) issued by the MASB and International Financial Reporting Standards (IFRSs). As a result, the Group and the Bank will not be adopting the above FRSs, Interpretations and amendments.

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

historical cost basis except as mentioned in the respective accounting policies notes.

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.



1. Basis of preparation (continued)

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

conformity with the FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. 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) - 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) - Fair value estimation for financial assets and liabilities

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

• Note 19 - 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, plus unrecognised actuarial gain, less unrecognised past service cost and unrecognised actuarial losses as described in Note 2(o)(i i i ).

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

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

A. Basis of consolidation

i. Subsidiaries Subsidiaries are entities, including unincorporated

entities, controlled by the Group and the Bank. Control exists when the Group and the Bank have the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

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

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group and the Bank.

ii. Accounting for business combinations Business combinations are accounted for using

the acquisition method from the acquisition date, which is the date on which control is transferred to the Group and the Bank.

The Group and the Bank have changed its

accounting policy with respect to accounting for business combinations.

From 1 January 2011 the Group and the Bank have applied FRS 3, Business Combinations (revised) in accounting for business combinations. The change in accounting policy has been applied prospectively in accordance with the transitional provisions provided by the standard and does not have impact on earnings per share.

Acquisitions on or after 1 January 2011 For acquisitions on or after 1 January 2011 , the

Group and the Bank measure goodwill at the acquisition date as:

• The fair value of the consideration transferred; plus

• The recognised amount of any non-controlling interests in the acquiree; plus

• If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; plus

• The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.



2. Significant accounting policies (continued) A. Basis of consolidation (continued)

ii. Accounting for business combinations (continued)

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group and the Bank incur in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

When share-based payment awards (replacement

awards) are required to be exchanged for rewards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s repayment awards is included in measuring the consideration transferred in the business combination. The determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

Acquisitions between 1 January 2006 and 1 January 2011

For acquisitions between 1 January 2006 and 1 January 2011, goodwill represents the excess of the cost of the acquisition over the Group’s and the Bank’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group and the Bank incurred in connection with business combinations were capitalised as part of the cost of the acquisition.

Acquisitions prior to 1 January 2006 For acquisitions prior to 1 January 2006, goodwill

represents the excess of the costs of the acquisition over the Group’s and the Bank’s interest in the fair values of the net identifiable assets and liabilities.

iii. 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, commission and other income derived from banking operations.

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 liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. The effective interest rate is established on initial recognition of the financial asset and liability and is not revised subsequently.

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

Interest income and expense presented in the statements of comprehensive income include:

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

• Interest on available-for-sale investment securities on an effective interest rate basis

D. Fee and commission income

Fee and commission income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate.

Other fees and commission income, including placement fees, account servicing fees, investment management fees, sales commission, are recognised as the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan, 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 relates mainly to

management and service fees, which are expensed as the services are received.



2. Significant accounting policies (continued)

E. Net trading income

Net trading income comprises gains less losses related to trading assets and liabilities, and includes all realised and unrealised fair value changes, interest, dividends and foreign exchange differences.

F. Financial assets and liabilities

i. Initial recognition and measurement

A financial instrument is recognised in the statements 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 or financial assets that are specifically designated into this category upon initial recognition.

Financial assets categorised as fair value through profit or loss are subsequently measured at their 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. Available-for-sale financial assets 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 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 held for trading, derivatives or financial liabilities that are specifically designated into this category upon initial recognition.

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.




F. Financial assets and 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

The Group and the Bank derecognise a financial asset when the contractual rights to the cash flows from the financial assets expire, or when they transfer the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group and the Bank neither transfer nor retain substantially all the risks and rewards of ownership and they do not retain control of the financial asset. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Group and the Bank are recognised as a separate asset or liability in the statements of financial position. On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset transferred), 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 profit or loss.

The Group and the Bank derecognise a financial liability when the contractual obligation is discharged or cancelled or expired. 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 is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date.

The determination of fair values of financial assets and financial liabilities is 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 technique 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.




G. Impairment

i. Financial assets (excluding investment in subsidiary companies)

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.

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 modeling 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 modeling. Default rates, loss rates and expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure they remain appropriate;

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 modeling.

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

Under the revised policy issued by BNM on Classification and Impairment Provisions for Loan Financing, if the repayment conduct of the loan is past due for more than 90 days of either principal, interest or both, the loan shall be classified as impaired. The Group and the Bank apply this policy in addition to the above when determining if a loan is impaired.

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 an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.



2. Significant accounting policies (continued) G. Impairment (continued)

i. Financial assets (excluding investment in subsidiary

companies) (continued)

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 groups of assets (the “cash-generating unit”).

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.

An impairment loss is recognised if the carrying amount of an asset or its 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 prorata 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 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 and measured as loans and receivables in accordance with policy Note 2(f) and carried at amortised cost in the statements of financial position.

J. Plant and equipment

i. Recognition and measurement

Items of plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

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



2. Significant accounting policies (continued) J. Plant and equipment (continued)

i. Recognition and measurement (continued) When significant parts of an item of plant and

equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment.

Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of plant and equipment and are recognised net within “other income” or “other operating expenses” respectively in the profit or loss.

ii. Subsequent costs

The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and the Bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of plant and equipment are recognised in the profit or loss as incurred.

iii. Depreciation

Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part 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 40 years - 50 years • installations 8 years - 14 years • furniture and equipment 2 years - 10 years

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

K. Assets under lease

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. On 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 the ownership are classified as operating leases and, the leased assets are not recognised on statements 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 unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 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 to the respective functional currencies of the Group entities at exchange rates at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies at reporting period are retranslated to the functional currency at the 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 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 the 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 years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statements of financial position and their tax bases. 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.

A tax incentive that is not a tax base of an asset is recognised as a reduction of the expense in profit or loss as and when it is granted or claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

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 service is 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 statements of comprehensive income 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 statements of comprehensive income 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 amount recognised in the statements of financial position represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of the Plan’s assets. The benefit is calculated using the Projected Unit Credit Method in order to determine its present value. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value to any economic benefits in the form of refunds or reductions in future contributions to the fund. Amortisation of unrecognised gains or losses are included as a component of the annual expense for a year if, as of the beginning of the year, that cumulative net unrecognised gains or losses exceeds 10% of the greater of the Plan’s liability or value of the Plan’s assets. If amortisation is required, the amortisation is that excess divided by the expected average remaining working lives of the employees participating in the Plan.



2. Significant accounting policies (continued) O. Employee benefits (continued)

iii. Defined benefit plan (continued)

When the benefits of the Plan are improved, the

portion of the increased benefit relating to past service by employees is recognised as an expense in the profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefit vests immediately, the expense is recognised in profit or loss.

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. Foreclosed properties

Foreclosed properties are those acquired in full or partial satisfaction of debts, are stated at cost less accumulated impairment losses.

Q. 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.

R. 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.

S. Profit equalisation reserves (“PER”)

PER is the amount appropriated out of the total Islamic Banking gross income in order to maintain a certain level of return to depositors which is as stipulated by Bank Negara Malaysia Circular on “The Framework of the Rate of Return”. PER is deducted from the total Islamic Banking gross income in deriving the net distributable gross income. The amount appropriated is shared by the depositors and the Group or the Bank.

3. Cash and short term funds Group Bank

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000 Cash and balances with banks and other financial institutions 61,830 61,683 61,810 61,663

Money at call and deposit placements maturing within one month 11,906,610 10,419,350 11,906,610 10,419,350

11,968,440 10,481,033 11,968,420 10,481,013

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

2011 2010

RM’000 RM’000

Licensed banks 1,516,673 811,660



5. Financial assets held-for-trading Group and Bank

2011 2010

At fair value RM’000 RM’000

Malaysian Government Treasury Bills 101,468 101,520

Malaysian Government Securities 1,004,580 130,739

Malaysian Government Investment Issues 13,572 136,604

Bank Negara Malaysia Bills/Notes 1,217,229 1,468,506

Corporate Notes/Private debt securities - 15,094

2,336,849 1,852,463

6. Financial investments available-for-sale Group and Bank

2011 2010

At fair value RM’000 RM’000

Malaysian Government Treasury Bills/Securities* 3,368,908 2,202,157

Bank Negara Malaysia Bills - 227,218

Malaysian Government Investment Issues 1,849,101 537,506

Yankee bonds/US bonds - 131,108

5,218,009 3,097,989 At cost

Unquoted securities 7,499 7,499

5,225,508 3,105,488

* Malaysian Government Securities of the Group and the Bank amounting to RM130 million at 31 December 2010 was utilised to meet the Statutory Reserve Requirement as further explained in Note 10.



7. Loans, advances and financing

i. By type

Group and Bank

2011 2010

RM’000 RM’000

Overdrafts 298,496 243,261 Term loans/financing

- housing loans/financing 9,192,709 9,827,111

- hire purchase receivables 1,592 3,175

- lease receivables 698 3,678

- other term loans/financing 1,474,378 1,266,750

Bills receivable 954,240 458,410

Trust receipts 15,671 14,147

Claims on customers under acceptance credits 1,125,751 1,111,455

Staff loans 94,091 101,585

Share margin financing 182,814 189,523

Credit cards receivables 5,951,843 5,702,121

Revolving credit 1,676,429 1,197,043

Other loans 3,491 -

20,972,203 20,118,259

Unearned interest and income (30,185) (38,615)

Gross loans, advances and financing 20,942,018 20,079,644

Less: Allowance for impaired loans, advances and financing

- Collective assessment allowance (365,325) (369,357)

- Individual assessment allowance (219,436) (229,542)

Net loans, advances and financing 20,357,257 19,480,745

ii. By type of customer

Domestic non-bank financial institutions

- others 649,573 299,856

Domestic business enterprises

- small and medium enterprises 454,908 408,123

- others 3,662,378 2,727,556

Individuals 15,958,134 16,365,585

Foreign entities 217,025 278,524

20,942,018 20,079,644



7. Loans, advances and financing (continued)

iii. By interest/profit rate sensitivity

Group and Bank

2011 2010

RM’000 RM’000 Fixed rate

Housing loans/financing 823,612 887,577

Hire purchase receivables 1,592 3,175

Other fixed rate loans/financing 10,028,423 8,977,936

Variable rate

BLR plus 9,229,388 9,825,153

Cost plus 859,003 385,803

20,942,018 20,079,644

iv. By sector

Primary agriculture 105,178 35,022

Mining and quarrying 18,991 7,708

Manufacturing (including agriculture based) 2,409,876 1,710,646

Electricity, gas and water 86,890 32,295

Construction 45,704 46,104

Wholesale, retail trade, restaurants and hotels 921,901 840,970

Transport, storage and communication 301,573 137,600

Finance, insurance, real estate and business services 800,246 512,027

Education, health and others 16,160 19,933

Household

- consumption credit 6,501,532 6,246,231

- residential 9,001,842 9,623,221

- purchase of securities 182,813 189,523

- others 271,947 306,610

Other sectors 277,365 371,754

20,942,018 20,079,644

v. By purpose

Purchase of securities 182,813 189,523

Purchase of landed property 9,584,491 10,243,017

Purchase of fixed assets excluding land and building 5,406 9,545

Personal use 660,946 698,800

Credit card 5,951,859 5,702,122


Working capital 4,446,136 3,214,786

Other purposes 88,358 13,289

20,942,018 20,079,644



7. Loans, advances and financing (continued)

vi. Residual contractual maturity

Group and Bank

2011 2010

RM’000 RM’000

Maturing within one year 10,620,013 6,711,434

One to five years 714,320 3,099,068

Over 5 years 9,607,685 10,269,142

20,942,018 20,079,644

vii. By geographical distribution

Within Malaysia 20,942,018 20,079,644

8. Impaired loans, advances and financing

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

Group and Bank

2011 2010

RM’000 RM’000

At 1 January 540,814 491,317

Classified as impaired during the year 727,676 724,457

Reclassified as performing during the year (384,262) (325,418)

Amount recovered (231,379) (178,916)

Amount written off (162,312) (170,626)

At 31 December 490,537 540,814

Individual assessment allowance (219,436) (229,542)

Net impaired loans, advances and financing 271,101 311,272

Ratio of net impaired loans and financing to gross loans and

financing less individual assessment allowance 1.31% 1.57%



8. Impaired loans, advances and financing (continued)

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

Group and Bank

2011 2010

RM’000 RM’000 Collective assessment allowance

At 1 January 369,357 360,407

(Written back)/Allowance made during the year, net (4,032) 8,950

At 31 December 365,325 369,357

As % of gross loans, advances and financing less individual assessment allowance 1.76% 1.86%

Individual assessment allowance

At 1 January 229,542 221,588

Allowance made during the period 16,888 34,644

Written back during the year (19,418) (12,984)

Written off during the year (7,576) (13,706)

At 31 December 219,436 229,542

iii. Impaired loans, advances and financing by sector Primary agriculture 7,328 8,937

Mining and quarrying 373 -

Manufacturing (including agriculture based) 32,041 36,178


Wholesale, retail trade, restaurants and hotels 18,082 20,070

Transport, storage and communication 84 104

Finance, insurance, real estate and business services 9,970 12,081

Household

- consumption credit 86,539 116,112

- residential 299,025 307,265

- purchase of securities 20,475 20,795

Other purposes 1,686 2,246

490,537 540,814

iv. Impaired loans, advances and financing by geographical distribution

Within Malaysia 490,537 540,814



9. Other assets Group and Bank

2011 2010

RM’000 RM’000 Interest/Income receivable 66,174 45,880

Other debtors, deposits and prepayments 414,094 264,640

Derivative assets (Note 30) 820,647 1,007,240

Tax recoverable 5,097 -

1,306,012 1,317,760

10. Statutory deposits with Bank Negara Malaysia

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act 1958 (revised - 1994) to satisfy the Statutory Reserve Requirement (“SRR”), the amount of which is determined as a set percentage of total eligible liabilities.

In accordance with BNM’s circular titled “Regulatory Treatment related to the Statutory Reserve Requirement Incentive for Principal Dealers and Islamic Principal Dealers” issued on 10 July 2009, the Bank being a principal dealer appointed by BNM, is allowed to utilise Malaysia Government Securities (“MGS”) holdings to meet the SRR. As at 31 December 2010, MGS of the Group and the Bank with nominal amount of RM130 million are utilised for SRR determination purposes. These securities are classified under financial investments available-for-sale (Note 6).

11. Deferred tax assets

Deferred tax assets and liabilities are attributable to the followings:

Plant and Reserves equipment - - Available Capital -for-sale allowances Provisions securities Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2010 (8,539) 66,830 (3,149) 55,142

Recognised in profit or loss (11,055) 9,586 - (1,469)

Recognised in other comprehensive income - - 5,627 5,627

At 31 December 2010 (19,594) 76,416 2,478 59,300



11. Deferred tax assets (continued)

Plant and Reserves equipment - - Available Capital -for-sale allowances Provisions securities Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2011 (19,594) 76,416 2,478 59,300 Recognised in profit or loss (260) (53,304) - (53,564) Recognised in other comprehensive income - - (4,940) (4,940)

At 31 December 2011 (19,854) 23,112 (2,462) 796

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.

The recognised deferred tax assets and liabilities are as follows:

Group and Bank

2011 2010

RM’000 RM’000 Plant and equipment - capital allowances (19,854) (19,594) Provisions 23,112 76,416 Fair value of available-for-sale securities (2,462) 2,478

796 59,300

12. Investments in subsidiary companies Bank

2011 2010

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

2011 2010 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

comprehensive income.



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

Cost RM’000 RM’000 RM’000 RM’000

At 1 January 2010 5,877 88,041 247,073 340,991

Additions 357 9,427 69,997 79,781

Disposals - (142) (3,502) (3,644)

Write offs - (56) - (56)

Reclassification - (133) 133 -

At 31 December 2010/1 January 2011 6,234 97,137 313,701 417,072

Additions 347 22,489 26,347 49,183

Disposals - (5,499) (9,261) (14,760)

Write offs - - (843) (843)

At 31 December 2011 6,581 114,127 329,944 450,652

Depreciation

At 1 January 2010 3,644 79,696 194,987 278,327

Charge for the year 367 5,420 26,988 32,775

Disposals - (112) (2,643) (2,755)

Written offs - (56) - (56)

Reclassification - (35) 35 -


Charge for the year 462 6,490 28,761 35,713

Disposals - (5,412) (8,002) (13,414)

Written offs - - (843) (843)

At 31 December 2011 4,473 85,991 239,283 329,747

Carrying amounts

At 1 January 2010 2,233 8,345 52,086 62,664


At 31 December 2011 2,108 28,166 90,631 120,905



14. Deposits from customers

i. By type of deposit

Group and Bank

2011 2010

RM’000 RM’000

Demand deposits 10,026,162 9,869,460

Saving deposits 935,372 837,370

Fixed deposits 9,559,230 11,583,915

Other deposits 9,444,737 6,393,953

Negotiable instruments of deposit 75,917 80,002

Others - cash collateral 10,168 24,163

30,051,586 28,788,863

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

Group and Bank

2011 2010

RM’000 RM’000

Due within six months 15,085,525 13,005,161

Six months to one year 3,395,429 4,412,942

One year to three years 372,522 338,543

Three years to five years 226,408 101,224

Over five years - 200,000

19,079,884 18,057,870

iii. By type of customer

Group and Bank

2011 2010

RM’000 RM’000

Government and statutory bodies 177,664 27,368

Business enterprises 17,418,167 15,065,326

Individuals 9,795,376 10,241,578

Others 2,660,379 3,454,591

30,051,586 28,788,863



15. Deposits and placements of banks and other financial institutions Group and Bank

2011 2010

RM’000 RM’000

Licensed banks 7,777,097 2,046,727

Licensed finance companies - 276,198

7,777,097 2,322,925

16. Other liabilities Group and Bank

2011 2010

RM’000 RM’000

Interest/Profit payable 81,090 106,294

Other creditors and accruals 1,673,582 1,640,664

Provision for retirement benefits (Note 19) 701 372

Profit Equalisation Reserve (Note 37(l)) 12,391 9,187

Taxation - 45,765

Derivative liabilities (Note 30) 769,950 1,044,120

2,537,714 2,846,402

17. Share capital Group and Bank Number Number Amount of shares Amount of shares

2011 2011 2010 2010

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

2011 2010

RM’000 RM’000

Share premium 380,303 380,303

Statutory reserve 121,697 121,697

Fair value reserve 7,387 (6,630)

Retained profits 3,388,271 2,998,408

3,897,658 3,493,778



18. Reserves (continued)

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.

The statutory reserve is maintained in compliance with Section 36 of the Banking and Financial Institutions Act 1989 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.

Subject to agreement by the Inland Revenue Board, the Bank has Section 108 tax credit and tax exempt income to frank approximately RM1.66 billion of its distributable reserves at 31 December 2011 if paid out as dividends.

The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As such, the Section 108 tax credit balance as at 31 December 2007 will be available to the Bank until such time the credit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.

19. Employee benefits

i. Retirement benefits

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

Group and Bank

2011 2010

RM’000 RM’000

Present value of the funded obligation 35,439 34,633

Fair value of plan assets (37,343) (37,488)

(1,904) (2,855)

Unrecognised past service costs (12) (20)

Unrecognised actuarial gains 2,617 3,247

Liability recognised in statements of financial position 701 372

The Group and the Bank make contributions to a fully funded defined benefit scheme for its employees. Contributions to the fund are made to a separately administered fund. Under the fund, eligible employees are entitled to one and a half month of the final/last drawn salary multiplied by the Plan service 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 Fund.

On 1 January 2007, majority of the Plan 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.

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

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

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



19. Employee benefits (continued)

i. Retirement benefits (continued)

Plan assets comprise:

Group and Bank

2011 2010

RM’000 RM’000

Equities 9,709 10,984

Property 15,796 15,782

Securities 9,971 9,597

Others 1,867 1,125

37,343 37,488

Movement in the present value of the defined benefit obligations:

Group and Bank

2011 2010

RM’000 RM’000

Defined benefit obligations at 1 January 34,633 34,093

Benefits paid by the plan (2,315) (2,002)

Current service costs and interest 3,323 3,376

Actuarial gains (202) (834)

Defined benefit obligations at 31 December 35,439 34,633

Movement in the fair value of plan assets:

Group and Bank

2011 2010

RM’000 RM’000

Fair value of plan assets at 1 January 37,488 25,972

Contributions paid into the plan 426 2,151

Benefits paid by the plan (2,315) (2,002)

Expected return on plan assets 2,577 1,765

Actuarial (losses)/gains (833) 9,602

Fair value of plan assets at 31 December 37,343 37,488





The amounts recognised in the statements of comprehensive income are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Current service costs 1,559 1,583 Interest cost 1,764 1,793

Expected return on plan assets (2,577) (1,765)

Net actuarial loss recognised in the year - 618

Prior service costs 9 11

Amount included under “personnel costs” 755 2,240

Actual return on plan assets 1,745 11,367

Movement in the net liability recognised in the statements of financial position are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Opening net liability as at 1 January 372 283

Recommended expenses as above 755 2,240

Contributions paid (426) (2,151)

701 372

The latest valuation of the Defined Benefit Plan as at 31 December 2011 was conducted by Towers Watson (Malaysia) Sdn.

Bhd.. The unfunded portion of the total liability will continue to be borne by Citibank Berhad. Projected unit credit method is used to calculate the actuarial present value of promised retirement benefits.

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

Group and Bank

2011 2010

Discount rate 5.00% 5.25%

Rate of increase in salary levels 7.00% 7.00%

Expected long-term rate of return on plan assets 6.50% 7.00%

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 55 years.

The overall expected long-term rate of return on assets is 6.5% per annum. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.





Historical information

Group and Bank 2011 2010 2009 2008 2007

RM’000 RM’000 RM’000 RM’000 RM’000

Present value of the defined benefit obligation 35,439 34,633 34,093 26,926 25,282

Fair value of plan assets (37,343) (37,488) (25,972) (18,991) (21,295)

(Surplus)/Deficit in the plan (1,904) (2,855) 8,121 7,935 3,987

Experience adjustments arising on plan assets - losses/(gains) 833 (9,602) (2,127) 2,774 (1,132)

Experience adjustments arising on plan liabilities - (gains)/losses (686) (1,342) 4,850 36 1,037

Assumption adjustment on plan liabilities - losses 484 508 566 1,262 1,251

The Group and the Bank expected RM865,040 contribution to be paid to the funded defined benefit plan in year 2012.

ii. Share option plan

The Group and the Bank have a number of stock option programmes for its officers and employees as part of a discretionary award package. Options are granted on Citigroup Inc. stock at the market value denominated in US dollar at the time of grant. Option granted in October 2011 has a six year term and will vest 33% each year over a three years period, provided the staff remains continuously employed in the Group and the Bank.

Group and Bank

2011 2010

Outstanding at 1 January 677,773 763,500

Granted - -

Exercised (393) -

Transfer in/(out) 21,388 (17,956)

Lapsed/Cancelled (36,833) (67,771)

Outstanding at 31 December 661,935 677,773




ii. Share option plan (continued)

Details of share options granted during the year:

Group and Bank

2011 2010 Expiry dates - -

Average grant price per ordinary share (RM) - -

Aggregated proceeds if shares are issued (RM’000) - -

Details of share options exercised during the year:

Year of expiry 2014 -

Average exercise price per ordinary share (RM) 12.97 -

Aggregated issue proceeds (RM’000) 5 -

Fair value at date of vesting (RM’000) 2,399 -

Terms of the options outstanding at 31 December:

Group and Bank

2011 2010 Expiry dates Exercise price - 26,401

- 2,681

415 -

- 414

26,980 -

1,839 -

- 1,839

- 28,220

750 -

- 635

635 -

- 11,992

11,188 -

- 605,591

620,128 -

661,935 677,773

iii. Share capital accumulation plan (CAP)

The Group and the Bank have a number of capital accumulation programmes for its 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 2011 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.

RM 152.78

RM 136.32

RM 155.47

RM 150.84

RM 133.82

RM 144.33

RM 129.19

RM 129.85

RM 107.74

RM 167.68

RM 172.82

RM 75.39

RM 77.70

RM 12.58

RM 12.97

Jan 2011

Aug 2011

Jan 2012

Jan 2012

Feb 2012

Feb 2012

Feb 2012

Feb 2012

Aug 2012

Jan 2013

Jan 2013

Jan 2014

Jan 2014

Oct 2015

Oct 2015


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

Group and Bank

2011 2010

Outstanding at 1 January 606,369 445,663

Granted 297,605 460,841

Vested 20,438 8,299

Lapsed/cancelled (220,324) (303,233)

Net transferred out (218,563) (5,201)

Outstanding at 31 December 485,525 606,369

Details of CAP granted during the year:

Group and Bank

2011 2010

Expiry dates Jan 17, 2015 Oct 19, 2014

Average grant price per ordinary share (RM) 15.95 12.54

Aggregated proceeds if shares are issued (RM’000) 4,748 5,781

Details of CAP vested during the year:

Average exercise price per ordinary share (RM) 25.02 13.44

Aggregated issue proceeds (RM’000) 6,171 10,629

Fair value at date of vesting (RM’000) 2,745 4,076

Terms of the CAP outstanding at 31 December:

Group and Bank

2011 2010 Year of expiry Grant price

- 41,071

19,602 -

7,004 -

- 133,553

497 -

- 1,990

94,804 -

- 194,155

140,932 -

- 209,405

222,686 -

- 26,195

485,525 606,369



RM 167.93

RM 62.76

RM 83.68

RM 81.19

RM 47.96

RM 46.53

RM 14.85

RM 14.41

RM 11.17

RM 10.84

RM 15.95

RM 12.86

Jan 2011

Jan 2012

Jan 2012

Jan 2012

Oct 2012

Oct 2012

Jan 2013

Jan 2013

Jan 2014

Jan 2014

Jan 2015

Jan 2015



20. Interest income Group and Bank

2011 2010

RM’000 RM’000 Loans and advances

- Interest income other than recoveries from impaired loans 1,217,598 1,209,905

- Recoveries from impaired loans 45,277 36,087

Money at call and deposit placements with financial institutions 247,359 158,914

Financial assets held-for-trading 50,702 39,944

Financial investments available-for-sale 84,187 109,320

Securities purchased under resale agreements 28,367 2,138

1,673,490 1,556,308

Accretion of discount 40,081 19,152

Total interest income 1,713,571 1,575,460

21. Interest expense Group and Bank

2011 2010

RM’000 RM’000

Deposits and placements of banks and other financial institutions 31,535 25,592

Deposits from customers 478,134 350,546

Others 4,975 15,752

514,644 391,890



22. Other operating income Group and Bank

2011 2010

RM’000 RM’000 Fee income:

Commission 138,542 177,756

Service charges and fees 15,202 3,428

Guarantee fees 6,698 7,267

Bankcard fees 167,817 143,294

Insurance premium and referral 19,578 16,290

Other fee income 36,995 24,464

384,832 372,499

Trading income:

Unrealised gain from revaluation of financial

assets held-for-trading 977 917

Net gain from sales of securities

- Financial assets held-for-trading 27,571 16,989

- Financial investments available-for-sale 7,332 58,470

Gross dividends from financial investments available-for-sale 28 58

35,908 76,434

Other income:

Foreign exchange profit

- unrealised gain 161,916 112,533

- realised gain 30,393 33,224

Gain/(Loss) from derivatives 47,157 (21,282)

Loss on disposal of plant and equipment (1,023) (178)

238,443 124,297

659,183 573,230



23. Other operating expenses Group and Bank

2011 2010

RM’000 RM’000

Personnel costs - Salaries, allowances and bonuses 323,600 235,173

- Contributions to Employees Provident Fund 37,592 33,648

- Staff benefits and other compensations 41,300 86,950

- Others 6,927 9,985

409,419 365,756

Establishment costs

- Depreciation 35,713 32,775

- Rental of premises 21,526 9,530

- Hire of equipments 2,603 25,583

- Utilities 6,677 5,593

- Others 18,436 3,398

84,955 76,879

Marketing expenses

- Advertisement and promotional expenses 44,560 42,641

- Others 1,518 1,744

46,078 44,385

Administrative and general expenses

- Processing cost 179,803 81,215

- Auditors’ remuneration

- Statutory audit 346 338

- Other services 191 182

- Stationeries and supplies 6,748 6,049

- Communication expenses 16,055 17,058

- Maintenance of office equipment 4,385 3,641

- Others 139,866 162,687

347,394 271,170

Total other operating expenses 887,846 758,190



23. Other operating expenses (continued)

Group and Bank

2011 2010

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

Executive Directors (including CEO) Salary and other remuneration, including meeting allowances 2,314 2,114

Bonuses 971 2,315

Benefits-in-kind 392 318

Share-based payment 830 (489)

Non-executive Directors Fees 300 225

4,807 4,483

ii. Other key management personnel:

- short-term employee benefits 3,144 3,534

Salary Benefits- and others in- remunerations Fees Bonuses kind Total

RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors and CEO

Sanjeev Nanavati 2,314 - 971 392 3,677

Non-executive Directors

Jonathan Christian Larsen - - - - -

Tan Sri Dato’ Hj Omar Ibrahim - 100 - - 100

Dato’ Syed Sidi Idid Bin Syed Abdullah Idid - 100 - - 100

Dato’ Siow Kim Lun @ Siow Kim Lin - 100 - - 100

Agnes Liew Yun Chong - - - - -

Terence Kent Cuddyre - - - - -

2,314 300 971 392 3,977



24. Allowance for loans, advances and financing Group and Bank

2011 2010

RM’000 RM’000 Allowance for loans, advances and financing:

Individual assessment

- allowance made during the year 16,888 34,644

- written back (19,418) (12,984)

Collective assessment

- (written back)/allowance made during the financial year, net (4,032) 8,950

Impaired loans, advances and financing

- written back (79,678) (68,042)

- written off 230,981 238,427

144,741 200,995

25. Taxation Group and Bank

2011 2010

RM’000 RM’000 Malaysian income tax

- current year 220,302 207,671

- prior year over provision (108,536) (14,787)

111,766 192,884 Deferred tax expense

- Origination and reversal of temporary differences (13,956) 1,469

- Prior year over provision 67,520 -

165,330 194,353

A reconciliation of the income tax expense between the statutory tax expense and effective tax expense is as follows:-

Group and Bank

2011 2010

RM’000 RM’000


Income tax using Malaysian tax rate of 25% 213,798 208,402

Non-deductible expenses 431 715

Others (7,883) 23

206,346 209,140

Over provision in prior year (41,016) (14,787)

165,330 194,353



26. Earnings per share

The earnings per ordinary share has been calculated based on the net profit after taxation of RM689,863,000 (2010 - RM639,253,000) divided by the number of ordinary shares of RM 1 each in issue during the year of 121 ,696,972.

27. Dividends Dividends recognised in the current year by the Bank are:

Sen Total per share amount Date of (net of tax) RM’000 payment 2011 Final 2010 ordinary 247 300,000 28 June 2011

2010 Final 2009 ordinary 205 250,000 25 June 2010

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 (net of tax) RM’000

Final ordinary - 31 December 2011 247 300,000

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. or Citibank Overseas Investment

Corporation as the holding companies and 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.



28. Significant related party transactions and balances (continued)

Transactions and balances with parent companies and other related companies Group and Bank Group and Bank

2011 2010

RM’000 RM’000 RM’000 RM’000

Parent Other related Parent Other related companies companies companies companies Income

Interest on interest bearing deposits 66,901 49,251 48,733 70,600

Other income 24,042 348,784 17,824 185,027

90,943 398,035 66,557 255,627

Expenditure

Interest on interest bearing deposits - 27,803 - 14,785

Other expenses 14,309 559,225 39,640 305,173

14,309 587,028 39,640 319,958

Amount due from

Interest bearing deposits - 7,542,592 - 4,876,540

Current account balances - 1,522,230 - 641,124

Other balances 124,982 1,059,365 126,092 242,572

124,982 10,124,187 126,092 5,760,236

Amount due to

Interest bearing deposits - 7,531,210 - 180,915

Current account balances 147,870 248,537 279,177 236,308

Other balances 134,169 250,231 151,790 1,630,408

282,039 8,029,978 430,967 2,047,631

All related party transactions are conducted at arm’s length basis and on normal commercial terms which are not more

favourable than those generally available to public.



29. Credit transactions and exposures with connected parties Group and Bank

2011 2010

RM’000 RM’000

Outstanding credit exposures with connected

parties of which: 2,438,114 1,224,100

Total credit exposure which is non-performing

or in default - -

Total credit exposures 68,594,284 60,288,251

Percentage of outstanding credit exposures to

connected parties

- as a proportion of total credit exposures 3.55% 2.03%

- as a proportion of capital base 57.20% 32.20%

- which is non-performing or in default 0.00% 0.00%

The disclosure on Credit Transactions and Exposures with Connected Parties above are presented in accordance with para 9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties, which became effective on 1 January 2008.

Based on these guidelines, a connected party refers to the following:

i. Directors of the Bank and their close relatives;

ii. Controlling shareholder and his close relatives;

iii. Executive Officer, being a member of management having authority and responsibility for planning, directing and/or controlling the activities of the Bank, and his close relatives;

iv. Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status of existing credit transactions, either as a member of a committee or individually, and their close relatives;

v. Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv) above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor, and their subsidiaries or entities controlled by them;

vi. Any person for whom the persons listed in (i) to (iv) above is a guarantor; and

vii. Subsidiary of or an entity controlled by the Bank and its connected parties.

Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. They also include holdings of equities and private debt securities issued by the connected parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions no more favourable than those entered into with other counterparties with similar circumstances and creditworthiness. Due care has been taken to ensure that the creditworthiness of the connected party is not less than that normally required of other persons.



30. Derivative financial instruments

2011 2010

Positive Negative Positive Negative Contract fair fair Contract fair fair amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Foreign exchange

related contracts:

- Forwards 44,501,232 202,448 96,410 44,990,550 264,681 310,204

- Cross currency interest rate swaps 5,212,667 294,397 294,535 6,948,760 423,054 311,223

- Options 2,034,702 9,026 2,956 703,871 3,205 3,213

Interest rate contracts:

- Futures 3,915,000 - - 7,384,086 - -

- Swaps 22,286,981 298,967 351,462 28,199,721 281,970 372,410

- Options 474,793 397 2,494 1,082,406 2,026 5,275

Equity related contracts 178,235 7,893 7,893 1,321,876 14,927 14,956

Others 785,672 7,519 14,200 731,077 17,377 26,839

79,389,282 820,647 769,950 91,362,347 1,007,240 1,044,120

Note 9 Note 16 Note 9 Note 16



31. Financial risk management

The Group’s and the Bank’s risk management framework are designed to monitor, evaluate and manage the principal risk they assume in conducting its activities. These risks include the following:

• credit risk

• market risk

• operational risk

1. Credit Risk

Credit risk is the potential for financial loss resulting from the failure of a borrower or counter party to honour its financial or contractual obligations. Credit arises in lending, trading, and derivatives transactions, securities transactions, settlement and when the Bank acts as an intermediary on behalf of its clients and other third parties.

The credit risk management process of 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:

o for residential mortgages - charges over residential properties

o for commercial property loans - charges over the properties being financed

o for share margin financing - pledges over quoted securities

o for other loans - charges over business assets such as premises, inventories, trade receivable or deposits



Financial Services, Wholesale Government Insurance, Electricity, & Retail and House- Real Estate Gas & Trade, Transport, Social & Central hold & Business Services, Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2011 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 2,141,000 - 9,827,440 - - - - - - - - - 11,968,440

Deposits and placements with bank and other financial institutions - - 1,516,673 - - - - - - - - - 1,516,673

Securities purchased for resale agreements 1,218,993 - - - - - - - - - - - 1,218,993

Financial assets held- for-trading 2,336,849 - - - - - - - - - - - 2,336,849

Financial investments available-for-sale 5,218,009 - - - - - - - - - - 7,499 5,225,508

Loans, advances and financing - 15,958,134 800,246 105,178 18,991 2,409,876 86,890 45,704 921,901 301,573 16,160 277,365 20,942,018

Other assets - - 947,626 10,816 747 67,573 835 20 14,156 5,997 - 258,242 1,306,012

Statutory deposits with Bank Negara Malaysia 398,080 - - - - - - - - - - - 398,080

11,312,931 15,958,134 13,091,985 115,994 19,738 2,477,449 87,725 45,724 936,057 307,570 16,160 543,106 44,912,573

Contingent liabilities - - 2,267,554 - - - - - - - - - 2,267,554

Commitments - 21,974,557 2,822,702 - - - - - - - - - 24,797,259

Total Credit Exposures 11,312,931 37,932,691 18,182,241 115,994 19,738 2,477,449 87,725 45,724 936,057 307,570 16,160 543,106 71,977,386

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 31 December 2011 , 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 Services, Mining & Water Restaurants Storage & Community Other Group Banks Loans Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors Total

2010 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 4,576,600 - 5,904,433 - - - - - - - - - 10,481,033

Deposits and placements with bank and other financial institutions - - 811,660 - - - - - - - - - 811,660

Securities purchased for resale agreements 404,417 - - - - - - - - - - - 404,417

Financial assets held- for-trading 1,837,368 - - - - - 10,095 - 5,000 - - - 1,852,463

Financial investments available-for-sale 3,097,989 - - - - - - - - - - 7,499 3,105,488

Loans, advances and financing - 16,365,585 512,027 35,022 7,708 1,710,646 32,295 46,104 840,970 137,600 19,933 371,754 20,079,644

Other assets - - 624,296 1,802 2,042 87,229 173 21 13,674 17,822 3 570,698 1,317,760

9,916,374 16,365,585 7,852,416 36,824 9,750 1,797,875 42,563 46,125 859,644 155,422 19,936 949,951 38,052,465

Contingent liabilities 617 - 2,307,478 - - - - - 1,114 - - - 2,309,209

Commitments - 21,912,163 1,632,020 - - - - - - - - - 23,544,183

Total Credit Exposures 9,916,991 38,277,748 11,791,914 36,824 9,750 1,797,875 42,563 46,125 860,758 155,422 19,936 949,951 63,905,857

31. Financial risk management (continued) A. Credit risk exposures and credit risk concentration (continued)

i. By Industry analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2011 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 5,232,143 3,902,079 144,827 6,436 12,527 702,090 444,941 1,523,397 11,968,440

Deposits and placements with banks and other financial institutions 1,251,495 106,278 - 158,900 - - - - 1,516,673

Securities purchased for resale agreements 1,218,993 - - - - - - - 1,218,993

Financial assets held- for-trading 2,336,849 - - - - - - - 2,336,849

Financial investments available-for-sale 5,225,508 - - - - - - - 5,225,508

Loans, advances and financing 20,942,018 - - - - - - - 20,942,018

Other assets 758,583 14,533 681 4,904 1,520 126,964 240,823 158,004 1,306,012

Statutory deposits with Bank Negara Malaysia 398,080 - - - - - - - 398,080

37,363,669 4,022,890 145,508 170,240 14,047 829,054 685,764 1,681,401 44,912,573

Contingent liabilities 1,627,769 19,180 469,849 - 1,624 63,232 36,688 49,212 2,267,554

Commitments 24,797,259 - - - - - - - 24,797,259

Total Credit Exposures 63,788,697 4,042,070 615,357 170,240 15,671 892,286 722,452 1,730,613 71,977,386




ii. By Geographical analysis




ii. By Geographical analysis (continued)

Hong Kong & North United Other Group Malaysia Singapore China PRC Japan Australasia America Kingdom countries Total

2010 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 6,884,986 3,113,155 8,654 48,309 61,220 13,639 76,082 274,988 10,481,033

Deposits and placements with banks and other

financial institutions 495,159 162,326 - 154,175 - - - - 811,660

Securities purchased

for resale agreements 404,417 - - - - - - - 404,417

Financial assets held-

for-trading 1,847,463 - - 5,000 - - - - 1,852,463

Financial investments

available-for-sale 2,974,380 - - - - 131,108 - - 3,105,488

Loans, advances and

financing 20,079,644 - - - - - - - 20,079,644

Other assets 792,891 12,958 277 20,162 513 126,856 208,795 155,308 1,317,760

33,478,940 3,288,439 8,931 227,646 61,733 271,603 284,877 430,296 38,052,465

Contingent liabilities 1,742,225 29,560 285,447 - 2,653 67,602 33,459 148,263 2,309,209

Commitments 23,544,183 - - - - - - - 23,544,183

Total Credit Exposures 58,765,348 3,317,999 294,378 227,646 64,386 339,205 318,336 578,559 63,905,857

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.



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

2011 2010

RM’000 RM’000

AAA 320,000 300,000

AA to AA- - 100,000

A+ to A- 1,196,673 316,501

Unrated - 95,159

1,516,673 811,660

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

2011 2010

RM’000 RM’000

Malaysia 1,251,495 495,159

Other 265,178 316,501

1,516,673 811,660

C. Other securities

Group and Bank

2011 2010

RM’000 RM’000

Financial assets held-for-trading 2,336,849 1,852,463

Financial investments available-for-sale 5,225,508 3,105,488

7,562,357 4,957,951




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

2011 2010

RM’000 RM’000

AAA 6,500 11,500

A+ to A- 4,427,380 4,804,249

Unrated 3,128,477 142,202

7,562,357 4,957,951

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

2011 2010

RM’000 RM’000

Malaysia 7,562,357 4,821,844

Other - 136,107

7,562,357 4,957,951




D. Credit quality of Loans, advances and financing

Group and Bank

2011 2010

RM’000 RM’000

Loans, advances and financing

- neither past due nor impaired 18,732,135 17,498,466

- past due but not impaired 1,719,346 2,040,363

- impaired 490,537 540,815

Gross amount 20,942,018 20,079,644


Collective assessment allowance (365,325) (369,357)

Carrying amount 20,357,257 19,480,745

Neither past due nor impaired

Included in the total loans, advances and financing 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 not 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

2011 2010

RM’000 RM’000

Renegotiated loans 876,855 846,099

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

2011 2010

RM’000 RM’000

1 - 29 dpd 1,228,861 1,419,750

30 - 59 dpd 331,993 437,370

60 - 89 dpd 158,492 183,243

90 - 119 dpd - -

120 - 118 dpd - -

>180 dpd - -

1,719,346 2,040,363




D. Credit quality of Loans, advances and financing (continued)

Impaired

Loans and advances 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 and advances to customers that are individually impaired analysed by age are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Current 10,957 15,786

1 - 29 dpd 8,319 13,959

30 - 59 dpd 12,305 12,688

60 - 89 dpd 31,738 34,317

90 - 1 19 dpd 74,426 57,572

120 - 180 dpd 104,047 118,518

>180 dpd 248,745 287,975

490,537 540,815

Estimated value of collaterals against past due but not impaired and impaired loans are RM766,045,000 (2010 - RM711 ,249,000).



31. Financial risk management (continued) 2. Market Risk

Market risk encompasses price risk and liquidity risk, both arising in 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 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 100 basis points movement for interest rates and a 6% 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 2011 , it is estimated that a general increase of 100 basis points in interest rate, with all other variables

held constant, would decrease the Bank’s profit before tax by approximately RM117,588,115 whereas a general decrease of 100 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 2011 , it is estimated that a movement of 6% in Ringgit Malaysia (RM) against foreign currencies,

with all other variables held constant, would result in maximum loss of approximately RM2,276,286.

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 balance sheet date for presentation purposes.




2. Market Risk (continued)

Liquidity Risk Liquidity risk is the risk that the Group and the Bank will not be able to meet its financial commitments when due.

Under the Group’s and the Bank’s internal liquidity risk management policy, there is a set of standards for the measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk. Management of liquidity is performed on a daily basis and is monitored by the Treasurer. The Asset and Liability Committee and the Treasurer undertake the joint responsibility of overall liquidity risk management which covers establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and periodic stress tests.

The Group and the Bank include the net cash flow position for derivatives as part of their daily liquidity reports under off balance sheet items, which are consolidated together with the on balance sheet items to monitor the overall liquidity position of the Group and the Bank. The daily report prepared to monitor the daily liquidity position is known as the Market Access Report (“MAR”). It is prepared by major currencies and it has maturity analysis ranging from overnight to more than 2 years and limits are set for each tenor bucket. Maturity mismatches are monitored through the daily MAR report for necessary treasury actions on funding and gapping.

Limits are determined by the ultimate holding company and are reviewed as often as on a quarterly basis and is done in conjunction with the liquidity stress testing.

The following table indicates the effective interest rate at the balance sheet date 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

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

Assets

Cash and short term funds 10,324,608 - - - - 1,643,832 - 11,968,440 1.55%

Deposits and placements with banks and other financials institutions - 733,854 619,328 163,491 - - - 1,516,673 2.67%

Securities purchased under resale agreements 1,218,993 - - - - - - 1,218,993 2.10%

Financial assets held-for-trading - - - - - - 2,336,849 2,336,849 3.04%

Financial investments available-for-sale - 307,638 1,436,145 2,807,965 673,760 - - 5,225,508 2.78%


- performing 1,725,044 1,422,520 6,993,639 632,761 9,677,517 (365,325) - 20,086,156 6.60%

- impaired - - - - - 271,101 - 271,101

Other assets - - - - - 485,360 820,652 1,306,012

Statutory deposits with Bank Negara Malaysia - - - - - 398,080 - 398,080

Deferred tax assets - - - - - 796 - 796

Plant and equipment - - - - - 120,905 - 120,905

Total assets 13,268,645 2,464,012 9,049,112 3,604,217 10,351,277 2,554,749 3,157,501 44,449,513




i. Interest/profit rate risk (continued)



Liabilities and Shareholders’ equity

Deposits from customers 24,011,170 1,485,000 3,956,486 598,930 - - - 30,051,586 1.66%

Deposits and placements of banks and other financial institutions 3,365,590 3,485,651 802,972 122,884 - - - 7,777,097 0.40%

Bills and acceptances payable - - - - - 63,761 - 63,761

Other liabilities - - - - - 1,767,764 769,950 2,537,714

Total liabilities 27,376,760 4,970,651 4,759,458 721,814 - 1,831,525 769,950 40,430,158

Shareholders’ equity - - - - - 4,019,355 - 4,019,355

Total liabilities and shareholders' equity 27,376,760 4,970,651 4,759,458 721,814 - 5,850,880 769,950 44,449,513

On-balance sheet interest sensitivity gap (14,108,115) (2,506,639) 4,289,654 2,882,403 10,351,277 (3,296,131) 2,387,551

Off-balance sheet interest sensitivity gap (223,464) (467,705) 811,510 92,589 95,340 - -

(14,331,579) (2,974,344) 5,101,164 2,974,992 10,446,617 (3,296,131) 2,387,551







Assets

Cash and short term funds 9,763,380 - - - - 717,653 - 10,481,033 1.50%

Deposits and placements with banks and other financial institutions - 578,355 51,793 181,512 - - - 811,660 4.29%

Securities purchased under resale agreements 404,417 - - - - - - 404,417 1.35%

Financial assets held-for-trading - - - - - - 1,852,463 1,852,463 2.69%

Financial investments available-for-sale - - 277,443 2,719,300 108,745 - - 3,105,488 3.39%


- performing 1,385,476 975,383 6,324,229 246,547 10,607,195 (369,357) - 19,169,473 6.71%

- impaired - - - - - 311,272 - 311,272

Other assets - - - - - 310,520 1,007,240 1,317,760

Deferred tax assets - - - - - 59,300 - 59,300

Plant and equipment - - - - - 108,781 - 108,781

Total assets 11,553,273 1,553,738 6,653,465 3,147,359 10,715,940 1,138,169 2,859,703 37,621,647







Liabilities and Shareholders’ equity

Deposits from customers 19,323,608 2,472,684 6,352,805 639,766 - - - 28,788,863 1.27%

Deposits and placements of banks and other financial institutions 512,996 1,438,808 256,016 115,105 - - - 2,322,925 0.89%

Bills and acceptances payable - - - - - 47,982 - 47,982

Other liabilities - - - - - 1,802,282 1,044,120 2,846,402

Total liabilities 19,836,604 3,911,492 6,608,821 754,871 - 1,850,264 1,044,120 34,006,172

Shareholders’ equity - - - - - 3,615,475 - 3,615,475

Total liabilities and Shareholders' equity 19,836,604 3,911,492 6,608,821 754,871 - 5,465,739 1,044,120 37,621,647

On-balance sheet interest sensitivity gap (8,283,331) (2,357,754) 44,644 2,392,488 10,715,940 (4,327,570) 1,815,583

Off-balance sheet interest sensitivity gap (21,735) (666,608) 4,069 844,350 (61,670) - -

(8,305,066) (3,024,362) 48,713 3,236,838 10,654,270 (4,327,570) 1,815,583




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 exposure to foreign currency exchange rate risk as at reporting date:

MYR USD JPY Others

Group 2011 2011 2011 2011 Total

2011 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 2,980,351 6,930,088 170,487 1,887,514 11,968,440

Deposits and placements with banks and other financial institutions 505,000 742,652 167,942 101,079 1,516,673

Securities purchased under resale agreements 1,218,993 - - - 1,218,993

Financial assets held- for-trading 2,336,849 - - - 2,336,849

Financial investments available-for-sale 5,225,508 - - - 5,225,508

Loans, advances and financing 18,652,984 1,537,447 156,882 9,944 20,357,257

Other assets (3,083,640) 4,901,670 868,509 (1,380,527) 1,306,012

Statutory Deposits with Bank Negara Malaysia 398,080 - - - 398,080

Deferred tax assets 796 - - - 796

Plant and equipment 120,905 - - - 120,905

Total assets 28,355,826 14,111,857 1,363,820 618,010 44,449,513

Liabilities

Deposits from customers 24,420,783 4,054,517 38,882 1,537,404 30,051,586

Deposits and placements of banks and other financial institutions 187,698 7,138,063 438,673 12,663 7,777,097

Bills and acceptances payable 913 57,499 2,372 2,977 63,761

Other liabilities (530,137) 3,382,608 885,192 (1,199,949) 2,537,714

Total liabilities 24,079,257 14,632,687 1,365,119 353,095 40,430,158

Shareholder’s equity 4,019,355 - - - 4,019,355

Total liabilities and Shareholder’s equity 28,098,612 14,632,687 1,365,119 353,095 44,449,513



MYR USD JPY Others

Group 2010 2010 2010 2010 Total

2010 RM’000 RM’000 RM’000 RM’000 RM’000

Assets

Cash and short term funds 5,175,951 4,275,961 165,662 863,459 10,481,033

Deposits and placements with banks and other financial institutions 400,000 214,965 56,762 139,933 811,660

Securities purchased under resale agreements 404,417 - - - 404,417

Financial assets held- for-trading 1,852,463 - - - 1,852,463

Financial investments available-for-sale 2,974,380 131,108 - - 3,105,488

Loans, advances and financing 18,793,386 500,705 165,477 21,177 19,480,745

Other assets 9,906,252 (9,071,471) 985,692 (502,713) 1,317,760

Deferred tax assets 59,300 - - - 59,300

Plant and equipment 108,781 - - - 108,781

Total assets 39,674,930 (3,948,732) 1,373,593 521,856 37,621,647

Liabilities

Deposits from customers 22,095,674 5,676,701 28,576 987,912 28,788,863

Deposits and placements of banks and other financial institutions 539,841 1,499,724 273,162 10,198 2,322,925

Bills and acceptances payable 911 31,405 2,706 12,960 47,982

Other liabilities 12,317,226 (10,018,370) 1,064,106 (516,560) 2,846,402

Total liabilities 34,953,652 (2,810,540) 1,368,550 494,510 34,006,172

Shareholder’s equity 3,615,475 - - - 3,615,475

Total liabilities and Shareholder’s equity 38,569,127 (2,810,540) 1,368,550 494,510 37,621,647


ii. Foreign currency risk (continued)

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 exposure to foreign currency exchange rate risk as at reporting date:



No Less than 7 days to 1 to 3 3 to 6 6 to 12 1 to 3 3 to 5 Over specific 7 days 1 month months months months years years 5 years maturity Total

2011 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 6,423,830 3,900,778 - - - - - - 1,643,832 11,968,440

Deposits and placements with banks and other financial institutions - - 733,854 354,781 264,547 162,597 894 - - 1,516,673

Securities purchased under resale agreements - 1,218,993 - - - - - - - 1,218,993

Financial assets held-for-trading - 127,356 1,098,792 293,885 390,371 446,387 (97,677) 77,735 - 2,336,849

Financial investments available-for-sale - - 307,638 811,937 624,208 1,759,444 1,048,521 673,760 - 5,225,508

Loans, advances and financing 372,100 1,372,220 1,466,563 1,130,554 6,070,508 323,064 404,260 9,731,856 (513,868) 20,357,257

Other assets 476,993 87,648 75,400 92,727 35,722 315,181 56,571 100,344 65,426 1,306,012

Statutory Deposits with Bank Negara Malaysia - - - - - - - - 398,080 398,080

Deferred tax assets - - - - - - - - 796 796

Plant and equipment - - - - - - - - 120,905 120,905

Total assets 7,272,923 6,706,995 3,682,247 2,683,884 7,385,356 3,006,673 1,412,569 10,583,695 1,715,171 44,449,513


iii. Analysis of assets and liabilities by remaining maturity

The following maturity profile is based on the remaining period at the balance sheet date to the contractual maturity.



Liabilities and Shareholders’ funds

Deposits from customers 14,856,097 9,155,073 1,485,000 561,057 3,395,429 372,522 226,408 - - 30,051,586

Deposits and placements of banks and other financial institutions 1,432,250 1,933,340 3,485,651 638,927 164,045 122,884 - - - 7,777,097

Bills and acceptances payable 1,016,844 (250,384) (366,546) (336,153) - - - - - 63,761

Other liabilities 1,773,033 51,804 43,039 44,453 20,287 384,451 84,553 93,170 42,924 2,537,714

Total liabilities 19,078,224 10,889,833 4,647,144 908,284 3,579,761 879,857 310,961 93,170 42,924 40,430,158

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 3,897,658 3,897,658

Total equity attributable to equity holder of the bank - - - - - - - - 4,019,355 4,019,355

Total liabilities and equity 19,078,224 10,889,833 4,647,144 908,284 3,579,761 879,857 310,961 93,170 4,062,279 44,449,513




iii. Analysis of assets and liabilities by remaining maturity (continued)





Assets

Cash and short term funds 8,557,099 1,018,710 - - - - - - 905,224 10,481,033

Deposits and placements with banks and other financial institutions - - 578,355 19,707 32,085 178,875 2,638 - - 811,660

Securities purchased under resale agreements - 404,417 - - - - - - - 404,417

Financial assets held-for-trading - 20,329 666,005 546,891 388,186 192,269 193,534 (154,751) - 1,852,463

Financial investments available-for-sale - - - 49,986 227,458 2,009,960 709,339 108,745 - 3,105,488

Loans, advances and financing 205,476 971,738 1,022,388 452,409 6,093,780 119,013 369,641 10,352,473 (106,173) 19,480,745

Other assets 323,798 72,516 138,915 230,998 32,102 283,367 107,563 69,729 58,772 1,317,760

Deferred tax assets - - - - - - - - 59,300 59,300

Plant and equipment - - - - - - - - 108,781 108,781

Total assets 9,086,373 2,487,710 2,405,663 1,299,991 6,773,611 2,783,484 1,382,715 10,376,196 1,025,904 37,621,647


iii. Analysis of assets and liabilities by remaining maturity

The following maturity profile is based on the remaining period at the balance sheet date to the contractual maturity.





Liabilities and Shareholders’ funds

Deposits from customers 11,988,182 7,335,425 2,472,684 1,928,144 4,424,662 368,565 271,201 - - 28,788,863

Deposits and placements of banks and other financial institutions 303,475 209,521 1,438,808 226,531 29,484 1,582 113,524 - - 2,322,925

Bills and acceptances payable 1,019,456 (289,259) (497,553) (184,662) - - - - - 47,982

Other liabilities 1,835,756 75,224 154,836 94,731 84,948 275,760 197,010 60,481 67,656 2,846,402

Total liabilities 15,146,869 7,330,911 3,568,775 2,064,744 4,539,094 645,907 581,735 60,481 67,656 34,006,172

Share capital - - - - - - - - 121,697 121,697

Reserves - - - - - - - - 3,493,778 3,493,778

Total equity attributable to equity holder of the bank - - - - - - - - 3,615,475 3,615,475

Total liabilities and equity 15,146,869 7,330,911 3,568,775 2,064,744 4,539,094 645,907 581,735 60,481 3,683,131 37,621,647


iii. Analysis of assets and liabilities by remaining maturity (continued)




iv. Analysis of financial liabilities by contractual undiscounted cash flows

The table below details the remaining contractual maturities at the balance sheet 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 rates current at the balance sheet 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

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial liabilities

Deposits from customers 30,051,586 30,207,246 24,131,510 1,405,722 4,060,241 609,773 -

Deposits and placements of banks and other financial institutions 7,777,097 7,781,241 3,365,836 3,487,778 804,141 123,486 -

Bills and acceptances payable 63,761 63,761 756,769 (359,864) (333,144) - -

Other liabilities 2,537,714 2,537,714 1,847,240 50,237 72,927 472,592 94,718

Total 40,430,158 40,589,962 30,101,355 4,583,873 4,604,165 1,205,851 94,718

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

2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Deposits from customers 28,788,863 28,932,550 21,242,320 1,512,703 5,523,671 623,834 30,022

Deposits and placements of banks and other financial institutions 2,322,925 2,323,975 2,164,426 605 42,985 115,959 -

Bills and acceptances payable 47,982 47,982 730,196 (497,553) (184,661) - -

Other liabilities 2,846,402 2,846,402 1,978,637 154,835 179,679 472,770 60,481

Total 34,006,172 34,150,909 26,115,579 1,170,590 5,561,674 1,212,563 90,503




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 and the Bank’s Self Assessments and Operational Risk Framework include the Risk and Control Self-Assessment and the Operational Risk Policy, and define 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. Available-for-sale financial assets (“AFS”);

d. Other liabilities (“OL”).



32. Financial assets and liabilities (continued) 32.1 Categories of financial instruments (continued)

Carrying L&R/ FVTPL

amount (OL) -HFT AFS

Group RM’000 RM’000 RM’000 RM’000

2011

Financial Assets

Cash and short-term funds 11,968,440 11,968,440 - -

Deposits and placements

with banks and other

financial institutions 1,516,673 1,516,673 - -

Securities purchased under

resale agreements 1,218,993 1,218,993 - -

Financial assets held-for-trading 2,336,849 - 2,336,849 -

Financial investments available-for-sale 5,225,508 - - 5,225,508

Loans, advances and financing 20,357,257 20,357,257 - -

Derivatives financial assets 820,647 - 820,647 -

Interest/Income receivable 66,174 66,174 - -

Total financial assets 43,510,541 35,127,537 3,157,496 5,225,508

Financial Liabilities

Deposits from customers 30,051,586 30,051,586 - -

Deposits and placements

of banks and other

financial institutions 7,777,097 7,777,097 - -

Bills and acceptances payable 63,761 63,761 - -

Derivatives financial

liabilities 769,950 - 769,950 -

Interest/Profit payable 81,090 81,090 - -

Total financial liabilities 38,743,484 37,973,534 769,950 -

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

2010

Financial Assets

Cash and short-term funds 10,481,033 10,481,033 - -

Deposits and placements with banks and other financial institutions 811,660 811,660 - -

Securities purchased under resale agreements 404,417 404,417 - -

Financial assets held-for-trading 1,852,463 - 1,852,463 -


Loans, advances and financing 19,480,745 19,480,745 - -

Derivatives financial assets 1,007,240 - 1,007,240 -

Interest/Income receivable 45,880 45,880 - -

Total financial assets 37,188,926 31,223,735 2,859,703 3,105,488

Financial Liabilities

Deposits from customers 28,788,863 28,788,863 - -

Deposits and placements of banks and other financial institutions 2,322,925 2,322,925 - -

Bills and acceptances payable 47,982 47,982 - -

Derivatives financial liabilities 1,044,120 - 1,044,120 -

Interest/Profit payable 106,294 106,294 - -

Total financial liabilities 32,310,184 31,266,064 1,044,120 -




32.2 Fair value of financial instruments

The following table summarises the fair values of the financial assets and liabilities carried on the statements of financial position as at 31 December of the Group.

Group

Carrying Fair Carrying Fair

value value value value

2011 2011 2010 2010

RM’000 RM’000 RM’000 RM’000

Cash and short term funds 11,968,440 11,968,440 10,481,033 10,481,033

Deposits and placements with banks and other financial institutions 1,516,673 1,516,534 811,660 822,904

Securities purchased under resale agreements 1,218,993 1,218,993 404,417 404,417

Financial assets held-for-trading 2,336,849 2,336,849 1,852,463 1,852,463

Financial investments available-for-sale 5,225,508 5,225,508 3,105,488 3,105,488

Loans, advances and financing 20,357,257 20,234,356 19,850,102 19,018,880

Other assets 1,306,012 1,306,012 1,317,760 1,317,760

Deposits from customers 30,051,586 30,051,442 28,788,863 28,790,690

Deposits and placements of banks and other financial institutions 7,777,097 7,777,097 2,322,925 2,322,930

Bills and acceptances payable 63,761 63,761 47,982 47,982

Other liabilities 2,537,714 2,537,714 2,846,402 2,846,402

The methods and assumptions used in estimating the fair values of financial instruments are as follows:

a. Cash and Short Term Funds, and Securities Purchased under Resale Agreements

The carrying amounts are a reasonable estimate of the fair values because of their short-term nature.

b. Deposits and Placements with Financial Institutions

The fair values of deposits and placements with remaining maturities less than one year are estimated to approximate their carrying values. For deposits and placements with maturities of more than one year, the fair values are estimated based on discounted cash flows using the prevailing market rates of similar remaining maturities.

c. Financial Assets Held-for-Trading, Financial Investments Available-for-Sale and Financial Investments Held-to-Maturity

The fair values are estimated based on quoted or observable market prices as at statements of financial position date. Where such quoted or observable market prices are not available, the fair values are estimated using pricing models or discounted cash flow techniques. Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for similar instruments as at statements of financial position date.





32. Financial assets and liabilities (continued) 32.2 Fair value of financial instruments (continued)

d. Loans, Advances and Financing

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. For fixed rate loans and Islamic loans with maturities of more than one year, the fair values are estimated based on expected future cash flows of contractual instalment payments and discounted at prevailing rates at statements of financial position date offered for similar loans to new borrowers with similar credit profiles, where applicable. In respect of impaired loans, 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.

e. Deposits from Customers and Deposits and Placements of Banks and Other Financial Institutions

The fair values for deposit liabilities payable on demand (demand and savings deposits) or with remaining maturities of less than one year are estimated to approximate their carrying values at statements of financial position date. The fair values of fixed deposits with remaining maturities of more than one year are estimated based on discounted cash flows using rates currently offered for deposits of similar remaining maturities. The fair values of Islamic deposits are deemed to approximate their carrying values as at statements of financial position date as the profit rates are determined at the end of their holding periods based on the profit generated from the assets invested. For negotiable instrument of deposits, the estimated fair values are based on quoted or observable market prices at the statements of financial position date. Where such quoted or observable market prices are not available, the fair values of negotiable instruments of deposits are estimated using discounted cash flow techniques.

f. Bills and Acceptances Payable

The carrying amounts are a reasonable estimate of their fair values because of their short-term nature.

g. Subordinated Loan

The carrying amount of the subordinated loan approximates fair value due to its variable interest rate.

h. Other Assets and Other Liabilities

The fair values of other assets and other liabilities are assumed to approximate their carrying values due to the short term nature of these financial instruments or the fact that they are derived by using the market rates at reporting date.




32.3 Fair value hierarchy

Comparative figures have not been presented for 31 December 2010 by virtue of paragraph 44G of FRS 7.

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

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

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

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

2011

Financial assets


Financial assets held-for-trading 2,336,849 - - 2,336,849

Derivative financial assets - 830,208 11,392 841,600

7,554,858 830,208 11,392 8,396,458


Derivative financial liabilities - 1,404,357 10,006 1,414,363

- 1,404,357 10,006 1,414,363


32.3 Fair value hierarchy (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

2011 RM’000

Financial assets

Balance at 1 January 14,148

Total lossed recognised in profit or loss: Attributable to losses relating to assets or liabilities that: - have not been realised (2,756)

Balance at 31 December 11,392

Group and Bank

2011 RM’000


Balance at 1 January 2,850

Total gains recognised in profit or loss: Attributable to gains relating to assets or liabilities that: - have not been realised 7,156

Balance at 31 December 10,006

The unrealised gains/(losses) have been recognised in other operating income/expenses in profit or loss.

Changing one or more of the inputs to reasonable alternative assumptions would not change the value significantly for the financial assets in Level 3 of the fair value hierarchy.



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

2011 2010

RM’000 RM’000

Within 1 year 25,953 24,355

Between 1 and 5 years 6,199 27,570

34. Capital commitments Group and Bank

2011 2010

RM’000 RM’000

Capital expenditures:

Authorised and contracted for 21,181 49,627



35. Capital adequacy

A. The capital adequacy ratios are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 22,272,830 19,954,371

Total market RWA 2,019,640 2,398,682

Total operational RWA 3,525,964 3,550,272

Total Risk Weighted Assets 27,818,434 25,903,325

Computation of Capital Ratios

Tier 1 Capital 4,008,709 3,565,282

Capital Base* 4,262,475 3,801,235

Before deducting proposed dividends:

Core capital ratio 14.41% 13.76%

Risk weighted capital ratio 15.32% 14.67%

After deducting proposed dividends:



* In arriving at the capital base used in the ratio calculations of the Group and the Bank, the proposed dividends were not deducted.

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).



35. Capital adequacy

A. The capital adequacy ratios are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Computation of Total Risk Weighted Assets

(“RWA”)

Total credit RWA 22,272,830 19,954,371

Total market RWA 2,019,640 2,398,682

Total operational RWA 3,525,964 3,550,272

Total Risk Weighted Assets 27,818,434 25,903,325


Tier 1 Capital 4,008,709 3,565,282

Capital Base* 4,262,475 3,801,235

Before deducting proposed dividends:



After deducting proposed dividends:



* In arriving at the capital base used in the ratio calculations of the Group and the Bank, the proposed dividends were not deducted.

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).



35. Capital adequacy (continued)

With effect from 1 January 2010, the capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.

B. The components of Tier I and Tier II Capital are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Tier I Capital

Paid up ordinary share capital 121,697 121,697

Share premium 380,303 380,303

Retained profits 3,388,271 2,998,408

Other reserves 121,697 121,697

Less: Deferred tax assets (3,259) (56,823)

Total Tier I Capital (Core Capital) 4,008,709 3,565,282

Tier II Capital

Collective assessment allowance* 253,786 235,973

Total Tier II Capital 253,786 235,973

Total Eligible Tier II 253,786 235,973

Less: Investments in subsidiary companies (20) (20)

Capital Base 4,262,475 3,801,235

* Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM111 .5 million (2010: RM133.4 million).



36. Off-balance sheet exposures

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows: 2011 Credit Risk Group and Bank Principal equivalent weighted amount amount assets

Nature of item RM’000 RM’000 RM’000

Direct credit substitutes 1,707,320 1,707,320 1,410,933

Transaction related contingent items 399,731 199,865 158,071

Short term self liquidating trade related contingencies 148,283 29,657 22,854

Forward asset purchases 12,220 12,220 6,110

Foreign exchange related contracts:

One year or less 24,279,480 568,900 387,454

Over one year to five years 4,180,829 532,616 322,054

Over five years 91,650 18,855 18,855

Interest/Profit rate related contracts:

One year or less 6,343,210 18,265 7,496


Over five years 2,342,535 248,393 110,993

Equity related contracts:

One year or less 54,639 4,577 1,648

Over one year to five years 123,596 16,482 8,593

Over five years - - -

Debt security contracts and other commodity contracts:

One year or less - 3,687 1,843



Other commitments, such as formal standby facilities and credit lines, with an original maturity up to one year 990,462 198,092 198,092

Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 598,618 299,309 227,000

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 5,376,095 - -

Unutilised credit card lines 17,832,083 3,566,418 2,677,910

Total 79,632,078 7,927,218 5,741,716



36. Off-balance sheet exposures (continued)

The Off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows: (continued)

2010 Credit Risk Group and Bank Principal equivalent weighted amount amount assets


Direct credit substitutes 1,489,992 1,489,992 1,288,190

Transaction related contingent items 395,970 197,985 180,418

Short term self liquidating trade related contingencies 422,631 84,526 127,781

Forward asset purchases 617 617 -


One year or less 24,729,003 758,795 561,289




One year or less 7,896,887 37,105 13,589


Over five years 1,800,014 191,416 64,169

Equity related contracts:

One year or less 388,457 25,785 12,867



Debt security contracts and other commodity contracts:

One year or less 175,461 34,810 32,976

Over one year to five years - - -



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 5,014,737 - -

Unutilised credit card lines 18,107,541 3,621,508 2,722,693

Total 81,239,637 7,804,893 5,751,160



37. The operations of Islamic Banking

Statements of financial position as at 31 December 2011

Group and Bank

2011 2010

RM’000 RM’000

Assets

Cash and short term funds (a) 68,863 394,301

Financial assets held-for-trading (b) - 343,179

Financial investments available-for-sale (c) 431,792 271,553

Financing, advances and other loans (d) 444,160 500,800

Deferred tax assets 239 1,142

Other assets (f) 15,593 164,651

Total assets 960,647 1,675,626

Liabilities

Deposits from customers (g) 649,448 1,089,505

Deferred tax liabilities - -

Other liabilities (h) 85,107 382,071

Total liabilities 734,555 1,471,576

Islamic banking funds (i) 226,092 204,050

Total liabilities and Islamic banking funds 960,647 1,675,626

Off-balance sheet exposures (s) 658,992 1,534,730




37. The operations of Islamic Banking (continued)

Statements of comprehensive income for financial year ended 31 December 2011

Group and Bank

2011 2010

RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 41,732 41,197

Provision for financing, advances and other loans (k) 822 309

Transfer to Profit Equalisation Reserve (l) (3,204) (9,164)

Total attributable income 39,350 32,342

Income attributable to depositors (m) (14,240) (8,461)

Total attributable to the Bank 25,110 23,881

Income derived from investment of Islamic Banking Capital Funds (n) 5,382 12,419

Total net income 30,492 36,300

Other operating expenses (p) (2,857) (4,696)


Tax expense (q) (6,799) (8,212)

Profit for the year 20,836 23,392

Other comprehensive income/(loss), net of income tax Net gain/(loss) on revaluation of financial investments available-for-sale 1,206 (1,549)

Other comprehensive income/(loss) for the year, net of income tax 1,206 (1,549)

Total comprehensive income for the year 22,042 21,843

Profit for the year attributable to:

Equity holder of the Bank 20,836 23,392

Total comprehensive income attributable to:

Equity holder of the Bank 22,042 21,843





Statements of changes in Islamic Banking Funds for the year ended 31 December 2011

Group and Bank

Capital Fair value Retained

funds reserve profits Total

RM’000 RM’000 RM’000 RM’000

At 1 January 2010 20,000 885 161,322 182,207

Fair value of available-for-sale financial assets - (1,549) - (1,549)

Total other comprehensive expense for the year - (1,549) - (1,549)

Profit for the year - - 23,392 23,392

Total comprehensive (expense)/ income for the year - (1,549) 23,392 21,843

At 31 December 2010/ 1 January 2011 20,000 (664) 184,714 204,050

Fair value of available-for-sale financial assets - 1,206 - 1,206

Total other comprehensive income for the year - 1,206 - 1,206

Profit for the year - - 20,836 20,836

Total comprehensive income for the year - 1,206 20,836 22,042

At 31 December 2011 20,000 542 205,550 226,092

Note 37(i)





Statements of cash flows for financial year ended 31 December 2011

Group and Bank

2011 2010

RM’000 RM’000

Cash flows from operating activities


Adjustments for:

Amortisation of premium less accretion of discount of investment securities 491 208

Allowance for bad and doubtful debts (net of write-back) (822) (309)

Profit Equalisation Reserve 3,204 9,164

Gain from disposal of financial investments available-for-sale (945) (996)

Mark-to-market gain on financial assets held-for-trading (88) (2,654)

Operating profit before working capital changes 29,475 37,017

Changes in working capital:

Financial assets held-for-trading 343,267 (275,128)

Financing, advances and other loans 57,462 26,511

Other assets 149,058 (72,935)

Deposits from customers (440,057) (542,911)

Other liabilities (298,864) 222,917

Cash used in operating activities (159,659) (604,529)

Income taxes paid (8,994) (8,212)

Net cash used in operating activities (168,653) (612,741)

Cash flows from investing activities

Purchase of financial investments available-for-sale (424,780) (273,805)

Proceeds from disposal of financial investments available-for-sale 267,995 402,387

Net cash (used in)/from investing activities (156,785) 128,582

Net decrease in cash and cash equivalents (325,438) (484,159)

Cash and cash equivalents at 1 January 394,301 878,460

Cash and cash equivalents at 31 December (Note 37(a)) 68,863 394,301





a. Cash and short term funds

Group and Bank

2011 2010

RM’000 RM’000

Cash and balances with banks and other financial institutions 2,863 4,301

Money at call and deposit placements maturing within one month 66,000 390,000

68,863 394,301

b. Financial assets held-for-trading

Group and Bank

2011 2010

RM’000 RM’000

At fair value

Bank Negara Malaysia Islamic Bills - 336,868

Malaysian Government Treasury Bills - 6,311

- 343,179

c. Financial investments available-for-sale

Group and Bank

2011 2010

RM’000 RM’000

At fair value

Malaysian Government Investment Issues 431,792 271,553

431,792 271,553




d. Financing, advances and other loans

i. By type

Group and Bank

2011 2010

RM’000 RM’000

Term financing

- Housing loans/financing 475,960 536,474

- Hire purchase receivables 1,592 3,175

- Lease receivables 631 2,878

- Other term loans/financing - 42

478,183 542,569

Unearned income (25,140) (32,059)

Gross financing, advances and other loans 453,043 510,510

Less:

Allowance for impaired financing, advances and other loans

- Collective assessment allowance (6,764) (7,626)

- Individual assessment allowance (2,119) (2,084)

Total net financing, advances and other loans 444,160 500,800

ii. By contract

Bai’Bithamin Ajil 34,701 42,101

Ijarah Muntahia Bittamilik 2,223 6,095

Diminishing Musharakah 416,119 462,314

453,043 510,510

iii. By type of customer

Domestic business enterprises

- Small and medium enterprises 2,206 5,812

- Others 2,419 2,829

Individuals 448,418 501,869

453,043 510,510




d. Financing, advances and other loans (continued)

iv. By profit rate sensitivity

Group and Bank

2011 2010

RM’000 RM’000

Fixed rate

- Housing loans/financing 450,820 504,416

- Hire purchase receivables 1,592 3,174

- Other fixed rate/financing 631 2,920

453,043 510,510

v. By sector


Wholesale, retail trade, restaurants and hotels - 98

Transport, storage and communication 67 2,040

Finance, insurance, real estate and business services - 33

Household - residential 448,418 501,869

Other sectors 2,402 2,547

453,043 510,510

vi. By purpose

Purchase of landed property 450,820 504,416

Purchase of fixed assets excluding land and building 2,223 6,094

453,043 510,510




e. Impaired financing, advances and other loans

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

Group and Bank

2011 2010

RM’000 RM’000

At 1 January 13,257 10,215

Classified as impaired during the year 57 8,987

Amount recovered (3,685) (3,200)

Amount written off - (2,745)

At 31 December 9,629 13,257


Net impaired financing, advances and other loans 7,510 11,173

Ratio of net impaired financing, advances and other loans to total gross financing, advances and other loans less individual assessment allowance 1.67% 2.20%

ii. Movements in impaired financing, advances and other loans are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Collective assessment allowance

At 1 January 7,626 8,026

Allowance written back during the year (862) (400)

At 31 December 6,764 7,626

As % of gross financing, advances and other loans less individual assessment allowance 1.50% 1.50%




e. Impaired financing, advances and other loans (continued)

ii. Movements in impaired financing, advances and other loans are as follows (continued):

Group and Bank

2011 2010

RM’000 RM’000


At 1 January 2,084 4,743

Allowance made during the year 40 203

Amount recovered - (117)

Amount written off (6) (2,745)

At 31 December 2,118 2,084

iii. Impaired financing, advances and other loans by sector

Group and Bank

2011 2010

RM’000 RM’000


Household - residential 8,249 11,811

9,629 13,257

f. Other assets

Group and Bank

2011 2010

RM’000 RM’000

Profit receivables 4,440 3,666

Other debtors, deposits and prepayments 8,529 14,760

Revaluation gain on profit rate undertaking contracts (Note 37(t)) 2,624 146,225

15,593 164,651




g. Deposits from customers

i. By type of deposit

Group and Bank

2011 2010

RM’000 RM’000

Non-Mudharabah Fund

Demand deposits 495,235 878,181

Saving deposits 69,912 69,203

Other deposits 48,247 104,349

Mudharabah Fund

General investment deposits 36,054 37,772

649,448 1,089,505

ii. By type of customer

Group and Bank

2011 2010

RM’000 RM’000

Government and statutory bodies 8,339 24

Business enterprises 208,987 642,811

Individuals 333,959 302,084

Others 98,163 144,586

649,448 1,089,505




h. Other liabilities

Group and Bank

2011 2010

RM’000 RM’000

Profit payable 8,846 11,783

Other creditors and accruals 61,246 214,876

Profit Equalisation Reserve (see Note 37(l)) 12,391 9,187

Revaluation loss on profit rate undertaking contracts (Note 37(t)) 2,624 146,225

85,107 382,071

i. Islamic banking funds

Group and Bank

2011 2010

RM’000 RM’000

Fund allocated 20,000 20,000

Fair value reserve 542 (664)

Retained earnings 205,550 184,714

226,092 204,050

j. Income derived from investment of depositors’ funds and others

Group and Bank

2011 2010

RM’000 RM’000

Income derived from investment of:

(i) General investment deposits 39,397 36,582

(ii) Other deposits 2,335 4,615

41,732 41,197


j. Income derived from investment of depositors’ funds and others (continued)

i. Income derived from investment of general deposits

Group and Bank

2011 2010

RM’000 RM’000

Finance income and hibah


Money at call and placements with financial institutions 8,245 5,217

Income from financial investments available- for-sale 10,046 9,205

37,207 32,542

Accretion of discount less amortisation of premium 1,966 3,010

Total finance income and hibah 39,173 35,552

Other operating income

Fee income 224 1,030

Income from general investment deposits 39,397 36,582




j. Income derived from investment of depositors’ funds and others (continued)

ii. Income derived from investment of other deposits

Group and Bank

2011 2010

RM’000 RM’000

Finance income and hibah


Money at call and placements with financial institutions 489 658

Income from financial investments available- for-sale 596 1,161

2,206 4,105

Accretion of discount less amortisation of premium 116 380



Fee income 13 130

Income from investment of other deposits 2,335 4,615

k. Provision for financing, advances and other loans

Provision for financing, advances and other loans:


- made in the financial year 179 203

- written back (138) (117)

Collective assessment allowance

- reversal during the year (863) (400)

Impaired financing, advances and other loans

- written off - 5

(822) (309)






l. Profit Equalisation Reserve

The movement in Profit Equalisation Reserve is as follows:

Group and Bank

2011 2010

RM’000 RM’000

At 1 January 9,187 23

Movement in the financial year 3,204 9,164

At 31 December 12,391 9,187

m. Income attributable to depositors

Group and Bank

2011 2010

RM’000 RM’000

Deposits from customers

- Mudharabah Fund 11,272 4,902

- Non-Mudharabah Fund 2,887 3,224

Deposits and placements of banks and other financial institutions

- Non-Mudharabah Fund 24 66

Others 57 269

14,240 8,461

n. Income derived from investment of Islamic Banking Capital Funds

Group and Bank

2011 2010

RM’000 RM’000


Money at call and placements with financial institutions 1,040 632

Income from financial investments available-for-sale 1,267 1,115

4,693 3,941

Accretion of discount less amortisation of premium (235) 324





n. Income derived from investment of Islamic Banking Capital Funds (continued)

Group and Bank

2011 2010

RM’000 RM’000


Gain/(Loss) from financial assets held-for-trading 88 (91)

Gain from financial investments available-for-sale 945 2,690

Fee income 1,628 877

(Loss)/Income from trading activities (1,737) 4,678

924 8,154

Income from Islamic Banking Capital Funds 5,382 12,419

o. Income from Islamic banking operations

For consolidation with the conventional operations, income from Islamic banking operations comprises the following:

Group and Bank

2011 2010

Note RM’000 RM’000

Income derived from investment of depositors’ funds and others (j) 41,732 41,197

Profit Equalisation Reserve (l) (3,204) (9,164)

Income attributable to depositors (m) (14,240) (8,461)

Income derived from investment of Islamic Banking Capital Funds (n) 5,382 12,419

29,670 35,991




p. Other operating expenses

Group and Bank

2011 2010

RM’000 RM’000

Personnel costs

- Salaries, allowances and bonuses 222 951

- Contributions to Employees Provident Fund 23 23

- Staff benefits and other compensations 14 14

- Others 1 30

Establishment costs

- Depreciation 1 1

- Rental - 3

Administrative and general expenses

- Others 2,596 3,674

2,857 4,696

Included in other operating expenses is the Syariah Committee’s remuneration of RM139,000 (2010 - RM108,000).

q. Taxation

Group and Bank

2011 2010

RM’000 RM’000

Current tax expense 9,884 7,161

Deferred tax expense (3,085) 1,051

6,799 8,212




r. Capital adequacy

i. The capital adequacy ratios are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Computation of Total Risk Weighted Assets (“RWA”)

Total credit RWA 199,050 436,946

Total market RWA 20,319 79,687

Total operational RWA 84,785 92,001

Total Risk Weighted Assets 304,154 608,634


Tier 1 Capital 225,131 203,761

Capital Base 231,517 210,955



With effect from 1 January 2010, the capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.

ii. The components of Tier I and Tier II Capital are as follows:

Group and Bank

2011 2010

RM’000 RM’000

Tier I Capital

Fund allocated 20,000 20,000

Retained earnings 205,550 184,714

Less: Deferred tax assets (419) (953)

Total Tier I Capital (Core Capital) 225,131 203,761




r. Capital adequacy (continued)

Group and Bank

2011 2010

RM’000 RM’000

Tier II Capital

Collective assessment allowance* 6,386 7,194

Capital Base 231,517 210,955

* Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM378,000 (2010 - RM432,000).

s. Off-balance sheet exposures

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank of the current year are as follows:




One year or less - - -


Over five years 300,000 19,721 11,144

Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 158 32 32

Other commitments, such as formal standby facilities and credit lines with an original maturity of over one year 8,834 4,416 3,275

Total 658,992 33,169 18,651




s. Off-balance sheet exposures (continued)

The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank for previous year were as follows:




One year or less 828,235 152,975 152,975

Over one year to five years - - -



One year or less 138,758 139 139




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 1,001 - -

Total 1,534,730 182,297 170,972




t. Derivative financial instruments

2011 2010

Positive Negative Positive Negative Contract fair fair Contract fair fair Amount value value amount value value

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


- Cross currency Islamic profit rate undertaking - - - 1,521,749 139,724 139,724

Others

- Islamic profit rate undertaking 800,000 2,624 2,624 927,515 6,501 6,501

800,000 2,624 2,624 2,449,264 146,225 146,225

Note 37(f) Note 37(h) Note 37(f) Note 37(h)

Effective

Up To 1 > 1 - 3 > 3 - 12 > 1 - 5 Over 5 Non-interest Trading Interest

Group and Bank Month Months Months Years Years Sensitive Book Total Rate


Assets

Cash and short term funds 66,000 - - - - 2,863 - 68,863 2.82%

Financial investments available-for-sale - - 80,000 351,792 - - - 431,792 2.81%

Financing, advances and other loans

- performing 1,446 - 422 2,065 439,481 (6,764) - 436,650 4.80%

- impaired - - - - - 7,510 - 7,510

Deferred tax assets - - - - - 239 - 239

Others assets - - - - - 12,969 2,624 15,593

Total assets 67,446 - 80,422 353,857 439,481 16,817 2,624 960,647

u. Profit rate risk




u. Profit rate risk (continued)

Effective




Liabilities and Islamic Banking Funds

Deposits from customers 592,768 - 8,432 48,248 - - - 649,448 1.53%

Deferred tax liability - - - - - - - -

Other liabilities - - - - - 82,483 2,624 85,107

Total liabilities 592,768 - 8,432 48,248 - 82,483 2,624 734,555

Islamic Banking Funds - - - - - 226,092 - 226,092

Total liabilities and Islamic Banking Funds 592,768 - 8,432 48,248 - 308,575 2,624 960,647

On-balance sheet profit sensitivity gap (525,322) - 71,990 305,609 439,981 (291,758) -

Effective




Assets

Cash and short term funds 390,000 - - - - 4,301 - 394,301 2.12%

Financial assets held-for-trading - - - - - - 343,179 343,179 13.98%

Financial investments available-for-sale - - - 271,553 - - - 271,553 10.57%

Financing, advances and other loans

- performing 214 210 1,598 1,215 494,016 (7,626) - 489,627 4.36%

- impaired - - - - - 11,173 - 11,173

Deferred tax assets - - - - - 1,142 - 1,142

Others assets - - - - - 18,426 146,225 164,651

Total assets 390,214 210 1,598 272,768 494,016 27,416 489,404 1,675,626




u. Profit rate risk (continued)

Effective


Group And Bank Month Months Months Years Years Sensitive Book Total Rate


Liabilities and

Islamic Banking Funds

Deposits from customers 973,532 5,567 49,057 61,349 - - - 1,089,505 0.76%

Other liabilities - - - - - 235,846 146,225 382,071

Total liabilities 973,532 5,567 49,057 61,349 - 235,846 146,225 1,471,576

Islamic Banking Funds - - - - - 204,050 - 204,050

Total liabilities and

Islamic Banking Funds 973,532 5,567 49,057 61,349 - 439,896 146,225 1,675,626

On-balance sheet profit sensitivity gap (583,318) (5,357) (47,459) 211,419 494,016 (412,480) 343,179

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