unaudited condensed interim financial … bank of abu dhabi malaysia berhad ... merger between...

THREE MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2017

UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

NATIONAL BANK OF ABU DHABI MALAYSIA BERHAD (965488-H)

(Incorporated in Malaysia)

31 March 31 December

2017 2016

Note RM'000 RM'000

ASSETS

Cash and short term funds 15 318,273 101,788

Held-for-trading securities 16 160,059 245,907

Available-for-sale securities 17 145,469 203,951

Held-to-maturity securities 18 8,896 9,097

Loans, advances and receivables 19 355,461 269,299

Derivative financial assets 155 2,611

Other assets 20 5,942 2,280

Property and equipment 5,013 4,963

Tax recoverable 4,557 3,746

Deferred tax assets 1,291 1,483

TOTAL ASSETS 1,005,116 845,125

LIABILITIES

Deposits from customers 21 418,687 218,896

Deposits and placements of banks and other

financial institutions 22 165,930 205,344

Derivative financial liabilities 37 -

Other liabilities 23 8,853 9,647

TOTAL LIABILITIES 593,507 433,887

EQUITY

Share capital 411,700 411,700

Other reserves (227) (1,400)

Retained earnings 136 938

TOTAL EQUITY ATTRIBUTABLE TO EQUITY

HOLDER OF THE BANK 411,609 411,238

TOTAL LIABILITIES AND EQUITY 1,005,116 845,125

COMMITMENTS AND CONTINGENCIES 30 365,999 435,481

The Condensed Interim Financial Statements should be read in conjunction with the audited

financial statements of the Bank for the year ended 31 December 2016.




STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017

Note 31 Mar 31 Mar 31 Mar 31 Mar

2017 2016 2017 2016

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

Interest income 24 7,874 6,587 7,874 6,587

Interest expense 25 (3,054) (1,929) (3,054) (1,929)

Net interest income 4,820 4,658 4,820 4,658

Other operating income 26 5,785 14,374 5,785 14,374

Net operating income 10,605 19,032 10,605 19,032

Operating expenses 27 (10,537) (11,673) (10,537) (11,673)

Operating profit 68 7,359 68 7,359

Allowance/(write-back) for impairment on

loans, advances and receivables 28 1,048 (1,283) 1,048 (1,283)

(Loss)/Profit before tax expense (980) 8,642 (980) 8,642

Tax expense 29 (178) 2,247 (178) 2,247

Net (loss)/profit for the period (802) 6,395 (802) 6,395

Other comprehensive income, net of income tax

to profit or loss:

Cash flow hedge 14 (84) 14 (84)

Fair value of available-for-sale financial asset 1,159 - 1,159 -

Total comprehensive income

for the period, net of tax 371 6,311 371 6,311

The Condensed Interim Financial Statements should be read in conjunction with the audited

financial statements of the Bank for the year ended 31 December 2016.

FOR THE THREE MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2017




STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

1st Quarter Ended Three Months Ended

Items that may be reclassified subsequently

Statutory Revaluation Hedging Accumulated

Share capital reserve reserve reserve profit/(loss) Total

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

At 1 January 2017 411,700 385 (1,865) 80 938 411,238

Net loss for the period - - - - (802) (802)

Revaluation reserve - - 1,159 - - 1,159

Hedging reserve - - - 14 - 14

At 31 March 2017 411,700 385 (706) 94 136 411,609

At 1 January 2016 330,000 - - 55 (7,585) 322,470

Net profit for the period - - - - 439 439

Revaluation reserve - - - - - -

Hedging reserve - - - (84) - (84)

At 31 March 2016 330,000 - - (29) (7,146) 322,825




The Interim Financial Statements should be read in conjunction with the audited financial statements of the Bank for the year ended 31

December 2016.

STATEMENT OF CHANGES IN EQUITY


Non distributable


31 Mar 31 Mar

2017 2016

RM'000 RM'000

Cash flows from operating activities

(Loss)/Profit before taxation for the period (980) 8,642

Adjustments for:

Net allowance for impairment on loans, advances

and receivables 1,048 1,283

Depreciation of property and equipment 371 502

Net gain on derivatives and investments (1,634) -

Operating profit before working capital changes (1,195) 10,427

Changes in working capital:

Change in loans, advances and receivables (87,210) 104,390

Change in other assets (3,662) (1,579)

Change in deposits from customers 199,791 57,061

Change in deposits and placements of banks and

other financial institutions (39,414) (190,437)

Change in other liabilities (794) 1,108

Income tax paid (811) (2,010)

Net cash generated from operating activities 66,705 (21,040)

Cash flows from investing activities

Purchase of property and equipment (421) (1,376)

Net investment of held-for-trading securities 85,848 -

Net investment of available-for-sale securities 64,152 9,117

Net investment of held-to-maturity securities 201 786

Net cash used in investing activities 149,780 8,527




STATEMENT OF CASH FLOWS




STATEMENT OF CASH FLOWS

31 Mar 31 Mar

2017 2016

RM'000 RM'000

Net change in cash and cash equivalent 216,485 (12,513)

Cash and cash equivalents at beginning of the period 101,788 206,726

Cash and cash equivalents at end of the period 318,273 194,213

Analysis of cash and cash equivalents

Cash and short term funds at end of period 318,273 194,213

The Interim Financial Statements should be read in conjunction with the audited financial

statements of the Bank for the year ended 31 December 2016.

FOR THE THREE MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2016 (continued)


1. GENERAL INFORMATION


National Bank of Abu Dhabi Malaysia Berhad ("the Bank") is principally engaged in the

provision of banking and related financial services.

The Bank is a company limited by shares, a licenced bank, incorporated and domiciled in

Malaysia. The principal place of business of the bank is located at Level 28, Menara Maxis,

Kuala Lumpur City Centre, 50088 Kuala Lumpur.

The Bank is a wholly-owned subsidiary of National Bank of Abu Dhabi PJSC ("Holding

Company"), a bank incorporated in Abu Dhabi, United Arab Emirate and listed at the Abu

Dhabi Securities Exchange. The ultimate parent company of the Bank is the Abu Dhabi

Investment Council, an entity owned by the Government of the Emirates of Abu Dhabi.


NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

Merger between Nasional Bank of Abi Dhabi PJSC ("NBAD") and First Gulf Bank PJSC

("FGB")

On 3 July 2016, the Boards of Directors of NBAD and FGB have voted unanimously to

recommend to shareholders a merger of the two Abu Dhabi-listed banks.

Subsequently, on 7 December 2016, the proposed merger (the Merger) of the NBAD and

FGB was approved by the Shareholders to be effected by way of a merger pursuant to

Article 283(1) of UAE Federal Law No. 2 of 2015 Concerning Commercial Companies (the

Law) subject to the terms and conditions of the Merger and with effect from the Merger

becoming effective.

Upon completion of the approved merger, FGB shareholders will own approximately 52

percent of the combined bank and NBAD shareholders will own approximately 48 percent.

The Bank has obtained the necessary approval from Bank Negara Malaysia for the change of

shareholding by the ultimate parent company Abu Dhabi Investment Council, pursuant to

Section 89 of the FSA on 13 January 2017.

The Securities and Commodities Authority of the UAE approved the Merger and confirmed

that the Merger takes effect on 31 March 2017.





1. GENERAL INFORMATION (continued)

2. BASIS OF PREPARATION

The unaudited condensed interim financial statements have been prepared in accordance

with MFRS 134: Interim Financial Reporting issued by the Malaysian Accounting Standards

Board ("MASB") and Policy Document on Financial Reporting issued by Bank Negara

Malaysia ("BNM").

The unaudited condensed interim financial statements do not include all of the information

required for full annual financial statements, and should be read in conjunction with the

audited financial statements of the Bank as at and for the financial year ended 31 December

2016. The explanatory notes attached to the interim financial statements provide an

explanation of the events and transactions that are significant for an understanding of the

financial position and performance of the Bank since the year ended 31 December 2016.

The following are accounting standards, amendments and interpretations that have been

issued by the Malaysian Accounting Standards Board ("MASB") but have not been adopted

by the Bank:

The unaudited interim condensed financial statements for the three months ended 31 March

2016 have been prepared under the historical cost convention except for the valuation of

available-for-sale securities and derivative financial instruments that are carried at fair

value.

The significant accounting policies and methods of computation applied in the unaudited

interim financial statements are consistent with those adopted in the most recent annual

financial statements for the year ended 31 December 2016.

Merger between Nasional Bank of Abi Dhabi PJSC ("NBAD") and First Gulf Bank PJSC

("FGB") (continued)

The combined bank will be named as “First Abu Dhabi Bank”, upon regulatory approvals at

a General Assembly Meeting held on 25 April 2017.





2. BASIS OF PREPARATION (continued)

(a)

•

A number of new standards and amendments to standards and interpretations are

effective for financial year beginning after 1 January 2018. None of these is expected to

have a significant effect on the financial statements of the Bank, except the following set

out below:

Standards and amendments that have been issued but not yet effective

IC Interpretation 22 ‘Foreign Currency Transactions and Advance Consideration’

(effective from 1 January 2018) applies when an entity recognises a non-monetary

asset or non-monetary liability arising from the payment or receipt of advance

consideration. MFRS 121 requires an entity to use the exchange rate at the ‘date of

the transaction’ to record foreign currency transactions.

IC Interpretation 22 provides guidance how to determine ‘the date of transaction’

when a single payment/receipt is made, as well as for situations where multiple

payments/receipts are made.

The date of transaction is the date when the payment or receipt of advance

consideration gives rise to the non-monetary asset or non-monetary liability when

the entity is no longer exposed to foreign exchange risk. If there are multiple

payments or receipts in advance, the entity should determine the date of the

transaction for each payment or receipt.

An entity has the option to apply IC Interpretation 22 retrospectively or

prospectively.






(a)

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS

139 "Financial Instruments: Recognition and Measurement".

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and

establishes three primary measurement categories for financial assets: amortised

cost, fair value through profit or loss and fair value through other comprehensive

income ("OCI"). The basis of classification depends on the entity's business model

and the cash flow characteristics of the financial asset. Investments in equity

instruments are always measured at fair value through profit or loss with an

irrevocable option at inception to present changes in fair value in OCI (provided

the instrument is not held for trading). A debt instrument is measured at amortised

cost only if the entity is holding it to collect contractual cash flows and the cash

flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These

include amortised cost accounting for most financial liabilities, with bifurcation of

embedded derivatives. The main change is that, in cases where the fair value option

is taken for financial liabilities, the part of a fair value change due to an entity’s own

credit risk is recorded in other comprehensive income rather than the income

statement, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the

incurred loss impairment model used in MFRS 139. The expected credit loss model

is forward-looking and eliminates the need for a trigger event to have occurred

before credit losses are recognised.

Standards and amendments that have been issued but not yet effective (continued)






(a)

•

•

•

•

•

•

•

•

•

•

•

Standards and amendments that have been issued but not yet effective (continued)

MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018)

replaces MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction contracts’ and related

interpretations. The core principle in MFRS 15 is that an entity recognises revenue

to depict the transfer of promised goods or services to the customer in an amount

that reflects the consideration to which the entity expects to be entitled in exchange

for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e.

when the customer has the ability to direct the use of and obtain the benefits from

the goods or services.

A new five-step process is applied before revenue can be recognised:

Identify contracts with customers;

Identify the separate performance obligations;

Determine the transaction price of the contract;

Recognise the revenue as each performance obligation is satisfied.

Allocate the transaction price to each of the separate performance obligations;

and

There are new specific rules on licenses, warranties, non-refundable upfront

fees, and consignment arrangements, to name a few.

As with any new standard, there are also increased disclosures.

Key provisions of the new standard are as follows:

Any bundled goods or services that are distinct must be separately recognised,

and any discounts or rebates on the contract price must generally be allocated

to the separate elements.

If the consideration varies (such as for incentives, rebates, performance fees,

royalties, success of an outcome etc), minimum amounts of revenue must be

recognised if they are not at significant risk of reversal.

The point at which revenue is able to be recognised may shift: some revenue

which is currently recognised at a point in time at the end of a contract may

have to be recognised over the contract term and vice versa.





3. SIGNIFICANT ACCOUNTING POLICIES

4 ESTIMATES

5. AUDITORS REPORT ON PRECEDING ANNUAL FINANCIAL STATEMENTS

6. COMMENTS ABOUT SEASONAL OR CYCLICAL FACTORS

7. UNUSUAL ITEMS DUE TO THEIR NATURE, SIZE OR INCIDENCE

8. CHANGES IN ESTIMATES

The auditors' report on the audited financial statements for the financial year ended 31

December 2016 was not qualified.

The operations of the Bank were not materially affected by any seasonal or cyclical factors

since the financial year ended 31 December 2016.

There were no unusual items affecting the assets, liabilities, equity, net income or cash flow

of the Bank for the period ended 31 March 2017.

There were no material estimated amounts in the period ended 31 March 2017.

The accounting policies applied by the Bank in these condensed interim financial statements

are the same as those applied by the Bank in its audited financial statements as at and for the

year ended 31 December 2016.

The preparation of these condensed interim financial statements requires management to

make judgements, estimates and assumptions that affect the application of accounting

policies and reported amounts of assets and liabilities, income and expense. Actual results

may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made

by management in applying the Bank’s accounting policies and the key sources of

estimation and uncertainty were the same as those that were applied to the audited financial

statements as at and for the year ended 31 December 2016.





9.

SECURITIES

10. DIVIDEND

11. SEGMENTAL REPORTING ON REVENUE, PROFIT AND ASSETS

12. SIGNIFICANT EVENTS DURING THE FINANCIAL PERIOD

13. SUBSEQUENT EVENTS

14. CHANGES IN COMPOSITION OF THE BANK

There were no significant events during the period ended 31 March 2017 that have not been

disclosed in these condensed interim financial statements.

Segmental reporting has not been prepared as there is no other segment other than the

Wholesale Banking.

There were no dividends paid or declared for the period ended 31 March 2017.

There were no other issuance, cancellation, repurchase, resale or repayment of debt and

equity securities for the period under review.

ISSUANCE, REPURCHASE AND REPAYMENTS OF DEBT AND EQUITY

There were no significant changes in the composition of the Bank for the period ended 31

March 2017.

There were no significant events subsequent to the statement of financial position date

which have not been disclosed in these condensed interim financial statements.


15. CASH AND SHORT TERM FUNDS


2017 2016

RM'000 RM'000

Cash and balances with banks and other

financial institutions 4,335 5,191

Money at call and deposit placements

maturing within three months 313,938 96,597

318,273 101,788

16. HELD-FOR-TRADING SECURITIES


2017 2016

RM'000 RM'000

At fair value

Government securities & treasury bills:

Malaysian Government Investment Issues 10,028 -

Malaysian Government Securities 40,206 -

Money market instruments:

Negotiable instruments of deposit 49,772 200,680

Cagamas Bonds 60,053 45,227

160,059 245,907








17. AVAILABLE-FOR-SALE SECURITIES 31 March 31 December

2017 2016

RM'000 RM'000

At fair value

Government securities & treasury bills:

Malaysian Government Investment Issues 50,213 50,467

Malaysian Government Sukuk - 108,449

Malaysian Government Securities 40,084 40,003

Money market instruments:

Negotiable instruments of deposit 50,082 -

Cagamas Bonds 5,090 5,032

145,469 203,951

18. HELD-TO-MATURITY SECURITIES


2017 2016

RM'000 RM'000

At amortised cost

Non-money market instruments:

Corporate Sukuk 8,896 9,097





19. LOANS, ADVANCES AND RECEIVABLES


2017 2016

At amortised cost RM'000 RM'000

(i) By type:

Syndication term loans 77,354 82,430

Term loans 66,541 49,536

Trust receipts 151,009 97,793

Revolving credits 62,574 39,662

Overdrafts 2,301 3,148

Gross loans, advances and receivables 359,779 272,569

Less: Allowance for impaired loans, advances

and receivables

- collective assessment (4,318) (3,270)

- individual assessment - -

Net loans, advances and receivables 355,461 269,299

(ii) The maturity structure of gross loans, advances and receivables are as follows:

Maturing within one year 218,459 145,793

More than three years to five years 121,563 126,776

More than five years 19,757 -

359,779 272,569





19. LOANS, ADVANCES AND RECEIVABLES (continued)


2017 2016

RM'000 RM'000

(iii)

Business enterprises 282,425 190,139

Foreign entities 77,354 82,430

359,779 272,569

(iv)

Malaysia 282,425 190,139

Indonesia 77,354 82,430

359,779 272,569

(v)

Variable rate

- Cost plus 151,009 129,627

- Other variable plus 208,770 142,942

359,779 272,569

(vi)

Agriculture 67,832 30,204

Mining and quarrying 2,301 3,148

Real estate 51,581 31,833

Wholesale and retail trade 141,677 124,953

Other sectors 96,388 82,431

359,779 272,569

Gross loans, advances and receivables analysed by geographical distribution are as

follows:

Gross loans, advances and receivables analysed by interest rate sensitivity are as

follows:

Gross loans, advances and receivables analysed by type of customer are as follows:

Gross loans, advances and receivables analysed by economic sectors are as follows:





19. LOANS, ADVANCES AND RECEIVABLES (continued)


2017 2016

RM'000 RM'000

(vii)

At 1 January - -

Impaired/(Recoveries) during the period/year - -

Closing balance - -

- -

(viii) Movements in collective assessment allowance are as follows:

At 1 January 3,270 4,165

Allowance made during the financial period 1,048 -

Written back during the financial year - (895)

Closing balance 4,318 3,270

As % of gross loans, advances and receivables less

individual assessment allowance 1.20% 1.20%

20. OTHER ASSETS


2017 2016

RM'000 RM'000

Interest receivables 71 448

Other receivables, deposits and prepayments 5,511 1,832

Amount due from holding company 360 -

5,942 2,280

Ratio of net impaired loans, advances and receivables

to net loans, advances and receivables

Impaired loans - movements in impaired loans, advances and receivables are as

follows:


21. DEPOSITS FROM CUSTOMERS


2017 2016

RM'000 RM'000

At amortised cost

a) By type of deposit

Demand deposits 64,383 36,288

Short-term deposits 354,304 182,608

418,687 218,896

b) By type of customer

Business enterprises 324,689 173,944

Foreign customers 13,983 14,678

Non-bank financial institutions 80,015 30,274

418,687 218,896

c) The maturity structure of short-term deposits is as follow:

Due within six months 354,304 182,608

22. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER

FINANCIAL INSTITUTIONS


2017 2016

RM'000 RM'000

At amortised cost

Licensed bank 165,930 205,344








23. OTHER LIABILITIES


2017 2016

RM'000 RM'000

Interest payable 85 779

Other payable and accruals 2,060 2,092

Provisions for other operating expenses 6,114 6,776

Amount due to holding company 594 -

8,853 9,647



24. INTEREST INCOME

31 Mar 31 Mar 31 Mar 31 Mar

2017 2016 2017 2016

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

Balances with banks 896 1,420 896 1,420

Held-for-trading securities 1,606 - 1,606 -

Available-for-sale securities 1,754 2,044 1,754 2,044

Held-to-maturity securities 73 430 73 430

Loans, advances and receivables 2,921 2,241 2,921 2,241

Others 624 452 624 452

7,874 6,587 7,874 6,587

25. INTEREST EXPENSE


2017 2016 2017 2016

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

Deposits from customer 1,076 367 1,076 367

Deposits from banks 469 401 469 401

Others 1,509 1,161 1,509 1,161

3,054 1,929 3,054 1,929


1st Quarter Ended

1st Quarter Ended

Three Months Ended

Three Months Ended






26. OTHER OPERATING INCOME


2017 2016 2017 2016

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

Fee and commission income 2,667 13,128 2,667 13,128

Net gain/(loss) on foreign exchange 529 (152) 529 (152)

Net gain on derivatives and

investments 1,634 - 1,634 -

Other income 955 1,398 955 1,398

5,785 14,374 5,785 14,374

27. OTHER OPERATING EXPENSES


2017 2016 2017 2016

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

Personnel costs

- Salaries, allowances and bonuses 4,819 5,064 4,819 5,064

- Defined contribution plan 587 403 587 403

- Others 866 884 866 884

6,272 6,351 6,272 6,351

Establishment costs

- Rental of premises 826 1,087 826 1,087

- Lease rental 13 10 13 10

- Depreciation 371 502 371 502

- Insurance 56 57 56 57

- Utilities 44 38 44 38

- Information technology expenses 830 1,329 830 1,329

- General repair and maintenance 9 24 9 24

- Others 18 24 18 24

2,167 3,071 2,167 3,071







27. OTHER OPERATING EXPENSES (continued)


2017 2016 2017 2016

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

Administration and general expenses

- Advertising and publicity 39 34 39 34

- Communication expenses 859 588 859 588

- Legal and professional fees 227 144 227 144

- Others 973 1,485 973 1,485

2,098 2,251 2,098 2,251

Total other operating expenses 10,537 11,673 10,537 11,673

28. NET ALLOWANCE FOR IMPAIRMENT ON LOANS, ADVANCES AND

RECEIVABLES


2017 2016 2017 2016

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

Individual assessment allowance - - - -

Collective impairment allowance

- charged/(written back) 1,048 (1,283) 1,048 (1,283)

1,048 (1,283) 1,048 (1,283)

Three Months Ended1st Quarter Ended






29. TAX EXPENSE


2017 2016 2017 2016

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

Tax expense for the financial period

- Malaysian income tax - 2,475 - 2,475

Deferred tax

- Origination and reversal of

temporary differences (178) (228) (178) (228)

(178) 2,247 (178) 2,247






30. COMMITMENTS AND CONTINGENCIES

Credit Risk Credit Risk

Principal equivalent weighted Principal equivalent weighted

amount amount assets amount amount assets

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

Transaction related contingent items 63,647 31,824 23,156 90,635 45,318 36,388

Short-term self-liquidating trade-related contingencies - - - 836 167 167

Foreign exchange related contracts:

- maturity within one year 39,064 641 128 25,010 84 17

Irrevocable commitments to extend credit:

- maturity more than one year 85,403 42,702 42,702 40,000 20,000 20,000

Interest rate related contracts:

- over five years 8,846 566 113 121,122 12,075 2,415

Other unconditionally cancellable commitments 169,039 - - 157,878 - -

365,999 75,733 66,099 435,481 77,644 58,987

31 December 201631 March 2017





31. CAPITAL ADEQUACY

i) Capital Adequacy Ratios


2017 2016

% %

Common Equity Tier 1 ("CET1") ratio 64.689% 80.730%

Tier 1 ratio 64.689% 80.730%

Total Capital ratio 65.370% 81.374%

ii) Capital Components of CET1, Tier I and Tier II Capital


2017 2016

RM'000 RM'000

Common Equity Tier 1 ("CET1") / Tier 1 capital

Paid-up share capital 411,700 411,700

Retained earnings 136 938

Other reserve (227) (1,400)

CET1 / Tier 1 capital before regulatory adjustments 411,609 411,238

Less: Regulatory adjustments

- Other reserve (94) (80)

- Deferred tax assets (1,321) (1,508)

CET1 / Tier 1 capital after regulatory adjustments 410,194 409,650

The capital adequacy ratios of the Bank have been computed based on BNM’s Capital

Adequacy Framework (Capital Components and Risk-Weighted Assets) issued on 28

November 2012 and the disclosures on capital adequacy ratios are pursuant to the

requirements of Bank Negara Malaysia ("BNM")'s Risk Weighted Capital Adequacy

Framework (Basel II) - Disclosure Requirements (Pillar 3).





31. CAPITAL ADEQUACY (continued)

ii) Capital Components of CET1, Tier I and Tier II Capital (continued)


2017 2016

RM'000 RM'000

Tier-2 capital

Allowance for collective assessment impairment 4,318 3,270

Total Tier-2 capital 4,318 3,270

Total capital 414,512 412,920

iii) The breakdown of risk-weighted assets by each major risk category is as follows:


2017 2016

RM'000 RM'000

Credit risk 520,565 412,758

Operational risk 79,901 75,409

Market risk 33,638 19,267

Total risk-weighted assets 634,104 507,434





32. REVIEW OF PERFORMANCE AND COMMENTARY OF PROSPECTS

i) Performance Review

ii) Prospect for 2017

The Bank incurred net loss of RM0.8 million for the three months ended 31 March 2017

as compared to net profit of RM6.4 million for the same period last year. Net operating

income decreased by RM8.4 million mainly due to lower fee and commission income

offset by net gain on derivatives in the period. Other operating expenses was lower by

10% or RM1.1 million in the current period largely due to decreased information

technology expenses.

Total assets increased by RM160 million to RM1.0 billion as at March 2017 compared to

December 2016, mainly due to higher placements with financial institutions of RM217.3

million and net growth in loans and advances of RM86.2 million but were offset by

lower held-for-trading securities of RM85.8 million and available-for-sale of RM58.5

million. Customer deposits grew 91% to RM418.7 million mainly arose from higher

deposits from business enterprises.

For 2017, the Malaysia private sector activity will remain the key driver of growth with

continued wage and employment growth as well as support from various policy

measures to raise disposable income. Investment activity is expected to grow

moderately as supported by on-going infrastructure development projects and capital

spending in the manufacturing and services sectors. Overall, the economy is expected to

grow within 4% to 5% range in 2017. Headline inflation averaged 2.1% in 2016 and is

expected to average higher in 2017, amid the prospect of higher global oil prices.

Underlying inflation, as measured by the core inflation index is expected to remain

stable given the stable domestic demand.

unaudited condensed interim financial … bank of abu dhabi malaysia berhad ... merger between...

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